SAP Email Sheds Light on Cloud Computing Strategy

By Reuven Cohen

An interesting leaked email from a senior SAP executive has been making the rounds today. It was posted last week by Michael Kroker a Journalist & Blogger at WirtschaftsWoche, a German business weekly.  The email was written on May 5th by Lars Dalgaard, an out spoken Founder and former Chief Executive Officer at Successfactorsa company SAP acquired  last year  for $3.4 billion.

The email is made all the more relevant with today’s news that SAP will buy Ariba for $4.3B and does a great job of shedding some light on the state of cloud affairs at the software firm. Aside from the fact that SAP has been making some big money acquistions the email also provides some insight into its integration processes.

A few hightlights include;

SAP has a real opportunity to become the no. 1 Cloud company in 2015, 3 years

  • SuccessFactors an SAP company is 7% ahead of plan, and did about $100M in the last quarter which was 59% growth.
  • AP OD Operating margin – 64%
  • SuccessFactors Operating margin +83%
  • In 6 weeks, deployed ALL of SAP’s On Demand solutions across the SuccessFactors’ infrastructure

The full email via Michael Kroker

From: Dalgaard, Lars

Sent: Samstag, 5. Mai 2012 04:42
To: SAP Cloud
Subject: Cloud Strategy and next org

SAP has a real opportunity to become the no. 1 Cloud company in 2015, 3 years from now, measured by the net promoted impact and excitement we bring to our users the totality of relevant easy, and both expected, but also first to market applications the total sales volume of our business


It’s been a little less than 3 months since the SAP acquisition of SuccessFactors finalized and more than a month that the OD Dev and Data Center operations and support team reports formally into the One SAP Cloud, and about a month that the OD Sales team reports into One SAP Cloud.


We now have over 5,000 colleagues in the Cloud business. I have met all leaders 3 layers down, I think, and shaken as many hands in Palo Alto, and St. Leon Rot as there were working the times I was there walking all the hallways. It’s clear we have some extremely smart, very experienced super-strong people, who are dying to lead, and to be lead and who have a lot of aspiration and burning desire to make SAP win the cloud, and make customers fantasize about our products.


Not enough.


Not enough.  Not on plan for the year in any area of the OD products.  SuccessFactors an SAP company is 7% ahead of plan, and did about $100M in the last quarter which was 59% growth.


Too much for our sales and customer level, we need to start selling a lot more relevant and competitive product.

  • SAP OD Operating margin – 64%
  • SuccessFactors Operating margn +83%

Yes that’s a minus (-) and a plus (+) we have some work to do to get our sales to cover our expenses

Next Steps

  1. We need less products, and focus more of our great people, from development to sales and customer support, on fewer products that can compete now, and sell now.
  2. We need to do to make SAP credible, then we can become relevant, and competitive in the Cloud. Then we can accelerate pipeline, and then excite customers, close a lot of business, then implement it in weeks, not months, and mass import and integrate data and make the client successful, renew and upsell .


I am so proud to say that in 6 weeks, we have deployed ALL of SAP’s On Demand solutions across the SuccessFactors’ infrastructure

We replaced 8 vendors –, Concur, RightNow, Netsuite, OpenAir, Coupa, Avalara and Onbase.

All from Sales On Demand over Travel on Demand to all of ByD. SuccessFactors is OD’s biggest customer. The thank you to all the teams who did this will never be enough. Legendary.

  • SAP is now also using SuccessFactors solutions in specific markets with global deployment planned by Q3/Q4.
  • SAP has now also in the last weeks adopted.
  • Sales OnDemand as well as Travel OnDemand within certain teams.
  • All of our Cloud solutions are being put to the test in real, production environments – it’s the first step to understanding what our customers actually need!
  • It’s the only way to sell, when you use your own products

The next step is to be clear on what our strategy is to win in the market. It was clear from my business reviews and meetings with many of you, that we have not had a clear and focused strategy in the Cloud. The challenge is not that we do not have enough resources, we have been given all the resources we need, and we will not ask for more.

