SAP’s co-heir apparent Shai Agassi has resigned, triggering a major realignment of the SAP executive board and sending a brief shiver through its share price.
Agassi, a member of the executive board who was responsible for product development, technology, and industry solutions, has been instrumental in developing SAP’s NetWeaver and SOA strategy since joining the company in 2001 following SAP’s acquisition of TopTier Software, which Agassi founded. He will be leaving immediately to more quickly commit himself to his personal agenda of environmental policy and alternative energy sources and other issues, said chairman of the board Hasso Plattner. Agassi is also looking to work on projects related to the future of his native country Israel.
There are no signs that he will go to a competitor, even though there does not appear to be a contractual non-competition condition, and Platter said Agassi had ruled that circumstance out. The question is just how big an an issue his departure will be.
Even without Agassi going to a competitor, this is still a big loss for SAP, said David Bradshaw, principal analyst at Ovum. He was a highly charismatic and highly visible driving force for change within the company. He championed the development and adoption of its NetWeaver architecture, turning it into a key part of the company’s path and a vital part of its product, marketing and competitive strategy going forward. There’s no lack of talent in SAP without him, indeed there are plenty of capable hands to grasp the career opportunities such a senior departure throws up, but some of the excitement will be gone.
The news caused the share price to fall about 2% for a short period on Thursday, but it soon recovered to hover around the $45.50 mark.
Agassi’s forte was his vision and his development skills, attributes SAP has needed over the past few years as it transformed its architecture. But now that much of the work has been completed, the company is entering a new phase, concentrating on sales and marketing. While his contribution will be missed, the effects of his departure will be substantially less than they would have been if he had left two or three years ago. The net effect is that customers should not be affected, nor should SAP’s sales suffer, a realization that has helped keep the share price stable.
Bradshaw said: From a competitive point of view, there’s no immediate change. SAP may lose a few deals that Agassi’s personal intervention could have saved, but not many. Customers make most of their decisions on rational criteria on financial and functional criteria, but clearly the competitors will seek to use his departure against SAP. No doubt some will be calling Agassi to come talk.
However, SAP is far from becoming a sales and marketing operation. It still has significant development work ahead of it, such as the forthcoming A1S product with which it wants to explore the SaaS model and break the mid market. Although the company has developed its own SaaS architecture, it may need further work to enable is to serve a volume market, while the technology behind the SaaS model is still rapidly developing and SAP needs to catch up.
Agassi’s decision was prompted by the announcement that the board had extended the contract of current CEO Henning Kagermann until well into 2009, which pushed out the timeline in which Agassi could anticipate becoming sole CEO, following a period as co-CEO alongside Leo Apotheker, president of customer solutions and operations, and member of the executive board. I had shared with Shai my plan that he should become successor to Henning Kagermann as a co-CEO for SAP, said Plattner. With the extension of Henning’s contract to 2009, it became apparent that Shai was not comfortable committing to a 10- to 15-year period, which was not in keeping with his personal career timeline.
His departure clarifies the CEO succession situation, confirming Apotheker as the next CEO. He has been appointed to the new position of deputy CEO. Other changes in the executive management include the creation of an executive council comprising the company’s corporate officers and reporting to the executive board. The council will have shared responsibility for customer-facing and product strategies.