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Can you CEO?

SAP is managed excellently by Christian Klein and his colleagues on the Executive Board. However, accents and milestones are not set by the SAP Executive Board. The presentation of Hana and the current ERP version was ten years ago. SAP does not need officialdom, it needs leadership.
Peter M. Färbinger, E3 Magazine
23 February 2023
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This text has been automatically translated from German to English.

Can Christian Klein be CEO?

At the end of Klein predecessor Bill McDermott's tenure, one member of the Supervisory Board lamented, "If Bill is at the helm of SAP much longer, I'll sell all my SAP shares." Things turned out differently. McDermott was able to become CEO and thus had the right foresight. He moved to ServiceNow. Professor Hasso Plattner was forced to once again put together a new management team for his SAP.

After the not unsuccessful dual leadership of ex-SAP co-CEOs Jim Hagemann Snabe and Bill McDermott, see illustration, Plattner decided to try again and appointed Jennifer Morgan and Christian Klein to head the ERP group. Mentioned Supervisory Board member did not sell SAP shares and was reconciled for the time being. Christian Klein, however, is a wholly-owned SAP product, so the question quickly arose: Can you be CEO?

The eventful, successful evolution of SAP: Co-founder Hasso Plattner became CEO and is Chairman of the Supervisory Board for another year. He was followed in the CEO post by Professor Henning Kagermann, Léo Apotheker, Bill McDermott and Jim Hagemann Snabe.

However, the relationship between the two alpha dogs Morgan and Klein deteriorated visibly after only a short time. Perhaps Christian Klein sensed that, with his internal SAP knowledge, he would sooner or later lose out to the globally experienced Jennifer Morgan. While Jennifer Morgan tried to lead the SAP Group strategically into a new era, Christian Klein focused on optimization, consolidation, harmonization and civil servant-like behavior - there was no sign of vision or strategy in his case.

Given the close proximity and a number of supporters and backers on SAP's Supervisory Board, it was an easy finger exercise for Christian Klein to convince his Supervisory Board chairman Hasso Plattner of the rightness of a strong CEO ruling alone. And Jennifer Morgan had to leave SAP. Which raised the question a second time as to whether Christian Klein can really be CEO at the top of the Executive Board.

Harvard Business Manager magazine asked on its cover in February: Can you be a CEO? The magazine postulates: "Less business studies, more empathy. Top management is at the beginning of a new era." Christian Klein has a very solid background as a CFO and controller, so he was also an ideal partner for the now departing SAP CFO Luka Mucic.

And can Luka Mucic CFO? He, too, is an SAP product and has spent almost his entire professional life at SAP. What always stood out was his very friendly and polite tone as well as his analytical thinking outside the box: not only did he excellently manage and present SAP's financials on cloud computing, but he also dug deep into ERP technology. Luka Mucic is equally good to discuss cash flow and SAP's Business Technology Platform with.

Luka Mucic had been a member of the SAP Executive Board since July 2014 and as CFO was responsible, among other things, for the finance and administrative areas of the company. In addition, he managed the acquired Signavio business. He was also responsible for SAP's acquisition of Taulia, a provider of working capital management solutions. Mucic had already taken on the role of Head of Global Finance in July 2013 with responsibility for Global Finance Infrastructure, Global Governance, Risk and Compliance, Global Tax, Global Treasury, Global Field Finance and Cloud Finance. Previously, he served as Chief Financial Officer (CFO) of Global Customer Operations and Head of Global Field Finance at SAP. In this role, he was responsible for all controlling as well as financial and commercial tasks within SAP's global sales organization.

From 2008 to 2012, Mucic was CFO of the DACH region and SAP Germany. Prior to that, he held various management positions within the Executive Board division Global Finance and Administration. These included responsibility for mergers and acquisitions activities as well as heading the Global Risk Management division and the legal department of SAP Markets Europe. He began his career at SAP in 1996 in the legal department, where he focused on the area of business law.

Luka Mucic

At my 37th and last annual press conference, I am very grateful that I was able to be part of SAP for 27 years.

Luka Mucic, former Chief Financial Officer, SAP

Can Mucic be CEO? Yes, it is highly likely that his successful career will continue after SAP. He has an excellent reputation in the financial scene and among DAX companies. However, his departure from SAP is in the dark and there is no clear opinion about it in the community. It is said that he can be CEO and wanted to be SAP CEO. Naturally, he would have been one of the logical successors after the departure of CEO Bill McDermott, but Mucic has too few advocates on the Supervisory Board, where a majority quickly developed for Christian Klein at the time. With former board member and current board member Gerd Oswald, Christian Klein had an outstanding starting advantage. For many years, Klein was one of board member Oswald's assistants.

Christian Klein SAP

On behalf of the entire company and the Executive Board, I would like to welcome Dominik Asam to the team.

