SAP says no plan to return to having two CEOs

Reuters News
Posted: May 21, 2014 8:54 AM

By Harro Ten Wolde

MANNHEIM, Germany (Reuters) - German business software company SAP is not planning to return to having two chief executives, its new sole CEOP said on Wednesday, as surging demand for online products calls for a faster pace of decision-making.

Since 2010 the company has been run by two CEOs, but last year it was suddenly announced that Jim Hagemann Snabe, aged 52, would be joining the supervisory board, leaving 46-year-old American Bill McDermott in sole command once shareholders approved the move at the annual general meeting which was held on Wednesday.

Some investors had hoped a more prominent role might have been given to SAP's technology chief Vishal Sikka under McDermott's leadership, but Sikka unexpectedly stepped down earlier this month.

"We are in a new era now where the sole CEO model is the right model," McDermott told reporters on the sidelines of the annual meeting.

"Therefore I will guide you forward on a sole CEO model for SAP because that will enable us to be more nimble and much quicker to market a cloud world."

SAP earlier this year pushed back its profit target as it waits for subscription revenue from cloud-computing to gather pace and invests more in the business to keep up with a fast-growing market.

Cloud computing allows businesses to reduce their costs by ditching bulky servers for network-based software in their own offices and using remote data centers run by technology companies instead.

Global business spending on cloud services are expected to jump 20 percent this year to $174.2 billion, research firm IHS estimates. By 2017 spending will be at more than $235 billion, triple the amount spent in 2011, they expect.

"As we now move to a cloud world where executive decision making has to be very rapid and the connection between innovation and execution has to be instantaneous," McDermott said.

McDermott did not rule out at a later stage SAP returning to being a company run by two chief executives but said it would be hard to replicate what he and Hagemann Snabe did.

"It is a unique model. It requires unique trust and friendship. Back in 2010 two was better than one. We had to get a lot of things moving on the strategy," he said.

Since McDermott and Hagemann-Snabe took over at the helm at SAP in February 2010 after the surprise resignation of Leon Apotheker. Since then the shares have added 75 percent in value, giving SAP a market value of 67 billion euros ($91.8 billion).

(With additional reporting by Ilona Wissenbach; Editing by Greg Mahlich)