Software AG turns 50 this year. That’s relatively, shall we say, mature for a software company. Headquartered in Darmstadt, Germany, just outside Frankfurt, the company is using its birthday to re-assess and re-invent itself. It has a strong integration platform with kudos from major research firms to back up their claim of being a market leader integrating apps, clouds, devices, and data, to go with strong financials. The last few years have seen it build its product depth through M&A, but its growth has remained flat. Last fall it brought on a new CEO, Sanjay Brahmawar, the first non-German to head the company, to ramp up the product line and jump-start growth.
Thanks for taking the time to sit down with us. Since taking the helm in August, what changes have you made at Software AG?
When I started, my most important thing was to listen and learn from our people and our customers. The first 60 days I spent getting a better understanding of the company. I wasn't really interested in making changes just because we had to change. I wanted to understand what is it that we needed to change. I asked three questions: What do we want to preserve? What do we want to change? What advice do you have?
I found we have several strengths to build on: The product technology, the financial strength, and the people. Those are things that are fundamental in the software business. We can build on 50 years of heritage, significant depth and expertise, and the battle scars of supporting and delivering for customers. Then when you think about what we need to change to go after the fair share in the market, because the market is growing? We are flat. Clearly there's a mismatch between our technology and the positioning of the product and the Gartners and the Forresters, and actually driving growth and leveraging the product positioning into growth for the company. That is what led me to think about Helix, and getting our people to think about what we should work on.
Where does Helix come from?
We asked the company to decide and nominate names for the strategy project. Hundreds of people came up with suggestions, and finally, we found Helix. Why Helix was interesting was because Helix is all about your DNA. It's an upward spiral. It’s about building on your DNA. It's about improving, but it's building on your strengths, and my firm belief is that you cannot build on your weaknesses. If you only make a list of all your weaknesses and you create a mountain then, by God, you just sit there staring at that mountain. You can never scale it, right? Think about your strengths first, and say, “Hey, what am I really good at? Okay, I can build on this."
We've made some changes in our leadership; we brought in a new Chief Revenue Officer because we very clearly have to strengthen our go-to-market. We’ve folded product marketing and product R&D together under one Chief Product Officer. Having the two separated was a big distraction for our company because people didn't understand exactly where product was sitting. “So do I need to go to this team or do I need to go that team?” Now it's only one team. We have not invested in brand, marketing, real positioning until now and brought on a new Chief Marketing Officer. We needed a visionary as our Chief Technology Officer, somebody who understands market trends, works well with the customers to help them understand business value from technology. Leadership changes have been made, but that's not enough. We need to make sure we make significant changes around product, around geography focus, and then simplify and execute in the market.
As far as leadership goes, I understand that you're the company's first non-German CEO?
Yes, that's true.
What ways do you think your multi-cultural experience in so many different countries will benefit you here?
Yes, our company's roots are German, right? We were established in 1969 by Dr. Schnell, here in Darmstadt. When we think about Dr. Schnell himself, what did he do in 1970? He picked himself up, and he went to the U.S because the market was in the US, and he had to get some quick customers in the US to establish Adabas & Natural, and that's exactly what he did. When I went to meet him in July before I started, I asked him if he had any expectations of me, and he simply said, “No.” I was a bit worried, right? Basically what he was saying is that “No, because Sanjay, I'm so out of touch, it's 20, 30 years since I’ve worked with the technology, so I really can't tell you much about where technology is moving right now. You can tell me a lot more. One piece of advice I will give you, Sanjay, is go where the market is.” That is something that has been the company ethos since it was founded, hence we are in 70 markets. I think we are an international company. What I can bring to this company if it’s to behave and work as an international company.
I have worked and lived in so many countries. I was born in India, and am a Belgian national. I can bring that spirit of diversity and inclusion, that is very crucial in the software industry today. Innovation is coming because of diversity and inclusivity very clearly. I don't worry about this German background thing, it's a great asset to have, and we can build upon it.
What were the key attraction points for you to accept this role? You were with IBM; you were doing well there.
Yes, I think it's absolutely right of you to say I had a great career in IBM. I started at PriceWaterhouseCoopers which IBM acquired in 2001, and so I became part of IBM. I learned a lot, so I'm very grateful. I wasn't looking for any opportunities, because I was running Watson IoT which is the most exciting place in IBM to be, so clearly I wasn't looking for much. Then I got approached for this. Initially, I didn't know Software AG that well, to be very honest. It was a process to get to understand the company. The more I did my due diligence, and I'm an engineer, so I like to understand data, there were four or five things that appealed to me.
What were those?
First of all, the company is in a growth market. It's a market that touches upon what is relevant to the customer of today. Tick mark number one.
