You can see my 25-minute exclusive interview with Klein HERE
Two years after becoming SAP’s sole CEO just as the pandemic began to rock the world, Christian Klein has—against considerable odds—transformed SAP into a high-growth and high-potential cloud powerhouse by shifting its focus from short-term deals to enduring customer success.
What do I mean by “against considerable odds”? Take a look:
- in April 2020, the pandemic had disrupted SAP’s business so profoundly that on its Q1 earnings call—the first with Klein as sole CEO—SAP was not able to offer guidance into its future financial performance;
- the recent departure of Klein’s former co-CEO Jennifer Morgan, who was very popular among customers and many employees, threatened to balkanize the company at a time when it needed uncompromising unity more than anything else;
- while having a range of cloud applications, SAP had still not completed the integration of those disparate solutions onto a single cloud platform;
- SAP archrivals Salesforce and Oracle were pouncing on the opportunity to portray SAP as unsteady, unfocused, and unable to make the leap to a cloud company; and
- a number of high-volume, low-perception “experts” were calling for the ouster of Klein and blaming him—absurdly—for all of the troubles the company was facing as a result of the pandemic.
But what a difference 18 months can make! As I wrote on January 18 in SAP’s Extraordinary Comeback: Cloud to Rise 26% in 2022, Klein and SAP are now delivering the powerful combination of strong quarterly growth in cloud revenue plus very impressive future-bookings growth. For Q4, SAP reported that current cloud backlog was up 32% to almost $11 billion.
So while it’s always a treat to speak with Klein, I was particularly excited about the recent exclusive interview I had with him as part of my Cloud Wars CEO Outlook series because my primary objective was to learn exactly how in the world Klein engineered that “extraordinary comeback.”
And now that the company’s “RISE with SAP” initiative has been out for just over a year, it is clear that while much work on many fronts went into the SAP transformation, the RISE program was certainly the catalyst that pulled all the disparate elements together and gave SAP the momentum of being the first mover with a go-to-market plan of that size and scope.
So my conversation with Klein centered on RISE and its repercussions, but also on the cultural changes that Klein had to lead, the shifting expectations and demands of customers, and the expansive new vision that Klein has brought to SAP where the goal is no longer just automating a company’s internal processes but also orchestrating growth opportunities centered around data and enabled by interconnected business networks.
For this latest installment in this exclusive Cloud Wars CEO Outlook series, you can watch the entire 1:1 interview with Christian Klein HERE, and below you’ll find five key excerpts from the interview that I believe reveal Klein’s most-strategic insights.
1. The Power of RISE.
Klein describes the 3 objectives of RISE: help customers create and execute new business models, help customers create intelligent and resilient supply networks, and help customers improve their sustainability.
“When I look back in our history and I look outside in the marketplace, I really see this is the period where most businesses are changing in the most significant ways. No matter if you’re talking retail, automotive, energy, or any other industry, all of our customers have to change their business models in one way.
That means actually offering different services and transforming their legacy business models. Take energy and the shift from traditional energy sources into renewable energy sources and new ways of sourcing energy—our software’s instrumental for that.
“With RISE, we also figured out that it’s not only a technology change that’s needed but also a cultural change. They have to change the way business processes are run, and data is obviously the key and if we can help our customers connect those dimensions, then you’re gonna see a great outcome with your transformation.
“It’s not enough to just technically lift and shift, and that was for me also very important with regard to our new strategy built around offering customers business outcomes. We don’t want to just sell a piece of technology—we really want to sell outcomes.”
2. Sustainability
“Obviously sustainability is key and it’s more important than ever to actually find new ways of running businesses with renewable energies. And our software is running factories and warehouses and supply chains all over the world and now offer not only connectivity and automation, as we did in the past, but there is a new dimension in it’s called sustainability and we want to measure that.
“Today our software gives you a financial balance sheet, but tomorrow we want to give also a standard report on ESG to take action and then infuse intelligent technologies to also help our customers to become more sustainable.
“That’s actually the three pillars or RISE: the business-model change, the network with resilient supply chains, and the third one is all around sustainability.”
