SAP's managing director and CEO Geraldine McBride gives her take on the heated rivalry for top spot in the CRM world.
How did someone with a background in zoology come to be CEO/MD of SAP?
It's a long story, but I followed a passion at university. Doing a degree teaches you discipline--to think, question, and discern. IBM was looking for people with good degrees to join in their Entry-Level Training (ELT) program. I joined IBM in their ELT end of 1984 and never looked back.
SAP CEO and President William McDermott said the company will beat out rivals Oracle, Siebel Systems, and PeopleSoft to be the number one seller of business software programs in the United States this year. How?
To be sure, SAP America is, in many aspects, already moving quickly past its rivals in the US market today. Achieving success against competitors will come from a few different directions. First, we are already moving past niche players like i2 and Siebel, because customers today are looking to meet the integration challenge head on by purchasing fully integrated solutions from suite providers like SAP.
If they are expanding their systems, they look to add on CRM, SCM, or PLM functionality that is already integrated by design with their ERP systems--again, an advantage for SAP. Secondly, while Oracle and PeopleSoft are formidable competitors, SAP continues to win customers because of our deep industry knowledge and experience in more than 22 different industries. For example, SAP's heritage with manufacturing companies--both discrete and process manufacturers--means that SAP is the obvious choice against PeopleSoft. And, SAP's reputation for proven, quality solutions gives it an advantage over Oracle, today a fairly small competitor in the applications space (compared to Oracle's core database business). Finally, SAP's large customer base of more than 19,000 companies across the globe gives customers the kind of security that companies in today's challenging economy look for in a trusted advisor.
It's been said that the release of mySAP CRM 4.0 later this year is the key to unseating. What features will set this new release apart?
mySAP CRM 4.0 will certainly be a major software release for SAP. Industry-specific enhancements will include trade promotion management and direct store delivery functionality for the consumer products industry, enhancements in channel sales for high tech, value-based detailing for pharmaceuticals, further development of our case management functionality for the public sector and enhancements
to several of our other industry solutions including telecommunications (dispute management), media (intellectual property management), financial services (leasing and asset management), professional services (project resource planning), and utilities (sales process for commercial and industrial customers).
It should be noted however that we have already established considerable momentum in the CRM market with versions 3.0 and 3.1. The market has made a clear shift away from point solutions and high integration costs, and has embraced fully integrated CRM solutions that drive value through the entire enterprise's internal and external value chain.
This shift has manifested itself in the growth of our CRM revenues relative to the point solution vendors. In an environment in which most of our competitors are seeing a decline in their revenues and are even shutting down operations in this part of the world, our revenues have increased quarter by quarter. In the fourth quarter of 2002 mySAP CRM achieved the greatest software revenue of any CRM vendor worldwide. We are the fastest growing top-tier CRM vendor and now have over 2000 CRM customers. We are confident of achieving the number one position in the CRM market in 2003 both in ANZ and worldwide.
SAP saw fourth-quarter licence sales fall 16 percent at constant currency rates in the United States, and a seven-percent decline company-wide. What has been the situation in Australia?
Despite a tough market, SAP has exceeded profit targets globally and is actually reporting growth and profitability in key Asia Pacific markets. Regionally, we increased profitability by six percentage points and are particularly pleased with our profitability in China, Hong Kong, Singapore, Malaysia, Australia, New Zealand, and India. Few companies can claim that. This is a sign of a resilient business built on sound business fundamentals positioned for growth.
You've said, "There's a lot more to be had [in Australia]." Where do you see the biggest potential for growth for SAP Australia in the coming year?
In addition to our core ERP solution, both CRM and SCM solutions are great growth engines for us. SAP expects to continue to gain market share and increase profitability in 2003 despite the continuing unpredictable political and economic environment. IT budgets are tight, but SAP is still seeing demand for business software. We are signing large contracts with companies that are downscaling as well as growth in our existing customer relationships.
SAP is a pragmatic company and we drive profitability through optimised business processes and strategic cost saving measures. Our business performance is a sign of a resilient business built on sound fundamentals--positioned for growth.
Sales of supply chain management applications have been experiencing a steep decline recently. Why is this? Do you see this changing in the near future?
Sales of Supply Chain Management (SCM) solutions have been growing for SAP locally and globally. It's true that only modest growth was expected (world issues), and several of our competitors have really struggled, but SAP has experienced good growth in these solutions. This has resulted in our market leadership in SCM, globally and in Australia.
