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SAP hits reset button with CEO change
SAP hits reset button with CEO change
By Joab Jackson and Chris Kanaracus | Feb 9, 2010
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With the replacement of Léo Apotheker as CEO of German ERP giant SAP, company officials are hoping to rebuild customer relations and ignite more innovation within the company, according to a conference call held with co-founder and chairman Hasso Plattner on Monday morning.
Analysts, aware of the company's recent stumbles in the marketplace, are taking a hopeful but cautious stance to the announced changes.
On Sunday, SAP announced that it had not renewed Apotheker's contract as CEO, and appointed two co-CEOs to fill the role: Bill McDermott, who was the head of the field organization, and Jim Hagemann Snabe, who was in charge of product development.
Apotheker's departure was preceded by months of rumors over whether his contract would be renewed, given his troubled reign as CEO.
He bid SAP workers farewell in an internal memo, which was obtained by IDG News Service.
"Confronted with the worst and most brutal economic crisis since the Great Depression, and faced with the consequences of decisions and actions made in the past, the Executive Board under my leadership had to take some very difficult decisions to steer SAP through the worst storm in its history," he wrote. "Yet we didn’t simply try to maneuver SAP thru the economic crisis. Indeed, we simultaneously started to build the foundation for a brighter future."
However, "the pace of change was rapid, probably too rapid for some," Apotheker said. In addition, his communications with employees were "not always optimal," and the negative results of an employee survey "did not completely come as a surprise to me given what happened during the time of the survey," he wrote.
The Financial Times reported Monday that an employee survey conducted in September found "a dramatic loss of confidence" in senior SAP management.
"I regret that I wasn’t able to earn the support of each and every one of you, but I serenely stand before you today with the knowledge – and the clear conviction -- that what I did was for the best of the company and that your future is brighter because of the actions the Executive Board and I have taken," Apotheker added.
SAP has been beset on all sides by a number of difficulties over the past few years. Like many companies, SAP has been fighting a difficult economy. Revenue had declined from €11.5 billion (US$15.7 billion) to €10.6 billion from 2008 to 2009.
Customers had groused over maintenance fee increases implemented in 2008.
On the technology side, SAP has been slow to catch up with IT industry trends such as cloud computing and software-as-a-service. And Plattner hinted Monday at employee dissatisfaction as well.
Going forward, the company plans to address all these concerns, Plattner promised.
"The focus is on growth, margin and innovation. It has to be kept in mind that all three have to be dealt [with] simultaneously," Plattner said. "Without growth, even strong margins don't help. Without innovation, you cannot grow. And without margin you can't have a streamlined company."
The company will change its approach in developing new technology, moving from simply updating existing products to boldly developing entirely new lines of software, Plattner said.
