Chapter 18: Post-Merger Integration

Merging startup agility with corporate scale is no easy feat. This chapter uncovers the delicate balance of preserving culture, driving innovation, and navigating corporate challenges.

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Transcript

About 30 minutes later, Mark called. He had news to share.

Having gone through the Hybris acquisition, Mark knew best what to expect for the weeks and months to come. Last time around, he had stayed on at SAP for another three years and climbed further to become the Chief Revenue Officer for one of SAP’s big product areas. 

This time, Mark didn’t intend to stay long after the acquisition. He had been there, done that and wasn’t eager to repeat it. He had already shared that with me throughout the acquisition process. He would, at least, ensure a smooth initial integration. Before the closing, we agreed he would stay until the end of the year, for another nine months.

Now, less than half an hour after the closing of the transaction, he told me that he changed his mind. He would take a couple of months off over summer and focus on other things in life.

He wanted to stay for three weeks only, in order to finish the quarter. From April 1 onwards, he would be gone.

I was speechless and disappointed. After four years together at Signavio, Mark had just pulled the plug within minutes.

Later that afternoon, we hosted an All Hands call with the Signavio team to celebrate the closing of the transaction. We shared that we were now officially part of SAP and could finally start working on the integration. We hadn’t prepared any messaging around Mark’s departure yet and I didn’t plan to talk about it. We stumbled into this topic nevertheless, as Mark just mentioned it on the call. It was an awkward moment.

Many colleagues wondered; Does the team already start falling apart on the first day of the integration? It wasn’t a good look from our side. 

I wanted the integration to be successful and Mark’s sudden departure sent an awful sign to the team. Also, I enjoyed working with Mark and would have loved to continue that a little longer.

Rouven reassured me that we would be okay without Mark. He believed we had a strong backup candidate who could fill the gap effectively. I hoped he was right and I put it out of my mind for the time being.

Rouven’s business process intelligence team comprised around 100 employees, and we were now merging our organizations. A key goal was to integrate into the broader sales machine of SAP to accelerate revenue growth.

In the weeks prior, Rouven and I had agreed to co-lead the integrated unit. It was somewhat unusual for me, having been the CEO, to share leadership responsibilities. But I felt comfortable with the arrangement due to Rouven's deep understanding of SAP's inner workings.

Luka Mucic, the SAP CFO, was now Rouven’s and my boss. We were positioned under his board area in an "incubation setup" to keep Go-To-Market and Product and Engineering closely aligned at the start.

My role had predominantly revolved around Go-To-Market in recent years. I had a strong passion for sales and shaping our marketing narratives. I was also deeply involved in establishing various other Go-To-Market practices at Signavio.

In Rouven’s eyes, I was seen primarily as the product guy. Indeed, my background in software engineering and love for product innovation supported this view, although I had often delegated responsibilities to Willi and Ron.

I also hoped that sharing Go-To-Market responsibilities with Rouven might lighten my workload, especially after Mark’s unexpected departure.

We immediately merged the sales teams to maximize market impact. However, for Product and Engineering, we decided to keep the Spotlight team separate from the Signavio team temporarily. This was to ensure that the initial market launch of Spotlight went smoothly. Meanwhile, the Signavio team was focused on achieving the “Acquire-to-Ship” (ATS) milestone, which involved onboarding to SAP product standards and processes within a few months.

Fortunately, we maintained continuity in Product and Engineering. Willi continued as CTO and Ron as Chief Product Officer for the combined Signavio and business process intelligence team.

Our finance, HR, and internal IT teams were integrated into SAP’s respective central functions but remained dedicated to SAP Signavio for the time being.

Daniel, having been pivotal in much of the integration work, found his role as CFO becoming redundant. One day, he expressed his frustration over having too much free time and missing the challenges of startup life. He was keen to move on and find another startup in need of a CFO. While it was hard to see him go, I understood there was no future role for him here, and I supported his decision to seek new challenges.

