Leo’s Sustainable Legacy: thoughts on SAP’s CEO changes.

Sunday night about 7pm I checked my phone and the chatter was already in full effect – SAP CEO Leo Apotheker had agreed to leave the company. The hardest working man in the analyst business, Ray Wang, already had first take post online a couple of hours later. Ray is awesome, but I am sure glad I’m not married to him! Dude- it was Sunday!

Make no mistake. For an organisation such as SAP that prides itself on a consensus management style in the German style this was a sudden and brutal change. Chairman, SAP founder and hefty shareholder Hasso Plattner (10.5% of the company’s shares) was taking responsibility. Indeed- he is arguably effectively the new CEO in anything with name, with new “Co-CEOs” Bill McDermott and Jim Hagemann Snabe effectively both reporting to him.

Having said that SAP is a consensus organisation, its worth noting that in a recent employee satisfaction survey Leo performed poorly. Apotheker had made problems for himself by trying to tough out justifiable customer unhappiness about maintenance fee hikes rather than take a more emollient line. Lose the customers, lose the employees and there is indeed consensus – and the consensus said its time for change.

We’re so conditioned to the American cult of the CEO that from a governance perspective the changes look even more surprising. You mean that the Board actually does something? Its not just a rubber stamp for CEO decisions? SAP just showed us Board level activism in action. Of course the other way to look at it is a Chairman with more power than usual flexing his muscles. Anyone that saw Plattner’s keynote at Sapphire last year could tell he was itching to be back in the game – at least as far as technical strategy is concerned.

But back to Leo and his sustainability legacy.

Before Leo took the CEO role SAP had a fairly traditional approach to Corporate Social Responsibility and Citizenship. They had one of the best guys in the space – James Farrar – making contacts, winning friends, and helping steer corporate ships to better outcomes. I met Transparency International through James. Indeed- James helped me understand that CSR is relevant to business, rather than just being a less than benign form of PR. But CSR still felt a little homespun at the company.

Until Leo pulled the trigger, that is. He created the role of Chief Sustainability Officer and gave it to one of SAP’s rising stars, Peter Graf. Here is Graf getting excited about cutting paper use. Sustainability at SAP had to be sustainable, which meant making it a product-driven activity that was going to help the top and bottom line. Apotheker made sustainability a watch word of his tenure – presenting his ideas at CeBIT for example.

I should disclose that that I have been involved in SAP’s sustainability strategy. I am currently chairing of a group of external stakeholders advising SAP on its Sustainability Reporting and Strategy. I am not being paid directly for my role, but I do have a client relationship with the sustainability business unit. The stakeholder panel is pretty stellar – Bill “Cradle to Cradle” McDonough is one of the advisers! The project’s sponsor, who we were set to report to next Month – none other than Leo Apotheker. Leo takes a personal interest in sustainability. He wasn’t interested in a corporate fig leaf, but growing a big tree with deep roots.

SAP’s Sustainability product strategy is in increasingly good shape. The firm has built and bought new technology to fill out its portfolio, linking Governance, Risk And Compliance with environmental concerns such as Health and Safety and Chemicals Reporting. My colleague Tom Raftery writes up SAP’s Sustainability KPI tool here.

Leo’s legacy is that he took Sustainability seriously and made it part of SAP’s spine, rather than being a fingers and toes activity. I just wanted to take this opportunity to thank Leo for continuing to stress the importance of sustainability even as the economy collapsed. SAP and its customers are set to benefit. SAP customers are some of the “dirtiest” in world in terms of energy consumption, chemical use and so on. SAP can act as a force multiplier in making these firms more effective, and cleaner.

Talking of force multipliers, one of the common arguments about Leo’s tenure was that there wasn’t enough technical innovation. With respect to many esteemed commentators that’s rubbish. Take a look at 12Sprints, a tool designed to drive collaboration around corporate data. The Business Objects folks in Palo Alto are on fire right now with product innovation. SAP CTO Vishal Sikka may have just taken a board level position, but he was already driving technical strategy. And Leo was prepared to sell Vishal’s vision of Timeless Software… NetWeaver is being retooled as web glue rather than on premises integration middleware. Non-transactional services will be delivered by cloud.

No – SAP was mainly struggling to sell to customers because they were angry about maintenance fees, especially in SAP’s biggest and most important market- Germany. As the recent Siemens case showed clearly enough. Plattner admits he fully agreed with the hikes, but unfortunately for Apotheker he was their public face.

Sustainability is Leo’s real legacy, and I would like to thank him for it.