Saturday, May 31, 2014

American Turnaround by Ed Whitacre

In his book about AT&T and GM, Ed Whitacre, the former CEO of those companies, talks about how he led those companies through disruptive technology and business model changes. I was particularly interested in understanding how AT&T, a company that relied on land lines and lucrative long distance call revenue, made its transition to a successful modern era wireless phone company. He points out that AT&T embraced the wireless business while MCI, a competitor, did not respond to the changes fast enough.

I am seeing a similar situation at SAP. Our business model of on-premise software with about 30 percent profit margins is being disrupted by cloud providers. Our hardware partners who made 2 dollars for every dollar we made and our services partners who made 4 dollars for every dollar we made are also seeing their business models disappear.

While we have recognized the inevitable move of all software to the cloud and have committed ourselves to the cloud, every employee and partner needs to execute on the strategy for us to be successful.

The good news is that the message for the top is clear. We need to be a cloud company powered by HANA. We do have very good acquired cloud assets for line of business applications such as human resources and procurement. We also have a good home grown system for travel and expense. We are trying some innovative things in other areas such as customer and finance. We have the HANA Enterprise Cloud model, where we manage applications in the cloud for customers.

I am cautiously optimistic.


Related Posts Plugin for WordPress, Blogger...