McDermott was in Mumbai recently to attend the SAP Summit 2008, SAP India's three-day annual business and technology forum. In a conversation with Aanand Pandey, McDermott discussed India's role in SAP's global market strategy. He also spoke about the attributes that have helped him drive the company through the expansion phase. Edited excerpts:
Where does India fit into your company's strategy?
India is the fastest-growing market in the world for SAP. We are looking at it as a centre of innovation and co-creation of value for our clients. The real interest in India is to find the next practice. To find the unexplored innovative idea - one that can change the game. We plan to use India as an incubation engine of innovation for our entire company.
Can you give us examples of innovations being developed here?
We started the outsourcing of value engineering to India a few years ago. The idea was to analyse the business functions of companies operating in 24 distinct industries, come up with a performance matrix and inculcate that analysis into everything that we do, not only in the US, but in Europe and Latin America as well. We used the intellect and the superior talent that we had in India to help us scale this company.
Another example of an innovative idea taking shape here is the "partner ecosystem". There are big Indian companies such as Satyam, HCL, Wipro and the Tata group that have standardised their business processes on SAP.
We are building composite applications on the top of their or their partners' existing SAP platforms. We are doing it when they want to change, for instance, their channel strategy or extend their supply chain. We are co-creating value with them as a trusted advisor.
Even if it means deploying Microsoft's or Oracle's application tools?
We are not in a technology war. We are in co-creating value for customers. We are working with Microsoft in enabling value creation with Duet, a program that combines Microsoft office applications with SAP enterprise applications. I got a call this morning from a client in India who wanted Adobe Interactive Forms to be embedded into his SAP applications. These co-innovations are good for the customers and it's good for us, because the platform holding these applications together is SAP.
You are credited with introducing the European long-term view of the market to SAP and combining it with the American market-driven strategy. Consequently, SAP applies the integrated European-American best practices to all its markets. This makes
Indian IT professionals working locally feel distanced from major policy decisions taken at SAP headquarters. Comment.
I still stand by the idea of leveraging upon the European way of building long-term account relationships and the American customer-driven strategy. What we have in India is an add-on to that. This is the value creation centre of the world. One might have the maturity and the professionalism of an end-to-end account plan.
One can also have the marketing, the excitement and the inspiration of the American way but here one has the benefit of building the value-creation centre of the universe. I tie these things together by looking at India as an incubation hub. This can be replicated in west Asia, Africa, Latin America and other fast-emerging markets.
We craft an enablement model that can snap into the other markets all over the world. So it starts here and moves rapidly to other places. What's going to change is the paradigm of creating things elsewhere and bringing it to India. The value is getting created here in India and now its moving to the rest of the world.
Could this be a factor behind the SAP's recent announcements of investing around $30 million in emerging Indian firms?
That's one of the reasons, definitely. We have a few companies on the radar that we are looking to invest in within the next 100 days or so. We think that there are some big ideas here that can go into our platform. But what I am talking about is something bigger than this. I am talking about something transformational.
It's about how SAP looks at becoming a truly global company. It's about implementing models that have been created here in the other markets of the world. If the model has proven to work here, I believe it can work anywhere. A formal blueprint of this process should evolve in the next 6 to 12 months.
You have the mind of an entrepreneur. It is said that you bought the delicatessen store you worked at as a teenager with the money borrowed from the owner. Does the entrepreneurial bug help a CEO do things better?
Having to head a business can teach great lessons to a CEO. For one, it makes you humble. It makes you understand that the customer alone can determine whether or not you are going to have a job. So you understand quickly that customer is king. The second thing you understand is that you have to segment your market. You can't be all things to all people.
The delicatessen business taught me to identify different segments of market. There were high school kids, the blue collar workers and the senior citizens and there was a whole business model at work around them. Similarly, in SAP, I know the industries we focus on, I know the market segments that count on us. We understand the value proposition, how we are different than the competitor.
The entrepreneur is endlessly curious. He will not give you copybook answers. He is in constant search of all the things he can do better than others.
