SAP: Reorg Will Restore Trust, Speed InnovationSAP: Reorg Will Restore Trust, Speed Innovation

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Enterprise computing is headed for "massive changes," according to SAP co-founder and former CEO Hasso Plattner. He vows that the boardroom shakeup at SAP over the weekend, which he helped engineer, will change the company's culture and help drive technical innovation.

SAP announced Sunday that it has accepted the resignation of its CEO Leo Apotheker. The company immediately appointed Bill McDermott, the current head of SAP's field organization, and Jim Hagemann Snabe, the current head of product development, to serve as co-CEOs.

"We will have changes in our management style," Plattner said Monday morning during a sometimes rambling, sometimes confessional press conference in which he, alone, spoke on behalf of SAP. "We will have fewer hierarchy levels, we will have more agile project teams with a flat structure, and we are ready for critical decisions."

Incremental improvement was once a favored style of development, Plattner said, but he added that radical changes have to be embraced when they are presented. "We are at a crossroads now in technology," he explained. "We will see radical changes in hardware technology this year and on the horizon... and SAP is more than prepared to take advantage."

Plattner cited super-large in-memory systems, parallel computing, on-demand software, cloud computing, and mobile phones as components that SAP will more rapidly embrace. Of course, competitors ranging from Salesforce.com, RightNow, and Workday to arch-rival Oracle are exploiting these technologies, too. In some cases they are well ahead. Rivals will no doubt air this week's turmoil and admissions by SAP in competitive bids against the vendor.

Plattner's comments make it clear that he took the lead role, as chairman of SAP's Supervisory Board, in replacing sales-oriented CEO Leo Apotheker with co-CEOs Bill McDermott and Jim Hagemann Snabe. Plattner said SAP needed a unifying strategy and leadership that could end infighting and win back trust.

"What SAP has to re-establish is that we have trust between all parties, from the Supervisory Board and Executive Board to the co-CEOs, the management team, the employees, the works council, partners, and the customers," he said. "We have lost, here and there, that trust, and I'm totally committed, with our team, to change this quickly."

Co-CEOs McDermott and Hagemann Snabe will focus on outward communication and inward development, respectively, Plattner said. The move also puts two capable executives in the public eye in SAP's two largest markets. McDermott, who will continue to lead the global field organization, is an American, a gifted speaker, and a technology sales and operations veteran. He joined SAP in 2002 and previously served as a senior vice president at Siebel Systems and as president at Gartner.

Hagemann Snabe, who remains head of product development, is a resident of Denmark and speaks five languages (Danish, French, German, English and Swedish). He has nearly 20 years of experience with SAP, including stints in consulting and industry solutions development.

Perhaps the more telling part of SAP's reorganization is the elevation of SAP Chief Technology Officer Vishal Sikka to the SAP Executive Board. In addition, a press release stated that Plattner would take an active role on advising on technology and product development. Plattner made clear in his remarks that he had no shortage of technology vision and opinion.

"We have the potential for radical process improvements though in-memory computing without disruption to current customer environments," Plattner said. He also promised a new database, to be demonstrated at the company's next SAPPHIRE event, which he said will support both columnar and row-based parallel querying.

Analysts contacted by information agreed that Apotheker and SAP were victims of the company's most recent successes.

"SAP was always a technology company that was innovative and provided leadership, and I think that has been lost over the past couple of years," said Forrester Research Analyst Paul Hamerman. "The company plateaued in a number of ways, and it was really just trying to milk revenues out of the customer base."

SAP was actually ahead of its chief rival, Oracle, in delivering its NetWeaver service-oriented middleware prior to Oracle's Fusion middleware. Despite SAP's head start, Analyst R. "Ray" Wang of Altimeter Group said NetWeaver has not stacked up. "SAP has one of the best ecosystems for partners to build on and extend composite apps, but the toolset is probably the hardest to use," he said. "Many system integrators will tell you it takes them three times longer to build in NetWeaver than it does in Oracle Fusion, IBM WebSphere, or Microsoft .Net."

It remains to be seen whether Sikka, with Plattner's input, can plug the technical innovation gaps at SAP. Plattner said SAP has an enormous pool of software development talent to draw from. He also pointed to pending releases including a relaunched and newly competitive Business ByDesign application suite, SAP's delayed software-as-a-service-based offering for small and midsize companies. In addition, Plattner noted investments in two other on-demand projects that will bear fruit later this year.

Of course, innovation can't come at the expense of financial imperatives. "It is clear that the focus has to be on growth, margin, and innovation," Plattner said. "They fit together because without growth, even a strong margin doesn't help; and without innovation, you can't grow."

Will the team of McDermott and Hagemann Snabe have the right qualities to drive SAP forward? Both executives have the confidence of SAP's Supervisory Board, Plattner said, and he added that joint leadership is a proven model.

"SAP has been successful in the past with co-CEOs," he said. "I'd also remind everyone that the best years at Oracle were when Larry Ellison and Ray Lane worked together, and the best years at Microsoft were when Bill Gates and Steve Ballmer led together."

Not everyone shared SAP's confidence that it could change its culture with a team entirely from within the company. "I see this as an interim move until they can find the right kind of charismatic and visionary leader who would probably come from outside the company," said Forrester's Hamerman. "They need a Steve Jobs."

McDermott and Hagemann Snabe neither spoke nor answered questions Monday. But Plattner said SAP's Executive Board would meet later this week and the two new co-CEOs would hold a press and analyst conference by next week.

For Further Reading:

SAP CEO Apotheker Resigns; Co-CEOs Named

SAP Questions Gartner BI Magic Quadrant Ranking

SAP CEO Details Prospects For 2010

SAP Introduces Two-Tiered Support

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