“Our software and services make a difference.”

                CONNECTING IDEAS
Software AG’s transformation was in high gear in 2021. In this interview, the Management Board members discuss topics and projects central to their business operations and the significance of growth, transparency and sustainability to their strategic objectives.

SANJAY, 2021 was your third year as CEO of Software AG as well as its third year of transformation. What comes to mind as your most valuable lesson learned in this time?

There is no handbook on how to be a CEO. Transforming a more than 50-year-old company is not easy—there’s no shortcut. Building resilience is tough work but very worth the effort. There are setbacks and wins that you don’t expect. Fortunately, we have a strong team and great employees at Software AG. I believe CEOs must think about the impact we have on the organization, customers and broader society in order to do the best job possible. As we move into a digitally transformed post-pandemic world, it’s crucial that our Company’s culture and values be exemplified by its leadership and built into every facet of the business. That’s how Software AG can create sustainable change and poise itself for lasting success.

                    “Our partnership with and investment from the technology investor Silver Lake reflect a strong endorsement of our strategy.”

Sanjay Brahmawar, CEO

Did the company succeed in doing this in 2021?

The momentum we have built over three years of innovation, investment and teamwork is now translating into real impact within our business, in the market and for our customers. We are delivering rich use cases of IoT, cloud, hybrid integration, business process mining, and self-serve analytics—all key to digital transformation. I firmly believe that everyone at Software AG understands that they play a pivotal part in our success. This transformation is led by our 4,800 employees and not by me or the leadership team alone.

What most impressed you last fiscal year?

I continue to be thrilled and impressed by the strong connection and commitment of our people. They are really moving the needle. Throughout the pandemic, we have been at the forefront of rapid acceleration of digitalization and technology investment. We helped a growing number of customers transform their business into a truly connected enterprise. We achieved this by strengthening our international partnerships. We are also seeing an acceleration in our Digital Business product revenue growth. At the end of 2021, we announced our new strategic partnership with the renowned U.S. technology investor Silver Lake, which reflects a strong endorsement of our product strategy, team and future growth potential.

MATTHIAS, Sanjay mentioned the importance of teamwork. You firmly believe in the notion of the finance department as a business partner. How is this role evolving?

On the one hand, modern-day financial management means streamlining our compliance activities and deriving value from them. That is an ongoing task. On the other hand, it also consists of providing meaningful KPIs, giving them context and proactively approaching other departments—especially in the middle of a complex transformation. We do this by treating finance as a communicative practice. Our aim is to create transparency, clarity and impetus for all of Software AG’s business decisions.

How does this manifest in your practical work?

Software AG is transforming its business model from perpetual software licenses to a dynamic subscription approach, and we are making major progress here. More than 80 percent of our bookings are currently based on subscriptions and SaaS. Internally, this change requires new models and processes, for example in accounting, planning and cash management. But it also means new interfaces with the market. When it comes to customer acquisition, how do we cultivate customer relationships during the term of the subscription? How can we enhance customer benefit when a subscription is renewed? We can only keep pace and propel this acceleration by engaging in dialogue.

                    “Teamwork isn’t just a buzzword to us. It’s our reality.”

Dr. Matthias Heiden, CFO

ELKE, How do Software AG employees perceive this dialogue and the Company’s transformation?

Software is a people business. That’s why we established a people-first culture across the entire organization, marked by mutual trust and empathy. This is the culture we are fostering at Software AG when we increase employee involvement in the conversation about decisions and improvements. In 2021, for instance, one of our focal points was building a hybrid work model. We included our employees and used their expertise in shaping change in the working world. Ultimately, they know best what suits their daily professional lives. Our aim with the hybrid work model is a better work/life balance and greater flexibility for employees. 

How does this benefit Software AG?

A balanced mix is the key to everything. It was clear even before the global COVID-19 pandemic that a desire for change was building among our employees that would allow for a combination of both: the freedom and flexibility of remote work as well as the direct, personal exchange in the office. If we find a meaningful way to bridge these two worlds, we will improve collaboration. We will become more agile and efficient, and we will break down hierarchies. Of course this requires a new leadership mindset—from the Management Board who must embody the cultural shift—as well as from each and every employee. We cannot lose sight of the well-being of any one individual. With the help of sports classes, meeting-free Mondays, the Headspace wellness app as well as our global employee assistance programs, we empower all of our employees with the tools they need to take responsibility for themselves and their well-being.

