SAP's Schwarz Resigns; Analysts Question Growth Plans

Executive board member John Schwarz is the latest to head for the door as observers of the software company weigh acquisitions vs. innovation.

Doug Henschen, Executive Editor, Enterprise Apps

February 12, 2010

4 Min Read

For more on business intelligence, see Intelligent Enterprise.

As SAP put the finishing touches on its C-suite reorganization Thursday, representatives from the customer, analyst, and venture capital communities questioned the company's plans and prospects.

On the executive front, SAP promoted two executives and accepted the resignation of executive board member John Schwarz, who joined the company through the acquisition of BusinessObjects.

The moves capped a tumultuous week in which SAP CEO Leo Apotheker resigned and company co-founder Hasso Plattner laid out an executive reorganization aimed at restoring trust and speeding innovation.

Thursday's executive moves were described as support for SAP's new co-CEOs, Jim Hagemann Snabe and Bill McDermott. Gerhard Oswald, a current board member responsible for Global Service & Support, has also been named chief operating officer. He replaces Erwin Gunst, who resigned earlier this week citing health reasons. Peter Lorenz, executive vice president of Small and Midsize Enterprises (SME), has been named to the Executive Board, a move that effectively elevates the importance of the SME market to the company.

Schwarz left SAP on his own volition, according to an SAP press release that quoted the former BusinessObjects CEO. "With the new SAP leadership team in place, the future of SAP is in capable hands," Schwarz stated. "My decision to leave gives me an opportunity to step back and think through how I can continue to contribute to an industry of which I have been part for 38 years."

ASUG (America's SAP Users' Group) CEO Bridgette Chambers told InformationWeek that the appointments of McDermott and Hagemann Snabe would be well received by ASUG's membership. "Bill McDermott is the quintessential customer advocate who can deliver the message of the value that SAP can deliver," Chambers said. "If you mix that with Hagamann Snabe's focus on innovation and products, I think it's a solid game plan."

The one thing missing from that plan appears to be an aggressive acquisitions strategy. Unless and until SAP can deliver new products -- such as the revamped Business ByDesign software-as-a-service (SaaS) suite now promised later this year -- it can't drive growth through innovation. Acquisitions have kept growth going at IBM and Oracle. But SAP offered only tepid statements on the subject this week, saying it would consider opportunistic deals.

Analyst R. "Ray" Wang of Altimeter Group counters that acquisitions are essential in this marketplace "because they provide a broad portfolio that balances out the ups and downs." He described Oracle's many acquisitions as part of a Sun Tzu art-of-war strategy adopted by CEO Larry Ellison. "By accumulating all that recurring revenue, he is in a power position to continue to squeeze everybody's margins or to continue to expand," he said.

SAP's statements this week focused on internal product innovations including SaaS as a growth driver, but venture capitalist Kevin Spain said it's very hard for on-premise software companies to do well in that market. "They are radically different in terms of product, sales, marketing, service and virtually everything else that you have to do as a business," said Spain, a principal at Emergence Capital.

Microsoft, Oracle, and SAP all have SaaS and cloud offerings, but Spain dismissed these initiatives as window dressing. "They're doing it because they feel they have to have a story around SaaS or cloud, but they don't have traction and their hearts fundamentally aren't in it," he said.

SAP has trouble enough communicating the value of its current on-premise software, noted Chambers of ASUG. "We sometimes see customers building applications and capabilities that are already available in enhancement packs," she said. "They have to do a better job of communicating and they have to make sure that new technology is digestible."

For Further Reading:

SAP: Reorg Will Restore Trust, Speed Innovation

Global CIO: An Open Letter To SAP Chairman Hasso Plattner

Global CIO: SAP's Last Chance: It's The Customers, Stupid!

SAP Questions Gartner BI Magic Quadrant Ranking

SAP User Group Claims Victory In Support Battle

About the Author(s)

Doug Henschen

Executive Editor, Enterprise Apps

Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of Transform Magazine, and Executive Editor at DM News. He has covered IT and data-driven marketing for more than 15 years.

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