SAP executive bloodbath continues

Analysts have warned SAP that it must reassure customers

SAP has lost two more senior executives after chief operating officer Erwin Gunst and board member John Schwarz announced yesterday that they are to step down.

The announcements follow the shock departure of SAP chief executive Leo Apotheker a few days ago.

Analysts have called on the company to give customers an idea of the direction SAP will take when new executives are appointed.

Gunst is a 30-year veteran at SAP, and had been on the executive board for nearly 14 years. He is said to be departing for health reasons.

Gerhard Oswald, currently the executive board member responsible for SAP global service and support, will take over Gunst's role. Oswald joined SAP in 1981 and had a major role in the development of the firm's SAP R/3 enterprise resource planning software.

Schwarz, a member of the executive board responsible for SAP's Business Objects division, joined SAP in 2008 when the company acquired Business Objects.

Schwartz was due to take over a new industry and solution management board at SAP. The firm has not announced a replacement for Schwartz, and may refrain from doing so altogether, according to analysts.

"The new composition of the SAP executive board and management changes will support the leadership structure of the co-chief executives announced earlier in the week," said Hasso Plattner, chairman of the SAP supervisory board. "We regret that John Schwarz has decided to leave the company."

Analysts have suggested that Schwartz is unhappy because he was not chosen to take over from Apotheker.

"I do not think that SAP wanted Schwartz to leave, but he may have felt awkward with the new board," said Gartner analyst Thomas Otter.

"Schwartz would have wondered why he was not given the job since he was really next in line. He might not have wanted to work for two chief executives both younger than him.

"It is too early to say at the moment what Schwartz's departure will mean for the business intelligence division. SAP is still figuring it out."

The analyst pointed out that SAP's business intelligence division had been well integrated with the rest of the organisation, and that a replacement for Schwartz may not be necessary. "The responsibility may just be given to [head of product development] Jim Hagemann Snabe," he said.

Otter said that it is also too difficult to say at this stage what direction the company will take with the new executives.

"SAP has not spoken yet. We have to let the new board announce the strategy. SAP needs to produce a new technological roadmap for the business intelligence division. There is an urgency for SAP to give customers some clarity," he said.

Apotheker left SAP last weekend after 20 years with the firm. His resignation was said to be by "mutual consent". He is being replaced by Bill McDermott, former head of field organisation, and Snabe.

Otter suggested that Apotheker's departure is likely to be down to a number of reasons, including poor financial results, dwindling customer satisfaction due to increasing enterprise support costs, a lack of company direction and an employee survey which showed that staff are disappointed with SAP's leadership.

SAP's fourth-quarter figures showed revenue from software and software-related services down 28 per cent to €2.48bn (£2.17bn) year on year, and total revenue down eight per cent to 10.7 per cent.

The company underperformed in its second and third fiscal quarters, and lowered expectations in the fourth quarter to reflect difficult market conditions.