Inside the Mysterious World of Tech CEO Succession Planning

Software arch-rivals SAP and Oracle take starkly different approaches to CEO succession planning, as do 'frenemies' Microsoft and Apple. Who's right? Customers and analysts say more information on who will be steering the ship is better.

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SAP's scripted and transparent change of control is important to customers, says Forrester's Wang. "They are the market leader," he says, "and people are looking for stability and visibility into where SAP is heading and in which direction."

Life After Larry Sails into the Sunset

Lawrence J. Ellison has served as CEO of Oracle since he cofounded the company in 1977. Ellison embodies all that is Oracle. As his brief bio states, he "also races sailboats, flies planes, and plays tennis and guitar." Those first two passions as well as his age (Ellison turns 65 in August) have caused many shareholders to angst over life at Oracle after Larry.

Speculation has focused on co-presidents Safra Catz and Charles Phillips, though neither has been publicly anointed nor openly campaigned for the job. In fact, both execs seem to have learned from past Oracle executives' transgressions.

"I don't know who would take over if something happened to Larry. I don't want the job," Catz told Forbes in 2006. Phillips added, in the article: "Larry will be here forever. We don't discuss succession. That's not my job." Not much has been heard from them on that topic during the course of the past three years.

Oracle's board members are equally as unrepentant: "There is no successor to Larry, no heir apparent," board Chairman Jeffrey Henley, told Forbes. "We discuss the subject, but there is no perfect plan. Larry still wants total control." And Ellison has said that he doesn't believe in grooming a successor. (Of course, it's also likely that Oracle has a succession plan in place and company officials choose not to share that plan with the outside world. Oracle executives declined to be interviewed for this story.)

Analysts note that Ellison's eventual successor will come down to a question of whether Oracle's board wants a CEO with "make the numbers" acumen (Catz or Phillips, though Phillips is much more outgoing than Catz) or an applications and customer guru (for instance, Thomas Kurian, the SVP of product development).

Genovese, for one, has noticed that Ellison has allowed Phillips to make many of the current decisions. "So while there is no formal succession planning document or process, there is something happening at Oracle that impacts leadership," she notes. "Who knows—Phillips could be the next CEO."

SAP's Next King Already in Training

Apotheker, who has come out of the sales side and not applications and development, has his work cut out for him during the next five years of his contract, as SAP fights through a global recession, deals with customers' increasing unhappiness over maintenance fees, and new sources of competition from all angles.

"For many customers, the relationship with SAP was neutral to good—a heritage of Henning's focus," Genovese says. "For many customers today, the relationship is more tenuous and strained—they are not sure what to expect. One of the important things to note is that it was not only the CEO that changed to a sales-focused leadership but also the entire board has seemingly moved to sales leadership."

Heitmann says Apotheker was promoted to the top spot because he is the best person for the job. "At the end of the day, it's not so relevant how many academic degrees you have or how many lines of code you have developed," he says. "With Leo, we have found the best manager and it is irrelevant what kind of background he has."

Even though Apotheker just started, analysts say that inside SAP there is plenty of jockeying going on. Leading contenders for the next CEO slot include: Bill McDermott, Jim Hagemann Snabe and John Schwarz, according to analysts.

When asked about plans for Apotheker's successor, just days before Apotheker's Sapphire keynote, Heitmann said that SAP has some "lead time" on announcing the next CEO, but plans will soon be in the works. "Because the process is understood—and several times we've proven it works—no investor is ever questioning or concerned whether SAP will have the right leadership here in the future," he says. "They can take this as a given here."

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Copyright © 2009 IDG Communications, Inc.

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