Second, was the technology. Is technology good technology? Because in software if you don't have good technology and you have to come in and immediately go on an acquisition spree to bring some technology in… that's a completely different space. What I saw was that most of the technology that we have is highly rated by Gartner and Forrester. Pretty clear we have a good customer base, good solid technology, so yeah, great.
Third, was the company’s financial situation. I have an MBA in finance, so I read the annual report a couple of times, to understand whether it had problems. Was it a financially -sound company? Yes. We're very strong from a financial perspective. The company has good discipline and strong financial management practices. We know how to manage costs, and we know how to do P&L in the right way.
Fourth, was the customer base. 250 customers out of the Fortune 500 are our customers. That gives us a great customer base upon which we can build, sell, cross-sell, et cetera.
Finally, I looked at its people. There wasn't any way to figure out whether the people were really good or not, so I looked at the website. The marketing team was running a campaign called Faces Campaign, where they were just taking pictures of the AG people. They kind of looked okay, so I decided to figure it out once I was here.
I wondered what I could bring to the company and realized there was a cultural shift needed. A mind shift towards a growth mindset and certain aspects of focus; how things were run had to change to be able to after growth. I thought with my experience building growth businesses in IBM, my international exposure and my working on IoT and AI, I thought, “Yeah, there could be a good combination here.”
How would you describe your management style?
First and foremost, it's all about enabling people. It's about finding the right people that have the skills or can build into the skills, and then enabling and supporting them, and getting them to understand what are we trying to accomplish. Those people tend to be self-drivers, then my job is only to help and enable them to go faster.
So you empower a curious mindset?
Correct. You're hiring for that mindset, really. You're not hiring for the state of skills at that point in time. You're hiring somebody for their mindset and their potential. Then the second thing is about inclusivity. In other words, whenever I'm in a room, I sometimes don't listen to the one who speaks the most or the loudest. I will engage and poll the person who doesn't speak. That brings in great perspectives, and you come out with the best solution for the company. The last thing about my style, I'm very direct. I like to be very open, very upfront, very straight. I'm very accessible, and anybody can raise anything with me, at the same time I also go back and hold people accountable. I’ll help you, support you and do everything, but then you're accountable for that. You hold the freedom, but you must take accountability.
I understand from the discussions that the primary goal is to increase your growth significantly. Specifically, how do you intend to generate growth, and what changes are needed to happen?
Absolutely, we want to go after growth. I must emphasize that we want to go after sustainable, profitable growth. We are not going to go after growth just at any cost. We have been a very profitable company for quite some time. We're going to make some investments now because growth requires investment. Very clearly, we will make investments in the go-to-market, in our channel and partners and in our products. Product investment is primarily coming from the re-allocation of our R&D's funding. I mentioned a shift to a growth mindset and going after our fair share of the market. That's not about being defensive; it's actually about being offensive.
You identified the North American market as one that you want to have stronger penetration into. How do you plan on doing that and who do you see as your competitors there?
North America is 35% of our market right now, and it’s a market that's growing. We were missing a North American leader when I started, so we immediately appointed a new North American leader. Our Chief Revenue Officer is based out of the US, and it’s the first time in our company history, that we have a North American board member. That sends a very clear signal internally as well as to our customers, of the importance that we put on the market.
When you're reaching out to potential customers, you're probably going to want to get into the development management, not just the C-level, but the people below who the C-level listens to about purchasing decisions, right?
You are spot on because today most of the decisions are not actually done on the C-level. You obviously have to get the strategic buy-in, and the business impact conversation at that level, definitely. However, when you ask the CEO, which platform, which integration technology, they won't have a clue. You have to have this dual messaging and engagement channel. We want to make sure that we strengthen our developer outreach, and give more access to developers on our technology, open out as much as possible to be able to allow people to test our technology, experiment with it, play with it, build on it, and so that when a CEO thinks, "Okay, I want to solve my integration API challenge, which is the best platform? Well, Software AG is the best, because we've been working with it, we know how flexible it is."
My last question for you is what are you guys doing with AI and ML since you’re building a product to support IoT and data analysis?
That's an important one. I spent quite a lot of time working in the IoT world. I think first and foremost we have to make sure that we help our customers with the basics around leveraging IoT. For example: Collect, connect, and be able to configure. That’s very important. Half of the people are actually struggling with that basic capability. We have created capabilities like Zementis which allow our customers to industrialize AI, and use it in different use cases. We will keep adding more of these capabilities. The technologies are very important, but the relevance is there when a customer actually has been able to collect the data correctly and assimilate the data correctly to apply AI and ML.
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