The National Football League (NFL) and the big annual event called Super Bowl Sunday in the United States was abruptly superseded by the announcement of the contract termination and resignation of SAP CEO Leo Apotheker. Simultaneously, the promotion of Bill McDermott, head of global field organization and Jim Hagemann Snabe, head of global product development were promoted to Co-CEOs as has been customary in past years -- a dramatic change in such a short period of time since Leo Apotheker took the reigns as sole CEO of SAP just less than a year ago.

Just last year Leo was on stage as the last CEO, Henning Kagerman left SAP and was part of my analysis (See: “SAP Communicates New Clarity for Business at SAPPHIRE”) and my colleagues analysis (See: “What Leo Apotheker from SAP Should Have Said”).

In a very quick move to shore up the industry rumor mill and spread of misinformation was an early morning conference call with the chairman of the board and co-founder of SAP, Dr. Hasso Plattner to briefly discuss the transition and address as many questions as possible across industry and financial analysts. There has been significant pressure in both Germany and from investors around the world as Dr. Hasso Plattner outlined the three attributes of their strategy that are growth, innovation and margin, which is obviously mandatory to adapt and grow SAP in a positive direction.

The tone of the conversation by Hasso was a little mixed and was more defensive than reassuring. The focus on ensuring "trust" with customers to stay committed to SAP and to not abandon a roadmap of solutions including upgrades and improvements using SAP was a strategic point by Hasso.

The second point of emphasis was on ensuring growth and profitability through SAP being a "happy company" that requires happier employees. In the questions and answers section, it was revealed the employee satisfaction and annual survey of employees was not up to the level of executive board satisfaction. I was quite surprised to the level of detail on these trust and happiness issues which most of us know about at some level but was thinking the chairman would acknowledge issues quickly and then have a more positive position on the portfolio of opportunities in front of them. This reveals the issue is much larger than most of industry folks who cover SAP closely have realized.

Hasso, on his point, did provide some points of confidence on SAP investment to R&D and move to more agile product teams and that business decisions related to products need to be more swiftly executed and deployed throughout SAP. An emphasis on a range of advancements for usage of in-memory computing to SAP DB with SAP Business ByDesign and a reference to SAP BusinessObjects are part of what he believes will help the agenda at SAP.

I actually see SAP has made many good advancements across their enterprise software portfolio and applications strategy that I have recently addressed (See: “SAP Broadcasts New Enterprise Software and Application Strategy”) along with advancements in BI (See: “SAP Brings Business Intelligence and Business Analytics Advancements to Industry”), solutions for enterprise class performance management and GRC (See: “SAP Promotes Value of EPM and GRC at SAP Reporting Conference“) and their On-Demand offering called SAP Business ByDesign that my colleague analyzed (See: “Business ByDesign is SAP’s Strategic Proof Point"). Like any technology supplier, SAP has very tough competition from dedicated niche providers and many of them providing very specific on-demand approaches for which it is no easy battle to get business closed let alone IBM and Oracle who have middleware and applications and operate at the global level. I have seen that SAP is not as aggressive or market engaging as they have been in past years but maybe the organizational changes and shifts of priorities in the last several years have them more internally focused than market focused.

I really believe that SAP's largest challenge is allocation of focus with resources and budget into high growth markets. It appears that SAP is continuing to keep a large focus on industries and solution suites where their customers and the market has not just stalled but moved on from spending significant budget and time cycles beyond paying maintenance in these areas. This fact is easily seen in the declining application suite license revenue by all the major suppliers including Oracle and SAP. And, it was evident in their year-end results, which does not appear to stop declining based on activities across all vendors. But to make these organizational changes and headcount reduction and shift is no easy task as a significant number of people and the design of the organization is mostly vertical industry-centric around the world. This was good for SAP in the last 15 years but not what is needed for the future of where the market is heading. Customers have shifted more responsibility to business for technology based solution rather than just IT buyers who are looking for unique ways to apply applications and tools to their function and role rather than standardizing across industries or buying a large multi-year upgrade. Just look at adoption of Analytics across business areas like customer, sales and workforce or the specific needs of GRC in finance, operations or IT.

I do think the first call from SAP should have been an introduction by Dr. Plattner to the new Co-CEO’s of SAP who most of us know that could have outlined the commitment to strategic areas of growth from On-Demand and Cloud Computing with applications from SAP, Analytics and BI designed for business and not just IT, GRC and Performance Management for business and growing need of specific applications within and across the suites of solution areas. What is clear is that less technology and infrastructure discussion is needed and focusing more on solving business issues by these buyers will be a key area of growth if SAP decides to further engage into growth markets.

Let’s see what is next for SAP as I believe more change is required to adapt and grow profitability while reassuring the employees the confidence they have for their future in the global enterprise software and applications business. There are plenty of existing solutions in the portfolio, and more focused and savvy marketing with dedicated inside sales teams will jump start their growth opportunity. SAP opportunity is there if they decide to make the changes to effectively operate in 2010 and addressed the new opportunity as I outlined recently (See: “Seek Innovation and Optimization in 2010 at the Intersection of Business and Technology”). My best to Leo for his dedication and hard work over the years as he dates back over good and challenges times at SAP and now this period of economic uncertainty and continued technology pessimism is no easy environment for anyone to be CEO.

Mark Smith also blogs at