SAP Announces Board Level Organizational Changes

Continued Focus on Customer-Centricity

By Robert Holland, VP Research and Publishing, SAPinsider

The message for SAP in 2020 has been very much one of customer focus. At their FKOM event in January, the message was “Forward Together” and the keynotes in all regions focused on customer stories and driving customer success. A week later, during the FY2019 earnings call, CFO Luka Mucic stated that, “Everyone needs to be pushing to make customer success a top priority. Customers must feel the benefit.” And when SAP announced the extension of mainstream maintenance to 2027 of ERP 6.0 and the other core applications of Business Suite, multiple executives indicated that SAP was making this change now because they were listening to customer input. This customer-focused change continued on February 20 when SAP announced organizational changes focused on better supporting customers, and the departure of two long-term executive board members.

Previously leading Global Customer Operations, Adaire Fox-Martin will now manage the Customer Success board area consisting of all sales, service, and related customer success organizations. Thomas Saueressig, who today runs SAP Product Engineering, will bring product management, development, and product support together in a single board area. And CTO Juergen Mueller, currently leading the Technology and Innovation board area, will be additionally responsible for “delivering one seamlessly integrated data management solution.”

The two executive board members who are departing are Michael Kleinemeier and Stefan Reis. Reis, the Chief Human Resources Officer, will leave SAP at the end of May. Kleinemeier, who currently leads the SAP Digital Business Services board area and will depart at the end of April, had previously been slated to be replaced by Bernd Leukert. Those plans changed on February 20, 2019, exactly one year prior to the current reorganization, when it was announced that Leukert would depart SAP immediately. Now, most teams from the SAP Digital Business Services organization will be integrated into Fox-Martin and Saueressig’s board areas.

As part of the changes, all Cloud Business Group (CBG) board teams will be integrated into the new organizational model except for Qualtrics, CX Engineering, CX Product Strategy, and most of Concur – SAP has not yet announced where these groups will sit. CBG is the board area that Rob Enslin led before departing to Google Cloud in April 2019, and Morgan took over until her elevation to the co-CEO role in October.

Why is SAP Making This Change Now?

This change reduces the size of SAP’s executive board from its current 8 members to just 6 – the co-CEO’s Christian Klein and Jennifer Morgan, CFO Luka Mucic, CTO Juergen Mueller, Adaire Fox-Martin, and Thomas Saueressig. It also reduces the average age of the SAP board to a youthful 44. But apart from streamlining the executive board, though the appointment of a new HR chief seems like a necessary step, what does this change achieve for SAP?

The immediate difference is that this brings all the customer success related roles into one organization under Fox-Martin. Incorporating the former Global Customer Operations team, the services organization from SAP Digital Business Systems, plus any other customer success teams (such as the Customer First organization led by Martin Mrugal) the Customer Success board unit seems designed to break down silos that have always existed across board areas at SAP and allow a greater focus on listening to customers and making them successful.

But there is also a need for this change. In the past SAP has been able to rely on a model that brings in a large, fixed maintenance base from on-premise solutions that customers may not have even installed. While some of this maintenance base does still exist, the transition to the cloud puts a much greater pressure on organizations to work closely with customers. Even if customers sign a 3-year cloud deal, if they do not see the value of their investment and a successful implementation there is little to stop them from moving to another vendor offering similar solutions. Having the sales, service, and customer success organizations grouped into a single organization that focuses on getting customers to purchase, adopt, and scale provides SAP with a very significant reason for the realignment.

In addition, with the extension to mainstream maintenance for SAP Business Suite core components, SAP admitted that customers needed more time to migrate to new solutions. While many organizations were adopting SAP S/4HANA simply because they needed to do so to stay on a fully maintained product, a significant number were also leveraging the opportunity to re-engineer business processes. Forming a board unit that can work directly to ensure that more of these customers are able to perform successful migrations makes sense. The changes in the engineering side will help support this as many of the support and development teams will be reporting to the same executive – Thomas Saueressig.

What Does This Mean for SAPinsiders?

Today’s changes are internal to SAP, but they can have a big impact on customers. Here are four steps that you should be taking.

  • Come and hear SAP’s customer-focused message. Marty Mrugal, Global Head of Customer First, will be the keynote speaker at SAPinsider 2020 Las Vegas in March. This is a great opportunity to learn more about SAP’s customer-centric approach, meet Marty in person along with other SAP leaders who will be at the event, and address your questions to them directly.
  • Make your voice heard. Whether you meet SAP executives at an event like SAPinsider 2020 or are simply reaching out to your account team to find out who your assigned customer success representatives are, make sure that you use the new channels available to you to let SAP know what you are thinking.
  • Leverage the resources that SAP makes available. To ensure that more customers can successfully transition to SAP S/4HANA, SAP has rolled out tools like SAP Business Scenario Recommendations and SAP Readiness Check. The realignment of development teams and the new Customer Success board area will see more tools like these available across SAP solutions. Use what is there and what is coming to drive your success.
  • Talk to SAPinsider. SAPinsider is always looking to speak to customers about their experiences with SAP solutions and implementations. Meet with us at an event or reach out to us online to let us know what you think. We would very much like to get your input and insight. You can reach me directly via email at holland@wispubs.com