 We're here with Reiner Zinau, who's the Senior Vice President of Business by Design, which of course is a big part of SAP's growth strategy. Welcome. Thank you very much. So let's see. So this is the big news this year. We're talking about all kinds of activities around analytics and the like. You know, last year was about the new CEOs, can SAP make this work? And I think by most accounts it did work, right? Stocks up, good valuation, that's good. You made a nice acquisition with Sybase, which was good and you're leveraging that. And so now you're in charge of a growing business. It's a very strategic business. Talk a little bit about that business, why it's important, the type of customers, the SMEs, and maybe how they're different than the traditional base. Well, if we start with that, the important thing for us since last year really was that we now see the market momentum that we've been fighting for now for the last couple of years. So just in time for Sapphire, we've passed customer number 500 with Business by Design, which was, we were optimistic that we could do 400. So now we did 500. So we're really happy about that. So by Design gets the necessary traction in the mid-market. Are these customers radically different than what we know for the last 30 years? Yes and no. Yes, regarding their unique requirements, we met this morning with our customer council and they talked to us, for example, about if we could advise them now on how to set up support structures. We had in the customer council also a representative from Dow Chemical who we're now also using in a subsidiary by Design and he said he has hundreds of support person and he doesn't know exactly what the problem is. So there we have a few things, but business process-wise it's the same. When you're dealing with a business by design, okay, first of all, SAP has been very impressive with your operating at scale business, obviously the size of SAP is huge and you're introducing technology and new stuff at the same time. So it's kind of a moving train. You've got customers that want to be satisfied with the latest and greatest, but they're running their business on SAP. So obviously it's a moving train. How do you deal with that and what has changed? Obviously in the past 18 months the whole world has been obviously accelerated around mobile. We've heard Bill McDermott on the QP here talk to us about the mobility or the analytics press conference. We saw some of the tech demos at your SAP labs day last month. So this stuff is exciting. It's important. So how does that change like your schedules and where are you now and what's deployable? Just give us a kind of quick summary. One, has it been a moving train? How has that impacted your development and what are your customers asking for? Well clearly it is a moving train without any doubt and some people said we're actually exchanging the engine of the airplane while we are flying. And sometimes it feels exactly like that. But we keep flying. So don't worry about that. The important part is, as you said, our large enterprise customers say innovate but don't disrupt. And the way how we do this is that we show them how they can extend their business suite with on demand solutions. Therefore the announcement which we are making tomorrow with sales on demand is so mission critical for us because it allows our customer to extend the scope business-wise without changing a single line of code on the business suite. So last year you had to prove out multi-tenancy and scale and things of that So you've proven that, right? Is that safe to say? No, that is proven. And also when I talk to the analysts, they say, yeah, how is it doing? Yes, working. They're harping on that. That's been a sticky point for these guys. But it's important. Now that sticky point is gone. So now we have the new one which is by design as a platform. Yeah, talk about that a little bit. Yeah, by design as a platform, we needed to get by design stable as a mid-market solution. Take it off. The next step was we transformed by design into a platform and we built new applications on top of it. And that's what we did with sales on demand and we're doing with career on demand and trouble and expense management on demand. The next step after that is to open up this platform to our customers and partners so that they can extend business by design. And that is then where we are offering a business platform as a service and not with a few tiny features and functions like some of our competitors, but the full business capability of by design. Okay, and that obviously going after SMEs, that's a critical piece because it's a partnership model. SME, M is different than S, isn't it? Well, the S's are more of a challenge because what we need to do there is they come, for example, and we heard that this morning, they come off of QuickBooks. They've grown out of QuickBooks, but they still have the QuickBooks mentality. Excel, QuickBooks. And I have an access database there and somehow I squeeze it in and now they say that the change management trick is that you now need to take the user by the hand and say you're a part of a business process. This is your responsibility. This is the colleague who's working in front of you. This one is behind you and therefore it's important that you see the entire flow. So that is the education part that we do for the S's. The mid-market companies, the more grown up ones, they know that and they say we are now driving the next round of internationalization and therefore we need such a solution. But you're right, the S's are a challenge. How do you talk to customers specifically about the security issues? Because what's on the mind of the average businesses? Damn, PlayStation is down, Amazon crashed, RSA gets hacked, and it's a security company, they get hacked. So you have all these carnage with the public cloud and you guys can't have none of that because you're SAP and you got some security built in. Absolutely. So you have to have some at the edge, you have to have some stability. So share with us. One, how do you talk to your customers in the light of that negative press? And two, how do you give them confidence? What do you say to them? First statement, even if the customer doesn't address it, we address it first because it's in the back of everybody's mind and you need to address it. The second thing we do is we simply say, look, these are the precautions that we are taking and the most important one is