Last week, SAP announced the departure of a second Executive Board level executive as the global ERP technology provider continues with ongoing corporate restructuring efforts.   SAP

Within our This Week in Supply Chain Tech column published in early February, we alerted Supply Chain Matters readers to an announced corporate restructuring that would be occurring at global ERP and Cloud computing technology provider SAP SE. The announcement was made in conjunction with the company’s Q4-2018 and full-year financial performance.

Since that time, there have some high-level executive resignations within the important areas of Cloud Business and overall technology strategy areas.

Last week, SAP announced that long time executive Robert Enslin, Executive Board Member and President of the Cloud Business Group, elected to resign from the company to pursue an external opportunity.

Mr. Enslin joined SAP in 1992, was a long-time executive confidant to SAP CEO Jim McDermott, and was elected to the Executive Board in 2014.  His role leading most all of SAP’s Cloud Business Units exceeded two years. Former executive leadership roles included field sales and operations assignments.

Mr. Enslin’s role will be assumed by Executive Board Member and Global Customer Operations executive Jennifer Morgan. Ms. Morgan’s previous role included responsibility for SAP’s strategy, revenue, and customer success in the Americas and Asia Pacific Japan. She joined SAP in 2014 and later became President of SAP North America, where she led the region’s rapid shift to the Cloud.

SAP Executive Board Member Adaire Fox Martin will now assume sole responsibility of Global Customer Operations. Ms. Martin’s role included responsibility for SAP’s field operations business focus in EMEA, MEE and Greater China. Adaire was previously Chief Operating Officer of SAP APJ and Senior Vice President for Industry Business Solutions, where she was responsible for defining SAP’s strategy for long-term industry investment and the industry go-to-market. She joined SAP as the head of Public Sector for APJ in 2008 from Oracle Corporation.

Last week’s high-level departure came in the shadow of a late February announcement that announced the departure of Executive Board Member and co-lead of SAP Digital Services Bernd Leukert from the company. Executive Board Member and other co-leader Michael Kleinemeier assumed the sole leadership role of the Digital Services business unit.

Leukert was also a long-time employee of SAP who served in a number of technology leadership roles including Chief Technology Officer (CTO), and the overall development of the HANA database technology, from the prior CTO, Vishal Sikka.

 

Supply Chain Matters Perspective

In its announcement of 2018 full year financial performance, SAP executives indicated that the company will have an increased focus on a few  key strategic growth areas. And, for the first time since 2015, execute a company-wide restructuring program to further simplify company structures and processes and to ensure its organizational setup, skills set, and resource needs meet evolving customer demand.

From our lens, these latest SAP senior executive moves are directed at consolidating the management focus of the company’s Executive Managing Board level, which now consists of eight members. Former co-leadership roles have obviously been eliminated.

Christian Klein holds responsibility as Chief Operations Officer (COO) which includes SAP’s digital core development functions and product management, including SAP S/4 HANA and SAP Digital Supply Chain. Klein’s organization is also responsible for making SAP an Intelligent Enterprise by focusing on business process simplification, global IT and cloud infrastructure, along with product and services quality.

SAP has additionally offered generous severance packages to development, support and marketing employees to trim down on select non-core headcount costs.

Our sources indicate that with the departure of Bernd Leukert, the original HANA development teams have been impacted by headcount cutbacks which is a likely indicator of a winding down of HANA development. With these new executive changes at Executive Board level, we anticipate additional management re-shuffling as the new breed of senior leaders take control of respective strategic growth areas.

SAP has set rather aggressive five-year goals related to total revenue, recurring Cloud subscription revenue  and operating profit growth. That implies that key strategic growth areas will garner priority of budgets and resources and other areas may not.

The most significant evidence of such strategy was the announcement last November of SAP’s largest acquisition to date, that being Qualtrics International. The $8 billion all-cash deal was executed to boost capabilities for SAP’s current and future customer relationship management (CRM) process support applications specifically in the area of integrating customer sentiment feedback into other processes such as product design and development. Qualtrics software collects structured and unstructured data on brand, customers and products by scrubbing email, social-media and various multi-system applications data. It was another of ‘bet the company’ acquisitions in order to accelerate recurring revenue growth. Such strategies run the consequences of cutbacks in other areas including headcount.

As to how the senior executive leadership changes will impact the ongoing strategies and direction of the ERP providers integrated supply chain, PLM and direct procurement product strategy areas remains unclear to us. There are obvious overlaps and inconsistencies in ‘experience’ areas such as IoT, blockchain and AI technology use, that will need to be addressed in light of new strategic priorities.

For the existing customer base, the upcoming Annual SAP Sapphire Now customer conference that occurs in just over a month, will likely set the stage for yet another unveiling of new executive keynotes with emphasis on revised strategy and customer adoption areas. Only this time, customers will likely have more pointed questions and feedback.

 

Bob Ferrari

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