SAP has announced that Vishal Sikka, executive board member has resigned with immediate effect for personal reasons. Rob Enslin and Bernd Leukert are promoted to the executive board.
As the chief evangelist for all things HANA and cloud but also with responsibility for the 23,000 person strong development organization, Sikka had a huge portfolio of products to heft. Internally, Sikka was attempting to transform the business to one that reflects the needs of a 21st century company. As someone who grew close to Sikka personally over the last few years, there is a profound sense of sadness at his departure. So what now?
The timing could hardly be worse, coming as it does just shy of a month from SAPPHIRE Now, the company’s annual customer showcase event. It will be interesting to see how SAP responds. One thing is for sure, SAP’s competition will have a field day. But what next for the company? Here are some questions that SAP will need to answer:
What happens to product strategy?
For the last couple of years, SAP has been on a path that looks much like that of a technology company rather than that of an applications business. That was fine up to a point and at least up to the end of 2013, HANA sales were shoring up the declining enterprise apps business.
At the last earnings announcement, it was noticeable that the company chose not to break out HANA sales.
So in the run up to SAPPHIRE Now, customers will need assurance and re-assurance that applications have not gone into large scale maintenance mode but that there is a direction they can buy into. What shape that takes is anyone’s guess. I have thoughts on this but will remain silent until I hear from the company. This is not a time for idle speculation.
What about cloud and mobile?
At the last earnings call, Bill McDermott, co-CEO repeatedly said that SAP is ‘the’ cloud company for enterprise yet beyond acquired solutions in the shape of Ariba and SuccessFactors, there is precious little evidence that SAP is gaining significant traction or is building momentum in that arena.
While SAP is not directly threatened in its core business by cloud competitors today, the fact that Oracle Fusion is now gaining momentum and acceptance among buyers must be a matter of concern. The fact Workday is pushing hard with HR as the Trojan horse for getting into SAP financials territory must be of equal concern.
But what of mobile. Last year, Sanjay Poonen, who was leading that charge departed since when the company has been silent on the topic. This is the one area where SAP could shine yet much of what we’ve seen so far is little more than baby steps.
How stable is SAP?
Leadership changes are always significant. The last year has seen Jim Snabe, co-CEO announce his departure, slated for this month. Now this event leaves important questions around the stability of the company as an ongoing entity. Regardless of speculation, job one for the new board has to be one of assuring customers, staff and partners that the SAP ship is not running aground but sailing into fresh, new waters. This will be tough. Paul Hamerman, analyst with Forrester had this to say on Twitter:
Sikka’s departure from #SAP signals internal issues. “Personal reasons” not credible explanation to this observer.
— Paul Hamerman (@paulhamerman) May 4, 2014
It is hard to disagree. Leukert and Enslin have plenty of experience in both development and sales respectively but will that be enough to satisfy the outside world? We will get an early indication when the markets open. However, in recent months, there has been a steady stream of highly competent people leaving the company. That’s never a good sign, and especially when it includes people who have been with the company many years in an industry known for short term tenure.
This is a rough day for SAP. Regardless of bench strength, Sikka’s departure leaves a massive hole in the company that will be tough to fill. What happens next may well define the company going forward.
Disclosure: SAP, Oracle and Workday are partners at time of writing.