Kathy Gibson reports from CeBIT, Hanover – Disruption creates turbulence for any company, and changing business models can have a temporary effect on a company’s bottom line – and even a giant like SAP is no exception.
“Business model innovation and the idea of giving the customer what they want is important, and every company has to do it,” says SAP CEO Bill McDermott, speaking on the centre stage of Global Conferences at CeBIT today.
“In 2010 SAP had very little in the cloud. But today we have more than 70-million customers in the cloud,” he says. “Now customers have the option of renting or buying.”
McDermott explains that changing business models has had a negative effect on the bottom line, but that this is a temporary price to pay for moving to new technology.
“The rental contract will pay the vendor more over time than the straight sale – you have to wait three years, but then it will have more value.
“So, yes, it’s a bump in the road, but people understand when they look at future profitability.
“The bigger issue would be what if the company didn’t change, if you didn’t make bold moves and didn’t give the customers what they want?
“We knew data was doubling every year, so we invented Hana; we knew that mobility was going to be big, so we wrote Fiore; we knew many customers would want to run in the cloud, and now there are customers running their whole business in the cloud.
“What we need to think about next is about conducting business inside and outside the company.”
This is what is enabled by the business network, McDermott says. “Companies have a need to collaborate with partners around the world; they also need to deal with people, to recruit the best people for a project, ensure they’re secure and manage the cost in realtime. Temporary labour is the fastest growing workforce in the world and now accounts for 40% of all labour.”
SAP offers its FieldGlass solution for the issue of temporary labour, Ariba to connect with trading partners, and a solution for travel and expenses management.
Among the concerns that companies today have to consider are job shrinkage and privacy.
As the digital economy takes off, there is a real possibility that many of the people working today will be left behind, with the economy eventually unable to provide jobs for everyone.
However, McDermott believes we will never see a society in which technology supersedes people. “You will always need people, because people always want to deal with people,” he says.
“There is no doubt that the digital march is on, and no doubt that people will have to be retooled and reskilled to keep pace with the digital economy, but there will still be jobs.
“SAP is a good example of a growth company that in the aggregate has increased jobs even as we change where those jobs are.
“Overall, in the aggregate, I don’t think we are going to lose jobs – and we should be able to create new jobs as well.”
In terms of privacy, there is a feeling that there may be a limit to how much information companies have about their customers.
“We have to always protect the privacy of the individual, protect the data, and be in full compliance with every local and international law,” McDermott says.
“The business has a responsibility to ensure that any innovation is absolutely a secure solution with no back doors and no ability to use a back door. You have got to respect the privacy of the individual.
“At the same time, it is also very important that we have a free global economy where you can make innovations, giving companies and people the choice to use technology as long as it is in full compliance. Industries have a right to use technology to further their business aims.”
He adds that the issue, while it is prevalent in Europe, is important around the world. “There is no doubt that the idea of privacy, data protection and security is at a heightened pitch now,” McDermott says.
“We aim to give customers the choice, and believe they should be able to run their tech in their data centre, in our data centre or in a partners data centre and have the same security regardless of the environment.”
