Leadership changes at SAP put technology strategy in the spotlight
SAP must work to regain the trust of its customers and become a "happy company" again the company's co-founder has said, in the wake of the unexpected resignation of the software giant's CEO.
Léo Apotheker, who became CEO in April 2008, has left after it was decided not to extend his contract as a member of the company's executive board.
Apotheker will be replaced by co-CEOs Bill McDermott and Jim Hagemann Snabe, who previously served as head of field organisation and then head of product development at SAP.
Under Apotheker's stewardship SAP found it hard to win over new customers with its stuttering development of its on-demand ERP system, Business ByDesign, and unsuccessful attempts to move all customers onto a more expensive Enterprise Support package.
Apotheker's departure from SAP prompted little surprise among analysts, who said SAP had alienated some of its customers while Apotheker was at the helm.
Thomas Otter, VP with Gartner, said: "SAP's performance over the last year hasn't been particularly good.
"Throughout the year, SAP was very much on the defensive. Customer satisfaction has dropped significantly on the back of enterprise support and SAP has been chasing margin as a main strategy and that's not really been sustainable.
"Also Apotheker hasn't done a great job of articulating a long term vision for SAP that's compelling," he added.
Forrester analyst Holger Kisker added: "This is not a surprise to me actually - I was expecting something like this. Everything was directed towards how to accelerate sales and out of that strategy I think a lot of the problems were generated. For example Apotheker pushing Business ByDesign when it was not really ready to hit the market - it was too early."
Kisker added: "2009 was a difficult year but specifically trying to drive sales up is the wrong strategy in such a year, you have to focus on other things to keep the business running."
Philip Carnelley, analyst with TechMarketView, said in a research note the decision not to extend Apotheker's contract was likely to be related to the company's poor new-licence sales performance along with the handling of the maintenance fee issue.
As part of the senior management shake-up, CTO Vishal Sikka, will join the executive board of the company while chairman of the SAP supervisory board and co-founder of the company, Hasso Plattner, will play a key technology advising role to the new CEOs.
Looking at how this change in leadership could change SAP's strategy, Gartner's Otter said: "I think we're seeing a more active role of [SAP chairman] Hasso Plattner in SAP's strategy and SAP with a new board has got some thinking to do and has got to come out of the blocks in about 10 days' time with a plan of the way going forwards."
"SAP is aware of the key challenges it faces - customer satisfaction and employee satisfaction in the short term are key then articulating a longer term strategy that will drive not only profitability growth but serious bottom line revenue growth."
As for the two co-CEOs, Kisker suggested they will need to complement each other. "I just hope that [Snabe] takes the side he's responsible for - products and technology - and being a good, strong counterpart to the sales part of McDermott," he said.
He added that the product strategy is unlikely to change significantly but SAP is likely to make sure it executes this more effectively.
TechMarketView's Carnelley suggested the change of leadership could be a potentially positive step for the company as the co-CEO concept has worked for the company previously.
Forrester analyst Paul Hamerman added: "The leadership changes at SAP elevate technology strategy and product innovation to their rightful place at the top of the food chain."
He added: "SAP needs to deliver innovation more quickly and help customers benefit from product enhancements by making the applications easier to use, manage and update. Software-as- a-service will play a significant role in SAP's product strategies going forward."
In a conference call about the change in senior management Plattner said: "What SAP has to re-establish is that we have trust between all parties: the supervisory board, executive board, the co-CEOs, the management team, the employees, the works council, the partners, the customers and the employees working for our customers. We have lost here and there the trust and I'm totally committed, with the team, that we change this and we change this quickly."
"We are a public company and profit is everything but in order to be profitable, it needs to be a happy company. I will do everything possible to make SAP a happy company again. And in order to be profitable and please the shareholders - to achieve this we have to focus on our customers and we have to make the customers and their employees happy as well, then we can succeed."
Referring to the Enterprise Support debacle, Plattner said: "We made a mistake, and we have to change course here. SAP did this and now we have to regain the trust from the customers who were more than upset. Unfortunately the head of the company takes a lot of the blame whether it's just or not."