Understanding The Impact of SAP’s Executive Changes

In an unexpected development, SAP has announced significant organization changes to their executive team less than one week after their Q2 2024 earnings were released. Scott Russell and Julia White, two prominent members of the SAP Executive Board, will be departing from their positions effective August 31, 2024.

The timing of these departures is considerable as both outbound leaders were featured in keynote appearances at SAP’s Sapphire conference in June, both executives are under contract until 2027, and their departures are planned one month before SAP’s busiest quarter.

Here, I will delve into these changes as well as SAP’s historical executive turnover, potential successors, and the potential impact for SAP customers.

Responsibilities of the Departing Executives

Scott Russell has served in a variety of roles in his 14 years at SAP, including leadership positions in the Asia Pacific region, and his most recent position as the Chief Revenue Officer and member of the Executive Board. Since 2021, Russell has led SAP’s Board area for Customer Success, while holding the responsibility for SAP’s global revenue under management for cloud, software, and support, and leading the global sales, partner, and customer engagement organizations.

Julia White joined SAP in 2021 after serving a 20-year stint with Microsoft, which featured the responsibility of leading product marketing for Azure. She joined SAP as the Chief Marketing & Solutions Officer and member of the Executive Board where she has led all marketing functions including corporate, regional, and product marketing, global communications, product learning and community, pricing and packaging, and government affairs.

Reasons Behind SAP’s Executive Changes

SAP is in the midst of a transformational journey focused on growth in their Cloud, Business AI and Sustainability offerings as well as the re-alignment of their internal organization to further support momentum in these areas. Since setting aggressive “Cloud First” goals in 2020, SAP has made significant progress in areas such as Cloud revenue and margins as well as predictable revenue. They have also demonstrated momentum related to Cloud adoption and innovation capabilities, evidenced by their 6,000+ RISE customers, 1,000+ Sustainability customers, and rapidly maturing Business AI roadmap.

So why make these moves now? According to SAP’s press release, these transitions were strategically positioned at a time of strength for the company and were made to further accelerate their transformation objectives.

Notably, SAP announced that due to Julia White’s achievements in improving and aligning SAP’s marketing function with SAP’s core objectives, there was a mutual agreement to step down and dissolve the Marketing & Solutions Board Area to streamline the Executive focus on other key priorities.

The case with Scott Russell appears to be different, however. When SAP appointed Thomas Saueressig to the newly created Executive Board Area for Customer Services & Delivery role in April 2024, they effectively took customer success responsibilities away from Russell. As for other potential warning signs, Christian Klein’s interactions with customers has become increasingly active. To that end, SAP’s announcement that Christian Klein will be assuming Scott Russell’s responsibilities in the interim potentially signals internal misalignment and a desire for change.

Reflection on Prior Changes

While these changes are significant, SAP is no stranger to executive turnover. As an example, beginning September 1^st and with the exceptions of only Christian Klein and Chief Technology Officer Jurgen Mueller, no other Executive Board member at SAP will have been in their position for more than a year.

SAP’s executive turnover is especially evident with members holding significant sales responsibilities. In addition to Scott Russell, other key departures in this area within the last 5-years have included:

Potential Internal Successors

While SAP will not be back-filling White’s position, SAP has confirmed that a search for Russell’s successor is already underway. Given the expanded role of Thomas Saueressig, this successor is expected to have a more concentrated focus on sales and not the entire breadth of Russell’s previous responsibilities.

Historically, SAP has promoted their regional leaders, evidenced by the fact that the last two executives to hold the responsibility for global sales, Adaire Fox-Martin and Scott Russell, were both promoted from their previous roles as President of Asia Pacific Japan. To that end, we foresee SAP promoting a member of Scott Russell’s current team as his replacement. Russell currently oversees 6 regional leaders, however, we believe the most likely candidates are:

Customer Impact & Recommendations

Long-term, these changes align with SAP’s strategic direction by streamlining their executive board to focus more on driving cloud adoption, innovation, and internal efficiencies. In the short term, however, customers should expect potential changes and even challenges in their interactions with SAP, especially in the sales and customer service areas, as SAP operates in an interim period of uncertainty.

Executive Sponsorship and advocacy at SAP play a critical role for customers related to success during both the negotiation process and ongoing transformational program. Customers where Julia White or Scott Russell served as the Executive Sponsor will have limited, if any, opportunities for further connections before their departure. Additionally, customers who are just starting their evaluation process with SAP may be assigned a more junior Executive Sponsor due to the reduction of the Executive Board and limited availability of Christian Klein.

What should SAP customers do in light of this news? In addition to monitoring the changing dynamics at SAP via market announcements, we recommend customers proactively request meetings with their SAP sponsors to gain assurance on SAP’s strategic direction and organizational changes and receive their commitment that no support impacts will occur. For customers with established relationships with Julia White or Scott Russell, we recommend settling for nothing less than a C-Suite level replacement moving forward.

At UpperEdge, we can help SAP customers navigate SAP’s executive changes and executive relationship management. Explore our SAP Advisory Services to see how we can help.