SAP CEO Bill McDermott on Wednesday said the company in January will outline a "clear vision from 2015 to 2020" that will revolve around the core business, cloud and profitability.
The comments, made at a Morgan Stanley conference in Barcelona, were mostly standard issue from McDermott. He talked HANA, cloud and growth. What was interesting is that McDermott said SAP has already "made the bold moves" and is now entering "an execution phase."
McDermott recapped the acquisitions of Concur, Ariba, Fieldglass and SuccessFactors and touted the business network impact. SAP wants licensing and maintenance, cloud subscriptions and network transactions as revenue buckets.
Reading between the lines, McDermott seemed to signal that SAP will be about organic growth, tuck in acquisitions that "will probably put you to sleep" and innovation.
"In January I will lay out a growth plan for each year. You'll see what our plan is to grow the core, grow the cloud and operating profitability. You'll know where the guard rails are," said McDermott. "It's all about execution now. I expect the core to be rock solid and the cloud to grow really fast."
McDermott clearly signaled where SAP is headed, but questions will remain before and after the plan is revealed. Here's a stab at the major questions ahead:
- Can SAP really be about acquisition-free organic growth? SAP is playing in markets that are changing rapidly and McDermott appears to be going the no-acquisition route. It's unclear whether you can make that call over five years. The Internet of things may also require acquisitions to add to the SAP portfolio.
- Will the core hold? McDermott said SAP's core business is extremely sticky and customers stay because the company can now innovate on the edge and in the cloud as well as mobile. What's unclear is whether the core on premise business model, which revolves around licensing and maintenance, can hold without serious declines over the next five years.
- Is HANA really all that? For SAP's 5-year plan to really work, HANA will need more traction. SAP's vision is that HANA is the base layer for the real-time enterprise and will become the analytics engine. However, a bevy of other vendors also have their own real-time analytics plays and swapping databases isn't something anyone wants to do.
- Does the suite really win? McDermott has a mantra that "the suite always wins." You can almost picture McDermott meditating to his suite theory. "You still have to integrate the enterprise. When you run SAP you will be an integrated enterprise on premise in the cloud and business network on one real time data model (HANA)," he said. The rub: The API is simply better foundational integration glue and can enable a more best of breed approach. Enterprises are also wary of lock-in. The suite always won because there weren't APIs everywhere. It remains to be seen whether the suite dominates in the next five years.
- Does SAP innovate? Much of SAP's next five years boils down to whether the company can innovate and make that innovation easier to consume. Without acquisitions, it's clear that SAP will have to deliver the research and development to keep customers thrilled.