Enterprise leaders must protect their core businesses while expanding the “perimeter,” SAP CEO Bill McDermott told the audience this week at a TechCrunch technology conference in San Francisco.
During the conference session, “Keeping an Enterprise Behemoth on Course,” McDermott emphasized that to stay on top, market leaders need to continue developing innovative solutions and creating new business models. “Change is unbelievably fast, but remember, the world will never move this slowly again,” he said.
Underscoring the importance of bold leadership McDermott noted, “We had a $110 billion addressable market in 2010, but if you were spending time addressing ‘today’ problems, we would lose the opportunity of tomorrow.” Today, he said, SAP’s addressable market has grown to $400 billion.
Since McDermott took over as sole SAP CEO in 2014 — becoming the first American to hold this position — he has grown the company and its market capitalization, thanks in part to a number of key cloud-based acquisitions.
“If you look at our business in 2010, we had zero cloud revenue. Now we will have a $15 billion cloud business by 2023,” he said. “If we hadn’t made those decisions [to buy cloud companies], we wouldn’t be in that position.”
Among those deals, SAP acquired Qualtrics, the experience management (XM) market leader, earlier this year. McDermott compared that deal to earlier tech industry mega deals, including Apple’s 1996 acquisition of NeXT, which brought Steve Jobs back to the company he co-founded, as well as EMC’s 2003 acquisition of VMWare and the subsequent purchase of EMC by Dell in 2016.
“Those were acquisitions that changed the industry,” McDermott said. “Similarly, the Qualtrics deal will be just as transformational for SAP and the software industry.”
“We are living in an experience economy,” McDermott shared, while describing Qualtrics as “the elixir to serve our customers.”
“It’s a key part of our strategy to be the fastest-growing enterprise company,” he said, adding that the combination of experience (X-data) and operational (O-data) data on the SAP platform can change experiences for people around the world, and make their engagement with companies “simple and beautiful.”
Growing the Market and Shareholder Value
Since becoming CEO, McDermott has overseen SAP’s market capitalization increase from $40 to $150 billion. He noted that while SAP’s market cap has quadrupled in 10 years, “We’ve quintupled the customers we serve.” To do that he said, “You need loyal customers, and a mindset at the company that’s focused on the customer.”
TechCrunch Sessions: Enterprise was the result of a partnership between SAP and TechCrunch. More than 1,200 attended in person along with a large audience online. SAP Chief Innovation Officer Max Wessel, managing director of SAP Silicon Valley, also presented at the event and spearheaded the collaboration.
Of the significance of the event, Wessel explained that SAP innovation is well understood by its employees and customers. “But to lead,” he said, “we need to be open to how we partner across the ecosystem and push ideas forward. Given that TechCrunch is a leading outlet for technology news, it’s important for us to sit side-by-side with them.”
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