Shai Agassi, a one-time rising star at SAP AG and a prime candidate to succeed Henning Kagermann as CEO, abruptly resigned from the company today.
SAP, in confirming Agassi's departure late in the day, also said it has appointed Leo Apotheker, president of the company's customer solutions and operations, to the new role of Deputy CEO. The changes are effective April 1, SAP said.
In an official statement, SAP officials indicated that Agassi's resignation was, at least in part, a consequence of the company's plan to replace Kagermann, whose tenure as CEO will likely end in 2009.
"I had shared with Shai my plan that he should become successor to Henning Kagermann as a co-CEO for SAP," said Hasso Plattner, chairman of the SAP Supervisory Board, in an official statement. "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. Given this, I made the recommendation to the Supervisory Board that we change our plans and now adjust SAP's executive management team responsibilities."
Public speculation about the SAP CEO transition has swirled since late last year. With Kagermann's contract scheduled to conclude at the end of 2007, both Agassi and Apotheker were considered strong candidates to replace him as CEO. In February, however, SAP announced that Kagermann's contract — and his role as CEO — had been extended to May 31, 2009.
In a conference call with reporters today, Plattner said he had not consulted with Agassi before extending Kagermann's contract. "[Agassi] was not happy when I asked Henning to stay until mid-2009," Plattner said. "He said, 'No, I'm not waiting.'"
Following the decision to extend Kagermann's contract, Plattner said, Agassi took himself out of the running for the co-CEO job in 2009. At that point, Plattner said, "It was clear to me, once a 120% committed person says he's not committed beyond a certain perspective in the future, that we should have short-term changes which could release energy in other people who [otherwise] would be frozen."
Plattner said he decided to ask Kagermann to stay on into 2009 because the company faces major new product initiatives in the next two years, including the expected release of its new A1S suite for small and mid-size companies later this year.
"We will do big things in the next two years, and I am very happy that [Kagermann] is there and leads the company," Plattner said.
Analysts and SAP observers today said Agassi wanted a quicker transition. When it became clear that this was not going to happen, observers said, he looked elsewhere.
"The swiftness [of Agassi's resignation] was a surprise, but, with the management transition and Henning leaving, you knew something was going to happen," said John Hagerty, vice president and research fellow at AMR Research.
Hagerty also speculated that Agassi may not have wanted to share the CEO role with Apotheker.
Agassi was not available to discuss his departure from SAP.
Plattner denied speculation that Agassi's departure reflects deep differences between Agassi and Apotheker on SAP's strategic direction. In fact, Plattner said on the conference call with reporters, he recently called a meeting between Agassi, Apotheker, Kagermann, and himself to iron out any possible differences.
"I could not detect if we have major differences in position," Plattner said. The meeting revealed what he called minor differences in the timing and other go-to-market details related to SAP's strategy. But there were not substantial strategic differences, Plattner insisted.
Plattner also categorically denied that Agassi's departure was related to a recent lawsuit filed against SAP by arch-rival Oracle Corp. The suit, which charges SAP with theft of Oracle's proprietary intellectual property, had "nothing to do whatsoever" with Agassi's resignation, Plattner said. In fact, Plattner contended, an SAP Supervisory Board meeting to discuss Agassi's departure was scheduled before Oracle filed its suit.
While SAP's CEO succession scenario seems to have been the driving issue behind Agassi's departure, observers today said the dynamic, 38-year-old Israeli may also have been contending with a dilution of his authority over SAP's new product and technology development efforts. One observer close to the company who asked not to be identified said that recently more key decisions affecting SAP's product development teams seemed to be coming from Germany rather than Agassi's Palo Alto, CA, offices. At the same time, according to the source, Agassi was under pressure from SAP officials to relocate to Germany, something he would not do, said the source.
Since joining the company in 2001 following SAP's acquisition of his portal software firm, TopTier, Agassi had been a driving force behind the enterprise giant's product and infrastructure strategy. Agassi was deeply involved in SAP's decision to expand beyond applications software and into infrastructure software through its NetWeaver suite of middleware products. He was an important driver behind the company's Enterprise Services Architecture (ESA) initiative to retool SAP's enterprise applications around services-oriented architecture. Agassi also had played a key role in SAP's maturing strategy for partnering with other software vendors, particularly around SAP's NetWeaver strategy.
Agassi, a rare non-German member of SAP's Executive Board, also brought energy, passion, and swagger that were uncharacteristic for SAP at the time.
"It's difficult to see how they could directly replace him," said Ray Wang, an analyst with Forrester Research.
In fact, SAP won't directly replace Agassi. Instead, the company said, his responsibilities will be split between Kagermann and Apotheker. Most of Agassi's former direct reports will now report to Kagermann. They include Doug Merritt, a newly named corporate officer and leader of the company's development of software for the business user; Klaus Kreplin, corporate officer in charge of NetWeaver; Jim Hagemann Snabe, corporate officer in charge of SAP Business Suite and industry solutions development; Michael Kleinemeier, corporate officer in charge of collaboration; and Bob Stutz, who is leading SAP's CRM team.
Reporting to Deputy CEO Apotheker will be Corporate Officer Marty Homlish, who will helm SAP's newly combined global marketing and solutions marketing organization. Peter Graf will report to Homlish as his deputy.
Also reporting to Apotheker will be Hans-Peter Klaey, corporate officer and leader of SAP's SME organization, and Ernie Gunst, the corporate officer responsible for a newly combined EMEA field operations unit.
Bill McDermott, a corporate officer, will continue to oversee SAP's Americas region, but he adds responsibility for SAP's Asia and Japan regions.
And Zia Yusuf, heading SAP's activities with ISVs, channel, technology, and service partners, will report to Apotheker. Yusuf had previously reported to Agassi.
While Agassi has not yet revealed his post-SAP plans, SAP statements and published reports suggest he may start a company with a focus on alternative energy sources. A report appearing in the Israeli finance publication Israel Money earlier this month said Agassi may team with Israeli entrepreneur Eitan Wertheimer to start a company that produces electric-powered automobiles.