Jim Hagemann Snabe during his visit in Mexico City

That was Jim Hagemann Snabe answer to the traditional “Are you ready?” question before starting this exclusive interview, granted to InformationWeek Mexico during his last visit. Today began Sapphire week in Orlando, so it make sense to publish this conversation.

What follows in a Q&A format is Snabe thoughts on Cloud Computing, Software-as-a-Service, big plans for Hana with 11 applications coming from now to 2012, Analytics and SAP CRM on-demand. He also mentioned 60% growth in Mexico, one of the fastest growing markets in Latin America.

Tim Jellison, an Accenture senior executive, believes that Cloud Computing is pushing technology companies out of the groove in which they are most comfortable. That is because, in the past, you used to sell “one size fits all” kind of products and proprietary software. But now users can pick and choose from different vendors and they can do as it fits. How is SAP responding to this new model?
First of all I believe that on demand cloud is fundamentally about easing the consumption of software. For many years we have now developed solutions to solve complex business problems and we installed them at costumers. So the costumer is left with the challenge of managing complex infrastructure that change all the time. For us, as a software company, Cloud Computing is a fantastic opportunity to allow the software to deliver the business value and at the same time simplify the consumption for the costumer. So, in many ways you could say that with this model is taking away all the manual work in the shop of the costumer, and as a consequence we can monetize the software more and we can provide faster benefits for costumers.

But, what about SAP as a company? It now has to change lots of its own processes and the way it used to sell to costumers. Is Cloud really challenging the way you use to operate? 

 I wouldn’t say the operation and the selling is so much different. I think even if its an on demand model at the end of the day its a long term relationship. I don’t believe in a world where you change your Enterprise Application pieces every month because there’s some other solution out there, even if it is On demand. That is not productive for the company. It is a long term investment where your assumption is that your partner (in this case SAP) would stay competitive all the time. Obviously if we are not, you can change but you don’t change all the time, you want stability on your IT. So where the biggest challenge reside is to understand how to build applications that have a much lower TCO (Total Cost of Ownership), much simpler way of managing and using the software, and we decided to go in a more difficult pad. Most of the On demand world today is in a very narrow function. In other words, it’s not mission critical and it’s very, very simple. So we said: “why couldn’t we, as the first company, provide everything you need to run a business On demand”? And that is much more difficult. So we had to learn how to bring the enterprise qualities of software into the Cloud, were many clouds today are not secure because they don’t provide the necessary infrastructure. You can run the whole business into the Cloud.

Talking about on-demand, can you elaborate on SAP Sales OD? It was just preview last March, and some said it’s a breakthrough on the way SAP used to think –and the rest of the industry– about CRM. And there are high hopes that this will be a good product that will challenge Salesforce.com and even Microsoft Dynamics.
It’s a very good observation. It’s exactly how we see it. CRM systems whether they are on premise or On demand today have been focus on what I would call “transaction CRM”, which is basically to provide companies with transparency into the pipeline. We took a very different approach with Sales OD: in a world where the power is going to people, why don’t we design a product which is not design for a company but for people? And so we spent most of our time together with sales people understanding how they work every day. A traditional CRM allows the sales people to update the pipeline. That’s not what they do most of the time, what a sales person does most of the time is, first of all, talk to the client which means he is not in the office –hopefully. He talks to his colleagues; he gets information all together in front of the costumer to get the best possible offer at the best possible price and that’s a lot of collaboration. So we decided to build Sales OD collaborative and mobile: it runs on iPhone, iPad, RIM devices and so on. It looks like Facebook, but it’s a productive Facebook because it helps sales people connect with other colleagues and people to do their job better and get in front of the costumer with the right proposal. So I think it is a breakthrough and right now we don’t know how to call this category, but I’m tempted to say so far we’ve built business software for businesses, and now we’re running business software for people, and the combination is the powerful thing. You put this kind of tools in the hands of people, designed based on how they work, and you connect to the business application of the corporate ERP and you get a very powerful combination, where you can empower your people to make the right decisions in front of the costumer.

And when is it going to be out there in the market?
We previewed it at CEBIT and we are right now collecting the first costumers. We will basically launch it at Sapphire 2011 in May. And then we will have, I guess, the first 50 customers or so to learn from, and rapidly improve the solution before we go big time.

