Merrill Lynch 360º

A Brand New Start

When Marty Homlish became SAP’s first chief marketing officer, the German software firm was searching for personality and a strong identity. Six years later, the value of the brand has risen more than any other software company in the world. How did Homlish and the SAP team do it?

A 360º case study.

"I approved every color, every piece of furniture. I made them repaint the yellow color twice,” says Marty Homlish, the chief marketing officer of SAP, as he shows off the headquarters of the software giant’s global marketing group. Six years ago, when Homlish first saw the space at 95 Morton Street in the warehouse district of New York City’s Greenwich Village, it was an abandoned shell crusted with decades of rust and grime.

SAP’s marketing strategy was similarly tattered. Today, Homlish points out the way the polished pear-wood walls can slide aside to turn the workspace into a performance space, how the frosted-glass partitions can be transformed into a curved projection screen, how the plug-and-play computer screens in the common area all default to the same image: SAP’s streamlined white-on-blue logo, followed by its famous tagline, “The Best-Run Businesses Run SAP.” “If you are really going to have a marketing culture, you have to have the environment for it,” he says.

SAP is the very model of a modern marketing-driven company, but it wasn’t always so. And Homlish is the man most responsible for reshaping its identity in the minds of its employees, its customers, and the marketplace.

Homlish was hired to help SAP resolve a massive identity crisis. By 2000, the 28-year-old German-based company was the world’s largest enterprise software company and the third-largest independent software supplier overall. But in the superheated, Internet-fueled fever of the e-commerce marketplace, SAP was seen as stodgy, slow, and out of touch. SAP’s revenue growth in 1999, for example, was only 1.4 percent compared with a blistering performance by the rest of the software industry of nearly 15 percent, according to International Data Corp., a market research firm. At the time, BusinessWeek asked, “What’s sapping SAP? … It has been left out of a flurry of e-marketplace deals.”

SAP cofounder Hasso Plattner, who was then co-CEO and who is now chairman of SAP’s supervisory board, pinned the problem down to SAP’s marketing strategy—or, rather, its lack of one. Each country in which SAP sold products was responsible for its own advertising and marketing— and there were more than 40 agencies on board. While the company was represented on the Internet by one global website, visitors had to thrash through 30 local country sites and numerous subsidiary company sites—a total of 9,000 web pages with no consistent design or content— to find the information they needed. The business tagline shifted five times in four years as the middle-aged giant tried to imitate the hip Silicon Valley upstarts: from “We Can Change Your Business Perspective” to “A Better Return on Information” to “The City of e” to “The Time of New Management” to “You Can. It Does.” As the authors of a recent Columbia Business School case study wrote, “Inside and outside of the company, there was no consistent way to answer the question, ‘What does SAP do?’”

Plattner realized that providing the right answer entailed rebuilding the SAP brand from the bottom up. In a product-driven company dominated by engineers, it was a task requiring a complete change in mind-set throughout the organization. To shepherd that shift, he searched outside the company, outside the software industry, and outside Germany to pick Homlish. “I saw SAP as a marketer’s dream,” Homlish recalls. “We already had great products, a strong history of innovation, and a loyal customer base. All we needed to do was transform marketing.”

ELIMINATING THE CORPORATE SPEAK

Prior to joining SAP in January 2000, Homlish spent 15 years at Sony Corp., where, as head of the electronic corporate marketing services division, he oversaw the launch of the Sony PlayStation, the single most successful product introduction in Sony’s history. While at Sony, Homlish also had a taste of the challenges he would face at SAP. His division was shopping for supply-chain management software, and SAP made a product presentation. He recalls, “About 30 minutes into the meeting, I leaned over to my IT manager and said, ‘I really don’t know what these people are talking about. After the meeting, decipher it for me.’”

It was his first experience of what he would later call “SAP-anese”—the acronym-packed argot of engineers that was all but impenetrable to anyone else. And it was a perfect exemplar of why SAP was stumbling. Speaking now as a SAPster, Homlish says, “We were speaking our own language, but we hadn’t found a way to translate that language into stunningly clear business insight. The simple translation of ‘supply chain management’ is, ‘Where’s my stuff? Can I get it here faster and cheaper? If I can get it here faster, I can sell it faster, make more money, and have a competitive advantage.’”

“One of Marty’s great gifts is that he’s able to take things that are complicated and boil them down to simple, understandable nuggets,” comments Rick Stockton, vice president of global events at SAP, who previously worked with Homlish at Sony.

Homlish faced three major challenges in managing the metamorphosis of SAP’s internal and external identities: creating one enduring brand that would fit a global organization, but also be flexible enough to support changing business goals within a dynamic industry; communicating the brand consistently inside and outside the company; and aligning all aspects of the organization around the brand.

