WEBVTT - Expanding Cloud Access to Mid-Market

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stenevic on Bloomberg Radio. So let's talk about the cloud

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<v Speaker 1>a little bit, because you know, we talk about it

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<v Speaker 1>so much, Maddie with I feel like, certainly through the

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<v Speaker 1>earning season, whether it was Microsoft, whether it was Amazon,

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<v Speaker 1>Gartner's got some statistics out there about worldwide spending on

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<v Speaker 1>public cloud services reaching nearly six hundred billion dollars in

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<v Speaker 1>twenty twenty three, up more than twenty percent year over year. Yeah,

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<v Speaker 1>and the next guest that we're going to talk with,

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<v Speaker 1>Julia White, is going to give us some really good

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<v Speaker 1>insights into overall cloud market dynamics. She is the chief

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<v Speaker 1>Marketing and solutions Officer and member of the executive board

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<v Speaker 1>at sapp. Julia also spent more than twenty years at

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<v Speaker 1>Microsoft building out Microsoft Azure, and she is with us

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<v Speaker 1>via zoom in Seattle. Julia, thank you so much for

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<v Speaker 1>being here. I wonder if you can just start off

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<v Speaker 1>by giving us a background on your company, including the

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<v Speaker 1>fact that I need to be calling it SAP instead

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<v Speaker 1>of which is hilarious because you literally have that in

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<v Speaker 1>your FAQs on your web. We've had a crazy all

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<v Speaker 1>of a sudden, We've had like an earning stump, so

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<v Speaker 1>it's like all of a sudden, we're going through our notes,

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<v Speaker 1>so we're with us a little bit. But I love

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<v Speaker 1>I love that you. I was literally just looking at

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<v Speaker 1>and you have that in your FAQ. So yeah, just

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<v Speaker 1>give us, just give us the background here. Absolutely great

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<v Speaker 1>to be here with you and SAP or SAP as

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<v Speaker 1>it's formally pronounced. We provide the cloud solutions for business transformation, right,

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<v Speaker 1>So you talked about Microsoft in my past life or

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<v Speaker 1>Amazon who have big cloud infrastructures, and SAP provides the

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<v Speaker 1>business solutions, so for things like finance management, controlling inventory,

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<v Speaker 1>supply chain, HR processes, procurement, all the business systems that

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<v Speaker 1>run companies. Those are the cloud services that we build

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<v Speaker 1>and provide to our customers. Yeah, what's great about talking

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<v Speaker 1>to a company like you And we've been talking me

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<v Speaker 1>awful lot about Mattie and myself about it, spending with

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<v Speaker 1>a lot of our guests. What are you seeing, especially

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<v Speaker 1>in a global macro environment where there's so much debate

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<v Speaker 1>about the outlook FED policy, you know, the big macro

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<v Speaker 1>stories that are out there. What are you seeing firsthand

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<v Speaker 1>in terms of your clients and your customers. Yeah, definitely

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<v Speaker 1>some interesting trends. I'd say for sure, we've switched into

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<v Speaker 1>a rigorous process around tech spending. Right, there's no more

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<v Speaker 1>nice to have tech. It needs to be proven, it

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<v Speaker 1>needs to be able to demonstrate real business value. And

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<v Speaker 1>you know, you've even seen in the recent earnings around

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<v Speaker 1>some of the big cloud infrastructure providers, you know, some

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<v Speaker 1>of the growth starting to slow a bit because customers

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<v Speaker 1>bought a lot during COVID. Right, they've moved a lot

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<v Speaker 1>of existing business systems to public cloud providers. But that

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<v Speaker 1>was just basically picking up an existing system running in

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<v Speaker 1>in a cloud to get some of the efficiencies, which

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<v Speaker 1>is great, but now they needed some of that business

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<v Speaker 1>value to come out of it, not just running it

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<v Speaker 1>in a cloud model. But are You're seeing a lot

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<v Speaker 1>more decision makers being in the mix as they purchase

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<v Speaker 1>these things and really saying like, well, how are you

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<v Speaker 1>going to help me with inflation? Right? How are you

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<v Speaker 1>going to help me refactor my Suffly that sounds like

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<v Speaker 1>CFOs are in the equation or the financial guys are like, great,

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<v Speaker 1>we want to spend it, but tell us how that

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<v Speaker 1>helps us with the bottom line? Is that fair. Yeah,

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<v Speaker 1>way more CFOs in the mix, and really those value

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<v Speaker 1>cases coming up, right, and I think the three big

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<v Speaker 1>ones right showing shifting business models, which is a CFO

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<v Speaker 1>led conversation. I need to go from selling products to subscriptions.

