SAP looks to Younger Talent for Future Success

Hasso Plattner may be the fearless leader who started a small software company in 1972 with nothing more than a few programmer friends and stolen time on a client’s computer system but that doesn’t mean he’s satisfied with what has become his German-based multinational tech empire.

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Plattner turned 75 this year and to celebrate his three-quarters of a century, he plans on shaking things up at his legacy software-giant one more time before his self-imposed retirement. The founder wants to make sure that SAP stays relevant and he believes that attracting the bright, young and talented will help him achieve that goal.

“There are cultural changes coming,” Plattner said at a SAP-organized event in Florida this May. “We have to change how we work and we have to use new talent.”

Not everyone has welcomed this news with open hearts and minds, however, as some of SAP’s 100,000 plus workers have balked at being shown the door. Notably, several of the software company’s senior managers – most of whom were 20 plus years veterans – have already exited stage left with another 4,400 being offered voluntary leave and early retirement packages. Perhaps not surprisingly, some labor representatives have taken a dim view of SAP’s new strategy to gently lead older employees to their greener pastures.

“Hiring more young people is good and right,” said Eberhard Shick, a member of SAP’s workers’ council. “But you shouldn’t forget about the seasoned employees – they deserve a career perspective and training opportunities.”

Like many companies that forged the IT path over the last four decades, SAP is fighting to stay ahead in a fast-moving market that favors the quick and nimble business. Between Oracle’s battle for the lucrative JEDI cloud contract and IBM’s all-in bet on Red Hat, SAP is not alone in their struggle to avoid ending up chum in a sea of lean, hungry startup sharks.

The shift towards selling products on the cloud has meant that software can be implemented and updated much faster and for far less money than a traditional data center deployment. It’s a trend that will require fewer people, and those with very different skills than the ones many long-standing SAP employees possess.

Plattner has found a kindred spirit in SAP’s American chief executive officer, Bill McDermott, however. The yin to Plattner’s programmer yang, McDermott is the embodiment of the perfect business executive with an easy charm and an answer for any situation. They share a vision for the company’s future and defend each other’s decisions – all in the name of the SAP’s success

When the tech-giant came under fire for their pricey $8 billion purchase of Qualtrics International who only made $570 million in sales last year (less than 5 percent of SAP’s profits), both founder and CEO backed the deal. They argued that SAP’s vast operational and sales infrastructure combined with the analytics company’s customer experience solutions will accelerate growth in an internet-based economy geared towards a personalized user preference.

SAP’s operating profit margins have slid from 42 percent in 2011 to 30 percent in 2017 and most of this is due, experts say, to the company’s inability to keep pace with many of the up-and-coming startups that are currently leading the pack. The company’s efforts to move into the cloud market has also hit some speedbumps which has concerned investors. SAP’s stocks slid as much as 10 percent in Frankfurt after SAP’s second quarter results posted July 18 revealed a slow-down in cloud sales – an important metric in determining future earnings.

But SAP is not about to go gentle into that good night and as the old adage goes, is often darkest right before the dawn. McDermott is well-known for his moonshot goals – like doubling SAP’s market value to $336 billion – and he has big plans for the software company moving forward.

“I’m just getting warmed up in terms of my leadership as CEO,” he said.