Back to Basics

In a Complex World, an Appeal for Corporate Clarity

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  • Why it matters

    Why it matters

    Reports suggest that 90 percent of executives think businesses are too complex. Here, the new CEO of software maker SAP, says that companies can please both staff and customers if they streamline their use of data.

  • Facts

    Facts

    • SAP, the world’s third largest independent software maker, has annual revenues of €16.82 billion.
    • The company is based in Walldorf, Germany and employs 66,500 people worldwide.
    • SAP works with the German football team and top club Bayern Munich on sports analytics.
  • Audio

    Audio

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I often think back to the week I moved to Heidelberg. The night I arrived, the German national football team defeated Brazil 7-1 in the semifinal of the World Cup.

The streets were jammed with fans, some of whom even congratulated me. They must have sensed my honor to be the CEO of SAP. Their enthusiasm was contagious and I shared in their celebrations.

We all know what happened next: Germany went on to win an historic fourth World Cup. It occurred to me that, in part, the team was successful because it kept things simple.

I love football and, while I still have much to learn about match strategy, I do understand its complexities. The German players worked extremely hard and studied their opponents thoroughly. They didn’t try to do too many things with the ball.

While it is easy to speak about simplicity, it’s hard to deliver in practice.

They won because they focused on the right things and played with discipline, dedication and passion. I believe focusing on the right things, working as a team and keeping things simple were key to becoming the best football team in the world.

The same simplicity needs to be widespread in business – a focus on the things that really matter. But while it is easy to speak about simplicity, it’s hard to deliver in practice. In my recent meetings with global industry leaders, one of the biggest complaints has been about pervasive complexity.

Executives say business is becoming more complex and, significantly, no one knows who is accountable for what. As information technology has become more widespread, it has brought about an explosion in the number of platforms and software tools.

Businesses often need to use different combinations to develop models. This results in rising costs, and it stands in the way of growth. Companies are not able to understand their customers as well as they need to, and processes become inefficient because data is compartmentalized.

That data is not being analyzed, leading to decisions based on assumptions rather than decisions based on insights.

I totally understand this challenge. Like any Chief Executive Officer, I want to focus my time and energy on the things that matter most, not on needless complexities. Research by The Economist suggests that 90% of executives believe business is already too complex and that complexity is getting worse.

We need to defeat this kind of complexity. We need to run simple.

Consumers are on our side in this fight. Reports show that they are 75% more likely to recommend brands that are associated with simplicity. A significant number said that they would even pay more for products that are simple. And “simple” companies have been rewarded by the capital markets, outperforming their peers by 100%. So there is a clear business case.

But “running simple” is more than a slogan or a business objective. It is an organizing principle that must galvanize CEOs and their teams as they eliminate unnecessary complexity and restore growth as a priority.

Reports show that customers are 75% more likely to recommend brands that are associated with simplicity.

Today we know that customers can do business pretty much however they choose. In person, via phone or on a device are all viable options to transact business of almost any kind. So if we want to make the customer experience simpler, we need a single view of each customer regardless of how they choose to do business.

This isn’t about getting e-mail addresses to spam customers with endless marketing gimmicks. It’s about respecting their choices and better anticipating their needs.

At SAP, our vision is to help the world to run better and improve people’s lives. We know that this vision will never be fully realized while organizations are stymied by complexity. So in essence, a better world is only possible in a simpler world.

Technology can and must be part of the way forward. For example, it’s time to get data out of silos and integrate it into one data model, one application platform and one beautiful way to use it for every specific industry. This is what my fellow CEOs expect from a leading software company: to help them to turn mountains of data into actions – just like the German football team did at the World Cup.

CEOs expect powerful tools to make sense of data so that they can solve complex business problems and better understand millions of consumers. SAP HANA, the standard in-memory (non-disk storage) database platform in the industry, was developed to meet this exact need. It allows firms to simplify, predict and develop new business models in real time.

It also enables business applications that only a few years ago weren’t even possible. Today, over 1,700 startup companies are building these next-generation applications to shape the future of customer engagement and the future of work more broadly.

Every organization has athletes on the field who always want to do better. Those athletes – or employees as they’re called in most businesses – want real time feedback on their performance. SAP HANA gives them that. In the same way teams want to connect with fans, businesses want to connect with consumers.

SAP technology gives them a great way to connect via context-aware mobile applications (those that can “sense” their environment), regardless of the device they use.

It’s no coincidence that I keep coming back to the German World Cup victory. I am very proud that SAP made a contribution towards the thrilling win by creating software that crunched data recorded by in-stadium cameras to help players and coaches understand specific areas for improvement.

In the same way teams want to connect with fans, businesses want to connect with consumers.

The coaches often used mobile devices to easily access the data in-between matches. Powering this was SAP HANA, which crunched thousands of hours of footage into simple but powerful analysis.

As well as working with the German national team, we are helping the country’s top club, Bayern Munich, to expand its global presence, and manage its players’ fitness. Our approach is to simplify the process so that the club continues its winning ways and players have a fulfilling experience. At the same time, our tools will help the club to connect meaningfully and seamlessly with fans on their mobile devices.

This goes well beyond football. We are replicating breakthroughs like this across multiple industries around the globe.

Running simple doesn’t mean being simple-minded. No one is suggesting that the designer of a commercial airplane or the latest high-performance automobile should do away with advanced engineering. But as Leonardo Da Vinci once said, “simplicity is the ultimate sophistication.”

If you look at some of the world’s most successful businesses, they embody simplicity in some manner. In Germany, the Mittelstand (small- and medium-sized German businesses) thrives because a Mittelstand company focuses on a particular area. This focus and engineering excellence has helped them to become unbeatable.

Today, managing complexity is at the top of many business people’s agendas. All of us at SAP are totally committed to making the business processes, the technology and the customer experience simple. As I learned in the streets of Heidelberg after the World Cup Final, running simple makes for championship teams and very excited fans.

Bill McDermott’s column appears once a month in Handelsblatt Global Edition. To contact the author: gastautor@handelsblatt.com

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