Bill McDermott, former CEO of German software and cloud computing giant SAP, and board members pose during the company’s annual general meeting on May 15, 2019 in Mannheim, southwestern Germany.
Uwe Anspach | DPA | AFP via Getty Images
The coronavirus pandemic brought a six-month experiment in dual leadership at SAP to an abrupt end as the German business software group named Christian Klein as its sole CEO to provide clarity to its 400,000 clients.
Klein will assume full responsibility while Jennifer Morgan, who was appointed alongside him last autumn to jointly run the world’s largest enterprise software company, will leave on April 30.
“What we figured out is that we have a responsibility to give our customers clear guidance,” Klein, 39, told reporters on Tuesday.
American Morgan, 48, became the first woman CEO of a blue-chip German company but her tenure was cut short by the sudden economic slowdown that struck in March as coronavirus spread around the world.
In an overnight statement, SAP said the decision to revert to a single CEO had come earlier than planned and was taken “to secure strong and clear leadership responsibility in this unprecedented crisis”.
The statement also carried a strong personal endorsement of Klein by SAP’s co-founder and chairman, Hasso Plattner, who said he had “complete confidence in Christian’s business vision and ability.”
Plattner, 76, exerts influence at SAP that far exceeds his 6% stake, and his backing for Klein represents a return to SAP’s German roots after the company took on a more American flavor during New Yorker Bill McDermott’s decade in charge.
SAP confirmed results pre-released on April 8, when it reported a 1% gain in quarterly operating profits and cut its forecast for earnings to show an expected decline this year of between 1% and 6%.
Finance chief Luka Mucic said demand would decline in the second quarter but anticipated an improvement from the third quarter as governments gradually lift lockdowns that have hurt economic activity.
SAP remains strongly cash generative and will slow hiring and restrict discretionary spending to ride out the crisis. It will not seek state aid or put any of its 100,000 staff on short-time work, Mucic said.
The company will conduct no further share buybacks in 2020 having completed a repurchase program worth 1.5 billion euros ($1.6 billion), he added.
SAP stood by its mid-term goal of expanding its profit margin by one percentage point per year through 2023 as more customers switch to running business processes, such as finance or supply chain management, on cloud-based servers.
“We are very confident that we will again emerge as a stronger company and clear leader after the crisis,” said Mucic, who recently received a contract extension.