Handelsblatt interview

SAP CEO: 'I'm a Fighter'

Bill McDermott SAP CEO Bloomberg
In Davos, SAP chief Bill McDermott said companies involved in innovation were upbeat.
  • Why it matters

    Why it matters

    SAP CEO Bill McDermott’s outlook on life changed, in many ways for the better, after an accident that cost him his left eye.

  • Facts

    Facts

    • SAP, the world’s largest maker of business software, cooperates with many research institutions in applying its Hana database to the medical field.
    • Mr. McDermott is writing a book about the accident and its aftermath.
    • He believes that private data is effectively protected in the Cloud.
    •  
  • Audio

    Audio

  • Pdf

Bill McDermott is back.

That was the message from the chief executive of SAP, the world’s largest maker of business software.

Mr. McDermott has rarely been seen in public since his accident last July which cost him his left eye and nearly his life.

But, he said, “I’m a fighter.” This week, attending the World Economic Forum, Mr. McDermott gave one interview after the next.

He described how he had had plenty of time to think since his accident, and outlined several important conclusions in an interview with Handelsblatt.

One will find its way into a book he is writing, Mr. McDermott said. Another will steer SAP towards new fields of business – including health care.

SAP is fighting fit. The company raised its outlook for revenue and profit in 2017 to the higher end of analysts’ predictions on Friday. SAP said it expected to make between €23 billion to €23.5 billion, or $25 to $25.5 billion, in revenue in 2017, above average expectations of €23 billion, Reuters reported. SAP said it expected profits of between €6.7 billion and €7 billion.

This would assume margins of 28.9 percent, below the historically higher margins of 35 percent that SAP had as a seller of business-based packaged software. Analysts had expected an operating margin of 30 percent, according to Reuters.

 

SAP-01 share price and revenue

 

SAP is working to become an internet based supplier of services via the cloud but its chief financial officer Luca Mucic said at a conference call he saw no reason why SAP shouldn’t gain similar margins although the upfront licensing fees for cloud based software tend to be slightly lower.

Looking ahead, health care will be a bigger part of SAP’s future too.

Mr. McDermott told Handelsblatt he had become more aware of health care and its shortcomings during his time recovering from his accident.

Last summer, Mr. McDermott fell down the stairs onto a glass of water he was carrying. It smashed his cheekbone and caused extensive damage to his eye, which he lost, despite extensive medical treatment.

In Davos, Mr. McDermott pointed out that SAP is already active in the health care sector, and said that his was the only IT company to be invited to an event in Davos about the fight against cancer.

Mr. McDermott explained that when applying SAP’s Hana database for medical purposes, the company works together with many research institutions, such as Stanford University. “We are thinking about how Hana’s fast data processing could be used to sequence the human genome more quickly. That too can help beat cancer,” he said.

Although many Europeans are concerned about the protection of their patient data by IT companies, Mr. McDermott said that the data could be rendered anonymous for research. He also said he didn’t think people’s personal information was better protected on paper than in the cloud.

Mr. McDermott called for a focus on the technologies of the future rather than the burdensome legacies of the past. Digitization has enormous benefits, especially in health care, he said. “I experienced the deficits of the current health care system firsthand because of my accident.”

He said there digitization could also help in terms of health care prevention and that mobile health checkers potentially could provide the change to use a large amount of data to prevent diseases.

There is no danger that digitization in health care will cost jobs, given the changing demographic structure and aging populations. “It also creates new jobs, especially if care becomes more personalized. The real question is whether people have the right qualifications for these jobs.”

Beyond health care, Mr. McDermott said he was writing a book about his accident and what had happened since. “I’m pretty far along. I’ve already thought it through. If you spend as much time on a plane as I do, your choices are to sleep, read or write. I write,” he said, adding that he felt more relaxed, clearer and more determined since his accident. Talking to his friend, Hasso Plattner, the co-founder of SAP, about his progress and about the company’s future had helped a lot, Mr. McDermott said.

Reflecting on SAP and its transition, Mr. McDermott said, “the transformation into a service economy isn’t easy. Restructuring SAP wasn’t easy, either. But both are necessary.”

SAP remains a German company and proud of it, although it is a global business headed by an American. “This still shapes our corporate culture. We would never go anywhere else. There aren’t that many leading global high-tech companies in Germany and Europe.”

One wish, Mr. McDermott said, was that, “we should have more appreciation for the fact that SAP is a company not even the Americans can copy.” Such appreciation would give young technology companies in Berlin the faith that they too could be the next SAP. “Silicon Valley isn’t the only innovation incubator in the world. There’s plenty going on in Germany, too,” he said.

“You can’t stop digitization,” Mr. McDermott said.

 

This story is based on an interview conducted by Thomas Tuma and Torsten Riecke. Thomas Tuma is associate editor in chief of Handelsblatt. Torsten Riecke is Handelsblatt’s international correspondent, reporting on international finance and economic topics. To contact the authors: tuma@handelsblatt.com, riecke@handelsblatt.com

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