Culture differences as a barrier to SAP growth

The Wall Street Journal (WSJ) yesterday brought insight (subscription required) concerning the SAP AG internal affairs about globalization. This article puts more light to reasons of recent Agassi’s departure.

The story started five years ago when SAP as Germany's largest software company decided to begins to become less German. In terms of statistics: in year 2000, SAP employed 3900 software developers, 75% of whom were based in Germany. In 2006, the software development headcount increased to 8500, but only 60% were located in Germany. SAP adopted strategy in company language and English became official in every communication within company even meetings in headquarter – Walldorf. In terms of software engineering they started to adopt rapid product development approach instead of traditional methodical approach. Such changes have been droved by influence of former member of the Executive Board of SAP and the changes created a bit conflict situation in company. German’s employees started to be worried and they complained about “March of the Americans”. WSJ quotes one German manager: “It's clear Agassi would like to get as many functions as possible to the U.S.” What else had happed meanwhile? “In April 2006, SAP executives hosted a town-hall meeting in Walldorf on the "Americanization of SAP," where workers aired concerns over the increasing use of English and the hiring of engineers overseas. A few months later, a handful of SAP workers, including Mr. Schick, won enough support to start a workers' council, roughly equivalent to a labor union.”

Germans workers worried about to much and too fast global oriented company and US and other countries workers worried about too less and too slow in changes. SAP’s highest executives were trying to calm down both sides assuring to Germans hat they would still have jobs while saying to others that SAP is still committed to change.

They want to align all development groups worldwide “work hard, and impress them with content”. An example of dissimilarities is that Indian developers like frequent attention while Germans prefer to be left alone, or Americans might say "excellent" when a German would say "good".

Strategy to be more open to other markets and be cost comparative in today’s fast moving world is must for SAP and must to get this real if they don’t want to close the business. Strategy to be less German is right but is not so easy for every company.

- update on 27/05/2007 -

Shai Agassi's thoughts about WSJ arcticle is here.