In a sudden turn of events, SAP made a major leadership announcement today. The company’s co-CEO model will transition into a singular CEO by May 2014.

The announcement declares that its Supervisory Board, the German equivalent to a Board of Directors, has agreed to propose co-CEO Jim Hagemann Snabe to be elected to that body in May 2014.  The proposal is subject to at least 25 percent of existing shareholder approval but more than likely comes with some endorsement of SAP Co-founder and Supervisory Board Chairmen, Hasso Plattner. None the less, Snabe will have to replace one the current 16 Supervisory Board members.

This announcement anoints current Co-CEO Bill McDermott to the role of sole CEO by May of 2014, an announcement that will draw mixed reaction both internally and externally. 

The obvious question is why now?

On the executive briefing for Press and Analysts, an agitated Hasso Plattner explained that the Supervisory Board held an extraordinary meeting over the weekend after hearing of Mr. Snabe’s personal decision.  Snabe’s existing employment contract extended to 2017, thus Plattner explained that regulatory factors deemed that SAP had to make a public announcement regarding this leadership development concerning the company’s top leadership and its Supervisory Board leadership.  Otherwise, it would have been an internal matter. In the Q&A session, representatives of the press provided many questions related to why this timing, especially since Mr. Snabe just three weeks ago was extolling the praises of the co-CEO structure.

There will no doubt be lots of open questions and possible implications from this significant announcement.  It was no secret that the SAP co-CEO model was working for SAP because of the respect that each co-CEO garnered internally and their working relationship with one another.  Mr. Snabe had a loyal following from the business unit and product development teams while Mr. McDermott’s following came from the sales and field aspects of SAP.

Obvious open questions relate to how leadership will evolve over the next eight months of what could be termed as a “lame-duck” transition.  From the call it seemed apparent that Vishal Sikka’s technical leadership will expand along with Bernd Leukert, with product go-to-market leadership influence expanded to Robert Easlin.  Perhaps that was already in the works.

SAP has a rather challenging next 12-18 months as it continues to make yet another major transition, the latest being HANA and cloud computing capability. Whether today’s announcement detracts from that challenge remains a matter of much speculation in the weeks to come.

This author came to know of Jim Snabe during my tenures both at SAP and as an industry analyst.  I found him to be a highly competent and personable senior manager, one that drew the trust and respect of many teams and individuals.  His leadership of both SAP business units and product teams was admirable. I found Jim to be a very down-to-earth and approachable executive, not swept-up in power tendencies of certain CEO’s or senior executive leaders.

From the wording of the announcement and this morning’s executive briefing, it would appear that this was a personal decision on the part of Jim to spend more time with his family. Our Supply Chain Matters gut feel is that there were probably more signs occurring behind the scenes to prompt such a sudden decision such as this.

By our lens, this is a big leadership loss for SAP.

Bob Ferrari