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SAP’s Christian Klein To Serve As Sole CEO As Co-CEO Jennifer Morgan Departs

Company cites the current ‘unprecedented’ economic crisis for the decision to quickly move to a single CEO management structure.

Jennifer Morgan, one of SAP’s two co-CEOs since October, is stepping down and leaving the company as the giant software company opts for a single CEO management structure with current co-CEO Christian Klein in charge.

The move means that once again SAP will have a single CEO as it did for more than five years under Bill McDermott, who left SAP in October to take the CEO job at ServiceNow. Klein and Morgan were immediately named as co-CEOs upon McDermott’s departure.

SAP operated with a dual-CEO management structure between 2010 and 2014 when McDermott was co-CEO with Jim Hagemann Snabe, who left the company in 2014.

[Related: Intel To Supercharge SAP Applications In New Multi-Year Partnership]

In a statement issued late Monday, SAP said Morgan “mutually agreed” with SAP’s Supervisory Board that she will leave the company effective April 30.

The global COVID-19 pandemic and resulting economic downturn apparently precipitated the change.

“More than ever, the current environment requires companies to take swift, determined action, which is best supported by a very clear leadership structure,” the company statement said. “Therefore, the decision to transfer from co-CEO to sole CEO model was taken earlier than planned to ensure strong, unambiguous steering in times of an unprecedented crisis.”

“I am grateful to Jennifer for her leadership of SAP, including all she has done for the company, our people, and our customers,” said Hasso Plattner, one of SAP’s founders and chairman of the company’s Supervisory Board, in the statement. “This transition comes at a time of great uncertainty in the world, but I have full faith in Christian’s vision and capabilities in leading SAP forward toward continued profitable growth, innovation, and customer success.”

Klein has been with SAP since 2000 and was serving as the company’s chief operating officer when he was named co-CEO in October.

“It has been a great privilege to drive SAP’s growth and innovation in so many areas and most recently as Co-CEO,” Morgan said in the statement. “With unprecedented change within the world, it has become clear that now is the right time for the company to transition to a single CEO leading the business.”

Morgan had been with SAP since 2004. Before being named co-CEO, she was president of the company’s Cloud Business Group, overseeing the company’s Qualtrics, SuccessFactors, Ariba, Fieldglass and Concur products.

The management change at SAP came as the company announced the financial results of its 2020 first quarter ended March 31, including a 7 percent year-over-year increase in revenue despite a significant decline in software license sales toward the end of the quarter as the global economic slowdown hit.

SAP described business activity as “healthy” in the first two months of the quarter. “As the impact of the COVID-19 crisis rapidly intensified towards the end of the quarter, a significant amount of new business was postponed,” the company said in an earnings statement. “This is reflected, in particular, in the significant year-over-year decrease in software license revenue.”

Software license revenue in the quarter was 451 million euros ($489.3 million), down nearly 31 percent from 650 million euros ($705.3 million) in the first quarter of 2019.

On the plus side SAP said that “predictable” revenue – recurring revenue from cloud software and software support – accounted for 76 percent of total revenue during the quarter. SAP has been aggressively transitioning to a cloud software model instead of traditional software license sales.

Cloud software revenue in the first quarter was 2.01 billion euros ($2.18 billion), up more than 29 percent from 1.56 billion euros ($1.69 billion) in the same quarter one year ago.

Total revenue for the quarter was 6.52 billion euro ($7.08 billion), up 7 percent from 6.09 billion euro ($6.62 billion) one year before. After-tax profit for the quarter was 811 million euro ($881.1 million) compared to a 108 million euro ($117.4 million) loss one year ago.

SAP said it incurred a cost of approximately 36 million euro ($39.1 million) for the cancellation of its in-person Sapphire Now conference, originally scheduled for May, and other customer events.

The company said it has moved quickly to implement “a virtual sales and remote implementation strategy” to allow the large majority of its employees to work from home during the COVID-19 crisis and maintain “its focus on current customers and the addition of new ones,” the company said in its earnings statement.

Earlier this month SAP took steps to aid its more than 21,000 channel partners amid the economic downturn, offering partner program level protection, flexibility in using market development funds, and subsidies for training and certifications.

SAP expects total non-IFRS revenue for all of 2020 to be in the range of 27.8 billion euro ($30.22 billion) to 28.5 billion euro ($30.98 billion) at constant currencies.

 

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