Shai Agassi is Leaving SAP

WSJ reports:

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Shai Agassi, president of SAP’s product and technology group and architect of SAP’s Netweaver software, is leaving the company to pursue interests in alternative energy and climate change, says a person familiar with the move.

The charismatic Mr. Agassi, 37, was among several SAP executives considered a potential successor to Chief Executive Henning Kagermann, who recently extended his contract through 2009. Mr. Agassi joined the company in 2001 when SAP acquired TopTier Software, a U.S.-Israeli firm Mr. Agassi founded.

An SAP spokesman declined to comment.

The Palo-Alto, Calif.-based Mr. Agassi is one of a handful of non-Germans in the top ranks of SAP’s executives, and is known inside the company for his brash manner. In meetings in recent months to discuss the company’s strategy, he expressed dissatisfaction with the company’s focus on short-term goals rather than on long-term progress, according to one person familiar with the matter.

Mr. Agassi’s responsibilities will be split among other executives, according to people familiar with the matter. Jim Hagemann Snabe, currently in charge of SAP’s products for industry users, will take over the bulk of those responsibilities, according to one person familiar with the matter.

The move comes as SAP seeks to shake up its corporate culture and shift to more flexible, Internet-savvy software. Much of that move was being led by Mr. Agassi.

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This will be a major blow to SAP’s efforts in adapting itself to Enterprise 3.0. However, it is not an unexpected development, since it is hard to imagine Agassi’s brash style to be compatible with SAP’s culture.

SAP has a very old-fashioned structure in every way, including compensation. Upside is not shared with employees except for a very small group in the absolute top management. There is hardly any concept of equity based incentives for the broader employeebase, and Shai was one of the people who opposed this practice. In a market where the competition for talent is severe, SAP simply doesn’t offer a framework for attracting top talent.

Beyond that, Agassi has tried to tilt SAP’s power structure towards his homebase in Palo Alto,
and insisted on leveraging Silicon Valley’s fast-paced innovation culture. This has created tension between Germany and Palo Alto, and has not been an altogether successful effort. Shai brought in many Silicon Valley executives into SAP, but it has been difficult for many of them to perform under the SAP structure, and deliver outstanding results. While Shai has instituted many changes at SAP, there are many areas that he would have liked to change, but hasn’t been successful, and would not be successful, unless he managed to get the CEO job right away.

Shai, at the end of the day, is an entrepreneur. It is hard for a man of his profile to commit to slogging for 10-15 years inside a large company, waiting for a possible CEO slot. He has the itch that most entrepreneurs do, to be the boss, and to be the full and complete owner of his destiny. While he has been a great deal more successful than most others of his ilk, in working at a large company, he is simply not cut out of the cloth that signs off 25 years of his life onto working for someone else.

Unfortunately for SAP, it is quite possible, that they will lose a lot of top executives who are more of the Silicon Valley bent, and are also finding it frustrating to be effective inside a largely German structure. On the other hand, SAP is a strong company that has weathered a lot of years of competition, and has emerged as one of the leaders in Enterprise Software. Hopefully, Shai Agassi’s departure doesn’t halt their process of reinventing themselves into a more innovative, faster-paced company.