Speaker 1: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenevic on Bloomberg Radio. So let's talk about the cloud
Speaker 1: a little bit, because you know, we talk about it
Speaker 1: so much, Maddie with I feel like, certainly through the
Speaker 1: earning season, whether it was Microsoft, whether it was Amazon,
Speaker 1: Gartner's got some statistics out there about worldwide spending on
Speaker 1: public cloud services reaching nearly six hundred billion dollars in
Speaker 1: twenty twenty three, up more than twenty percent year over year. Yeah,
Speaker 1: and the next guest that we're going to talk with,
Speaker 1: Julia White, is going to give us some really good
Speaker 1: insights into overall cloud market dynamics. She is the chief
Speaker 1: Marketing and solutions Officer and member of the executive board
Speaker 1: at sapp. Julia also spent more than twenty years at
Speaker 1: Microsoft building out Microsoft Azure, and she is with us
Speaker 1: via zoom in Seattle. Julia, thank you so much for
Speaker 1: being here. I wonder if you can just start off
Speaker 1: by giving us a background on your company, including the
Speaker 1: fact that I need to be calling it SAP instead
Speaker 1: of which is hilarious because you literally have that in
Speaker 1: your FAQs on your web. We've had a crazy all
Speaker 1: of a sudden, We've had like an earning stump, so
Speaker 1: it's like all of a sudden, we're going through our notes,
Speaker 1: so we're with us a little bit. But I love
Speaker 1: I love that you. I was literally just looking at
Speaker 1: and you have that in your FAQ. So yeah, just
Speaker 1: give us, just give us the background here. Absolutely great
Speaker 1: to be here with you and SAP or SAP as
Speaker 1: it's formally pronounced. We provide the cloud solutions for business transformation, right,
Speaker 1: So you talked about Microsoft in my past life or
Speaker 1: Amazon who have big cloud infrastructures, and SAP provides the
Speaker 1: business solutions, so for things like finance management, controlling inventory,
Speaker 1: supply chain, HR processes, procurement, all the business systems that
Speaker 1: run companies. Those are the cloud services that we build
Speaker 1: and provide to our customers. Yeah, what's great about talking
Speaker 1: to a company like you And we've been talking me
Speaker 1: awful lot about Mattie and myself about it, spending with
Speaker 1: a lot of our guests. What are you seeing, especially
Speaker 1: in a global macro environment where there's so much debate
Speaker 1: about the outlook FED policy, you know, the big macro
Speaker 1: stories that are out there. What are you seeing firsthand
Speaker 1: in terms of your clients and your customers. Yeah, definitely
Speaker 1: some interesting trends. I'd say for sure, we've switched into
Speaker 1: a rigorous process around tech spending. Right, there's no more
Speaker 1: nice to have tech. It needs to be proven, it
Speaker 1: needs to be able to demonstrate real business value. And
Speaker 1: you know, you've even seen in the recent earnings around
Speaker 1: some of the big cloud infrastructure providers, you know, some
Speaker 1: of the growth starting to slow a bit because customers
Speaker 1: bought a lot during COVID. Right, they've moved a lot
Speaker 1: of existing business systems to public cloud providers. But that
Speaker 1: was just basically picking up an existing system running in
Speaker 1: in a cloud to get some of the efficiencies, which
Speaker 1: is great, but now they needed some of that business
Speaker 1: value to come out of it, not just running it
Speaker 1: in a cloud model. But are You're seeing a lot
Speaker 1: more decision makers being in the mix as they purchase
Speaker 1: these things and really saying like, well, how are you
Speaker 1: going to help me with inflation? Right? How are you
Speaker 1: going to help me refactor my Suffly that sounds like
Speaker 1: CFOs are in the equation or the financial guys are like, great,
Speaker 1: we want to spend it, but tell us how that
Speaker 1: helps us with the bottom line? Is that fair. Yeah,
Speaker 1: way more CFOs in the mix, and really those value
Speaker 1: cases coming up, right, and I think the three big
Speaker 1: ones right showing shifting business models, which is a CFO
Speaker 1: led conversation. I need to go from selling products to subscriptions.
Speaker 1: I need full customer life cycle engagement. Right, That's something
Speaker 1: very hot. Supply chain refactoring. I mean, twenty years of
Speaker 1: going global supply chain, now we're refactoring all that to
Speaker 1: be more regional. And then interesting the last one, despite
Speaker 1: controversy or other things saying otherwise, sustainability still top concerns
Speaker 1: switching to be more sustainable as companies, we still see
Speaker 1: constantly driving purchases. That's really interesting, especially given the change
Speaker 1: in the supply chain piece that you mentioned right before that,
Speaker 1: I would think that given some of those headwinds, it
Speaker 1: would be really hard for these companies to continue to
Speaker 1: prioritize that. How are you kind of seeing that play out? Yeah?
Speaker 1: You know, again, there's lots of speculation and rumor that
Speaker 1: sustainability is dropping. We're not seeing that in terms of
Speaker 1: people behavior, and actually it's somewhat a little bit of
Speaker 1: a silver lining as people need to shift their supply
Speaker 1: chains right from big global to more regional and more suppliers.