Soon after Homlish joined SAP, he temporarily shut down all spending on advertising and marketing. “We had multiple advertising agencies, multiple campaigns, and multiple taglines. As a result, we were a global company, but not seen as a global brand. The messaging in one place was counterintuitive to the messaging somewhere else in the world,” he explains. “If we continued with these multiple voices, we were going to create more confusion and chaos. And the more money we spent, the deeper the hole we would be digging.”

Homlish went on a listening tour of the company’s key stakeholders, partners, salespeople, and customers. He came away with two fundamental findings: “The real asset we have is the power of our customer base. And the real essence of what we do is that we help other companies do what they do best.” Those epiphanies would spark SAP’s marketing revolution.

WINNING CONVERTS WITH THE GRAND GESTURE

Homlish was determined to make a big statement first, one that would “prove to the entire organization that perception and presentation were as important as the products and services. We needed something to galvanize the organization into thinking, ‘Maybe there is something to this marketing stuff. Maybe it is something more than slogans and brochures.’”

That proof point was SAPPHIRE, SAP’s annual extravaganza for customers, press, and industry analysts. In March, when Homlish attended the SAPPHIRE event for European customers, held in Berlin’s convention center, he was astounded by what he didn’t see. SAP’s wares and presentations were scattered through more than eight different halls on multiple levels. “You could never see the depth and breadth of the company,” Homlish notes. The North American SAPPHIRE conference was scheduled to be held a few weeks later in Las Vegas. In the planning document for the event, Homlish stated a simple goal: Attendees should leave thinking, “SAP gets it.”

Homlish took over the entire Sands Convention Center— 500,000 square feet of display space—and built a theatrical set from the ground up. “We used all the tricks that we in the creative and design world knew would pay off—great lighting, friendly curves, cutting- edge technology,” recalls Stockton. “We highlighted the depth and breadth of the product offering through sight lines allowing you to see lots of industries and solutions. When you walked onto the floor, the overall reaction
was, ‘Whoa, something is very beautiful and very different here.’”

The products shown in Las Vegas were exactly the same as those displayed in Berlin. But everything was different. “This was the first time the whole company had been on brand and on message together, singing the same music,” says Homlish.

The tune was that SAP was as much a truly cutting-edge technology company as any of the Internet start-ups—but one backed by nearly 30 years of reliable and resourceful engineering. “SAP gets it,” wrote Michael Bittner of AMR Research in his post-conference research report.“SAP has honed a solid, well-structured, easy-to-understand Internet message for its users and the world.”

It was a message that would be repeated countless times in an ensuing series of meetings to regional sales staff—and in almost every case, the response was the same. “It was an extreme makeover,” says Mario Giampaglia, another Sony alumnus hired to work on the Las Vegas SAPPHIRE and now SAP global creative director. “It was a way of holding up a mirror to the company and allowing our people to see themselves in a new way.”

That SAPPHIRE’s resounding success gave Homlish the confidence to do something that he knew would unsettle the rank and file: centralize all marketing efforts in a new group, to be called SAP Global Marketing, and have it headquartered in New York.

FINDING A CONSISTENT MESSAGE

Repositioning the brand—and, concomitantly, the tagline and logo—demanded both strong-mindedness and sensitivity. Just before Homlish was hired, SAP had tried to assert its Internet coolness by redesigning its logo to read “mySAP.com,” written in bright, multicolored letters. After he was hired, Homlish showed Plattner a selection of logos from Toys “R” Us and Skittles. The mySAP.com logo slotted right in. “You were asking people to put up $1 billion to get this software and it’s got a logo that looks like it was designed by Crayola,” recalls Bruce Richardson of AMR Research. Plattner got the point. The logo was pulled immediately.

The brand message was another matter. “For the last year, the ‘SAP-ometer’ had been swinging wildly, from the old image of the enterprise provider to the new ‘Internet- friendly’ image of mySAP.com,” says Homlish.

“I didn’t want another wild swing in the brand. If we were going to change the perception, it would need to be evolutionary, not revolutionary. We needed a credible brand promise.”

He looked to the company’s proven strengths—its engineering
prowess, the reliability of its products, its deep industry experience, its blue-chip customer base, and, above all, its own nearly 30-year heritage—to provide the inspiration. “SAP was considered a mission-critical part of almost every great company on the planet,” Homlish notes. “We’re running power plants, armies, entire cities—that’s the sort of thing you can’t trust to a couple of rogue developers sitting in a garage in Marin County.”

The promise was that SAP would help businesses do what they do best. To allay Homlish’s concern about another wild swing of the “SAP-ometer,” the repositioning would take place in three stages over 18 months, beginning with a familiar Internet-age element—“The Best-Run e-Businesses Run mySAP.com”—then evolving to “The Best-Run e-Businesses Run SAP” and to “The Best-Run Businesses Run SAP.”

Meanwhile, a new two-part global advertising campaign was launched in October 2000. The first part offered variations on the theme: “Welcome to the new, new economy—you know, the profitable one.” The second part leveraged SAP’s stellar customer base. Each stylish black-and-white photo zoomed in on a customer’s product, with the simple headline: “Samsung runs SAP.” “P&G runs SAP.” “BMW runs SAP.” Oversized posters
were displayed in airports serving business centers around the world; whenever clients, prospective clients, and employees got on or off a plane, they saw SAP.