Rouven and I talked every day. He helped me understand how SAP worked and I helped him understand Signavio and the market we operated in. As part of the integration project, there were a thousand things to consider, an endless list of workstreams and decisions to get through.

For some aspects, we arrived at SAP at snail’s pace. IT access was a real pain in particular. We had merged teams now but they couldn’t see each other’s calendars or collaborate on a Sharepoint document easily.

A friend of mine and long time SAP employee joked one day: “Post merger integration means that corporate IT comes to your office, installs new Wi-Fi routers and then your Internet is ten times slower.” This is actually not what happened, but IT infrastructure was heavily impacted by the integration for sure.

For other aspects, we arrived at SAP at lightning speed and I had to learn how to fit in. For example, Sapphire was SAP’s most important flagship event and it came up shortly after the transaction. We needed to fiddle the Signavio story in there somehow.

At one point, I was very frustrated that Signavio wouldn’t get the presence I had hoped for. Therefore, I intended to pull Signavio out of Sapphire completely and focus on our own events instead. Good that Rouven held me back. No way to pull out of SAP’s most important marketing event - especially when you are the new kid on the block.

My message to the team was: We want to integrate fast and deeply. For 80% of our processes, we adopt the SAP standard, for 15% we keep our own way and for 5% we try to take SAP’s standard to the next level. The only tricky question was: what bucket should each process fall into?

Of course, our colleagues were very proud about how we did things. How we ran 360 degree feedback, how we tracked employee engagement, how we ran customer success management and how we supported our customers. We had built an operating model that had produced the success of Signavio so far and I could very well understand that people didn’t want to give it up easily.

We did a detailed analysis and compared the SAP way of working with ours. Some changes were obvious and unavoidable. For example, it was clear that we move away from our ERP and CRM systems and move in with SAP’s central platforms. Other areas were less obvious. For example, should our customer support move over to SAP’s processes and systems, or should we rather stay independent?

My support team insisted that their way was much more effective and provided a better experience for the customers. I still decided to move to the SAP standard. The positive result: within a few weeks, we could increase our support coverage from a few hours to 24/7, because we could suddenly leverage additional support locations and onboard new colleagues from across SAP easily. But also, it became much harder for our customers to issue a support ticket.

There were also many small things I needed to adjust to. At Signavio, my day was only 30% filled with meetings. I had most of the time for spontaneous conversations, for actual content work, for research and innovation, and for just wandering around and bumping into people. Now, my calendar was 100% filled with meetings and every conversation I wanted to have needed to be scheduled well in advance. I was suffering from at least 30 context switches every day, having to jump into all kinds of topics for a couple of minutes each.

I was also surprised by the large number of people that participated in most calls. At Signavio, I used to say: Every meeting with more than four people can be considered an All Hands call. At SAP, the number of people in a meeting was just insane.

Then, the executive board members. These colleagues were perceived as half-gods by many and every word they said was taken very seriously. I couldn‘t stand the name dropping, as if throwing in a board member’s name made an argument any better. But what I absolutely hated were the fire drills: A board member asked something and suddenly my SAP colleagues felt they needed to get all hands on deck and adjust strategy overnight. Luckily, I could convince Rouven that we must run our unit at our own pace. For the most important decisions, we run an annual strategy cycle. If that meant for the board members that they needed to wait for a certain decision for a couple of months, so be it. We would only focus on doing the right thing and aim for maximum momentum, not maximum distraction.

Every organization has their vocabulary and at SAP, names of managers were often synonymous with a certain topic. “Karl Fahrbach’s organization” was the synonym for partner management, “Georg’s team” was M&A, and “Julia” was marketing. In the beginning, I required a cheat sheet to make sense of who meant what in the company. Only months later, when the first physical events came back, I met Karl, Georg, Julia, and all the others in person and could start to visualize how things related within SAP.

Don’t get me wrong. There are always little things that are different - and kind of awkward - when you join a new organization. All in all, arriving at SAP actually felt like candyland.

