SAP's strategy shaped by 3 megatrends

A perfect storm — one fed by technological innovation — is brewing in Washington. 

It’s a convergence of mega-trends in IT that will drive business in the government market and improve the effectiveness of government in the years to come, said Bill McDermott, co-chief executive officer of SAP AG, the world’s largest maker of enterprise software applications, and president and CEO of SAP America Inc.

“I believe these trends are changing everything,” said McDermott, who delivered the keynote speech at TechAmerica Foundation’s 9th annual Technology and Government dinner June 15.

In an interview with Washington Technology in SAP’s Washington office, McDermott outlined three major trends that are coming together to foster innovation, transparency and accountability in government.

The move to a more mobile world

The proliferation of mobile devices is “an unstoppable force,” McDermott said. “The world will not tolerate being tethered to a desktop and the world needs to move and it needs to move fast.”

Big data

The government is accumulating massive amounts of data that need to be analyzed in real time to improve transparency and accountability in federal services and operations. “The big data challenge is something the government has to conquer and now it can because the technology is there,” McDermott said. “It wasn’t there before. It is there now. Government can start working for the people and the people can see how their money is being used and government leaders can take pride in being transparent and getting the information out there.”

Sustainability and cloud computing

Sustainable technologies, which use less energy and fewer limited resources, and cloud computing go “hand in hand,” McDermott said. “Agencies are being asked to consume less and manage their footprint. But by the same token, they’re being asked to do more.” By moving operations or applications to the cloud, agencies can lower hardware costs by as much as 90 percent and accomplish more toward their mission goals, he said.

“The idea of transparency driving accountability and mobile changing everything in terms of people taking action — all based on facts and data — has now hit Washington by storm,” McDermott said.

SAP is well-positioned to meet government demand in all three trend areas, particularly with the acquisition last year of Sybase, an enterprise software and services company offering products to manage, analyze and mobilize information. For example, Sybase brings its Sybase Unwired Platform, which lets enterprise developers quickly build applications that connect business data to mobile works on any device at any time, to SAP’s product portfolio, McDermott said.

“You’re going to have mobilize the workforce and invest in that, otherwise you won’t get things done,” he said. “We therefore decided to invest in Sybase and the Unwired Platform.” 

The company is also geared up to respond to the government’s growing need for data analytics tools, McDermott said. “The idea of applying business analytics on top of the system to extract the data in real time is the No. 1 priority that we see among decision makers.”

A case in point is that SAP has just integrated — in just 30 days — a business analytics tool, named Recovery Explorer, into recovery.gov, the government Web site that tracks how and where funds dispersed under economic stimulus law are spent. SAP’s Recovery Explorer makes it easier to drill deeper into that data and slice and dice it in different ways, creating more transparency and visibility for people who want to see how taxpayer dollars are being spent. “You don’t get accountability without transparency and visibility,” McDermott said.

In a time of budget uncertainty and mandates for agencies to do more with less, SAP’s business strategy is to stick with what works and innovate on top of its core products.

“It’s not business as usual and it never will be again,” McDermott said. “Budgets will be limited and clients will invest in the things that have the most business outcome and value and will forego the typical churn of technological refresh. We want to have that consistent core and keep it fresh.”

Another part of SAP’s business strategy is to seek partnerships with other companies that are doing innovative work through an “open ecosystem” course.

“None of us is as smart as all of us and that’s the open ecosystem approach that we have chosen to take,” McDermott said. “So whether it’s a Lockheed Martin or an IBM or many of the other well-known integrators in this town, we’ll partner with anybody if we can make a difference in a mission or an initiative to return value to the U.S. taxpayer.”

McDermott’s mantra is: “Vendor lock-in is bad. Open ecosystem, open innovation is good.” 

In all, McDermott is confident in a robust outlook for the government market because he sees “a willingness of change and a willingness to innovate” among government leaders in Washington.

“The government market should be one of the faster growing markets in the world for SAP because these trends have such enormous economic payback,” he said.