SAP Intends to Restore Market Trust Under New Management Regime
A new SAP management team will focus on restoring trust inside and outside of the enterprise business software company that was lost over the past couple of years as a result of policies that led to discontent among SAP employees as well as customers, according to Hasso Plattner, chairman of the company's Supervisory Board.
Plattner said making SAP a "happy company again" was a key objective after the company on Feb. 7 named co-CEOs, Bill McDermott, head of SAP's field organization, and Jim Hagemann Snabe, head of product development, to replace the former sole CEO Leo Apotheker, who resigned over the weekend. Apotheker resigned after he and the SAP Supervisory Board "reached a mutual agreement" not to extend his contract as CEO and as a member of the SAP Executive Board.
Plattner emphasized that there "was no difference of opinion between Leo and myself on strategy" and that claims to the contrary are false. But Plattner indicated that the Supervisory Board decided that something needed to be done to get SAP back on a path to solid growth. Apotheker's resignation came barely a week after SAP announced a 12 percent non-GAAP (Generally Accepted Accounting Principles) decrease in operating income for the full year 2009, while total non-GAAP revenue for the period declined 9 percent.
Nor did Plattner find fault with Apotheker over the long development cycle and delays in building volume sales of SAP's Business ByDesign, a suite of Web-based SAAS (software as a service) business applications.
Media reports that one of the reasons that Apotheker left his job was "the lack of success of ByDesign" were "totally wrong-Leo was the one who really was instrumental in turning it around," Plattner said, adding that Business ByDesign is now in a good position for growth.
"We got during 2009 very good feedback for 2.0. It's now live with many customers," he said. SAP is close to launching Version 2.5 "and I'm very optimistic that this will be a very good year for ByDesign," Plattner said.
SAP is continuing to build up its on-demand software portfolio with its plans to release 12Sprint, a business collaboration platform that in part can serve as a Web-based meeting room where corporate users can virtually congregate to work on projects or hold online meetings for any reason.
With a new management team in place, "It is clear that the focus is on growth, margin and innovation," Plattner said. "And it has to be kept in mind that all three of them have to be dealt with simultaneously because they fit together."
Focusing one or two of these factors won't help, Plattner said. "Without growth ... even a strong margin doesn't help. Without innovation you can't grow and without margin you can't have a streamlined company and you will not be valued as ... a company with a strong future," he said.
"All areas of this company must understand and accept the strategy-the strategy of change without losing too much in productivity."
One of the first orders of business for the new management team will be to restore trust among "all involved parties," including the executive board, the new co-CEOs, the management team, employees, corporate partners, customers and the employees of SAP customers that are using the company's products, Plattner said.
SAP is a public company and "at a public company 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," he said.
In a blog post on the Forrester Research site, analyst Paul Hamerman said Apotheker failed to act affirmatively to resolve customer resistance to SAP pricing policies and sales campaigns.
"During his watch, customers become disenchanted over the mandatory migration and price increase related to Enterprise Support, as well as overly aggressive sales of featured products, including analytics. Mr. Apotheker couldn't have been expected to perform miracles in a down economy, and can't be blamed for the false starts with Business ByDesign that he inherited. On the other hand, Mr. Apotheker's persona projected defensiveness rather than adopting a tone of reconciliation and accountability that would have helped heal the wounds with customers."
Hamerman said he was glad to see Plattner take a leading role in explaining what SAP plans to do after the departure of Apotheker. "I think it means that [Plattner] has reassumed command of the company."
With the new management team in place, "They need to put the
contentious issue of [product maintenance and support] behind them and I think
they have taken steps to do that already prior to this event. They also need to
re-establish a clear technology direction, which is something that had sort of
taken a back seat under Leo's tenure," he said.
This goal is important because SAP will face even more formidable competition if Oracle's latest Fusion Web-based business applications start appearing as expected by the end of the year, Hamerman said.