Cloud revamps game, mindset for SAP

SAP's cloud strategy not just game changer for company but also represents mindset change due to need to start focus on delivering user experience and "work backwards from there", exec says.
Written by Jamie Yap, Contributor

SINGAPORE--Cloud will be an overall "game changer" for SAP, not only because it is a different technology but as it also entails a mindset shift for the German enterprise software maker, particularly in delivering cloud solutions to customers that focus on user experience, says company exec.

"Cloud isn't just the technology, it's a mindset on how you deliver an experience to the customer [and] in the cloud it's just really different," said Kurt Bilafer, regional vice president of analytics at SAP Asia-Pacific and Japan, in an interview Friday.

Facilitating this cloud game plan and the necessary mindset change was the company's US$3.5 billion acquisition of SuccessFactors, which he explained was because it recognized a "tremendous opportunity with a leader and entity like SuccessFactors to leverage that across all of SAP". It was also announced last month that SuccessFactors CEO Lars Dalgaard would join SAP's global managing board and head the company's new cloud business unit, which combines all the cloud assets of SAP and SuccessFactors.

Changing expectations, changing mindsets
Bilafer explained that in the period prior to the acquisition last December, SAP "didn't really understand what cloud meant" because cloud was in its infancy.

"We, like many other providers, just thought we could perpetuate on-premise systems to the cloud, and let's face it, we still see lots of companies do that today. We've now realized that wasn't the case [and] that we probably needed to rebuild from scratch," he said. "We recognized the impact and legitimacy of [cloud] and that for customers, the cloud is a viable delivery mechanism not to replace on-premise, but augment on-premise."

Bilafer added that SAP aims to base its innovation on what customers want, and since customers' expectations have shifted due to the cloud, there also has to be a mindset change in the developers and designers who are creating and writing the software code.

"When everything is on-premise, people just threw hardware [when there's] a problem," he said, noting that this would not be applicable for a cloud-based solution--where ease of use, quick responses times, and user experience are vital.

For SAP to continue innovating with regard to the cloud, the company will have to "hit the reset button, forget everything you previously knew, and start from user experience and work your way backwards", Bilafer emphasized. SuccessFactors has been "wildly successful" with this approach, which proves that this "mindset and culture aspect" around cloud computing is key, he added.

Analytics push
Another focus area that SAP is banking its innovation is analytics, which Bilafer said will usher a "new wave and new era" in the company.

There is a "unique opportunity" in Asia-Pacific, where the innovation cycle may well be shorter as compared to other regions, he added, since there is not a lot of legacy infrastructure that companies have that needs to be replaced to take advantage of new analytics tools.

The executive explained the renewed focus was to ensure that it can address the changes and challenges that enterprises today face, which are occurring at a rapid rate, otherwise it will "miss the whole market". "Customers who previously invested in ERP won't rip it out. But the question is how do you win the next wave of customers?"

Bilafer observed that a growing volume of the data that many organizations collect and use do not originate in the enterprise, such as customer sentiment on social media.

Analytics in this case helps "takes out the guesswork" for companies, so they can capture and spot patterns, from which to generate insights that help optimize business, he explained. Fashion retailers, for instance, can find out which designs are popular with which customers living in certain locations, and manufacture or stock more of such items in specific boutiques.

However, Bilafer emphasized that the potential for analytics is not limited to enterprise users, which SAP wants to take to the next level. "We've moved beyond business analytics--from analytics for the enterprise to analytics for everybody."

This goes beyond users being able to see the top trending topics on Twitter, and can include smart appliances where a housewife can track the differences in electrical energy consumption of a washing machine with different laundry loads to make informed decision, or a person using a mobile fitness app to comparing how much kilometers he jogged and calories burned with that of his peers, he said.

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