In order to win, there are four keys to our go forward strategy – all centered around providing beautiful solutions our customers want in the cloud to be used and deployed in any mobile device, instantly


We must focus our resources and efforts behind fewer product areas and ensure they are positioned to win against the competitors. We will target four markets, all benefitting from social, analytics, content and mobile:

  • My PEOPLE: Human Capital Management (HCM)
  • My MONEY: Finance
  • MY CUSTOMERS: Customer Relationship Management (CRM)
  • MY VENDORS : Procurement

Loosely Coupled Suite, of standalone best in class cloud products, that always work with all of SAP’s on premise products. Most customers won’t buy a total cloud suite yet, but they will buy multiple products, loosely coupled together, especially in the enterprise. Often we won’t be able to predict how they will buy them, and we often see they buy combinations of products we would not expect. We must provide an integrated menu of business streams that allow our customers to choose the solutions that work within their environments and in addition, experience a consistent user experience and process integrity.  Whether the backbone is NGAP or Java doesn’t matter as long as the experience for the customer is beautiful, fun, impactful and fast and addictive.

Full Suite Solution. We will continue to offer ByD for mid-sized companies and subsidiaries and B1 OnDemand for small businesses where there is a demand for a full suite option. Products not listed will continue to be closed out for deals that are live, or in pipeline, selling must continue, customers will be taken care of… but majority of our focus will be on the products mentioned, to get focused and not boil the ocean.

Open Platform Strategy. We must deliver an open platform and integration technology to allow our ecosystem to easily extend their SAP solutions, this means both integration to all SAP On Prem products so they can say „I still have one throat to choke, I can buy if all from SAP and get as much cloud as I can handle leveraging my infrastructure “But also leveraging Mulesoft, Cast Iron, Boomi, Cloud Foundry, and our own platform and API’s to richly connect with all other data streams and apps. Finally we will aggressively partner with partner companies to extend the solution like for instance Eloqua (lead scoring) for Sales On Demand which went live as a standard integration today, and BenefitFocus (employee benefits) in Employee Central (Cloud Core HRIS)

Finally, we need to have one combined Cloud Business Unit optimized to execute on our strategy – to have end-to-end responsibility from sales, to development, to customer service. We need to bring all the cloud teams from SAP and SuccessFactors together and operate as one Cloud business, which can compete effectively against our pure play competitors as well as large ERP vendors.

I am excited to outline the structure of the first layer of that organization, effective starting immediately

Cloud Go to Market Teams

We are establishing two Go-To-Market teams, GTM, that respectively and singularly, with no dilution in focus target our no. 1 and nr. 2 competitors; Workday and – and we will continue that focus throughout the company including development. We will be hiring two new Presidents to focus on 2 major market opportunities:

#1 – HCM + Finance with Workday as no. 1 competitor, and Netsuite, Oracle/Taleo, Conqur as secondary (meaning we will likely be able to take business from them)

#2  – CRM, Procurement, ByD, Social on Demand with as no.2 primary competitor, and Ariba and Netsuite as secondary competitors for this go to market group

§  Through the products we will aggressively leverage Social, Analytics, Mobile, Integration/Extensibility, UX -revolution (Mike Tschudy ++ to report to Cloud Leader Interim to accelerate UX, UI, and fun and beautiful revolution)

Why 2, and why these 2?

Because these are the two cloud companies, most likely to hurt SAP’s customer base, and we want to excite this customer base with our combined cloud and on prem offering

There is an ongoing external search for these two Presidents.

President #1 for HCM+ FIN GTM, will have following reports; Kara Wilson; CMO, Jay Larson; Product and Alliances acceleration, Karie Willyerd; Cloud Talent Success and Ramp, Paul Brook; Customer Success, and Phil Carty

Phil Carty is General Manager of the Global Sales and Sales Operations for the HCM+Finance Go To market business, selling the BizX suite of products, Employee Central, Travel, Payroll, WorkForce Analytics, and Finance into that customer base.   Teams with direct reports to Phil include:

  • Alex Saleh – Vice President, Global Sales Operations

Mark Oakey, will support the OD GTM, but will report permanently to Alex

  • Murray Sargant  – General Manager Asia Pacific
  • Mario Rosic, Vice President, Finance & EMEA Sales
  • North American HCM/FIN GTM Sales Managers

# 2 CRM, Procurement, ByD (smaller focused more ready portfolio leveraging OD assets and people)


  • David Spencer, will play two roles

§  Continue NAM OD Sales mgmt

Will have Didier Mamman, Dave Osborne, Karthik and Dietmar Meding reporting to him interim

  • Rupert Kauffman (Professional Services) to report interim  to Shelly Heiden
  • Sven Denecken (Customer-Co-Innovation) report interim  to Phil Carty


  • Cloud marketing team to report permanently to Kara Wilson
  • Customer Support to report permanently to Paul Brook
  • Sales operations to report permanently to Alex Saleh
  • Cloud ecosystem and Channel team to report permanently to Mercedes Ellison, who reports to Jay Larson
  • Cloud Onboarding, Talent Success and Ramp permanently Karie Willyerd

HCM and Finance Product Management and Engineering, we intend to have three teams:

  • Dmitri Krakovsky will continue to lead the HCM/SF Product Management team.
  • Adam Kovalevsky will continue to lead the HCM/SF Engineering team.
  • Juergen Sattler will lead the Finance OnDemand and ByD Product Management and Engineering teams
  • o   The groups have as priority no. 1 to make employee central beat workday in the next 3 months. With the intent to Demo the key aspects @ Sapphire, integrated loosely coupled with the other key applications; Finance, Travel, Payroll, Project Finance, and Org Modeling, and HANA all in the cloud.

