Big Executive Shakeup and Shakeout at SAP

February 15, 2010 Timothy Prickett Morgan

Heads were rolling and chairs were moving at German application software giant SAP last week. The changes were implemented in the wake of the global economic meltdown, difficulties in getting a SaaS product called Business ByDesign to market, and an uproar in the SAP customer base as the company was getting set to jack up maintenance prices. Customers balked, SAP blinked, and gave SAP shops a two-tiered maintenance plan that probably has plenty of customers still grumbling.

On February 7, SAP announced that Leo Apotheker, who had been the company’s sole CEO for the past seven months, resigned from the company. For many years prior to that, Apotheker was co-CEO alongside Henning Kagermann, driving the company’s growth, and in recent years, mainly through acquisitions like at application software rival Oracle. But SAP’s revenues and profits are down, and the company wants to shake things up to get things moving again. Apotheker has been at SAP for 20 years, and got the obligatory thank you for “his enormous contribution to the success of SAP” in the official press release.

In the wake of Apotheker’s resignation, SAP is returning to its twin CEO approach. Bill McDermott, head of the SAP field organization, and Jim Hagemann Snabe, head of product development, were appointed as the new co-CEOs of the software giant. Both were already members of the SAP executive board that negotiated Apotheker’s exit. Hasso Plattner, one of the co-founders of SAP and its current chairman, is sticking around, and will “continue to play a strong role in advising the new leaders on technology and product development,” according to the company’s statement on the reorganization.

‘The new setup of the SAP Executive Board will allow SAP to better align product innovation with customer needs,” Plattner explained. “The new leadership team will continue to drive forward SAP’s strategy and focus on profitable growth, and will deliver its innovations in 2010 to expand SAP’s leadership of the business software market.”

Vishal Sikka, chief technology officer at SAP, has been appointed to the SAP executive board to replace Apotheker. Erwin Gunst, the company’s chief operating officer, is stepping down for health reasons and will be replaced with Gerhard Oswald, who currents runs SAP’s global service and support operations. And in a nod to the growing importance of the SMB segment to SAP–which it has not attacked with the same results as it did with large enterprises–Peter Lorenz, who is executive vice president of small and midsize enterprises has been named a corporate officer. Lorenz continues to report to co-CEO Hagemann Snabe and continues his job of managing the development of the Business One and Business All-In-One suites as well as the online Business ByDesign suites.

In a surprise move, John Schwarz, who ran business intelligence software maker Business Objects when SAP shelled out $6.8 billion two years ago to acquire it, resigned from SAP. Schwartz was a member of the executive board at SAP and continued to run the Business Objects development and sales efforts at SAP. Schwartz is Canadian; he was president and chief operating officer at Symantec when that company acquired file system expert Veritas for a princely sum, and in 2005 was tapped as CEO to rev up Business Objects. Before that, Schwarz spent 25 years at IBM, ending up as general manager of IBM’s industry solutions unit. It is reasonable to conjecture that Schwartz was annoyed at not being named one of the co-CEOs.

McDermott is an American, who came to SAP in 2002 from CRM giant Siebel Systems, now part of the Oracle collective. McDermott was previously president of IT consultancy Gartner and spent 17 years in executive positions at Xerox before that. Hagemann Snabe hails from Denmark and is an SAP lifer excepting a brief stint in the 1990s at IBM Denmark. So, as you can see, you don’t have to be German to rise to the top of SAP. Not that it doesn’t help. But being German clearly doesn’t keep you in the job, either.

It will be interesting to see how the new SAP sorts out its midrange strategy and if they make a concerted effort to “upgrade” AS/400 shops from homegrown or heavily customized applications to the Business ByDesign suites. For the right price, more than a few companies might make the jump.

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