Speculation over who will take over the CEO position next year has grown in proportion to the proximity of Kagermann’s end of contract date, with Leo Apothekar and Shai Agassi the main contenders. The decision may be deferred in the light of comments by SAP co-founder, former CEO, and currently supervisory board chairman Hasso Plattner, who has indicated that he will recommend that Kagermann be offered a 12-month contact. The matter is scheduled for discussion at the supervisory board meeting on February 15.
SAP operates a policy whereby members of the executive board aged 60 or over are offered annual contracts rather than the more usual five-year contract, although there is no upper age limit or restrictions on how many times short-term contracts can be issued. Kagermann will be 60 later this year. There is also the question of whether Kagermann would accept or decline such an offer. There are no indications as to what he may be thinking as all questions over recent months regarding his tenure been met by a friendly but determined refusal to comment.
As co-CEO with Plattner from 1998 to 2003, then sole CEO from 2003, Kagermann has successfully overseen major changes within the company including the major move from R/3 to mySAP Business Suite and the application of engineering-style rigor to the sales and marketing operation. More recently he has steered SAP through the even more complex SOA roadmap, which is due for completion on schedule this year.
In one way completion of SAP’s SOA Enterprise Services Architecture roadmap would be a convenient point for a change, but completing the roadmap is just part of the work SAP has in hand. One of its major challenges is to ensure user adoption of the architecture and the fundamentally different and rebuilt applications SAP is producing.
The company is also well into a transformation plan whereby by 2010 it hopes to have topped 100,000 customers, expanded its target market, brought in substantial numbers of mid-market customers, and changed its make-up so that more than 50% of its revenue will come from technologies other than conventional ERP software. A substantial $300m incentive plan is in place to help ensure the transition. If by 2010 SAP’s share price has doubled, the executive board (which includes Kagermann) stands to take about one-third of the incentive total.
A delay in the succession would probably benefit Shai Agassi, giving him time to further embed himself within the company and deliver clear revenue benefits from the R&D work he is responsible for, but would work against Leo Apothekar who heads up global operations. The timing will be an important factor in selecting the next CEO. Agassi is a technologist rather than an operations expert, whereas Apothekar has operational and field experience but is not a technologist. If SAP’s challenge is user education and encouraging adoption of its new technologies, Apothekar could gain the edge in the next couple of years.
