Once again, an SAP executive had to abruptly leave the company. This time around, it was Bill McDermott himself.
Former CEO Bill McDermott was always one to look out for himself. He catapulted SAP into the cloud computing age with unwavering enthusiasm and optimism. What he did for SAP financially can only be described as a firework of superlatives. He was the life of the party at the software company.
However, consolidation is now the order of the day, and it might be one of SAP’s biggest challenges yet. Consolidation is hard, technical work – not Bill McDermott’s favorite. Most party animals don’t stay around for clean-up the next morning, after all.
What happened?
Next year, Bill McDermott could have renewed his contract with SAP. In conversation with Hasso Plattner, he mentioned that he might not be up for another five years – three years, perhaps? Some might say this is a reasonable proposition – but not so Hasso Plattner. Plattner is not one to dwell on a decision. He’s the kind of guy to rip off the Band-Aid. Consequently, Bill McDermott had to go! If you’re not for SAP, you’re against SAP, right?
It’s almost tradition by now that SAP chooses successors as quickly as it lets predecessors go. On Monday, Christian Klein landed in the U.S., and by Thursday evening, he was the new co-CEO with Jennifer Morgan. During dinner with Hasso Plattner and Bill McDermott, Plattner quickly made his decision final – even though he tried spinning it in his favor afterwards. In the official press release, he says, “Bill and I made the decision over a year ago to expand Jennifer and Christian’s roles as part of a long-term process to develop them as our next generation of leaders.” To reinforce this sentiment, Bill McDermott will stay on as advisor until the end of 2019.
What will happen after Bill McDermott’s departure?
SAP’s Q3 figures are exceptionally great. Clearly, SAP is better off than ever. However, that’s only one side of the coin.
Bill McDermott was uncompromising when it came to cloud computing. He invested a lot of money in his cloud vision, like buying Qualtrics for 8 billion euros, and he ruined SAP’s corporate culture by initiating the layoff, letting many esteemed and long-time employees go. He pressured sales teams to sell more while sacking developers. The results are great Q3 figures and many unsolved problems behind the scenes.
SAP customers are unsatisfied and have lost their confidence and trust in SAP, according to a DSAG survey. Furthermore, no one wants to recommend SAP systems anymore, according to the Net Promoter Score for 2018.
Qualtrics is successful on its own, but will never truly be integrated with any SAP system. Hana is not only weaponized against database competitors like Microsoft, IBM and Oracle, but also against SAP’s company Sybase, which further worries customers and partners. And even now it’s obvious that many customers will not be able to make the deadline 2025, no matter how hard they may try.
To master all of these obstacles, SAP doesn’t need two CEOs, but a triumvirate! Jennifer Morgan, Christian Klein and CFO Luka Mucic will have to work together to sort SAP’s mess out.
The SAP Capital Markets Day in New York City (November 12, 2019) is the first challenge they have to tackle. The three musketeers will have to prove their skills and their willingness to cooperate. In NYC, SAP will face reporters and analysts on the biggest scale yet since Bill McDermott’s departure. Morgan, Klein and Mucic have to present a united front to get them on their side.
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