The Chief Information Officer role is changing dramatically, driven by shifts in expectations from external customers, internal clients, and business leadership. For the CIO, this means rethinking relationships with all these groups. In this episode, we talk with a Millennial CIO to learn from his perspective on the evolving role of IT.
Thomas Saueressig is Chief Information Officer, Senior Vice President, Global Head of IT Services and a member of the SAP Chief Technology Officer circle. In his role as SAP CIO, he represents the entire IT organization internally and externally and is actively rejuvenating the IT organization to become agile, user-centric and business driven with a cloud first approach. As global CIO of SAP, he is enabling new business models as well as optimizing business processes by leveraging the latest technologies and innovations while providing a modern workplace.
Thomas has vast experience in the global IT organization, having led multiple organizations, always following his vision to become a user-centric IT organization and with this not only deliver great user and customer experiences but also change the perception of IT. Starting with building up the Enterprise Mobility organization and leading all cross functions, over to heading the entire IT Project Delivery and Client IT organization globally. Prior to this, he supported Executive Board Member Gerhard Oswald as Executive Board Assistant in his daily operations and strategic projects. Thomas started his career in SAP Consulting where he successfully led multiple CRM customer projects. Thomas was named in the renowned Fortune 40 under 40 list and holds an executive MBA Mannheim Business School (Germany) and ESSEC (France).
SAP's Millennial CIO: The Changing Role of IT
Dion Hinchcliffe: Hello and welcome to the CxOTalk Episode #236. It’s a Tuesday, June 6th, 2017. We have a very special show for you, today. We have the Global CIO of SAP, Thomas Saueressig, as our special guest. And with us, we also have Michael Krigsman, founder of CxOTalk, who will also be joining us for the conversation today on the Millennial CIO: The Changing Role of IT.
I’d also like to thank Livestream for all their support in broadcasting the show. You can go to Livestrea.com/CxOTalk for a discount on Livestream. And so, let’s get going!
Welcome, Thomas, to CxOTalk. I think it’s your first time on the show, right?
Thomas Saueressig: Yes, absolutely. Thanks for having me! It’s truly a pleasure to be here with you!
Dion Hinchcliffe: Absolutely! And, Michael, glad to have you be with us today, too! It should be a great show.
Michael Krigsman: Hey, thanks so much, Dion! And this is exciting! So, this is part of your regular, every-other-Tuesday series of conversations with CIOs. And, of course, I do my show on Friday. So, Dion, thank you so much!
Dion Hinchcliffe: Absolutely! But we have such a special guest; we thought we would both have a conversation. And it goes back a while! We've done several online shows, not on CxOTalk, with Thomas. We learned his story. He’s part of a new generation of CIOs with a new way of looking at IT, a new way of looking at service delivery, a new way of thinking about working. So, Thomas, tell us a little bit about SAP, about your role you’ve been in for about a year now, and give us a sense of how things are going!
Thomas Saueressig: No, thank you! Yeah, basically, SAP is the world market leader with regards to enterprise applications. That means we want to empower companies in more than 25 industries to run that company best, meaning trust lines of business from marketing, to sales, to finance and all the others, to empower the business. And that also comes along with, at SAP, and being the CIO within SAP; I need to ensure that I support and enable the new business models of SAP. SAP is 45 years old, and we are coming from a licensed maintenance business model, and now, for sure, impressively moving to the cloud which means subscription and consumption-based. And here, we also aspire to become the most innovative cloud company in the world. And as a CIO, for sure, you need to see how to make that possible, how to enable this for SAP as a company, which has multiple dimensions.
On the one hand, how to enable these digital business models, how to make the business process. But on the other side, how actually to provide a digital workplace to the employees; how to make the users of SAP the most productive in the world. And that's certainly part of the role to enable this, actually.
Michael Krigsman: So, Thomas, when you talk about making this change from an on-premise world to a cloud-based world, tell us what is involved with that.
Thomas Saueressig: Actually, this has multiple dimensions. If you look at it from a […] perspective, in a licensed world, you have a big deal, up-front cash, and then you basically monetize it throughout the maintenance period you have. In the cloud world, with subscription, you have these massively […] revenue streams. And this is changing the entire fundamental […]. It also needs to change to a culture of sales, which we see. So, it's a lot of pressure on the sales side, but also, the same on the finance side. If you think about the difference in liquidity management and treasury, which we see, which we need to enable to make that possible. So, this change is going through the entire company end-to-end, starting with digital marketing approaches, starting with high-volume sales processes as well. And that’s exciting as well, to get new sales channels. So, SAP is also happening… We’re going into online sales, into digital sales channels, with the sapstore.com to facilitate the trial and buy process throughout the entire web experience which we offer.