It's pretty clear to us that the demand for our supply chain solutions is going to increase further as our customers' successes become more widely recognised. Examples locally are Carter Holt Harvey Tissues, Parbury Building Products (owned by Alesco) and BHP Billiton.
But our really strong capability is in the close relationship between our Customer Relationship Management (CRM) solutions and our Supply Chain Management solutions. Our customers want good returns from their investment in technology. So they either need to lift revenues or decrease costs--or both.
What is the theory behind SAP's recent Netweaver strategy? How is it a "neutral" force in software infrastructure?
SAP NetWeaver, our comprehensive integration and application platform, will allow us to deliver more flexible solutions to our customers while at the same time reducing total cost of ownership (TCO). SAP NetWeaver will power all our business solutions going forward, enabled by Enterprise Services Architecture, our blueprint for complete, services-based business solutions. SAP does not force our customers to commit to any specific technology platform by designing SAP NetWeaver to be fully interoperable with Microsoft .NET and J2EE.
This provides customers with the flexibility to manage heterogeneous infrastructures. To that end, SAP, IBM, and Microsoft have recently established joint collaborative technology support centres which will staff and support the companies' focus on customer projects around the usage of SAP NetWeaver and its integration with IBM WebSphere and Microsoft .Net.
In 2001, you said, "Retaining good customers and building profitable relationships through CRM will be critical in helping businesses regain their footing and stimulating the economy." Why didn't that happen?
Investing in CRM software will not bring tangible benefit without similar investments in customer strategy, people, and business processes. In these tough times, organisations that maintain their focus on mutually beneficial customer relationships will continue to prosper and will lay a foundation for market dominance when the world economy improves. Customers are increasingly being recognised as the most important asset, hence the increasing importance of finance as a stakeholder in CRM initiatives.
How is SAP dealing with the scepticism that many potential customers now feel towards CRM solutions?
| About SAP |
| SAP is a provider of business software solutions. The company's mySAP Business Suite, is designed to help businesses improve relationships with customers and partners, streamline operations, and achieve efficiencies throughout their supply chains. Today, more than 19,300 companies in over 120 countries run more than 60,100 installations of SAP software. |
SAP believes that the market has moved away from niche, point solutions that carry enormous integration costs towards fully integrated suites. Our growth has been fuelled by our unique ability to show fast and proven ROI, coupled with low TCO, in a market where our competitors have suffered very high and public failure rates. We have proven that tangible return on investment can be gained from mySAP CRM at Canada Post (26 percent ROI), Brother International (129 percent ROI), Tyrolit (83 percent ROI), Boots Digital Wellbeing (72 percent IRR), and Ratiopharm (63 percent IRR). We have also seen organisations abandon best of breed strategies and invest in mySAP CRM, for example Adidas, Johnson & Johnson Vistakon, Adobe, Ericsson, Volkswagen, and Tecan.
With 30 years of experience and 18,800 customers, SAP offers companies the confidence of a reliable, viable solution provider. No other CRM solution provider can match SAP's investment in CRM. This is why Gartner recently described us as "the most viable business application vendor in the world".
What is Security Resource Management, and what is its potential in Australia?
SAP Security Resource Management software addresses both the technical and functional sides of homeland security. From the technical side, what we're looking at with homeland security is getting the right information to the right people at the right time. To do that, SAP uses its NetWeaver suite, with added security technology.
On the functional side, the software includes such things as border security systems, emergency response management software, mobile technology and instant tracking, as well as chemical, nuclear and biological countermeasure management. As SAP has many government agencies as customers, including Defence, we are speaking to our customers about this solution.
How is SAP targeting government business in Australia?
SAP has over 100 public sector customers in Australia, spanning both Federal and State Government. We have a close and trusted relationship with our public sector customers and we see the public sector vertical as one of our most important areas of growth for CRM.
Many of our public sector customers have now rationalised and optimised their back-office processes and are ready to build on that foundation and invest in CRM to help manage relationships with citizens, businesses, other government agencies, and even employees.
Many government organisations are coming under increasing pressure to simplify the outward face of government, increase transparency of customer-facing processes and provide 24x7 information to all constituents. This is a trend we have seen in other parts of the world, particularly in Canada, the US, and the UK where we have several customers either live or implementing our Public Sector CRM solution (eg Government of Nova Scotia, the US Naval Systems Command, the State of Florida Department of Revenue, and the Ordnance Survey in the UK).
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