According to a survey commissioned by SAP, companies that were more advanced in digital transformation survived the Covid-19 pandemic more easily. The conclusions drawn by business development managers are obvious. Today, the vast majority of them rate digital technologies much higher than before the pandemic and declare investments in this area. We talk to Thomas Duschek, Managing Director, SAP Poland, about the impact of cloud solutions on the flexibility and speed of response to changing conditions in the economic environment.
You took over as Managing Director at SAP Poland at a very strange time of the pandemic. So your first impression of the Polish market was certainly fraught with Covid turmoil. So I would like to ask how, in your opinion, Polish companies coped with this unusual situation. Who – and why – emerged unscathed from the pandemic, while others fared less well?
Thomas Duschek: Last year was a shock for many businesses, but it turned out to be a driving force not only for digital initiatives but above all for a fundamental digital transformation, a new look at processes inside companies. A recent survey of Polish entrepreneurs commissioned by SAP makes it clear that the uncertainty and crisis caused by the pandemic is better handled by those companies that have already invested in solutions that digitalize and automate business processes, or those that acted quickly and flexibly during lockdowns. Among Polish companies with a high level of digital transformation, less than half (45%) reported a decline in sales in 2020. However, among companies with a low level of digitalization, as many as 73% of companies reported a negative impact on sales.
The higher level of automation and digitalization of business processes also translates into revenue generation. Among companies with a high level of digitalization, 27% recorded an increase in revenues, and 49% – their decrease. In companies that are not very advanced in this area, 66% of companies declared a decrease in revenues, and 20% – an increase.
The year 2020 was full of changes and new experiences. We saw it then, and we continue to see different industries having to deal with new realities such as retail store closures, manufacturing struggling with supply chain uncertainty, and in the case of financial services – customers who become increasingly familiar with technology and avoid face-to-face interactions. Companies must respond to these changes faster than ever before. The most important observation from the pandemic, which our research confirms, is that those companies that were more advanced in digitalization survived the test of time more easily.
What strategies for copying with the crisis caused by Covid are you currently observing in companies? Which of these would you rate as most effective?
We operate in a new reality where the need for change is driving customers to move processes to the cloud and invest in solutions that automate and optimize business processes. They are looking for cost-effective solutions and a way to turn CAPEX into OPEX. They need flexibility to respond quickly to changing market conditions.
The whole market has noticed that new technologies play an important role in market success. The vast majority of Polish enterprises today rate digital technologies much higher than before the pandemic. This is also the conclusion of our survey – such opinion was expressed by as many as 63% of entrepreneurs, while only 7% of them had an opposite opinion.
Change and competition have always been part of business reality, however the pressure to change quickly has never been as great as it is today. It’s not only about getting things done faster but also about doing completely new ones in an agile manner. It’s about changing the mindset of the entire organization and adopting new technologies along the way. Digital transformation, especially based on cloud solutions, is a tool for any company that wants to respond to the rapidly changing environment and consumer needs.
Cloud solutions have dominated thinking about software for business. Although sometimes I have the impression that we – as solution providers – renounce reality a bit. The truth is that – at least in Poland – most SAP customers are delaying the decision to migrate their core ERP systems to the cloud. What one crowning argument would you use to convince them – apart from ending support for the old solutions, of course?
This approach has changed dramatically over the past 12 months. To meet current and upcoming challenges, Polish entrepreneurs rely on the right digital tools. As many as 70% of companies in Poland already have or plan to purchase enterprise software in the coming months. Among them, 27% had such software even before the pandemic, 15% made a purchase in recent months and 28% plan to purchase such solutions in the coming months. The “Computerworld" research also shows that only 4% of Polish companies do not plan to use the cloud in the near future.
These numbers clearly demonstrate that Polish companies are becoming more advanced in digital transformation and will migrate their core operations to the cloud. And now it’s easier than ever, thanks partly to our new offering, RISE with SAP. A record number of companies that do not yet use SAP technology contact us and our partners – which you can probably confirm – to check the possibilities of using ERP systems in the cloud.