There were many topics where Signavio had been too small to handle them well or where we lacked the focus. Launching a new country? Easy, everything is in place already. A compliance issue? There is a team to handle that very professionally. Sustainability considerations? SAP has the best possible reporting and arrived at net zero already. Diversity and Inclusion efforts? SAP has employee groups left and right and a D&I program that makes other companies envious. Employee benefits? SAP has them all in place already, including walk-in Covid vaccinations for employees.

We could truly focus on building a great product, bringing it to market with full steam and expanding our team along the way. 

“Gero, how is it to go from startup to corporate environment? Isn’t that a shock?” People often asked me.

No, it wasn’t. At Signavio, we grew and changed like crazy all the time, this was just yet another step in our evolution. And I was granted more autonomy at SAP than I had at Signavio. I could focus more on the topics that mattered most and I did not have the scrutiny and close oversight like I had with my financial investors.

With my investors, I had to beg for every new engineering team. I had to show the commercial impact within less than two years. At SAP, we increased our development team from 150 people to more than 800 in three years. No financial investor on the planet would have allowed that.

Yes, delivering a good quarter-by-quarter performance is important at SAP, too. But what matters even more is where you can take things over the next 5-10 years. The level of trust by the SAP board is incredible, as long as you are navigating on your path reasonably successfully.

And success became our second name. Business started to boom like crazy. Rouven did a phenomenal job to inject us in the SAP sales machine. Sales pipeline started to increase massively. It was like drinking from the fire hose.

While integrating into SAP felt very good for me, many people from the outside assumed it would be horrible. Over and over again, people asked me: “Gero, now that you sold your company, when are you finally leaving SAP?”

I didn’t have any contractual obligation, nor any financial incentive to stay.

Yes, I mentioned to Jürgen that I planned to stay for at least two years because I wanted to make sure that integration is indeed successful. He had asked me what exactly he could write to the supervisory board during the acquisition process. 

Out of fun, I suggested: “Jürgen has the right to cut off Gero’s little finger with a rusty ax if he stays for less than two years.” I would have loved to be in the room with the supervisory board when that suggestion was discussed.

But back to the question. At some point, with all those people asking all the time, I wondered whether there is indeed something wrong with my perception here at SAP.

I decided I wanted to take an objective, data-driven approach to this question to avoid fooling myself. I reflected on what motivates me every day and, thanks to the Georgina exercise a year prior, I could spell it out easily: Did I learn something today? Did I achieve something great today? Did I waste time today? Did I have enough time for myself today?

From now on and for many months, I noted down a score for each of these four questions, from 1 being the worst and 10 being the best score, every day of the week. I called it my “daily sentiment tracker”.

I was committed to learning and adapting my work environment to improve my daily experiences. Each day, I diligently recorded the highs and lows, noting them down as keywords. This routine allowed me to observe emerging patterns over time, providing clear insights into what was working well and what wasn’t.

From this data, I made adjustments to focus more on activities that yielded positive outcomes, such as speaking in front of large audiences or traveling to new destinations. These were the kinds of engagements that energized me and contributed significantly to my satisfaction and effectiveness.

Additionally, I actively sought to reduce activities that proved less fruitful or unnecessarily time-consuming, like getting bogged down in minute operational details. By minimizing these less productive tasks, I could allocate more time and energy to the aspects of my new role that were not only more satisfying but also more impactful.

I promised myself that if my weekly average score drops below 5, I would leave SAP. Instead, my scores hovered around 8 most of the time. I just had a good time.

It also helped to have an “Executive Office”, something I didn’t have previously. Before the acquisition, I scheduled most meetings myself, responded to all emails myself, cared about administrative approvals myself and prepared my presentations and customer meetings myself, too. Now at SAP, I enjoyed the full service. 

I hate working through emails. I really do. Sometimes I even ignore my inbox for several days. Now, with all that help from my assistant Stephanie and the rest of the team, many things were already taken care of without me interfering.

