update Once a rising star at SAP, Shai Agassi is leaving software in favor of a possible switch to the hot alternative-energy sector.
The world's largest enterprise software application vendor announced on Wednesday that Agassi is departing at the end of the week as president of SAP's product and technology group. Leo Apotheker, head of marketing, is now serving as deputy CEO, and a new executive council will take charge Sunday.
"While we regret Shai's decision to leave, we congratulate him on his record of achievement at SAP," Hasso Plattner, company founder and chairman of the SAP Supervisory Board, said in a statement. "Shai drove the company's successful platform strategy, led innovation that helped SAP grow and continue market leadership, as well as set the stage for the future of business software."
Agassi's resignation comes as a surprise, given events over the past two months.
Agassi, a relative newcomer to the company, had been viewed as a potential successor to SAP's current CEO, Henning Kagermann. Kagermann's term was set to expire later this year, but last month, SAP's supervisory board voted to extend Kagermann's contract until May 2009.
Ovum analyst
Some with influence over the CEO selection process had said the extension would have provided Agassi with the time needed to lay out his big technology plans. Up until the past eight months, Agassi had been in a dead heat with Apotheker as Kagermann's potential successor. But in recent months, Apotheker had gained ground as a front-runner due to his long tenure with the company and responsibility over a substantially larger portion of it, sources said.
The decision to extend Kagermann's contract did not sit well with Agassi, who wanted to ascend to the CEO spot on a faster track, Plattner said.
Plattner, who had passed the baton of SAP's future technology developments to Agassi four years ago, noted that he had also wanted Agassi to succeed Kagermann as CEO.
"I had shared with Shai my plan that he should become successor to Henning Kagermann as a co-CEO for SAP," Plattner said. "With the extension of Henning's contract to 2009, it became apparent that Shai was not comfortable committing to a 10- to 15-year period, which was not in keeping with his personal career timeline. Given this, I made the recommendation to the supervisory board that we change our plans and now adjust SAP's executive management team responsibilities."
The new executive council will be composed of SAP officers who will report to Kagermann. The council, which reports to SAP's executive board, will handle product and marketing strategies aimed toward faster customer response and growing the business under its 2010 goals. The council's executives will report to Kagermann.
Although one analyst was surprised by the announcement and the speed at which Agassi will be transitioning out of his role, the company is expected to weather the change.
"Shai has been the primary spokesman of technology of late, but there are hordes of people behind him," said John Hagerty, an analyst at AMR Research. "New leaders will emerge."
Kagermann's plans to stay at SAP for another two years will provide stability at the top of the company while members of the executive council settle into their new roles, Hagerty added.
However, David Bradshaw, principal Analyst at Ovum, noted that Agassi's departure is still "a big loss" for SAP because the senior executive was a "highly charismatic and visible driving force for change" in the company.
Bradshaw said: "He championed the development and adoption of its NetWeaver architecture, turning it into a key part of the company's path and a vital part of its product, marketing and competitive strategy going forward."
While SAP does not lack the talent, "some of the excitement will be gone" and Kagermann's description that SAP is about the boring stuff could very well apply, he added.
"SAP board politics aside, what does this mean for the company, its competitors and its customers? The most damaging possibility for SAP would be that Agassi could be tempted back into the software world to lead a competitor," the Ovum analyst said. "When asked if there was a non-compete clause in Agassi's contract, Plattner seemed to imply there wasn't. Instead, he said that Agassi has ruled this out completely."
Bradshaw noted that there will be no immediate change following the announcement, and the company's strategy, products and roadmap remain unchanged. However, SAP might lose a few--though not many--customer deals that could have been revived with Agassi's intervention, he said. "[And] clearly, the competitors will seek to use his departure against SAP," he added.
Agassi, meanwhile, has his eye on alternative energy.
"I look forward to new opportunities and working on issues that are important to me, including alternative energy and environmental-policy issues, as well as the future of Israel," Agassi said in a statement.
No plans were announced of Agassi joining a particular company. Plattner said the young executive will likely build an alternative-energy company rather than join one.
"Shai has always said [being SAP's chief executive] is not the last thing he wants to do with his life," Plattner said.
Agassi will be retained as a special consultant to SAP's supervisory board chairman office, the company said. He will provide advice on technology, innovation and competitive trends, and maintain an office on the company's Palo Alto, Calif., campus.
Eileen Yu of ZDNet Asia contributed to this report.
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