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Bill McDermott, CEO of SAP America Inc., has taken on what’s been seen as a difficult position as CEO of the U.S. subsidiary of the largest software company in the world—and one that has a very strong German heritage and leadership. With a revolving door at the CEO’s office over the past few years at the U.S. headquarters, there were few expectations when McDermott took the job 18 months ago.

During that time, however, the CEO has been working quietly to change SAP’s internal skills base and to evangelize the company’s newest technology, NetWeaver.

McDermott recently talked to eWEEK Senior Writer Renee Boucher Ferguson about the technology direction for the company and about some of the work he’s done in his nearly 2-year tenure at SAP America, in Newtown Square, Pa.

What’s the technology direction for your company, particularly with the introduction of NetWeaver?

What we do is quite unique. The technology is not the same as [that offered by] anybody else.

We have 9,000 developers who actually receive about $1 billion on a per-annum basis to continuously improve that which we’ve already done, but also to innovate. And what was once a great ERP [enterprise resource planning] company is now ERP, CRM [customer relationship management], SCM [supply chain management], PLM [product lifecycle management] and SRM [supplier relationship management], all in one holistic, fully integrated business suite.

But because we live in a world where customers are not necessarily ringing the phone off the hook, saying, ‘I only want to do business with you,’ you have to be open, and you have to be completely agile in relation to your acceptance to other technologies, because companies have spent billions of dollars on IT, and they’re not just going to chuck it all out the window.

NetWeaver is an enabling integration technology that essentially allows SAP applications to work harmoniously with each other, but more over, because it’s a Web services architecture—and the only one of its kind in our industry—it also enables complete, unfettered access to all the other systems as well.

The big breakthrough is you’re now in a world, because of NetWeaver and how its changed the game, where you can essentially dramatically reduce your total cost of ownership. How they do it is about 85 to 90 percent of the IT spend in most companies today is tied up in legacy applications, legacy infrastructure, legacy systems. [This] means that only 10 percent—ten percent—[of IT spending] actually goes towards innovation and change to actually do work differently, to impact the business processes and impact the outcomes of the company.

What NetWeaver enables us to do is go in and attack that legacy spend and essentially say, look, [what] if we automate these business processes. No one knows more about the industry business processes than SAP; we’ve been at this 32 years and we have 28 industries inside and out, so we have the best practices, 22,000 customers in 66,000 installations around the world built in to the application. So if you take a scenario in an industry as a best practice way of doing, lets say, order-to-cash, you already know the scenario on how the best businesses actually execute that best business practice.

Now the question is, from a customer point of view, are your systems able to execute at the benchmark level? If no, well OK, what can we do to change. What you basically do is you go into that 85 to 90 percent of the legacy spend and you eliminate stuff, or you consolidate stuff.

For example, it’s not uncommon for us to walk into a company today where they have thousands of interfaces, thousands of connectors, thousands of relationships that they don’t need. With our application suite, and NetWeaver, we not only focus on what companies should do, but we first eliminate what they shouldn’t do any more. And we free up that cash flow that they used to spend on legacy, into innovation and transformation of the business processes.

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