* SAP says co-CEO Snabe to move to supervisory board
* Move due in May 2014, leaving McDermott as sole CEO
* Shares fall 1.2 percent, underperform market
By Maria Sheahan
FRANKFURT, July 22 German software maker SAP AG
is breaking up its dual-CEO structure and giving sole
executive power to Bill McDermott, only weeks after his co-CEO
Jim Hagemann Snabe defended the power-sharing structure in a
Hagemann will move to SAP's supervisory board in a rejig
which comes two months after the group announced a management
revamp to sharpen its focus on "cloud" computing, a hot area for
SAP and its rivals which allows clients to ditch costly servers
for network-based software and storage in remote data centres.
McDermott, a 51 year-old U.S. citizen, was promoted to SAP's
executive board in 2008, having run sales first in the Americas,
then also in Asia, and finally worldwide since joining the
company in 2002.
Under his and Snabe's leadership, SAP raised its market
share in the key North American market, helping increase group
revenue 44 percent to 10.7 billion euros in 2009 and to 16.3
billion by 2012.
McDermott's elevation to sole CEO may also shift the focus
of SAP from its German home market to the United States. Snabe
is based at the company's headquarters in the German town of
Walldorf near Heidelberg, while McDermott's main office is at
SAP's North American centre in Newtown Square, Pennsylvania.
Snabe, 47, who brushed off criticism of SAP's dual
leadership in an interview with Handelsblatt newspaper earlier
this month, said he was stepping down from management after a
20-year career at SAP, including three years as co-CEO.
He cited personal reasons and said he had no plans to take
on a management position at another company.
"We have done great things, ... got through the global
economic crisis and ... made SAP a highly innovative and
profitable company again," Snabe told Frankfurter Allgemeine
Zeitung in an interview published on the paper's website.
The enterprise software industry is being reshaped as SAP
and rivals such as IBM and Oracle Corp rush to
meet surging demand for cloud computing.
Since taking office as co-CEOs in 2010, with contracts that
were due to run through 2017, McDermott and Snabe have spent
more than $14 billion on acquisitions to expand in mobile and
SAP splashed out $7.7 billion last year to buy Ariba and
SuccessFactors to push into cloud computing, which research firm
Gartner has said is expected to grow 18.5 percent this year to
$131 billion worldwide.
To increase its focus on this area, SAP said in May it was
grouping together all its development activities under the
command of executive board member Vishal Sikka from June 1.
Last week, though, SAP trimmed its sales outlook for this
year, citing a slowdown in demand in Asia and the rapid shift to
Some analysts said it was slightly negative that reshuffling
of SAP's management was continuing, but said they did not expect
McDermott to pursue any major change in strategy.
"McDermott is the sales machine ... the products that are in
the pipeline will continue to be pushed," analyst Marco Guenther
at savings bank Hamburger Sparkasse said.
The company has also been looking for a candidate to take
over from finance chief Werner Brandt, who is due to leave when
his contract ends in June 2014.
SAP recently launched a cloud-based version of its HANA
tool, which helps companies analyse large quantities of data
quickly and competes with Oracle's Exalytics as well as a new
version of its Business Suite software running on top of HANA,
which it started offering in mid-May.
The proposal for Snabe to move to the supervisory board will
require the approval of at least 25 percent of shareholders at
the company's annual general meeting next May.
Shares in SAP were down 1.2 percent at 55.09 euros by 1017
GMT on Monday, the second-biggest faller in a flat blue-chip DAX
index and not far from a nine-month low of 53.63 euros
set earlier this month.