Over time, I got better and better in delegating tasks to others. For most of it, they were more knowledgeable and passionate about it anyways.

Our sales leaders found the transition to the new environment particularly challenging. The structure of sales at SAP was significantly different from what they were accustomed to at Signavio, often describing it as "living in the matrix."

At Signavio, our sales structure was straightforward: we had distinct regions each led by a regional head, followed by sales teams, and finally, individual sellers who managed customer relationships from start to finish.

In contrast, SAP operated with multiple product groups, each supported by their own specialist salesforce. Additionally, there were generalist sellers who managed customer accounts across all products. The organization even separated license sales from services sales - a division I found perplexing. This setup led to a complex web of roles and responsibilities all interacting with one and the same customer.

The matrix structure meant that any given customer opportunity involved a substantial team, comprising colleagues with differing interests.

At Signavio, a seller’s primary job was to convince the customer of the fit between our product and their challenges. However, within SAP's matrix, sellers also had to convince the generalist seller that our product deserved prioritization among the plethora of options SAP offered. For instance, if a customer was in the midst of acquiring a substantial ERP package, the generalist seller might prefer to avoid any distractions or delays to that deal.

It wasn’t long before Ian Pollard decided to leave the team. As someone deeply rooted in startup culture, he preferred working in a smaller company environment. Gerrit also began to lose his motivation over time. Although he had built and cared deeply for his team, the new operational mode at SAP did not resonate with him. Fortunately, he did not depart immediately, giving us several quarters to arrange a proper handover.

Torben was the one co-founder who really thrived after the acquisition. Interestingly, he wasn't involved with SAP Signavio in any direct capacity, but he had discovered a new passion in the meantime.

After exiting in 2016, Torben initially experimented as a business angel investor, focusing primarily on software startups. Over time, however, he shifted his interest to a field he found more thrilling and meaningful: climate tech.

It always struck me as somewhat ironic that Torben, of all of us founders, would develop the most intense passion for saving the planet. He was known for riding his motorcycle across Europe and spending weekends racing fast, gasoline-powered cars. Yet, he became the most devoted one to addressing the climate crisis. He decided to dedicate the majority of his time and resources to helping solve this immense challenge.

"Realizing how viciously fast the carbon clock was actually ticking became my trigger to think about how I could drive positive change in the most meaningful way.” Torben said, “With my angel investments I had seen that the next generation of entrepreneurs actually benefited from an eye-level sparring with someone who had built a company before. And climate research is pretty clear about the fact that today we only have sufficient technology available to tackle roughly half of all GHG emissions we actually have to fix. So it became my mission to find, finance and accelerate early-stage breakthrough innovations in climate tech to fix the other half of the emissions pie." 

These innovations would need to include transforming coal power plants into geothermal ones, developing scalable methods for producing sustainable aviation fuels, capturing carbon from the atmosphere at ultra-low cost, establishing scalable battery recycling systems, and many more. Many of these innovative solutions were still at the seed stage, being developed by companies that needed to demonstrate that their prototypes could work outside lab conditions and be scaled up to meet commercial demands.

Torben helped to establish a new venture capital firm based in Berlin, called Extantia Capital, which focuses on early-stage climate tech companies across Europe. From now on, he managed investment transactions and worked with the entrepreneurs. He shared with me: “At Extantia, we realized we were onto something and our actual lever was to mobilize substantial amounts of traditional institutional capital and to channel it into climate investing. There is a lot of money in this world, it just needs to be deployed for the right causes. Ever since, we have been working on our first billion in assets under management for high-impact investments.”

As the SAP acquisition was finalized, Torben persuaded us co-founders, along with a number of key Signavians, that investing a significant portion of our earnings into climate tech was the right move. He, too, had profited considerably from the acquisition - remember that he reinvested in Signavio during our emergency Series B when we needed it most - and he committed to channeling most of those funds into combating the climate crisis.

Torben had found his new mission and was executing his plan. Personally, I was still deeply involved operationally at SAP Signavio and cherished any spare time I could spend with my family.

