SAP and Business Objects Acquisition—A Succession Scenario

I assume you’ve heard everything about the SAP and Business Objects Acquisition. After all, there are 182,000 search results in Google for this query alone… If you followed the news you also know that John Schwarz, Business Objects CEO, will join SAP’s executive board as its seventh member (SAP is a German company and the executive board acts as the company’s management team) and will get to manage both the former BO business and SAP’s fast-growing Business User division, that is led by Doug Merritt, SAP Labs top brass. Lots of power and influence from day one.

 

Major acquisitions like this one seldom have only one motive, and they are much more a form of art than science. One can assume that SAP liked the technology and products, was intrigued by the large installed base and the synergies with SAP’s Business User strategy. There are also many other hidden motives— I would like to speculate* about one of them—the succession motive.

More than 6 years ago, SAP acquired Top Tier software for $400 million, a major acquisition for the company. Hasso Plattner, SAP’s CEO at this time, identified a golden opportunity to leap into the Internet era that SAP smartly avoided until then, together with a chance to bring in a new and promising blood, the 33 year-old Top Tier founder, Shai Agassi.

Whether it was planned or not, Shai was marked for the top from day one. In one year he became the CEO of SAP Portals, then managed the merged SAP Markets and SAP Portals and was named an executive board member. Less than 3 years later, Shai was named the president of SAP Product and Technology group, managing most of SAP R&D efforts. Soon after, he was marked by Hasso and the supervisory board as SAP’s next CEO. Shai left SAP 6 months ago, leaving behind the opportunity to lead the biggest business software company in the world so he can promote his personal passion for alternative energy.

Why do I tell you this long and convoluted story? I have the feeling that Hasso Platnner, the architect of both deals, is doing the same thing again. The clock is ticking towards Henning Kagermann, the current CEO, departure and the company needs to build a strong leadership pipeline that can steer the large tanker ahead. SAP is facing 3 options:

  • Promoting from within the company—the supervisory board has only one strong internal candidate, Leo Apotheker, Henning’s deputy CEO and the successful president of SAP’s filed organization.
  • Hiring from the outside- with no open leadership role at the top, the company would not be able to hire a potential CEO today and it would be limited to hiring a seasoned CEO only when Henning’s agreement expires. For a company that had founders or nearly founders managing it for 35 years it would be way too risky.
  • Using a merger or an acquisition to fill the leadership pipeline.

Evaluating all three options, the last one makes a lot of sense. It allows an injection of a seasoned CEO, directly into a power role, without an immediate shake-up at the top. John Schwarz will get couple of years to learn the secrets of the giant, get used to the company culture and train himself to lead such a big and complex company. If this scenario is correct, expect some major shake-ups at SAP’s top starting early next year.

 

* Disclaimer—This is a speculation only, and it is not based on any internal information. The writer is not employed by SAP.

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SAP and Business Objects Acquisition—A Succession Scenario

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