SAP CEO: There’s “No Chance” We’ll Buy Salesforce (CRM)

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SAP CEO: There’s “No Chance” We’ll Buy Salesforce (CRM)

SAP CEO Bill McDermott spoke with FOX Business Network’s (FBN) Maria Bartiromo about their cloud business and the global economic landscape. Regarding a possible acquisition of competitor Salesforce.com, McDermott said there is “No chance” because, “I think you are seeing them at their peak now of their valuation and their relevance.” He went on to discuss the U.S. economy, saying, “I think the U.S. is spotty depending on which industry you are talking about,” but “Overall we are growing in the United States in double digits.” McDermott also commented on their growth strategy, saying, “You have to look for the fast movers, and make the right bets on who they are so five, ten years down the road, you stay a serious growth company, and that’s what we’re going to do.”

SAP CEO: The cloud is more secure

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SAP CEO Bill McDermott on SAP S/4HANA

Data is doubling in the world every 18 months, so there’s this huge explosion of data. Not just transactional information, but also social information from Twitter and Facebook. And companies have to reconcile this data on a common platform and manage it in real time…and there’s really only one data base in the world that does all of that in one platform and that’s SAP S/4HANA. So that’s been our breakthrough innovation.”

SAP CEO Bill McDermott on the IRS Hack, and data security:

“Data science, data Security, all very important high growth areas. And one of the things companies are realizing, for every 1 billion U.S. dollars in revenue, most companies have 100 desperate applications in their enterprise. That’s too many. So what’s happening is you have all these fault lines where things can go wrong. With an integrated system like SAP, if you put it in the cloud, and you manage it in the cloud, your chances of being a secure enterprise are far greater. Of course, it’s a race without a finish line, you always have to stay ahead of the bad guys, but that is at least, theoretically, a better way to go than disparate systems all over not being managed in a secure way.”

Does the growth at SAP come from acquisitions

“In 2010 we really didn’t have much going on in the cloud. It’s now 2015, we have 80 million users in the cloud, more than any other company in the world. So we made this bold move to the cloud, we have the assets we need now. Whether you are trying to manage your people, your customers in an Omni-channel e-commerce set, or trying to manage business networks where you manage people, buy and sell materials, or even travel and expense for all your employees. SAP does that. But we also run the entire company in one business suite now in the cloud. So you can consume that on a pay as you go model, highly secure, very low cost.”

SAP CEO Bill McDermott on whether they would buy Salesforce.com:

“No chance. When we look at Salesforce, they did a very good thing. When you look at year 2000, let’s go back 15 years, at that time, CRM software, taking care of your customers, and taking care of your sales department – how’s my pipeline, what’s my forecast – that was very important. But it was not available in the cloud at the time and they were the first mover to put that in the cloud. The truth is in 2015, that’s a hygiene item in most enterprises – yes, you should do that. But the more important issue is, can I connect with my consumer, in any channel – direct to consumer on the internet, wholesale, retail community. Do I know my consumer and can I connect to that device, and can I make them an offer in real time and make them an offer in real time and sell them something based on their likes, and then ship that good, just the way they like it, on time, in the form factor they want, so the buy again. That is Omni-channel e-commerce. Salesforce.com doesn’t do that. So I think you are seeing them at the peak now of their valuation and their relevance and as this becomes more of a prevailing theme – like CEOs want to connect with that customer so they can grow, back office operations get commoditized, prices drop. So you are at the eclipse now when the whole thing changes is anybody’s guess but it won’t be long.”

SAP CEO Bill McDermott on competitors like Workday:

“What’s interesting about Workday is they are down nearly 10 percent now in before market trading. And the reason is if you look at their billings and their revenue every quarter since they’ve been a public company, their rate of growth has declined. So people are waking up now with these enormous multiples and declining revenue on a quarter over quarter basis, is this where I want to put their money. So we’re seeing now in 2015, a replay of what we saw in 2000 –the best of breeds become irrelevant, they become commoditized now because the big ones now have the capability and it’s integrated and prices fall. And when prices fall in a commodity point solution, the end is near.

SAP CEO Bill McDermott on the economic landscape

“We’ve been really fortunate, we’ve grown in double digits every quarter in Europe. So we are a little bit different than most technology companies because of our immense install base in Europe and the prestige of the SAP brand. So the only place where we’ve seen a disruption obviously is the Ukraine and Russia with the ongoing crisis. Other than that, Southern Europe, Central, Northern everything is strong for SAP. Now the one thing is really positive, this is the first time in like a decade where we’ve had tailwind on the currency. Because we are so global and we report in euros, as the euro weakens, we get currency tailwind. For example, we reported 24 percent year over year growth in our software sales last quarter, about 14 percent of that was attributed to currency. So it was nice for a change to get a little help.”

SAP CEO Bill McDermott on the United States economy:

“I think the U.S. is spotty depending on which industry you are talking about. If you are dealing with public sector entities, it remains somewhat slower than some of the other industries. Manufacturers are now picking up. If you look at industry 4.0 what they call the ‘internet of things,’ and how you make these organizations digital and much more efficient, there’s a lot of investment going on.  So it really does depend on the industry and it depends on the solution. Overall we are growing in the United States in double digits.”

SAP CEO Bill McDermott on growth opportunities

“We’re really focused on small, mid and large – that’s one of the attributes of our brand. We go to market in 25 industries and we also focus on small, mid and large…so for smart companies, you cannot just harvest today’s big company relationships. You have to look for the fast movers, and make the right bets on who they are so five, ten years down the road, you stay a serious growth company, and that’s what we’re going to do.”

SAP CEO Bill McDermott on security and data protection:

“We launched a product called S/4HANA, so our real time in memory data platform now runs all our applications fully integrated on that real-time in memory data platform. That is the most secure platform in the world by definition because it was designed and engineered to be fully integrated. Contrast that with the average company, for every 1 billion in revenue they do, they have 100 disparate, disconnected, unintegrated applications. My goodness, what a risk that is. We must help them out.”

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