SAP CEO: European Tech Leadership, Cloud Innovation, and Performance Culture
In Good Company with Nicolai Tangen · 30 Apr 2025
Source: https://shows.acast.com/in-good-company-with-nicolai-tangen/episodes/sap-ceo-european-tech-leadership-cloud-innovation-and-perfor
Transcript: https://podcasts.opennash.com/shows/in-good-company-with-nicolai-tangen/sap-ceo-european-tech-leadership-cloud-innovation-and-performance-culture-1156fc/ (via OpenNash Podcasts, machine-generated)

Hi, everybody, I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund, and today I'm in really good company with Christian Klein, the CEO of the software giant S A P. Now, S A P is now the largest company in Europe, third largest software company in the world, and we own just under 3% of the company, $9 billion, equivalent to 100 billion Norwegian kroner, or 20,000 kroner per Norwegian. So it's a very big and important position for us.

Christian started as a student intern in S A P, like twenty years ago, he became the C E O. Wow, what a journey, Christian.

Yeah, but you see my gray hairs.

First of all, now, just to get a feel for the importance of S A P, how much of the world's business touches an S A P system?

Yeah, Nicolai, first of all, thanks for the trust in into S A P, and indeed, yeah, it was a remarkable journey the last four years. But of course, you you feel, you know, the that, you know, a lot of the world's transactions are relying on S A P systems, uh now, especially with the cloud. I mean, clients are very serious about, you know, how do we want their most mission-critical systems? And to your question, 80% of the world's, you know, B two B transactions, one and touching an S A P system.

Wow, how much of the largest companies, how many of the largest companies in the world?

Actually, and 95%, uh, use one or the other S A P system, many of them finance, supply chain, obviously, but we have H R. I mean, we have probably in the S A R space, the broadest portfolio in our industry.

It's unbelievable. Now, for the people who don't know what, uh, E R P is, what so stands for Enterprise Resource Planning System, what what kind of things are you involved with?

I mean, there's a lot of talk about digital transformation these days and just, you know, to maybe illustrate a bit what is the role of an E R P, because E R P oftentimes sounds like back office, but it's not at all back office, you know, at the end of the day, this morning I had a big, you know, car manufacturer, and they actually all wanna offer, you know, mobility as a service in the future. So they need to change their license model, their pricing model, they also wanna, you know, improve delivery times, and that is all connected to their E R P.

Yeah, the way how you quote, the way how you price, the way how you manufacture, deliver. I mean, that is all part of an E R P, and then we even go to the front line, yeah, with commerce and with our C X portfolio. So it's really covering the value chain, the mission critical part of each value chain of a company. And here comes also my passion, yeah, it's it's a piece of technology, Nicolai, but at the end, what it does, it connects business, it actually wants business processes, and that is actually the fascination, what is so special about S A P.

We are running the world's most mission-critical business processes.

Now, one of the reasons why I love S A P is because you're so integrated in people's businesses. It's not going to, it's not you can just change your system. So how often do you lose a client?

Okay, uh, not very often, and indeed, yeah, I mean, but I don't like it when we talk about a lock-in of customers in S A P. I mean, they they wanna see the value, I mean, first of all, and when we talk to Apple, and when we talk about, you know, their their portfolio, I mean, they really also challenge us from time to time. They say, hey, we also have to, you know, squeeze for further productivity.

How can we automate our supply chain? They also then offer new solutions, they wanna offer new license modules, so it's it's very important that we also follow, you know, what our customers, you know, need for their transformation. And of course, when you are running a mission-critical business, Nicolai, I mean, you don't change your E R P, you know, every year. So it's indeed a very sticky business, but it's also an earned business.

But how does it, but how much work does it involve to get it installed?

Yeah, see, I mean, that is, of course, And how many, yes, depends.

how many?

Yeah, I mean, depends on the size and what kind of business you are running. I mean, there, of course, you know, when you talk, you know, about one hundred warehouses in the world or factories, I mean, this is complex business, yeah, to one manufacturing, to one logistics. That takes a bit longer, but just, you know, because you also need to involve the business and then implement, you know, the software all over the world. When we talk about H R, about finance, you can have really fast go-lives, yeah, and then it also depends on the size of the customers.

I mean, we have also S A P is known for, you know, large enterprises, E R Ps, but we are also having actually 80% of our customers are mid-market customers. And there, when you actually adhere to our template, our best practices, you can also have go live in three to four weeks, absolutely possible. If you adhere to the standard, if you wanna apply the best practices, you don't wanna configure that much, then actually, you know, S A P is also very agile.

The Co companies often also change the way they work, right? And the logistical systems when they introduce your software. How does that work?

I mean, that is actually the part why we also said four years ago, we are not only doing a transformation into the cloud. I mean, at the end, we are running mission-critical businesses and we wanna start with the end users. And for them, a transformation is a change of the way how they work and the way how the the company operates. And that's why we said, let's also focus on not only implementing our technology, but also let's focus on the change management.

Start with the end user. They do a piece of work today like that. How will this work look to to more? What kind of automation can we bring in so that the end user can focus on more value-adding tasks? I mean, this is, you know, what S A P does with our clients, so that they also maximize the value, not only I T-wise, but also business-wise.

You say you don't, um, look at it as if you are locking in the customer, but, uh, I mean, they are quite, uh, what should we say? They are very dependent on you. How do you think about your ability to increase prices? Just how do you how do you weigh that?

I mean, first, um, you know, the way how we do our pricing. I mean, first of all, we look at the piece of technology. I mean, A I is a great example. Uh, we have a consumption-based pricing module. We look into, you know, what does this A I use case do? How many transactions can you automate? You know, how faster can you actually quote? How much more intelligent will your pricing be? How much better can you, eH, optimize your inventory?

Then we define the output, the outcome, and then, you know, the customers can actually calculate, you know, what does it cost? But they also see then the outcome in terms of more automation, more productivity, more intelligence in the way how they run their business. And that is the correlation. And then on inflation, obviously, a big other topic. We wanna treat our customers very fairly. We said, look, there is a a maximum price increase, which is very fair, but it also can be lower in case, you know, inflation is is lower.

