SAP’s product side is the problem

Dennis Byron here gives the most succinct gloss I’ve seen on the challenge before Hasso:

Hasso Plattner wants to drive a great deal of technological innovation at SAP, and did not believe it could happen under Leo’s leadership, and without Hasso’s very direct involvement…. The product organization is full of conflicting technologies, conflicting interests, and conflicting agendas. Driving change in this kind of climate will be very challenging for Jim [Snabe] and Vishal [Sikka].

Hasso stalks the product halls?

There’s one more challenge: SAP hasn’t been honest about what is working on the product side. BYD folks walked around like the cocks of the walk long after it was clear that BYD was in deep trouble.  And the leadership let them…

Hasso’s right: Leo couldn’t call BS on the product side effectively enough.  From what I can tell, he’s the only one left in SAP who can meld innovation with the market AND is credible and powerful enough to actually do it!

Unfortunately, I can imagine that many on the development time think that they’ve won and happy days are here again.  Hasso’s back and it’s innovation for innovation’s sake at SAP!  What…monetize?  Isn’t that what sales people are for?

Wow, Leo Apotheker’s gone already?

Unbelievable that Leo Apotheker has already fallen on his sword.  There has been tons of chatter about Leo and his demise (Dennis Howlett here, Larry Dignan here, Michael Krigsman here, and the #leogone Twitter feed is here).  Here are a few of my thoughts and questions:

  • Everyone at must be relieved that Hasso is back in charge, morale at SAP has been a mess for a while.  The honesty from Hasso in his press conference was refreshing…the lack thereof is one of the reasons I’m not there.
  • Blaming Business By Design on Leo seems ridiculous…I’ve seen that mentioned a couple of places (here’s Bloomberg).  Didn’t Peter Zencke fall on his sword for this already?  Anyway, absurd.
  • How can anyone have any confidence that giving the development side more power will be fruitful? (see “Blaming Business By Design on Leo seems ridiculous” above)  I agree this represents a shift back to product development.  But what then? 
  • What does the field have left?  Leo supposedly represented the field, but IMO the field has been carrying SAP for a long time.   Will Werner Brandt’s beatings continue until the field’s morale improves?
  • Who else is leaving?  I’m not sure that current leadership gets what Peter Goldmacher states bluntly: “I think SAP is structurally impaired.”  The rot runs much deeper than Leo.

Why I left SAP…”macro” negatives

Second-guessing oneself is a risk when deciding to leave a leading company, so I needed to ensure that I had no regrets when I left SAP.   In particular,  I didn’t want short-term personal or “micro” stumbling blocks to obscure great “macro” opportunities in the rest of SAP.  Unfortunately, there were too many big picture concerns that nagged at me, at least from my less-than-exalted perch:

  • The “Post-Shai” Backlash:  The reaction to Shai’s departure was almost giddy in many quarters, which wasn’t a surprise.  The real surprise was the scale, scope, and snarkiness of the reaction.   A lot of non-Palo Alto folks minimized Shai’s contributions when it was convenient — see Peter Zencke on Shai’s “second tier” involvement with BYD — and blamed him when it wasn’t convenient (e.g, BYD didn’t perform because of NetWeaver). 
  • Condition of SAP’s Product Portfolio:  For those familiar with the BCG Matrix, IMO the SAP portfolio is unbalanced.  Nearly all of the SAP portfolio can be classed as either cash cows or pets.   I just don’t see enough “stars” on the solution horizon. 
  • Confronting the Reality of Business ByDesign:  Speaking of pets, there was way too much happy talk about BYD for far too long.  The funding that was poured into BYD — while SAP increased its margins — came out of the hides of other parts of the company.  

This last point highlights the fundamental doubt I had about the validity of SAP’s strategy: Was it still able to produce “stars” organically?  A “not-invented-here” mindset only works when you’re still able to invent.  It is one thing to miss on product development, it is another to deny the miss. 

