SAP Co-CEOs Chart a Bold New Course

Na ja, when eine Wertediskussion “Nonsense” ist und umgebracht werden muss, könnte auch zu hinterfragen sein, ob man mit einem soilchen Unternehmen noch Geschäfte machen muss?! (hfk)

Date: 22-05-2010  Source: Businessweek

Bill McDermott and Jim Hagemann Snabe have been cutting red tape and shaking up management practices—even before the company’s big Sybase acquisition 

One of the first things SAP co-Chief Executive Officers Bill McDermott and Jim Hagemann Snabe did after taking over in February was to kill a long-running executive examination into corporate values. 

The project was typical of the German business-software maker: top managers spending hours deliberating their approach to business.

“Companies that are too internally focused are sick,” McDermott said. “There’s nothing healthy about being obsessed with your own internal nonsense. If there was a project that built bureaucracy into the company or required people to think about our internal stuff, we’ve killed those projects.”

On May 12, McDermott and Snabe killed another sacred cow—the reluctance to make acquisitions—with the $5.8 billion deal for Dublin (Calif.)-based Sybase (SY), a maker of database and mobile-computing software. 

SAP (SAP), based in Walldorf, Germany, will use the purchase to add business applications for customers that want employees to use tablets and smartphones at work, and database software widely used in finance and telecommunications. It helps SAP compete with Oracle (ORCL), whose chief executive officer, Larry Ellison, has spent more than $42 billion on 65 companies since 2005. 

SAP’s new bosses are taking a bolder approach than their predecessors. With the exception of SAP’s 2007 purchase of Business Objects, the company’s last two CEOs, Leo Apotheker and Henning Kagermann, largely eschewed big purchases. 

“They’re out to make their mark,” said Joshua Greenbaum, principal of research firm Enterprise Applications Consulting, based in Berkeley, Calif. McDermott and Snabe are “planning to be a little more aggressive and dramatic than some of their predecessors.” 

Accelerating Product Releases

On their watch, SAP is moving faster to release products. Companies including Siemens (SI), ExxonMobil (XOM), and Wal-Mart Stores (WMT) use SAP software to order goods, plan inventory levels and deliveries, and manage sales. 

At SAP’s Sapphire Now conference in Orlando and Frankfurt this week, the company announced July availability of a new version of its Business ByDesign Web software for midsize customers that also runs on Apple’s (AAPL) iPhone and iPad. SAP showed new data analysis software that can yield instantaneous insights from millions of pieces of data. 

“There has not been a shortage of innovation at SAP,” said Chief Technology Officer Vishal Sikka, who joined the executive board in the February shakeup that cost Apotheker his job. “There has been a problem with bringing it to market rapidly.” 

In 2009, software license sales at SAP fell 28 percent and revenue declined 13 percent to $14.88 billion, as customers cut spending on computer systems during the recession. The company also announced its first big layoff.

 SAP sales are expected to be $14.56 billion in 2010, according to analyst estimates compiled by Bloomberg. Shares of SAP have gained 5.3 percent in the past five years, compared with a 78 percent increase in Oracle stock. SAP fell 28 cents to 34.86 euros on May 20 on Deutsche Börse’s Xetra trading platform. 

Cutting Bureaucracy

Aside from disbanding the corporate values project, McDermott has been reducing bureaucracy.

In April he combined SAP’s 9,500-person field sales force with 14,000 consultants who customize its software for clients and a group of several hundred people who handle relationships with partners including International Business Machines (IBM) and Hewlett-Packard (HPQ). 

Now account reps can keep an eye on all facets of a sale “without having to navigate through a complex system,” McDermott said. 

About two weeks later, he ordered SAP’s 200 top managers to gather with their reports at “coffee corners” where SAP employees at branch offices refuel and explain their agendas without using PowerPoint slides. 

He’s told managers to stop calling meetings to review data they can look up in the company’s computer systems. “We no longer have an interest in this upward cascade of information,” he said.

“Managers who can’t get comfortable with that won’t do very well.” 

Formerly SAP’s global head of sales, McDermott focuses on operations and coordinating sales teams across continents. 

Snabe, who started as a trainee in 1990 and ran consulting and product development groups, brings engineering chops. He lives in Copenhagen and says he tries to be “at least somewhere in the world” three days a week, shuttling among Germany, the U.S., India, China, Russia, and South Korea to meet with employees and customers. 

“Agile Development”

By the end of this year, SAP plans to have 12,000 of its 14,000 engineers using a programming method called “agile development” that aims to kick out new test versions of products every four weeks and incorporate quality assurance into the development process. 

In the past, SAP fixed bugs in another department after the code was written. The new Business ByDesign software is a result of the new approach. “It sounds crazy, but you get both faster outcomes and higher quality,” Snabe said. 

Sybase will operate as an independent unit under its current chief executive officer, John Chen, who will join SAP’s executive board when the deal closes, probably in July. The two companies share an engineering-oriented culture, and McDermott and Chen have worked together on partnerships between the companies prior to the acquisition. 

Snabe and McDermott are inviting more customers into the company’s development process, too. SAP has brought clients to Germany, Israel, and Bulgaria to help define requirements of upcoming products. 

“The thing Jim and Bill have done very well is they’ve stopped everything else” that’s not related to bettering products and increasing sales, said Executive Vice-President John Wookey, an Oracle veteran who joined SAP in 2008 and leads a product-development team. Case in point:

the values inquiry, which Wookey had worked on.

“It’s a big transformation,” he says. “I don’t think we’re worried about losing our moral compass.”

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