SAP NA President Lloyd Adams: Accelerating Cloud Migrations, Building AI Solutions And Expanding Channel Initiatives

In a conversation with CRN, Lloyd Adams, president of SAP North America, speaks about the application giant’s channel initiatives – including the recent appointment of a chief partner officer for SAP America – and the cloud and AI opportunities for the company and its solution provider partners.

SAP is headquartered in Walldorf, Germany, but North America is one of the software giant’s biggest markets with sales in the U.S. accounting for €10.49 billion (approximately $11.40 billion) in constant currency in 2023 – nearly one-third of all SAP revenue last year.

So SAP’s moves in North America – including in the channel – are significant for the company, its partner ecosystem and the industry overall.

Leading those efforts is Lloyd Adams who was named President of SAP North America in September 2022. Altogether Adams has worked at SAP America Inc. for more than 24 years, holding such posts as SVP and East Region Managing Director, National VP – SAP for Utilities, and Chief Operating Officer of U.S. Regulated Industries, according to his LinkedIn page.

CRN recently sat down with Adams to talk about what’s happening with SAP in its North American operations, including the company’s work with partners, expansions of its Rise with SAP and Grow with SAP cloud migration programs, and its early efforts to infuse AI into its product offerings and industry-specific solutions.

The discussion also covered the recent creation of a North America partner organization led by Nanette Lazina, a 16-year SAP employee who was named Chief Partner Officer of SAP America in January. “I think the next frontier for us is to much more intentionally curate an even more vibrant channel ecosystem to help us scale, particularly in the mid-market,” Adams said of SAP’s North American channel plans.

The conversation with Adams took place in Boston in March where he was attending a customer event sponsored by SAP Fioneer, a firm started in 2021 by a group of former SAP financial services experts that provides SAP-based solutions and services for banking, insurance and financial service customers.

The interview has been lightly edited for readability and space.

What’s top of mind for you and SAP in North America right now?

Right now it's just how do we keep helping our customers transform and move to the cloud and harness the capabilities that AI is bringing to bear while at the same time, as an organization, we're transforming ourselves. You follow us, so you know we're three years-plus into a pretty dramatic change as we kind of pivot away from our – call it our legacy – on-premises business to now being almost exclusively, predominantly, a cloud company. And all the implications that come with that, not just in terms of product and engineering and so forth, but all the way through the full lifecycle of business development, post-sales support, you name it, as well as our ecosystem partners globally and locally here in North America.

What are you seeing in terms of demand in North America versus the rest of the world? Are there specific economic drivers or headwinds?

You know, we're quite bullish. We're coming off of a really successful 2023, particularly our fourth quarter, end of the year, globally significant double-digit growth on a number of key metrics by which the street measures us, particularly current cloud backlog, operating profit, and so forth.

And while we don't necessarily break the numbers down locally, say, here at the North American level, or SAP Germany or what have you, what I can say is that North America follows the trend in terms of the growth percentages. And when I look at that, in conjunction with some of the absolute signature wins that we had last year with brands like McDonald's, L3Harris, General Motors and the like, it’s really cross industry and really across the solution portfolio. We saw really great strength across the board, carrying us into this year, all verticals, all product areas.

That has us excited and bullish for this year, particularly with the onset of AI, which, as you know, we’re kind of just getting started, but showing ample opportunity, if you will, that’s led us to believe that the momentum that we saw from the end of last year should carry over pretty resoundingly this year.

Is North America head of or behind the world in cloud, digital transformation and AI?

I wouldn’t necessarily say [North America] is ahead or behind, but I would definitely say it’s much more competitive here. Really, America, it's the battleground, right? And given the competition, that brings some added dimensionality to how we have to go about things.

But at the end of the day our mission, when we look purely just at our current customer base, the number of clients that we have been helping transition to the cloud, we're still in-flight, moving them there. We still see great opportunity. In terms of moving the installed base in North America, relative to other regional theaters, it’s rather consistent. Just from the magnitude of how big the customer base is here, so is the number of opportunities. If you just look at our current customer base, I think the outlook is rather exciting.

Now, if I also then look at it through the lens of new client acquisition, organizations here that aren't necessarily part of SAP family yet. I think North America is really primed for incremental growth, particularly in the midmarket. Which is why we're so excited about everything that you've probably seen in the last year, with our launch last year of Grow with SAP, our public cloud offering, which is not exclusively focused on the midmarket, but it's a big emphasis area for that. And based on the scale that we're starting to see, it's quite exciting.

Is North America more competitive because there are more software competitors here in North America? Or are their other reasons?