Inspired and led by Torben's dedication, myself, Willi, Nico, and Gerrit collectively decided to invest over €50 million euros with him to help fight the climate crisis.

The influx of new money from the acquisition didn't significantly change our family's lifestyle. Karolina continued to manage her fintech company, finmarie, full-time. I remained deeply involved with SAP Signavio, and we lived in the same house, with our kids attending the same public school nearby.

Karolina’s mission with her company has always been a point of pride. “I started finmarie to address a gap I saw in financial education for women,” she explained. “We don’t just manage wealth; we empower women to take control of their financial futures - from budgeting to picking the right insurance all the way to investing in stocks or even alternative assets like angel investments.”

“When I started, it was just me and a few team members,” she continued. “Now, we’re a profitable company with investors and a platform that’s making a real impact. It hasn’t always been easy, but the vision has always been clear.”

Karolina’s ability to build finmarie while managing our family is something I deeply admire. Her work ethic and the personal touch she brings to her company mirror the values we’ve always shared; perseverance, trust, and doing something that matters. She even went as far as creating a non-profit for financial education in schools. With Schulgold they teach kids and teens how to manage their pocket money and introduce them to concepts of finance.

One day, during an SAP info session which I joined from my car, a colleague curiously asked, “In which car are you sitting, Gero?” He was picturing a successful startup founder driving luxurious sports cars like Porsches or Ferraris. I chuckled and informed him that I was in my old Volkswagen Passat.

This revelation seemed to strike a chord with many on the call, and I received a flurry of private messages afterward. Colleagues expressed their admiration, finding it refreshingly cool that I still appeared to be “normal” despite the financial success. I must confess though that I have since upgraded my car. But it did not reflect a dramatic shift in how we as a family valued and used our resources.

At SAP Signavio, we faced several significant challenges that needed to be addressed. The Go-To-Market teams had merged smoothly and adapted quickly to the new work environment, but we had two major milestones looming on the product side that required our immediate attention.

First and foremost, we needed to manage the Acquire-to-Ship process for Signavio products, which involved integrating SAP’s security standards and release processes. For the On-Premise version of Signavio, we implemented an Acquire-to-Decommission strategy. This defined an end date for all On-Premise deployments and established a clear migration path for customers still on those platforms.

Another key objective was to launch Process Insights, formerly known as Spotlight. This product was revolutionary, offering capabilities that didn’t exist anywhere else in the market. Unlike traditional Process Mining, which involves collecting raw data on the activity level, reconstructing event logs, and then querying these logs, Process Insights provided a broader and faster scan of process landscapes. It started with a vast catalog of process performance indicators across numerous business processes and directly fetched data per indicator. This approach allowed it to quickly generate a heatmap indicating areas where a company was performing well and areas that needed improvement. Detailed Process Mining analysis would then be used to delve deeper into the most promising opportunities for improvement.

Launching a new product is invariably challenging. I often reminded the teams that "if you are not embarrassed by your first release, you have shipped it too late," a notion inspired again by Ben Horowitz. Despite this philosophy, our development colleagues were under considerable stress to deliver a product that was more than just minimally viable.

The general availability release of Process Insights turned out to be an overwhelming success, exceeding our expectations in both customer adoption and revenue generation.

Along the way, we had to make some tough decisions, including reducing the project’s scope by eliminating the user behavior mining component. The most significant compromise, however, was organizational. We decided against merging the Process Insights development team with the broader SAP Signavio development organization immediately. It eventually took another three years to fully integrate these teams.

The internal momentum within SAP gave us a significant advantage and led to impressive growth in 2021. We surpassed all of our targets with ease. The fact that we sold more Signavio licenses than SAP had previously sold with Celonis in a given year served as the ultimate validation that acquiring Signavio was a sound decision.

We passed €80 million euros in ARR - despite having adjusted to the more rigorous SAP accounting standards - and grew the SAP Signavio Go-To-Market and Product and Engineering team to almost 700 employees.