So we actually do this, in my eyes, in a very fair manner. And so that customers also see they have also a kind of price protection with S A P.

Are there any verticals which you haven't really addressed enough yet?

I mean, actually, we won twenty five industries and the horizontal layer is actually oftentimes really S A P. And then, of course, in many industries, we also go into deep verticalization. I mean, just last week, I had a Scottish utilities company here. We talk about the meter ring, how to better, you know, improve asset management for the grids. So there we have also deep verticalization in our in our portfolio. Same for retail when it comes about customer loyalty management, returns, claims management.

These are the the the verticals we provide, and we provide actually a lot of vertical applications. And but also customers and partners also can build extensions on our platform because you need data oftentimes from the E R P, be it supply chain, finance data, order data, customer data, and then customers say, hey, I also wanna build my own I P. Okay, here we go. You have the our platform called B T P. There's our data model, our identity, so you can natively integrate, and then you can also build your own vertical solutions.

Yeah, also possible.

One of the things we've seen more of lately is technological nationalism. What what are the issues here for you?

Yeah, I mean, these days, yeah, it's big. And um, you know, tariffs, um, you know, protection, new sovereignty, you know, laws. And obviously, for us, I mean, running businesses in almost over 140 countries, I mean, that is our commitment to our clients, no matter if you do, you know, business in China, in the U S, in Europe, in Southeast Asia, everywhere, we will adhere, yeah, to to local laws, and not only local tax requirements, but also sovereign clouds.

So we're building now a lot of sovereign clouds, um, you know, based, of course, on local laws about data security, who's touching the data, data sovereignty, where does the data will be located? And that's part of the business, I mean, and that becomes, of course, now, these days, more and more important.

Are you seeing more demand now as European companies wanna have a European alternative to some of the large U S providers?

Yeah, I mean, I I see signs for that, um, people, customers asking, Hey, when this continues, you know, how safe is my data when it goes to the East, when it goes to the West? So they are asking definitely, Hey, S A P, uh, can we also localize our data more and more in Europe? Even, you know, in non-regulated industries. I mean, in the public sector and the regulated industries, sovereign cloud was always a big part, yeah, of the business, but also now we see more and more non-regulated business.

Not that, you know, customers now suddenly shifting systems already around, but you see, you know, there is, uh, the the risk is increasing, so there's also some uncertainty around that topic, absolutely, yeah.

Now, you sit in the middle of kind of the global supply chain here. Is there enough agility and flexibility to cope with all these changes in supply chains, tariffs, inflation, all these things?

Uh, I mean, yeah, absolutely. I mean, the tech, you know, especially in the cloud. I mean, we deliver, you know, new releases in the cloud, you know, every quarter, or if the customer wants, every year. But so we can deliver fast innovation. We can also adjust, you know, our software to adhere to any kind of tariffs, you know, which are coming up in every place in the world. The point is, of course, what we would love to see as a tech company, but then I'm not only talking about S A P, is of course, you know, to have, you know, a bigger, you know, sovereignty a across Europe, yeah, not having sovereignty in each, you know, member state, but really,

you know, having it across Europe. Because that makes it, you know, easier to scale, and that makes it also easier to do business with. And I

Will will that happen, you think?

I'm not so optimistic. I mean, the the point is, you know, it's same like, you know, in a in a in a private company, yeah, you need to give up power, yeah, for the sake of, you know, for the benefit of the of the bigger union. And you know, it's it's not always so easy to convince every member state to give up power and say, look, I actually, you know, remove my own sovereignty requirements for the sake of having, you know, one European sovereignty requirement.

And that that is of. But I feel this is, of course, key, not only for for S A P, we are doing business everywhere, we have our labs everywhere, but for the startups, I mean, you know, they need scale, they need they need to fast time to value, and they need to scale fast. And for them, of course, that would be, uh, very, very important, yeah.

How do you, um, work with data privacy and cybersecurity? I mean, it's totally key. I mean, that would probably be one of the worst things that that could happen if you got some malware really integrated into your systems.

Yeah, and um, I mean, it's part of of all of our contracts with the customers. Yeah, they have clear S L As on, you know, on what happens in case there are vulnerabilities. We, of course, invest, you know, billions of R and D money, uh, into cyber. Uh, I mean, it's actually for us a corporate requirement, and there are clear also S L As and requirements inside S A P. So we take this very seriously. We have their even, you know, in the board, regular checkups so that the organization feels there is no compromise around cybersecurity.

But what I always tell my customers about is, well, when you look at S A P or our hyperscaler partners, I mean, we are putting a l a a big firewall around the whole technical stack. I mean, as a mid-sized company somewhere here in Germany or in Europe or everywhere in the world, I mean, it's hard to deal, you know, with this, you know, fast developments on cyber. So I would say the cloud is another good reason now to say for cyber, I want to move to the cloud.

I give this, you know, topic also in the hands of big technology companies to secure my data, to secure my systems.

Just seems like the attack surface is getting bigger and bigger as everything is digitalized, right? And you ha and you have new type of enemies.

Yeah, you have, uh, new, you know, bad actors, you you actually, the threats are increasing. I mean, we see it clearly. I mean, you know, and that is, you know, the B two B data, especially in some industries, is is very mission critical. So, yes, you, you have to absolutely make sure that you have a secure landscape up and running, yeah.

Now, if you look at history, uh, Amazon, uh, kind of invented cloud computing. Why why wasn't it S A P?

Yeah, uh, Nicolai, that's a good question. I mean, um, look, the good piece is now you see it in our numbers. Uh, we are there, we are super successful. I would say we have the fastest growth in the S A R space. But the point is, of course, you know, why didn't we see it, you know, fifteen, twenty years ago? I mean, there's a good book about the innovator's dilemma. He said there is a lot of truth into it.