I think what I would say is, yes, it's quite competitive in terms of just other players in the space. And then I would also say – and this might not be a North America phenomenon, but it's definitely something I observe here in North America – as you go down market, even though a considerable amount of our current installed base is, in fact, what you would consider small or midsize enterprise, it's not necessarily what we're known for out in the market. There's the perception that SAP is for the largest of the large. I think that is a myth that we're still actively trying to bust and I'm going to call it headwinds, per se, but it's an added lens through which we need to fight as we compete out in the market, that we do indeed have the capabilities and the services for [smaller size] organizations, particularly those that have aspirations to grow into large organizations.

Does SAP have specific ongoing or new major initiatives in North America, apart from the rest of the world?

I think one of the biggest focuses right now – but it's not North America-specific – is our whole push behind business AI. You can look at that in a number of different ways. The first, and maybe most obvious, is that when you look across our rather expansive business solution portfolio horizontally, without putting the industry lens on it first, there's a wealth of innovations on the AI front that have been curated from a use-case development perspective. So if you're a customer that runs Ariba for procurement or Concur for travel and expense, and so on, down the whole expanse of the solution area, that's helping clients unlock some of the AI capabilities that have been woven into those solutions.

That's number one. I think the next big frontier would then be looking beyond horizontal, getting into some very specific, industry-specific use cases, which is kind of – I don't want to call it the next frontier, but the next logical layer of focus, where you're going to see a lot of activity here in North America for sure, but also globally.

How would you size up what’s happening with AI in North America versus the rest of the world right now?

It's pervasive. We see it in every vertical, in companies of all sizes. I think one of the approaches that we're trying to very intentionally take is to bring forward things in a way that takes into account the mission-criticality of some of the business processes and functional things that are inherent in the solutions that our customers are using with us.

We like to refer to the three Rs: Reliable, responsible, and relevancy. Reliable in that it's harnessing all of the key systems and business processes that our users know us for and trust us for. Relevant in that it's harnessing and accessing the data that actually makes the “I” in AI what it is, because AI is only as useful or helpful as the data is. And then responsible because it has to, obviously, take into account everything by way of data privacy, security, and so forth. And particularly in certain verticals.

And it's interesting. On one of the customer panels this morning here at this [SAP Fioneer] industry conference, one of the speakers, a consultant from EY, was mentioning how as they advise clients around the criticality of AI and, very intentionally, propagating use cases and so forth, they’ve had to do so in this particular space, banking or insurance, with the wherewithal of the profound responsibility that the organizations in the room carry in relation to their customers, managing money assets, what have you, versus, say, a CPG [consumer packaged goods] company. If you mess up someone's soup delivery, someone might get annoyed. But if you mess up their money or their asset management, they're going to get really perturbed. It’s much more of a visceral experience. So understanding that and then taking all that into that account as you curate more of these use cases and POCs [proof of concepts].

In terms of AI technology and sales/go-to-market, is SAP taking much the same strategic approach in North America as it is globally or is it taking a different approach? And if different, how so and why?

I think our go to market is rather consistent globally. I would say one added nuance here in North America is a more amplified pronouncement, if you will, of where we're heading from a partnership and an ecosystem perspective. In North America, like other regions, we've always enjoyed a very rich history and go-to-market with the traditional SIs [systems integrators] – what we call GSSPs [global strategic service partners]. And of course, now, with the dawning of Rise with SAP a few years ago [and] the even tighter linkage that we have with the hyperscalers. All that’s been rather vibrant and remains so as we look to 2024 and beyond.

I think the next frontier for us is to much more intentionally curate an even more vibrant channel ecosystem to help us scale, particularly in the mid-market. And, you know, one of the things that's a bit new news, here in North America, as part of a go-to-market this year versus years past, is we have adopted a construct that some of our other regional theaters have called a chief partner organization.

And so we've named the chief partner officer here in North America. Her name is Nanette Lazina [and] she's based out of New York. She's essentially been chartered to build and oversee a team that looks at all of the different permutations of the types of partnerships that we can have, be it GSSPs, SIs or hyperscalers, the solution extension partners, building a channel ecosystem for the mid-market and so forth.

And I think that's an added emphasis that we’ll be weaving into our go-to-market that is a bit different and supplemental to the way that we've attacked the market in North America in the past that we're really excited about. Particularly as it relates to the proliferation of Grow with SAP, purveying our public cloud offering more expansively and pervasively across verticals in the mid-market and even down to some smaller companies.

What’s the strategic significance of SAP’s technology alliances, such as with Microsoft, Google and IBM, for SAP’s AI strategy specifically in North America?

Stronger together, right? I think the power of our best engineers with some of theirs, in the context of any one of those partnerships that you mentioned, together with our customers, and what that can ignite and activate in terms of what that particular enterprise could carry forward. That's discretely at the client level. And then downstream, the industrialization of that, so that we could then take some of these very tangible, originally customer's specific use cases, take them to market more broadly, once fortified.