 Leo is certainly aware of this issue, but this unwillingness confront reality has continued to spread IMO.   I’m not sure that SAP understands just how much damage it has done to itself by running some sides of the company with a gimlet eye, while other sides seems to be living in the best of all possible worlds.

Leo Apotheker interview on Charlie Rose

Leo recently gave an interview to Charlie Rose with Andrew McAfee of Harvard Business School (video here, transcript here at the bottom of the page).  I’ve live “replay” blogged the interview below.

  • Oops… Charlie both mangles Leo’s name and implies that SAP is based in Paris.
  • Leo’s description of IT as the “central nervous system” is useful.  In my mind, I think of configuring, coding, and implementing enterprise software as creating a virtual model of the enterprise.  Extending Leo’s metaphor would mean that such projects are “virtually wiring” an enterprise.
  • About 2 minutes in, Andrew McAfee gave about the best concise explanation I’ve heard of how IT can be used to differentiate competitively (and why it isn’t a commodity).
  • About 9 minutes in, there’s an interesting discussion about barriers to entry and how they have little to do with technology.  As Leo says, “sometimes there’s a spark”, but most often the technology becomes widely available and commoditized very quickly.  The differentiation is in the richness of the ecosystem and the melding of business and technological expertise.
  • About 13 minutes in, Leo spends sometime talking about business networks and their emerging role in innovation (Procter and Gamble as an example).  He also talks about the parallel role of process and human collaboration, which we tend to talk about separately.  This last point hits one of my pet projects — encouraging more tightly coupling process, project, and knowledge management.  Too often KM is divorced from the “way we work.”
  • Finally, Andrew McAfee alludes to the boundaries between “designed” and “emergent” processes/structures, but he never explores the topic in depth.  To me, the debate between design and emergence advocates isn’t that useful — too much either/or.  Exploring the boundaries and potential co-existence between these approaches is where I want to go.

P.S. — I think someone clarified SAP’s location for Charlie via his earpiece at the very end…

The headline shows how big SAP has become

The other transition” is quite a headline for this piece on the pending accession of Léo Apotheker to the CEO role.  Pairing the SAP transition with the inauguration of Barack Obama says a lot about where SAP is today.  The piece itself is perceptive and worth a read, especially about how SAP has avoided concocting

a recipe for cloning the head of a corporation so the body can stay the same. But SAP, which has practised this type of “smooth” transition in different forms since it was founded in 1972, has so far avoided this pitfall. Each of its bosses has been quite different from the previous one, as the firm’s needs have changed. 

There are a few other points in the piece that warrant comment:

  1. At SAP, succession planning is done about as well as I’ve seen it anywhere.  While the succession role may not materialize per the original design, I’ve found the process useful in planning my career, as well as helping my team plan theirs.
  2. Léo is very keen on an “internationalist outlook.”  Global perspective and experience has become a prerequisite for SAP executives.
  3. Many of SAP’s current and pending organizational changes are all about executing against the goal highlighted in this line from the article: “[M]aking real money from all the new products it has developed.” 

Good article on SAP CEO transition

I liked Carter Dougherty’s recent article (here) on the pending handover from Henning Kagermann to Leo Apotheker.   Most of the focus is on Henning and the tone is casual and chatty, befitting a successful exiting CEO.  For the most part the facts, spin, etc. appear correct.  It’s also useful to remember that Henning did lead sales for a bit; he isn’t simply a coder. 

There is one bit of emphasis I’d like to add to this paragraph:

There is some truth to the tale being told in the markets, but the reasons run deeper than a mere change of chief executives. The company is indeed shifting its focus more toward the bottom line,…

Definitely agree so far.

… and less on the multibillion-dollar investments in technology that helped make it the market leader in the lucrative field of business software.

Don’t agree here… in fact, my take is that we’re being more careful about how we spend our R&D dollars.  The intent is to focus the development portfolio on initiatives that are true game-changers or keep us on top of the current game, which usually aren’t small potatoes.

For more on this, my own comments when we announced the new R&D targets are here, along with some from Dennis Howlett (here) and Larry Dignan (here).

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