When Christian Klein first set foot in SAP’s Walldorf, Germany headquarters in 1999, he was an intern tasked with grunt work like shlepping bulky computer monitors between offices. Today, as CEO of the software and app-making giant, Klein’s directive has become significantly more involved: turn SAP, which turned 50 this year, into a much bigger player in cloud computing with a focus on helping companies improve their supply chains and sustainability efforts.
Klein, 42, has a laundry list of things he’d like SAP to achieve. He wants the cloud business to generate more than 60% of revenue by 2025, double its percentage in 2020 as it competes with Oracle, Salesforce, Google Cloud and Microsoft; become faster in developing software; and drum up more business with companies looking to diversify and digitize complex supply chains, especially the automotive and pharmaceutical industries. SAP notably received kudos for the role its S/4HANA software package and cloud tech played in speeding up the distribution of Moderna’s COVID-19 vaccine.
SAP is also working more closely with clients to help them hit environmental goals, and recently received an endorsement from a surprising supporter—Coldplay lead singer Chris Martin.
Last year, Martin asked SAP to create a climate app so roadies and fans could monitor and help reduce the band’s carbon footprint on its current world tour. The collaboration offered an important case study for SAP, which has updated its Concur travel expense claim portal to track the environmental impact of users’ trips. (For instance, comparing the impact of renting a car versus taking a train.)
“This kind of engagement was fantastic to show how our technology can help on the sustainability side,” Klein says.
This interview has been edited and condensed for clarity.
Fortune: How do your products fit into the pursuit of sustainability and hitting ESG goals for your customers?
BMW, for example, can track and trace all parts of the car down to the raw materials. And this is what companies want, they want this traceability. They want this end-to-end transparency. Let’s go one step ahead. When you are now producing an electric car, BMW, Tesla, whoever—do they know how sustainable this car is? Now you can also track and trace your ESG carbon footprint down to the raw materials, which is a game changer.
That applies to giant rock tours too it seems. You tweeted recently about the work SAP has done with Coldplay to track their carbon footprint. How did this come about?
Chris Martin and the Coldplay team reached out and said that they heard SAP is doing a lot with technology and sustainability. They asked, ‘Can you help us to decarbonize the tour?’ Of course we can. They were really heavily invested in this and shared ideas on how we can build this app together for the concert audience. What can we do to harness energy from when the people are dancing? This kind of engagement was fantastic to show also how technology can help on the sustainability side. Coldplay is a fantastic ambassador for that.
And it helped make SAP better known by the general public too, I’m guessing, while giving you a case study for how your tech can help companies with their sustainability efforts?
Spot on. Sustainability is now part of every business case. In the past, it was always about ‘Okay, how can I use this technology to help me digitize and to help me grow faster, or to automate more to gain higher productivity?’ Now there’s always a third dimension about how we also help optimize the green lines of an enterprise.
For Coldplay and other projects, you adapted your travel and expense app Concur. How do you like Concur as a user?
What I especially like is that I can use my mobile to take pictures of invoices and it’s automatically booked through the system, so there is no need to type a lot of information into the system anymore. It’s highly automated. But if you want to share some end-user feedback, I’m always happy to take it.
To be honest with you, I don’t love it, and I always have to make myself a nice chamomile tea before I sit down to do my expenses. But to be fair, someone on your team told me some of the problems are in the workflows companies put in.
The complexity which you get from a system is very often from how you configure the business process. You can add another workflow and then, boom, you have complexity. The system has a standard and when you deviate from the standard, it can become unbelievably complex. But also, in all honesty, this is where it’s on us to keep our clients closer to the standard and simplify the experience.
Let’s go back to talking about more important matters than my expenses. How are you preparing for a potential recession in key markets for SAP?
What’s important is to show our customers, especially in a macro economic time like this, how we can save them costs and offset some of the pressure with further productivity gains in their enterprise. First and foremost, is to really show our customers the value of our products.
You announced in the spring your decision to wind down business in Russia and that you’ll take a 300 million euro hit to sales as a result. Is there a scenario in which Russia could be a market of interest again?
With the current government, clearly no. There’s no way that we can ever do business again there while these people are in charge. We are really winding down our operations, and we are either transferring our employees to other parts of our business outside of Russia, or they’re leaving SAP. So it would take years anyway to actually ramp this up again. Again, under the current political circumstances, there is no way that we’re going to go back to Russia.
What about trouble spots elsewhere and the pushback on globalization?
Geo-political tensions are dramatically increasing not only now with Russia. I mean, look at China. When I’m talking to politicians, I always remind them, ‘Hey, please, when we go completely backwards on globalization, everyone will suffer.’ There would be no winner in China, the U.S. or in Europe. And so what we are also trying to do with our technology is help build those bridges because the supply chains are global. When the supply chains are not global anymore, when the data flows are not global anymore and are getting more disrupted, everyone will suffer. The downside will be for the consumers.
How do you decide what business opportunities to chase?
I try to keep a fresh perspective on what is coming in the industry in the next three, four, five years. If you are able to build a capability in new technologies—blockchain, the metaverse—or whatever is coming, then you validate that not only with customers, but also with investors, and see if you are actually catching the train early enough.
Then as a CEO, you have to make bets. You cannot dance everywhere. The market is just too big. So you have to ask yourself, ‘Do we have a way to win? Do we have the people or the mindset to be successful in that? And do we have enough financial power?’ If you can answer these three questions with yes, then you probably have to give it a shot.
You said earlier this year that the pandemic demonstrated the increasing value of cloud computing in helping companies operate. Now that the pandemic’s disruption to business has eased a bit, does the growth of cloud computing still have momentum?
Indeed, the pandemic is absolutely not over not yet. But when you look at the other challenges the world is facing right now, like the macro environment, like inflation pressure, like supply chains that are more fragile than ever, it comes down to how technology can help to overcome those challenges. It’s the cloud in combination with software and innovation.
Get to know Klein:
- Klein became sole CEO of SAP in April 2020 after one year as co-CEO.
- A milestone in Klein’s career was when he was put in charge of the integration of SuccessFactors, a cloud company SAP bought in 2011 for $2.4 billion in a deal that made SAP a bigger player in the cloud wars.
- In his younger years, Klein harbored ambitions to become a professional soccer player. Instead, he’s settled for adventure skiing, favoring hors-piste, or off-track, skiing in British Columbia’s Whistler Mountain and the Dolomite Mountains in Italy.