Let´s now talk about Hana, the in-memory database system. There are 11 new apps, due out in a set of rolling releases through the year, that appeal to a line-of-business user, as opposed to the nerdy appeal of Hana. One customer said that with Hana they will skip building a data warehouse altogether.
That’s exactly right. We challenged a lot of the core assumption, which is “data must be store in discs, data must be pre-aggregated”, so that you have the answer ready when the user asks. Data needs to be collected in complex, large data warehouses, and we said “what if you could hold all transaction data of a company not on disk but in main memory?”, which is 10,000 times faster than disk. Then you could calculate on the fly anything you want. It’s real, real time, it’s the essence where you actually can do any calculation of anything you ask, any question you want and you get a sub-second response time. A couple of years ago must people set the equations and now we are able to prove with real costumers and real data that we can take the largest companies in the world with all the data in main memory , which is very cheap, totally revolutionizing the way data is store and used in companies. Why is this so important? Hanna is not just a product: it is a fundamental breakthrough in how you store and read data and we think this will be the future structure architecture for business applications.

But the applications appeal also to business users.  Because Hana itself is more appealing for techies, but the applications are aim to business users, right?
Hana has the technology foundation but the real value of SAP comes when we have the business context. So, I give you one example: I’m sitting with a large bank and we are discussing the speed of Hana and he offers me a cup of coffee because no speed is interesting, but coffee is also interesting. And then I say: and what if you could do real time risk management in a bank every second? And the conversation goes away from technology…. I never got coffee that day, because suddenly it was business value that could change the profitability of the bank.

Well, that brings me to the next question around Business Objects (BI) 4.0. SAP emphasized three aspects with its release: real time, easy and optimized. Is this the year of Analytics for SAP?
Both Hana and this release show that companies in today’s world begin to realize that the world has become unpredictable.

Companies deal with unpredictability so when a devastating earthquake happens in Japan they cannot say “we had a bad quarter because of Japan”. They are expected to be able to respond and change their plans real time. And that’s why companies are going away from the quarterly or even the monthly report to the real time one. And we truly believe transactional applications such as Supply Chain Management, CRM and Analytics will come closer and closer together and eventually become one. That’s why BI 4.0 is so important, because it moves business intelligence much closer to the transactional world and Hana accelerates the merge of the two.

Talking about financial results, SAP’s software revenue was $864 mi8llion dollars for the first quarter ended March 31, up 24% in constant currencies from the same period last year. Net profits, the measure that most disappointed analysts, were $597 million dollars up, 4% from last year but well short of the expectations by analysts. In the on-demand, software-as-a-service sector, SAP seems to be over-cautious about the roll-out of its Business ByDesing suite. How is it being adopted by business users, compared to CRM SaaS leader Salesforce.com?
So first of all, it’s now the fifth quarter in a row with very high growth rates and the good news about the growth rates is it verifies our innovation strategy. When others are consolidating the industry we chose to innovate. You mention all the categories: Cloud Computing, mobile computing and memory computing. Our three new categories that we think will transform the way business software is built and use. So, it’s very exciting and we now see that the costumers buy into our strategy. They love the fact that we are innovating faster and better than ever before, and that’s why we see high growth rates. By the way, I have to mention one of the fastest growing markets was Mexico: more than 60% growth is a tremendous leap forward, even in Latin America. It demonstrates that this region is very ambitious and able to grow.

As for the results you mentioned, at the announcement there was confusion around the margin. From our perspective, we increased the margin again, fifth time in a row. I believe the main thing that caused the disappointment was the fact that we have in our accounting principles stock base compensations, where we basically share the success of SAP with all employees and because the share went so much up last year, we certainly had to reserve for cost for stock base compensations. But if you look at the operational business we actually have increased the margin again 1%. So we are on a track. We see very high growth rates and we are very excited. With ByDesign we have reached 400 costumers. We have said we want to get a thousand by the end of the year and we are already on 400, which is faster than we had anticipated. So we hope to be able to cut to the 1000 earlier, and we hope to accelerate our country delivery of ByDesign, including Mexico, being one of the first countries in Latin America to get it.

This is the right product for midsize companies, right?
I believe this is very valuable for small and medium companies who don’t want to mess up with IT but still want to run their business the best possible way. And interestingly enough most small and medium companies have the ambition to be large companies; they don’t want to replace IT every other year when they are more successful, so we can scale with them. We are prepared to be the global partner of choice for them to really scale their business.

Finally, I am very excited to be here. It’s a lovely country, lots of business opportunities for SAP.

