The Youngster Who's Out to Energize SAP

By Steve Hamm This drama features Shai Agassi, a 34-year-old Israeli who started no fewer than four technology companies in the 1990s. In April, after playing the role of entrepreneur-in-residence at German software behemoth SAP for a year, Agassi was appointed to its executive board -- the first non-German to land there and by far the youngest among a sextet of graybeards who run the 30-year-old company. Agassi, with the title executive board member, now heads SAP's 1,500-person Collaborative Solutions Business Area, based in Silicon Valley, which includes its portal, e-marketplace, and collaborative software products.

While the businesses he oversees represent less than 5% of SAP's roughly $1.6 billion in quarterly sales, they're being counted on to eventually provide a lot of future growth. SAP leads the world in sales of basic applications for corporations, with a dominating 36% share, according to AMR Research. But that's a mature market, growing at about 1% a year.

Agassi's business "is a major investment area," says Henning Kagermann, Co-CEO of SAP. "These are areas where we can generate additional revenues. We think it will pay off -- breaking even in one to two years."

CUTTING ACROSS LINES. SAP co-founder and co-CEO Hasso Plattner has long been the resident visionary, but now that role is being shared with Agassi. His vision: to create a new generation of software for corporations that he calls "event-based" applications. Unlike SAP's core products, which automate specific functions such as finance, human resources, and materials planning, the new software is being designed to cut across many of these functions at the same time.

A half-dozen of this new generation of products, called xApps for cross-functional applications, are in the planning stages. This year, SAP plans to introduce software for managing corporate projects such as product development from start to finish and for managing relationships with multiple suppliers. Next year, it plans to launch products for managing mergers and handling relationships with employees.

All of these are based on standard Internet technologies. That makes it easier to pull information and data from multiple sources, such as a customer relationship management or human resources databases, and integrate the functions of a wide range of applications. Instead of being monolithic pieces of software, both SAP's existing software products and its new xApps will be components that can be mixed and matched.

SOFTWARE'S GM? "This is going to be like the auto industry, when standards emerged and manufacturers could pick parts from different suppliers," says Agassi. "We intend to be the GM of software."

That's if Agassi can thrive inside SAP and convince a long-established organization to do things quite differently. Even Agassi has his concerns. When he took the new job, for the first time in 12 years he wasn't the CEO of a company. "I felt like a deer in the headlights. I was afraid of taking risks," he says. "But then I realized that if I don't take risks, my whole value goes away."

He kept pushing for the new generation of applications, which were first explained to customers at SAP's annual user conference in June. Going forward, he expects to be SAP's "contrarian" -- offering the outsider's view.

APPETITE FOR RISK. Until now, when it came to encouraging entrepreneurship, SAP had tried to have it both ways. The company operated two wholly owned but independent subsidiaries, SAP Portals and SAPMarkets, designed to act like Silicon Valley startups and focus on new markets. Agassi came to the party in March, 2001, when SAP paid $400 million for his corporate portal software company, TopTier Software -- later renaming it SAP Portals. In January, 2002, the two subsidiaries were combined, and Agassi took charge as CEO.

Now he's in the belly of the whale -- but people who have worked with him say they believe he can keep the risk-taking spirit alive inside SAP. "Shai is in a strong position," says Peter Graf, vice-president for market strategy in Agassi's business area. "The fact that he's on the executive board shows how important this is to SAP. We hope we can become the catalyst to keep the strategy going inside."

For Agassi, being closer to the center of power is vital. He wants to have a sizable impact on the tech world. In the current harsh environment, corporations are less willing to take a chance on a startup and are turning to large, well-established companies as their trusted suppliers. "Being inside a large company gives you the ability to build things on a much larger scale," Agassi says. "You can't make sea changes in a startup anymore."

FAMILY TREE. The situation was dramatically different in Agassi's early days in business. When left college in 1990, on the eve of the Gulf War, he started up one tech company after another in partnership with his father Reuven Agassi, a former Israeli Defense Force colonel and telecom company executive. First came QuickSoft, a software distribution company, followed in 1992 by TopTier, and then TopManage, in 1993, which sold applications for small businesses. Finally, in 1994, multimedia software company QuickSoft Media was born.

Technology came naturally to Agassi. He remembers writing little computer programs in Fortran, a mainframe language, starting when he was seven years old. "Programming was the ultimate sandbox. You could control things and build things," he says.

But sometimes he got a little distracted -- and paid a price. Once, when he was 18 years old, he was daydreaming while he walked near a highway and veered into traffic. He was struck by a van and suffered a complex break to his right leg that required four surgeries. That leg is now an inch shorter than the left and causes him chronic back pain.

"A DIFFERENT COUNTRY." That's the only obvious scar that Agassi carries with him through life. Despite his Jewish heritage, he felt no discomfort when a German company approached him about an alliance, and, later, a merger. Recalls Agassi: "I said, 'We don't have a problem. It's two generations after.' You're doing business -- it's a different country now."

Agassi's family came to Israel from Iraq when Israel declared its independence. He grew up in Ramat-Gan, a suburb of Tel Aviv, which is notable for being the place where many Iraqi SCUD missiles struck during the Gulf War. They were aimed at Tel Aviv, but missed. These days, Agassi lives in much safer environs, in Silicon Valley, where he moved in 1996. His wife, formerly general manager of QuickSoft Media, takes care of their two young sons.

He still has a family connection in the software world. Agassi's father remains general manager of TopManage, which SAP bought in March. Soon, the world will see if father and son can do for SAP what the other Agassi, Andre (no relation), did for tennis -- shake it up. Hamm writes about technology for BusinessWeek from New York

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