The second stage, the “Momentum” campaign, generated its own momentum too. Existing customers clamored to appear in them—“It’s a special fraternity of the best companies in the world,” says Homlish—and prospective clients paid more attention. “Marketing is responsible for creating awareness of the brand,” explains Ronald Carolan Jr., vice president of finance and administration, SAP Global Marketing, Inc. “But it’s also responsible for demand generation.”

Inside SAP, the new campaign helped restore company pride. “The employees were feeling beaten up by the negative press,” says Homlish. “When they began to see the ‘best-run businesses’ campaign, where our customers were now telling our story, the employees embraced it because it made them feel proud of their company.”

The next challenge Homlish faced was to ensure alignment to the brand throughout the company. “We didn’t have a simple discipline in place that filtered the outbound communication to ensure that it was consistent,” Homlish recalls. “The definition of a product solution could vary from country to country, market to market, division to division.”

The “One Voice” campaign aimed to change that. Pocket-sized “brand cards” were distributed worldwide, offering employees a succinct, easy-to-understand guide to the core positioning and attributes of the brand. The “One Voice” lexicon defined the correct way to describe products down to the smallest detail—not, for example, “SAP Production Revenue Accounting” but “SAP Production and Revenue Accounting.” The production of all collateral material—brochures, white papers, website content, customer testimonies—was centralized. Homlish even had one group make sure that everyone’s business cards and e-mail signatures were consistent with the brand.

Nit-picking? Perhaps. But according to BusinessWeek’s annual brand rankings, the value of the SAP brand in 2005 was $9 billion, a gain of 46 percent (representing $2.86 billion) between 2000 and 2005. Not only was SAP the only software company to gain brand value for five years in a row, but it did so during the dark days of the dot-com bust and an economic recession.

Now that those times are past, SAP has even higher goals. Henning Kagermann, now SAP’s sole CEO, has announced a long-term goal of 100,000 customers by 2010. To help achieve that goal, SAP will have to expand its client base from its traditional list of Fortune 500 behemoths and persuade mid-market companies, which have long shied away from SAP, that it is neither too big, too expensive, too complex, nor too slow to satisfy their needs. “We’re at about 34,000 customers
now,” says Homlish. “That requires a tremendous amount of support from marketing.”

It will be another test of the power of perception. Marty Homlish expects to ace it.

Inside Secrets to an OUTSIDER’S Success

An American in a German based company, a non-techie in a tech world, and a proselytizer of marketing to an audience that mostly viewed marketing as a career detour—with all those counts against him, how did Marty Homlish succeed? He explains some basic lessons for anyone attempting to effect change in an organization:

Explain your reasons. “You have to give people a compelling reason to change, especially when they’re already winning. SAP had a nearly 30-year-old culture, 30,000 employees, and the number-one share in the industry. The feeling from employees was, ‘So why would we want to listen to this ex-PlayStation guy who’s telling me we have to change?’”

Get support from senior management. “The main reason all of this (change) worked was because Hasso (Plattner, SAP’s cofounder) embraced it, supported it, went to the tough meetings with me. Without his support, it would never have worked. No question about it.”

Never miss an opportunity to educate. “I attended board meetings every month. I had regular sit-downs with the entire c-suite, from the CEO to the CFO. One time, Henning (Kagermann, then SAP’s co-CEO, now sole CEO) came into the New York office to learn more about what marketing could do for SAP. I spent an entire day showing him how marketing could be strategic, and he walked out visibly impressed. He spoke enthusiastically of the great opportunities to leverage marketing, especially because of its role in making the company more efficient.”

Identify trustworthy partners. “There’s the power of the formal organization and the power of the informal organization. Typically, it’s the power of the informal organization that you really need to understand to get things done. You need to find a few people who can guide you. Henning not only helped me understand SAP, but he helped me work with senior management and the executive board.”

Don’t clean house. “I didn’t make any organizational changes at SAP in the first six months. My feeling was, I am learning this industry and this business, and I’m working for the number one company, so I’d better not come in and turn everything upside down. Let me focus on what I know I can do well and what the people in this organization do well, and then bring it all together.”

Build consensus. “I had to do a lot of listening and participate in a tremendous number of meetings. It’s a challenging process, because you have to be very patient, and I’m not by nature a patient person. But the leaders who fail more are the ones who believe that they can simply decree change.”

Provide proof of success. “You need something that galvanizes the organization, something that says, ‘OK, the new kid is here and he actually did something.’”

Praise whenever possible. “In every meeting I had with employees (after a successful campaign), I made a point of recognizing their valuable contributions. I would say, ‘None of this would have happened if it hadn’t been for the hard work you did through almost 30 years in helping these companies become the best-run businesses.’”