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SAP hits reset button with CEO change

By Joab Jackson and Chris Kanaracus
February 8, 2010 12:13 PM ET

IDG News Service - With the replacement of Léo Apotheker as CEO of German ERP giant SAP, company officials are hoping to rebuild customer relations and ignite more innovation within the company, according to a conference call held with co-founder and chairman Hasso Plattner on Monday morning.

Analysts, aware of the company's recent stumbles in the marketplace, are taking a hopeful but cautious stance to the announced changes.

On Sunday, SAP announced that it had not renewed Apotheker's contract as CEO, and appointed two co-CEOs to fill the role: Bill McDermott, who was the head of the field organization and Jim Hagemann Snabe, who was in charge of product development.

 Leo Apotheker
Leo Apotheker

Apotheker's departure was preceded by months of rumors over whether his contract would be renewed, given his troubled reign as CEO.

SAP has been beset on all sides by a number of difficulties over the past few years. Like many companies, SAP has been fighting a difficult economy. Revenue had declined from €11.5 billion ($15.7 billion) to €10.6 billion, from 2008 to 2009. Customers had groused over maintenance fee increases implemented in 2008.

On the technology side, SAP has been slow to catch up with IT industry trends such as cloud computing and software-as-a-service. And Plattner hinted Monday at employee dissatisfaction as well.

Going forward, the company plans to address all these concerns, Plattner promised.

"The focus is on growth, margin and innovation. It has to be kept in mind that all three have to be dealt [with] simultaneously," Plattner said. "Without growth, even strong margins don't help. Without innovation, you cannot grow. And without margin you can't have a streamlined company."

The company will change its approach in developing new technology, moving from simply updating existing products to boldly developing entirely new lines of software, Plattner said.

"Incremental improvements were once one of the favorite styles for development. This is OK where it makes sense," he said. "But radical changes have to take place where the opportunity presents itself. We are at a crossroads in technology. We will see radical changes on the horizon. SAP is more than prepared to take advantage of super-large in-memory systems with a high number of parallel cores."

In order to make this innovation happen, some reorganization will be necessary.

"We will have changes in management style," Plattner said. He promised fewer hierarchical levels of management and more agile software development teams "with a flat structure," he said.

Plattner admitted that customer trust and employee morale have suffered of late. "I will do everything possible to make SAP a happy company," he said.

He addressed head-on one of the most heated issues in SAP's recent history: Its 2008 decision to move customers to a richer-featured but more expensive Enterprise Support service. The plan rankled users worldwide, particularly those with older, stable systems and little need or desire for additional support.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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