Yeah, you have a well-run traditional business model, delivers good growth, good profits, and and you, you don't realize, hey, how fast can the market change actually? And then to to tell, you know, um, your customers, to tell your employees, and even, you know, worse, sometimes to tell the capital markets to say, hey, I gonna disrupt my own business module, and I'm, you know, building now a different different business model in parallel, which costs probably a lot of money, you know, it's not that easy for

What was the moment where you realized you needed to change?

I mean, for me, I mean, it was pretty clear already when we acquired a lot of, you know, cloud products, it was clear that the market is is changing. And for me, I mean, personally, I always thought, hey, we need to bet even more on the cloud. I mean, you see, you know, where the customers is going. And and so it was for me very clear in 2019, when I became the co-C E O of the company, that we have to double down on our cloud transformation, absolutely.

I mean, Nicolai, we are have 50,000 developers, they're coding great stuff every day, a lot of A I use cases, a really good stuff. But what does it help when you are sitting on an eight-year-old release and you're looking into a screen which is, you know, probably, you know, still touched, you know, by one of our founders, yeah, so that is that that is the problem, yeah, the innovation gap is too big, and we are coding a lot of new capabilities for business model transformation, resiliency in supply chain.

We have a Queen Ledger, you know, you can use a Queen Ledger to not only guessing about carbon emissions, but also having actuals. And so you need to reduce this this gap, yeah, you you between, you know, the customers are here, the latest release is there, and and the the answer and the solution to that is cloud.

But you, but it's a. Sure, I mean, it's a tough decision to make, right? Because you do kind of you, you take a hit on, uh, when it comes to the share price and all that kind of things, right?

Yeah, I mean, look, I mean, S A P had in 2007, eight, we had a company, uh, you know, 100% owned S A P S A P hosting. So some people here somewhere, you know, realized, hm, there is something coming. Maybe customers wanna outsource their I T systems to the cloud, and then we sold it. Um, what I figured out later is, you know, the margin was not that high as in our traditional business.

It was actually, you know, not helping, uh, quarter by quarter. Yeah, but then, you know, to have the courage to say, you know what? We go out to the capital markets and say, you know, we have our traditional business, so to say more our cash cow, and then plus we, but we invest into a new business model. I mean, that is, of course, never easy. And then look at S A P the last four years, when you would ask now the people here, there's a lot of change also in the way how they work, day day over day, the way how we incentivize them, the way how we measure success.

I mean, everything is changing. It's a nice piece of strategy paper, but then to get the strategy executed is, you know, oftentimes, yeah, the biggest challenge.

How do you think quantum computing will change the way we work?

Um, Qu Quantum, I mean, definitely, we're doing, uh, uh, research there. For example, take supply chain, yeah, when it comes about logistics optimization, yeah, it's very, very complex. You need a lot of computing power, yeah, to to simulate, you know, logistical chains, you know, how to bring a product A from product B. There are millions of, you know, value drivers who influence your logistical supply chain. And that is, of course, you know, one use case where we definitely see it will be a big game changer if we can, you know, use quantum, yeah, in the case of in the context of our supply chain portfolio.

Finance blockchain is, of course, you know, one si another thing, um, but you know, these are the early use cases. And, you know, when I'm talking to our researchers, they actually would say now in three to four years, I mean, the the the technology should be that mature that we really can apply it in the context of our portfolio of our products.

Why haven't companies gotten more productivity out of software in the past?

Yeah, that's a good piece. I mean, when I, before I became the the C E O, um, I asked, of course, I was running here the I T organization, and I got presented a business case. Yeah, move to S four HANA. I said, Oh, great idea, but what does it do to our business? What does it do to our transformation? But it was purely planned as a technical migration. Oh, there's a next E R P, let's just technically migrate.

I said, what is now, you know, changing for the benefit of our S A R S module? I mean, we run the company still as a on-premise company in many business processes. So for me, I guess it's very important that the customers understand when you are running an E R P project or let's take A I, you always have to have the business at the table. When you're coming in here and you talk about E R P, and there are only I T people around the around the table, I would question, will the customers see the M the maximum value?

Of course, I T can benefit of decreasing the cost of running such a system. There is, of course, also a T C O game in that, but it's very, very important that you connect, you know, the technology with the business. And this is where companies struggle the most with how to do it, how to integrate the business. Is the business really open for that kind of change? Is the business open for automation, for standardization, or is, you know, actually has everyone the freedom to do whatever they want in a in a in a commodity business?

That is oftentimes the challenges in such software projects.

Let's move to A I. Um, what excites you the most with A I?

The possibilities, the opportunities, what you can do with this technology. I mean, I see it always in the context of our customers business. Uh, and I just had, you know, yesterday, uh, a big, you know, French retailer here, and they do millions of changes to orders. Yeah, they change orders every day because consumers, you know, actually, you know, do a change of what they order. They do a lot of order changes in the supply in the supplier space.

And now, when you can see how you can automate that, yeah, with A I, I mean, for them, it's like a big productivity booster.

So so if you if you look at the possibilities here, uh, and so from if you were to try to rank them, what are the kind of the most amazing things you're seeing here? I I mean, starting from the biggest, the biggest changes, over the next The biggest three to five years.

the biggest changes is actually in the context of S A P and A I is definitely on the analytics space. Yeah, I mean, you you today, you gonna figure out, you know, your own planning simulations. You're figuring out how does my supply chain planning work I in context with the demand which is coming. And when you see now how A I and all these algorithms will work, and now you can not only bring business data in, but also a lot of other content in.

I mean, that makes, of course, you know, financial planning, supply chain planning, workforce planning, I mean, will be absolutely moved to a completely different level. Yeah, so in the world of intelligence, the way how these plans are integrated, and of course, how you then at the end can optimize and run your business. Or take another example on the supply chain side. I mean, a lot of our customers spend billions of of dollars on asset management, yeah.

So predictive maintenance for assets is something which will be, of course, hugely impacted by generative A I, but also traditional A I. So that is definitely an area where uptime of machines, uptime of factories, I mean, is absolutely a big potential there with A I, yeah, to actually try further productivity for a company. So these are some of the use cases we are trialing on. And then talking about, you know, the stuff which is coming now on agentic A I.

