SAP chief: Don’t talk to me about consolidation

ORLANDO — Henning Kagermann, chairman of the board and CEO for SAP Inc., told delegates at the Orange County Convention Center Tuesday they must adapt to challenging times and not get so hung up on consolidation they paralyze their businesses.


at SAP’s annual SAPPHIRE Conference, Kagermann said consolidation offers no true business value; it merely cleans up previous mistakes.

While acknowledging the fiscal hurdles customers face, he said the key to moving forward and the path to true financial recovery is to lower operational costs while focusing on and investing in innovation and adaptability.

“It’s time to focus on growth,” he said. “CEOs should invest in new areas, it’s the only way to bring down your costs . . . (financial) uncertainty will always be with us, we’re now caught in a vicious cycle.”

Kagermann said globalization is here to stay and it’s folly to wait for recovery to happen; we must create recovery.

“We should be adjusting to (the times) and go after an adaptive business model,” he said. “If you want success, you need growth and you need innovation to get growth.”

He said IT drives all aspects of business evolution and warned against not investing in IT budgets. “If you can’t budget for IT, you may have great vision but no execution,” he said. “IT really kicks off the next brand of evolution and opportunity and competitive advantage . . . you need to mobilize your IT people.”

Kagermann also took the opportunity to dispel the notion that businesses purchasing different “over-sophisticated solutions” will bring about better efficiency.

“The answer is a standardized ERP platform,” he said. “So many companies are offering you consolidation tools and you hope you master the challenge of consolidation with your data, but you have not done this. Don’t do these things in the future.

“We’ve seen over the last five to 10 years people building ERP platforms (on the fly) . . . they end up with 200 different (applications) and then they need to consolidate. I have concerns in time we’re going to make the same mistakes again.”

Kagermann took time to praise the evolution of Web services, but he added that the technology is still in its infancy.

“Web services is not where it should be,” he said. “It should be speaking to business people, not tech people. It will build on extending specific functionalities and we’ll use those capabilities to go faster to the market.”

While singing the praises of the mySAP Business Suite and SAP’s NetWeaver solutions, Kagermann cautioned the audience against snap judgments that lead to purchasing a bevy of different applications. Standardization, he reiterated, is of the utmost importance.

“Don’t go for a piece meal approach, we need a more coherent approach,” he remarked. “Integration is the key to application success and your business needs to have an adaptive infrastructure.”

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