SAP stakes future on Business ByDesign, mobiles and more flexible software

Co-CEOs speak out on how the German software giant is planning to bounce back

Co-CEOs speak out on how the German software giant is planning to bounce back

SAP has turned its attentions to boosting innovation and growth as it works to bounce back from a difficult 12 months which culminated in the resignation of CEO Léo Apotheker in February.

The message was delivered at the CeBIT trade show in Hannover, Germany, yesterday by the company's recently installed co-CEOs, Jim Hagemann Snabe and Bill McDermott, who were appointed as part of a senior management shake-up at the business software giant.

The appointment of McDermott and Hagemann Snabe sees SAP return to its co-CEO management structure which was abandoned for a short period under Apotheker.

"Jim and I have been together for many years now...and we have a big trust relationship and we also have very complementary skills. In case you haven't noticed, we're having fun," McDermott said.

SAP co-CEOs, Bill McDermott and Jim Hagemann Snabe

SAP's recently installed co-CEOs, Bill McDermott and Jim Hagemann Snabe, spoke about their vision of the future for the business software giant at CeBIT in Hannover
(Photo credit: Tim Ferguson/

Fun it may be, but there's no small task ahead of the two co-CEOs - last year, SAP's revenue dropped by eight per cent year-on-year, while the company has also seen its on-demand product Business ByDesign suffer from clipped budgets and missed deadlines while rivals continued to ramp up their on-demand offerings.

The company currently has around 100 customers using Business ByDesign and is planning to roll out the software more aggressively from the middle of the year.

"I do believe Business ByDesign is a significant opportunity for SAP and our customers. We're building a complete solution for them. The on-demand delivery model gives some unique capabilities like speed to market and that takes a big burden away [for companies pursuing growth]," Snabe said.

SAP's Business ByDesign push is part of the company's plan to give customers greater flexibility to choose between various elements of on-premise and on-demand technology.

"There is no doubt that companies like to consume software in an on-demand way," Snabe said.

Such flexibility signals an increased focus on customers that will be a key strategy under the new leadership, according to the co-CEOs.

McDermott claimed SAP's U-turn last year, which saw it once again offer customers the option of standard support following months of trying to move all customers to the more expensive enterprise support, proved the company is listening to its customers.

The company has also started a new approach for developing software in which developers are split into small groups to create an environment similar to an entrepreneurial start-up.

Snabe said this approach encourages...

...innovation while taking advantage of the scale of SAP as a whole. Currently around 20 per cent of SAP's 12,000 engineers are working in this way and the plan is to extend it to the entire developer workforce.

In addition, Snabe said SAP will invest more heavily in software for mobile devices along with more cutting-edge technology such as in-memory processing.

According to McDermott, the company will now turn its attentions to developing markets as well as more established geographies in its quest for growth.

"We are a growth company and we will continue to grow this company by focusing on the Bric countries, the Middle East and [existing customers in Europe and the US]. We will also continue to increase our margin by maintaining tight cost control and making SAP into a lean organisation," he said.

He added that as the market improves, the company will see double-digit growth again with the aspiration of reaching an operating margin of 35 per cent in the medium-term. "We can do this," he said.

As for 2010, McDermott said the aim is to increase revenue for software and services by between four and eight per cent and achieve an operating margin of 30 to 31 per cent.

When asked how SAP could improve, McDermott said: "In terms of what we could do better, less bureaucracy, less layers...better at executing, get the job done and do it in a way that inspires people. I think we have to be very approachable."

As for industry speculation that SAP could be the subject of a takeover, McDermott noted: "We expect fully to be an independent software maker. Jim and I are incredibly motivated - we think the best days of SAP are in front of us."