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The topics innovation and startups are sexy, no doubt. Media loves to report about the young and vibrant scene. Yet, how many of these startups and innovative new ideas become profitable? Often it is not just about great technology but more about the readiness and the needs of the market. Laurent Fratty knows the market. As part of the SAP sales force, he is an expert in creating big revenue. He tells us why he does not put “all eggs in one basket” and why he wishes SAP would approach the startup topic in a programmatic way.
Laurent and the SAP IoT Startup Accelerator work as partners in crime in making SAP and startups successful. The IoT and Digital Supply Chain (DSC) startup program focuses on co-creation with customers, startups and SAP. The cooperation around the startup Loginno shows in a great way the win-win situation for SAP and a startup when adding the field knowledge.
As part of the SAP IoT and Digital Supply Chain (DSC) unit, which is led by Dr. Tanja Rückert, the SAP IoT Startup Accelerator matches startup technologies with the specific SAP IoT and DSC solutions. The outcome are tailormade solutions for the needs of the SAP customers.
Interview with Laurent Fratty
Laurent, what is your job at SAP?
I’m an account executive which basically means that I am a sales guy. I carry a quota and have various other commitments. There are two kinds of account executives at SAP. The Industry Account Executives, who are responsible for a specific set of customers. They sell all kinds of SAP products. And there are Specialist Account Executives, like me, who work with wider sets of customers but only on specific solutions. I mainly sell our HANA platform both on premise or in the cloud through the SAP Cloud Platform, and additional software such as Enterprise information management, middleware and other databases.
What is the main focus in your job?
My primary objective is to overachieve my revenue quota on a quarterly and yearly basis. As I’m the only one focused on sales of Database and Data Management in Israel, I also lead initiatives to develop this field, work with partners and ignite costumer events.
How do startups fit in here?
Actually, not that well (laughs). I’m saying not that well because my core role and expectation is to work with large enterprises with key accounts. You may be aware of the customer segmentation at SAP. From top to bottom we have the strategic key accounts which represents large organizations and the key accounts. Then the general businesses, which represents the small and medium size companies. My core role is on the key accounts, i.e. the largest organizations. Which means I don’t have the proximity every day to work with partners such as startups. Mainly because most of them don’t generate revenue and so can’t pay for our software in a reasonable sales cycle.
Is there a long-term benefit in taking a startup solution to a customer or is there no such thing as “long-term” in sales?
Actually, long-term planning was the motivation when I got in touch with the IoT startup Loginno. I think that startups, especially the ones in an early stage, don’t have any legacy system, they start from zero. And that’s an opportunity to position a platform story. When you come to a large organization and tell the SAP platform story, HANA or Cloud platform, the first question you get is, how this corresponds with the already existing landscape. They have a lot of capabilities, yet, they have other legacy systems they are working with. This makes it difficult for us to position the full capabilities of our platforms. The long-term benefit in bringing a startup and its solution to a customer, is that you can showcase the full capabilities of the SAP platform. As everyone is interested in success stories, we succeed together and it resonates well to the market.
Looking on my revenue objectives, I can’t put everything on the startup card since they by design don’t generate a lot of revenue. However, you should diverse your portfolio for opportunities amongst large organizations and startups. Having a few startups in your portfolio brings you abilities to work on the full scope of your platform and that – in a long-term perspective – is a strong benefit.
Do startups help with customer adoption?
That’s interesting as well. Let’s have a look at the startup Loginno. This is a good example of cross selling initiatives. Loginno is an Israeli startup which develops specific sensors for the logistic industry, specifically designed for containers. Their primary goal is to convert containers, which are basically just boxes, into smart containers. This solution enables the whole value chain in logistics to better understand what’s going on in real time with their container stored goods. The primary sales process we started with Loginno is about positioning our Cloud platform. We connect to their sensors to start working with the data from their sensors. The more Loginno sells, the more we get on royalties. This is easy to understand. Let’s look at the story from another perspective. One of my customers is ZIM, one of the top shipping lines worldwide. They operate big ships on which they put containers which they mainly ship from China to other places round the world. ZIM is running SAP software, in the line of business and in other areas. Of course, they are looking for productivity gains and are researching the smart container area. I, as a sales guy, have the goal to satisfy the need of a customer. I can get revenue from Loginno, but the aspect of introducing ZIM to Loginno, strengthens my relationship with ZIM. I will have brought them added value even out of the direct sales opportunity.
