At SAPPHIRE NOW, SAP announced plans to deliver solutions running in the cloud for all 25 of the industries it serves. Simon Paris, the new president of the Industry Cloud organization, talks about how this ambitious undertaking will be implemented.
What moved SAP to create an Industry Cloud organization?
Simon Paris: The origin of the cloud organization began 2½ years ago, when Bill McDermott and Robert Enslin asked me to set up what was then called the integrated operating model for banking. That was the first step to what is now known as the Industry Cloud organization.
After a year and a half of this model we saw that it was working very well. So we extended from banking to financial services. The results were good, the employee feedback was good, and the customer feedback was outstanding, so we decided to replicate it. And we replicated it to what became known as the strategic industries. And those were the four industries of financial services, public services, including healthcare, retail and telecommunications.
Now, in parallel we’ve also been becoming “The Cloud Company powered by SAP HANA,” which has been reinforced through acquisitions and organic development. What we’re starting to see is the convergence of the industry centricity trend and the cloud trend. And that gave us the name of Industry Cloud. What it brought with it was a return to all of our industries, being under a single leader and with a single model. We announced the Industry Cloud organization and the replication of this model to what will essentially be three categories of industries.
What are the three categories of industries?
Firstly there are the strategic industries. They carry on being strategic in terms of our disproportionate investment in anticipation of disproportionate return. Then our core industries which are the bulk of our revenue and of our maintenance. The customers rightfully expect more industry-specific innovation. And then the third category, which for now we’re calling incubation industries, are industries which are relatively small today, but have the potential to be huge. An example of that could be healthcare or sports, media, and entertainment. So those make up the industry clustering within Industry cloud.
What is the unique selling point with Industry Cloud?
It’s something that no one else can say: Every line of business, every industry, every cloud model, public, hybrid, managed, everywhere in the world. Keeping data consistency, coherency, the benefits of integration and the power of us localizing for all the countries we serve, in a way which is available today, and together with our ecosystem and with our partners.
With the focus on cloud, are we neglecting our bread and butter on-premise solutions?
On-premise is not going away. Many customers will prefer or will be required to keep data on premise. And that tends to be true in highly regulated industries or in highly conservative societies. So if I take the banking industry, in certain geographies they are compelled by the regulatory authorities to have control directly on customer data, and/or they’re required directly to have the logical and physical data within the boundaries of that territory. First of all, we are clearly in the on-premise world as well as we are in the cloud world. But we’re the only people who can do it all.
SAP is co-innovating with customers and partners to deliver industry-specific solutions. Can you give examples?
Co-innovation is a fantastically differentiated approach for SAP to lead the way to Industry Cloud. We do not produce all the software the world requires, so we encourage others to co-innovate on our platform. And that can be the customer himself, a developer, or a partner. CSC for example is developing with us a core banking capability that is delivered in a cloud model to small banks. That’s beautiful. And they can do that independent of us, but with us in a co-innovation way. We are co-innovating and co-validating software with a series of customers. For example, there are around 20 customers who are working with us from a higher education and research perspective to determine what a student information system should look like.
What kind of people are you looking for in the Industry Cloud organization?
People who are focused on outcomes. The success of a software company is not revenue, it is adoption. It is delighted customer adoption – a standard software that enables their industry-specific business processes. That’s the benchmark or the achievement we’re trying to get done.