On a recent visit to the UAE, SAP CEO Bill McDermott told James Dartnell about the company’s plans to build a data centre in Dubai, with the possibility of an additional site in Riyadh.
What’s your perception of the Middle East?
If you think about the UAE and the 2021 vision, the idea of digitising services, and creating digital technology and innovation-oriented jobs for young people is fantastic. You’re seeing lots of businesses diversifying into multiple industries. Obviously there’s less of a reliance on oil in the UAE compared to Saudi Arabia, but if you look at their 2030 vision, they’re clearly trying to diversify their economy.
Customers want to run S4 HANA in a public or private cloud. We’re making a commitment to the region to have cloud data services here for public and private environments. Data, data management and data security are very important here, and a commitment from a company like SAP is reassuring in that journey.
So you’ll be building an SAP data centre in the region?
We’re doing it; the data centre will be in Dubai. We’re refining the locations and the final strokes on that, but the capability is clearly there for it to be here, with perhaps one or two other locations. There could be one in Riyadh as well. We’ll keep you posted as soon as the deal is inked.
We now have 40 cloud data centre locations around the world, in every major economy, and we’re going to build one right here. It’ll be here in 2017. You can have the private cloud right now, but for public cloud we’ll be offering that here, as-as-service – the servers, the cloud data centre – will be right here. So people will be able to validate that and have comfort with their own servers and information.
Since 2007, when we established a middle channel between us and our customers, we’ve been the fastest growing software company in the world, and in the Middle East. We’re very well liked here, and I think we’re well liked everywhere. Our brand is highly regarded and people have trust in us.
A company of our size and scale – a $25 billion company – has to ask where growth will come from. We have to do well in our core markets – the US, Europe, Latin America, Asia – but if you’re really going to get the hockey stick, then you have to capitalise on the immense growth opportunities in the Middle East, Africa, parts of South America, India and China. These are mission-critical markets for us and that’s why we’re investing heavily, and in doing it the right way.
Is digitalisation a realistic prospect for this region in the short-term?
You need to have a vision, and you have to start somewhere. I think the region is counting on us to bring thought leadership and best business practices from all our other worldwide operations. We need to scale that across 25 industries – as you know, we got to market by industry – and that’s a great place to start.
It’s important that technology and research are encouraged within the region, and that public-private partnerships are leveraged to achieve this. One of the universities I visited in the UAE has 6,000 students from 90 different countries – that’s a lot of intellectual firepower. I think a digital journey starts with education, which emanates into a global opportunity.
The Middle East’s digital journey is far from complete but we have the vision to lead it. If you think about Expo 2020, if you think about travel and expense with Concur, and what we’ve done with professional sports, I think we’re the perfect match for the UAE and the Middle East.
You’ve just announced partnerships with HP, Lenovo and Microsoft…
I think we’re all trying to do the right thing for the new consumer. Satya and I were at Sapphire Now last week in Orlando talking about Office 365 and S4 HANA, and the notion that an office worker could have a seamless experience between their Microsoft office experience, and their enterprise application experience with SAP.
If you happen to be in Outlook and you have a human capital management function in ERP that you’re trying to access, then it does that seamlessly.
HP has obviously abided by our reference architecture on S4 HANA, and they’re interested in private cloud environments, where SAP is pervasive.
Lenovo make outstanding hardware and have very attractive price points, HANA runs on x86 hardware so we keep the price low. HANA consumes ten times less hardware than other databases on the market, as well as providing seven times more throughput and is 1,000 times faster. Any time we can get the customer better value on the hardware, and better performance on the software, it’s win-win.
What can Middle Eastern CIOs learn from their American and German counterparts?
I think Germany has done a great job in terms of its Industry 4.0 efforts, led by Chancellor Merkel and her vision for the industrialised Internet. There are many large companies operating at scale, taking advantage of opportunities including the IoT. Lessons to be learned include how to take big companies, and scale and diversify them. How to look at businesses in real-time for clarity and visibility.
The United States is incredibly creative in terms of developing new markets and opportunities. When you have a bust in one industry, they’ll create a new industry and a new market. There’s this resilience around markets and market dynamics. The other thing is innovation. When you think about Silicon Valley, venture capital money and the investment in young people, there’s a lot to be learned. The other thing that’s underreported is the philanthropic aspect of what the US does. Philanthropy is done at scale and there’s a big lesson there.
Are you the antithesis of Larry Ellison?
I think we’re both very driven people who are in charge of very different companies.
I think that we have some similarities too. We both do all that we can to make the best for our companies, and we’ve both been very good at what we’ve done. You can only give credit to Larry on a personal level for that. He’s been very good at what he does for a very long time. Hats off to him in that regard.
As for Oracle and SAP, we’re just very different companies. They’re a database company that moved into the application space, we are an applications market leader that was in a perfect position to disrupt the database industry at the very moment it mattered the most to disrupt it.
Due to the mobile explosion and IoT, the disk-based database from the 20th Century is too slow, consumes too much hardware, and doesn’t give the businesses that rely on it the complete clarity of mission, where they have visibility into their data in real-time. With HANA, we disrupted the database market as we know it. You might even say we are going to ‘Uber’ the database market.
With regard to the applications, reinventing S4 HAHA on a pure in-memory platform has dealt with the toughest objection to SAP. Maybe you could’ve said ‘it’d be great if SAP had a database’ or ‘it’d be great if SAP could be more simple’. We’ve now simplified work that used to take six or seven steps to a matter of a few clicks.
I think that makes us a very different company from Oracle. I’m not saying better or worse – that’s up to the customer. We’re the only company that does inter-enterprise collaboration of companies. I think in this century that will create more growth than pure internal enterprise computing. We stayed out of the hardware business. We can work with commodity hardware and cut costs dramatically.
CIOs are under constant pressure to marry business and technology. To what extent have you earned your CEO position through technical skill, and how much has been through aligning business and technology?
It’s always been the Holy Grail to match business objectives with IT enablement. The biggest reason that strategies fail is that companies do not enable technology in the execution phase. What I think I bring to the party, and what I think SAP brings to the party, is a rich appreciation of how to run a business, and a true empathy for how you enable that strategy for the use of technology. Some companies are determined to talk about their products, but the truth is, the best mouse trap doesn’t always make the strategy a winner. You have to combine business and IT. One of the big challenges is aligning business professionals and IT professionals in the customers we serve. The only medium that I think serves the interest of the company is when these professionals are aligned in common goals, and how to combine them for the benefit of the business.