                    “Hybrid is the new way of working—remotely and in office spaces that invite collaboration.”

Dr. Elke Frank, CHRO

How have these measures resonated with employees?

The results of our most recent global MyVoice employee survey confirm that we are taking the right steps to attact and retain talent. The metrics show a significant improvement over the previous year. I’d also like to mention two other important global HR initiatives. The Change Network is helping us understand where we are in our transformation and how it is progressing through our collaboration on people and culture initiatives and employee engagement. Our Diversity, Equity and Inclusion network facilitates us in establishing and promoting these activities in our organization. In addition, we offer a Leadership Learning Journey, which is a program open to anyone in a leadership role. It consists of three objectives: individual learning, connecting leaders and developing a future leadership culture. To date, more than 500 leaders have enrolled in  the program. We also actively engage in succession planning to identify successful career paths. All in all, these dialogue platforms provide us with valuable feedback as to where we are in our transformation process.

STEFAN, To what extent does the transformation affect Software AG’s products and services?

The transformation can be felt all over the place. And it’s working. We know this because we received the best product ratings we’ve ever had from leading market analysts in 2021. The quality of our solutions is excellent, and fortunately that is being noticed. One focal point was and continues to be the end-to-end cloud experience of our offerings. All products are available as a cloud service, while we continue to address the hybrid landscapes of our customers.  The digitalization boost this topic offers is highly relevant.

What else was important last year from your point of view?

We are integrating more and more AI methods, not just in individual projects but in our products as well. APIs have also gained relevance because they are considered monetizable assets. Last but not least, the Internet of Things (IoT) is naturally the focus of transformation in many manufacturing companies. So we are connecting three key topics: First, we provide the IoT platform. Second, we take care of integration. Every IoT solution a customer builds on a platform will at some point have an integration need, for instance, with an SAP system, with a ticketing system for reporting a problem or with a CRM system. The third aspect is the process view, which we help design. Thanks to our range of products, we are unique in the market as a software provider able to offer one-stop shopping for all three solution areas. 

                    “We are unique in the market in integrating business, IoT and process data, enabling a truly connected enterprise.”

Dr. Stefan Sigg, CPO

In your opinion, are cloud, AI and IoT the most relevant technologies for the near future?

Yes, in addition to automation and analytics. When I refer to analytics, I mean coherently merging relevant data to derive key insights about business operations. An example from our portfolio is ARIS Process Mining where we reconstruct process structures from operational data and then visualize business-critical KPIs on live process instances, detecting where companies lose time and/or money. We are unique in offering this out of the box for IoT and business data.

ELKE, Speaking of predictions… What will be a key aspect of HR in fiscal 2022?

Clearly, the topic of talent management. We are planning to implement and promote talent discussions throughout all levels of the Company with a particular focus on succession. We will continue driving the entire process of employee development with our Employee Discussion Program, supported by relevant new learning and growth offerings. We want to raise awareness for DE&I and are developing customized training concepts for all leadership and staff members in this area. These topics are all aligned with our hybrid work model, which we will also continue expanding in 2022.

MATTHIAS, How do you see the current year and beyond?

I have quite a few joint endeavors with Elke. For example, setting up new office spaces that invite collaboration is a joint effort between HR and Finance. We discuss the strategy and then execute together according to our respective core competencies. This shows that teamwork isn’t just a buzzword to us. It’s our
reality. This is also true for DE&I, which will carry more weight for talent development of employees in my division. We will also concretely assess where and how we can accelerate digitalization and automation in accounting. I don’t just mean eliminating a few clicks here and there, but really putting our processes to the test to determine what information is needed where and how it can be collected and transmitted. I expect a great deal of continuity in our efforts to provide deeper insight about our business model—and our transformation—through meaningful metrics. Transparency will also be prioritized in the context of planned M&A transactions.

SANJAY, How do you see Software AG’s future?

I see our future as fast growing, purpose-driven and truly connected. We intend to further invest in people and culture to ensure our growth is sustainable. Beyond that, we will continue to contribute to a higher societal purpose: We are committed to sustainability and, with our technology, help customers preserve our planet for future generations. With Silver Lake as our new partner, we welcome a world-leading technology investor that has a proven track record of creating value in software companies as they drive growth. We believe that Silver Lake’s expertise and network combined with our transformation will help us access more of the $64 billion total addressable market. This will be propelled by executing our planned M&A program to augment growth, adding complementary technology and honing our go-to-market capabilities.

                    Connecting The Future