We are planning to strip from ByD as a standalone cloud product the very deep Finance product that by external consultants is considered better than Workday’s financial product and extend this product

386 customers using it, and 88 formal references

Four successfully passed certifications (FP2.6, FP2.5, FP2.0,  FP1.2) conducted by independent auditors (E&Y, Deloitte)

Because of the sales traction we are beginning to see we will continue to have an EXTREMELY big and important investment of at least 200 engineers in ByD.

For CRM, and Procurement Product Management and Engineering, we intend to have two teams:

Nayaki Nayyar will lead the CRM Product Management and Engineering team, and a newly to be formed Integration Services business, to emphasize essence of

Integrating SAP On Prem and Cloud

Integrating with partner vendors

Integrating the loosely coupled apps in one experience with embedded multisource analytics.

Mark Ellis will continue to lead the Sourcing Product Management and Engineering team.

In order to scale across the entire Cloud Business Unit, we will leverage heavily SAP Corporate Functions in areas such as Corporate IT.  In other areas where the functions are an inherent part of the Cloud Business model which we must protect and nurture, we have the following functional dedicated teams:

Bob Grazioli will lead Cloud Datacenter Operations, and Cloud IT.

Aaron Au will lead the Architecture team, that will have increased importance in coordinating with TiP, and evangelizing the cloud,  and Sameer Patel will lead the combined Streamwork, Jam and technology for feed technology anywhere (like Sales On Demand), and PS and Product Management,  and the engineers will report to Aaron

Jeff Diana will lead the HR team focused on the Cloud Business Unit.

Christian Klein will be CFO of the Cloud Business Unit, Bruce Felt as CFO Emeritus. Christian will optimize our Finance and controlling, planning and streamlining  toone business unit. The M&A Corp Dev team for all Cloud, will continue to be key strategically and run by Seksom Suriyapa reporting to Christian.

Hillary Smith will drive Legal, Contracts and IP across both Go To Market Streams.

The leaders of the new combined Cloud organization will be working very quickly to identify their teams so we can make sure each and every member of the team is actively working toward our common objectives.

Being aware of the co-determination rights of our social partners we will continue to keep our partners informed and will approach them as soon as we have a clear picture of the target structure.

Furthermore, all organizational changes will not affect the legal entities. If you are an SAP employee, you will l continue to be employed by SAP and if you are a SuccessFactors employee, you continue to be employed by SuccessFactors, an SAP company.

Open, full access, collaboration

We also look forward to partnering with Bernd Leukert’s group, Bjoern Goerke’s group, Rob Enslin’s groups more than has ever happened before, and invite representatives for full participation in our meetings, to maximize the break through and revolutionary experience for our great, great customers in one great unified and beautiful experience.

With trust in each other, leaving the drama triangle of victim hood, heroing, and

There will be many mistakes made, and that’s ok with the speed we are moving, done is better than perfect, we need to bring excellent break through products to market faster than ever, accelerate our growth and have a lot of fun doing it.

We need your help. Please help iron out any mistakes and complications and bumps in the road, or even broken bridges, by helping fix it yourself, instead of point fingers and lose your heart. With customer focus and heart in all we do, discipline and search of being legendary we will write history together.

Please send any questions or feedback to me

Shortly, we will also be communicating our Cloud portfolio internally, and we will unveil it to customers at the upcoming SAPPHIRE and SuccessConnect events in the next few weeks.  Let‘s continue to focus on the task at hand and make sure SAPPHIRE is a huge success, and close out a greatQ2! We have the opportunity of a lifetime ahead of us!

Semper fidelis; Lars

Dalgaard!/LarsLuvThe customer mustwin

Massive thanks to Christian Klein, Roy Ng, Sven Denecken, Chakib Bouhdary, Sandra Stegman,  Nicholas Cumins and my admin team, for the legendary work to get us to this point, and frankly the Board for the trust they are giving us.

See original email provided here.


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