by Thomas Wailgum

Analysis: HP Spins CEO Carousel and Picks Wrong Horse in Apotheker

News Analysis
Sep 30, 2010
Business IntelligenceCloud ComputingData Center

Nothing miraculous has transformed Leo Apotheker since his old school ways failed to energize SAP employees or customers during his brief stint as CEO. Apotheker is not the best choice--even if HP has designs on enterprise software or SAP itself.

In professional and collegiate sports, it’s referred to as the “coaching carousel”: Each year, losing sporting organizations unceremoniously fire their head coaches. Words such as “disappointing” and “change” and “new direction” are bandied about.

Weeks or even days later, a few of those same discarded coaches are ceremoniously introduced as the new coach of another (losing) team in need of change. Words such as “experienced” and “track record” and “good fit” are tossed around. (The NFL’s Eric Mangini and NBA’s Mike Dunleavy leap to mind.)

The platitudes flow freely—whether based on any semblance of reality, or not. New strategies and schemes are announced to generate excitement among the loyal fan base.

What happened in the interim to effect such a change in those cast-off coaches? Who knows.

But what we do know is that one company’s discarded CEO can be another’s treasured find. At least in the eyes of old-school corporate boards.

In the high-tech world, there is such a thing as a “CEO Carousel.” A recent example is CEO Mark Hurd’s TMZ-worthy departure from HP and acrimonious arrival at Oracle.

By now, everyone has heard that Hurd’s replacement at HP is none other than Leo Apotheker, the multi-lingual former CEO of enterprise software giant SAP. Apotheker, you’ll recall, was asked to step down from his CEO post not even a year into his troubled tenure.

When SAP cut Apotheker loose on Super Bowl Sunday 2010, the company was a listless vendor in need of a re-charge. At the time, I observed:

SAP was a mess. Its still new-ish CEO, Leo Apotheker, was forced out, followed by a thorough house-cleaning at the top. Employee dissatisfaction was running rampant at the German ERP giant.

Rather than SAP customers talking about apps, everyone was focused on SAP maintenance and support pricing, which is not a good thing. Competitors old and new were chipping away at its number-one spot in the enterprise apps universe. Revenues, profits and operating margins were all down year over year.

If we could have measured SAP’s influence at the start of 2010, the most accurate assessment would have been: waning.

Sticking to the “script,” SAP proudly announced their new co-CEOs, Bill McDermott and Jim Hagemann Snabe, using the words “product innovation” and “profitable growth” and “innovation” (again). The SAP Supervisory Board thanked Apotheker for his “enormous contribution to the success of SAP.” (Insert well-timed cough here.)

Wrong CEO for the Job?

In enterprise technology circles this HP CEO hire will be big news for a while. Very early speculation is that HP has designs on enterprise application plays in the near future, perhaps even SAP itself as an acquisition target, and Apotheker can help make that happen. If that is the case, then I think HP has made the wrong hire.

Remember that Apotheker spent 20 years at SAP, was groomed for the top spot, only to fumble his chances away. Exhibit A: SAP’s Business ByDesign suite of Web-based applications, which during Apotheker’s watch was “success-challenged,” to put it mildly.

The future of business software is going to require “fresh eyes” and a “new perspective” from someone who can think “outside the box.” Leo Apotheker is not that person.

While the nimbler, Workday and NetSuites of the world are strategizing and innovating for the future, the big enterprise software vendors are focused on locking in their customer bases for the future. The difference in approaches is alarming.

Apotheker, the CEO, wasn’t regaled for his “innovation” at SAP (despite what HP asserts in a press release announcing his hire).

He was nurtured in the culture of traditional Big ERP; it’s what he knows. Though HP is big, it doesn’t need more of the same when it comes to enterprise technology. It needs less of it; much less of it, especially if it’s going to make a serious play in the shifting business applications space.

But hey, if Leo doesn’t work out at HP, I hear former Oracle exec Charles Phillips is looking for a job.

Thomas Wailgum covers Enterprise Software, Data Management and Personal Productivity Apps for Follow him on Twitter @twailgum. Follow everything from on Twitter @CIOonline. E-mail Thomas at