At a struggling SAP, CEO Bill McDermott is building for the long term - Technical.ly Philly

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Nov. 7, 2014 7:29 am

At a struggling SAP, CEO Bill McDermott is building for the long term

In a Q&A headlining the IMPACT conference last week, the Villanova resident and first American CEO of the world's largest business software firm talked about building for the cloud-based future.

Bill McDermott is the CEO of multinational software giant SAP. The Villanova resident headlined the IMPACT conference.

(Photo courtesy of SAP)

Disclosure: Technical.ly was a media partner for IMPACT, and this reporter interviewed McDermott for the event.
Share prices for German software giant SAP have been punished by investors over the last year. For CEO Bill McDermott, who lives in Villanova, it has been a trying experience. But, he says, he’s leading the most important transition SAP can be making right now. “That takes courage,” he said.

SAP has blamed its sagging performance on this seismic transition: no longer are most of SAP’s customers buying bundled software to install locally, but rather they are subscribing to cloud-based software options — like SAP’s signature and much hyped HANA platform.

That means less revenue upfront and, the plan goes, more later. But that move to the cloud is exactly the kind of bold change that McDermott said he wants to be known for, as he recently told Fortune magazine.

“You can’t build a company for 60 days; build for 60 years,” said McDermott, 52, tall and fit with full, graying hair. McDermott, who became the company’s first sole American CEO this spring, was speaking last week as the keynote of the IMPACT conference from PACT, being interviewed by, full disclosure, me.

SAP is forgoing short-term value for long-term impact, he told the audience, referencing a recent $8.3 billion purchase of cloud-based business travel expense company Concur, among other moves. McDermott has positioned himself as the leader of a big, established brand (SAP was founded in 1972) that’s hoping to outlast its primary rival, Oracle, by taking pain now for future gains — something McDermott says in the business press with some regularity.

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McDermott is now promoting his new autobiography, Winners Dream, which doubles as something of a business philosophy book.

Written with former Forbes writer Joanne Gordon, the book has three broad sections: his middle class upbringing on New York’s Long Island; his Xerox career, from entry level to CEO; and his executive growth at SAP.

It’s straightforward, rich with the optimism you might expect from a lifetime corporate sales guy and dotted with anecdotes that are ready-made fables for American capitalism. Picture teenage McDermott buying the corner deli he worked in, or him refusing to leave the Xerox offices until he got his first job there, or him building his own executive team at SAP through thoughtful conversations.

McDermott is practiced at being warm.

Before last week’s on-stage interview, he received this reporter with a cocktail and made a point to talk thoughtfully with a young entrepreneur who approached. But a man charged with shareholder interest and responsible for more than 68,000 employees in 130 locations can’t be all things to all people.

When asked onstage about the role he might have in growing the Philadelphia technology community, as a Main Line resident and CEO of one of the world’s largest software companies, he offered an honest answer, but likely one that could play the same way in Peoria. He loves the place, he said. Entrepreneurs should build on the HANA platform. SAP will need to purchase talent and technology. It’s a large employer that hires locally. Look at our partnership with Drexel. But there was no sweeping or certain gesture there, just practiced warmth.

Because the reality is that McDermott is running an $80 billion company headquartered in Germany in the midst of a protracted battle with other enterprise software giants.

Now, too, he says, he has to educate investors on the long-term play SAP is making by moving its customers to cloud offerings.

It’s building for the future, just like McDermott did when he was growing his deli business or climbing the corporate ladder. It’s about focus and priorities.

“You have to be a warrior,” he said.

(Find the questions this reporter asked McDermott at IMPACT here.)

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Christopher Wink

Christopher Wink is a cofounder and Editorial Director of Technical.ly, the local technology news network. In that capacity, he is a co-organizer of Philly Tech Week, Baltimore Innovation Week, Delaware Innovation Week and other events that bring smart people together. Previously, Wink worked for a homeless advocacy nonprofit and was a freelance reporter for a variety of publications. He writes regularly about news innovation and best business practices on his personal blog here and curates a personal monthly newsletter of ideas and links here. The bicycle commuter loves cities, urban politics and squabbling about neighborhood boundaries.

  • phillytechnews

    One minor point: McDermott got his MBA from Kellogg (Northwestern); he took an exec education program at Wharton but don’t think that granted a degree

  • blackylawless

    What about real SAP issues? I could care less about another Horatio Alger lemonade stand story. (Hasso is a much more compelling figure anyway.)

    So, when will HANA be fully integrated with the ERP suite such that myriad new sets of breakthrough ERP suite functionality that leverage HANA are in place to amaze and delight customers and blow away competitors (Workday, Netsuite, Oracle, MS Dynamics, Infor, Salesforce, in-house like that at Tesla Motors) who, up to now, have been catching up?

  • John Coleman

    What Mr. McDermott needs to understand is that the software itself is not the issue with customers. Implementation partners need to be held accountable for their failures, which in turn sour the stomachs of customers. We have been implementing SAP for almost 2 years now. We are a simple call center and the SAP partner could not get it right. To this day they admit no wrong doing and basically ignore our request to have a functional program that we paid nearly $800,000 for (initial quote for build, $300,000). I would love for Mr. McDermott to contact me and we could talk about possible solutions to healing SAP’s black eye. Until then, I am looking at Sales Force with much interest.

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