What does a startup solution need in order for you to bring it to a customer?
At first you need to change your mindset. If you start working with a startup and you have a quarterly objective in mind, you are dead! Usually they can’t afford your products. Their primary goal is to succeed and generate revenue. You need to adapt to that specific context. In return, when you work with a large enterprise, most of the time you have someone in front of you, who has a budget. He or she doesn’t care about the revenue from his or her enterprise. The task is often to drive a project with a dedicated budget. It’s simple: they have the budget, you have the solutions. If you succeed to meet their objectives you get the money. It’s as simple as that. When speaking with startups you mostly speak directly with the CEO, the founder. You don’t speak with the head of department. You speak with the one who put his life into his company. So, you need to position SAP as a partner and not as a vendor.
Ideally – and for Loginno this was the case – you need to find out what particularly interests startups in SAP. Mainly it’s not the technology. Most of the startups are open source minded. They consider – and mainly this is proving to be wrong – that they can find any piece of software for free or they assume that they can get processing from Amazon for very low-costs. They don’t need the vendors of large corporates, but they’re very interested inthe customers of large vendors as SAP. For Loginno that means, that they are more interested in a strong relationship with Mærsk, CMA-CGM or ZIM, than in the SAP cloud platform. But the deal is that they commit to the SAP cloud platform and via that, they get access to the SAP ecosystem. If they succeed we will get the investment back with royalties. That’s the idea. You need to keep focused on that because you won’t get any money, until they get their own revenues. And that’s not so usual in direct sales. This is the mindset change you need to take. You need to be clear about your own goals and let the startup understand what you can do or not do. But when things are clear, we have a great win-win situation.
What is your motivation to support startups and what do you expect from them?
I’m a sales guy and my success will come from the revenue I bring to SAP. So, let’s be clear: I expect revenues. And I will be even clearer: I expect revenues at mid-term, that will come without efforts. Loginno and other startups I work with, will do the sales for me. So, if they succeed, I succeed. Besides that, I also expect to get very strong customer stories. When a large enterprise is interested in the SAP cloud platform and I can showcase the Loginno story that’s always a benefit. These are stories that consolidate my value propositions and I can tell customers: “Listen guys, this works and we have a strong story for that!”
What would you tell the colleagues who are very skeptical about SAP working with startups?
Never put all your eggs in the same basket. Meaning, it’s not about getting your revenues only from startups. Startups are a bet in the future. Bets can turn into nothing but can also turn into big revenue. This bet also means that you’re working with committed people, they invest 24/7 in their company. If they believe in what you propose them, you have committed people in front of you who bring in fresh air. In large enterprises, this is not always the case. Besides the customer stories, you also get feedback on your products. Startups are moving fast you can get feedback in very short cycles. Which is a huge plus, too.
Do you have vision or wishes for the future?
My wish would be to see a more programmatic approach towards startups at SAP. What we needed to do with Loginno required a lot of personal initiative. Luckily, I met James Crawford from the SAP IoT Startup Accelerator. The support of the team was crucial for the success. I would not have gotten this support otherwise internally. So, my wish would be to strengthen this kind of approaches. When you work with startups you need this kind of resilience and this is what James brought. The partnership between the field and a program like the IoT Startup Accelerator creates a lot of value from my point of view. Even at companies that heavily invested on startups programs such as Microsoft with BizSpark, I didn't see these bridges with the sales team in the field. Yet, the value comes exactly from the joint force of the field and specific startup programs.
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