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Feb 09
2010

SAP tries to get happy

Posted by MQuinn in TechnologysoftwareSAPmoraleCEOsCareers/Managementbiztech

MQuinn

In the third season of The Simpsons, Mr. Burns sells his nuclear power plant to two German investors, who ultimately wind up selling the plant back to him at a huge loss. After its clear they are going to take a bath on the investment, one of the investors warns Mr. Burns, "Okay, Mr. Burns, you win. But beware. We Germans aren't all smiles and sunshine."

It's safe to say that particular German has no place in the new SAP.

In a conference call Monday discussing the abrupt resignation of its CEO Leo Apotheker, Hasso Plattner, SAP's supervisory board chairman and co-founder, said, "For a public company, profit is everything, but in order to be profitable it must be a happy company, and I will do everything in my power to make us a happy company again."

There wasn't a lot to smile about at the German business-software maker under Apotheker, who became the sole chief executive in May when his co-CEO Henning Kagermann retired.

Last year, revenue at the company fell 8 percent, the first annual drop since 2003. Additionally, Apotheker roiled customers by trying to push through higher-cost support contracts at a time when most companies were striving to rein in expenses. SAP caved to pressure in January and offered a new, tiered support system with cheaper options. But the episode surely damaged some relationships.

No doubt sensing that turmoil, Oracle has stepped up its competition with SAP, bragging in December that it has been successful in stealing business away from the company.

SAP has also been struggling with employee morale, likely due to the 3,000 job cuts announced under Apotheker, the first in the company's history. Bloomberg reported that according to a Feb. 1 statement on the IG Metall union's Web site for SAP staff, the employee satisfaction index fell 15 points from the last survey. About 50 percent of the employees gave the company's board of directors a positive approval rating.

Apotheker's contract wasn't up until the end of the year, but he resigned effective immediately. SAP is returning to split leadership with Bill McDermott, head of field organization, and Jim Hagemann Snabe, product development chief, both already members of the SAP executive board.

Still, some wonder if insiders can bring that loving feeling back to SAP.

 "I don't necessarily think SAP insiders can turn the company around," Paul Hamerman, an analyst with Forrester Research in Virginia, told Bloomberg. "The company could benefit from new blood at this point."

Should they fail to turn frowns upside down, SAP could find itself a takeover target and it's unclear who that would make happy.

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