I mean, how often did I sit in front of an S A P system, you know, analyzing, you know, our the payments overdue, and then you put the finance data out. Oh, overdue. And then what is actually the problem of this customer? Why why is the customer not paying? Then you can talk to sales, you can talk to logistics, you can have maybe a commercial issue. And when you look now at Gen Digi AI, you can actually tell the system, you know what, give me all payments overdue, the top twenty or top one hundred.

But then not only give me this report, give me why is what is the root cause? Why is this customer not paying? Is there a sales issue? Is there a logistical issue? Did we deliver too late? Or is it a commercial issue? And then when you think about that, you know, what kind of answer do you get back? And recommendations about what kind of actions you should actually take. I mean, this is remarkable. I mean, the, you know, actually today, a lot of humans being not only spend time, but probably not always figuring out the right, you know, call to action.

And that is now what agentic A I will do. There is a finance agent, there is a logistical agent, there is a supply chain agent, and they will collaborate with each other. And they have so much more data, you know, in the, you know, in their mind in their

When when will you have a true agentic, uh, A I, where?

Actually, the the first one we already shipped. Yeah, that is about, you know, the services and the services agents we have, yeah, when you're sitting in a in a call center and you need to give advice, uh, to a customer about are the assets, you know, actually available? What is the issue of an asset that is already shipped? And now we will launch at S A P, we will launch ten more agentic A I use cases, and I mean, that is

But S A P has the big exhibition, huh?

yes, exactly, yeah, yeah, which is coming in May.

Yeah. On average, across your client base, how much do you think this can drive productivity?

I mean, our promise to our clients this year will be every end user who is working with our A I, so our digital assistant tool with the embedded A I use cases, yeah, we can actually drive productivity up to by 30%. Yeah, 30%. Yeah. I mean, what

Thirty?

we do? Yeah, but Nicolai,

So across the whole company, or you have just that function?

to. It's not only a marketing claim.

No, but I is that, uh, just for this function, or is it across the company?

It's actually across the company. Yeah, when you are touching S A P software, yeah.

What are the big things this year which are going to drive 30% productivity gain?

I mean, it really depends on, you know, you can take H R, take H R, yeah, you actually, when you're an H R business partner, um, you you you need to hire, you need to retain, you need to hire the white skills, you need to retain the white people. You actually need to bring make sure that the learnings are connected, yeah, to the skills of the people, what what are the learning gaps? And that is, you know, somewhat so something what an H R agent will do for you.

Job postings done based on, you know, a lot of insights, where is the skill gap in the company? What kind of skills do I need? When you then put trainings together or goal setting, that will be taken over by H R agent. Obviously, an H R business partner will have to say, yes, that is the right learning journey for this kind of job profile. But at the end, you know, in in the past, they had to type, they had to search, what is the right learnings for them.

Now an H R agent is doing this for them, and then they can confirm it if if it fits, you know, to their expectations. In finance, when you are in F P A, I mean, you put a lot of data out of P W, you're doing financial simulations, how you gonna end the year, what is the sales pipeline? How can it influence my top line? I mean, there is a finance and a sales agent now doing this for you.

When is, uh, agentic A I going to be so good that we don't need S A P?

Actually, I mean, I would say, um, you know, at the end, you need business software. I mean, when you look at, you know, and I know there was a lot of talk about, you know, is S Aas still relevant when A I is progressing? I would say S Aas is very relevant because at the end, every A I use case needs data, needs the business context. I mean, sorry to say, I have no imagination. Maybe someone out there has how we could deliver our A I in the context of the business without our apps.

I need a business context, I need a context of the business process, I need a semantical data structure of the customer. I mean, it's not like, you know, that you can just implement a large language model from any kind of vendor, uh, and then say, Okay, I'm now having, you know, A I working for my business. No large language model on this globe understands business data, has access to business data, understands the business context. And that's why we are saying, yes, we use the L L Ms for the unstructured content, for, you know, actually, for speech to text.

But at the end, what it really is, the differentiator for us is our A I foundation who understands the businesses, the business processes and the business data.

So when we have made this new great, uh, agentic A I, and we are putting this model in charge of running S A P. Uh, what part is it that you will be happy to see go, and what part would you absolutely keep yourself?

I mean, first, I mean, obviously, I mean, our overarching goal is to deliver more value. If the customer delivers more value, I have a belief they will rely more on S A P software to run their business. And obviously, what we wanna shrink and reduce and remove is the time to implement the software. Yeah, the time, What part the time to of your, what part value.

of your job do you think is a bit dull?

Um, my job. I mean, look, at the end of the day, I mean, I I still believe there are human beings who are making decisions, yeah, who will, you know, I mean, I'm traveling the world, I'm visiting customers, partners, investors, and I still believe that is, you know, something what human beings and my C E O has to do. But what will be, of course, you know, much less is when I'm getting prepped for my earnings, when I'm getting prepped, you know, for a conference, et cetera.

I mean, a lot of that will be highly automated, yeah.

What is it that you look forward to not doing in this year?

Me personally, yeah. I mean, what I'm not doing is in in the past, you know, I still know our products, I still know our solutions. So sometimes I go in and look into goals, I look into learnings, I look into financial numbers. So I'm able to really access our finance solution still. And in what I'm not doing anymore is typing in a lot of transactions, uh, to get the information I would like to get out of our systems.

I'm an end user of S A P software as well. And that is, of course, I'm using Juul, I'm using a lot of A I, and I see, you know, by myself, how I also will get more productive. Yeah, just this morning, I looked into our P and L. I cannot talk about our earnings, but I wanted to see where we stand. And when I looked at what, how I did it in the past and how I'm doing it today, I'm not only getting a P and L report with one mouse click, or actually with one, you know, talking to Jewel, please give me my Q one P and L.

I can also say, give me a prediction about, you know, what is our current cloud backlog will be based on the bookings we did, et cetera. So that is, you know, of course, more intelligent and way more automated. Yeah, also for me as a C E O.

Now, uh, many private companies are, uh, doing well here. What about governments and public sectors across Europe, for instance? What's the s, what's the s, what's the scope here?

