SAP Confirms Move to Co-CEO Roles, Kagermann's Exit

Leo Apotheker preps to take the reins from CEO Henning Kagermann. Peter Zencke, who led the design of SAP's Business ByDesign suite, will also step down.

SAP promoted Deputy CEO Leo Apotheker to Co-CEO, alongside Henning Kagermann on April 2 and confirmed weeks of speculation that Kagermann will step down in March 2009.

Peter Zencke, a pivotal development leader at the company, will also leave later this year when his contract expires, the company announced. Zencke will spend the next year as an advisor to SAP, according to Kagermann.

Zencke has led the design of SAP's Business ByDesign suite of on-demand ERP (enterprise resource planning) applications-a project that SAP has put a lot of emphasis, cash and margin growth expectations on.

Effective July 1, Jim Hagemann Snabe will be responsible for development of the SAP Business Suite as well as the NetWeaver technology platform, which underlies the Business Suite and Business ByDesign. That said, it's not at all clear who will take over Zencke's position.

"[Zencke] is at an age where he wants to have a little bit more time for himself and Business ByDesign is ready," said Kagermann during a press conference April 2. "From that point of view, this is something where we are lucky that he is willing to spend time in the next year as an advisor."

Additional changes to the company's executive roster include adding three new members to its supervisory board, as Zencke, an existing Executive Board member, plans to exit later this year.

Also appointed to the executive board are current SAP Americas CEO and President Bill McDermott and current president of the company's Europe, Middle East and Africa region, Erwin Gunst. McDermott joined SAP in 2002 to manage the Americas region and his responsibilities grew to include Asia Pacific and Japan. With this latest promotion, McDermott will be responsible for all sales regions worldwide. Gunst, on the other hand, has been appointed the first chief operating officer at SAP.

SAP's corporate governance structure follows Germany's system that separates management and supervisory functions into two bodies: the Executive Board and the Supervisory Board. The Supervisory Board includes employee members; the Executive Board includes Kagermann, Apotheker and Zencke, among others.

Appointing a new COO is as much indicative of SAP's plans for the future as is appointing the heavily sales and marketing oriented Apotheker as CEO. SAP has set the aggressive goal of doubling its customer base by 2010 by going into a volume business-selling more on-demand than on-premise licenses.

"We thought about appointing a COO a year ago but that didn't happen for a number of reasons," said Apotheker during the April 2 call. "We had to find the appropriate person, and we found that person [in Gunst], who has an uncanny ability for organization, for implementing processes. We wanted to run across-the-board processes and internal processes. If you look at our future plan to move to a volume business [with Business ByDesign] there was a crying need for a COO."