Henning Kagermann isn't your typical button-down executive. With his penetrating blue eyes and Einstein-like mop of silvering hair, the CEO of German software giant SAP (SAP ) looks more like the theoretical physics professor he was until age 35 than a globe-trotting business leader. He even has a well-known taste for heavy metal music.
But don't be misled. Kagermann, 56, who became SAP's sole CEO in May, 2003, after sharing the job for five years with chairman Hasso Plattner, guided SAP through the dark days of the tech downturn with as much bottom-line toughness as any MBA. Now, with sales expected to head up again, by 4% this year and 9% in 2005, Kagermann can devote more time to his passion for new technology. SAP is the world's largest supplier of run-the-business software -- sales, accounting, manufacturing, and so on -- with tens of thousands of big corporate clients. But critics have faulted it in the past for plodding innovation. During the Internet boom, for instance, SAP took heat for being late to grasp the Net's impact. It scrambled to retool its software for browsers and Web servers and eventually emerged triumphant over dot-com rivals. Today, Kagermann says, "the waves of change are coming faster." SAP won't be fooled again.
That's why the cerebral CEO is pushing to get ahead of the next big trend in business software -- so-called Web services, which link disparate applications over the Internet into a single intelligent mesh. Microsoft Corp. (MSFT ), IBM (IBM ), and others are chasing the same idea with their own solutions. So Kagermann and his brain trust are taking an unusual and ambitious approach, launching software called NetWeaver that talks openly with everybody else's. "We're building what our customers want," Kagermann says. "They're going to choose different solutions, and we have to connect between them." With NetWeaver, which has already shipped to customers such as BMW, Whirlpool (WHR ), and Colgate-Palmolive (CL ), clients don't have to rip out existing technology or cast their lot entirely with one company. They can choose the systems they want and tie them together with SAP software.
SAP as the industry's conciliator: You could call that an innovation in itself. But with 70% of SAP's $8.8 billion in annual revenue coming from existing clients, Kagermann aims to keep customers happy. That's a far cry from the strong-arming used by some rivals, and investors like the strategy. SAP shares are up 50% from last year, outpacing the NASDAQ. Not bad for a rock-and-rolling physicist who found his life's calling pushing the boundaries of business software.