But let's look at the press release in our standard News Analysis format and take it from there:
WALLDORF — To advance the technology industry’s most successful transition to the cloud, SAP AGtoday announced the decision of its Supervisory Board to appoint Robert Enslin and Bernd Leukert to the company’s Executive Board, effective immediately. Enslin will continue to lead global customer operations and Leukert will assume responsibility for the global development organization. The Supervisory Board also approved two new appointments to the Global Managing Board, Helen Arnold and Stefan Ries, to strengthen the next generation leadership team of SAP.
MyPOV – It may have been seniority – Enslin longer with SAP than Leukert overall – but Sales before Product is not the usual sequence at SAP. Good to have all new additions in the first paragraph and good to see a woman back in the Global Management Board.
In conjunction with today’s announcements, Dr. Vishal Sikka, Executive Board Member for Products and Innovation, announced his departure from the Executive Board for personal reasons, effective immediately.
“No company in the industry can do what SAP can do in the cloud with the SAP HANA platform today. I would like to personally thank Vishal for his contribution to take SAP to this stage. We will remain friends as he pursues the next step in his journey,” said Hasso Plattner, Chairman of the Supervisory Board of SAP AG. “Robert Enslin and Bernd Leukert have dedicated their careers to SAP’s customers and employees. They will play integral roles in scaling the broad adoption of the SAP HANA Cloud platform and accelerating the company’s success into a new era. I’m also pleased that strong leaders like Helen Arnold and Stefan Ries are stepping into senior leadership positions to drive SAP forward at this moment of significant opportunity.”
MyPOV – So now we know why Leukert was appointed. No desire to speculate on why Sikka is leaving for personal reasons, classy move from Plattner to congratulate him. With McDermott becoming sole CEO as previously announced – the Enslin appointment was likely accelerated. And as CFO in waiting Mutic would have been the sole non-executive board member of the left in the Global Managing Board – good time to add Arnold and Ries, so this organizational body has life. SAP could have gotten rid of it, too – but the decision seems to have been to stick with consistency. Shareholders may ask though at the soon happening general assembly.
We would be remiss as analyst not to note that Sikka was in charge of Product and Innovation, Leukert will run the global development organization. As this press release states. So this leaves room for some speculation, that may not be desired at this point.
SAP HANA had a continuing strong adoption rate in the first quarter 2014, demonstrating that it is the leading real-time business platform. SAP now has more than 3,200 SAP HANA customers since market launch in June 2011 and close to 1,000 customers for SAP Business Suite powered by SAP HANA, which was launched just one year ago. SAP HANA is also evolving into the leading technology platform: there are more than 1,200 startups from 57 countries building applications on SAP HANA. Of these startups, more than 60 already have commercially available products on the market today.
“Our SAP HANA platform is established as the global standard, its roadmap is in full effect”, said Bill McDermott and Jim Hagemann Snabe, Co-CEOs of SAP. “Now is the moment for leaders like Rob Enslin, Bernd Leukert, Helen Arnold and Stefan Ries to step up and fulfill the promise of SAP as THE cloud company powered by SAP HANA. We couldn’t be more thrilled by this next-generation leadership team and all it will bring to our mission to simplify everything.”
MyPOV – We know HANA is rolling – and McDermott is giving the best quote a future CEO can give in the situation. The key is that McDermott says the roadmap is in full effect. It would be good to learn more about that HANA – or probably overall roadmap. Will be key for customers to be aware of SAP’s plans and to align – if they want to – their IT investment with SAP’s.
Enslin and Leukert represent two of SAP’s longest serving and most promising leaders, bringing a combined 42 years of SAP experience to the Executive Board.
“Rob Enslin and Bernd Leukert have played central roles in executing our transition to the cloud and the adoption of SAP HANA,” said Bill McDermott and Jim Hagemann Snabe. “SAP customers are looking for the operational experience, thought leadership and best practices to support their own transformations through innovation without disruption. We are very confident that Rob and Bernd are the right leaders to drive the scale and adoption of the SAP Cloud powered by SAP HANA.”
Enslin joined SAP in 1992 and began his career as an SAP consultant supporting customers in South Africa. He has steadily risen to his current role leading the company’s over 20,000 professionals in sales and services and has presided over the integration of SAP’s go-to-market teams to advance a simplified experience for SAP customers.
MyPOV – Enslin has done a good job bringing in the numbers for SAP, while McDermott was been tied into more CEO activities and spending less time on the sales side. Getting the SAP sales machine to bring in the numbers while products are in transition is no easy feat – and Enslin deserves credit for delivering. I do not expect any difference in execution going forward – no pressure. But congrats and certainly well deserved.
Leukert joined SAP in 1994 and has long been one of the company’s foremost technologists and solution visionaries. He was appointed to the Global Managing Board in 2013 after successfully orchestrating the development and delivery of SAP Business Suite powered by SAP HANA. He will now lead the global development organization in redefining business applications on the SAP HANA Cloud platform.
