Bill McDermott

SAP's American Dream

  • Why it matters

    Why it matters

    SAP has become so successful that it is now snapping at the heels of U.S. market leaders Microsoft and Oracle.

  • Facts

    Facts

    • Bill McDermott took over as sole chief executive of SAP in May 2014.
    • This year, SAP expects to log record net profits of €3.6 billion – 16.5 percent more than last year.
    • Since May 2014, the firm’s share price has risen 47 percent to more than €80 per share, helping it claim the top spot on the DAX index.
  • Audio

    Audio

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Bill McDermott, SAP AG
Bill McDermott has been at the helm of SAP since 2014. Source: Marc-Steffen Unger for Handelsblatt

Bill McDermott is tired of answering questions about the accident that almost cost him his life. It’s been almost one and a half years since the chief executive of software company SAP fell down a flight of stairs at his brother’s house, landed on a water glass and nearly bled to death.

Doctors spent months treating him, yet for all their efforts they couldn’t save Mr. McDermott’s left eye. Now, a pair of dark glasses hides some of the damage, but the scars on the left side of his face down to his neck are still visible.

“I’m alright. I’m a fighter,” Mr. McDermott said when asked about his injuries.

He plans to reveal the events that led up to the accident and his recovery in a new book. The SAP boss likes to tell stories, especially success stories. When he has time, he sits down at this laptop and writes – usually during long flights around the globe on his way to visit customers.

Mr. McDermott travels a lot. He spends more than half his time working outside the company’s headquarters in Walldorf, southern Germany. Usually, he’s with customers, spreading the word about Europe’s largest IT business. And his tireless efforts have paid off – SAP is more successful than ever.

Mr. McDermott is a firm believer in the "American Dream," the notion that even a dishwasher can ascend to become a millionaire.

Under the American’s leadership, SAP has not only fundamentally reworked its classic business of licensing software to tens of thousands of companies around the world. It has also grown its cloud computing unit into a profitable area of operations that generates 15 percent of the company’s overall revenue, a number that is only going up. On top of that, SAP’s many acquisitions, notably the purchase of Concur Technologies for more than $7 billion (€6.7 billion), have proven to be worthwhile investments.

The success of the new strategy can be easily quantified. This year, SAP expects to log net profits of €3.6 billion, a new record. It would be 16.5 percent more than last year, when the company raked in profits of close to €3 billion.

Investors have reveled in the firm’s soaring profits. Today, SAP is the most valuable company listed on Germany’s blue-chip DAX stock index, valued at around €100 billion. In the past few months, SAP overtook two other titans of German industry, Siemens and Bayer, to claim the top spot. Since Mr. McDermott took office on May 21, 2014, the firm’s share price has risen 47 percent to more than €80 per share.

It’s no wonder that the SAP boss’s contract was extended early this year. It wasn’t only a clever attempt to dispel any rumors about the executive’s medical condition after his accident, but an unequivocal display of confidence. SAP founder and chairman Hasso Plattner depends on his chief executive. This isn’t only because of the company’s financial success, but also because Mr. Plattner and Mr. McDermott have known each other for many years and appreciate one another.

Fourteen years have gone by since Mr. McDermott’s first day at SAP – an eternity in the fast-paced world of IT. Bill, as he’s known within the company, first joined SAP as the chairman of its branch in the United States, SAP America. He oversaw operations in the U.S., Canada, Latin America and in the Asia-Pacific region. It didn’t take long for his talent for sales to be noticed by the company’s leadership in Walldorf, which promoted Mr. McDermott to head of global sales and gave him a seat on the company’s board.

The ambitious American’s career, however, didn’t stop there. He later took over the role of co-chief executive with Jim Hagemann Snabe, before taking over the reins completely in 2014. In the meantime, SAP has become a serious competitor of the US technology giants Microsoft and Oracle.

Mr. McDermott’s career trajectory may have reached lofty heights, but his life story had very modest beginnings. He grew up in a working-class family on Long Island, New York. His father earned his living as a maintenance electrician at the New York utility company ConEdison. It was he who taught the younger McDermott to trust in his own abilities.

That skill was put to use when Mr. McDermott founded his first company, a delicatessen, while he was still at school. He used the profits from that early venture to pay for his college education. Independence, financial freedom, economic success – those are the driving forces that have defined Bill McDermott from early on. He is a man who succeeds of his own volition – a fighter.

Mr. McDermott has come to feel at home in his adopted home country of Germany. He loves the country and the people, just not the language. It’s one of the few challenges he never bothered to accept. The world of Bill McDermott – one populated by programmers and software developers – speaks English. That’s why he never seriously tried to learn the German language. He understands individual words in German, but he relies on his mother tongue if he needs to hold an important speech. “I can articulate myself more precisely in English,” he said when asked about his lack of command of the German language.

It’s not as if speaking German is part of his job description. SAP has become such a global company with thousands of foreign employees that German is only rarely spoken there. But Mr. McDermott has an appreciation for both German and American culture.

“I tell the Americans, ‘You need to be more like the Germans.’ And I tell my German friends, ‘Take a page from the Americans.’ If you combine German engineering and American marketing, you get a powerful mix,” he said.

When Mr. McDermott is in Germany and has time, he likes to have guests over. His home, a modern villa in the city of Heidelberg, offers visitors a sweeping view of the Neckar river and Heidelberg Castle. At a recent barbecue, Mr. McDermott proved himself to be a charming host, remembering the names and backstories of every guest and making conversation about topics other than SAP.

He engaged people in discussions about the challenges of digitalization, the consequences of Brexit for Europe and the grand coalition in Berlin. He only mentions his access to German Chancellor Angela Merkel if asked. He’s not one to brag.

Growing populism in Europe is as much a cause for worry for Mr. McDermott as many countries’ high unemployment rates.

“Governments need concepts for how they can integrate all of their people into modern economies. In order to do that, we need a strong commitment to education and training. Companies play an important role in this,” he said in a recent interview with Handelsblatt. “Young people” in particular must be supported.

Mr. McDermott is a firm believer in the “American Dream,” the notion that even a dishwasher can ascend to become a millionaire. For him, it’s painful to watch as the middle class in the U.S. gradually disappears and only the children of top-earners are granted access to higher education. The way the SAP boss talks about certain issues, it’s no wonder his friends think he’d make an excellent politician.

The thing that stands out most about Mr. McDermott is his optimism. It’s not that he’s unrealistic or naive, he just always sees more opportunities than risks. This is one of the key differences between him and other top executives – that and his willingness to talk about his personal life on social media.

“Celebrating our 25th anniversary with my wife Julie, the woman of my dreams. No bond means more to me. Love makes life worth living!” he recently posted on Twitter. The man knows how to tell a story.

 

Sven Afhüppe is the editor in chief of Handelsblatt. To contact the author: afhueppe@handelsblatt.com

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