Award-Winner's Interview: Colin Sampson, SAP
Back in September, the 3rd Shared Services Asia Pacific Excellence Awards 2009 were presented "to recognise the results, achievements and performance of SSOs in the region".One of the most coveted gongs to be bestowed at the glitzy ceremony in Singapore - the award for Contribution to Shared Services and Sourcing Thought Leadership - went to SAP's Asia Pacific Japan CFO, Colin Sampson. Now, kicking off our series of interviews with recipients of 2009's Asian awards, Colin speaks exclusively to SSON on why his organization has succeeded where others fear to tread - and why his unique leadership style stood out from the competition in the eyes of the judges...
SSON: Colin, what made you stand out from the competition in terms of winning the award?
Colin Sampson: If I could guess, it would be passion, leadership and clear vision.
SSON: Did you suspect you were going to win or did it come out of the blue?
CS: We asked but they wouldn’t tell us so it was a surprise. In hindsight it was a nice surprise - like finding out you’re going to have a baby!
SSON: I suppose in many ways a project like that is a baby really, isn’t it?
CS: It is - and in fact it was always my baby. I owned the project right from the start and I take much pride in the way it turned out.
SSON: I guess that is a good opportunity really for us to look at how you came about to be in the position that you're in now: can you give us a little background on how your career has panned out to this point?
CS: I’m a South African-born Australian with an Australian Chartered Accountant qualification as well as an MBA from Macquarie University in Australia. I joined SAP Australia in 1994 as Australia/New Zealand CFO and in 1997 I got responsibility for Asia Pacific, located in Singapore.
As a CFO, process improvements, costs reduction and business efficiency are on the radar constantly - we stumbled across shared services due to the region set up where we have smaller subsidiaries like Thailand, Philippines, and Indonesia. In establishing those subsidiaries we did not want to cater for full-blown activities like payroll and contract admin - so we ran it out of Singapore, establishing a shared service concept by default. Proving to work well, it made sense to expand to other countries in Asia Pacific and evaluate other processes like accounts payable, bank reconciliation, month-end closing and billing activities.
In 1999 we carried out a feasibility study for setting up a full blown shared services centre. At that point in time, the parent company in Germany didn’t see the benefit - for them a shared service was SAP running on a single IT platform, but they allowed me to proceed holding the responsibility and success and I guess the rest is history. We (APJ) went live in December 2003 and our wins, successes and positive noise got SAP globally interested, inviting me back to Europe to help set up shared services across the world. Today SAP shared service is one of the more established shared services around the world and moving into a new model – a globalized shared service, meaning standardized, best practice processes across the world.
SSON: You mentioned the wins that initially grabbed Germany’s attention: one of the things our network members frequently ask is, what are those initial quick wins that you can use to show progress? Can you give us a couple of examples of the kind of wins you mean?
CS: Yes. The temptation is to do a Big Bang implementation, but better to do it in bite-sized chunks which can be rolled out to a few countries. For example, accounts payable process rolled out to a few countries in South East Asia - such as Singapore, Malaysia, Thailand – evaluating the success, collecting feedback and measuring the savings against the KPIs, making sure customer satisfaction and the right SLAs are in place, resulting in lower cost and improved quality and efficiency.
This was our approach; we demonstrated the success with wins where our customers came back pleased with the service - and suggested other processes to be managed by shared services: that by itself is a justification of success and a green light to continue with the journey.
A Big Bang approach may mean a lot of risk on the project and its ultimate success.
SSON: So obviously having had the engagement from Germany, when things were a lot more smoothly supported from the organization, what challenges then lay ahead of you in terms of the actual implementation rather than when everything was up and running?
CS: I will focus on a few. The first challenge was ensuring that, right at the beginning, we had the headquarters' support and buy-in. We didn’t want any country to opt out of the shared services environment and decide "this is not for me: it’s a great idea but we don’t fit into this model".
The other support that we need is from the countries – e.g. CEO, CFO, COO, HR people etc – to accept the new way of operating. We interacted with each one of the management teams, explaining the process, the changes, the savings, agreed on the service level agreements, etc. This is a long and laborious process - but it is crucial to get buy in and ensure success.
Along that line, we had a lot of change management activities; jobs are going to change and headcount reductions will take place. There is a need to cater for all levels in the organization and help people embrace the change.
