SAP is a multinational software corporation covering 25 industries, from very small companies to the largest companies in the world. SAP also cooperates with governments. “The public sector has a lot of responsibility to develop the right digital platform for the country,” says Franck Cohen.
|Dear Mr. President, the last SAP Forum in Prague was such a huge event. Does this event take place periodically?|
Yes, we hold this event every year, in every capital of Europe. The idea is that our customers don‘t have to travel. We bring news to them. We present the innovations from the last 12 months to them.
You are SAP’s President of Europe, Middle East & Africa. We are in Czech Republic, a rather small country.
Every country counts.
What are your ambitions for the Czech market?
Generally speaking, the idea is to develop our presence in each and every country. There is no point for us to neglect a country, or say that we will only focus on Germany or France. By definition, our business is truly global. Even the customers in Germany, France and Great Britain have subsidiaries in Central Europe, in the Czech Republic. They expect us to support them wherever they are. The proximity is still important. You cannot just say I‘ll manage everything from one call center. You have to be closer to customers. You have to go and visit them, listen and see what is happening in the company.
So IT is the same as any other business.
Yes, of course.
When we speak with executives in Europe, they all understand that the digital transformation is a major business priority for them. They don’t talk about IT or technology. They just say: We understand that we have to move to the digital world and digitize our processes.
The reason is they realize that they should take advantages of available technologies. Otherwise they don’t know what the people on social media are saying about their brand. They have no idea. And if you have no idea, how can you adjust, react or correct things? In the past it was very easy. All the information was plugged into the company’s system. So you were able to manage and control everything.
Today all the information is everywhere…
Yes. The information is on social networks, Facebook, Twitter or LinkedIn. The information is also in sensors - connected cars, health equipment. The question is: Will we ignore all of that, and continue to do business as we did 20 years ago, or will we try to take advantage of modern trends?
And what is the advantage you see?
It is the collection and analysis of data and information, which can teach us more about our customers. We can know more about what they want and like. At this moment we see that we can adjust our products or services according to data. We can also personalize the services we offer to users. Today nobody wants to be treated like one out of a thousand. If I go to the store and buy something from you and the day after I go to your online e-commerce platform, I expect you to know what I purchased yesterday. If there is a promotion that goes with it, I may make another purchase. On the other hand, if I have to call you to explain what I bought yesterday, I will not be very impressed.
Are the IT and online segments still growing dynamically?
They are. People are moving from selling products to selling services online. It’s a fundamental transformation. They’ve even invented a saying for it: service the product. So the product is becoming the service. And the moment you do that, you change the game. For example, Rolls Royce is not selling engines anymore to any airline companies. They are selling uptime fizz for their engines. They give you an engine, completely free, and you pay them based on the number of hours that the engine is used in flight. The service agreement will cover the engine, leasing, and maintenance of the engine. Everything is covered for one price.
What is the advantage for the company?
The companies only pay the necessary costs. They don’t have to spend millions of dollars to buy new engines. They are not buying a product anymore. They buy a service.
What exactly is your product HANA?
HANA is nothing other than a new platform to allow you to move to a digital transformation. Today, companies need to explore more data more rapidly. The idea is to collect data from all types of sources – social networks, sensors, local geographic areas – and based on all of that, companies can make decisions. A quick analysis of data may predict the next trend, and a company can subsequently make a decision. The current platform cannot do this.
They don’t know how to manage different types of data. They don’t understand social networks, or the sensors in your machine. Our HANA platform is the new platform that will allow you to enter the digital world.
Is HANA also available for smaller industries?
The way we charge is by a percentage of your maintenance fee. If you have a small installation or footprint, you only pay a small fee for HANA. This way we make it available and accessible for small companies. We are selling SAP digital access to HANA for 500 US Dollars. We don’t sell HANA as a product anymore; we sell HANA as a service. You don’t have to buy anything. You just pay for the service and subscription every month based on utilization of the HANA platform.
What are the concrete advantages of S/4 HANA?
It’s very simple. If you ask SAP to operate the HANA system for you, you have a station like an iPad or laptop connected to our data center. You enter with a password and you run a complete application. The speed that you get when you ask for your query, or when you launch a report, is the speed of our HANA platform on our data servers. You have zero equipment to buy, zero infrastructures and zero IT costs in terms of administrating people. And you still have access to the latest technology of SAP.
“The cloud” is one of the today’s biggest buzz-words…
This is going to happen in the Czech Republic as it is happening in the rest of the world.
Why is that so unavoidable?
The promises of the cloud are too important to be neglected by any particular country. It is not only about the cost, or moving from capital expenses to operating expenses. You don’t have to buy software anymore. The cloud by definition is a service. We’ve come back to what I was saying before - you don’t buy software anymore, you buy services. Cloud services include everything. The maintenance, support, helpdesk…
Why is it working so well?
The cloud is simple. You don’t apply cloud solutions over years. You do that in weeks. You don’t need a long educational process to learn about the cloud, because it is intuitive, like an iPad. It’s easy to use, apply, and maintain. There is no doubt it is going to happen in the Czech Republic. This is why SAP decided to promote concept cloud computing. I think it’s good for companies.
What about security?
