SAP’S Bill McDermott: The Overdog Who Thinks He’s an Underdog

Toward the end of his recently published biography, Winner’s Dream: A Journey from Corner Store to Corner Office, McDermott admits that the company “had to embrace simplicity.”

SAP-2Going back over your career, Xerox, Siebel, Gartner, the Amityville delicatessen—what was the biggest learning for you, as a leader?

BM: I’ve learned so much from all of them. But I have to say my first lesson at age 16 was the most important: If I don’t get the customers to come through that door and I don’t understand who my base is, I don’t make payroll and I go out of business. At that time, I had a deal. I had a $5,500 note on the business, I either paid it back—$7,000, with interest— in 12 months or less, or I would lose everything I put into the business. So, for my first venture, that was really, truly a character-making experience, and that’s where I got my whole focus on the customer.

But I must say, Xerox was quite amazing, also. I always wanted to come into Manhattan, this big beautiful city, and take on the world. For a kid from modest means from Amityville, Long Island, this was the dream. When I was 21, I went to the Top of the Sixes for an interview and lined up against these kids in gorgeous suits and fantastic degrees from the best schools. I was there in my $99 suit from the mall that I charged on a credit card, and I was wondering, ‘Man, how do I pull this thing out?’ I did what I was good at, which was talking to people. I knew exactly why I was there. I was there because I was going to get my dream job that day, and I wanted it more. And that passion of wanting it more is every bit in my heart and my soul today as it was then. I felt like my life was on the line, because if I didn’t get that dream job on that day, then maybe none of this would have happened.

The other lesson I’ve learned is to always remain humble. I am more humble today, on the launch of this book, than I might have been when I was 16 or even 21 years old. But I also have to stay immensely hungry. I’m constantly looking around the corners for the next big thing. We just conducted an acquisition of Concur, because I believe that the business network is even bigger than the social network. The idea of helping companies manage their business within the company is super-important. But managing business between companies is even more important.

“I tell them it’s fair to be a skeptic; but if you choose to be a cynic, you have to be better than the facts.”

Explain.
BM: For example, I left a large manufacturer just yesterday who’s building huge engines. And these engines serve the global economy in many, many ways. But they don’t make much money on the hardware; they make all their money on the services. So, think of a world where you’re running on the HANA data platform from SAP. And everything is in real time, including all the equipment that you have and the performance of the hardware that you sell to your customers.

What if you could predict through simulation technology when you were likely to have a breakdown of a key part within a key engine? And what if, in a frictionless way, that part could be ordered by the business network and [if you could put] that order bid out to the global competition to get the best possible price?

And what if, once it’s procured, seamlessly, totally digitally, with no paper, it could be delivered to the customer site and matched with the perfect technician who has the precise skills for that part and that particular engine? That particular company could improve its profitability by more than 50 percent on that one idea of leveraging a business network. That is doing business between companies. That’s the big idea.

A cynic might say that what you’re describing is still a fantasy. What do you tell skeptics?

BM: I tell them it’s fair to be a skeptic; but if you choose to be a cynic, you have to be better than the facts. Today, $600 billion in commerce is getting done on that particular business the U.S. and in Europe. In addition, consider the travel
and expense move that we made with our acquisition of Concur. What do business travelers hate to do? I can’t stand filling out expense reports or even keeping track of this junk—because I’m a busy guy. If you take land, air, hotel, food, entertainment and all the expenses thereof, it’s now managed in your iPhone or whatever device you choose to use. It’s automatically, digitally updated in your ERP system for the benefit of your CFO, so you’re in compliance. And by the way, now you have a best-run business because everything is taken care of financially; but more importantly, your productivity, your time and your life are enriched through technology.

Now, why do I think the network is the future? Because on all those land exchanges—take Uber as an example, the fastest-growing ground transportation company in the world—they’re a partner. Every time they pick you up, we make money. Let’s take the hotel industry. There are hotels that you favor. Every time you check into a room on the network, we’re making money. Let’s think about the air travel that you take. Every time that you choose a certain ticket on a certain airline, we’re making money.

But the best part is that you’re making more money. Because 80 percent of the travel that is done today gets done outside of the travel department, and do you know why? Because you can get a better deal on the open Internet than your travel department could have imagined, because of the real-time exchanges that take place in a real-time network called the Internet. And now, if you’re running Concur, you’re not only getting the best deal, but the financial people back at your company are happy because it’s reconciled in the system of record within the financial walls of your company.


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