Yeah, I mean, uh, you know, when you look at Germany or France, I mean, there is not a question anymore, should we go cloud? They are all convinced about cloud, they all want to use A I. They see, you know, also for the citizens, the all the citizen services, they, you know, you can actually digitize a lot and you can actually make this also ma make the citizens more happy with embedded A I. Now they, of course, have way more regulations on, you know, what, what, what does happen with the data?

They have, you know, clear, very clear sovereign cloud requirements, and so we are investing, yeah, we have, uh, De Lucy in Germany, we have in in France, we have together with Cap Gemini and Microsoft, we have Blue. So we are building these sovereign clouds to also then say, hey, but now, you know, every government, every public sector agency can also then, you know, do business and run their business with S A P in the cloud.

Is there a real willingness amongst, uh, public sector to rationalize?

Yeah, look, I mean, sometimes I see there is some, you know, um, of course, they they are a bit more risk-averse. And of course, you know, when you wanna digitize a certain agency, you are touching, you know, usually thousands of end users, and when something goes wrong, you get criticized. The problem here is when everything goes right, usually no one talks about that. And then, you know, sometimes I see, you know, governments, you know, politicians getting a little bit shy or risk-averse to make those decisions.

Just, you know, because when you stay on the status quo, everything stays like it is, and I cannot get criticized. The problem is, everything stays, everything also stays very bureaucratic, uh, very manual. So, but we see now that it's moving, but clearly the public sector is definitely not a front runner when it comes to digitization. Yeah,

No, no, I mean, the safest way not to make mistakes is not to do anything, right? What is work going to look like in ten years' time?

In ten years' time, um, look, I I really believe that, um, when you, when you look at, no matter in a company which function you wanna take, I would say people can be way more focused on, you know, on building great strategy, how is my industry transforming? But really not so much into anymore, you know, going into, you know, data analytics, et cetera. I mean, there will be a lot, you know, what will be done by A I or software to really supplement, you know, your strategy work way way more.

And the same is true for, you know, as I said before, on on finance or H R. There's still today a lot of, you know, uh, manual transactions, documents, which you need to screen, a lot of bureaucracy, you know, you have to deal with. And I'm totally convinced a lot of that will be taken out and will allow H R business partner to think more about, hey, what is the the workforce I need in five years from now?

How will my skills change? And a lot will be done, you know, in the back by software and A I.

So what about the situation with the humanoids and and robots? So I I met this, um, robotic company, uh, earlier in the week. I'm just amazed by how soon they will be all over the place. Well, how is this going to impact society?

I mean, the impact is there already today. I mean, I have seen warehouses in China and other places in the world where 95% of the work in a warehouse is done by robots. And I mean, that is already, you know, today changing, and that will continue. I mean, also the way how you maintain factories, how you maintain machines will be completely automated, uh, also by A I, not only robots. And so your workforce will change.

I mean, even at S A P, look at S A P. I mean, we actually have today a profile of a developer. So we will still have many developers also in five years from now. But the skill profile of a developer will change a lot. Yeah, so the way how we code, the way how we will deliver software will radically change. So it's very important for every company to also think about, okay, this is my workforce here and today, but also how does my workforce need to transform skill-wise?

And what kind of jobs do I need? And which kind of jobs will will do I won't need anymore in the future?

Europe? How is Europe doing?

Yeah, I mean, uh, I mean, look, I would say still Europe has a lot of strengths, but, you know, these days, I would say Europe is not very competitive. Uh, I mean, you see, I mean, look at Germany, our economy is clearly suffering. Other economies are doing still better. But I would say Europe is, you know, losing a lot of trends, just not being by being not a union. Yeah, at the end of the day, we're, you know, you need a market, a common market for banking union, for digitization, yeah, for for infrastructure.

And and and the the point is, yeah, when you look at the U S, when you look at China, I mean, when you bundle your power, you know, you also then, you know, have better chances, yeah, when it comes to competition, not only in I T or tech, it's also about banking, it's about retail, et cetera. And this is something where I feel the union is just not a union, and that, in my eyes, clearly has to change.

And there is too much regulation. I mean, you know, there's

Tell me about digital information act.

the digital information. Yeah, the the point is, yeah, I mean, we are not against, for example, the A I Act. I guess A I clearly needs a framework for regulation. The point is only you have the A I Act on Europe, but you still have the Daden Schutz Grundverordnung in Germany. Yeah, so another, you know, clause around where you, you, where it's defined how data needs to be protected, you know, how do we deal with consumer data?

And so, you know, you have a new act on E U level, but you still have, you know, different, you know, acts also then on in the member states. And then you're adding one layer on top of another layer. And that is, of course, not contributing, you know, to reduce bureaucracy, you're adding more bureaucracy. And that makes also that the ease of doing business is getting harder, not easier. Yeah, and that is the kind of problem what we have in Europe.

What are the implications?

The implication when you sign a contract today around, you know, with with a European company, and you embed A I into into the solution, and then finally into a commercial contract, I mean, you have you need way more lawyers. You need a lot of lawyers. You need lawyers who understand local law, but then you need lawyers understanding European law. And that just shows, I guess, very well, you know, the the the difficulty of doing business in in in Europe.

And when you are signing a contract in the U S, you know, there is first of all, much less regulation, but they are not different regulations state by state. And and I mean, Nicolai, we here in Europe, in the last two years, we had to double the size, you know, of our of our legal department. Yeah, just to screen.

How big is your legal department now?

Here in in Europe, uh, I have to check, but it's probably around, you know, 150 people. Yeah, yeah. Only for commercial, for contract, you know, compliance checks. Are we compliant? Is everything in the contract right? And, of course, customers have a lot of questions around how do we do

I'm sure A I can help you with that eventually.

Yeah, actually, you you are actually saying something which is also very true. Yeah, when you see we do all the refrack checks, it's done by A I first. There's still a revenue accountant who is then looking at the contract finally, but there's a lot of refrack checks, compliance checks, which we are doing with A I. Still, you get every time new regulations, so the bureaucracy is also increasing.

