It was been eight business days since the SAP installed based customer community, and indeed the enterprise technology market landscape market was somewhat taken back by the unexpected announcement that Bill McDermott was stepping down as the company’s CEO.

Our Supply Chain Matters blog banner headline was that the move portends added changes for SAP beyond Jennifer Morgan and Christian Klein being appointed as co-chief executive officers effective immediately. Our context was primarily internal to SAP, but true to the ever-accelerating dynamic pace of business and executive changes surrounding many industries, the name Bill McDermott has once again suddenly appeared.  SAP SE

Late yesterday after the stock market closed in the U.S., news broke that longtime Nike CEO Mark Parker would be stepping aside in his role and would be succeeded by technology industry veteran John Donahue, a Nike board member as well as the CEO of Cloud based software provider ServiceNow. Donahue reportedly would assume the Nike CEO role in January 2020.

That was quickly followed by a statement from ServiceNow acknowledging that Donahue would be departing, and that Bill McDermott, who recently stepped down as CEO of SAP would assume the ServiceNow CEO role later this year, on the departure of Donahue.

News of SeviceNow CEO change caused shares of the company to fall as much as 15 percent in after-hours trading. Since assuming the ServiceNow CEO role in 2017 Donahue reportedly facilitated the company’s shares to have risen 161 percent during his tenure. The company’s shares this morning trended down 5 percent at the open and as we pen this blog in late afternoon, the stock is trending down 9 percent for the day. Translation- Big shoes to fill.

True to form and style, Business Network CNBC today features a nine-minute video with popular on-air personality Jim Cramer interviewing McDermott. The usual phrases of super excited and “fired-up for the next chapter of growth” are again evident. Asked by Cramer if the former SAP CEO would have wanted to take some personal time off with family. McDermott’s immediate response was that he is already moving his family to California.

From our lens, this added development is likely a sign that McDermott was already prospecting his next CEO moves and opportunity was present. Perhaps there were signs within SAP that a leadership change was desired. Again, we merely speculate without first-hand knowledge. But, why would a highly visible technology executive quickly jump to another high growth tech company unless that executive had a very attractive opportunity to do so?  Could such developments happen in eight days? Readers can make their own conclusions.

New Look for SAP Already Emerges

Back to the subject of SAP, TechCrunch reported this week that veteran enterprise technology executive Bob Stutz, who has had a storied career with enterprise software companies, including stints at Siebel Systems, Microsoft and Salesforce, announced on Facebook last week that he’s leaving his job as head of the Salesforce  Marketing Cloud and heading back to SAP to head the Customer Experience business that includes Qualtrics. According to this commentary: “Having Stutz on board could help stabilize the situation somewhat, as he brings more than 25 years of solid software company experience to bear on the company.

And earlier this week, SAP announced it had reached a new three-year deal with Microsoft’s Azure Business unit to help its larger enterprise customers move their business computing needs to the Azure Cloud.  The partnership which is termed ‘Embrace’ has the objective for accelerating customer adoption of SAP S/4HANA and SAP Cloud Platform on Microsoft Azure. It calls for Microsoft to not only be a reseller of SAP systems but the preferred Cloud infrastructure platform, de-facto over Google Cloud, IBM Cloud and Amazon Web Services.  According to the announcement:

SAP will lead with Microsoft Azure to move on-premise SAP ERP and SAP S/4HANA customers to the cloud through industry-specific best practices, reference architectures and cloud-delivered services. This includes future deployment and migration of existing direct SAP HANA Enterprise Cloud customers leveraging hyperscaler infrastructure. However, SAP continues with its long-standing policy of supporting choice for those customers who request alternatives based on business requirements.

This week, SAP also announced financial performance for the quarter ending in September.

The headline banner included Cloud Revenues up 37 percent, IFRS Operating Profit up 36 percent, New Cloud Backlog up 39 percent and Cloud Gross Margins up more than 5 percentage points.  If SAP customers had any doubt as the priorities of the new senior management team, pay close attention to these amplified business metrics. It is all about Cloud and hyper-scaling Cloud growth.

We will close this commentary with our usual analogy of the lyrics of that great Eagles tune: In a New York minute everything can change.

In eight days, the former CEO surfaces with a new opportunity, SAP hands over Cloud infrastructure platform preference to Microsoft and the new co-leadership team is off and running with executing new and more succinct financial performance priorities.

So goes today’s business and technology provider hyper business cycle. It’s just a matter of days of dramatic announcements and PR hype.

For customers, especially ERP and supply chain management technology focused, it will remain digging through the real information behind the headlines.

 

Bob Ferrari

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