AT SAP, A NEW CHIEF AND A NEW COURSE

August 25, 2008
Financial Chronicle

Speaking at a technology conference in Las Vegas in February, Kagermann seemed to suggest that SAP would achieve a 35 percent operating margin quickly, an utterance that sent its stock up sharply, surprising SAP officials. So in May, executives seized on the subject at Sapphire, SAP’s annual analyst conference, and people who attended said Apotheker gave a full-throated endorsement of the goal of higher margins.

Knut Woller, a software analyst at UniCredit in Munich, said the novelty of having a numbers-oriented executive like Apotheker at the top had electrified SAP watchers eager for a trimmer company. ‘‘Apotheker will make it more about sales, simply by virtue of the reason that SAP has to compete,’’ he said.

Kagermann has also left his successor a good amount of wiggle room, analysts said. By promising to reach a margin of 35 percent ‘‘in the medium term,’’ he is saying it could take as few as three years, or as many as six, while still dangling a juicy target in front of analysts.

‘‘There is no fundamental reason not to achieve it,’’ Kagermann said.

The man who transitioned from professor of theoretical physics in the fairytale town of Heidelberg to market-moving executive no doubt has more cunning in him than simple labels let on.

With his swoosh of wavy gray hair and narrow, rimless eyeglasses, Kagermann, 61, conveys the impression of a mad scientist, though his genial, informal manner keeps him approachable.

Whether talking profit margins or the future of software development, Kagermann rocks back and forth in his chair, often blinking furiously, as if to convey the point that no thought worth having should be pondered lightly.

Kagermann joined SAP in 1982 as a software developer, working out of what is now Building 6 on an enormous company campus that looms over the village of Walldorf, outside Heidelberg. The work force has exploded from about 100 then to over 51,000 now.