Siemens' longtime chairman is stepping down at the end of this year, and the massive German industrial conglomerate has made a telling choice in the man who will replace him: Former SAP co-CEO Jim Hagemann Snabe. In a statement, current chairman Gerhard Cromme laid out the rationale:
Digitalization poses major challenges for society and for companies. With its magnificent, innovative products, Siemens is very successful in today’s market. However, the digitalization transformation is also changing our business. Mr. Snabe has in-depth industry expertise in software and digitalization. This recommendation sets the course for long-term succession planning and continuity in Siemens’ Supervisory Board.
Snabe, who already sits on Siemens' board, is set to take over the chairman spot in January after Cromme's contract expires. He stepped down as co-CEO of SAP in 2013, when Bill McDermott became sole CEO of the enterprise software vendor. McDermott is SAP's first non-German sole CEO. There is a parallel to that with Snabe becoming Siemens chairman, as he is from Denmark and will be its first non-German chairman.
While co-CEO of SAP, Snabe focused more on product development while McDermott oversaw sales and operations. Snabe took a seat on SAP's supervisory board after leaving the CEO role.
SAP and Siemens have a deep and longstanding commercial relationship. Siemens is one of SAP's biggest software customers, and the companies have formed many partnerships that in recent years have centered more and more around software developed both by SAP and Siemens itself.
Siemens' move comes as its traditional competitors are making rapid moves to transform themselves into more software-centric companies. The canonical example of this is GE, which has stated a goal of becoming a top 10 software vendor by 2020.
Snabe will be working with Siemens CEO Joe Kaeser, but as chairman will have vast influence over the company's direction. Just what form that takes is something to ponder.
After SAP jettisoned former CEO Leo Apotheker in 2010 and elevated Snabe and McDermott to the co-CEO slots, the duo moved quickly to shake up SAP's culture and product strategy, spending billions on acquisitions such as Sybase and SuccessFactors and shifting SAP's lucrative but legacy on-premises software business model toward the cloud.
Siemens made a key acquisition in November, buying Mentor Graphics for $4.5 billion. Mentor makes software for designing and testing chips, circuit boards, embedded systems and other key components of the industrial Internet and broader IoT (Internet of Things) market.
Overall, naming Snabe chairman makes sense for Siemens, says Constellation Research VP and principal analyst Holger Mueller. "Siemens is building its own software, and software is in the future of Siemens," he says. "The future of Siemens is more about software than industrial engineering."
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