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SAP Development Chief Leukert to Make Software More Lego-Like

SAP AG (SAP) veteran Bernd Leukert, thrust into the role of development chief this month after the surprise departure of Vishal Sikka, says the German software giant’s products should resemble those of toymaker Lego AS.

SAP applications need to be shaped around building blocks rather than a “monolith” to let customers tailor to their needs, Leukert said at a press event today in Walldorf, Germany. SAP’s next key goal is to broadly proffer the Business Suite -- its mainstay product -- over its home-grown fast-running database called Hana, he said.

“Technology alone doesn’t suffice,” Leukert said, a week after he was appointed to SAP’s executive board. “We can’t just get into the cloud and say we’re successful.”

Leukert, who has worked at SAP for 20 years, will lead an 18,000-strong team of developers behind the back-office and sales software used by its more than 250,000 clients. Competition is getting stiffer from Salesforce.com Inc., Oracle Corp. and Workday Inc. for applications companies use to manage everything from their workforces, factories to accounts.

As more companies want online programs they can access anywhere, SAP is modernizing its applications and using Hana to lure customers from Oracle. The German company on April 17 reported first-quarter sales and earnings that trailed analysts’ estimates as it reckons with the costs of the industry-wide shift.

Central Platform

“We’re developing all applications for the cloud,” said Leukert. “We want to remain open,” though Hana is the “central platform” that will free up time for customers by automatically updating more portions of SAP systems, he said.

Co-Chief Executive Officers Bill McDermott and Jim Hagemann Snabe presided over four years of expanding sales and operating profit, partly helped by acquisitions, including cloud-based human-resources software maker SuccessFactors Inc. SAP’s stock has climbed 67 percent since the duo took over in early 2010. Snabe will relinquish the co-CEO position next week to join SAP’s supervisory board.

Yet, with SAP’s shares down 10 percent this year, there are signs that investors are worried about how the company will cope with recent management changes. Sikka’s departure was announced in a Sunday night press release on May 4, weeks before McDermott is set to become sole CEO on May 21 and the company’s annual customer conference in Florida next month. SuccessFactors CEO Lars Dalgaard left last year to join a venture-capital firm.

‘Key Man’

“He put himself up as the key man for Hana,” Josh Greenbaum, an analyst at Enterprise Applications Consulting, said of Indian-born Sikka, who is based in Silicon Valley. His leaving harks back to the 2007 departure of Shai Agassi, another foreign-born technology whiz who tried to make SAP’s software more compatible with the Internet, Greenbaum said.

At the opening of a new development center near Berlin in February, SAP co-Founder and Chairman Hasso Plattner launched into a long soliloquy from the stage about the self-reinforcing power of Silicon Valley to create wealth, and other regions’ inability to replicate it. SAP, the 70-year-old said, would do well to take a page from Google Inc.’s playbook of using its strengths to fund new ventures.

“We have to move this franchise forward,” Plattner said at the time. “This is what I would like to see -- that we do some crazy things.”

Without Sikka and his strong hand in Silicon Valley, Plattner’s plan has become a little harder to execute.

To contact the reporter on this story: Aaron Ricadela in Walldorf, Germany at aricadela@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Kenneth Wong, Robert Valpuesta

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