SAP's CEO-Designate Earned the Job

Posted by: Jennifer L. Schenker on April 03

Leo Apotheker’s official endorsement on Apr. 2 as SAP’s next CEO comes as no surprise. Long the heir apparent, he is scheduled to take the helm when current chief Henning Kagermann steps down about a year from now. Until then, the two will share the top job as co-CEOs. Apotheker’s promotion is viewed as a positive by financial analysts, who not only agree with the choice but heartily endorse his outlook for SAP’s future.

Apotheker, who joined SAP in 1988 and most recently served as its deputy CEO, has performed nearly every key job at the company, including heading up European and U.S. operations. People close to him say he deserves to get the top spot: he has paid his dues and shown his worth, driving the performance of the company and its stock price with a “take no prisoners” style that is both tough and focused. We wrote a story about him last year laying out some of those qualities—and noting that they would likely win him the corner office.

Some news reports this week focused on how Apotheker will face challenges as CEO since SAP is now bracing for a slowdown in tech spending. But it ain’t necessarily so. Since January, Apotheker has been telling anyone who will listen that the corporate software sector won't be hit hard by a weak dollar, a looming U.S. recession, and a plunging stock market.

Investment bank Dresdner Kleinwort said on Apr. 3 that its conversations with chief information officers affirm that view, pointing to a robust spending environment and scant evidence to suggest cutbacks as a result of economic uncertainty. "We maintain the market is overly pessimistic on demand trends," the investment bank said in a research note.

Some corporate governance types are uncomfortable with SAP's "two-in-a-box" approach to CEO succession, which can dilute decision-making authority. (It did the same thing when co-founder Hasso Plattner was transitioning out of the top job and handing the reins to Kagermann.) But it's typical of the company's conservative and thorough management style.

Apotheker's willingness to bide his time reaffirms why SAP's ambitious former chief software architect, Shai Agassi, who was also cited as a potential heir apparent but left the company last year, might not have fit the mold. After all, when you're selling the software that thousands of companies around the world rely on to run their operations, the last thing you want to appear is impulsive.