SAP’s Apotheker fails to work his chemistry

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After just nine months in the job, SAP’s chief executive (CEO) stood down last weekend.

SAP – along with other enterprise software companies – has had a torrid time of late. But it hardly seems fair to lay all the blame for economic woes at the feet of Apotheker, a likeable and urbane man who is equally at ease holding a conversation in French or English as he is in his native German.

Apotheker might have served only a short spell as CEO, but he was by no means new to SAP.

He served as co-CEO under Henning Kagermann, and took sole charge on Kagermann’s retirement last year. Interestingly, SAP is reverting to a co-CEO structure, having replaced Apotheker with Jim Hagemann Snabe, and the head of field sales, Bill McDermott.

But if Apotheker cannot be blamed for the wider economic malaise, he must share responsibility for SAP’s particular problems. As one insider put it, SAP under Apotheker “was not all bad”. Yet the company made some serious mistakes.

The company alienated customers with an ill-judged hike of its maintenance fees, back in July 2008, and a muddled about turn on the same subject late last year which simultaneously frustrated loyal SAP shops, and gave the impression that the vendor was lacking direction.

SAP has also experienced a series of setbacks with its mid-market, hosted application Business by Design; the software has still not fully rolled out, more than two years after it was originally launched.

These are both issues that Apotheker could, and should, have tackled more vigorously.

The challenge for his successors, though, is more structural. The trend among enterprises and mid-sized businesses is away from large, monolithic IT systems that take years to build, and towards more agile and flexible systems.

Such systems might not have all the functionality of their larger competitors, but they can often deliver just enough technology, at a fraction of the price. Often enterprises want to rent, rather than buy, software now too: look at the success of Salesforce.com for just one example.

Calling SAP “stone-age, on-premise software”, to quote the words of software-as-a-service rival, NetSuite, might be going too far.

But SAP needs to find a way to satisfy companies that want to snack on its software, rather than sit down for a four-course meal. Whether this means resurrecting Business by Design, or developing an alternative SaaS strategy, is now the challenge facing Mssrs Snabe and McDermott.

Stephen Pritchard is a contributing editor at IT PRO. Comments? Questions? You can email him here.

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