the SAS 70 part two certification that we have for all of the compute center facilities where SAP runs business by design. That is the second highest level that you can theoretically get. There's only one above that and that is for the credit card companies. The second thing we are doing is, and I'm talking about this tomorrow on stage with my partner in crime from Intel. Who's that? Scott Allen and he has a capability that you've seen all of the acquisitions that Intel has done lately in the security area and what they are doing now is they're putting a lot of security functionality on the silicon. So they are creating an unbreakable combination of software and hardware, right down to the process. And what that means for us is what we can do now, not now but soon, we can say I take the signature of a specific device and I register that one with business by design and I cut off by design for all unregistered devices. We had Pat Gelsinger last week on the Cube, a former Intel president CEO at EMC and he basically said that security in many ways is a do-over. We have to really look at the architecture. Do you agree with that? Absolutely. And if you say, well, this here was the hardware layer and then I had on top the software layer. But we saw a couple of cases where people really went into this tiny gap between the hardware layer and the software layer. Therefore, I'm really, really happy that Intel moved forward and said, come on. We take, for example, the encryption algorithms, which we typically in our crypto lip use as software. We put that directly on the silicon because what that means for me, I can write now every single piece of information that I have fully encrypted to wherever I need it. This was something that we couldn't do before because it simply would have eaten up too much CPU resources. Now I can do this. As applications get more social, you hear a lot more talk about privacy. But CIOs generally talk about security. Are security and privacy different? Are these two sides of the same coin? No, it's not exactly two sides of the same coin. But data privacy and you know that I'm coming from Germany, the standards in Germany are much higher than here in the U.S. And we even had discussions with customers who said, we want you to host us out of Germany because you have a higher standard than we have here. Take an example. Here in the U.S., it's now from a privacy standpoint, business by design has a built-in learning management system. And every end user goes through certain learning units and it's perfectly okay that we have a report in the system which shows you how far is the learning progress of every single user. In Germany, completely unthinkable. So there you have the differences. So it's not one and the same thing, but it's a challenge for us because we now need to look into every single country, understand the legislation there, understand the rules there, meet these standards and do that. But that's one of the things that we bring to the table as a large company. Yeah, it's not just information access you're saying and data access. It's the policy around that and the knowledge of the local laws of ethics. What do you do if a person leaves the company? In Germany, you need to take certain actions with the data, retire the data, physically delete it. In the U.S., it's sufficient if you flag it. So in some ways, privacy is a superset. It's more complicated than security. Is that right? I wouldn't say it's more complicated. You need to do both things. You need to do security to be in the business at all. If you can't guarantee the security, if the customers are not convinced that you really do that in the best possible way you're out of business. The data privacy is more the legal side of the equation where the employees of the company now says, for me, this is an important thing to know how my data is handled in the system and that it really meets all of the required standards. Talk about simplicity. SAP historically has not been known for its simplicity. But it's a fundamental part of your business. How have you approached that topic and why will you succeed? That was clearly the big ray of light this morning when we saw the survey results from the American User Group on ByDesign. We really scored high in usability. I sat there and thought, it's too nice that I can really sit in this presentation and see this after all these years. Did it feel good? Yeah, it felt amazing. You took a lot of bullets. I mean, you've taken your share of shrapnel over the years. I've seen some of those videos on YouTube. You're taking it pretty hard. Yeah, I know they're worth some really tough times. But you're walking tall right now. Why is usability so strong? Simply because we took our ego a bit back and we said, let's simply look at what our applications look like if you look at Amazon, if you look at eBay. In a certain way, it's a lot easier these days to build good user interfaces because you simply watch what's happening in the consumer space and you adopt these standards. For example, 10 years ago, we would have had an endless debate in SAP if you want to represent something on the screen, which is actually a link, how to do this. Some people would say, I want to box around it. Other would say, I want this, I want that. Today, this is not an issue. Hey, if there's a line under it and that line is blue, it's a link. There's no need to write a user manual about that. People just click it. The norms are developed. And we always ask ourselves, could somebody who can purchase something in eBay, can that person operate by design? Yes, good. If no, back to the drawing board. And how does mobility all play in for you? I mean, is that going to be a core part of it? I mean, application mobility is the combination of that usability. Okay, that's a big moving train, but it's pretty, you kind of know where it's going. I mean, it's getting smaller, faster, cheaper. Are you here in the US or on the forefront of all of that? I talked recently to a couple of customers from the West Coast who say, we now see the first generation of people, employees, walking into our company. And when the CIO comes up on stage and says, and this is our policy, and this is how we do it, people in the audience who say, you know what that is? This is an iPhone. Either your crappy corporate applications run on this device or I'm not coming. Yeah, yeah. So it's about that important. And therefore, with by design, we had the luxury