SAP's Snabe to step down in 2014, McDermott to become sole CEO

SAP co-CEO Jim Hagemann Snabe will leave his post in May 2014 to become a member of the enterprise software vendor’s supervisory board, leaving Bill McDermott as sole CEO.

Snabe’s election to the board is dependent on the support of at least 25 percent of shareholders, SAP said on Sunday.

“After more than 20 years with SAP, I have decided that it is time for me to begin the next phase of my career, closer to my family,” Snabe said in a statement. “What the entire SAP team has achieved since 2010 is remarkable, and the momentum we have built is now driving the transformation of the industry.”

Snabe and McDermott were appointed co-CEOs in February 2010 after CEO Leo Apotheker was forced out of the job. Apotheker went on to become CEO of Hewlett-Packard but left after a short and rocky run, while McDermott and Snabe presided over a repositioning of SAP that included a string of large acquisitions and the release of its HANA in-memory database platform, which is at the centre of all SAP product development moving forward.

“I am incredibly proud of what Jim and Bill have achieved together since they took the lead as co-CEOs in February 2010,” SAP co-founder and supervisory board chairman Hasso Plattner said in a statement. “With two of the best leaders in the industry, now I can look to bring Jim’s experience and energy to the SAP supervisory board, and be sure SAP is firmly in the hands of a visionary leader with Bill as sole CEO.”

McDermott and Snabe often spoke of their relationship in positive terms, but of late Snabe seemed to fall into the background somewhat. Upon taking the jobs, the co-CEOs took up clearly defined roles, with the gregarious McDermott focused on sales while Snabe oversaw product development.

“As co-CEOs, we have a proven track record of making bold decisions that set SAP and our customers up for value and growth,” McDermott said in a statement Sunday. “The proposed set-up, with Jim joining the supervisory board, builds on the strength of our partnership and personal friendship, and will make SAP an even stronger company.”

But a major shift seemed imminent earlier this year, when SAP executive board member Vishal Sikka was placed in charge of all SAP software development, seemingly leaving Snabe without a clear operational role at the company.

“Snabe’s move to the supervisory board reflects a need for two things,” said analyst Ray Wang , CEO of Constellation Research. The first is “a shift to more hardcore technology development – that’s [Sikka].”

The second is “a realisation that innovation is happening faster outside of Germany than in Germany,” Wang added. Sikka is based in Palo Alto.

Meanwhile, SAP’s decision to have Snabe join the supervisory board is a reflection of the valuable role he’s played as co-CEO.

“Snabe has done a great job re-focusing the company to verticals and industries,” Wang said. “He’s also been seen as the diplomat within SAP.”

While SAP’s announcement Sunday explicitly stated that McDermott would become sole CEO, there’s a chance SAP will preserve the dual leadership format, according to Wang.

“There is a need for faster pace of innovation and also a greater alignment with the needs of the customer base,” Wang added. “We wouldn’t be surprised if Vishal is named to co-CEO in six to nine months as he’s a good counterweight to McDermott’s sales and business acumen.”

SAP is expected to discuss the leadership changes further during a conference call on Monday.