As the Chief Digital Officer of SAP, Jonathan Becher is tasked with building a new business unit with SAP that will help people discover, try, buy, and use SAP offerings in a simple, entirely digital interaction. Previously, he was SAP’s chief marketing officer (CMO). He joined SAP from its…
As the Chief Digital Officer of SAP, Jonathan Becher is tasked with building a new business unit with SAP that will help people discover, try, buy, and use SAP offerings in a simple, entirely digital interaction. Previously, he was SAP’s chief marketing officer (CMO). He joined SAP from its acquisition of Pilot Software where he was President and CEO. Here is my conversation with Jonathan on the emerging role of the Chief Digital Officer:
Bruce Rogers: It’s been a little over a year since you moved from the CMO role at SAP to a newly created position as Chief Digital Officer. Tell us about your role.
Jonathan Becher: I have what I describe as a T-shaped role inside the organization, and you’ll remember lots of people have talked about T-shaped roles in the past, McKinsey is always big on that as a background model, but the downward spike, the vertical bar of the T is designed to build a new business unit whose mission statement is to allow anybody in the world to be able to buy and to use an SAP offering, and maybe eventually a third-party offering, with little to no human interaction.
I ran several start-ups before I joined SAP, and I view this, our digital business unit, as a kind of start-up inside the large company. Along the way, we learn what it really means to build an end-to-end digital business unit, and, therefore, use it to digitize the rest of SAP – that’s the horizontal bar of the T. However, I’m not trying to do it outside as a standalone, separate holding company, which might in some people’s minds be faster, because then the learnings don’t go back to the parent unit. So that’s why I’m doing it. I still report to Bill McDermott, the CEO and I use SAP technology and take existing business processes and I try to improve them rather than be a revolutionary soldier completely outside the current environment.
Rogers: I’m not quite sure I’ve heard that from anyone else. Typically the CEO says, “We’ve got to be better at digital,” and either hires or assigns someone to be the evangelist for it, and is often a position without an organization. So the CDO goes hat-in-hand, if you will and tries to make things happen by getting the CMO, CIO and operations people together on how to better incorporate digital skills and technology. It seems to me like that would be a very challenging role to have. The idea that you are building a business and from which you hope to transform the company; that, to me, is a big idea.
Becher: Well, thanks, Bruce. Hopefully you’re not terribly surprised given my background that the first thing you described would not be something I would want to do. Not that there aren’t some very smart people doing that and making a real contribution to their organizations.
Rogers: Fair enough.
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Becher: What you described, is a digital evangelist, usually a one-person band, sometimes a small team. They go around as cheerleaders trying to convince, as you say, the CIO or the CTO or the CMO, or whoever, to be more digital, and there’s nothing wrong with that, but it’s a slow change. You correctly contrast that with what I’m doing. Another type of CDO I’ve also seen emerge quite a bit is the digital marketing arm of the marketing organization breaks off or somehow gets more visibility. There was a couple years when we were calling those chief marketing technology officers (CMTO). Remember that acronym that showed up for one year?
Those people now call themselves CDOs, and they have real organizations, they have people reporting to them, but their primary job is still digital marketing. It’s building out the website, it’s figuring out the social strategy, etcetera. It’s still a relatively narrow scope. Again, nothing wrong with that, but a different focus than what I’m trying to do.
I think of myself as a business person, you can decide whether I’m more like a digital GM. I’ve got a dedicated budget and business goals, which include revenue that I have to deliver. I’m 15 months in, so my revenue is not big compared to the rest of the company yet. However, because I have a start-up background, I didn’t expect revenue yet, but wanted a certain number of customers, and I’m just growing my business that way. It’s different, which means we have to break a little “glass,” but it also means that sometimes people joke with me that as CDO I’m more of the chief disruption officer than the chief digital officer.
Rogers: Is this model the answer to the innovator’s dilemma?
Becher: Right. You got it.
Rogers: It obviously says something about you, there’s no doubt about that, but it says as much about Bill and the board. It’s pretty unusual.
Becher: Taking me aside, I will say that it’s clear that bringing someone in from the outside of an organization and asking them to do a role like mine would never have worked.
Rogers: How so?
Becher: One of the reasons that I’m able to make progress, and I’ll openly tell you, Bruce, not as fast as I’d like, I’m impatient, but certainly faster than most people expected, is because I’ve been here long enough that I know how things work, so I understand the past and I still honor it.
