Q&A: SAP Europe chief executive José Duarte

The business software giant's European chief talks about job reductions, price hikes and his determination to relieve customers' pain

Duarte: "My concentration is on how we can steal customers from competitors"

Even the biggest providers of business software are not immune to the recession. In January, SAP announced 3,000 job cuts from its global workforce to prepare for a tough 2009, as it reported a two per cent drop in annual profit to €1.89bn (£1.75bn).

José Duarte, a 15-year veteran of the company, started his new role as president and chief executive of SAP in Europe in July last year, just as the worst of the downturn began.

He talked to Computing about how the software giant plans to maintain growth in such trying economic times.

How much has the downturn affected SAP’s business?

Last year started off great and we were well within the projections we had set but when we finished our second financial quarter, after September the world went crazy and quarter three was tough. Quarter four was a new reality and we had a solid period with 10 per cent growth. Some countries have been more affected than others, such as the UK and Russia, but this is because the impact of the financial crisis is more severe than elsewhere in Europe.

Could the decline in business from the UK also be down to the market being more saturated by SAP and its rivals than elsewhere in Europe?

The market is not at all saturated, it is only mature. We have 1,300 UK customers. We have many innovative solutions and we always have products that people want to buy. The new solutions from [recently acquired subsidiary] Business Objects also helped us counter a lot of decline in business from Europe.

What is your sales strategy in this climate?

Our priority is to get closer to our clients. I spend 50 per cent of my time on the street visiting clients and 50 per cent of that time I spend listening to their needs so I can understand their pain and know what I need to do to heal that pain. My main drive is to give customers a good experience and to be on-site with the client. My concentration is on how we can steal them from competitors.

SAP recently cut thousands of jobs. How did you manage the layoffs?

Firing people does not feel good and making 3,000 layoffs does not give you the best memories. We are dependent on people and we have to invest heavily in each member of staff. We spend about 12-18 months just training staff.

We cut as many staff as we needed to at this time. Some say these were big cuts and some say they were small, but we were not prepared to cut more than we needed to. If the situation gets worse, we may have to look again.

There has been confusion in the past over SAP’s software-as-a-service (SaaS) strategy. What is happening?

SAP CRM is not yet what we want it to be and the Business ByDesign offering for smaller businesses needs time to mature. We hired [ex-Oracle executive] John Wookey to make our SaaS strategy work.

But SaaS is not a major business for SAP. We are definitely not targeting it at our customers because many of them are not ready, but stay tuned.

SAP last year increased support prices and many users complained they were being charged for services they did not need. Has the opposition from user groups been addressed?

Customers need enterprise support and we cannot deliver more at a less competitive price. Whatever you do that touches on the budgets of establishments always generates waves of emotion. When you add a benefit, no one complains. It is only when you add price that it gets bad.

With hindsight, was it a bad time to increase fees?

Regret is not a question you put on the table. I see stories about this but no one covers the reason why Oracle and Microsoft do not lower their prices. Why do they charge more than SAP? I can give you the facts to prove we offer the most competitive rates.