Sometimes things will get done in the context of a singular customer. Often, but not exclusively, some of our larger ones, but then, as is often the case, what might be required for a larger player and a certain protocol, more often than not covers the vast amount of the requirements that you will see from a multitude of players in said industry.

What role do solution providers and systems integrator partners play in SAP’s AI strategic plans in North America? It sounds like you see them playing a bigger role there in North America than in the rest of the world.

It's hard for me to say because I only have a purview of North America [and] I can't quantify that. But I can certainly validate that [channel partners] are a very big part of the market here in this part of the world.

And maybe just to underscore that for a second, sharing another data point that came up in some of the presentations this morning. We polled several hundred of our installed base customers in North America, across all verticals, companies of all sizes, and [included] some basic question in terms of what some of their current plans or in-flight activities are around generative AI across their enterprise in any way, shape, or form. And then secondarily, but more importantly, the value that they felt that they were unlocking from that.

What was interesting around some of the preliminary results that came back was that of those several 100 polled, 96 percent of them had something going on around generative AI within their firm. But on the flip side, only 3 percent of them could point to something of substantive value that, at least at this current state, they were realizing in terms of value. That's a pretty broad chasm.

So to take that back to your question. We see that as a huge opportunity, not just for us, but plus our ecosystem. And later in the [Fioneer] program, one of the leads from finance IT at one of our larger insurance clients here on the East Coast, challenged everybody in the room, within the context of their quarterly business reviews with SAP and our partners, to better understand where we're driving things on the AI front and where we can step in to actually help them fill that void between the 96 percent and the 3 percent. Which I thought was really interesting.

I tell you that because I think it's an opportunity for us and also for our partners.

And just to illuminate a little bit further. I told this particular gentleman that I love the challenge and I think we can look at it through two lenses. The first is, as we tighten up our governance with each other relationally there's a number of things that any organization can begin to naturally unlock just by virtue of turning certain things on. If you're a customer and you have [SAP] Ariba or [SAP] Concur, for example, either for procurement sourcing or travel expense, you might actually have in your grasp some AI capabilities that you're not even aware of. How do we help you unlock that so that even just by virtue of doing that type of a light unlock increase the amount of value that you're deriving from that. That's number one, table stakes, unlocking the existing vertical or horizontal stuff that's there.

And then I think, secondarily…leaning in to help us curate, develop and deliver more industry-specific use cases. So AI for insurance, AI for utilities, AI for CPG – whatever the case may be in some very specific areas that then help more of the business users understand much more of the criticality of what these systems and capabilities can be delivered to their business.

The speaker challenged SAP and its partners?

Right. To say, ‘Look, you know us and you know what [IT] we possess from you,’ by way of certain capabilities through licensing or whatever, it's through our partnership. We're not exploiting some of the things, the low hanging fruit that we already have, number one, and there's intrinsic benefit from just utilizing more of that. And then secondly, once we get our arms around that, and we actually can cite a [customers deriving value] percent that's more than 3 percent. Then how do we take it to the next level and how can we keep folding this out and co-create together other use cases, some of which may be more industry centric.

What do you see as they major opportunities for channel partners working in North America around SAP software, AI and data?

I think it has a lot of different dimensionality in terms of how you segment the market. And it goes back to some of what I was saying earlier. The answers are a little bit different when you're talking about current SAP customers and where they already are in their journey with us and where they have to get to. Because some of them, quite honestly, could have some pretty complex, existing landscapes that need a great deal simplification as they move to the cloud. So there's a whole host of opportunities, I think, for partners that want to get very intentional in that space.

But then I also think, through the lens of new client acquisition, particularly in the midmarket, [the opportunity] is helping organizations start off on an SAP journey that, as best as possible, conforms to a cloud-first, fit-to-standard methodology – in other words are not heavily customized, don't necessarily make the new systems do exactly what your legacy systems are doing. Which is the trap sometimes I think a lot of clients fall into.

And I think with cloud it’s a good line of demarcation to eliminate that type of trap, if you will, and for partners to be advisory to clients to not fall into that trap and underscore the criticality of keeping the core as clean as possible. Because the better firms can adapt – the quicker they can get to rely more on the data that's in that system and pulling in data from other systems – it really accelerates the degree to which AI can become a catalyst within the firm.

So I think it's a huge opportunity for partners, either existing partners that want to expand what they're doing in the North American market or partners that want to start anew in the SAP ecosystem – because I do believe there's plenty of space.

Is SAP recruiting partners in North America and expanding its partner base here?

It’s twofold. One would be to look at just the existing partner landscape, continually enabling them. We're finding that what it is they do, from a market and from a delivery perspective, to just be more in accord with a cloud-first mindset and SAP’s evolving strategy. That would be number one. Number two, though, and that I think with particular emphasis around midmarket and public cloud, would be new partner curation. And I wouldn't necessarily call it a massive expansion, but it is intentional recruitment to have more players in the space than exists today.