SAP Announces Changes at the Top; Hasso Steps Up

On Super Bowl Sunday, February 7, 2010, SAP announced that CEO Leo Apotheker’s contract will not be renewed and his resignation is effective immediately. In his place, the company appointed co-CEOs Jim Hagemann Snabe and Bill McDermott. Both executives are already members of the SAP Executive Board, with Snabe in charge of product development and McDermott in charge of field operations prior to their appointment as Co-CEOs. More importantly, perhaps, Supervisory Board Chairman and cofounder Hasso Plattner has stepped up to take a more active role in overseeing the company’s direction. Apotheker’s departure was not a surprise for most industry followers. His contract was up for renewal things were not going so well for SAP of late. Just a week and a half prior to today’s announcement, SAP reported its 2009 financial results, in which total revenue declined 9% for the year (to €10,671) and software revenues declined by 28%. During his watch, customers become disenchanted over the mandatory migration and price increase related to Enterprise Support, as well as overly aggressive sales of featured products, including analytics. Mr. Apotheker couldn’t have been expected to perform miracles in a down economy, and can’t be blamed for the false starts with Business ByDesign that he inherited. In fact, Business ByDesign has seen significant progress during his tenure and is now ready for market. In addition, Apotheker was instrumental in launching SAP’s strong commitment to sustainability during the past year. With the appointment of co-CEOs Snabe and McDermott, SAP continues a long-standing tradition of promoting CEOs from within. Co-CEOs, in fact, have been used before, most recently with Apotheker serving as co-CEO with his predecessor, Henning Kagermann, during the transition period leading up to Kagermann’s retirement. This time, the co-CEO arrangement is not so much part of an orderly succession, but a solution necessitated by Apotheker’s rather sudden departure. Whether this Co-CEO arrangement is workable over the long-term remains to be seen. Monday’s press and analyst briefing call left no doubt who is really in charge of SAP following the changes. Hasso Plattner has resolved to resume a more active role in the company than he has in the past few years. Plattner accepted responsibility for SAP’s recent problems that led to a growing sentiment of customer distrust and pledged to make SAP a “happy company” again. He’s got this right: taking care of your customers makes your company successful. Forcing profitability via price increases and sales tactics is not a sustainable recipe for success. Plattner will also apparently play a more active role in leading SAP’s technology strategy. Vishal Sikka has moved up to the Executive Board to help drive the technology vision forward. SAP is betting that in-memory computing will be the silver bullet, which Plattner expects to drive a dramatic shift in enterprise computing. One would hope that SAP’s technology strategy will become clearer in other areas as well, including usability, mobile devices, SaaS and social computing. Over the next several months, SAP will focus its strategic communication efforts on the May Sapphire conference in Orlando. While these moves are a step in the right direction, it will take some time and persistence for SAP to earn back the admiration and confidence of its customers.