And now, this is exciting from an IT perspective because if you look at it, if an end-user, a customer of SAP, is going to sapstore.com, and gets a trial, buys the solutions, all online. Basically, the idea is to make that without any human interaction. So, 100% optimized and automate the entire process. So, IT is becoming part of the value chain. And that's exciting that you're not only supporting these things but basically, you're the fundamental enabler of the technology platform to have these new business models enabled.
Dion Hinchcliffe: Right. Well, this takes this […], we’re in a new era of IT as you’re talking about it becoming its own P&L in its own right and becoming part of the business. So, what do we look at? What is the optimal role of the CIO today? The role is clearly changing, you’ve seen my writing, the things I’m talking about; you know we need to be much more customer-centric; we must be talent magnets because we need people who can build that digital future with which we'll run our business. But, what do you see in the role of the CIO? And does it change by industry or company, or is it really kind of a new perspective broadly emerging?
Thomas Saueressig: I think you’re pretty right. In the core moment in time, when you look at the technology which we have at hand, IT needs to lift the role to have this custom experience in the center of all those activities and, to talk about business outcomes. It’s not about providing a solution here or an education there. It's not about operating infrastructure. It's talking about the business outcome of the company that we can drive with our activities. And that’s a different level of discussion we need to have because…
That's also if you think about the cloud. A lot of people, if they think about cloud, talk about, "Oh, I just want to move workloads from A to B," when they talk about technologies or something like that. But fundamentally, the advantage that CIOs now have with leverage in the cloud, is that you can get rid of commodity service that you, for yourself, can focus on the whole value chain of the company.
I will give you an example. If you are in a certain industry, managing data centers, managing service and all the replacement depreciations and something like that, basically, you spend a lot of time from an IT perspective. And those kinds of topics. But these are not part of your core value chain because your core value chain is most probably having a great customer experience, having a great go-to-market, enabling new business. But it's not about the data center or operations, which means, if you now go to an infrastructure-as-a-service provider, and you get rid of your infrastructure, you basically free up mental capacity. And that's important for you that you can spend your valuable time and to keep differentiating things for the company. And it's a different kind of thing how to fuel the cloud. And that just was one example with regards to Infrastructure-as-a-Service.
The same, we have with Platform-as-a-Service and Software-as-a-Service. You need to see how you can focus your entire energy and those of your organization on core value-delivering, differentiating capabilities for a company. And that’s…
Dion Hinchcliffe: And that’s very interesting. So, it sounds like you’re a major proponent of outsourcing in somewhere, offloading in some way, the tactical aspects of IT; the lower parts of the stack, if you will; and focusing on the strategically significant bit of the business, to the core of what the organization does. Is that correct?
Thomas Saueressig: Absolutely! You need to focus on exactly this value at which we deliver as a company. And that, for sure, means, on the one hand, what I mentioned with regards to business processes, but also, never forget your end-user; your employee; who is working in your company which you want to make the most productive in the world. And that's… Because thinking about SAP, SAP has no warehouses. We don't have a large supply chain. We don't have production chains. So, in my case, if I want to increase the productivity of SAP, it's only working on improving the productivity of the employees. And that's the reason why we changed our strategy to become a user-centric IT organization. And that's a very fundamental decision which we took to place the user, the internal user, or an external user, in the center of our activities. Because, it also comes as a […] how an IT organization needs to work to serve our users in all regards, in the entire delivery process as well. And that is, I think, a very important factor as well.
Michael Krigsman: Thomas, how do you create an IT organization that is user-centered? So, in other words, when you say “user-centered,” can you drill down and elaborate what does that mean, exactly?
Thomas Saueressig: Yeah. Very good. And that’s exactly [it]. It starts already with a project initiation. So, if we talk about new projects which we deliver, we changed [to a method where] we purely talk about user stories. What is the impact we generate by the user? What is the change of how he's working in the future when we do that project? If we are not able to articulate that in a solid way, then most probably, we don't have exactly the knowledge of what we need to do. And we need to clearly can articulate that change. So, user stories, the user value; each and every single activity is key. But it also means we need to involve the real end-users, not a business operations team or our sales organizations. We involve real account executives together to validate our mock-ups, our prototypes. And this is also something which is very important. You need to make it transparent. The people need to see to understand what it means. And that means a lot of markups, a lot of prototyping, but involvement of the user to validate and give feedback along the way, in a very iterative way.
