Reinventing SAP for the Digital Age

How do you get a huge successful, multimillion-dollar IT behemoth to become agile and highly responsive? We asked Bertram Schulte, chief digital officer (CDO) at SAP, who offered a candid view of his life at a tech giant.

CDOTrends: How do you characterize your job?

Schulte: I am the king without the land. Because I do not own sales, contracts, and products, except for our stores, I need to find ways to make it work across all of [these departments] so that it makes sense for the customer. So, you can say that I am essentially orchestrating a change initiative across all the functions that makes sense for the customer and SAP. It is cross-functional and the little part that I own is orchestrating the digital transactions towards the customer.

CDOtrends: Are reporting lines important?

Schulte: The question around the reporting lines is important. But it is both helpful and not helpful. Currently, I am directly reporting to the board for the COO, which gives me a wide range of influence. But it is not good enough. Even if you get the COO to agree or the sales leader to agree, it does not mean that anything happens. So, you need to work at least at the same speed bottom up.

For example, when we started to sell digitally direct to customers, there was a huge discussion in the field that it is the starting point to eating “our lunch”. So, I tell them “why don’t I take these [smaller deals] off your table and allow you to spend more time on the bigger deals and make more money.

CDOTrends: How do you get the business to buy that vision?

Schulte: Usually it happens when it all makes sense. To the head of sales, the pitch was relatively easy as I told him if you do this, 10-25 percent of your sales activities can be freed up to reinvest in bigger deals. To the COO, he saw the operational savings in the field. So, this was not a problem. Rather, the major [challenge] was how to implement it across all the policies in the company. For example, do we say that deals below a certain threshold are prohibited for the field [sales team], or we do not incentivize them?

CDOTrends: How did you drive the change?

Schulte: Everyone wants to change; everyone knows that they need to change. The question is rather how we best go about it. If you are green field, it is a little bit easier; if you have existing billions of dollars of revenue streams, it is always going to get sketchy. The one thing we really learned is that just starting bottom up, [by doing] small tests and pilots here and there, did not work. It is because if you are going to change policies, you need the big boys to agree. So, you need to go top down as well.

CDOTrends: In a company that has a huge product development team, how did you implement your digital strategy?

Schulte: In our company, what works perfectly is creating concrete customer situations so that the product [team] is challenged.

For example, we had for two to three years huge discussions with the product development organization on provisioning times. They happily ignored it because it was not directly relevant. [Also], the store sold products that were not mainstream SAP. When I started, I began onboarding the mainstream product lines [to the online store] and started to sell them [directly]. If customers had problems with our provisioning times, they will call us and we apologized. This created a situation where it made people on the Board level aware that provisioning times were not good enough and were a worthwhile investment.

So, we usually start by creating a problem, escalating it and putting [it] in a customer situation. We then create an internal pressure point to change.

CDOTrends: How important is automation and machine learning for CDOs?

Schulte: I do not believe my job is a job; I see it as a temporary one. Digital everywhere [should be] second nature for everyone with machine learning and artificial intelligence becoming key.

What is the special thing about the digital connections? It is the scalability. We already know what customers have installed, what they use, what industries they are in, and how successful they are. If I can bring that intelligently into context, I can be the most powerful enterprise application guru in the world. If I can give meaningful recommendations on how a customer should be looking at the landscape and what should be the next application they should buy based on all the customers we have been looking at, it is powerful. It is the machine learning scenario that is valuable to me.

But it is actually not my job. Rather, it should be the job of the head of sales together with the head of products, etc. [However,] it is not yet second nature in daily business.

CDOTrends: How does SAP ensure data is correctly orchestrated?

Schulte: We need to go back to a single source of truth. And it actually drove the product strategy for the intelligent enterprise. You do not want a scenario where you replicate data and where all the replications are manipulated and augmented in different ways leading to different results. We need to all come together [to create a single source of truth] and it is a painful exercise for companies. And then [you need to make sure] all data is digital. For example, a PDF file is digital and yet it is not digital. If you fix all these, 90 percent of the war is won.

CDOTrends: Where do you get your talents?

Schulte: Obviously, we have less of a problem with tech-savvy talent. I personally try to avoid external hires with a few exceptions because huge parts of the job depend on change. And change comes with network. You need to have experience and knowledge of the processes. You need to also create informal networks to drive that change. Yes, it comes at a price of gaining best practices from other companies and inflow of fresh ideas. So, you need to find ways to equalize [the talent gaps].

CDOTrends: What is the single most important advice for CDOs?

Schulte: You need to create starting points [using small pilots and agile delivery] and decide where you want to go from there. If you want to do everything perfectly, then you should not become a CDO. Because you will never have the chance to do everything perfectly and you will not be able to deliver anything. Then, you will be fired first.