Can SAP rebuild trust and innovation?

SAP chairman Hasso Plattner started with contrition and signaled that product development will lead the rebound in the company. Plattner's task: Rebuild employee and customer trust.
Written by Larry Dignan, Contributor on

SAP chairman Hasso Plattner started with contrition and signaled that product development will lead the rebound in the company. Plattner's task: Rebuild employee and customer trust.

It's been a busy 24 hours for SAP. Dennis Howlett has been detailing the play-by-play from CEO Leo Apotheker's resignation on Sunday to Plattner's conference call Monday morning. The company goes back to the future with a co-CEO arrangement that has worked well in the past.

Bill McDermott, head of sales and Jim Hagemann Snabe, head of product development, will be co-CEOs (right) and CTO Vishal Sikka is appointed to SAP's supervisory board.

Plattner laid out the future:

We are at the advent of the largest, most significant changes in the industry…The next years will be dominated by massive parallel computers. We will see a massive shift. It will be a catastrophic move to be on maintenance without innovation. We have to maintain and innovative.

Also: SAP: Hasso Plattner back at the helm. Job no.1: rebuild trust

Apotheker's resignation memo highlights where SAP went off the rails. The delays in Business ByDesign, a price increase in a downturn and an inability to set a tech vision all conspired to down Apotheker with customers and employees. Plattner said that a happy SAP (internally and externally) can drive innovation. In a memo, Apotheker wrote:

"The pace of change was rapid, probably too rapid for some. My communication towards you was not always optimal and the results of the employee survey did not completely come as a surprise to me given what happened during the time of the survey. I’m pleased that many of your concerns and worries are already being addressed by the Executive Board. I regret that I wasn’t able to earn the support of each and every one of you, but I serenely stand before you today with the knowledge – and the clear conviction - that what I did was for the best of the company and that your future is brighter because of the actions the Executive Board and I have taken."

Add it up and SAP is at a crossroads. Can SAP's team of McDermott and Snabe be like Microsoft's Bill Gates and Steve Ballmer combo? Plattner even referenced the Larry Ellison-Ray Lane tag-team at Oracle.

Time will tell.

For now Wall Street analysts are mixed on the prognosis. Here's a roundup of commentary on SAP's new leadership.

Piper Jaffray analyst Rajeev Bahl wrote:

By elevating both the head of sales and the head of R&D, plus the promotion of the CTO to the Executive Board and the clear statement that co-founder Hasso Plattner will maintain an involvement in product development, this seems a carefully orchestrated move to shift the balance of power within SAP back in favor of product development (Apotheker had been SAP's first CEO not to have come from the R&D side of the business).

Jefferies analyst Ross MacMillan wrote:

Our first thought falls squarely with Enterprise Support and SAP's unsuccessful attempt to migrate the base to a more comprehensive/ higher cost offering. However, the real reason may be broader than this, and relate to disagreements over strategic direction as SAP tries to find sustainable growth given its mature install base, risks from business model transition (SaaS) and the aggressive M&A efforts of major competitors.

JMP Securities analyst Patrick Walravens wrote:

Our view is that by letting Apotheker go after only 9 months as sole CEO, SAP is acknowledging the depths of its current issues. These issues include a convoluted product strategy, loss of market share to Oracle, and trouble adapting to the cloud computing model. Second, the appointment of co-CEOs with a strong role by the co-founder suggests to us that the SAP Supervisory Board could not agree on a single person to lead this business.

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