SAP surprised the markets last night announcing that CEO Léo Apotheker had left the company with immediate effect after a ‘mutual agreement’ not to extend his contract beyond the end of 2010. He had been with the company for 20 years but (sole) CEO for just 8 months, taking over from Henning Kagermann. The company has appointed two co-CEOs: Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development, both already members of the SAP Executive Board. SAP also said that Chairman and SAP co-founder, the charismatic Hasso Plattner, would “play a strong role in advising the new leaders on technology and product development.”
The reluctance to extend Apotheker’s contract is, we believe, a reaction to SAP’s poor performance in new licence sales last year, relative to Oracle and others, and to the hash over the issue of raising maintenance fees. SAP has looked to us like a wounded animal lately, with a lot of (non-attributable) comment in the industry about how they’ve “lost it”. Perhaps the internal view is equally bleak – or more so. The FT reports that an internal staff survey last year found a dramatic loss of confidence in top management.
In our view this news is potentially a positive for SAP. One problem we had with Apotheker was that in the early days of SAP’s attacks on the SME market – when he was head of sales – he didn’t seem to ‘get it’ in terms of what it took to build a good channel to the mid-market. More recently, the Business By Design project (the mid-market oriented SaaS offering) has not gone well, and as CEO he must carry some of the blame. And, as mentioned above, the move to increase maintenance fees upset customers and the company had to climb down publicly.
The idea of co-CEOs may sound a bit dubious, but it could work – it was certainly successful in the days of the Plattner/Kagermann team, from 1998-2003, arguably SAP’s best years – though in truth, Plattner always seemed like the CEO with Kagermann as COO. They're trying to re-create the 'dream team'. We think Bill McDermott will overhaul the salesforce and take the Plattner role, while Snabe takes the Kagermann position. We think McDermott will appeal more to the Wall Street investment community than Apotheker, which will help the share price. Will these changes restore SAP back to its former glory? It will take more than a new management structure: the IT world is changing profoundly. An awful lot hinges on the re-launch of Business By Design.
SAP is hosting an analyst call later today – if we learn anything more we’ll report it thereafter. Meantime we can reflect that in Anthony’s “2020 vision” speech last week he predicted SAP being acquired within the next decade… it may come true sooner than we expected!
The Innovation Group (TIG) 
CA announced its Q3 