This morning I had the opportunity to review the latest open letter to SAP customers authored by the company’s new co-CEO’s, Jim McDermott and Jim Hagermann Snabe.  I also took the opportunity to view recent press outreach interviews at the CeBIT Conference in Europe, as well as a recent appearance of the duo on the financial news network, CNBC. It should be no surprise that SAP has orchestrated its senior executive outreach from European venues.

First, let me get one point out of way.  I am of the belief that in any company, there can only be one CEO, one person accountable to drive a vision, set direction, and insure results for the shareholders. I must therefore admit that my views on SAP’s current leadership duo are a bit clouded, since I do not quite understand who has accountability for what. I also do not subscribe to the success of a management-by-consensus model, especially at critical times.

The SAP community should take note that the first statement in their communication to customers is the acknowledgement that SAP’s success will and always be linked to the success of customers.  It has become rather apparent these past months that SAP lost that perspective, instead, focusing more on SAP’s needs to continue to grow in a rather challenging and highly competitive enterprise software market. The previous declaration of a more expensive software maintenance program could not have been timed in a worst fashion, at the height of the past global recession as companies had to justify every incremental expense. SAP management also lost the confidence and trust of its employees, with perceptions that revenue and profitability growth were more important than providing customers the product innovation they desired. With the prior CEO tenure of Leo Apotheker, SAP’s internal power structure shifted toward the field organization, where license sales growth was more important than educating customers on product roadmaps and strategic direction. SAP’s confusing and layered organizational structure continues to force the company’s most influential customers to continue to nurture important contacts with product development and management teams within Germany.

I was pleased to note the commitment to accelerate the pace of product innovation, but SAP customers know of the constant lag times in execution of product innovation.  No doubt SAP supply chain and procurement customers have been rather patient waiting either for required new functionality or broader options in their technology deployments.  I could not believe that I actually heard Bill McDermott acknowledge the critical importance of end-to-end supply chain capability as a differentiator for SAP’s mid-market software offerings.  Perhaps SAP has finally understood that the company lost focus in SCM, while competitors did not.  SAP claims that its software touches 60 percent of the world’s transactions, yet confusion remains relative to the functionality included in SAP Business Suite 7 and ERP 6.  SAP customers need more efficient options in supply chain business intelligence and analytics, rather than having to rationalize BW vs. BusinessObjects as the BI platform.  I’ve been impressed with SAP CTO Vishal Sikka’s goals for more leveraged use of in-memory technology, which should capture the interest of the supply chain community.  The potential of this new in-memory technology is that aggregating global wide supply and demand plans could be performed literally on the fly, in real-time. 

I have consistently been of the view that SAP’s best strengths come from it roots as a technology provider that is driven and always sensitive to the needs of its customer’s business goals and unique industry challenges. It was one of the first ERP providers that understood the challenges of globally focused supply chain business processes, but execution of vision always lags.  While SAP may have strayed away from these goals, the new leadership structure has the opportunity to right the ship.  But storm clouds remain on the horizon. Crisp leadership, clarity of organization and clear accountability need to be top of mind.

Bob Ferrari


Disclosure: The Supply Chain Matters blog has not received any financial consideration related to influencing the content of this posting.