situation that we could really start on a green field. So we built mobility in right from the beginning. To explain that, business functionality in by design has no knowledge about who's actually consuming it. Is it a traditional device? Is it a mobile device? Is it maybe an excel spreadsheet with a macro functionality? So therefore, in by design, I don't need to add a single line of code if I want to have a mobile scenario. So therefore, it's easier in the business suite, as this is not exactly a green field activity for us. Therefore, we did the CyBase acquisition and the CyBase acquisition on the mobility side gave us three amazing things. CyBase is the platform on this planet for all short message systems. The second thing is CyBase has the required device management capability. Even a small SME easily has 30 40 mobile devices. What do you do if you lose one of them? So that is something that CyBase can do. And it gives us an amazing platform on which we can build mobile applications. So that is what makes the beauty. We've been talking about last year, we were talking about big data before. Big data was big data and now it's sexy and everyone's talking about data science. Data scientists like, yeah, been there, done that, but it's good. They're catching up to us, Dave. So we're proud of that. But we also talked about last year a term that probably will become popular again this year and that's fast data. Because we need to talk about these mobile applications, you need low latency. And so can you talk about those dynamics? Technically, you talk about CyBase, we've got the in memory conversations going on here. What is that about? What is fast data? And why is it so important? Because you need to have what was once a big data warehouse type mindset, you need to be stored in a very high low latency, high performance way, whether it's SSDs or whatever, and deal with virtualization of the desktop, deal with these kinds of things. How is fast data? Simply look at it from the perspective of some of our large customers from the food industry. I recently met with a few of them and they said, look, we have such a landscape by now that between entering an order in the system and seeing it even in the last information subsystem can take three days, four days. And if fast data has a meaning, it means, hey, I see it 20 seconds later, the latest. Because then, and we also saw that from the consumer products companies, for example, Sony a couple of years ago, we had that discussion, they say, if they do campaign management, the problem of the data latency is that they run campaigns for stuff which is out of stock already. So they make the situation worse. So fast data means I have real time knowledge of my stock and now I run a campaign and I run it now, now. And I run the campaign while I still have that amount of quantity or that quantity in stock and now I get rid of it. If there's a five-day latency between me recognizing that I have surplus stock, I then run the campaign, not talking about the capital that I have in my warehouse. It is way too late. Yeah, we talk about that. And the other thing that's coming out of our editorial is the notion of extracting the data and just in the data and storing the data is one thing, but that extraction via fast data is the real value. And using the data, and we talked with those like ClickFox where they used the data to serve the users. And that requires a different mindset from a technical perspective. I mean, you guys at SAP looking back over the years, even going back into the mid-2000s, really invested early on APIs, SOA-like stuff. And now, obviously, that was a big bottoming out of the marketplace with the repression, but now you got an upswing. SOA is translating really into the global web platform. So that's an operating system, if you think about it. Yeah, well, it's basically, it's a lingua franca of the way how we build applications today. If you, it is really not difficult to link up to systems. And to say I have this object here and that object there. And I technically can now move the message from here to there. Done deal. We know how to do this. The difficult thing is, how do I convert order type four on this system into order with a fixed date on that system? So the next, the next big thing is all of the semantics so that you get that straight and then you can integrate. And that is what we've done with SOA. SOA, first of all, on the technology layer, that you can consume everything as a web service, but the next thing really is the semantics. The next big thing you heard it here is semantics. And I think it's about integration of the semantics. Can you talk about, you know, obviously you guys are a software company, that's the DNA of the company, but you really kind of a systems company with the cloud is, and you got the edge of the mobile, you're putting that system together. How important is this? Can you give a specific example of your system where a user would benefit from that semantic? Yes. Take the latest announcement here from Sapphire, sales on demand. Our large customers have probably since 15 years, a process called quote to cash implemented based on SAP Business Suite. They love it. It works super scalable. Just great. But they have no clue what their sales force is actually doing. So every every end of the quarter is a surprise. So they say, ah, the next thing I need is lead to opportunity because that gives me transparency of the funnel. Now they do that for a while. And some of our customers have done that with other products. But after two years latest, they say, I have a fantastic view on what my sales force does, but lead to opportunities, great lead to cash would be much better. Now they need to integrate these two processes. And now you must translate the opportunity into a quote. And that is where we are again back to the semantics and where you now need to say, okay, how do I translate that? How do I make sure that I don't lose any of the information which I put into the opportunity and carry that forward into the quote? Yeah. So we're seeing this world of point products sort of consolidated into more functional solutions. And it's the end to end processes what the companies really want. All right, we're here with Reiner Zinau, who heads up SAP's business by design. Reiner, thanks very much for coming on the queue. It was great to have you. Thank you very much for having me. Really interesting discussion and good luck with