Como cada año, desde hace nueve, superamos la prueba del Business Innovation Forum (BIF). Y como cada año, sufrimos por congregar a la audiencia. Estoy segura de que en esto no hablo solo por mí, sino por todos aquellos que se dedican a la producción de conferencias, seminarios, o foros de divulgación. Los ejecutivos en México, en general, no tienen el hábito de actualizarse por estos medios presenciales. Es más, a no ser doctores, fiscalistas o abogados, a quienes se les exigen certificaciones periódicas, la mayoría de los profesionistas ni siquiera se suscriben a publicaciones especializadas en su área. En esta úlima edición, el renombrado BIF (The new business platform) tuvo una agenda muy rica en contenidos. Comenzamos con Andy Cohen, el gurú del pensamiento diferente, quien utiliza la magia como metáfora para que las personas desafiemos nuestros prejuicios e ideas preconcebidas. Follow the other hand –que da título a su libro– no es mas que otra forma de llamar al pensamiento divergente, a pensar “out of the box”, a mirar las cosas desde una nueva perspectiva.

Luego siguió un programa VIP para los principales CIO del país, en el que el Dr. Carlos Ruiz, director del programa AD2 del IPADE dirigió un taller para luego evaluar la capacidad creativa de los asistentes. Por su parte, Fernando Sepúlveda, director de Impulsa, facilitó un divertido y dinámico taller para mostrar los distintos tipos de innovacion posibles.  Y el otro plato fuerte del programa fue el Dr. Guillermo Aguirre, director de Aguirre Innovación, y quien fuera director de negocios de innovacion en Conacyt. No pude evitar sentirme derrotada con la lastimosa posición de México en la generación de riqueza que Aguirre nos mostró con datos y estadísticas comparativas. Luego habló de un nuevo modelo de negocios posible para los mexicanos que no quieren seguir con el viejo modelo del “compra-conecta-opera” (como lo describe él) y que ha sido el típico de los empresarios.

Además, nos acompañaron muchos de “Los más innovadores de InformationWeek México” en demostraciones de casos de éxito, bajo cuatro tracks: CRM, BPM, Logística y Business Intelligence. Por supuesto, no podía faltar el panel con los cinco primeros de la lista, en un formato original: , los panelistas tomaban un número al azar y respondían a la audiencia la pregunta pre-grabada de uno de sus colegas.

Por supuesto, no podía faltar el entretenimiento al final de la conferencia. Tuvimos esta vez a “Historias de noche”, un grupo de talentosos y jóvenes actores expertos en improvisación teatral. Arrancaron muchas risas a los cansados pero satisfechos asistentes que disfrutaron del evento hasta el final.

Tenemos todavía mucho que innovar y que aprender para mejorar la convocatoria, pero creo que también falta que, desde los años universitarios, nos enseñen que la asistencia a congresos, seminarios y demás debe formar parte de nuestra contínua actualización. Además, conoce uno a gente inteligente y con los mismos intereses. Usted ¿a cuántos eventos asiste al año? Déjeme saber.

En una sesión-comida que llevaremos a cabo en el Club de Industriales, esperamos la asistencia de más de 110 personas de empresas líderes en sus ramos para explorar juntos la forma en que podemos cerrar la brecha que existe entre los mundos de IT, ventas y mercadotecnia. Por nuestra parte, hemos estado trabajando en una serie de iniciativas que están encaminadas a proveer de recursos para iniciar el diálogo sobre la base del interés común: mejorar la satisfacción de los clientes.

Si logramos involucrar a los CIO como parte fundamental en el logro dicho objetivo, entendiendo mejor las necesidades de sus contrapartes en las áreas comerciales, tendremos ya buen camino andado.  Los CIO saben que existen nuevas herramientas digitales para lograr un mejor aprovechamiento de la información de los clientes y los mercados, conocen a fondo los procesos de negocio pues son quienes deben automatizarlos, y son los guardianes de las bases de datos corporativas. De manera que son ellos quienes están llamados a liderar este Dream Team.

Gracias a Internet y la irrupción de las nuevas tecnologías Web 2.0, se han creado todo tipo de comunidades virtuales con base en intereses comunes. Está demostrado que dichas comunidades están jugando hoy un papel cada vez más importante en la forma en que se toman las decisiones de compra. Las redes sociales pueden moldear los gustos y opiniones de los consumidores y, si no me cree, pregúntele a sus hijos adolescentes cómo es que se enteran de quién es quién en la organización de una fiesta, qué galán está de moda o cuál es la tendencia otoño-invierno. Lo más probable es que su fuente sea Facebook, Hi5 o MySpace.

En lugar de ser simples observadores de los fenómenos del social networking, una de las primeras conversaciones del Dream Team podría ser cómo sacar provecho de esta nueva realidad.  En Netmedia hemos creado incluso un nuevo repositorio de información para concentrar documentos relevantes en torno a éste y otros temas, mismos que pueden ser compartidos por IT, Ventas y Marketing. Lo invitamos a participar visitando: www.crm.netmedia.info 

Pero quien tiene la última palabra es usted. De manera que lo invito a comentar sobre los temas que le gustaría explorar.