SAP: an unexpected shock

Following the sudden departure of Leo Apotheker as CEO at SAP, the company held a media call with Hasso Plattner, co-founder and chairman of the supervisory board. Much has been written about his performance, events leading up to Leo’s departure and speculation about the future. I’ve been a part of that. The key takeaway: The company is restructuring the board with the introduction of Jim Snabe (products) and Bill McDermott (sales) as co-CEOs along with elevating CTO Vishal Sikka to the board. In other words, the company is placing a fresh emphasis on technology. Alongside, Hasso Plattner will take a more active role. In the short term he is talking about rebuilding trust the company needs to have with both customers and employees.

While most industry watchers are quietly optimistic, there is much speculation about the future of the German giant. This inevitably opens up questions about the company’s ability to remain as an independent business and its ability to once again come to market with, as my friend and Gartner analyst Thomas Otter puts it: ‘big hairy engineering.’

There is no doubt that SAP must now put its foot on the Business ByDesign gas. Engineering wise, it’s pretty much ready to go. Distribution is a whole different story about which I have yet to hear an intelligent answer. That will come but it needs to be sooner rather than later. My sense is that SAP has at best, three months to get those ducks in a row because

1. analysts will want answers at the next earnings call and
2. it is close to SAPPHIRE where they need to make a big splash

As regards the broader product roadmap, I am in agreement with another colleague, Ray Wang who believes that SAP needs to show the market it can once again innovate in a meaningful way. I’d add that it needs to ensure that happens in the context of protecting core products that are in use around the world.

Today, the world is giving Hasso a breathing space – not long – during which to re-organize and re-energize the business. There are plenty of tough tasks ahead. However, for customers there are two outstanding questions:

1. What does this mean for maintenance costs? Fellow Enterprise Advocate Frank Scavo believes SAP will take a softer line on the topic.
2. What about succession? Few people I speak with believe the co-CEO arrangements are much more than a Band Aid. I don’t know. Both Snabe and McDermott need a chance to prove themselves, along with Sikka. I go further. SAP’s woes extend way back. While it should not agonize on the past, it needs to address the future in that context. It is a context in which Hasso is deeply entwined. Whether he can extricate himself from that, apply his analytical mind to the issues and formulate a solution is moot.

In the meantime, and again as Ray says:

“There’s lots of debate as to whether Hasso is the right person to bring the company back,” said Ray Wang, a partner at Altimeter Group in San Mateo, California. “For the next three to six months, he brings the vision and direction. To improve the treatment of employees and customers, Hasso is the right person. If there is no turnaround in the next 12-18 months, SAP will be in real trouble,” he said.

If you are an SAP buyer or contemplating its products or services then these are questions you should keep in mind.

Aside – the best coverage of Hasso’s call is on ComputerWorld. It provides a good context for the events and a sensible parsing of what Hasso did (and did not) say. A more pointed and acerbic view can be found on Helmuth Guembel’s site.

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