Speaker 1: In some cases they're investing in more sustainable agriculture as
Speaker 1: an example, bringing new people into the supply chain that
Speaker 1: weren't participating before, which enables you to be more sustainable,
Speaker 1: bring more diversity into supply chains. So in some ways
Speaker 1: they're actually very aligned. Or also the case where you're
Speaker 1: doing more reuse in circular economy actually brings down cost,
Speaker 1: helps supply chain resiliency and improve sustainability. Your sweet spot
Speaker 1: for SAP is mid market, which you know, the big
Speaker 1: You know, large cap companies often get a lot of
Speaker 1: the headlines, a lot of the attention, but tell us
Speaker 1: about the MidCap space, which I think, just like small caps,
Speaker 1: tells us so much about the economy. Yeah, thank you
Speaker 1: for asking, because most people think, I say, the only
Speaker 1: serves the biggest of the world companies, which we do,
Speaker 1: but the majority of our customers are actually mid market,
Speaker 1: and you know, the things that we're seeing big companies
Speaker 1: amplify when we talk to our mid market customers right
Speaker 1: when they have little fluxes in revenue and it can
Speaker 1: be devastating impacts on their bottom line, and so working
Speaker 1: with them on how they manage inflation, better management, own
Speaker 1: cash flow, better business planning. And the nice thing about
Speaker 1: cloud technology is it gives any size customer, but midmarket
Speaker 1: customers access the same sophisticated business process tools as a
Speaker 1: big company, right, so it really has a democratizing effect
Speaker 1: to it. So we're able to really help mid market
Speaker 1: in the ways we help big customers, but in a
Speaker 1: way that's more agile and cost effective for them. What
Speaker 1: would you say is one of the biggest mistakes that
Speaker 1: you see some of these Not to put it on them,
Speaker 1: but some of these midsize companies making when they are
Speaker 1: struggling and they don't necessarily have access to the tools
Speaker 1: that you offer yet. Yeah, I think that the biggest
Speaker 1: mistake is they spend too long running their company on
Speaker 1: Excel and they you know, they're moving spast they're trying
Speaker 1: to be efficient, but they don't realize what they're missing
Speaker 1: out on. And you know, I was actually just recently
Speaker 1: working with a kind of mid sized chemical company and
Speaker 1: it waited a long time to move into automation of
Speaker 1: business processes, which it just helps a lot of our
Speaker 1: ound efficiency and decision making. And you know, once they
Speaker 1: spent the time to implement some more modern enterprise resource management.
Speaker 1: They were able to react much more quickly and they
Speaker 1: saw remediate results, but you know, they had to go
Speaker 1: through that journey to get there, and then in retrospect
Speaker 1: they're like, I'm should have done this earlier, but it
Speaker 1: takes time and focus. It does remind me a little bit,
Speaker 1: and we don't have to get into this, but it
Speaker 1: reminds me of FTX using quick books. When we all
Speaker 1: found that out, we were like, oh my god, how
Speaker 1: did you have such a huge company and do that.
Speaker 1: But then we talked to these startup guys who are like,
Speaker 1: if you have a big idea, just make it happen
Speaker 1: and do it. But it sounds like, I'm I'm hearing
Speaker 1: from you that you do need to focus on the
Speaker 1: bones and the infrastructure a little bit as well. Yeah,
Speaker 1: really thinking about all these processes. Yeah, they're getting it done,
Speaker 1: but at what costs and what are they not getting?
Speaker 1: And it's oftentimes hard to see the opportunity cost or
Speaker 1: the missed cost of what they're doing. But as we
Speaker 1: work with them, and that part of it too is
Speaker 1: it used to be i mean big and hard and
Speaker 1: expensive to deploy, and you know, an ear pear enterprise
Speaker 1: resource process. Right, it used to be the premises, but
Speaker 1: now the cloud changes that so fundamentally. But I think
Speaker 1: a lot of mid market customers are still coming to
Speaker 1: realize that actually, I can get a really robust enterprise
Speaker 1: resource system in place in a couple of months. You know,
Speaker 1: it's not three years and three hundred million dollars anymore.
Speaker 1: Julia tell us about just got about a minute or
Speaker 1: so left here the feedback loops. So in other words,
Speaker 1: you're talking with your clients and customers, you're saying that
Speaker 1: these organizations are feeling the impact of a downturn in
Speaker 1: the economy, so you say about value with you know,
Speaker 1: fewer resources. So how do you go back to your
Speaker 1: creative team or your engineers, when your solutions team and say, hey,
Speaker 1: here's what we need to be doing because this is
Speaker 1: what the customer demands. Yeah. I think the things that
Speaker 1: the big trends we're hearing from our customers are automation,
Speaker 1: which means, you know, using AI to identify where there's
Speaker 1: an efficiencies and automating that out and helping the customer
Speaker 1: be much more predictive with what's next. Right, Like the
Speaker 1: world's changing fast and all of our crystal balls are
Speaker 1: kind of imperfect these days, and so that agility to
Speaker 1: do different kinds of predictive planning is the generative AI
Speaker 1: move kind of impacting you guys all of a sudden,
Speaker 1: because it does seem like it's all of a sudden
Speaker 1: on everybody's radar. All well, we know it's not brand new,
Speaker 1: Yeah it has, but it has definitely hugely revolutionary opportunities
Speaker 1: with it. So absolutely looking at how we use it
Speaker 1: in a bunch of our different products, whether it's HR
Speaker 1: and onboarding to customer engagement. All right, gonna leave it there. Hey,
Speaker 1: thank you so much, really appreciate it. Julia White, she's
Speaker 1: chief Marketing and Solutions Officer at SAP, joining us via
Speaker 1: zoom from Seattle. Some great thoughts. And I think our
Speaker 1: perspective too more broadly, Maddie, about you know, people clients
Speaker 1: want to spend, but they've got to do it smartly.
Speaker 1: They're thinking about the value proposition when they go to
Speaker 1: do it spending. So I thought that that was a
Speaker 1: really key component as we have our big broad macro discussions,
Speaker 1: if you will, and like you said, we've been talking
Speaker 1: to all of these is because you make a great
Speaker 1: show and so does the team. We've been talking to
Speaker 1: a lot of people who are behind these companies that
Speaker 1: can really be leading indicators for us about where the
Speaker 1: economy is going