3. Intelligent networks flexible and powerful enough to connect not only data and products but also refugees.
Klein describes how this new generation of SAP solutions is flexible enough to help deal with the tragic creation of 2 million Ukrainian refugees, despite having been designed to help end-to-end supply networks collaborate and innovate.
“This actually opens up completely new dimensions of how B2B businesses run. In the past 50 years our software was often used within industries to automate business processes. But now it’s about connecting not only one-to-one with your direct suppliers but with all your stakeholders in the supply chain.
“And with that, you suddenly see the power of data coming together, the power of a B2B network that gives you transparency and opportunities you never had before….”
“Right now, we have at the border of the Ukraine a lot of refugees. So, we are now just thinking about how we can also help many volunteers who are reaching out to see if they can help these refugees. And so how can we also build a network for matching all the volunteers who want to help with the refugees to organize them to deliver faster support? How can we distribute refugees faster and in safety to other countries to give them a safe home?
“And this is this idea of creating these networks to build resiliency and supply chains, but also around people and workforces. And obviously you see with all of these great examples when you think out of the box you end up with a whole new way of doing businesses.” (You can see watch the full video interview with Klein HERE.)
4. RISE and the cultural transformation within SAP.
Klein outlines the new priorities for developers, salespeople, and go-to-market teams that are all totally focused on business outcomes and customers success rather than SAP-centric metrics.
“The biggest change is for sure happening not only on the development side and the move toward a DevOps model, which means your code is going to be live in 4-5 weeks and that’s changing a lot in how you design, how you develop and deliver software, that’s for sure. But also, on the go-to-market side the changes are equally big. Look at what we did in bringing together sales, consulting, services, and support under one board area [led by Scott Russell], because we had to tell our people, ‘Hey, you are not acting in silos anymore. Now it’s all about customer lifecycle and it’s about time to value and business outcomes.’
“And that took some time. And even today say that when we are doing account planning, I don’t only want to see what you can sell into the customer—I also want to see the adoption plans, I want to see the milestones, I want to see the outcomes. And that’s the case no matter if you’re in sales or consulting or you are one of our customer-engagement executives: you are doing this end-to-end and you are speaking with one voice.
“Are we completely done with that? No, but that was a big change—in the past we had sales calls, and now we are doing ‘delivery calls’ to check on where our RISE customers stand. They are all working on the business transformation and not on the technical migration, and that’s a big change….”
“My last thought on this is around bonus plans. Never underestimate how you can incentivize people and how you need to connect the targets and the objectives to your strategy, and that also it needs an explanation. Your people need to know what our strategic rationale is and why we are now not measuring anymore on utilization. Instead, we are measuring you on time to go-live and on outcomes, and again that all belongs to transformation which certainly is happening inside SAP as well.”
5. CEO as “bridge-builder.”
Klein describes SAP’s new mindset that cuts across product teams, go-to-market teams, and solutions-and-marketing teams with total focus on customer outcomes.
“That’s what we need to do, and I need to be the bridge-builder. So, what we also said is take S/4HANA or take CX or SuccessFactors or Intelligent Spend portfolio and when we’re discussing our business plans for the year, I want to see the development leader, or the product owner and I also want to see the go-to-market owner and customer-success owner and I want to see the solutions and marketing owner.
“And together they need to really present an end-to-end plan on how they’re going to win this market and what they deliver together now because I want to see exactly how we’re going to make customers successful in these different categories….”
“And then I feel that with that wide outside-in perspective and having all the pieces together internally at SAP, then the customers will perceive that SAP really feels unified on how our products, on our go-to-market, and on our solutions and marketing are focused on outcomes and capabilities rather than about products.”
Final Thoughts
I have long believed that SAP’s technology and capabilities and expertise and insights were well out in front of the company’s ability to articulate that value, potential, and innovation to the world.
And I believe that the creation and execution of RISE, under the vision and leadership of Christian Klein, is once and for all closing that gap and allowing customers, partners, and other stakeholders to perceive and understand the extraordinary value that SAP can deliver.
We all know that yesterday’s history and tomorrow’s a mystery, but from where I sit, Christian Klein has done a superb job over the wildly tumultuous last 2 years in turning SAP into a cohesive and immensely talented force in the acceleration economy.
You can see my 25-minute exclusive interview with Klein HERE