So, you could for sure, say agile will help, because you have more iterative ways to develop your application. And for sure, end-user testing is key. And again, I mean the real end-user, not the business operations team. Fundamentally, if you do approach it, you need to also ask the user afterward, after a couple of months, "Did the change we aspired to really come through?" So, the user service and the user feedback is essential for us. That’s the reason why we have regular IT client satisfaction surveys, regular employee surveys at SAP overall, but also what we did within our organization…So, each and every […] application and each and every single mobile application we have, has the possibility to drive straight feedback from each end-user directly to a responsible product owner within IT. And that means every real response that's accountable for IT gets rated feedback [that's] positive, but also negative. And that's very important that we have a straight direct, communication line from the end-user to the IT because we don't want to hide in between our buildings. We don't want to hide behind processes. We want to go center-stage to the users. We also do a lot of activities and campaigns to get the straight feedback from the users. That’s a key thing which is important for our culture; taking feedback with services.
Dion Hinchcliffe: And if you say you can put the users on center stage, and your leadership is well-known over the last year or so in talking about empathy as a key focus ... One of the things that were really interesting about the new Gartner CEO Survey is that most companies don’t seem they actually have KPIs around this. How does empathy appear at the top level? I mean [to] measure it. Do you guys have a KPI, or are you managing to that? I mean, how do you make sure that you’re actually doing that follow-up at the very end to make sure you deliver the right solution?
Thomas Saueressig: Exactly. And so, certainly, that’s something which we established in our delivery process that after each and every single project, we send out projects so it's to get feedback around it and that we, as I mentioned, have these regular client satisfaction surveys for the IT solutions.
We also have some service projects throughout the year for specific areas with high usage. And, this is something everybody has on my team in his goal settings, actually, to really get closer to the user to get this feedback and mention that very seriously. Actually, also, the specific KPIs we have around client satisfaction where we for sure want to continuously increase the client satisfaction, even if we are already actually, based on benchmarks we have, under the top 10% of IT organizations. But again, our aspiration is high to even [the] product first. Absolutely.
Michael Krigsman: And, Thomas, what are the skills and the capabilities that need to be in place inside IT to make this happen? Because, clearly, when you talk about empathy, you’re not just talking about empathy for the computers and for the wiring in the walls. There’s something beyond that! [Laughter]
Thomas Saueressig: [Laughter] Absolutely! I think the mindset is a key topic anyway for an IT organization because you need to have a mindset that people really want to help people on every occasion. Not hiding between processes, but really understanding that process is just made [so] that they actually should help people; and if they don't need [help], to treat them. So, the mindset is a key topic. But, if you talk about the roles and the skills within the IT organization, you can receive that as a change for multiple reasons also based on the move to the cloud.
So you see, actually, different roles which are now getting more center stage in the core, and between the past couple of years. So, we've certainly … We see that change. And also, what is quite exciting to see, we need more business skills in IT, actually. We need to be able to consult more and advise the business as well because if we embrace best-in-class public cloud solutions, for sure, we can do a lot of configuration. For sure, we can do some extensions and differentiating applications on the Platform-as-a-Service, like […] platform. But still, this is also that we now need to take a different role advising to the business to make it work.
And I also believe if you see the multitude of cloud solutions between […], IT is the central organization to need to make that work in a holistic way, to have a seamless integration. Because, at the end of the day, if you talk about the need to cash the process, this needs to be tightly integrated. It doesn't help you if you have spots and you can see point solutions there. We need to talk about customer master data. You need to have that straight. So, data quality is a key aspect in the cloud. And that's something, if you think about all those aspects, we need to come together. You see actually an increased relevance for the IT organization, especially in the cloud to make that work. And that’s something we’re I believe we see a push also in the next couple of months that IT needs to have a stronger role in orchestrating this entire enterprise architecture, end-to-end.
Dion Hinchcliffe: Yeah, so we heard you talk about the business, you know. We've always had this classic divide between IT and business; the IT department software in their own building in many organizations even today. But, you're [part of] a new generation of CIOs that are coming in and looking at things with different eyes. And as I hear you talk about things like the cloud that I heard you talk previously about, your belief in being responsible for stakeholder happiness, which I've never heard CIOs talk about; can you talk a little bit about your guiding approach or philosophy of IT at a high level? Where is this all going? Are we going after the cloud? Are we going to manage happiness in the end? What’s going to happen there?