MyPOV – Leukert has risen through the ranks of the development organization, mostly when reporting to Hagemann Snabe – back when Hagemann Snabe was running product development. Leukert has run what was then R/3, Industries and has gained international exposure with BusinessOne, which has its foundation in Israel with the SAP Labs there. His promotion to the Management Board came when SAP consolidated all development under Sikka (taking it from Hagemann Snabe) – less than a year ago. Leukert has been presenting at the recent TechEd, DSAG and local German conferences and got a lot of exposure through this. To me it has looked like SAP was transitioning him as the trusted contact for the long term (applications) customers of SAP – a role that will soon be vacant with Hagemann Snabe’s imminent departure. Leukert is likeable, smart and German – all three will work to his advantage (see more on culture and country below).
In joining the Global Managing Board, Helen Arnold and Stefan Ries bring strong executive backgrounds that will support the company’s cloud operations and people agenda, respectively.
A 18-year veteran of SAP, Arnold will assume the role of chief information officer for the SAP Group and lead cloud operations and the SAP HANA Enterprise Cloud, in addition to her current responsibilities as the head of SAP´s internal Business Innovations and Application Services organization. She has broad experience leading SAP’s internal innovation agenda, most recently transitioning SAP to a next-generation financial management system on the SAP HANA platform.
MyPOV – Arnold has been the silent transformer behind many SAP internal and some external SAP intiatives. Knowing where the skeletons are in the closet will certainly be an asset. SAP is also doing well at separating the product development and the product operating roles. But McDermott will have to make sure that they are on even footing – as the operate side of a cloud business is often more important than the product side. Should SAP slide into a build here – operate there mentality will not help. We can assume that Arnold will mainly deal with Executive Board super veteran (member since 1996) – Gerhard Oswald – who has the important HEC responsibility in his area or responsibility. Should that be carved out, it would be one of the first (if not the very first) loss of responsibility for Oswald – who has been adding more responsibility since over a decade. With Oswald’s contract valid till 2016 – it would be an early start of pre-retirement moves.
Ries recently rejoined SAP to lead global human resources from Egon Zehnder, where he served during the last three years as principal consultant, advising global companies in leadership and executive search. Between 2002 and 2010, Ries had several global and regional leadership positions with SAP’s HR organization.
MyPOV – Ries is sitting on nominally the most volatile post inside of the SAP Executive Board. Both predecessors on the HR leadership side Dammann and Delgado did not last long. Brandt on the other side has been dealing with HR on an on and off base quite successfully. Ries in contrast to Dammann and Delgado is a SAP long timer and his time at personal recruiter Egon Zehnder should give him some good outside in perspective.
With Brandt retiring and handing over to Mutic end of June on the CFO side – it will be interesting to see where Ries dotted line will end up (for not it is with McDermott). My personal view is that with a software company, where people are the key asset, the Chief People Officer, needs to work for the CEO. In a last wrinkle for German labor law friends – Brandt held the formal title of Arbeitsdirektor – which as local newspaper report may go to McDermott.
Country & Culture matter
While I personally support the view that intelligent people will find ways to work together well – no matter where they are from on the world, no matter where they have been raised and how that may have influenced in their values and beliefs. But culture matters, and people from the same and similar culture do instantaneously work with each other more productively, bond faster, trust each other faster etc. So country and culture matter, and with SAP having it’s first non German and non European CEO (Hagemann-Snabe learnt German rather fast and scored big with customers and employees) – it’s probably smart for SAP to have a product leader from Germany. At the end of the day SAP needs to get the developers in Walldorf to execute on next generation applications. And three of five executive board members (Oswald, Leukert and Mutic) will reside in Walldorf. Walldorf now will have to show that it can innovate like in the early 90ies – with no excuse in regards of leadership under representation. (And yes there was innovation in Walldorf, too – great innovation comes form the Labs, but Walldorf in my view needs the ‘e pur si muove’ moment now.)Implications, Implications
So what does this mean for…- SAP customers and prospects – Customers and prospects need to pay special attention to Sapphire in early June. New executives, and most likely new plans. Any pending roadmap items – time to reach out and have them secured all the way from the (new) top, which means McDermott. Then customers and prospects will have to tune in to the new messaging. If pre-Sapphire is like last Sapphire – SAP will be releasing all major announcements before in a more or less coordinated fashion. Let’s hope this won’t be repeated this year and we see a well coordinated news cycle at Sapphire (please Mr. Becher!).
Overall enterprises are customers of SAP for leading, integrated and high quality enterprise automation software. Having an executive like Leukert at the helm of product development, who has been building business applications for all of his career should be a change for the better into a promising direction. Application developers look at technology different than how technology developers look at technology. Customers and prospects will have to wait and listen as Leukert designs direction and roadmap for SAP’s next generation applications.
- SAP partners – It’s time to pause now and see where SAP is heading strategy wise. On the application side investments are certainly secure, on the technology side it will be key to see who Leukert will put in charge of technology direction and what the new revised technology roadmap will look like. As always when you live and breathe in an ecosystem – make sure you understand and plot your course in the ecosystem – but when the 800 pound alpha male moves, it’s time to sit down and observe. Then plot your move.
- SAP – No matter what SAP execs say – going through five executive board members in 12 months is not desirable (Dalgaard, Delgado and Sikka are gone, Hagemann Snabe and Brandt are schedule to leave the next 2 months or so). And while the transitions of Hagemann Snabe and Brandt were announced and look orderly. The rest – well surprises… Just compare with SAP co-opetitor Oracle when was the last substantial management change there - who remembers? And SAP co-opetitor IBM? Steve Mills rotates like a modern soccer coach, but its the same team.
It will be key to see how McDermott will be able to setup his executive board. The claim will be of course all is done now, and that may well the case, but I would not be surprised if more changes are coming. The only areas that are really set are Sales with Enslin and Finance with Mutic. Oswald’s contract is up in 24 months, so orderly transition commences ... now. Leukert needs to prove himself. Cloud company CEOs usually have a trusted CTO working for them (see e.g. Ed Screven at Oracle or Parker Harris at Salesforce.com) and due to direct market access the CMO is part of the Executive Board, too. I shared my view on the Chief People Officer before.
But then SAP’s technology business is also large enough to be moved completely into separate hands. Plenty of options for McDermott.
And next will be how Leukert will setup his team. He needs a leader for the technology side of the business and the only person I know inside of SAP would be Bjoern Goehrke. Franz Faerber would be an alternative, but probably does not want the limelight. But Leukert may (have to) go outside. And then Leukert needs to figure out functional organization vs. product organization, how to handle innovation, where to put vertical development, how to reach out to developers, partners etc. – he will be getting little sleep in the next weeks.
- Competitors – SAP has been often rightfully derided on its inertia. But now inertia is a good thing, the ship will run its course and there will be very little to none short term wins against SAP in the marketplace. HANA is too established for questioning it. Suite on HANA is equally established – so there is no questioning here. Competitors will have to wait – like everyone else – to what McDermott / Leukert are up to and then adjust their strategies accordingly.
MyPOV
I see SAP at two crossroads. The first one is, that soon it will be lead by the first non European CEO. A predominant European / German board will quell potential concerns here.
The second and more important crossroad is how SAP wants to look like in 5 years. More like the SAP of 5 years ago - the global leader in business applications (of course in 2019 running on HANA) or more like Oracle today (a leader in both the business applications and technology space). McDermotts organizational and talent management decisions will be crucial to setup SAP on either trajectory.
Only one things if for sure... the world will be watching.
The second and more important crossroad is how SAP wants to look like in 5 years. More like the SAP of 5 years ago - the global leader in business applications (of course in 2019 running on HANA) or more like Oracle today (a leader in both the business applications and technology space). McDermotts organizational and talent management decisions will be crucial to setup SAP on either trajectory.
Only one things if for sure... the world will be watching.
And more on overall SAP strategy
- Market Move - SAP acquires Fieldglass - off to the contingent workforce - early move or reaction? Read here.
- SAP's startup program keep rolling – read here.
- Why SAP acquired KXEN? Getting serious about Analytics – read here.
- SAP steamlines organization further – the Danes are leaving – read here.
- Reading between the lines… SAP Q2 Earnings – cloudy with potential structural changes – read here.
- SAP wants to be a technology company, really – read here
- Why SAP acquired hybris software – read here.
- SAP gets serious about the cloud – organizationally – read here.
- Taking stock – what SAP answered and it didn’t answer this Sapphire [2013] – read here.
- Act III & Final Day – A tale of two conference – Sapphire & SuiteWorld13 – read here.
- The middle day – 2 keynotes and press releases – Sapphire & SuiteWorld – read here.
- A tale of 2 keynotes and press releases – Sapphire & SuiteWorld – read here.
- What I would like SAP to address this Sapphire – read here.
- Why 3rd party maintenance is key to SAP’s and Oracle’s success – read here.
- Why SAP acquired Camillion – read here.
- Why SAP acquired SmartOps – read here.
- Next in your mall – SAP and Oracle? Read here.
And more about SAP technology:
- News Analysis - SAP moves Ariba Spend Visibility to HANA - Interesting first step in a long journey - read here
- Launch Report - When BW 7.4 meets HANA it is like 2 + 2 = 5 - but is 5 enough - read here
- Event Report - BI 2014 and HANA 2014 takeaways - it is all about HANA and Lumira - but is that enough? Read here.
- News Analysis – SAP slices and dices into more Cloud, and of course more HANA – read here.
- SAP gets serious about open source and courts developers – about time – read here.
- My top 3 takeaways from the SAP TechEd keynote – read here.
- SAP discovers elasticity for HANA – kind of – read here.
- Can HANA Cloud be elastic? Tough – read here.
- SAP’s Cloud plans get more cloudy – read here.
- HANA Enterprise Cloud helps SAP discover the cloud (benefits) – read here.
