Hasso Plattner Fields New SAP Lineup - Just in Time for Baseball Season

This is a stretched analogy to apply to a German company because I doubt if Walldorf is big on baseball. But there is major U.S. armed forces presence right up the road in Heidelberg, and since major league baseball starts Monday let’s go with it.

SAP’s (SAP) owner and general manager Hasso Plattner has shuffled the SAP lineup in major league fashion to kick off his second quarter. The spring training batting order (the SAP executive board) had been:

• Henning Kagermann, CEO, with
• Shai Agassi, Product and Technology (implicitly NetWeaver)
• Léo Apotheker, Sales and Service
• Claus E. Heinrich, the dugout coach the last few years with responsibility for SAP Labs, internal IT, and a few side jobs like HR
• Gerhard Oswald, Service (implicitly working for Apotheker but concentrating on things such as getting new releases out the door—what SAP calls “ramp up”—and managed services, while Apotheker handled worldwide sales)
• Peter Zencke, Research, application platform (implicitly working for Agassi but concentrating on SAP R/3 and follow ons, especially the move to get enterprise services running on NetWeaver, while Agassi concentrated on NetWeaver)

Agassi, apparently unhappy with a recent Plattner decision to keep Kagermann in the lead-off spot, has become a free agent. Shai apparently was not comfortable with some arrangement where he would be both in the left-handed batters’ box and in the on-deck circle at the same time, while Kagermann swung from the right side. Apotheker now gets the unenviable job of standing near home plate while Henning is hitting (but it is unclear whether he is also next up).

So for opening day, the following, some of whom used to be coached by Agassi, will now report to Kagermann:

• Doug Merritt will “lead the development of software for the business user.” Or at least some of the software for the business user according to the rest of the press release. Doug, who was picked up on waivers from Quest Software in 2005, had been a key player in building Peoplesoft to a billion-dollar HR application powerhouse in the 1990s.
• Jim Hagemann Snabe will lead development of the SAP Business Suite and industry solutions. How this is different from “software for the business user” is not clear.
• Michael Kleinemeier will drive collaboration and lead industry business unit priorities. I guess his role is to handle locker-room towel-snapping incidents between Merritt and Snabe.
• Klaus Kreplin will lead the SAP NetWeaver technology effort. Kreplin is heritage SAP, beginning as a manager on the SAP BI product in 1997, before SAP acquired what is now NetWeaver when it acquired Shai Agassi’s Top Tier (free registration required).
• Bob Stutz will continue to lead the CRM team. He had been picked up off the waiver wire from Siebel when that franchise folded a few years ago.

The following will now work with coach Léo Apotheker:

• Global Marketing and Solution Marketing will be combined into an organization led by Marty Homlish. Peter Graf will report to Marty; Peter previously worked most recently for Agassi, and has gone through more of these SAP line-up changes than Steinbrenner has gone through Yankees’ managers.
• Hans-Peter Klaey will lead the new SME organization, which now encompasses SAP Business One market development. This organization just got their new uniforms in January 2007 after going though multiple management changes in 2006.
• All partner activities – including independent software vendors, channel, technology partners, service partners and systems integrators – will be led by Zia Yusuf. Yusuf (like Graf, a heritage SAP employee) worked for Agassi before Shai’s leaving. Presumably with Klaey and Yusuf both working for Apotheker, SAP’s major channel issues will begin to sort themselves out.
• Sales regions have been collapsed at least at the Executive Board level:

o EMEA NEWS / EMEA Central will be combined into one EMEA region led by Ernie Gunst, who is responsible for SAP’s field operations in that region.
o Bill McDermott, will oversee the Americas and the Asia Pacific and Japan regions.

Many of the above SAP managers are now members of what SAP calls an Executive Council, reporting to the executive board. The executive board itself (Kagermann, Apotheker, Heinrich, Oswald and Zencke) will now play one man short (without a right fielder, I guess, because I don’t want to switch to a hockey analogy). SAP stated that the changes go into effect April 1, 2007.

From an IT investment research perspective, I don’t read any good news in this for the league leaders in applications software.

For starters, SAP cannot help but have a one- or two-quarter hiccup in critical NetWeaver development and marketing efforts because Agassi was NetWeaver. SAP’s middleware business grew to close to a billion dollars in 2006 from its 2004 launch, depending on what you convert the Euro at and using “Oracle rules” (for what constitutes middleware and when you start the clock as to how fast a middleware business grew).

Second, SAP could have used the reorganization to solve a couple of minor but irritating organizational issues:

• There are too many guys with “product” stamped on their foreheads.
• There is nobody on the executive board with “channels” stamped on his (or her?) forehead.

SAP did not fix these problems and in fact compounded them by spreading the executive team even thinner.

As I have written about previously, most recently on March 11, to get Business One competing with Intuit and Sage and All-in-One competing with SAP’s Microsoft Office Live, SAP needs go to market programs following the tactics it talked about during its January 24 conference call with financial analysts. The delay in getting ERP SaaS out the door at SAP is a fundamental problem illustrating how SAP is continuing to struggle with its channel. “Legacy companies” like SAP (I never thought I’d use that expression but it fits in this case) need to get out of their “the technology/product is first” mode of thinking.

Third, I don’t like the new tiering of the sales organization. Organizationally, it’s now further from Walldorf to—let’s say for example—Bryan, Texas and I think this organizational distance is going to make SAP less responsive to customers, not more responsive. Did someone miss the HR theory classes given all through the last decade on flatter organizations?

However, I doubt if this is a sign of any problems for the quarter just ending. You don’t usually fire the product guy because sales are off in a given quarter. But given the SAP “product/technology” culture, maybe I’m wrong.