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SAP CEO heir-apparent resigns

SAP announced today that Shai Agassi, president of SAP's product and technology group, is resigning effective April 1, 2007.

SAP said today that Shai Agassi, president of SAP's product and technology group, is resigning effective April 1, 2007. The assumed successor to CEO Henning Kagermann, Agassi has been a rising star within SAP since joining the organization six years ago when SAP bought his company TopTier.

In his time with SAP, Agassi was often the face of SAP at conferences and events. It was widely assumed that he would succeed Henning Kagermann after the CEO's contract extension ran out in 2009.

Apparently that was too long to wait. SAP said Agassi was leaving "to pursue interests in alternative energy and climate change," in a statement.

In the same statement, Hasso Plattner, SAP's founder and chairman of the board, further addressed Agassi's reasons for leaving.

"I had shared with Shai my plan that he should become successor to Henning Kagermann as a co-CEO for SAP," Plattner said. "With the extension of Henning's contract to 2009, it became apparent that Shai was not comfortable committing to a 10- to 15-year period, which was not in keeping with his personal career timeline."

However, it is no secret that the German base of SAP clashed with its Palo Alto, Calif. branch.

"I think there was some friction between the activity in Palo Alto where Shai is, and some of the development work going on in Germany," said Paul Hamerman, an analyst for Cambridge, Mass.-based Forrester Research Inc. "Some of the ideas and plans were maybe at odds with each other."

With Kagermann's extension, many have speculated that Agassi's resignation was a long time coming. But others think it was probably a surprise to SAP.

"I suspect that whatever drove this to its conclusion happened fairly recently," said David Yockelson, vice president of research operations for New York's 451 Group. "I have a couple reasons for this: Sapphire [SAP's annual user conference] is in two weeks and this announcement is too close to have been planned, and my informal polling of others at SAP suggests that they are as surprised as we are."

How this move affects SAP remains to be seen. With over two years left on Kagermann's term as CEO, there is plenty of time to identify other potential successors. SAP announced that Léo Apotheker, current president of global field operations, will become deputy CEO.

Agassi, still only 38, was a driving force behind SAP's service-oriented architecture (SOA) plan and small and midsized business products.

"Shai drove the company's successful platform strategy, led innovation that helped SAP grow and continue market leadership, as well as set the stage for the future of business software," Plattner said.

As part of a major realignment of executives, SAP announced that Jim Hagemann Snabe will lead SAP Business Suite and industry solutions development, which includes the mySAP products, and Doug Merritt will take over many of Agassi's product responsibilities with software for the business user including Duet and GRC.

There will be little short-term affect on customers or the industry, other than the obvious shock factor, given Agassi's out-front presence, according to Yockelson.

In the longer term, the move has potential to affect SAP's product direction. With Agassi gone, Yockelson wonders if some of SAP's initiatives, such as SOA and business process platform (BPP), will be given the same attention they received with Agassi around.

Analysts don't expect Duet, which SAP has co-developed in a much talked about partnership with Microsoft and which Agassi helped to promote, to be greatly affected.

"The product gives more users access to SAP systems and it gives SAP a differentiator in the market from other vendors," Ray Wang, another Forrester analyst, said. "It will just be a question of how quickly they can get products out the door."

SAP customers should, however, keep their eye on SAP's midmarket products.

"The midmarket strategy being run out of Germany seemed to go against what Agassi was doing in the midmarket," Hamerman explained. "The company had two midmarket strategies, A1S vs. All-in-One, that didn't seem to mesh."

SAP All-in-One was largely driven by Agassi, while A1S, announced early this year but not delivered yet, originated mainly in Germany. So the strategy going forward bears watching, he said.

Indeed, another issue worth considering is SAP's presence in North America, said Yockelson, as many see SAP shifting more responsibility back to Germany.

SAP moved a lot of decision making from Palo Alto to Germany in the last three to six months, according to Wang.

SAP America maintains headquarters and sales leadership in Newtown Square, Pa., but SAP Labs and other functions in Palo Alto have become the focal point for SAP outside of Walldorf largely due to Shai's influence and presence, Yockelson said. If this were to diminish, it could impact SAP's mindshare in North America.

Even with good "bench strength," to help fill his shoes, one thing is for sure -- Agassi will be tough to replace.

"Shai will be pretty well missed especially in Palo Alto, he was a great evangelist and a great asset for SAP," Wang said. "Customers should look for whether Shai's vision will be carried forth. A lot of deals were signed on the expectation that Shai would deliver on that vision."

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