Readers who run SAP software or who attended this year’s SAPSapphire and ASUG customer conference may have noticed the absence of a key executive board member.  That executive was Lars Dalgaard, the board executive with overall charge of SAP’s cloud computing strategy. He came to SAP with the $3.4 billion acquisition of cloud technology provider SuccessFactors.  

During Sapphire, SAP senior executives exclaimed that Lars was not able to join the conference. Last week, in the shadows of a major holiday in the U.S., came the real story, the announcement that Dalgaard  is joining venture capital firm Andreessen Horowitz. According to the interview with CNN Money/Fortune, Dalgaard, who was appointed to the SAP executive board in April 2012, declared that he does not want to be a manager of groups anymore but rather an investor.  That is an interesting statement coming from the former SAP board member charged with the entire cloud go-to-market strategy and who was touted as being the visionary of SAP’s cloud strategy. Speculation and rumor however pointed to frustrations with the near-term benefits of SuccessFactors.

 A report posted on the San Francisco Business Times web site indicates that SAP will now consolidate cloud development under current CTO Vishal Sikka, while Gerhard Oswald, the board member responsible for global support will assume responsibility for hosted enterprise cloud operations related to SAP HANA. Go-to-market leadership is reported to be moved under Bob Calderoni, CEO of Ariba, an SAP company.

Thus an executive structure that centralized all of SAP’s cloud computing activities under one senior board level executive is apparently moving toward activities managed by three board level executives. Perhaps these moves were already in the works.

By our view, shared board level responsibilities concerning a common product strategy has not had a stellar track record at SAP. Readers may recall the initial efforts to development the web-enabled successor to R3 ERP and Business Suite applications or the early attempts to bring SAP Netweaver to market. Each of these efforts languished by competing internal skunk work efforts or conflicts in budget allocations. To the credit of SAP, efforts focused on both HANA and Cloud made some dramatic inroads this past year under concentrated leadership.

It seems that a pattern has developed regarding the senior SAP executive ranks.  CEO’s of successful start-up technology companies that have embraced market innovation and speed to market generally tend to get rather frustrated with the organizational culture and internal status-quo conflicts of a company like SAP.  Former CEO’s of Lighthammer and IKON have departed to name just two. At this year’s Sapphire, Vishal Sikka confessed that after an accident involving his family, he was ready to move on because of personal frustrations.

Major change at SAP has by our view, generally come from external forces.  SAP HANA would not be a current reality without the external stewardship of a Hasso Plattner and neither would aspects of cloud computing. The acquisition of Ariba is one of big-stakes potential with significant internal integration challenges among Ariba and existing SAP sourcing, procurement and other applications.

SAP is far too vested in maintaining the status-quo, and that seems to be reflected in the revolving door of executives hoping to drive change. Some prevail and reap the professional and financial rewards of their accomplishments. Some are vested in maintaining the status quo as much as possible, as long as the financial rewards keep coming.   To continue to prosper, SAP needs to retain more innovators and can-do leaders.

Bob Ferrari