Thomas Saueressig: Yeah. As you mentioned, I mean certainly … As I mentioned, I mean … Our key purpose for the IT organization is to enable SAP to become a digital enterprise with happy end-users. That’s basically the progress of the IT organization of SAP. And what you see is multiple aspects of the purpose. The one aspect that we briefly talked about is digital enterprise. What does a real digital enterprise mean? And here, I have always referred to, on the one hand, digital business process and new digital business models. And on the other hand, the digital workplace; how do people work? And at SAP, I mean, we have more than 190 locations, more than 86,000 employees around the globe and you need to bring them together and you need to connect the people because I also fundamentally believe that innovation is only happening by connecting people. A diverse set of people. And that’s where IT needs to have a huge role to make this digital workplace happen in that way, to try, actually, innovation at SAP.
On the other hand, you also heard the sentence "with happy end-users." And that means, with all our functions, from project delivery, from IT support, IT operations, all the functions, I mean, they are customer-facing. They need to ensure ... They need to have an emphasis upon the end-user when an application's not working. When something's not working, they have a huge pressure point because they also serve our customers; which means, are you really ensuring that IT organization has the empathy to serve our employees? And it needs to [be in] the best possible way because they are in a pressure situation as well. And this is a very important topic.
And, this comes along with some guiding principles, for sure. User-centricity is one principle I already mentioned, which is totally key. The next principle, which is also very important is Agile. And when I talk about Agile, it's not purely about the project methodology what Agile means, like “strong or […]". I also talk about the culture around it - from a mindset perspective, that you are adaptive to change, that you are actually positively reacting to change, and [what] change requires. And that's something, especially for the IT organization, [that is] very important because the business is a paradigm and we are in an exciting market these days with changing business models. So, we cannot just say, "Oh, we now work on this project for the next one year, and then we have an outcome." That will not work. We need to see that, first of all, we have quick results and business outcomes on the one hand, and on the other hand, when something's changing, we need to be able to react on that in a very positive way and make that also work.
So, user-centricity, Agile is key. Then, for sure, for the aspect of the cloud: That also, here, again, is the notion that we not just want to have the cloud for the sake of having the cloud. It's really about that on the one hand, quickly delivering innovations and value to our end-users, but also to ensure that we have the right level of focus and key differentiating aspects of our […] and not just on the commodities that exist by the side. That's also an important key element.
And, with those, we had leading, guiding principles. We drive the IT organization [with them], for sure, supplemented with one which should never be forgotten which is part of each and every IT organization, is that of rock-solid operations. I mean, stable operations are the key for each and every single company in the world. We need to ensure business operations. And that's the foundation where we, then, at the end of the day, build on our innovations on top of that. If stable operations are not given, nobody will thank you for the innovations because you need to get that right. And that's even more important that you have the right level of, you know, working models in place; operating models; to have stable operations so that you are going to focus on innovations, on value delivery, for your business. And that will also lift up your discussion that you have.
Also, if you think about topics like enterprise architecture, enterprise architecture is a key asset every IT organization needs to have - having a plan [for] how to transition from today's world into the new world, actually, into tomorrow. And when I talk about the enterprise architecture, this is nothing where I would reduce to any IT topic. For sure, it compromises the application architecture. But, it for sure should also have data architecture [with] roles and processes included because, at the end of the day, you want to talk about business capabilities. So, business capabilities are your anchor point where you talk about your lines of business. That's what they understand, and that's what you want to improve. Business capability. And the business capability itself is set up with different applications, data models, data points, role to fulfill this specific business capability as well as the process. And, now, you can tweak those four dimensions to improve your overall business capability.
And, this is something you also need to come into multi-year discussions with them [about]. So, if you talk about a business strategy, about a line of business, for the next three years, basically you want to see what that means for the specific business capability. And with that, you turn around the discussion from a pure IT I want to replace with an ERP system that forces them… What exactly is the business capability I am sure I want to improve? My liquidity management? My cash management? What do I want to do with real-time analytics on top of that? So, we need to go away from an application or IT-centric discussion as well.
Michael Krigsman: So, clearly, there are many, many moving parts to this. And I want to remind everybody that you’re watching Episode #236 of CxOTalk. And, we are speaking with Thomas Saueressig, who is the CIO of SAP. And, we have an interesting question from Twitter. Sal Rasa, and in a way, gets right to the heart of what you were just talking about, Thomas. And, he says, "How can IT become a hub for digital transformation internally, to make practices and processes like HR more modern and bring innovation? So, it gets right to the heart of the issue.
