SAP: New leadership, same old story?

SAP CEO Leo Apotheker has resigned and two of his former lieutenants have become co-CEOs. Are these two executive the answer or does SAP need some outside intervention?

SAP CEO Leo Apotheker has resigned and two of his former lieutenants---Bill McDermott, head of sales and Jim Hagemann Snabe, head of product development--- have become co-CEOs. Are these two executives the answer or does SAP need some outside intervention?

Dennis Howlett, Vinnie Mirchandani and Michael Krigsman have the hits, runs and errors. Apotheker created SAP's sales juggernaut and goes out in a terse statement. Apotheker's departure---voluntary or otherwise---has been rumored for months. He raised prices in a downturn and never quite bridged the sales-technology gap. Oracle has out-executed SAP in many cases.

Job one for McDermott and Snabe: Hug the customers so they feel good about paying maintenance fees and innovate.

Mirchandani summed up the elephant in the enterprise software market:

The reality is the customer has been forgotten in enterprise software, not just at SAP. It’s about squeezing as much out of old technology as possible...I wish the other bigger vendors had the cajones to acknowledge they similarly mostly live off profits from software 15- 20 years old, from consultants which implement that old software and provide services from data centers which were designed during the Cold War.

So what should SAP do? Here are three suggestions culled from the Enterprise Irregulars:

  • Buy up software as a service companies. SuccessFactors, Workday and others up-and-coming threats. SAP has its own SaaS adventure in Business ByDesign, but a series of acquisitions would eliminate future threats and bring in fresh blood to the management bench.
  • Streamline the implementation process. SAP executives have said repeatedly that they'd go after consultants that don't add value. The problem: That's tough to do when consultants are a big part of the sales equation.
  • Give us a technology vision. Oracle CEO Larry Ellison has been able to simplify the company's message. With the acquisition of Sun, Ellison's wants to sell complete systems. Oracle wants to be T.J. Watson's IBM. Before the Sun detour, Oracle sold its middleware vision (while it took your maintenance and support dollars). In contrast, SAP's message is muddled. What does SAP stand for and can the company effectively communicate it?

Regarding that last point Ray Wang writes:

Putting McDermott as Co-CEO makes sense.  He is an excellent sales guys but the issues is not sales.  It’s products.  Snabe and Vishal will need strong product vision to right SAP and point it in a forward direction.   Engineering and products need more attention to bring out trapped innovation at SAP.

Are McDermott and Snabe the revolutionaries that will rip up the old enterprise software playbook and cannibalize their existing businesses? Probably not. SAP needs a rethink and has the funds to endure one. The big question is whether the will is there to make it happen.

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