- Business Insider spoke with SAP’s new co-CEOs, Jennifer Morgan and Christian Klein, who have replaced longtime CEO Bill McDermott.
- The new CEOs said the job offer came on Wednesday and was a surprise to even them: Klein said he didn’t even pack enough to stay in the San Francisco Bay Area for more than a few days.
- SAP’s new CEOs also denied Larry Ellison’s recent claim that Oracle was about to win over one of the German tech giant’s biggest customers.
- “We checked everything, and I can tell you there is not a single one who moved away from SAP,” Klein told Business Insider. He added: “We don’t want to talk too much about our competitor because it feels like it’s a weakness when you talk too much about the competition.”
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On Thursday, the German tech giant SAP made the surprise announcement that longtime CEO Bill McDermott had stepped down and would be replaced by a pair of co-CEOs: Jennifer Morgan, who had been president of SAP’s cloud business group, and Christian Klein, who was chief operating officer.
Business Insider had the chance to catch up with Morgan and Klein after the announcement of their new jobs.
“The cloud world demands a different experience,” Morgan said. She said tapping SAP’s technological strengths would be one of the keys for this transition, stressing the need to “reinvigorate the amazing engineering culture that SAP is known for.”
Morgan and Klein, who both serve on SAP’s executive team, said they were surprised when they were offered the roles of co-CEOs. They had been asked to a meeting in Palo Alto, California, by SAP cofounder Hasso Plattner, but they weren’t aware of what they were there to discuss. They were offered the jobs on Wednesday.
“You’re always surprised when something like this happens,” Morgan said. “We’re really honored and excited about what have in front of us.”
Klein, who is based in Germany, where SAP is headquartered, said he had expected it to be a short trip to the San Francisco Bay Area. The news created a bit of a problem since he didn’t bring enough clothes for the stay.
“There are some guys running around now trying to buy some shirts for me,” he said.
McDermott, who is stepping down after 17 years as CEO, was also present when Morgan and Klein were offered the positions.
“He said something that was really meaningful,” Morgan said. “He had stayed away from us in the last few days. He said, ‘I wanted you to have this moment the way I remember experiencing it. When I got the call, I wasn’t really expecting it when it came.’ That’s how I’d describe how we felt.”
Ignoring the competition
The new CEOs of SAP kicked off their tenure at the helm of the German tech giant by denying a stunning claim by their archnemesis, Larry Ellison — that Oracle was about to win over one of SAP’s biggest customers.
Ellison had told analysts last month, “We’re in the middle of converting one of their very, very largest customers. And we think that, of course, is the huge opportunity.”
But SAP’s new top execs dismissed Ellison’s statement about their customers.
“We got the news, and we checked everything, and I can tell you there is not a single one who moved away from SAP,” Klein told Business Insider.
And that was all they wanted to say about Oracle, Klein added: “We don’t want to talk too much about our competitor because it feels like it’s a weakness when you too much about the competition.”
Morgan also said: “We have a different culture … We always take the high road. That’s all I have to say about that.”
SAP shares rally on the leadership change
Morgan and Klein were named co-CEOs on Thursday — news which sent SAP shares soaring by more than 10% on Friday.
SAP and Oracle have been bitter rivals in the market for enterprise software used by businesses, including the world’s biggest corporations, for managing their networks. SAP dominated the enterprise-applications market with 7.9% share of the $207 billion market, according to IDC’s 2018 data. Oracle was second with 5.6%.
But the two giants, and other major enterprise-software companies, are struggling to adapt to the rise of the cloud, which has dramatically changed the way companies access business applications. Instead of companies paying hefty licensing fees for software installed in private data centers, the cloud has made it possible for businesses to set up their networks and access applications through web-based platforms, typically based on a subscription model.
That has been a challenging transition for companies like SAP as it faces cloud-based rivals such as Salesforce and Workday. SAP is looking to triple its cloud revenue to $15 billion a year by 2023. It could be a challenging shift for the 47-year-old technology powerhouse.
‘Trust and fun’ will be key to work as co-CEOs
Steve Allen, an analyst with S2C Partners, said Morgan and Klein “have a lot of experience and capability.”
But “the question remains, no matter what, how will they function together?” he told Business Insider. “Since they are shy to discuss a business rival, ask them how they plan to divvy up the roles and responsibility of each CEO.”
Asked how they plan to make their different backgrounds — Morgan is an American who is based in Philadelphia, while Klein is German and based in Walldorf, Germany — work as they take on the job, Morgan said, “That’s one easy. It’s trust and fun and Christian and I have that in spades.”
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Source: SAP’s new CEOs on getting the job and not being worried about Oracle
By Benjamin Pimentel
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