A few years ago, we first offered our customers the opportunity to move their ERP systems to the cloud. We started with selected processes, such as the HR area. These were the first experiences, customers could see how the whole process worked, what the security standards were. For SAP, security is absolutely crucial, and our customers are increasingly aware that the cloud is more secure than their own data center. Already last year, customers were ready to move their core processes to the cloud as well.
Our existing customers are moving to the cloud, however the path for each customer is different each time. Together with our partners, we can find the best solution for that particular company and provide a customized approach. Each company has its own unique challenges, and we always look at the greatest potential and capabilities of each solution. In the end, it’s all about making our customers successful.
How does RISE with SAP address new customer expectations in a changing business environment? What are the key elements of this offering?
As we have already said, companies want to take advantage of technology that is available in the cloud – solutions like AI, process automation, data analytics. They want to accelerate their operations and reactions to the changing economic environment, and cloud solutions help them do that.
RISE with SAP can be compared to a concierge service. One offering and one contract that provides a transformation path for everyone – literally every customer. Regardless of their size, level of digitalization or the industry in which they operate. RISE with SAP is a service tailored exactly to their needs. All this without big investments but with a reduced TCO, fast time to value and the flexibility that is needed in today’s world, which is moving faster and faster. Everyone can decide which capabilities they want to use at any given time and when to migrate their ERP to the cloud – public or private. No matter what the customer chooses, they will experience tangible transformation benefits at every stage and in every area.
Our partners play a key role in transforming customers into smart enterprises with S/4HANA Cloud as the digital core.
In recent years, SAP has also expanded its offering through the active acquisition of companies and their products, including Litmos, Emarsys, Signavio and Qualtrics. How do these solutions fit into the SAP portfolio? How interesting can they be for an average Polish company?
Our ambition is to be a digital transformation partner of first choice for every Polish company. We take an individual approach to all our clients – we verify their business environment, supply chain, how they want to digitalize and how their business will change in the future.
Cloud is the future. As an organization so far associated mainly with the on-premise model, we wanted to broaden the scope of our activities, so we made acquisitions of companies specializing in the cloud. Over the last 7-9 years, our portfolio has grown significantly. The breakthrough moment for SAP was the year 2020, when we started to focus more on the cloud model than on-premise and we achieved success – our cloud revenues are growing and on-premise revenues are stable. Even in the pandemic, we maintained year-on-year growth – both in Poland and globally.
Just a year after you took over as CEO, SAP Poland achieved impressive sales results – the best fourth quarter in its 25-year history. After such a successful start the expectations are certainly high. What are your priorities for the coming years, what other surprises is SAP preparing for Polish customers and what effects do you expect from them?
It is true – the fourth quarter of 2020 was the best quarter ending the year in the history of SAP Poland. It is a great culmination of SAP’s 25-year presence in Poland. I am grateful for the trust of our customers and partners.
This year, we have three key strategic goals. First, our mission is not only to sell licenses and cloud but also to support the adoption of these solutions. This is an extremely important part of our strategy – working for the success and satisfaction of our customers.
The second goal is to arouse greater interest in our products among companies that have not been in our ecosystem so far. We are focusing on introducing them to the world of our solutions, which will help gain even more diversity.
The third pillar of the strategy is, of course, the implementation of RISE with SAP and travelling together with customers to the cloud.
We are watching the market closely. We put more and more emphasis on an extensive network of local and global partners – we have a very good partnership with Microsoft and Google, and we are also scaling the partnership with the National Cloud. This is how digital Poland is being built.
Our local partners, such as SNP, work on projects for Polish and international clients. We want to help them work on their transformation to the cloud, determine what resources are needed for this, what are and will be the expectations from the consultants. Partners know their customers and their needs, and this is extremely important – they become agents of change for these companies.
Next year we will celebrate SAP’s 50th anniversary worldwide. We started with different systems, with a different architecture. One of the key features of SAP is continuous transformation – now RISE with SAP is the most important part of it.
In line with our strategy, SAP worldwide will continue to grow strongly – in 2020 we recorded €8 billion in revenue, in 2025 we want to reach €22 billion. This is a very ambitious plan.
Interviewed by Mirosława Huk, SNP Poland