SAP CEO Bill McDermott steps down

McDermott will be replaced by SAP board members Jennifer Morgan and Christian Klein

Bill McDermott, the chief executive officer of SAP, has announced he is standing down after 17 years at the German enterprise software giant.

McDermott was co-CEO with Jim Hagemann Snabe between 2008 and 2013, and has been flying solo as chief executive since then.

In 2015, he suffered an accident which cost him an eye, and coming back from that injury won McDermott admiration in the enterprise software community, including from the author of this article.

Jennifer Morgan, vice-president of SAP’s cloud business group, and Christian Klein, chief operations officer at the supplier, have been appointed co-CEOs, with immediate effect. A company statement said McDermott will remain in an advisory capacity until the end of the year to “ensure a smooth transition”.

Hasso Plattner, a co-founder of SAP and chairman of its supervisory board, said in the same statement: “SAP would not be what it is today without Bill McDermott. 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.”

Paul Cooper, chairman of the UK and Ireland SAP User Group, said: “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 executive 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 [ERP system] ECC6 fast approaches.”

McDermott said: “Every CEO dreams of being able to transition a company to its next generation from a position of significant strength. When you look at where we were and where we are, I simply could not be prouder of what this company has achieved over the past decade. I am thankful for the opportunity to lead one of the world’s finest companies.”

McDermott joined SAP in 2002. He eventually led customer operations worldwide and joined the supplier’s executive board in 2008.

He is the author of a business book, Winners Dream, recounting his passage from a working-class background in Long Island through roles at Xerox, Siebel and Gartner, where he was president. Co-authored with journalist Joanne Gordon, the book ends with a recollection of his first job as a salesman for Xerox: “My memories of … climbing stairs on hot Manhattan days with a copy machine strapped to my back are never far from my own mind.”

Read more about Bill McDermott

Morgan joined SAP in 2004, and 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 started at SAP two decades ago as a student, and most recently served as the company’s chief operating officer, also overseeing product development for SAP’s ERP system S/4 Hana.

Liz Herbert, vice-president and principal analyst at Forrester, offered this comment: “The news of McDermott’s departure will come as a disappointment for many customers, particularly those who found his passion and enthusiasm and ambitious vision to be refreshing.

“Some view him as a key figure in SAP’s own digital transformation from old world ERP company towards becoming a next-gen software company that is AI-powered, cloud-based, and CX [customer experience]-oriented. Under Bill’s leadership, the company doubled down on CRM, commerce, CX, cloud and design thinking – all elements that customers demand, and elements necessary for a next-generation enterprise software company.

“One immediate risk to customers of this major change is whether other key leaders close to Bill – notably Ryan Smith of Qualtrics and Alex Atzberger the head of C/4 Hana – will follow suit and erode some of the focus on CX and CRM.

“Some customers will view this change as refreshing due to issues they have faced and pin on McDermott at the helm, related to value for the money, pricing policies including the indirect access issues, and a culture some deem as overly sales-oriented. The change presents an opportunity for SAP to start fresh and move to more customer-centric behaviours in their sales approach and customer support. The change also presents an opportunity for SAP to return to the more product- and engineering-centric focus that defined the company for so long.”

SAP concurrently pre-announced its preliminary Q3 earnings. It stated total IFRS revenue of €6.79bn, up 13% on the same year-ago quarter. The Company will report its complete third quarter 2019 results on 21 October.

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