Thomas Saueressig: Yeah. I think that’s a great question because if you talk about digital transformation, the important piece is that it’s always coming along with multiple stakeholders. It’s never only IT alone. It’s always complemented by the various business functions, and that’s the important, key aspect. Also, each project which we do, they are business-driven. So, we talk about what do you want to achieve with the business? So, in this case, with regards to HR, for sure, you need to talk with HR about the plans for how to […] for talent, which means, how to increase the […] to get the best talent, to recruit the best talent. And automatically, you have one component: recruiting. How do you prove the recruiting in a digital world? Like, with online recruiting; like machine learning that you automatically screen the right CVs, actually, fitting to the job description. And then, you already discuss how to improve that business capability actually using machine learning for recruiting.
The next topic is for sure that you want to have an employee experience throughout his entire lifetime at a company. So, starting with onboarding, what do you do with onboarding? How do you get the best level of education right to the employee? And this is for sure complemented by [something] that they get right away: they want the best possible key setup. But here, these are the discussions, then, which need you need to have with the business organization [about] business capability [while] leveraging for sure the modern technology to support it. But also, really thinking about how you are getting leverage - like, innovations like machine learning into each and every single one of those processes to make them more efficient? And then, basically, we transform business functions; we transform the line of business that is there, and even more importantly, we also need to see the interfaces between the lines of business. If you talk about HR, it never should be only the internal organization.
We also need to talk about the external workforce. And then all of a sudden, you have global procurement as the next line of business joining again because you won't have a total workforce discussion; which means your internal and external workforce, and how you actually develop your entire organization and derive skillsets and roles. And now, you have to bridge the gap between procurement and HR to make it transparent, and also the reporting throughout the entire total workforce discussion. And here, you see, by focusing on business applications, and, as well, the interfaces to other lines of business, the IT function would actually be the glue between the entire company. And that’s what you need to recognize, and that’s where you need good people in your team to actually bridge the gaps, respectively build up the bridges between the lines of business.
So, IT, in my opinion, has a huge need, [to have a] collaborative function throughout the entire company. Because there are not many functions like HR who are [relevant] across each and every single line of business […]. So, you do see that interface as an IT organization. And now, it’s also your […] job, actually to go fix it and go bridge the gap between some line of business […]. And this is something I can just recommend to everybody: highly collaborative [role] to really join the forces with the various business owners and make that work. And again, think of the product picture across lines of business; not just HR.
Michael Krigsman: Dion?
Dion Hinchcliffe: So, if you’re talking about a very holistic view of IT, and I think that encouraging … The question was about this IT as a digital transformation hub. Let’s draw on IT and that hub: is it to cultivate innovation from the business, or is IT really supposed to lead innovation? Or is it really a partnership, and if there’s a lot of discussion about who’s going to be driving digital transformation these days?
Thomas Saueressig: Yeah. I mean, at the end of the day, if a company itself is becoming really digital, then it means that each and every single function of the company needs to be digital. And then, all of a sudden, you have a different [feeling about] the topic of Chief Digital Officers here, CIOs here, CMOs there. I think this is something where when you have the right level of maturity, I mean, everybody should have that in their DNA to think about digital. But, we are not in that moment today, which means today, for sure, there are various functions [that] push a lot of business functions into that direction, which makes sense. But, at the end of the day, it's a partnership approach, which is the key to success. So, collaboration, what I meant [before], is required.
But if you think about innovations, technology innovations like artificial intelligence: I certainly have the aspiration that the IT organization needs to try because we are close to the market. We know what's technically possible. We see that every day. And for sure, we need to look at how we could best leverage those technologies to involve it within the business processes of a company. And that's where, for sure, the IT needs to drive that innovation and discussion in the company to push the various business functions. And also, at the end of the day, with that, inspire our customers to have a customer experience which is exciting to see, because they get the right […] at the right moment in time. And again, technologies like artificial intelligence will help, and you need to try that and bring that into the company.
Michael Krigsman: Thomas, you mentioned earlier the importance of IT operations and maintaining stable systems. And so, how do you now manage to maintain infrastructure and have skill sets that are necessary in order to maintain infrastructure and do that really well? And projects; standard project management and so forth, and project portfolio management? How do you do that and at the same time maintain IT as a highly innovative force inside the company? It seems like there are very different skills and roles and requirements. How do you do that?
Thomas Saueressig: Absolutely. I mean, it’s certainly clear that as an IT organization, each and every IT organization has that challenge. And one insight providing stable systems and to create operations. On the other side, to drive quickly and agile innovations. I think this is something every IT organization is faced with. And now, I believe … And we also heard a lot about bimodal IT and topics like that. And I think, from a conception discussion, it is highly exciting to talk about a bimodal IT. But fundamentally, it's about enabling a two-speed IT architecture where on the one hand, we have stable systems, but you need to be able to [quickly] build up […] innovations on top of those. And this is something where such an architecture is the essential driver for that success.