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<v Speaker 1>I need full customer life cycle engagement. Right, That's something

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<v Speaker 1>very hot. Supply chain refactoring. I mean, twenty years of

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<v Speaker 1>going global supply chain, now we're refactoring all that to

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<v Speaker 1>be more regional. And then interesting the last one, despite

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<v Speaker 1>controversy or other things saying otherwise, sustainability still top concerns

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<v Speaker 1>switching to be more sustainable as companies, we still see

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<v Speaker 1>constantly driving purchases. That's really interesting, especially given the change

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<v Speaker 1>in the supply chain piece that you mentioned right before that,

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<v Speaker 1>I would think that given some of those headwinds, it

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<v Speaker 1>would be really hard for these companies to continue to

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<v Speaker 1>prioritize that. How are you kind of seeing that play out? Yeah?

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<v Speaker 1>You know, again, there's lots of speculation and rumor that

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<v Speaker 1>sustainability is dropping. We're not seeing that in terms of

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<v Speaker 1>people behavior, and actually it's somewhat a little bit of

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<v Speaker 1>a silver lining as people need to shift their supply

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<v Speaker 1>chains right from big global to more regional and more suppliers.

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<v Speaker 1>In some cases they're investing in more sustainable agriculture as

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<v Speaker 1>an example, bringing new people into the supply chain that

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<v Speaker 1>weren't participating before, which enables you to be more sustainable,

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<v Speaker 1>bring more diversity into supply chains. So in some ways

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<v Speaker 1>they're actually very aligned. Or also the case where you're

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<v Speaker 1>doing more reuse in circular economy actually brings down cost,

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<v Speaker 1>helps supply chain resiliency and improve sustainability. Your sweet spot

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<v Speaker 1>for SAP is mid market, which you know, the big

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<v Speaker 1>You know, large cap companies often get a lot of

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<v Speaker 1>the headlines, a lot of the attention, but tell us

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<v Speaker 1>about the MidCap space, which I think, just like small caps,

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<v Speaker 1>tells us so much about the economy. Yeah, thank you

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<v Speaker 1>for asking, because most people think, I say, the only

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<v Speaker 1>serves the biggest of the world companies, which we do,

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<v Speaker 1>but the majority of our customers are actually mid market,

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<v Speaker 1>and you know, the things that we're seeing big companies

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<v Speaker 1>amplify when we talk to our mid market customers right

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<v Speaker 1>when they have little fluxes in revenue and it can

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<v Speaker 1>be devastating impacts on their bottom line, and so working

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<v Speaker 1>with them on how they manage inflation, better management, own

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<v Speaker 1>cash flow, better business planning. And the nice thing about

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<v Speaker 1>cloud technology is it gives any size customer, but midmarket

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<v Speaker 1>customers access the same sophisticated business process tools as a

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<v Speaker 1>big company, right, so it really has a democratizing effect

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<v Speaker 1>to it. So we're able to really help mid market

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<v Speaker 1>in the ways we help big customers, but in a

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<v Speaker 1>way that's more agile and cost effective for them. What

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<v Speaker 1>would you say is one of the biggest mistakes that

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<v Speaker 1>you see some of these Not to put it on them,

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<v Speaker 1>but some of these midsize companies making when they are

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<v Speaker 1>struggling and they don't necessarily have access to the tools

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<v Speaker 1>that you offer yet. Yeah, I think that the biggest

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<v Speaker 1>mistake is they spend too long running their company on

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<v Speaker 1>Excel and they you know, they're moving spast they're trying

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<v Speaker 1>to be efficient, but they don't realize what they're missing

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<v Speaker 1>out on. And you know, I was actually just recently

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<v Speaker 1>working with a kind of mid sized chemical company and

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<v Speaker 1>it waited a long time to move into automation of

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<v Speaker 1>business processes, which it just helps a lot of our

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<v Speaker 1>ound efficiency and decision making. And you know, once they

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<v Speaker 1>spent the time to implement some more modern enterprise resource management.

