SAP has fired the head of its cloud business unit Shawn Price, sources familiar with the move tell Re/code, in what appears to be a significant strategic realignment of the German business software giant.
The news comes just days after a weekend reshuffling of its executive board and is the third major departure among the senior executive ranks in SAP’s cloud software business this year. The management changes are taking place against the backdrop of SAP’s shareholder meeting scheduled for May 21 in Mannheim, Germany, where Bill McDermott, the American who has shared co-CEO duties with Jim Hagemann Snabe, will be confirmed as the company’s sole CEO. Hagemann Snabe announced last summer he would retire.
Price initially told other senior executives that he would be leaving in a meeting held April 30, people familiar with the matter say. His departure was announced internally today. He is not being replaced, these people say.
Instead, SAP will seek to portray its cloud software as core to the company as a whole. It remains the one sector of SAP’s business that is growing as sales of its traditional on-premise software products have declined.
McDermott’s swift management actions are designed to refocus SAP around cloud software rather than treat the business as a separate division. The company has been struggling to build up a solid business comprised of software that runs in the cloud as opposed to its traditional business of software that runs on-premise, or on a company’s own equipment.
Companies have in recent years shifted how they buy software used to run their business. Applications used to track the flow of deals, hiring and promoting employees, and management of supply chains are increasingly sold as a subscription service by companies like Salesforce.com, Workday and NetSuite. SAP, which has long sold these types of applications in an “on-premise” manner, operating these types of services in local data centers, has in the last three to four years embraced the cloud and acquired several companies in the sector including SuccessFactors and Ariba.
But SAP has not moved fast enough. Its results have recently suffered as sales of on-premise software have declined faster than sales of cloud-based products have grown. The struggle can be seen in SAP’s shifting revenue targets. It had previously stated an annual goal of 2 billion euros in cloud software revenue by 2015. That target now calls for 3.5 billion euros by 2017. It reported total revenue of nearly 17 billion euros (about $23.7 billion) last year.
SAP’s first-quarter results fell short of what analysts had expected. It blamed part of the problem on the effects of currency exchange rates.
Price (pictured) had been hired to take over running sales marketing and support at SuccessFactors, the cloud-based human resource software company that formed the backbone of the cloud business unit when SAP spent $3.4 billion to acquire it in 2011. He had been hired by Lars Dalgaard, the founding CEO of SuccessFactors, who left SAP last year to join the venture capital firm Andreessen Horowitz.
James Dever, an SAP spokesman, confirmed that Price had made a decision to leave. “His role was a transformational role, and we’re at a point where we’re a leading cloud player. There will no longer be a single individual cloud executive. His responsibilities will be divided among other executives.”
Price was promoted to take over the combined sales and marketing portfolios of SuccessFactors and Ariba, following the January resignation of Robert Calderoni. In that role he was widely seen as the head of SAP’s cloud software unit. Price is a former president of Zuora, a cloud-based provider of finance and billing software.
The change coincides with several other management shifts taking place inside SAP, some of which were announced within the last hour. Among them: Rodolpho Cardenuto, president of SAP Americas since the start of 2013. Cardenuto is being moved to head up a new Global Partner Operations organization and will be in charge of what SAP calls its “partner ecosystems” for both cloud and on-premise software.
The SAP Americas business is being split into divisions covering both North and Latin America, sources say. Heading up North America will be Jennifer Morgan, currently head of a branch of SAP that sells software to regulated industries including health care, utilities and the public sector. Diego Dzodan, currently head of SAP Brazil, will take over Latin America.
Greg McStravik, currently head of SAP’s U.S. business will take over HANA, its in-memory database product that helps customers build new cloud applications.
On Sunday, SAP announced that Rob Enslin and Bernd Leukert had been appointed to the company’s executive board and that Vishal Sikka, the executive responsible for the launch of HANA, SAP’s cloud software platform, has resigned.