Since February, SAP spent nearly $8 billion buying a stake in the cloud.That’s between its $3.4 billion purchase of SuccessFactors, closed in February, and its pending $4.3 billion acquisition of Ariba.
Business Insider talked to SAP’s Sven Denecken, Vice President of Strategy for the cloud, and one of the people involved in the acquisition of SuccessFactors. He now reports to SuccessFactors’ CEO Lars Dalgaard, who is on the SAP board, running the company’s new Cloud Business Unit as well as still CEO of SuccessFactors.
SAP has a long history of struggling with cloud computing. But SAP knows it must change that.
“These acquisitions are all about speed, not about consolidation,” he said, telling Business Insider that SAP will not have big layoffs for either SuccessFactors or Ariba. “No that’s never our intention.”
Denecken also told us:
- SAP has 17 million people using its cloud, 15 million on SuccessFactors.
- The other 2 million are spread across on a handful of other clouds including its Business ByDesign, and its “platform as a service” cloud, NetWeaver Cloud Portal.
- SAP knows its traditional sales structure has to change for cloud to succeed. Traditional software is about getting a contract signed. Cloud is all about keeping the customer happy so they keep paying that monthly bill. That’s why it formed a separate unit within SAP and will let SuccessFactors and Ariba run as separate companies.
- Some 4.500 employees report to Dalgaard today and some 2,400 more will be added to SAP’s cloud payroll when Ariba closes.
Here’s an edited transcript:
BI: SAP had traditionally struggled with cloud. What’s different now?
SD: I come from ERP world. I tried to implement cloud before here at SAP. What did we do different this time? No. 1 , we made some clear organizational changes. We developed our own board area for cloud where all field-facing functions like, sales, marketing support, and all engineering functions, like product management, development and service and data centres, are under a board area and Lars Dalgaard is our leading that. We are 4,500 people under the leadership of Lars.
We have exactly addressed those concerns that we need to have an autonomous business unit, but we don’t want to be independent. We can also leverage every basic tech trends like mobility, in-memory, analytics because SAP has those already.
BI: Where does Ariba fit in?
The same. We want to preserve the DNA. This is a very interesting area to us with business networks. Business networks are the inter-combination between enterprises. That is something that we support many enterprises already, but the network effect, that is what Ariba is going to bring. We’re going to do the same, keep it in tact and leverage every tech out of SAP like HANA and others.
BI: So no big layoffs when the Ariba deal closes?
SD: No not at all. More than 250 [employees] moved from SAP to the cloud business unit to support SuccessFactors ot build 10 times faster than they did before. Where you find so much talent in such a short time?
BI: There’s been some reports that SuccessFactors wasn’t in great shape when you bought them. How are going to get it there?
We have made a very clear decision to communicate the cloud numbers at SAP. We do that in full confidence that we are sticking in our goals, which is $2 billion in revenue, in the cloud are by 2015, including acquisitions, and to have profitability in the cloud business.
SuccessFactors had 3,500 customers [when we acquired them], only 120 were SAP customers. Just imagine having more than 200,000 customers at SAP what the leverage is [to acquire new SuccessFactors customers]. You don’t have the same cost of sales. Its just another example where 1+1 = 3.
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