SAP leadership turmoil needs to settle in 2025

Changes at the top

The restructuring plan also included changes at the top of SAP's leadership team. In April, longtime SAP executive Thomas Saueressig moved from his role as the head of product engineering to lead the new customer services and delivery unit and was elevated to the executive board. Muhammad Alam, head of the SAP intelligent spend unit, succeeded Saueressig as head of product engineering and was also elevated to the executive board.

In May, SAP's legendary co-founder and former CEO Hasso Plattner retired. The 80-year-old was a central figure in all of SAP's 52 years, including a stretch as CEO, after co-founding the company in 1972 with Dietmar Hopp and three other former IBM colleagues.

The summer saw more change -- this time unexpected. Chief Marketing Officer Julia White and Chief Revenue Officer Scott Russell exited SAP by "mutual agreement," according to the company. Neither has been replaced, and the marketing and solutions area that White led was dissolved from the SAP executive board in an effort to streamline the board's structure.

The SAP executive shake-up culminated in September when CTO Juergen Mueller left under a cloud of controversy. The departure was the result of inappropriate behavior by Mueller at a past company event; SAP did not provide additional information. SAP CEO Christian Klein assumed the CTO role on an interim basis, and a permanent replacement has not been named yet.

Organizational turnover is chaotic for all

SAP's leadership changes were exacerbated by the organizational turnover across the board, according to Joshua Greenbaum, principal at Enterprise Applications Consulting.

Restructuring upheaval and turnover of personnel is chaotic for everyone involved in a company's ecosystem, both internally and externally, Greenbaum said. SAP will not want to undergo similar experiences in 2025.

"It's chaotic for employees, for partners and certainly for customers," he said. "For SAP customers, hopefully things can slow down and there's not another year like 2024, in terms of waking up and trying to figure out who you're supposed to talk to about a problem this week."

For SAP customers, hopefully things can slow down and there's not another year like 2024, in terms of waking up and trying to figure out who you're supposed to talk to about a problem this week.

The SAP leadership changes also resulted in some turmoil, but SAP hasn't been affected negatively to a significant degree, Greenbaum said.

Some of the changes were business decisions. White being elevated to the executive board was an experiment, which didn't work. Now, SAP is moving marketing back to product engineering under Alam, who has a deep understanding of the technology and its value to customers, according to Greenbaum.

Saueressig, who moved onto the executive board as the head of customer services and delivery, also has shown to have a good perception of what customers need, Greenbaum said.

"The way things are settling down on the board are the right moves for the moment," he said. "But it's always in the execution, so we'll have to see how this goes as the year unfolds."

Holger Mueller, vice president and principal analyst at Constellation Research, noted that SAP's executive board is untested and still dealing with gaps after the departures of White and Russell, but added that SAP should be in good shape for 2025.

"We know that SAP has the least experienced leadership team from a tenure perspective, and the CRO and CMO positions still need to be filled," he said. "Nonetheless, SAP has been doing well, which shows the deep bench that operates the company under the [top executive] levels."

SAP is also somewhat out of step with its leadership structure compared with competitors Oracle and Salesforce, which are led by recognizable personalities, according to Jon Reed, an analyst at Diginomica, an enterprise industry analysis firm.

Klein might have a lower profile, but overall, SAP's leadership team is more collaborative, Reed said.

"My impression overall is that SAP has a pretty enlightened leadership team when you talk with them about customer issues and pain points," he said. "They generally understand where you're coming from, and they often have pretty good answers to what they're doing about the problems."

However, the issue that SAP must face is how the top-level ideas around transforming customer experience and helping customers migrate to the cloud get communicated effectively to customers, Reed said.

"One interesting thing about SAP in 2025 will be seeing to what extent the good stuff you hear from leadership resonates in the field," he said.

Will employee restructuring continue?

Along with changes at the top, employee restructuring was a major part of SAP's story in 2024. This was a common theme in the enterprise software industry, but it was disruptive in the SAP ecosystem, according to Greenbaum.

A company as large and well established as SAP can always attract talented people, but the restructurings resulted in a loss of institutional memory and experience, he said. However, the loss of some conventional institutional memory is not always a negative thing.

"To a certain extent, that memory can be a blocker as much as an asset," Greenbaum said. "A lot of times, old-guard thinking creates old-guard reactions to new ideas."

But the employment changes are disruptive, regardless of who leaves the company, he said.

"Having a continuity of content at all levels of the company is really important for strategic planning and for relations with customers and partners," Greenbaum said. "The bigger issue isn't what the underlying causes are, but how can SAP maintain the stability it needs to be a better partner to the ecosystem."

The restructuring can also undermine employee morale to an extent, Reed said. SAP has an opportunity to rebuild trust in 2025, but not if it institutes more cutbacks and buyouts.

"There were a lot of people that were lifers at SAP, and you could say that some of those people stagnated a bit, but SAP has to earn that internal trust back in order to fulfill that reputation," he said.

SAP is an important company on the global stage because it has been resolute on its commitments to environmental, social and governance issues and diversity, Reed said. This stance is badly needed now as there's increasing global instability, strife and nationalism.

"We can pretend these things don't affect business, but the fact is that [wars and unrest] affect global economies and supply chains, and we desperately need forward-thinking companies that are willing to engage globally across cultures," he said. "SAP has a good track record with that, including all their different programs for diverse workplaces. They've been out in front of a lot of that stuff."

Jim O'Donnell is a senior news writer for TechTarget Editorial who covers ERP and other enterprise applications.