Very recently SAP participated in multiple activities at the European Committee level to define the rules for safe cloud computing in the EU. A few weeks ago Brussels published the new white page “Digital Europe”, where they try to describe some rules of the game. Data privacy in Europe has a different meaning than in the US. It is good for Europe to have their own rules of the game for cloud computing. We are a European company, so we understand what data privacy means. I’d like to mention privacy and security. Cloud computing is great, but it is more risky when you have everything in one place. So you have to have a great level of security. For 42 years SAP has protected a Mission Critical application. We try to use our best practices and protect the data of our customers. We implement this for cloud computing as well. Our customers can be sure that we are using the same techniques and principles, and actually even more so, because of the cloud’s nature as a database. In addition to that we respect the concept of data privacy. We have many customers in Europe who are telling us: We are ok with your cloud solution, but we don’t want the data center to be in the US. We want the data center to be in Europe. We don’t want people outside Europe to operate your system, we want it to be under European jurisdiction and laws.
European laws are very protective. Do you like this about them?
The nature of the Internet is that it is free and open. We should not stop that. It would be ridiculous to try to regulate what is happening on the Internet. The word Internet by definition means freedom of speech and communication. At the same time we need to protect the private lives of the people. We cannot accept that data would be used for merchandising purposes, or other purposes, by any government without allowing the citizens to control what is done with their data. We try to do both. We try to protect the freedom of the Internet as a global platform, and we should not regulate it too much. With wide protections of the data privacy of individuals, SAP cloud and data centers in Europe are operated by European citizens.
Why should governments cooperate with IT companies? Is it different in Europe?
Most countries continue to develop their own bespoke applications. They spend a lot of money, with a very high failure rate. 50 percent of IT projects never go live in Europe. They waste money.
Why is that?
It’s very risky. When you start from the white page and want to build a new application, it’s much more complicated than using the best practices that SAP suggests. We have many examples of people spending hundreds of millions to develop their own payroll or their own budgeting system. Using SAP’s system would save time and costs and still do it better. Citizens do not want to spend their income taxes on developing systems from scratch. They prefer standard packages that can do the job at much lower costs.
What about IT spending from the government?
If you look at a typical 100 Euro budget, 20 Euros are spent on hardware and infrastructure, 70 Euros on services (consultants & developers), and only 10 Euros are spent on standard solutions. It is in the interest of the country and the citizens to reduce the costs of hardware by using the cloud, and by combining resources for multiple customers. I also believe that we can reduce the amount of services needed by using more standard packages. This would lead to a typical budget of 10 or 15 Euros for hardware, maybe 30 or 40 Euros for services, and 30 or 40 Euros on start-up packages.
How many states in the EU run their agendas on SAP? Can you give us some examples?
We work with every single government in Europe. In Czech Republic you have multiple ministries that are using SAP solutions. We have healthcare companies and universities, and yet we are still only scratching the surface. There are many more customized applications that everyone could benefit from.
Why is that so unique?
When you pay the maintenance fee every year for an SAP platform, you are one out of hundreds of customers paying this fee. We combine these financial resources and we develop for everyone at once. Everybody can benefit from that. When you have your own application for the ministry of justice, and you have to maintain this application every year, you are the only one paying the fee. The whole cost of maintaining the same scope is paid by one company. That’s makes the costs much higher. The public sector has a lot of responsibility to develop the right digital platform for the country. To be able to move to the digital world, you have to have a Wi-Fi Internet connection for the whole country. You need to promote IT spending in I-TEC. I believe that if companies would subsidize access to the best possible IT system, companies would grow faster. It would give them access to the global economy.
Back to SAP’s HANA platform. SAP announced cooperation with the Czech Ice-Hockey Association before this year´s IIHF World Championship. The Czech national team is using a solution based on this platform. Why sports?
The whole idea started in the US. People in the US are crazy about statistics in sports. We started by providing big data capabilities using HANA. We now have more data available for the fans and also for the teams. We are working with the NHL, NFL and NBA. If you go to any of those websites and you check statistics, and you can compare players with the players who played 20 years ago. You can do whatever you want. You can create your own metrics that you want to follow on the Internet as a fan. The players are also very interested. Take the German football team at the World Cup. Every single player had a 45 minute briefing on the characteristics and the statistics of his direct opponent before every single match. We do that now with golf and tennis.
So the IIHF World Championship is not the first time SAP’s HANA was used in sports…
No. We have created a whole new industry group called Sports, Entertainment and Media. We have several companies as clients. One of them is doing ticketing for Bayern Munich. Another big team from Great Britain is taking the whole package.
Is there any industry you’re not involved with?
We cover 25 industries, everything from very small companies to the largest companies in the world. If you take the car industry, every factory in the world is using SAP. If you take life science, the top 20 companies are using SAP. Of course, there are industries in which our footprint is lower. Take for instance financial services. Lots of banks are using our back office system. Not many banks are using our core banking applications. Another big industry is TELCO. I should also mention retail.
What is SAP HANA?
SAP HANA is an in-memory data and application platform that makes real-time business a reality. With it, you can simplify Big Data analytics and applications on a single platform with one data copy. The new SAP Business Suite for HANA (S/4 HANA) is a business suite of applications designed to run simple in a digital and connected world. Built on the advanced in-memory platform, SAP HANA® is designed for the most modern user experience, SAP Fiori®.
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