There are some challenges you normally have to accept but you still have to take seriously into account, such as different cultures, different languages, different capabilities within the shared services and legal requirements in certain countries. They are not showstoppers but you have to take them all into account when you go through this whole change management.
SSON: What sort of staff are we talking about in terms of helping you out with that implementation?
CS: You have to remember the circumstances back in 1999 where headquarters supported only the idea. We had a very low budget for this and therefore ended with only a very few people, about four to five key staff members - who of course all had their day jobs as well…
SSON: OK, let’s move on. In terms of external developments over the last couple of years, specifically the financial crisis: how has that affected SAP’s business in your region and do you think that the challenges you were facing earlier on have stood you in good stead to face specific challenges now?
CS: If you look to see whether the financial crisis has affected us, there is no doubt that it has. Our top line business has fallen forcing us to cut expenses in order to preserve the bottom line. With shared services, you realize that in times of expanding the business, your shared services infrastructure and people grow much less, so you can leverage off that. This is applicable for bad times - it is easier to reduce your capacity in shared services in line with the reduction in the business – and this was true for our shared services.
SSON: So you’re talking about using shared services as, I guess, a safety cushion when it comes to the kind of violent financial oscillations we have witnessed?
CS: Yes, absolutely.
SSON: It’s a good strategy and definitely one that people will need to think about because, as you say, you need to be agile and nimble - for the next downturn.
CS: Yes, you need as much agility and flexibility to move both ways. It’s easier to get your hands around the resources that are in shared services: they are in one area and they specialize in their activities.
SSON: So what proportion of these crisis-related challenges that you have had to deal with have been as a result of what’s happened in your region specifically, and what proportion have been as a result of the global situation? Your region seems to be picking up a lot faster than everywhere else.
CS: The region grew a lot faster and it collapsed a lot faster. Some multinational companies think that they are going to be driven out of this crisis by China and India. I think that it is going to take a lot longer.
There are other areas we have to be careful of. The first one is to manage the expectation of growth versus profitability again. We had this back in the days when we were growing at 30, 40, 50%. Managing growth - and specifically managing fast growth markets - is obviously going to happen again which means that if profitability is expected to increase at the same time, there is less ability for us to invest for the growth. It is a balance.
The second thing, more particular to our industry, in addition to the world financial crisis - maybe as a result of it or maybe it was happening even before the financial crisis - there is a major change taking place in the way companies are now intending to buy software: their buying patterns are changing. In the past, you could see many big deals where customers were prepared to make large investments upfront and deploy the users over a number of years. Many were giant projects with all the licenses paid for up-front. Today customers want much more of a consumption model - use of the software as and when needed and payment for this in line with usage.
Customers are looking to get software as a service – a service that can be switched on and switch off, a service that may be hosted by someone else rather than hosted by the company itself.
SSON: An SSON member, Tim Cummins, of the International Association of Contract & Commercial Management, wrote an interesting article a few months ago about how business is changing from an aggregated to a disaggregated model and how the outsourcing model, for example, as an example of partnerships between businesses and cooperation is a standout development of business over the last few years - and I was just wondering - in terms of the financial crisis maybe acting as an accelerator - how much do you think changes in business generally (rather than specifically just in the software business and software industry) are going to affect what you do and the way that your shared services team has to work over the next few years?
CS: I think it is going to change dramatically, I really do. The financial crisis was an accelerator to this whole thing. People just looked at this massive growth pattern without really taking account the asset bubble that took place and the risks that people were taking to get there. Growth aspirations were outrageous.
Going back to shared services, the transformation of business will continue - as companies realize that they may not have the growth that they perceived originally, they are still going to drive their business, reduce costs and provide a more effective and productive environment. The analysts, the shareholders and the stakeholders are going to continue to demand this.
To achieve this transformation of the business and re-engineering of processes, running the operations through shared services becomes even more important. If you talk to most CFOs today, a common topic is managing effective shared services operations to save costs. It’s a huge issue. It has been spoken about for many years, and now companies are really focusing on how to leverage shared services to minimize costs, maximize productivity and efficiencies, to ensure they are able to cope with the changing business environment of the future.
