Longtime CEO Bill McDermott steps down amid string of leadership shake-ups
After nine years at the helm of German software giant SAP, Bill McDermott announced yesterday that he will not renew his contract and is stepping down immediately. Through a preplanned succession plan, SAP executive board members Jennifer Morgan and Christian Klein will serve as co-CEOs.
The Lowdown: While McDermott is vacating the CEO post immediately, he will continue to serve in an advisory capacity for the next two months.
The succession plan returns SAP to its traditional co-CEO role that existed until 2014 when Jim Hagemann stepped down.
Morgan, who joined SAP in 2004, currently serves as president of the Cloud Business Group, which includes Qualtrics, SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Customer Experience, and SAP Concur. She’s been a member of the executive board for two years.
Klein, a two-decade veteran of SAP, was the company’s CEO and previously worked as the CFO of SAP SuccessFactors and as SAP’s Chief Controlling Officer.
The Details: The news of McDermott’s departure comes as SAP pre-announced its third-quarter earnings announcement in which cloud bookings jumped 38%, cloud revenue expanded 37%, and SAP S/4HANA adoption grew 25% year over year.
The Impact: The appointment of Morgan and Klein, who boast respective strong backgrounds in cloud systems, operations, and financial management, reflects SAP’s continued commitment to pivot toward more cloud-based products and services.
Background: McDermott, who started his working career as a deli owner on Long Island, New York, leaves a legacy of success at SAP. During his tenure, SAP expanded his business portfolio, grew revenue, and pivoted the company into the cloud computing and cloud platform era. Stakeholders and partners say SAP would not be the company that it is today without McDermott’s leadership and vision.
Nevertheless, questions remain about McDermott’s decision, which is the latest in a string of leadership departures. In recent months, SAP has seen the exit of SAP SuccessFactors COO Brigette McInnis-Day and cloud business president Robert Enslin. On the channel side, North America channel chief Marc Monday departed in August to become the global head of small business at Cisco.
The Buzz: “Every CEO dreams of being able to transition a company to its next generation from a position of significant strength,” said McDermott. “When you look at where we were and where we are, I simply could not be prouder of what this company has achieved over the past decade. I am thankful for the opportunity to lead one of the world’s finest companies. Now is the moment for everyone to begin an exciting new chapter, and I am confident that Jennifer and Christian will do an outstanding job. I look forward to supporting them as they finish 2019 and lay the foundation for 2020 and beyond. To every customer, partner, shareholder, and colleague who invested their trust in SAP, I can only relay my heartfelt gratitude and enduring respect.”
“SAP would not be what it is today without Bill McDermott,” said Professor Hasso Plattner, chairman of the supervisory board of SAP SE. “Bill made invaluable contributions to this company, and he was a main driver of SAP’s transition to the cloud, which will fuel our growth for many years to come. We thank him for everything he has done for SAP. We also congratulate Jennifer and Christian for this opportunity to build on the strong foundation we have for the future of SAP. Bill and I made the decision over a year ago to expand Jennifer and Christian’s roles as part of a long-term process to develop them as our next generation of leaders. We are confident in their vision and capabilities as we take SAP to its next phase of growth and innovation.”
“I could not be more grateful to Hasso Plattner and the supervisory board for placing their trust in me and Christian to lead this next chapter for SAP,” said Morgan. “We accept the challenge with a high degree of humility, but also with a sincere belief that the best is yet to come for SAP. We have the finest, most talented colleagues in the world who give us so much confidence in the road ahead. Bill McDermott has been not only a tremendous leader, but a mentor and a role model for so many of us. In Bill, we stand on the shoulders of a giant and look forward to building on his legacy of success.”
“As someone who began my career in the halls of SAP, this is the highest honor I can imagine to become co-CEO together with Jennifer,” said Klein. “Hasso Plattner has given us a tremendous opportunity, and we are truly thankful to him and the supervisory board. SAP has the most comprehensive solution portfolio in the industry. We have an unprecedented opportunity to finish what we started and deliver the intelligent enterprise. This will be the best way to honor our predecessor, Bill McDermott. We will always strive to be leaders who bring out the best in people like Bill has always done.”