SAP Announces Leadership Changes Alongside Strong 2024

SAP’s FY2024 earnings call, while highlighting the company’s strong performance, was also used to announce multiple leadership changes.

Months after the departures of Chief Marketing and Strategy Officer Julia White, Chief Revenue Officer Scott Russell, and Chief Technology Officer Juergen Mueller, SAP has announced a new leadership structure in its FY2024 earnings call. Amid the departure of three SAP Executive Board members last year, it is surprising that only one new position has been created. This is for a new Strategy and Operations board area which will be led by Sebastian Steinhaeuser. Steinhaeuser, who will become SAP’s Chief Operating Officer on February 1, joined the company in 2020 as the Chief of Staff to CEO Christian Klein, and became Chief Strategy Officer in 2021. Prior to joining SAP, Steinhaeuser worked in multiple roles at The Boston Consulting Group.

While Steinhaeuser is the only new member of the Executive Board, SAP announced multiple other leadership changes. This included appointing Philipp Herzig as global CTO in addition to his existing role as Chief AI Officer, as well as Jan Gilg and Emmanuel (Manos) Raptopoulos who will jointly lead SAP’s Customer Success organization as co-Chief Revenue Officers. Raptopoulos, currently the regional president of SAP EMEA, will manage the SAP EMEA, MEE, and APAC regions. Gilg, currently president and chief product officer for Cloud ERP, will oversee SAP Americas and the Global SAP Business Suite. Both Gilg and Raptopoulos are long-time SAP employees with nearly twenty years of experience with the company. Gilg, Raptopoulos, and Herzig will all report to Klein.

Although no additional new leadership positions were announced today, SAP did confirm that Ada Agrait will continue as Chief Marketing Officer, a role she has been filling on an interim basis since White’s departure. Agrait, along with Herzig, Raptopoulos, and Gilg will all be part of a new Extended Board which will act as a strategic advisory body for the company. Other members of the Extended Board will include Michael Ameling, General Manager for SAP BTP, Sebastian Behrendt, Head of Global Finance, Thomas Pfiester, Head of Global Customer Engagement, and Monika Schaller, Chief Communications Officer. The General Manager for Business Suite will also be part of the Extended Board once that position is filled.

The goal of the Extended Board is to create a diverse team that can scale the reach of the Executive Board, discuss a broad range of portfolio topics, and act as a strategic advisory body that will assist in driving the company’s AI-first, Suite-first strategy. In speaking about the Extended Board’s role during the earnings call, Klein emphasized that the Executive Board has been in discussion with the Supervisory Board and has looked at the way other technology companies run.

Financial Performance

SAP also had a very strong fourth quarter resulting in an exceptional FY 2024. The headline was that the company met or exceeded all their financial outlook parameters for the year. This included a 32% increase in current cloud backlog to €18.1 billion, a 43% increase in total cloud backlog to €63.3 billion, a 25% increase in cloud revenue to €17.1 billion, and a 10% increase in total revenue to €34.2 billion. In alignment with this performance, SAP also saw a 28% increase in non-IFRS cloud gross profit to €12.6 billion, gross profit by 11% to €25 billion, and operating profit by 25% to €8.2 billion. Based on these performances SAP have raised their 2025 outlook.

SAP highlighted a particularly strong cloud performance in APJ and EMEA. While some of this is because these regions have lagged in cloud adoption compared to Americas, they are now catching up. But this highlights SAP’s success in accelerating cloud adoption in every region with cloud revenue in APJ and EMEA increased by 37% and 31% respectively compared to 19% in the Americas.

Impact of AI

SAP does not separate AI performance metrics as it is embedded in every solution the company offers. However, Klein highlighted that AI use cases are now embedded in 50% of deals and that 34,000 customers are now actively using AI. SAP also sees agentic AI at the nexus of business and technology and a continued investment area that will be a major factor total revenue acceleration.

