SAP Loses Visionary Agassi Over CEO Rift

Shai Agassi's resignation from SAP in late March triggered a major realignment of the SAP executive board and has left industry pundits and customers alike wondering how the exit of the whiz kid will influence SAP's product strategy and road map. Agassi, president of SAP's product and technology group (and seen as the front-runner to replace Henning Kagermann as CEO), left SAP to tackle climate and global energy issues and to work on projects related to the future of his native Israel, according to SAP Chairman Hasso Plattner at a press conference. Agassi was denied a job as co-CEO after Plattner asked Kagermann to retain his position until 2009, instead of leaving the job this year. Plattner stated he wanted Kagermann's hand at the wheel as SAP readied the launch of new products in the coming year. That didn't sit well with Agassi, the mastermind of SAP's NetWeaver and on-demand offerings, and considered by many a visionary thinker willing to embrace technologies like SOA and Web services. "It became apparent to Shai that he was not comfortable committing to a long-term, 10- to 15-year period [with] SAP and that I should not consider him for the co-CEO or CEO position," Plattner said. Leo Apotheker, president of SAP's global customer solutions and operations, was named deputy CEO, alongside Kagermann. Plattner also said that Agassi's departure--despite his position as chief architect--would have no impact on the development of A1S, a forthcoming SaaS midmarket software suite, nor had anything to do with Oracle's lawsuit against SAP or SAP's two late quarterly filings in FY2006. "We have only disclosed that we will come out with the product this year, so [Agassi's leaving] will not impact us at all," Plattner said. There are no signs that Agassi will go to a competitor, but his departure is a big loss for SAP, says David Bradshaw, principal analyst at Ovum. "He was a charismatic and highly visible driving force for change." While his contribution will be missed, the effects of his departure will be substantially less than they would have been had he bolted two or three years ago, according to Bradshaw. "For SAP, now it's about execution." Still, Bradshaw says, there is "significant development work to be done," especially around A1S, with which SAP wants to explore the SaaS model and break into the midmarket. "The technology around the SaaS model is still rapidly developing and SAP needs to catch up." Denis Pombriant, managing principal of Beagle Research, agrees, and says the long-term fallout could be more significant for a company that was already late entering the SaaS game. "Sometime this year, analysts say, Toyota will overtake GM as the largest maker of automobiles. The same thing could happen in software. Smaller, more nimble companies armed with new technologies and platforms--as well as an army of partners--could drive SAP, and Oracle for that matter, upmarket into irrelevancy unless it decides to fight the battle of SaaS turf. "SAP still has a chance if it continues to execute on an on-demand strategy, but it is now in need of a continuing vision," Pombriant says. "Agassi's departure tells me that the old guard at SAP never really wholeheartedly bought into the vision that Agassi promoted. He was an agent of change but also an outsider, and when the kitchen got too hot he was expendable." Legal Trouble for SAP SAP's rivalry with Oracle heated up on March 22 when Oracle filed suit against SAP alleging violations of U.S. fraud legislation. Oracle's complaint alleges that one or more staff at TomorrowNow, an SAP subsidiary that provides third-party support and maintenance services for PeopleSoft, J.D. Edwards, and Siebel, hacked into Oracle's support Web site, copied content, and used it to offer Oracle customers cut-rate support services in the hopes of eventually migrating them to SAP applications. Ray Wang, a senior analyst of enterprise applications at Forrester Research, sees the suit as highlighting the issues around third-party maintenance, in which Oracle itself is a player, offering support for Linux and other products. Still others believe either TomorrowNow did nothing wrong or that the alleged actions were those of a rogue employee "leaving the reservation," says Denis Pombriant, managing principal of Beagle Research. If Oracle were to win, the fallout could succeed in keeping vendors from entering the third-party maintenance market, according to Wang, which wouldn't bode well for customers. "Customers would lose. For organizations running older software, third-party maintenance providers are great, because you can receive upgrades and repairs for a fraction of what the vendor would charge. Limiting that option could raise the total cost of ownership of enterprise apps for a lot of businesses." --C.B.

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