Christian Klein, Chief Executive Officer, SAP

CFO, unfortunately no CEO

Luka Mucic took it sportingly at the time and observed the goings-on of Jennifer Morgan and Christian Klein from the comfortable position of a successful CFO. But the work of the Management Board was neither smooth nor successful. The discord and power struggle between Morgan and Klein paralyzed SAP's progress in Hana, S/4, and digital transformation in general. And then came the second defeat for Luka Mucic.

Christian Klein achieved his goal and became CEO of SAP. Jennifer Morgan went back to the USA. Instead of taking off powerfully and innovatively, Klein shifted his focus to the administration of the ERP world market leader. He operated repair service behavior and was committed to taking care of all upcoming problems and construction sites. Many years ago, it was already rumored at SAP headquarters that Klein worked far too much and did far too little to lead the group strategically and innovatively. Christian Klein is a motivated and disciplined workhorse. He has extensive product knowledge and knows the SAP portfolio like no one else. You can find Klein at headquarters until late at night and on weekends, but are these the tasks of a CEO. Can Christian Klein be CEO?

From the outside, SAP has suffered from two main problems in recent years: Share price and storytelling. Despite diligent, civil servant-like work almost around the clock, seven days a week, Klein was unable to save SAP's share price from a disastrous crash. For a short time last year, SAP's share price was below 80 euros on the Frankfurt Stock Exchange. And Klein has no history for the SAP community. Assurances that S/4 will remain in mainstream maintenance until 2040 is not storytelling. Existing SAP customers need a strategy and vision for why they should switch to Hana and S/4. Cloud computing as the answer is too little.

However, Luka Mucic, not Christian Klein, had to take responsibility for the lack of storytelling and especially the weak share price in recent years, which in retrospect cannot be described as fair. Thus, the question of whether Mucic could be CEO no longer arose. Professor Hasso Plattner needed a culprit and could not change his CEO again. So it was decided that Luka Mucic would have to leave the ERP group. For a second time, the SAP CFO lacked clout on the supervisory board, and there was no way to counter Plattner's anger about the low share price. Luka Mucic made way for Dominik Asam, who comes from Airbus as CFO. The news of Mucic's departure came as a surprise because his contract had been extended in 2020 until 2026. At the time, Professor Hasso Plattner had presented it as a sign of continuity and stability in uncertain times.

Dominik Asam

I've been an SAP customer for a long time, so I know the unique value of the company's technology.

Dominik Asam, Chief Financial Officer, SAP

Asam is leaving Airbus for SAP after just under four years. He has an excellent reputation as an analytical reorganizer. If you talk to companions from his successful career, there is almost nothing but the highest praise. He is praised for his discipline and foresight. Can Asam be CEO? Yes, very well, because Dominik Asam has been able to gain extensive experience at numerous companies such as Goldman Sachs, Siemens and Infineon in recent years. This makes Dominik Asam exactly the counterpart to CEO Christian Klein, Chief Technology Officer Jürgen Müller and Executive Board member Thomas Saueressig. All three of them are pure SAP whiz kids and have no experience worth mentioning outside SAP's territory. The first voices in Walldorf are already speculating that Dominik Asam will quickly outsmart the three young SAP board members with his broad professional experience.

SAP vs. Siemens and Infineon

Yes, Dominik Asam can certainly be CEO, but how will Hasso Plattner react? Asam will very quickly carve out a leading role for himself on SAP's Executive Board and easily pass over Klein, Müller and Saueressig. So there are two scenarios for this year: Dominik Asam puts a good face on the matter and remains CFO, also in consideration of Hasso Plattner, who is now in his last year as Chairman of the Supervisory Board. Or things escalate and Klein, Müller and Saueressig quit.

Jürgen Müller is Head of Technology and Innovation at SAP. As Chief Technology Officer (CTO), he is responsible for the entire platform and technology development. Furthermore, he is responsible for innovation related to the SAP Business Technology Platform (BTP). The platform includes application development, data management, analytics and planning, integration and artificial intelligence in an environment optimized for SAP applications. Müller has held various leadership positions at SAP since 2013, including head of the Innovation Center Potsdam, managing director of SAP Labs and SAP's chief innovation officer. In 2019, he was appointed to SAP's Executive Board as CTO, assuming responsibility for the development of BTP. Müller holds a degree in business informatics from the University of Göttingen and a doctorate from the Hasso Plattner Institute in Potsdam in the field of in-memory computing databases such as SAP Hana.

Board tasks

Thomas Saueressig is head of SAP Product Engineering with global responsibility for all areas of application development. This includes all functional areas from product strategy and product management to product development and product innovations as well as delivery, operation and support of solutions. The product portfolio for which Saueressig is responsible includes S/4, the digital supply chain portfolio, Hana Enterprise Cloud, and the midmarket and industry solutions. In addition, Saueressig is responsible for solutions such as Ariba, Concur, Fieldglass, SuccessFactors and customer experience solutions from Qualtrics. Furthermore, he is responsible for the global SAP Labs network. Before assuming responsibility for Product Engineering, Saueressig was Chief Information Officer and global head of SAP's IT organization. In his role as CIO, he oversaw the development and implementation of SAP's IT strategy with a cloud-first approach.

