SAP CEO Bill McDermott has declined to renew his contract and is stepping down, with board members Jennifer Morgan and Christian Klein taking over as co-CEOs, effective immediately, the company said late Thursday.
The news came as SAP pre-reported “outstanding” Q3 earnings, with new cloud bookings up 38 percent year-on-year; 50 percent when excluding Infrastructure-as-a-Service. McDermott, who has been in the role for 11 years will stay on in an advisory role until the end of the year.
McDermott has helped drive significant restructuring at the company, including a concerted effort to shift its traditionally on-premises based software subscriptions model to a cloud-based play.
SAP said in April that it aims to triple cloud revenue by 2023 and has cut over 4,000 jobs, with long-standing company veterans led to the door.
Paul Cooper, chairman of the UK&I SAP User Group, told Computer Business Review in an emailed comment: “We wish Bill well. He took over as co-CEO (alongside Jim Hagemann Snabe) at a very difficult time for SAP, dealing with the contentious issue of Enterprise Support and both worked very closely to regain customer confidence. We welcome a return to the co-CEO model that has served SAP and its customers well in the past.
“Christian has been a key exec sponsor of SUGEN’s ‘Ease of doing business’ and ‘Licensing’ charters, and he has always made time to listen to product feedback and understand how SAP could work better with customers.
“We look forward to hearing Christian and Jennifer’s vision for SAP as the 2025 maintenance deadline for ECC6 fast approaches.”
SAP CEO “Main Driver” of Cloud Transition
“SAP would not be what it is today without Bill McDermott,” said SAP supervisory board chairman Hasso Plattner.
“Bill made invaluable contributions to this company and he was a main driver of SAP’s transition to the cloud, which will fuel our growth for many years to come. We thank him for everything he has done for SAP.
Congratulating the incoming duo, he added: “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.”
McDermott said: “When you look at where we were and where we are, I simply could not be prouder… To every customer, partner, shareholder and colleague who invested their trust in SAP, I can only relay my heartfelt gratitude and enduring respect.”
Both incoming co-CEOs serve on the Executive Board.
Morgan, who joined SAP in 2004, most recently served as president of the Cloud Business Group, overseeing Qualtrics, SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Customer Experience and SAP Concur.
Klein, who started his career at SAP two decades ago as a student, most recently served as the company’s COO, and oversaw product development of the company’s flagship ERP solution SAP S/4HANA.
The news came as SAP pre-reported earnings for the quarter ending September 30, saying revenues were up 13 percent overall, with operating profit (IFRS) up 36 percent and profit after tax hitting $1.26 billion.
Despite significant restructuring the preliminary earnings show that headcount was actually up year-on-year for the quarter, totalling 99,710 versus 94,989 in the same quarter in 2018.