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New SAP Co-CEOs Jennifer Morgan, Christian Klein: Their Background

ServiceNow CEO Bill McDermott
Former SAP CEO Bill McDermott

SAP's CEO crown has shifted from longtime leader Bill McDermott to Jennifer Morgan and Christian Klein, effective immediately. The shift comes after McDermott decided not to renew his contract, effectively elevating SAP executives Morgan and Klein into the co-CEO roles, the German software company said Thursday.

The CEO change is the latest in a series of major updates at SAP. McDermott revealed a management and business shakeup in January 2019. At the time, he insisted the software company remained in growth mode amid its shift to cloud-fueled recurring revenues. By August 2019, SAP organized its channel partner strategy around two pillars – Build and Run. The pillars are led by Sachin Vora and Nanette Lazina, respectively.

McDermott's overall efforts this year were designed to meet key long-term profit and business performance goals set by activist investor Elliott Management.

McDermott appears to be stepping down at a time when SAP is showing tangible progress on multiple fronts. The evidence: SAP pre-announced third-quarter results on Thursday, disclosing that total revenue rose 13 percent and cloud revenue jumped 37 percent. SAP's stock rose about 7 percent in pre-market trading based on the financial results and CEO change.

McDermott says he stepped down on his own terms and was not pressured to exit by Elliott Management, Reuters reports.

New SAP Co-CEOs Morgan and Klein: Who Are They?

The CEO crown now shifts to Morgan and Klein. McDermott will stick around as an advisor through the end of 2019 to ensure a smooth transition, the company indicated.

SAP Co-CEO Jennifer Morgan

Morgan joined SAP in 2004, and most recently served as president of the Cloud Business Group. In that role, she oversaw Qualtrics, SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Customer Experience and SAP Concur.

Morgan became the first American woman ever appointed to the Executive Board of SAP SE in 2017 when she was named president of the Americas and Asia. In this role, she was responsible for SAP’s revenue, strategy and customer success in North America, Latin America and Asia Pacific Japan, regions encompassing more than 43,000 employees and nearly 230,000 customers, the firm says. Earlier, she was president of SAP North America.

SAP Co-CEO Christian Klein

Meanwhile, Klein started his career at SAP in 1999 as a student. He held various positions in Active Global Support Operations, Services Operations and Global Controlling, and served as chief financial officer of SAP SuccessFactors (2011-2012). In 2014, he was appointed chief controlling officer. In 2016, he was also named chief operating officer leading the Intelligent Enterprise Group. The role included a global responsibility for the development and delivery of SAP’s core applications with his cross-Board area mandate for SAP’s global business operations.

SAP Chairman Explains CEO Succession Plan

In a prepared statement, SAP Chairman Hasso Plattner praised McDermott and explained the co-CEO succession plan:

“SAP would not be what it is today without Bill McDermott. Bill made invaluable contributions to this company and he was a main driver of SAP’s transition to the cloud, which will fuel our growth for many years to come. We thank him for everything he has done for SAP. We also congratulate Jennifer and Christian for this opportunity to build on the strong foundation we have for the future of SAP. Bill and I made the decision over a year ago to expand Jennifer and Christian’s roles as part of a long-term process to develop them as our next generation of leaders. We are confident in their vision and capabilities as we take SAP to its next phase of growth and innovation.”

Despite SAP's progress in the cloud market, the company continues to face intense competitive pressure on multiple fronts. In addition to traditional rivals like Oracle and Salesforce, the company must also push back against a lengthy list of fast-growth SaaS companies like Workday.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.