Bill McDermott, chief executive officer of SAP AG, poses for a photograph during the software company's annual general meeting in Mannheim, Germany, on Wednesday, May 21, 2014. McDermott, who becomes the German company's sole chief executive officer today, is counting on the leadership change to speed decision-making at the software maker trying to accelerate growth. Photographer: Martin Leissl/Bloomberg *** Local Caption *** Bill McDermott Bill McDermott, chief executive officer of SAP AG, poses for a photograph during the software company's annual general meeting in Mannheim, Germany, on Wednesday, May 21, 2014. McDermott, who becomes the German company's sole chief executive officer today, is counting on the leadership change to speed decision-making at the software maker trying to accelerate growth. Photographer: Martin Leissl/Bloomberg *** Local Caption *** Bill McDermott
Frankfurt - Bill McDermott, who became the sole chief executive of SAP on Wednesday, is counting on the leadership change to speed up decision making as the German software maker tries to accelerate growth.
Having a single chief executive to deal with the product roadmap, sales and personnel actions would allow SAP to make quicker decisions, McDermott said before the annual shareholder meeting in Mannheim, Germany.
After more than six hours of questions on competition, growth and management, investors approved Jim Hagemann Snabe’s appointment to the supervisory board as he gives up the joint chief executive position.
“We did a lot of good things for SAP,” McDermott said. “We brought SAP together and role-modelled what leaders can do when they trust each other.”
Lately that harmony has been tested. The biggest supplier of business applications software is undergoing a transitional period as McDermott shapes the company and its management to compete with Oracle, Salesforce.com and others for a greater share of software delivered over the web. Sales growth is slowing on lower demand for traditional software installed on customers’ premises.
Technology head Vishal Sikka, the company’s face in Silicon Valley, resigned abruptly this month.
SAP, based in Walldorf, Germany, was looking to develop engineering managers in Silicon Valley and needed a person to be its face in the region, McDermott said.
“We have a plethora of talent that has not been seen by the press and the market. Sometimes because there is a strong personality they don’t get the limelight they deserve.”
Sikka built SAP’s key Hana database software and advanced other products through alliances with Silicon Valley chief executives, including at Adobe Systems and VMware. Now McDermott and others will need to redouble efforts to keep the company plugged in.
“I’m not personally interested in getting rusty,” McDermott said, citing his own ties to the chief executives of partners such as Microsoft, EMC and VMware.
SAP is cutting about 3 percent of its 67 000 workers, or about 2 000 jobs, as McDermott repositions it to develop more cloud-computing software. The company plans to hire enough new people to offset the cuts.
McDermott said: “We’ll move through this swiftly.”
He said SAP benchmarked its severance plans against other companies and would offer departing employees “the best” package possible. The firm was seeking to do away with small satellite offices that might house a “pet project” staffed by few workers, he said.
SAP is also on the acquisition hunt. It agreed to buy SeeWhy, a Boston-based maker of marketing software designed to increase e-commerce sites’ conversion of visitors into buyers, for an undisclosed price on Tuesday. In March, the company agreed to buy Fieldglass, a maker of online human resources software.
McDermott and Snabe oversaw a four-year period of rising sales and profit, as well as gains in SAP’s share price. Investors though are becoming concerned about frequent management changes.
Sikka’s departure, Snabe’s exit from the executive suite and last year’s resignation of cloud-computing chief Lars Dalgaard to join a venture capital firm constituted “a wave of departures”, Kepler Cheuvreux analyst Laurent Daure said in a note to clients this month. “Investors will become increasingly worried if other changes occur in the near future,” he said.
SAP chairman Hasso Plattner said Sikka had been torn between work and family.
SAP’s growth is slowing as it tries to move from software designed to run in businesses’ data centres to applications delivered online. Sales this year may rise 4 percent – the same as last year. McDermott and Snabe oversaw three years of double-digit growth after taking the reins in early 2010.
Among the company’s challenges are the escalating sanctions that Russia faces from the US and EU.
“Recent EU sanctions on Russia could lead to longer sales cycles,” McDermott said. “We are confident any impact could be counterbalanced by our global sales.” – Bloomberg