I’ll give you an example, actually. For sure, every larger enterprise has a hybrid landscape. It has some cloud solutions and has some on-premise solutions. That's for the larger enterprises certainly as setup which is on the market. And now, you will see some on-premise systems where you have delivery cycles where you have perhaps, once or twice a year, a release. But still, you want to provide on a monthly basis, perhaps, innovations for this specific area.
What we did actually at SAP to enable this two-speed IT architecture is actually leverage the SAP cloud platform. So we exposed services from the premise system to this SAP cloud platform. And now, at that moment, I can now start building a new application on edge for these on-premises to continuously evolve this and use the stable APIs […] on-premise system. So, I can iteratively improve the applications, the experience for employees, and actually, still have the stable operations on an on-premise system as well.
I’ll give you one concrete example how we did that to make that really crisp. We had actually, at SAP, two on-premise ticketing systems. One for IT tickets and one for business tickets like for all the shared services, and for finance, HR, travel, facility management, and the like. And the employees of SAP came to me and said, “Look, Thomas. I really don’t understand why we have two ticketing solutions. I want to have one system where I can, you know, glaze my ticket, and actually, one system where I get my inbox where I get the solutions." And, quite frankly, five years ago, most companies would have probably started a massive migration project from one on-premise system to the other on-premise system; which you know you need to align the categories, you need to have some data migration. It would be a two or three-year program, and at the end of the day, you just have, you know, the outcome that you have […] for the tickets.
We actually decided against those. We [also] kept on-premise systems, but we build a new application on top of the SAP cloud platform, leveraging functionalities and business rules out of these on-premise business systems. And now, we are responsive to sign for each and every single device, and that means within the six weeks, we were able to provide this unified ticketing application with one inbox and that now, this is the starting point for an exciting journey. First of all, the employees had quickly this innovation and this great user experience with […] on each device, so only one system. But now, actually, […] our paths. So, the second step was, we used the public cloud solution, SAP Chain, where we have the knowledge database of SAP. And, employees going out to this floor application can type in the keywords that automatically get all the relevant knowledge articles that, perhaps, actually, you don't even need to create the ticket [for]. Because, for sure, the IT organization would want to try to reduce the number of tickets because as an outsource partner, I would need to pay for tickets. Which means, now we [would] combine two on-premise systems, and one public cloud solution, with this SAP cloud platform application on top. So, that was the second iteration.
And the third now was with machine learning, because in the machine learning services of the SAP cloud platform, basically, we are able to include and introduce the application in an internal round, which is just amazing from … It was also four weeks only, and now an employee is typing in a description. Basically, we can automatically determine the right category, you know? Ticket classification that we brought on the first level depending upon who is the responsible team because sometimes employees just choose the wrong category. And, we can automatically provide the right solution, which we have in our knowledge of the business as well.
So you see, we still live in a hybrid world, two on-premise systems, one public cloud solution, but we leverage this cloud platform for iterative and agile innovations in a quick way, harvesting and leveraging innovations we did actually in the past. But, the employees quickly get these innovations. And still, we have two very stable on-premise systems in the back-end for the functionality which we have in there.
And now, the exciting piece if you think about it, from an end-user perspective, you have created your applications in the cloud working on every device, where you get, every month now, innovation. So here, actually, the end-user ... He or she doesn't know what the back-end system is anymore. And now, it's actually IT who can charge, "What do we do now with migration? Do we wait? Do we migrate to a public cloud solution at some point in time?" But that's decoupled from the user. And that's also giving us a good position in our enterprise architecture discussion on how we handle it. Because from a user perspective, we solve the issue, and even more, we are giving innovations now on a regular basis to the end-users based on the agile two-speed IT architecture that we have. And I think that’s a great example where such an architecture can help on the one side, stabilize operations; leveraging investments; but also having this possibility for quick innovation on top, which is essential because nobody will wait for IT. We need to be quick. If we are not able to show quick innovation, for sure, the line of business will ...
Dion Hinchcliffe: Absolutely. I did a CIO survey, which in fact, you recently participated in, and we clearly saw 96% of CIOs are either under significant or great pressure to move faster. But, when we look at how to do that, I mean, you mentioned siloes earlier on in our conversation. And, you know, we've had IT around for nearly 40 years, and we've been having the silo conversation from the very beginning. How does a CIO cultivate the right business relationships? What advice do you have? I mean, you talked about procurement. You talked about HR. You talked about accounting functions, time to cash, and lots of other interesting things that touch into the different business areas. How are you pulling them together? What would you advise CIOs to do to get better at that?
