Bill McDermott: Relationship Management And Cloud

While other IT companies always try to expand their communities and organize conferences and exhibitions for 50,000 to more than 100,000 visitors, SAP’s Sapphire and TechEd are shrinking year after year. When Bill McDermott accepted dual leadership with Jim Hagemann Snabe, there still was an European Sapphire. However, because of SAP’s lack of communication and relationship management, it was discontinued soon after.

Since then and together with Hasso Plattner, Bill McDermott tried to make the best of a bad job every year in Orlando, Florida. However, despite his efforts, the traditional solidarity and unity between SAP customers and management does not exist anymore.

Because of economical stability, Bill McDermott is still doing relatively well. His business plan of a steadily growing market does not allow for any alternatives in his mind.

In the Austrian SAP community, customers still from time to time tell anecdotes of how it used to be. Chief among them are the ones of the sauna meetings.

Once a year, Heinz Hartinger, founder and first CEO of SAP Austria, invited SAP customers to go hiking with him in the Alps. Part of the experience was a nice dinner and a meeting in the sauna afterwards. Furthermore, they chartered a jet once a year and more than 100 SAP users flew to Sapphire Europe together.

Cloud alternatives

SAP does not communicate enough with its customers. However, this is not its only shortcoming. SAP customers are also complaining about a missing alternative cloud strategy.

At first glance, SAP’s cloud subscription numbers and revenue are quite impressive. At second glance, the secret of its success becomes apparent: SAP acquired many cloud companies in recent years. This obviously results in imposing subscription numbers. Furthermore, SAP is trying to make on-premise systems as unfavorable as possible for its customers by not providing on-premise products anymore and creatively interpreting licensing policies.

At third glance, it becomes painfully obvious that Bill McDermott cannot provide a real alternative to AWS, Google, and MS Azure. SAP is simply relying on the strategy of a vendor lock-in.

Experience shows that SAP customers don’t mind paying a little bit more to continue to collaborate productively with SAP. This is fortunate for SAP, but it does not have to be like this forever.

Right now, Bill McDermott’s advantage is a good economy. However, if IT budgets get tighter, SAP customers could prefer on-premise systems or migrate to more cost-efficient cloud models by AWS, Google, or MS Azure. These three hyper scalers are way out of SAP’s league.

Worst case?

Bill McDermott has no chance at winning the cloud battle. However, he is also not in the least prepared for his worst-case scenarios. For example, what happens if AWS decides to acquire Rimini Street, and SAP customers would not only enjoy hosting, scaling, and storage for S/4 and Hana, but also maintenance and support? It is reasonable to assume that Bill McDermott himself has no idea.

Nevertheless, German magazine “Manager” announced in its January issue that a jury voted on Bill McDermott for “Manager of the Year”. This seems like a great honor for him, as he is always trying to push SAP’s revenue and stock price to new heights – also for his personal gain.

This is the second article of a series. If you would like to read the first one, click here. If you would like to read the next one, click here.