Vishal Sikka on SAP’s Challenges, Futures, and Realities

The odds of sitting down with a senior executive of a major technology company and being surprised and enlightened are one in a million because typically they sit down with a prepared agenda and, with the benefit of years and years of media training, religiously stay on message turning every question back to the thing they want to talk about.

On Wednesday Vinnie Mirchandani, Oliver Marks and I sat down with my old friend Vishal Sikka, CTO of SAP at the Fortune Brainstorm Tech event in Pasadena for a discussion that was free wheeling and definitely without the benefit of a script, meaning it was actually interesting. The fact that Vishal is one of the smartest and most level headed people you will ever have the privilege of meeting no doubt played a big part in why our lunch meeting was so engaging.

Vishal has a tough job because he is responsible for charting the technology roadmap for a company that prides itself on being innovative yet is faced with the reality that their customers want stability and continuity. In Vishal’s own words, SAP’s customers want the company to be like a night watchman who ensures that everything is safe and secure when no one else is watching.

At the heart of this night watchman metaphor lies the fundamental criticism levied against the company, and others like them, which is that despite their vigorous pronouncements to the contrary, the fact is that they won’t change, dramatically lower the cost of their solutions, or embrace third party offerings that are better than their own products. I am sure that there is some truth to this but like other mature industries with a small cluster of dominant vendors, I’m not sure it really matters to customers.

The problems that SAP, Oracle and Microsoft are solving are complex and massively consequential; Vishal made the comment that SAP is at the center of more global trade than any other company on earth and I have little reason to doubt that but with that realization comes significant responsibility that goes well beyond the legal dance called compliance.

The financial industry is the ultimate example of a modern industry that exists because of technology, the ability to exploit information latency for profit as a result of massive processing capacity and well honed software algorithms… but with that immense power the ability for the oldest of human motives, greed, to corrupt is exponentially greater than at any time in history and we now live with what feels like ritual boom and bust cycles as a result. Ironically, we now have a new class of financial software applications that act as circuit breakers to essentially slow down automated trading that can wreak havoc in a market on any given day.

When I confronted Vishal with the above observation and applied it to supply chain rather than financial markets he acknowledged the problem and made an interesting that global trade is a great human equalizer and when nations intertwine economically they are inherently less prone to making war with each other. His point is valid, that whatever damage any bad actors can do with technology, the benefits far outweigh the downsides, a fact that is hard to disagree with.

In the years ahead I think I am on solid ground in suggesting that companies like SAP will come under increasing scrutiny to provide not only full compliance offerings and features, but also overarching transparency that exposes more of the underbelly that all organizations have.

The point about transparency is something that Vishal brought up in our conversation, his exact quote was “radical transparency that reinforces clarity of purpose”. The question that prompted this was based on the observation that unlike Oracle, SAP has always been obsessively consensus oriented, which is really difficult to sustain when involving innovations that have the result of reducing the power of individuals who are expected to grant consensus.

In such an environment how do you breed a generation of leaders who balance risk, customer expectations, commitment to excellence, and financial returns against their own personal agendas? I don’t think you do but Vishal made the point that it’s essential to not forget where you come from, which is just another way of saying you have to always keep in the forefront what your core business is and what it is that has made you successful in that over the years. This ties back to the night watchman metaphor because Vishal is right to assert that SAP’s customers don’t want them chasing every new trend that emerges, in the process foisting upon them disruptive and expensive change for benefits that are still largely promises.

What this does mean is that SAP can often be late to the party or resisting of developments that others have pioneered, but that tradeoff doesn’t seem to bother Vishal very much. A potentially more damaging consequence is that because, as has been said before, “when you are SAP every new market is a niche” and that allows oxygen for other companies to develop offerings that shape the market to SAP’s detriment. I don’t think SAP is alone in this regard, the same could be said of Microsoft, but the question must remain at the forefront of Vishal’s thinking as he is responsible for all of the self-described innovation groups at SAP.

It really is a treat to talk with Vishal, there are few people in his stratosphere who bring his smarts, rational perspective on the market, and most of all, a confidence in what he is good at that never crosses over to arrogance.

PS- I have more notes that cover Vishal’s thinking on cloud computing, the analytics market, enterprise 2.0 technologies, and much more. Rather than cover everything in one post, I will follow up with several posts on each topic.