SAP’s Survival Strategy: Become a Database Company

If business software firms’ prospects in a cloud-based world were described in the language of a high school yearbook, SAP would probably be voted “least likely to survive.”

Critics of the $21.2-billion-a-year German company say it missed the big shift, allowing startups like Workday and Salesforce.com to grab billions of dollars in market share. To catch up, SAP has spent more than $20 billion acquiring cloud companies such as SuccessFactors and Concur, among others. It helps that SAP, unlike its younger rivals, is solidly profitable, although the company recently lowered its operating profit target for 2017.

Now it has made what is essentially a bet-the-company move. This month, SAP released a brand new suite of cloud-based software, called S/4, for financials and other business functions that will only work with its relatively new database technology, HANA. The combination is called S/4HANA. (The strategy may be new, but the alphabet soup names continue.)

The firm says the new technology will allow big retailers and other customers to analyze millions of transactions an hour in real time. It’s the difference in reacting to Black Friday sales trends immediately versus waiting until almost Christmas to get the data back.

But prompting customers to shift from their traditional databases, often sold by chief rival Oracle, is a big ask.

As chief technology officer since November, Quentin Clark is leading SAP’s technological strategy while the firm’s big bet plays out. A recent hire away from Microsoft’s Big Data division, Mr. Clark wants to ensure the next Salesforce or Workday springs up within the SAP ecosystem, rather than in competition with it.

Mr. Clark, 43, spoke with The Information from his Palo Alto office about SAP’s push into analytics and what happens if the big bet doesn’t pan out. Edited excerpts below.