I know a lot of people and have built up some personal equity with them, so before I go break the glass, at least I go talk to them and present how and why I’m doing it. And when things don’t work, and they sometimes don’t, I don’t mind pivoting and trying something else. That culture of experimentation, maybe that is somehow a little bit more unique to me because I spent so much time at small companies, allows me to say 30 days into a project, “Well, this looks like it’s not going to work and try something else”.
Rogers: Perhaps we need to call you something different than a CDO as the world currently defines the role. Typically, the CDO role is going to have to engage in a bit of an arm wrestle between the CMO and the CIO− someone has got to come out on top of that development. But the idea that this could be a transformational strategy for companies is a very interesting proposition. This speaks to the culture of innovation and experimentation SAP CEO Bill McDermott has created.
Becher: Bill is very much of a leader who, once-he-gets-to-know-you, he trusts you not just explicitly but implicitly. There is more experimentation and innovation than you would expect in a company that you might think of as old school and slow-moving, because we’re not really.
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Rogers: What have you been working on?
Becher: One of the very first things I did when I started this 15 months ago, I said, “Hmm. How come we’ve never accepted credit cards before?” People were like, “I don’t know.” Okay, “I’m going to go build a digital payments system.”
Can I do it by myself? Definitely not. I need to go spend some time with the finance guys and the legal guys. So, in the last year, we’ve been together with all those other departments to orchestrate a rollout of credit card payments, and as of today we accept credit cards in 32 countries around the world. We’ll have our 33rd country turned on in the next few weeks. We want to be Amazon-like, so it’s not just digital payments, but a digital contract or agreement as well. Not for every product, not in every country, but in many situations, you can do one click, “I agree,” or if you want something slightly more sophisticated, you can sign with your digital signature and off we go.
Rogers: Is this your first milestone, where you’ve built something that you’ve productized and now taking the market?
Becher: I would say we’re finishing up stage two, actually. If you use start-up words, we were in stealth mode, busy, heads down, and our coming-out party, when we came out of stealth, we launched at SAP’s major flagship event, SAPPHIRE NOW, in Orlando last May. We’ve had really good success since we launched in May. We haven’t broken out the revenue or the orders or anything yet because we’re still relatively small, we’re in that small stage, but we’ve processed many thousands of orders since we’ve launched.
I’ve also told people as proof that it’s a very different business model, you might imagine that SAP’s average sales price is in the hundreds of thousands of dollars and that it’s not uncommon for SAP historically to sell something that costs more than $1 million. Our average transaction price is in the hundreds of dollars, so we’re clearly not cannibalizing the old SAP.
Rogers: It’s a different business model.
Becher: Completely different. In fact, this to me is business model transformation as much as anything else.
Rogers: What else are you working on?
Becher: The next phase of the payment idea is what we call in-app purchasing, whereby you can buy instant upgrades to your software. We send you a token, which goes back into your software, and now suddenly, without you doing anything, you’ve instantly got this new feature. It’s only in one product right now, but as a company, we’ve learned so much. It’s like, “Ah, we should genericize this thing and make it available to almost every product in the SAP portfolio,” and that’s something I would like to do over time, as well. Its digital commerce inside of a digital piece of software.
Rogers: How did you apply your previous experience as the CMO to this new role?
Becher: As CMO I spent a lot of my time and energy on digitizing marketing, on what we call digital marketing, and I saw firsthand, because I didn’t just hire somebody to do it, I did it myself with my team, how hard it was culturally to make the change. A lot of people come into this thing thinking this is a technology problem, and of course, I work for a technology company, we have tons of technology, and I’m using my own stack, but this has been more of a cultural and mindset problem than anything else.
The other thing I learned the hard way in my years doing digital marketing is that no good plan survives contact with the customer. So we’ve given up building these 12-month plans, and we’re very much in an agile software kind of model of where we try something, and if it works, we do a lot more of it. If it doesn’t work, we stop it and move on. We try something that seems risky, get some real data on what works, adjust it some more, try it again, and then keep going.
So do I have a roll-out plan? Yes. Do I think that reality will will bear any resemblance to that plan? Probably not, and I’m okay with that.
Bruce H. Rogers is the co-author of the recently published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders