Apotheker's Resignation Bad Medicine for SAP

By David Sims

TMCnet Contributing Editor

 

Leo Apotheker's surprise departure from SAP (News - Alert) did not do wonderful things for the German firm's stability or stock price.

PCWorld said SAP's co-founder and chairman, Hasso Plattner, explaining SAP's decision not to renew his contract as CEO of SAP, told journalists during a conference call early in the week that company officials are 'hoping to rebuild customer relations and ignite more innovation within the company,' in PCWorld's words.

The world's largest business software company saw its stock close 2.5 percent lower in Germany earlier this week, while the DAX overall ended 0.9 percent higher, according to Reuters (News - Alert).


Uncertainty's never a good thing for a stock market, but in the case of SAP it's a particularly bad time to change horses, due to 'customer dissatisfaction and what some analysts perceived as a lack of company strategy just seven months after he took over,' Reuters said.

'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,' PCWorld said.

SAP officials said the company 'would return to split leadership with Bill McDermott, head of field organization, and Jim Hagemann Snabe, product development chief, both already members of the SAP executive board, taking the helm.'

No clear reason was given for Apotheker's leaving, which was described as 'mutual' by SAP officials. The BBC reported that Apotheker, 'who had been in sole charge for seven months, had been with the company for more than 20 years… He was named co-chief executive with Henning Kagermann in April 2008 and took over the sole responsibility for leading the company after Kagermann's retirement in July 2009.'

Gartner's (News - Alert) Yvonne Genovese, head of software analysis for the research firm, told Reuters SAP 'was reacting to client displeasure and a perceived lack of clarity over the company's long-term vision… The client base has lost confidence largely because of the maintenance issue fees,' and the company's 'lack of clear, cohesive strategy.'

SAP 'raised maintenance fees for its customers by five percent when Apotheker took over last July after keeping rates stable for several years unlike rivals, which raise fees annually. The company eventually backed down after clients complained and asked SAP for performance indicators by which to measure improvements that would justify an increase in maintenance fees,' Reuters reported.