Three Tenets of a Best Run Business

May 15, 2012 by Perry Manross 0

Bill McDermott delivers the opening keynote at SAPPHIRE NOW in Orlando. (Photo: SAP)

“If you’re between the ages of 18 and 24, you’re more likely to have a mobile phone than a job,” said Bill McDermott in the opening of his keynote at SAPPHIRE NOW in Orlando. In his fast fact, the SAP co-CEO hit on two important realities in the business world: the pervasiveness of mobile technologies, as well as the economic challenges both businesses and people are facing.

Throughout his keynote, held in front of around 22,000 attendees and thousands more following online, McDermott made reference to how trends in technology can help businesses run better and improve people’s lives in a still delicate world economy.

“We can take society’s experience to a new level, a higher level of wellbeing,” he said. “You are addressing the world’s larger problems,” he addressed customers in the audience, “by using technology to lower healthcare costs, reshaping education, reinvigorating job markets and manufacturing, and reengineering social welfare programs so they can work again. It starts right here, right now, at SAPPHIRE NOW.”

Check out the SAP TV video below to get a feel for the atmosphere at the convention center in Orlando. You can watch the Bill McDermott’s keynote in full and catch up on other sessions on the SAP Virtual Events page.

Not to be forgotten, the ASUG keynote also took place in Orlando. World-renowned cyclist Lance Armstrong was a guest speaker. (Photo: SAP)

Over 22,000 people attended the opening keynote at SAPPHIRE NOW 2012 (Photo: SAP)

Speed, simplicity, personalization

McDermott put down detail after his introduction in a discussion with Mika Brezezinski, co-host of MSNBC’s “Morning Joe.” He recounted SAP’s vision of making the world run better and the creation of a strategy that bolstered its leadership in applications and analytics, as well as hurled SAP head first into new markets, including mobility, cloud, and database and technology.

Now, two years after the announcement of this strategy, the convergence and savvy implementation of these technologies are enabling SAP customers to serve their customers better in three primary aspects:

  • Speed: “It has to be immediate – nanosecond fast.”
  • Simplicity: “It’d better be beautiful and it’d better be easy to use, or they’re done.”
  • Personalization: “[customers] want to be the only consumer in the world when you deal with them.

SAP’s goals are its customers’ goals, McDermott related. “And it’s all about business outcome.” As important as technology can be, it often distracts or – even worse – detracts from value. McDermott characterized the current average IT landscape of a given customer as 85% hardware and 15% software. A more valuable ratio, he contended, would be 50% / 50%.

“I think of technology like cholesterol: there’s good and there’s bad,” he said. Data centers chockablock with underutilized or utterly useless hardware don’t make any sense, he argued. What companies need to do, he said, is move to software to “improve relationships with their customers, grow your revenues, and satisfy your shareholders…Now we’re talkin’!”

McDermott noted that companies worldwide are boasting a total of USD 7.75 trillion on their balance sheets, USD 3 trillion in the U.S. alone. Innovative companies are hiring, he said.

These facts prompted him to plead, “Don’t do loser talk. If things are tough out there, you have to innovate, you have to get in touch with your consumers, get in touch with this [mobile social] revolution, put your funds together so you can maximize your shareholder value in new markets with new products, solving new problems, so you, too, can make the world run better.”

(Photo: SAP)

From left: Ray Griffith, CEO of Ace Hardware, Scott DiValerio, president of Redbox and CFO Coinstar, Angela Ahrendts, CEO of Burberry, Bill McDermott, Co-CEO of SAP, and moderator Mika Brezezinski (Photo: SAP)

SAP wins when its customers win

Three such customers joined McDermott on stage for the second half of the keynote to talk about how they have followed this strategy of growth through innovation. They were Ray Griffith, CEO of Ace Hardware; Angela Ahrendts, CEO of Burberry; and Scott DiValerio, president of Redbox and corporate CFO Coinstar. Each executive explained to attendees how their SAP implementation has helped them get closer to their consumers, as well as to reduce costs and move these savings into innovation and new value-added activities.

British luxury fashion house Burberry had implemented SAP as the backbone platform for its IT landscape six years ago. The company wanted a consistent, federated landscape that would allow them to scale quickly globally. Now, 90% of its business is based on this single enterprise system. “Had we not put that in place, we would not have been able to do so much of the front-end, digital innovation we have been doing.”

Burberry streams its runway shows live with 200 media partners. This acts as a virtual commerce platform, too, allowing users to choose from myriad items in eight different languages 24 hours a day, seven days a week. “Without a platform in place to enable that, we would not have been able to push the company aggressively forward,” Ahrendts said.

She also alluded to a project SAP and Burberry are closely collaborating on that would put new mobility solutions as well as in-memory computing to work for Burberry in the near future. The executive had good things to say about SAP HANA, associating it with “Heart,” “Access,” “Nanosecond,” and “Awareness” (HANA). McDermott took it further, calling the product, “the most breathtaking big data invention in the history of IT.”

Ace Hardware CEO Ray Griffith described how his company’s initial SAP implementation was to replace legacy systems to provide better flexibility and control. “SAP delivered in that respect,” he said. But he was then surprised how quickly thereafter the data and knowledge gleaned from this system could help Ace Hardware better connect with its customers and communities. “The data mining enables us to know our customers better and to interface with the younger generations in ways we have never done before,” he said.

Redbox, famous for its automated DVD rental machines, implemented SAP in 2011. As CEO Scott DiValerio explains, the company’s first goal was to move its multiple legacy systems down to one instance across the platform and line themselves up for the new businesses it is looking to launch in over the next couple of years in the automated retail space. Redbox’s goal is to achieve the same growth rates for these businesses as Coinstar and Redbox have had. With a planned SAP CRM system, DiValerio plans to enable his company to better understand buyer behavior and to stock their kiosks accordingly.

Again, SAP HANA will play an important role in customers’ futures. More than one billion people walk by a Redbox kiosk per month. At peak hours, consumers are renting more than 40 discs per second. By using the CRM solution and SAP HANA, Redbox will be able to analyze the massive amounts of associated data to understand what customers are renting, how they are renting, and arrange inventory accordingly.

“SAP has been rethinking and revolutionizing the way business is runs or the last 40 years, McDermott said. “Now we have a once in our life time in opportunity to work together in new ways to help the world itself run better. To improve people’s lives, their work, for the next 40 years and beyond.”

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