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<v Speaker 1>They were able to react much more quickly and they

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<v Speaker 1>saw remediate results, but you know, they had to go

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<v Speaker 1>through that journey to get there, and then in retrospect

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<v Speaker 1>they're like, I'm should have done this earlier, but it

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<v Speaker 1>takes time and focus. It does remind me a little bit,

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<v Speaker 1>and we don't have to get into this, but it

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<v Speaker 1>reminds me of FTX using quick books. When we all

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<v Speaker 1>found that out, we were like, oh my god, how

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<v Speaker 1>did you have such a huge company and do that.

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<v Speaker 1>But then we talked to these startup guys who are like,

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<v Speaker 1>if you have a big idea, just make it happen

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<v Speaker 1>and do it. But it sounds like, I'm I'm hearing

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<v Speaker 1>from you that you do need to focus on the

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<v Speaker 1>bones and the infrastructure a little bit as well. Yeah,

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<v Speaker 1>really thinking about all these processes. Yeah, they're getting it done,

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<v Speaker 1>but at what costs and what are they not getting?

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<v Speaker 1>And it's oftentimes hard to see the opportunity cost or

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<v Speaker 1>the missed cost of what they're doing. But as we

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<v Speaker 1>work with them, and that part of it too is

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<v Speaker 1>it used to be i mean big and hard and

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<v Speaker 1>expensive to deploy, and you know, an ear pear enterprise

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<v Speaker 1>resource process. Right, it used to be the premises, but

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<v Speaker 1>now the cloud changes that so fundamentally. But I think

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<v Speaker 1>a lot of mid market customers are still coming to

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<v Speaker 1>realize that actually, I can get a really robust enterprise

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<v Speaker 1>resource system in place in a couple of months. You know,

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<v Speaker 1>it's not three years and three hundred million dollars anymore.

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<v Speaker 1>Julia tell us about just got about a minute or

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<v Speaker 1>so left here the feedback loops. So in other words,

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<v Speaker 1>you're talking with your clients and customers, you're saying that

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<v Speaker 1>these organizations are feeling the impact of a downturn in

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<v Speaker 1>the economy, so you say about value with you know,

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<v Speaker 1>fewer resources. So how do you go back to your

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<v Speaker 1>creative team or your engineers, when your solutions team and say, hey,

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<v Speaker 1>here's what we need to be doing because this is

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<v Speaker 1>what the customer demands. Yeah. I think the things that

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<v Speaker 1>the big trends we're hearing from our customers are automation,

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<v Speaker 1>which means, you know, using AI to identify where there's

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<v Speaker 1>an efficiencies and automating that out and helping the customer

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<v Speaker 1>be much more predictive with what's next. Right, Like the

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<v Speaker 1>world's changing fast and all of our crystal balls are

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<v Speaker 1>kind of imperfect these days, and so that agility to

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<v Speaker 1>do different kinds of predictive planning is the generative AI

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<v Speaker 1>move kind of impacting you guys all of a sudden,

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<v Speaker 1>because it does seem like it's all of a sudden

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<v Speaker 1>on everybody's radar. All well, we know it's not brand new,

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<v Speaker 1>Yeah it has, but it has definitely hugely revolutionary opportunities

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<v Speaker 1>with it. So absolutely looking at how we use it

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<v Speaker 1>in a bunch of our different products, whether it's HR

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<v Speaker 1>and onboarding to customer engagement. All right, gonna leave it there. Hey,

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<v Speaker 1>thank you so much, really appreciate it. Julia White, she's

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<v Speaker 1>chief Marketing and Solutions Officer at SAP, joining us via

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<v Speaker 1>zoom from Seattle. Some great thoughts. And I think our

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<v Speaker 1>perspective too more broadly, Maddie, about you know, people clients

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<v Speaker 1>want to spend, but they've got to do it smartly.

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<v Speaker 1>They're thinking about the value proposition when they go to

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<v Speaker 1>do it spending. So I thought that that was a

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<v Speaker 1>really key component as we have our big broad macro discussions,

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<v Speaker 1>if you will, and like you said, we've been talking

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<v Speaker 1>to all of these is because you make a great

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<v Speaker 1>show and so does the team. We've been talking to

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<v Speaker 1>a lot of people who are behind these companies that

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<v Speaker 1>can really be leading indicators for us about where the

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<v Speaker 1>economy is going