April 2nd, 2008
SAP's Succession Plans: Making Things Safe for Business ByDesign?
SAP executed the beginning of a well-orchestrated and otherwise somewhat boring (and boring is good) management transition with the much-expected elevation of co-CEO Leo Apotheker to the more important title of heir-apparent. In the process, Henning Kagermann assumed the title of retiree-in-waiting, and all was good with the world.
At least that’s what I thought until I got a call from a reporter, Renee Ferguson, who had the benefit of sitting in on a press conference where some rather significant information was discussed, to whit: Peter Zencke, a long-time board member, technology stalwart, and, most significantly, the father of SAP’s Business ByDesign mid-market, on-demand, SOA-based, model-driven, hoped-for volume market offering, is resigning at the end of the year.
This is more than just minor news, however minor SAP sought to play it. As someone who has watched SAP closely for 16-plus years, one of the constants about the company is that no idea — however meritorious — can go forward without executive sponsorship at the board level. This is of course true in many companies, but in SAP I have seen this scenario played out on numerous occasions, most recently in regards to Duet, which was one of Shai Agassi’s babies and which was left to drift around after his departure last spring, until finally everyone remembered what a good idea it was and some top level focus was brought back to bear on the opportunity.
Zencke’s departure doesn’t leave BBD completely adrift by any measure. Gerhard Oswald, another SAP old-timer and an executive board member (whose contract doesn’t expire for another 20 months) remains BBD’s board-level sponsor. And Hans-Peter Klaey is still in charge of the day-to-day tuning of the BBD machine, and has no plans to go anywhere any time soon.
But the problem with Zencke leaving at the end of the year is that it’s pretty clear that the fate of BBD will not be decided within the next eight months. There’s a lot on the table here: SAP has some aggressive plans for growth in revenue and customer count, and has placed a lot of the onus on BBD to make this happen. Meanwhile, BBD is experiencing some growing pains of its own: the problem of needing a sophisticated channel partner that can sell at the CEO level and be satisfied with a volume business (and volume margins) is turning out to be a harder nut to crack than anyone would have imagined. Then there’s the problem of having to figure out what to do with the larger companies that weren’t in the initial target market for BBD but who are clamoring for its ease of deployment and pricing model. And with that problem comes the issue of how do you deal with the possibility that BBD will cannibalize existing SAP Business Suite sales, thereby short-circuiting the SAP direct sales force and potentially lowering revenues per customer in the process.
In short, there’s a lot about BBD that remains unresolved, despite the enormous promise of the product. Having Zencke involved with BBD for another couple of years would, in my mind, help keep resources focused and board-level attention high. While Zencke’s departure doesn’t in any way doom BBD, the timing is, to be charitable, unfortunate. At a minimum, this makes next month’s Sapphire conference more than just a show-and-tell user conference. It’s going to be a great opportunity to prove that Zencke’s departure is as much of a non-event as it was positioned to be today. It’s something to look forward to.
Joshua Greenbaum's opinions on enterprise software have annoyed enough vendors that he now checks under the hood of his PC every morning before he boots up. For disclosures of Joshua's industry affiliations, click here.
| 04/02/08
