If the new bosses of SAP are to put Europe’s biggest software company back on track, they will need to pull off nothing less than a cultural revolution.
Reeling from a botched fee increase that brought a rebellion from customers and precipitated the abrupt departure last month of Léo Apotheker as chief executive officer, SAP is now looking to force rapid internal change.
“I don’t think we did a lot of things wrong in the past – we just have to do them a lot faster,” Jim Snabe, co-chief executive officer, said during a visit to Silicon Valley this week.
“Speed” and “innovation” are now the words that come first from the lips of the new management team, which includes Bill McDermott, the American software salesman who shares the chief executive title, and Vishal Sikka, the chief technology officer who has just been elevated to a board position.
For a company whose name is a byword for stolid reliability, and whose systems are known for their rigidity and inflexible user interfaces, this points to a much-needed cultural shift.
Some of SAP’s biggest technology bets of recent years have failed to yield the results it hoped for. One of the main ones – on a new generation of more flexible software based on so-called “service-oriented architecture” – has failed to bring much benefit so far since corporate customers have not seen enough benefit in retro-fitting their old systems to adopt this technology, admits Mr Sikka.
Meanwhile, SAP’s first big push into “cloud computing” – an on-demand system for medium-sized businesses known as Business By Design – has been bedevilled by delays. “They’ve been working on this for many years, and whatever they’ve been doing, it hasn’t produced much,” says Michael Cusumano, a professor at the Massachusetts Institute of Technology and an expert in software development techniques.
With technology change accelerating and corporate users wanting to get technology into the hands of a wider group of workers much more quickly, SAP is under pressure to change its ways.
The clearest symbol of this internal upheaval has been the adoption of a new approach to software development.
According to Mr Snabe, SAP first started dabbling a year ago with so-called “agile” development techniques, which eschew the traditional rigid project planning it has traditionally used. Instead, the agile method relies on programmers working with customers on small elements of a project, using rapid trial-and-error methods to reach a solution before moving to the next part.
“They’re very late with this,” says Mr Cusumano. “The old approach isn’t working – it probably shows they have reached a crisis.”
Even analysts who claim SAP’s new methods are already bringing it closer to its customers concede that this is only the start of a bigger overhaul. “SAP has been saddled by the perception that it’s old-school,” said Josh Greenbaum at Enterprise Applications Consulting.
As SAP’s new chiefs try to turn around its methods, meanwhile, they are facing twin technology upheavals that could open up big new markets for the company – if it can find a better way to respond than it has so far.
The rise of cloud computing and software delivered over the internet has so far found SAP wanting, due to the delay in Business By Design, which the company says will finally launch later this year.
Yet most of its big customers expected to move to the cloud only gradually, combining their existing systems with services delivered over the internet. That could play to SAP’s strengths, since it should be better positioned than companies that operate only online to handle and integrate all aspects of a customer’s data.
A second upheaval is the advent of “in-memory” databases – the hardware advances that are pushing corporate data much closer to the processors that need to work on it. Without the need to call on separate database systems to retrieve data, corporate systems could work far more efficiently and quickly, says Mr Sikka. Eventually, he adds, that could prompt the renewal of SAP’s core applications, representing a new generation of technology as important as the company’s original breakthrough resource planning systems.
Big technology visions such as these are nothing new for SAP. But as its new leaders are well aware, they now need to prove they can make them real much faster.