There will be no new dual leadership: Christian Klein's ambition is too great to act as co-CEO again after he successfully pushed Jennifer Morgan out the door. What we also read in Harvard Business Manager in February: A dual leadership can work if there is a strong and capable Chairman of the Supervisory Board. However, no one yet knows who will succeed Hasso Plattner in a year's time, so the construct of a co-CEO plus a strong supervisory board is only theoretical. It is likely that very little will move at SAP this year, which could end up in a dangerous situation for the ERP world market leader. The entire SAP community will be looking spellbound at Hasso Plattner and his Supervisory Board and speculating who will follow the SAP overfather.

The focus topic of Harvard Business Manager could not be better tailored to SAP: "Wanted: CEO with flair - technical knowledge and financial expertise are no longer enough. Empathy and social skills decide careers in top management." And the magazine gives its readers another mnemonic: "Board members must be able to communicate spontaneously and anticipate how their words and actions will be received." Christian Klein, on the other hand, administers the Group like a civil servant with the utmost meticulousness. He works tirelessly, fixing and organizing - but he only solves problems and makes decisions when there is no other way.

Christian Klein has been familiar with the Qualtrics problem for many years. After a visit to Qualtrics in the USA, he reported on a fascinating application that could hardly be integrated into the SAP system. This realization is now three years old, and only now has he decided, together with Luka Mucic, to sell Qualtrics. Because SAP's commitment to CRM in general is to be scaled back, SAP will also reposition the connection to Qualtrics. This realization comes rather late, after ex-CEO Bill McDermott wanted to launch a new SAP CRM with C/4 Hana about five years ago and could hardly celebrate any downstream successes with it, despite the eight-billion-euro takeover of Qualtrics. Now Christian Klein is perhaps doing the right thing - it is wrong in every respect because it is too late and has caused great uncertainty in the SAP community. Once again, the question must be asked: Can Klein also be CEO?

There is thus a challenging starting position for this year at SAP: Luka Mucic could be CEO, but he is leaving the Group. Newcomer Dominik Asam could also be CEO, but he is parking himself in the vacant CFO spot for the time being. Christian Klein is cleaning up and trying to put himself in an optimal position - also vis-à-vis Asam. The supervisory board, under SAP's founding father Hasso Plattner, who co-founded the company in 1972, is keeping an eye on developments. Concerns like those of Klein's predecessor Léo Apotheker in 2010 are becoming increasingly visible. Apotheker could be CEO, but he didn't understand the rules of the game in the German-speaking SAP community.

This could be one of Christian Klein's advantages. He comes from the region and is a pure SAP product. Last year, however, he carelessly squandered his advantage by not attending the important annual congress of the German-speaking user group DSAG in person. In his current role, Klein is responsible for corporate strategy, business management and SAP's success. In 2018, Klein joined SAP's Executive Board as head of the Intelligent Enterprise Group. There, he combined his global responsibility for the development and delivery of SAP's core applications with his mandate for operations across all board divisions.

The CEO maker Professor Hasso Plattner: Plattner is skilled at finding CEOs, but his choice has not always been long-lasting, as here with Léo Apotheker. He is still holding on to CEO Christian Klein.

As a student at SAP

Klein began his career at SAP in 1999 as a student. He worked in various positions within the company, including Chief Financial Officer of SuccessFactors and Chief Controlling Officer of SAP SE. In 2016, he was appointed Chief Operating Officer, a role he continued to perform until July 2021. In October 2019, Klein took over as co-CEO with Jennifer Morgan before being named sole CEO in April 2020. Klein holds a diploma in international business administration from the Baden-Württemberg Cooperative State University.

Harvard Business Manager's conclusion to the question: Can you be a CEO? "Over the past two decades, companies have visibly redefined the role of top managers. Management of financial and operational resources still plays an important, but diminishing, role. Instead, one qualification is gaining in importance: strong interpersonal skills. This is especially true in environments where productivity and success depend on effective communication, such as in technology-intensive companies."

The extent to which Christian Klein and Dominik Asam can revive SAP's stock price in the future will also depend to a large extent on external factors, but SAP storytelling, i.e. adequate communication with the SAP community, is a homework assignment that Christian Klein should tackle very quickly. Repair service behavior will be too little in this regard. In the next 18 months, SAP will have a new chairman of the supervisory board. If, in parallel, a CEO who communicates poorly and weakly merely manages the ERP group, many members of the SAP community will ask themselves the question: Can Christian Klein also be CEO?

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Peter M. Färbinger, E3 Magazine

Peter M. Färbinger, Publisher and Editor-in-Chief E3 Magazine DE, US and ES (e3mag.com), B4Bmedia.net AG, Freilassing (DE), E-Mail: pmf@b4bmedia.net and Tel. +49(0)8654/77130-21


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