SAP CEO Urges Businesses To Proactively Seek GrowthSAP CEO Urges Businesses To Proactively Seek Growth

Uncertainty is here to stay, SAP AG CEO Henning Kagermann told an audience during his keynote address Tuesday at the company's user conference in Orlando, Fla., and businesses must adjust to it. That means creating an adaptive business--one that's innovative and pursuing growth, not one perpetually waiting for the recovery that's hopefully around the next corner.

According to Kagermann, who's also chairman of SAP's executive board, IT plays a critical part in that effort. "Without IT, there can be a good vision but no execution. IT can kick off the next kind of recovery." What's needed will be a mindset change, as well as a change in how IT investments are allocated. Today, typically 10% of IT dollars go to innovation, 30% to consolidation, and 60% to operations. He says the equation to shoot for is 40/20/40.

This means companies have to stop thinking about consolidating their systems and start thinking about leveraging them for innovation--and Kagermann admitted that's a change in SAP's own mindset. "Consolidation has no business value," he said. "It's just clearing up the mess you created in the past. Instead of mobilizing, it paralyzes." Businesses must get rid of the endless cycles of consolidation and the layers of complexity they add.

SAP, he said, is doing its part, with its Enterprise Services Architecture driven by its NetWeaver integration, portal, Web services, and application-server technology, its applications' industry-specific functionality, its Master Data Management technology for creating one vision of the truth as it relates to data, as well as xApps, plug-in prepackaged business-process components. Together, these can help companies achieve best business practices that let them drill down deep to deliver the information they need to make decisions--such as whether to accept a customer order, which requires knowing everything from whether the customer is a good credit risk to the capability to deliver to whether it's a good deal to make. Access to that information becomes even more critical in a build-to-order environment, but with NetWeaver's integration and portal-based capabilities, "heterogeneity is not an issue anymore," Kagermann said. As innovations become best practices, they'll become consolidated into the SAP suite, he said--and having best practices already in place frees up capacity for more innovations.

SAP's mySAP ERP software will take a page from its CRM offering, incorporating pattern-based design that reduces the number and complexity of the screens users must deal with, as well as role-based design, to suit the screens to the user's function. Kagermann also talked about leveraging blade server technology and pay-as-you-go computing in its applications to help build an adaptive business and one that can see reductions in total cost of ownership of 20% to 30%. He also noted that SAP is announcing 100 certified NetWeaver partners who will be able to extend the SAP software with their own component solutions, and that it's working with IBM and Accenture on helping companies to achieve quality of implementation.