Empathy was a key theme of SAP CEO Bill McDermott’s keynote address last May and it is expected to be a continued touch point at this week’s SAPPHIRE event. When McDermott kicked off his customer empathy revolution last year, he indicated it was a direct result of feedback he received from SAP’s executive board. “They gave me a handful of messages, not all of them good,” said McDermott. “They basically told me we weren’t empathetic enough, we weren’t listening or hearing their problems, in their terms, on a consistent basis.” McDermott’s pledge to the SAPPHIRE 2016 attendees was to address this feedback through an empathetic approach – something he now calls executing to empathy.
Is SAP empathy an oxymoron?
Empathy requires you to place yourself in someone else’s shoes and feel what they are feeling. It requires an understanding and appreciation for their perspective and can be recognized as genuine based upon the empathizer’s actions. Using the word empathy over a dozen times in his 2016 SAPPHIRE keynote address, it’s safe to say that McDermott bet big on the customer empathy message. Given the actions SAP has taken within the SAP customer base relative to indirect use, it does not seem that their actions are truly “executing to empathy”. When McDermott gave his SAPPHIRE keynote address in 2016, SAP was already several months into its indirect use suit against Diageo. More recently, SAP America commenced an arbitration against Anheuser-Busch Companies seeking in excess of $600M. Naïve customers may not be as concerned given these two data points represent such a small percentage of the overall SAP customer base, but they are failing to appreciate the significance of SAP’s stance with these marquee customers and the fact that a significant number of SAP customers have confidentially been approached and already settled indirect use claims with SAP. Numerous other indirect use audits and claims are inflight as I write this article.
2017 SAPPHIRE Indirect Use Update
There has been a tremendous buzz within the SAP customer base regarding indirect use, unlike anything I’ve seen since SAP decided to raise its maintenance factor from 17% to 22%. In light of all the press, analyst commentary and customer concern, SAP cannot ignore the indirect use elephant in the room at this year’s SAPPHIRE event and we expect they will try to address it the same way they addressed the maintenance increase in 2008 – under the guise of empathy.
What We Think the Key Messages will Be and How We Think it Will Go Down
- Bill McDermott will play off his 2016 customer empathy theme focusing on the fact that SAP has heard the voice of its customer and is now executing on empathy. Indirect use will be a key part of responding to customer concerns, but it will likely be sandwiched between other customer concerns such as lack/speed of innovation and roadmap transparency.
- SAP will explain the complexity of licensing given the ever-evolving manner in which customers use software and how their focus is only on recognizing the value of their software.
- SAP will try to explain and rationalize how impossible it is to define every possible indirect use customer scenario.
- SAP will outline to the SAPPHIRE attendees that executing to empathy is a journey and therefore SAP has taken some initial steps to simplify its approach to ensuring customers are compliant based upon indirect use.
- SAP will claim it is being transparent in response to its customers, but details will be limited.
- SAP will offer a concession to entice its customers to more openly engage in discussions on ensuring indirect use compliance. This will come across as a begrudging offer, something like SAP offering to waive back maintenance on such indirect use claims. In our opinion, this is table stakes for any indirect use settlement.
- SAP will not want to go into the specifics of the Diageo case or the AB InBev arbitration.
- SAP will not provide any guidance on how it intends to address indirect use as it relates to artificial intelligence, machine learning or the Internet of Things. Those areas represent future growth which must be protected.
- Sean Spicer or Melissa McCarthy, pretending to be Sean Spicer, may be on hand for the Q&A portion of the indirect use update.
Genuine Show of Empathy or Lip Service?
We believe SAP has to provide some sort of message or update on indirect use this week at SAPPHIRE given all the recent press and customer buzz. Given the number of attendees and those following remotely, SAPPHIRE is the most logical forum to reinforce SAP’s prior message of empathy and to lessen existing and prospective SAP customer concerns. The key question to be answered this week will be whether SAP’s message is a genuine show of empathy or purely lip service. If SAP delivers the message as we have outlined above, it will be nothing but lip service.
Check in from SAPPHIRE with Your Thoughts
UpperEdge will be present at SAPPHIRE this week to see how this unfolds, but we would love to hear from those attending customers on their perception of SAP’s indirect use message. Please do not hesitate to contact me at email@example.com with your thoughts, comments and feedback.