EY Chairman, left, interviewing SAP CEO Bill McDermott at the EY Strategic Growth Forum.
EY CEO Mark Weinberger, left, interviewing SAP CEO Bill McDermott, right, at the EY Strategic Growth Forum. Photos: EY Strategic Growth Forum 2015.

PALM DESERT, Calif. — SAP CEO Bill McDermott started his entrepreneurial career as a teenager serving deli sandwiches at a corner store in New York, blue collar roots that have stuck with him throughout his business career. Now, the 54-year-old leads one of the biggest enterprise software companies on the planet, one which is working hard to adjust to a new cloud-based world.

Some don’t think SAP — a 43-year-old German company that was recently described by Salesforce.com CEO Marc Benioff as a big dinosaur — can make the transition.

sap=mcdermottBut don’t tell that to McDermott, the hard-charging and straight-talking tech executive who has repositioned SAP, even after surviving a freak accident earlier this year that nearly took his life and resulted in him losing his left eye.

McDermott appeared Thursday at the EY Strategic Growth Forum in Palm Desert discussing the cloud, and how SAP is making the transition, including the company’s recent purchase of Bellevue-based Concur Technologies for $8.3 billion.

That deal was part of what McDermott dubbed a $35 billion “shopping spree” — which also included buyouts of Ariba, Hybris and Fieldglass — meant to reposition SAP as a cloud powerhouse. McDermott took some criticism at the time of those deals for paying too much, but he said the acquisitions were necessary to fulfill a mission to “help the world run better and improve people’s lives.”

“We were very thoughtful about where we wanted to be in the cloud,” said McDermott, adding that SAP needed to change in order to survive.

“A 20th century disc-based database could not possibly keep up with a mobile-first, consumer-driven economy,” he said. “It couldn’t do it because you had to have the information instantaneously in real time. I call this a live system strategy.”

The acquisitions, along with some fine-tuning in the executive offices that included an entirely new mission, have repositioned SAP. The stock price is up 18 percent in the past year, and the company now boasts a market value of $97 billion.

While SAP took some “lumps” in the transition to the cloud, McDermott says that the strategy has worked well as they’ve moved everything to a real-time live platform, one which creates a “collaborative network” for customers.

Bill McDermott's new book
Bill McDermott’s book. Photo via Amazon.

“Instead of having an addressable market of $110 billion in our core business, we now have a $10 trillion U.S. dollar addressable market that we are chasing,” he said. Today, McDermott says that 85 percent of SAP’s business comes from customers that they did not have in 2010.

However, it was not an entirely simple transition. The move required SAP to rethink how it interacted with customers, employees and shareholders — all of whom needed to buy in to the new vision.

McDermott admits that no one previously thought that SAP’s products were easy to use or “gorgeous to look at” — so they had to challenge the engineering department to reinvent the product for a mobile-first environment where design mattered.

The transition also required SAP to create an entirely new mantra, with McDermott tossing out a 110-page strategy document for one that could be simply digested by management, employees, investors and customers.

“If it is too complicated, it is not good,” said McDermott. “You got to have a bumper sticker for where you are going, not an encyclopedia.”

Bringing in that simplicity was core to SAP reinventing itself, a process that started with SAP convening 250 top leaders to discuss the new vision.

“We really laid it all out there, and then we laid a surprise on them … At the end, everyone is actually pretty excited — they think this is a bold move into the future — but then we say: There is only one catch. You all have to role model this leaders, and you all now have to get up and do this same vision and strategy presentation for your people.”

McDermott then spent the next few days watching those leaders pitch the new vision and strategy of the company across the SAP campus, with no one going home until they honed the pitch.

“That move fundamentally changed a lot of things,” said McDermott.

And it has repositioned SAP for a new future.

“Now, we have nearly 100 million users in the cloud and we are the fastest-growing cloud company of size and scale in the world,” he said. “I am not saying that to be like pounding my chest because I actually think that there are two imposters in this room today: the one headline that says you are really great, and the one that says you are really terrible. What you really have to be doing is thinking about where the customer is going to go a few innings before they actually need to get there, and then you might have a good business.”

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