SSON: So how does that mean shared services work is going to develop over the next few years - obviously we’re not asking for any trade secrets in terms of what you are doing at SAP! But how are those changes going to manifest themselves, do you think, or is it a bit too early to start speculating?
CS: Globalization of shared services. The first thing is to change your processes in the shared services to be as effective and as world-class or best practice as possible, and continue to do that. It’s not just a one-time exercise, it’s a continual journey.
The second part of it is to ensure that the processes that you operate across the globe, regardless of location, are very similar - meaning standardization. This will result in a tremendous amount of efficiency - and obviously, if you have very efficient processes, with the right IT tools, you can drive automation, and save costs.
With this, you can drive further savings with lower costs per head: rather than incurring high costs in expensive locations such as Australia, Japan or Korea, you can have shared services operating in less expensive locations, while still getting the best quality talent.
SSON: Do you truly believe that cost can be infinitely reduceable? At some point surely there has to be a baseline.
CS: You are right; there is a finite limit here where you won’t be able to drive the costs down much more. I suppose to a large extent, hopefully we can rely on increased technology and better innovation in our products that can help companies drive down that cost in the future.
SSON: I guess that a certain amount of responsibility does sit on your shoulders at SAP!
CS: Yes, it does. We have about 92,000 customers around the world and most of them use SAP for specifically that: to drive their process efficiency and effectiveness. A lot of the improvements and solutions we build into our applications are derived from our customers’ needs, suggestions and feedback.
SSON: Let’s look at some personal insights to finish, Colin. Can you let us have an idea of what your aims and ambitions for the next couple of years are?
CS: Right now I am interested in getting SAP through the current financial crisis, and then working on developing further growth plans – particularly in fast-growth markets like China and India and maybe in some other small emerging markets like Vietnam, Cambodia, Pakistan, etc.
I also want to work on continuing to deliver more innovation and work with the global team to continue to showcase SAP as a thought-leader in the area of shared services, particularly with process improvement.
SSON: Does that mean that we should be contacting you about being a speaker at some more SSON shows at some point?
CS: Happy to do that anytime!
SSON: Excellent! What is the most important advice you have ever been given?
CS: The most important advice I have ever been given is that your family comes first. I am very focused on family life. You shouldn’t allow work to get in the way of it but keep a healthy balance between the two. I know we talk about having work/life balance - and we don’t always listen to it - but we should make the effort.
One of the aspects I have learnt along the way is that integrity is the most important value and whatever happens, you need to protect it - at the same time you also need to have a lot of empathy for the people who work for you, because you need to put yourself in their shoes when you make decisions.
Another thing is that you need to manage your career yourself; you need to take responsibility for that - and I learnt that from an ex-CFO that I worked with at Honeywell many years ago, in doing this you need to take some calculated risks. One of the things I did was join SAP in 1994 when it was SA-who.
And the last thing I have learnt is you need to take control of your own emotions at work, and rather work with passion. I just don’t understand why people get so angry at work and throw tantrums. Things go wrong, you learn from the failure and you move on.
SSON: And the most important advice you’ve given, in turn?
CS: You have got to take responsibility for yourself… I have always passed on the message that the work/life balance is important and your family comes first and that is why I am concerned when I see my staff working on the weekends or continually working excessive hours. There are certain things we have to do and sometimes we work a few hours later than normal, that’s fine. But if it’s a regular pattern and people are not spending time with their families and their children, I’ve got a problem with that.
SSON: Well I think that seems to be a pretty laudable attitude which should be shared by many more CFO’s in my opinion! Moving on: what do you think is the biggest mistake you have ever made (that you can tell us about)?
CS: I should have taken up golf as a teenager...
SSON: Surely you have to take it up aged two or three now!
CS: I’m sure you do! It’s much more difficult to keep my handicap down. I picked golf up in Singapore, of all places – one of the most expensive places in the world to play golf! I’ve enjoyed it ever since. And actually it’s been a terrific thing for my career. I meet customers playing golf and through our customer golf events or golf days around the world… It’s extremely enjoyable and helps to build positive business relationships.
SSON: Finally, Colin, how would you like to be remembered?
CS: I would like to be remembered as a fair and reasonable person who has given opportunities to many of the people that I have worked with, and a person who has been fun and enjoyable to work with and live with. Simple, easy, but that is it.
SSON: As you say, those are the important things.
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