Related question Why are there so few tech companies in Europe?

I mean, my big belief is when I

So I think the number is what three out of the top fifty in the world? And you're the number one.

that's right, that's right. I mean, look, it's of course about, you know, I mean, you know this better than I do about, you know, is there enough people funds and willing to take some risk and, you know, and fund, you know, some early startups. But I would say money is not, um, the main issue we're having here in Europe. I mean, take, for example, S A P. Yeah, there was actually, you know, five people who did a job, and they found, hey, I'm doing the same task all over again.

And they had, first of all, the courage to say, you know, I'm going out of a well-paid job, and I found S A P. Then they had to find, you know, people who finance them. That wasn't by far not easy. They got a lot of, you know, no's from many banks here in the region. And then, last but not least, yeah, they had an idea, but then also they had to execute. So they had the courage once again not only to do business here in Germany, but they also then wished, you know, to to go to the U S and in other places in the world.

And so when I look at this today, and why is this happening so often in the U S and not in Germany? When you look at in the Silicon Valley, and I mean, there's often a talk why are there so many, you know, successful tech companies in this in the Silicon Valley. I see there is a piece, there is great research, there are great universities, but there are also great companies. And, you know, when you see this in combination, you have great tech, new tech coming.

You see it, you see it very early, especially in the Silicon Valley. There are a lot of smart people figuring out where is the technology going to, what are the technology trends. But then you also have real-world problems, and when you then bring this together business, research, and universities, this is, you know, where great ideas, you know, are born. And then you, of course, have to have the money to execute and have to have people who are willing to finance, you know, this new idea, this startup, yeah, to scale.

And that is, of course, also the ecosystem there, which makes it very, very special. And here in Europe, I mean, look at that. If you build now a startup in Germany, I mean, you have a certain size of a market. But then when you wanna do business in France or in Belgium or another or Norway, you know, there are different regulations, you actually have to build a different legal entity, and that is time and money, what it costs you.

And that is not good. Yeah, and that that's why I would say there are a lot of good reasons to then to go to the U S and found your startup there before you're doing it in Europe.

Absolutely. So, against this really difficult backdrop which you just painted, if you were to distill down, why has S A P been so successful?

I would say, first of all, five founders who had a great idea, and second, to always have the courage to transform. I mean, there were many, many situations in S A P's history, when, you know, the C E Os or back then the founders wouldn't have, you know, the willingness to disrupt their own business model, their own technology, S A P would have been yesterday's company. So it's also about this constant transformation, this willingness to disrupt your own traditional business model and to move on.

Moving on to leadership, so you, um, became the C E O before you turned forty. It's quite extraordinary. How was that?

Yeah, when I look at my career at S A P, and I feel this is a strength of S A P. I mean, I started here as a student, um, and, um, and since then, I always had, first of all, people, mentors who actually, you know, gave me a lot of knowledge, who actually gave me a platform to grow my career. And they gave me a lot of trust and responsibility. I had my first team here at S A P with seven people when I was, you know, twenty six, twenty seven.

Others are still at the university. And then, you know, I had the the opportunity not to only see one part of S A P. I mean, we have here a big internal job market. So the the ability to rotate and seeing different parts of the business is absolutely there. And that helped me a lot to not only have great mentors, but also then to learn business end to end. And then look at my time at SuccessFactors.

I was moving from here to, um, San Mateo in in San Francisco, and I was ab able to help Lars Dahlgaard back in the days to one SuccessFactors end to end. I mean, I learned so much, yeah, from, you know, closing deals, doing marketing into delivering software, and also then making sure the customers are adopting the software. That was for me, of course, you know, better than any, you know, learning course at the university. I saw real life how such a company has to work.

And then, of course, with my career, you know, really seeing different parts of the company. When I'm sitting here today as a C E O, I see sometimes screen lights, you know, in certain meetings, and I can still judge, Hm, is this maybe too green, or should this not be more or orange? And I don't like orange, so let's go to red. It's green or red. We have a problem or not. And and so I have, I guess, the ability to judge, of course, not always to the deepest level, but I have the ability to judge, you know, are we going in the right direction and are the pieces really fitting together so that it works end to end?

How, um, was it to lead, uh, people who were a lot older than you when you were so young?

Actually, I didn't think so much about it. I always, you know, wanted to convince people about, you know, leadership, about making decisions, um, also convince them about, you know, with knowledge and expertise and and also, you know, always, you know, be there to also help them, yeah, to do that job better. And I guess when people feel that there is someone who understands the business, who is also helping me, you know, in my own career, helping me, you know, to move on.

I guess then you also, you know, create, you know, the acceptance you need. And then I guess age doesn't matter so much. And here at S A P, I would say we also have that kind of culture that it's not a matter of age, it's really about, you know, your own performance, but also the way how you adhere to our values and be able to work in a team. Because here, everything w, you know, once in projects, there are not so many job profiles here at S A P where you do where you are an individual contributor.

A lot of is happening in teams, in projects.

Who have been your important mentors?

I mean, uh, early in the days, I mean, there was, uh, uh, of course, uh, the the person who hired me, who gave me, you know, um, you know, a great platform to to learn, but then also to said at one day, he said, hey, why don't you go to this executive board member and present your stuff by yourself? And not me presenting it, you know, go there and I give you the platform, you know, to really show how how good you are and what kind of work you are doing.

And that helped a lot. And then I was, of course, with Gerd Oswald, he was a long-standing board member here. He taught me a lot about, you know, not so much care about so much internal stuff, but really focus on customers. He was responsible for service and support. So I learned it the hard way also how mission-critical our software is. And he always told me, Christian, no matter if you're in finance and service and support, always understand our products and our customers business.

Then I had Lars Dahlgaard, um, you know, as, um, you know, C E O of SuccessFactors, who founded this beautiful company. I had Jim Snauber, completely different personality. He was wanting development, so I was wanting dev operations for him. So I learned a lot about, you know, how to connect business with technology was very important. And then I guess the most important time in my career was when, uh, Bill McDermott asked me to become the Chief Operating Officer.

