On November 12, 2019, SAP held a special Capital Markets Day in New York City, well-attended by analysts and shareholders alike. It was special not only because it was already the second SAP Capital Markets Day of 2019, but also because it was the first chance for co-CEOs Jennifer Morgan and Christian Klein to make an impression on investors.
Customers First, even on Capital Markets Day
Jennifer Morgan and Christian Klein took over the reins after Bill McDermott announced his departure from SAP in October 2019. This leadership change surprised customers and shareholders alike.
Especially customers, whose trust was already at an all-time low, might have been wary of what seemed more like an impulsive decision than a planned rotation. Since their appointment to co-CEOs, Jennifer Morgan and Christian Klein have both made sure to highlight their focus on customers – and the Capital Markets Day was no exception in that regard.
“We have spent the past month listening,” said Jennifer Morgan during the first presentation of the day. “We hear you. We hear what’s important. You clearly want a strategy that drives growth organically, integrating our cloud acquisitions of recent years. We heard you. And we know you want us to do what we say that we are going to do.”
Morgan sees areas of improvements in defining one set of priorities for the company, presenting strong product strategies, and driving accountability in the organization.
Christian Klein also made some points highlighting the importance of customers to SAP. “Customer success has to become an integral part of our culture and our strategy,” he said, adding, “Our customers don’t always feel like we are one SAP, and the same goes for our employees. We are working on a plan for a much simpler SAP.”
Listening to the two co-CEOs, one could get the impression that this was a customer event like Sapphire, not a conference meaning to reassure shareholders and financial analysts.
Growth and Operational Excellence
While customers seemed to be the focus, the official theme actually was ‘Growth and Operation Excellence’. Especially CFO Luka Mucic talked about key growth drivers and SAP’s 2023 ambitions.
Not surprisingly, the cloud will remain a key growth driver for SAP. As part of its Ambition 2023 goals, SAP aims to hit €35 billion in revenue, which includes tripling the cloud revenue.
As SAP’s executives pointed out, the company currently has many successful components making up its cloud business: Qualtrics, which is expanding its list of more than 11,000 customers; SuccessFactors and SAP Fieldglass as HCM solutions; and the SAP and Microsoft partnership, which offers S/4 Hana and SAP Cloud Platform on Azure.
SAP also aims to improve profitability by reducing expenses, particularly focusing on marketing and sales (streamlining operating models and reducing overhead) and the product and services portfolio (optimizing ecosystem leverage and considering divestments of non-strategic assets).
While there is still a lot of room for SAP to improve, financial analysts, shareholders and customers alike seem to agree that the Special Capital Markets Day was an all-around success.
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