Culture clash at SAP

SAP announced it was acquiring a couple of small software companies this week: CRM vendor Wicom and identity management solution provider MaXware. But the big SAP news is that details of the company's recent turbulence and Shai Agassi's departure are finally starting to come to light.

Just as Daimler-Benz recently decided it had overreached with its Chrysler acquisition, it seems the SAP home office in Walldorf, Germany, is grappling with backlash from its recent aggressive workforce globalization. A deep dive by The Wall Street Journal last week revealed the cultural and business tensions that have played out behind the scenes.

Rewind to 2001. SAP acquires Agassi's company, TopTier Software, just as it's becoming clear that the Internet will threaten SAP's proprietary, self-contained software suite business model. Agassi convinces then-CEO Hasso Plattner to pour resources into NetWeaver and to start investing in lighter-weight Web-based software products with faster product cycles.

Agassi accumulates more and more power, hires thousands of developers in the United States and India, decentralizes product development into eight global centers of excellence, and ultimately gets put in charge of all SAP product development. Then the questions begin: Will greater speed jeopardize quality? Will SAP abandon its tried-and-true proprietary ABAP (Advanced Business Application Programming) language? Do customers even want all the new stuff?

The biggest questions were cultural, as it turns out. Germans, like Americans, are generally afraid these days of losing good jobs overseas. Plus, they feared the business impact of the "Americanization" of SAP, as Americans flooded into top management positions. They may have a point: SAP succeeded by giving the world a very German software model -- highly structured, with enforced standardization of business processes -- the discipline that global customers needed. Not exactly the chaotic entrepreneurial American way.

Agassi heard the footsteps and left. Now that he's gone, what does the future hold for SAP? The German developers have started a union and are advocating a pullback. But current CEO Henning Kagermann says the company will "stay the course" on its aggressive globalization. And co-founder and Executive Chairman Plattner, for his part, made the move to California long ago.

So the two big application software juggernauts -- SAP and Oracle -- now face similar challenges. Oracle must integrate discordant cultures and products from its recent spate of big acquisitions. SAP must bring harmony to the diverse global organization it recently and rapidly built, spurred by competition from Oracle and others.

Where do customers fit in all this? Watching and waiting, I guess. Why hasn't anyone yet done a software industry reality TV show? There's so much good material to work with!

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