And because, uh, four C E O's before all failed. And I said to Bill, you know, Bill, I don't wanna be the fifth one failing here. I wanna still build a great career at S A P. Can you do me a favor? Um, I T is great, but I need businesses, I need business processes, and I need data. Otherwise, you know, I T is can only be, you know, less impactful, but I need, you know, the business systems and data.

And so he gave me also then, you know, this opportunity to become the Chief Operating Officer. And there, you know, I learned how hard it is to transform a company. It's not only about tech. And that's what I'm also now telling our customers today. As a C E O, I said, hey, S A P can be way more for you than only implementing a new tech, a new solution, a new E R P. We need to be part of your business transformation because then the tech can unfold immense value.

A I can unfold immense value. You can buy a yacht, a lot of

If you if you have a big problem now, who do you approach? Who do you ask?

actually, when I have a big problem now, I mean, I have my executive board colleagues and which I trust a lot. And, uh, you know, many of them I really ask for an advice. Be it, you know, Sebastian Steiner, who was head of strategy, is now our C E O. I go to him and then we have a cup of coffee and think about, you know, the strategy, uh, strategy to execution, what does work well, what does not work so well.

And then the same is with with my other all all other board colleagues. I'm the one who is

And what about outside the company? Who do you

outside of the company. Uh, I would still say I have a good relationship still to Lars, you know, a former mentor. I have, um, you know, a lot of coaches who also help me on, you know, how to deal with complex topics, how to do problem solving, etcetera. So I have a few people there. And then, of course, you know, when you talk to Satya Nadella, when you talk to, uh, Shantanu from Adobe, etcetera. I mean, we talk about business,

just just doing just doing just doing legal plug here? We have had them both on the on the broadcast,

but we also talk about

so so the listeners should really and especially check it out.

when I became, you know, I was thirty eight when I became the C E O. I mean, oftentimes, I at the where we especially at the beginning, I asked them for advice. I said,

They they are, they are both, uh, Indian. Is there something with the Indian leadership that you admire or try to replicate?

Look, I mean, what I see in both of these gentlemen, I see that Satya and Chando, first of all, understand the business inside out. Satya also started his career at Microsoft very early. And when I talk to him, I mean, he understands, you know, product, commercials, where is the market going to? He has a a super creative mindset on how to bring all of these pieces together.

But they're also quite humble, right?

They're also quite humble. Yes, indeed. And I would actually say this is also very important. Yeah, as I also tell the people here, I mean, it's great about the share price, but at the end, you know, next day you have to deserve, you know, the the wide to actually, you know, serve your customers better. And that is, you know, at the end, this humbleness, what you need to not only become successful, but also to stay successful.

Is there such a thing as a German leadership style?

Um, I would say, you know, the Germans, yeah, when I look at the German leadership style, I mean, we have our processes, you know, we have regulations. Am I now a typical German? I mean, I sometimes, you know, try to I'm trying to to get bureaucracy out, yeah, but I see this as a ty typical German thing, which is, on the one hand, a strength. Yeah, when it comes to, you know, organizing supply chain one, supply chain one, manufacturing, you need to have this, you know, kind of passion for the details, but you also need to be careful that you are not over-regulating so much.

Yeah, there is a there is somewhere a borderline, which you shouldn't cross, because then your strengths can also become your biggest weakness.

What have you learned from being on the board of Adidas with, uh, our fellow Norwegian Bjorn Ingrid?

yes, yes. Um, he's also a humble guy. And, uh, what I what I when I look at Bjorn, I mean, he he wants to be close to his retailers. He wants to be close to the people running the supply chain. And I guess that is what a C E O is also about, to not sit at the top in your ivory tower and, you know, see, this is my strategy. And, uh, so, but really coming down and say, hey, what are the needs, you know, of my different stakeholders?

And then act based on those. And then the second, based on Adidas, it's a different industry. But, of course, you know, marketing pointed, you know, matters a lot. And that is, of course, certain things, what I can also take out for for S A P, despite we are different industries, supply chains, COVID was very interesting how Adidas built a very resilient supply chain and how can tech can help. So, out of this mandate, I also take a lot of, you know, input for our technology on to how to help, you know, such, um, companies to one even better with our technology.

Because you are sitting in the board and you see, you know, what is working well and where do they need help?

Why do some C E Os have execution power? Why do some people get things done? You mentioned that you were number five, you know, in a particular job, and you you managed to do it.

yeah, I would say, um, you know, people, when you would ask people, um, you know, surrounding me, they would probably say Christian can be sometimes a bit impatient, uh, and wants to do decisions sometimes maybe a bit too fast. But I'm more acting and managing based on the principle I rather do, you know, ten decisions a day, and eight are great, and two are wrong. And I'm the last person who says, you know what? This decision was absolutely not great by Christian.

Let's revert this decision. Uh, it was not good. So I, you know, let's cost correct it. But then I get something done. And at the end of the day, when I leave and go to home, I I the thing what I don't hate, what I really hate is I was sitting in ten steering committee, spent the whole day here in Waldorf, and I have to feel I got nothing done.

Do you micromanage?

I micromanage. Yeah, no, that is a point, yeah, which I got, you know, a lot of blame for in my early years. I have have to say, you know, when I micromanage, I micromanage when I feel things are not going well. Yes, then Christian can really go deep and wanna understand the problem. But is this now necessarily a bad thing? But I also have to tell you things which are one in great. I'm actually so happy to also cancel a meeting, said, you know what, today, no, we don't have to talk about that because it's one in great.

I see it in the numbers, the facts, the customers, everyone is telling me fantastic. So, you know, I give you some time back. You rather focus on other stuff. You don't have to spend the time with me.

How do you give feedback? Are you a straight feedback giver?

Yeah, but this is a it's a big, big risk in this job. I sometimes feel people, you know, have so much respect. They are actually, you know, concerned about giving you open feedback. And so sometimes I sit in meetings, I said, Hey, hey, hey, uh, you don't have to be so polite and saying only so many polished things to me. Tell me, are you agree with me or not? And if you don't agree, it's absolutely right, but please tell it to me now, because now we are making a very important decision.