Thomas Saueressig: Yeah. I think the most important advice is most probably that you shouldn’t care about the recognition because I believe that we can achieve so much if just avoid the discussion about the recognition for success because it's a show and game. And if you actually help the business users and the business owners to shine, and to have success, they would love to really work with IT because they know that actually, they are better off with working together with IT. So, that's a very important topic and dear to my heart because, at the end of the day, it's about the user, it's about value for the company which we deliver, and not about individual successes. And that's the first, very important aspect.
And the next aspect like this: You need to be proper. You need to be able to connect multiple people in the organization. And by connecting the people, you need to show that they are all … that the sum is more than the parts. And, that’s something which is very important to translate, actually, to your business owners as well. So, the key aspect, and again the recognition aspect from a psychological aspect that you should not forget. And, I think IT can be a great enabler for that. And, they will highly value and appreciate your support, actually, in making them successful, because refer to what I said in the beginning. It's about the business outcome, and that's what we should have in your mind with that way from an IT perspective; that the business is successful with what they do with the end-customer of SAP; or, in this case, our business units; is more successful. It's not always about the success of IT. That is always the wrong discussion. It's always the success of the business.
Michael Krigsman: But, Thomas, does the business also need to learn how to relate to IT in a new way? Because, the business, historically, has looked to IT to be that kind of services provider of technology. So, what does the business need to learn?
Thomas Saueressig: I think multiple aspects. I mean, certainly, they need to learn that in a new world, when you see all that technology and innovation, that it is a digital world, nowadays. And that means you need to get out of traditional thinking morals to see how can each and every single company in each industry now really become digital? And that again is going throughout the entire organization, from marketing to sales, down to the support organization, finance organization; and here, IT plays a fundamental role in enabling that. And each and every line of business needs to understand that, again, it's only working together with IT also across boundaries to make that work and to leverage these new technologies, and also new thinking about it.
I mean, the IT organization also needs to provoke a discussion within the company to say, "Look. If we now take this, why can't we enable this digital channel for our company? Why can't we provide a different level of support? For instance, why don't we have a social support? Why don't we have chat support?" And actually, by the way, when we have support, why can't we use chatbots, actually, for the first level in a large way? So, [we are] dealing now with these new technologies influencing the core value chain in improving those [channels]. And this is something where for sure, with the technology we have, you can go into these value chain discussions and improve that end-to-end. And that's what you actually need to do, and the business needs to acknowledge that without the help of IT, it would be a very difficult option.
Dion Hinchcliffe: Yeah. That makes a lot of sense. And, yeah, so this is … All this conversation takes us to the evolution of the cloud, the push for innovation and digital transformation, and it really brings us to the question of where does the traditional operating CIO go as opposed to innovation-driven or digital CIOs who are focused on the forward-looking aspect of it? We know that 80-90% of the CIO budget goes to operating what we call "Legacy Mountain," right? All the things that we build up, […] in most organizations, literally hundreds or even thousands of legacy applications which are important, but as you said, they're really becoming tech where that’s something you should figure out how to offload in some way. What’s the future, you know? If we’re looking five or ten years ahead, where is this all taking us?
Thomas Saueressig: Yeah. And I mean, you are spot-on. Certainly, every year, we need to work on getting out of the operation or […] into an innovation-driving function. Otherwise, you become irrelevant because somebody in the company will take that role because no company can wait. You need to innovate consistently, and you need to have an IT organization who can do that. So, if you focus too much on … Or, if you only can focus on operational tasks, then you are doing something right. And you mentioned it: If you talk about the move to the cloud, then certainly, this is about offsetting some of your commodity services to providers. So, if you talk about infrastructure, pieces move to the infrastructure [of the cloud.
If you talk about a certain commodity service, which you have on-premise systems for, put them into public cloud solutions. Invest in cloud Software-as-a-Service solutions so you don’t need to worry about those anymore. And you orchestrate this. And then, with the freed up capacity and resources, you can again turn them into focusing on the core value chain and differentiating capabilities, and you need to do that. You also need to be able to work on functions in your organization, really working on enterprise architecture, innovations; really keeping the focus on the latest and greatest innovations doing some proof-of-concept, and to see how this could influence the existing distance operations. And that's something which is important, and you need to be able to do that. And, moving to the cloud on all the different layers will actually help you in this journey.