Part of SAP’s confidence stems from the strategic approach SAP is taking toward AI. Klein stated that SAP is committed to building the strongest foundation for businesses which require access to both unstructured data and business data. This is achievable by embedding and delivering AI out-of-the-box, a capability that, Klein emphasized, cannot be achieved with on-premise solutions. This is because SAP recognizes that no single LLM fits all use cases. By maintaining an agnostic approach, SAP identifies and integrates the most suitable AI technology for each specific scenario. This flexibility allows them to prioritize customer needs, leveraging the best AI solutions to deliver optimal outcomes.

What This Means for SAPinsiders

SAP withheld announcing these changes to  ensure a strong 2024-year end. With this achieved, SAP is now moving forward with multiple leadership changes, including a return to having two Customer Success leaders who report to the Klein. SAP previously had a similar organization structure when Jennifer Morgan and Adaire Fox-Martin both reported to Bill McDermott. The difference is that both Morgan and Fox-Martin had a strong history in sales. While that is true of Raptopoulos, that does not seem to be the case with Gilg. Although Gilg has been very successful leading Cloud ERP, it remains to be seen whether that success can be emulated in his new role.

However, SAP has not commented on some of the existing regional sales leadership. While some will retain their roles, changes at the top often trigger a ripple effect as new leadership brings in familiar and trusted team members. It is also possible that SAP is reshaping its sales leadership to align with SAP’s “AI-first, Suite-first” strategy, departing from a more traditional sales model. Given that SAP needs continued cloud growth to be successful, this will be a priority for the new sales organization.

While some disruption in sales is expected as the leadership transition occurs, there will be minimal impact on deals already in progress. A stronger emphasis on the Global SAP Business Suite and the AI-first approach is the most definite approach that SAP will take. While the exact components of the Global SAP Business Suite remain unclear, SAP’s decision to appoint the new General Manager for Business Suite to the SAP Extended Board shows that this is a priority for the company. This development could tie into SAP’s planned announcement for February 13th, which CEO Christian Klein described as “the next breakthrough innovation.” With 2025 being heralded as “the year of data,” it’s likely this announcement will shape SAP’s strategic direction in the years ahead.

One area that may be of concern to both employees and customers in the Americas is the lack of regional representation in new leadership positions. Since Klein became sole CEO there has been a swing towards a greater German representation on SAP’s Executive Board, something that is now also reflected in the Extended Board. SAP has always had a back and forth between Walldorf and the US, with McDermott’s period as CEO perhaps being the furthest the company has seemed from its German roots. How this will play out remains to be seen, but Gilg will have significant work to do to build strong relationships in the region.

Given these changes, and SAP’s strong performance and ongoing focus on AI and the Global SAP Business Suite, what should SAPinsiders keep in mind?

• Focus on ERP transformation plans. Although Klein mentioned that 40% of customers had now started a transition, no additional mention of RISE with SAP or SAP S/4HANA adoption was made during the call. This leaves many customers still needing to determine a path forward. While SAP may now be offering an alternative that will allow customers until 2033 to complete a transition to RISE with SAP, it continues to be vital that organizations focus on ERP transformation plans.
• Expect a continued emphasis on business AI and generative AI copilot Joule. AI is having a significant impact on SAP’s bottom line, and SAP sees their approach as being a better one for SAPinsiders. Rather than acquire an AI company or LLM which may fit some needs but not all, SAP’s agnostic approach gives them the ability to use the best model for every use case. Customers are already starting to reconsider RISE with SAP based on the ability to access business AI, and this will continue to be central to everything SAP does in 2025.
• Concentrate on achieving internal goals. Changes at SAP can be distracting. Like any large company, SAP undergoes organizational changes every year with significant restructuring every few years. Do not let these changes distract from the goals organizations need to achieve. This may be a cloud transformation, replacing aging legacy systems, modernizing data and analytics, or making huge volumes of data relevant. SAP has the tools needed to support these goals, but organizations must remain focused on making that happen to ensure their own success.