It is absolutely fair to say no, the C E O maybe, you know, has, you know, a different opinion than I. And so I constantly also, first of all, challenge myself to, you know, to come across as, you know, please give me this feedback and not running into a meeting and speak up, you know, first, and then dominating the whole meeting. Because then you can, you know, wonder why you're not getting feedback, but it's not a surprise.

But then also, you know, encouraging others, uh, to speak up. And I guess this is very, very important that you facilitate that kind of culture.

What's the part of, uh, S A P corporate culture which you try to change?

Yeah, there's a lot of talk these days about performance management, and, um, and there's a lot of talk about, you know, indeed, this micro micromanagement and giving more freedom to our people. And I guess it got a lot better. But, you know, the thing what I wanna actually facilitate, especially, you know, here in in Germany, in Europe is, I mean, you know, you can always say around, you know, what is good or bad around, you know, U S labor laws and so on.

I don't even wanna go there, but I'm actually convinced that in order to stay at the top of an industry and be a market leader, you need a kind of performance culture. And performance culture is not about every year kicking 10% of the people out. It's about, you know, what I'm as a manager need to be able to sit here together with you and give you constructive feedback about what was great and what was not so great.

Because in my career, especially the things which were not so great, helped me to get better. I mean, how often did Jim Snauber tell me, you know what, Christian, in this meeting, first, I didn't feel very well prepared. There was a certain piece missing. And also the way how you argumented, you didn't come straight to the point. And I said, Oh, yeah, I felt the same now, but now that you're saying to me, it's good. Now I can go back and think about it and do it better next time.

But this ability is got a little bit lost. And that is something what I wanna facilitate. So this performance feedback, this connotation to, oh, do we wanna get rid of people? No No. I'm a big believer that performance culture, first of all, matters for your high performers, so that they see when they walk the extra mile and perform that they really feel rewarded. But it's also for the people who are still new in a job that they have the ability to get better.

And, of course, it's also then a thing that you also understand, hey, S A P is really looking for performance. It's also not okay for the rest of the team when you're just sitting around and, you know, doing your job, uh, you know, in a in a way that, you know, you're just, you know, pulling the your task activities to others in the team, yeah.

Do you think, um, the lack of, um, uh, kind of compar competitive spirit and, um, performance culture, do you think it's a function of where Europe is now, you know, a bit more bureaucratic, more rules, more, uh, security, safety. It's not easy to implement in in this part of the world, right?

Yeah, absolutely do. I mean, look, when I, um, I mean, I see it, you know, actually also when I look at my kids, I mean, do I always tell them don't climb up here the cherry tree? No, I mean, you know, climb up. But, you know, I'm, of course, still watching, but I'm not the one who says, hey, when you don't take any risks, you know, how does this further, you know, in your career later? When you take zero risk, I'm I'm convinced you're also limiting yourself.

And I mean, there is, of course, a topic like compliance. You, you, the compliance is super important. You always should stay compliant, but there's a big difference of not taking any kind of risk. And I guess here in Europe, I really feel we also need to educate, especially already in in in school, in the university, that risk taking is absolutely something what you have to do in order to succeed. Yeah, because, you know, when I look at my competitors around there, I mean, of course, every decision you do, every investment decision, every portfolio decision you do, there is some risk into it.

I could sit here the whole day and say, you know what, we don't transform. Actually, it's great S E P is, you know, here at a certain level. We stop our transformation and we just stay where we are. That would be probably the way of where I would get, you know, much less resistance here and there, much less criticism. But it would be 100% the one thing for this company to just stay where we are because tech is moving fast, AI is moving fast, so we have to continue to transform.

Question, how do you relax.

Relax, um, actually, I I love to ski. Uh I really love to ski. I love the mountains, um, both in even more in winter, but also in the summer, when you don't have always your mobile with you. And that is for me great with the family, with friends. Um. And then, of course, you know, I have my sauna where I can, you know, do you know, also spend a bit time for me. I guess it's also very important.

I love the family, but sometimes it's also to come down and to digest what happened in the day and to think a little bit broader about the world and everything what is happening on the geopolitical side. That is also some time which is very, very important for me and to come down.

So we interviewed a hundred leaders. You are the first one who mentioned a sauna. So perhaps perhaps See. You have a Finn inside you or something because Yeah, I I I do sauna, Actually You know, probably five times a week.

I actually can almost compete with you on that one. Yeah so I I you know oftentimes when I do my U S calls in the evening uh and it's then around nine ten in the evening and I

You're in the sauna.

Turn on the sauna now and not during the call but I already turn on the sauna and then I hop in you know before I go to to to bed or you know I I'm I'm a big I really really love it and it's a good way for me to come down and relax.

What do you read.

What do I read. Uh I read a lot of you know of course you know business newspapers. I lead a lot of research. I love research. I uh sometimes tell my C E O give me the latest research on knowledge graphs. Give me the latest re research on vector engines, et cetera, because I'm now not the deepest technologist, but what I love about this research is.

What do you like about vector engines.

But vector engines, I mean, the the point is when you look at, you know, A I, and you need to, you know, have now structured and unstructured content. The power of A I is to bring those two together. And the vector engines is actually a very, very important piece in that. Yeah.

What is what uh lastly, what is your advice to young people.

My advice to young people is, um, stay humble. Never stop learning, be always curious. Uh it's it's that is for me, I mean, in my career, that was really, really important. And then at the end, yeah, you also understand that, you know, when you wanna build a great career and you, you know, wanna come in a position where you have, you know, also higher in the wings, uh you know, also, you know, hard work. And I mean, that's also part of the truth.

You need to, you know, deliver outcomes, but you also have to also be open and and honest to yourself that it also requires that it's not a nine to five job, yeah.

Well, clearly you work very hard. And I would say you have stayed surprisingly humble given that you are a young person running the biggest company in Europe. Well done.

Thanks a lot, Nicolai.

Thank you.