And that's what I mentioned in the beginning. You need to get the mental capacity of your organization focused on the key topics, and not commodities. But for sure, there's a lot of work. You will have hybrid scenarios along the way, because in the next couple of years, by using something like this SAP cloud platform as an agile innovation platform, these are elements which will make you successful because you can continuously innovate and on top of those, leverage the latest and greatest technology already along the way - because you also need to gain time. And that's the important piece as well because this is not a transition from day to the other, but you also don't have now three years where you say, "Now, I have three years [to] clean up my enterprise architecture." Nobody has that time because the competitor will already have passed you in three years, which means, you need to see how you can have this quick innovation value and in services on your organization as well. And again, you’re right. I mean, if you don’t live up to this innovation and master each and every relevant role from an IT perspective, somebody else will take that.
Michael Krigsman: Thomas, we have about two minutes left. So, just in one minute, you’re a Millennial CIO. You’re one of the few Fortune-500 Millennial CIOs. And, does that come into play, just in one minute? Is that relevant? Does that come into play? What about that?
Thomas Saueressig: I think actually, if you talk about Millennials, it’s not about age. That’s very important for me. It’s not about age. But, it’s about a different kind of mindset and thinking which is coming into the workforce, and you need to ensure that with the services due to arrive, that you have a different level of how you serve your end-users, how you serve your customers, how you want to deal with innovation, how you want to actually adopt innovations in a quick way. And this is something where a Millennial, for sure, has a huge interest to get the innovations out of the door; to get the close user feedback; to have new ways of working. I mean, if you talk about how people want to work in the future, for sure, this is something where we need to provide greater answers to have this digital workplace; to be able to work everywhere, anytime, where you are, and in the best possible way. And these are topics where I believe a different mindset is now coming into the organizations, and that’s the prime factor. But, it’s not age.
But for sure, I believe the new workforce which we see will change how companies function. You need to think about different leadership skills; how you lead, actually. Millennials and actually, the grown workforce with that mindset … And this means, yes, from a mindset perspective, there’s a lot of topics where I believe there will be a huge push into each and every single level of the company.
Dion Hinchcliffe: That was fantastic! Thomas, we really appreciate you taking your time to join us today on CxOTalk and sharing your thoughts on how IT is evolving, how we’re connecting the business and IT, becoming more agile, moving to the cloud; so that was a fantastic discussion. And you will be able to see this on YouTube in a few days. And we would appreciate your time. Michael, do you have any closing thoughts for us, today, as we talk to the CIO that’s […]?
Michael Krigsman: I thought it was so interesting, Dion, to hear the way Thomas thinks about placing the customer as the reference point. And, it’s not just language, but he has built up the IT operating model and the enterprise architecture all thinking about that. I mean, don’t you think? Isn’t that interesting?
Dion Hinchcliffe: I think it's unique with respect to how he's connected a very direct line between the customer and the way IT operates. And, not just during the initial process of engaging the customers, because this is the old requirements […], but all into the very end of the afterword saying, "Did we do the right thing?" So, I think that kind of … That's real customer-centricity and I agree that coming up with the enterprise architecture behind that is really the hallmark of I think the next generation of IT.
Michael Krigsman: And of course, we’re talking about IT. We’re not talking about the marketing department. We’re talking about IT in exactly the same language that the marketing department might speak about their relationship with customers and end-users as well.
Dion Hinchcliffe: I think it’s a very consumerized view of IT, and that’s the future. And, I always enjoy talking with Thomas. He has a very fresh perspective; a different one than we’ve heard before. I love this discussion about happiness and the whole message around empathy. It’s the right thing and it’s hard to actually do. It’s always been hard to do in IT and we’re seeing now a sign that it can be done much better than it has been. So, very good start.
Michael Krigsman: Well, clearly, there’s a lot more to talk about. So, Thomas Saueressig, thank you for joining Dion Hinchcliffe and me for Episode #236 of CxOTalk today. Thank you so much, Thomas.
Thomas Saueressig: Thank you!
Michael Krigsman: And Dion, I’m the interloper on your Tuesday CIO show, so thank you for allowing me to interlope, as they say. [Laughter]
Dion Hinchcliffe: Always a pleasure, and really glad you can stop by, Michael. Thank you for coming.
Michael Krigsman: Everybody, we have another show on Friday and tune in. And, come back. Take a look at CxOTalk.com/Episodes to see the always current schedule. And while you’re at it, you should “Like” us on Facebook. [Laughter]
Dion Hinchcliffe: [Laughter]
Thomas Saueressig: [Laughter]
Michael Krigsman: Thanks so much, everybody. And, have a great day. Bye-bye!