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The American Who's Yanking SAP onto the Net SAP America CEO Kevin McKay is getting the credit for a Web about-face at the sinking German software giant, and he's making his U.S. unit the key to a turnaround It's a good thing that Kevin McKay, the CEO of SAP America, has a sense of humor. A year ago, after his predecessor quit suddenly on the eve of SAP's annual customer conference in Los Angeles, the company painted a head of hair on a billboard photograph of the balding Paul Wahl -- apparently in an attempt to disguise the fact that it was promoting an executive who was no longer working there. When asked about the incident recently, McKay quipped: "Let's put it this way: We had to get him into the witness protection program." There's not much to laugh about at SAP America these days. The parent company, SAP of Germany, has seen its stock price plunge 33% in the past 16 months, and its revenue growth has sunk to an uncharacteristically placid 8% -- rather than the 60%-and-up growth of a couple of years ago. In the Americas, sales of $519 million in the second quarter are actually down slightly from $532 million a year earlier. And on Oct. 13, the parent company warned that it expects revenues to grow only 7% (in euros) in the third quarter and profit margins to decline. Wahl wasn't the only high-level defection, either. Former President Jeremy Coote joined Wahl at rival software maker Siebel Systems, and two top sales executives also left to join competitors: Peter Dunning went to Oracle Corp. and James Maikranz to J.D. Edwards.
That has yet to be seen. There's no question, though, that SAP's attempt at an about-face can be credited in large part to McKay. While previous SAP executives, including former CEO of SAP America Klaus Besier, had been pressing for the company to get with the Web for years, it was McKay's warning to top corporate executives at a planning session in Germany in January that finally got their attention. "He came across really strongly," recalls SAP co-Chairman Hasso Plattner. "He said 'I need the Internet, and I need it now.'" Remarkably, SAP executives say, the first non-German to run the company's American operations has actually succeeded at making his 7,000-person organization the key mover and shaker in SAP's worldwide operations. Because it's headquartered in Walldorf, Germany, and its core markets were traditionally in Europe, SAP has long treated its U.S. operations as a poor cousin. But now the bigs in Germany are listening more to American voices. The top execs pay heed, according to Peter Graf, director of technology marketing at headquarters in Germany, "because Kevin lives in the Web community every day." WELCOME TO PHILLY. Not only that, McKay has worked hard to build a bridge between the operation in America and Germany. He invites German executives to visit the company's U.S. headquarters outside of Philadelphia and encourages them to tag along on customer calls. Four of the company's 12 annual executive board meetings are now held in the U.S. Also, McKay's people are in close touch with SAP's corporate development operations in Palo Alto, Calif., and Germany. At his core, McKay is an operations guy. He trimmed out the fat in his operating costs by reducing the number of trade shows and other promotional events SAP participates in from an unwieldy 250 to 175 per year and combining the administrative operations for the U.S. and Canada. He also cut out the printing of expensive training manuals -- instead publishing the content on the Web. "I tell people to spend the company's money like it's your own," he says. It's no wonder he's careful with money. McKay grew up in the rough Greenpoint section of Brooklyn ("Now, you need to wear body armor to go there," he quips). He went to secondary school at Xavier High School, a military prep school in Manhattan. As a scholarship student at St. Peter's College in New Jersey, he entered as a physics major but switched to the more practical accounting program. Finance has been his metier ever since. He spent a decade at Price Waterhouse, then got an operations job at Sony USA as head of business strategy. Former SAPer Besier hired him as chief financial officer for the Americas four years ago.
He has also been at the forefront of pushing SAP into new markets, such as those for managing sales forces and linking companies with their suppliers. His fear: that the company's core software for finance, manufacturing, and human resources would begin to look like so much plumbing to customers -- and not worth a premium price. "I can't make my margins selling a commodity," he says. So far, those forays haven't yielded great results. But McKay sounds confident that SAP will ultimately work its way out of its problems. "We saw the potential for a crisis. Now, we're reinventing ourselves," he says. Analysts concur. "Customers are looking for SAP to show the way," says John Hagerty, an analyst at AMR Research. Thanks in good measure to McKay, it looks as if the company has a chance to turn things around before it's too late. Hamm is the Software editor for Business Week. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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SAP America CEO Kevin McKay WEB POINTERS Click here to visit sites mentioned in the story: SAP AMR Research | ||||||||||||
