SAP Leads Enterprise Software Market Worldwide (SAP)

SAP Ranks #1 Worldwide in CRM, ERP and SCM Markets, According to Latest Reports from Industry Research Firm

SAP Leads Apps Market (Line56)

Gartner numbers show SAP dominating the world of enterprise applications

SAP plans to remain independent, says chief (FT)

Henning Kagermann, chief executive of SAP, a German business software maker, believes consolidation in the sector has peaked and that big IT groups from the US are not planning to buy the market leader.

In an interview with the FT and sister paper FT Deutschland, Mr Kagermann tried to quell the excitement caused by Hasso Plattner, SAP chairman, who said recently a takeover of the company was always possible.

“I think we’ve seen the main thrust of consolidation. The next steps are going to be marginal,” Mr Kagermann said. The sector has recently seen Oracle, the number two, shell out billions for rivals such as PeopleSoft and Siebel.

The Californian company last year trounced SAP in a brief bidding war for Retek, a US maker of software for retailers, which would have marked the biggest transaction for SAP, a company otherwise focused on organic growth.

Instead of trying to buy big chunks of market share, SAP is betting on a new generation of software, launched last year, which is meant to give customers the flexibility to combine programs made by other companies.

“Our strategy of growing organically has proved successful even as other big players have gone together,” Mr Kagermann said.

“It’ll be enough for us to enrich our current portfolio with one or two smaller acquisitions.”
SAP has bought small companies including Tomorrow Now, which services Oracle products. But it has not been drawn into making significant further acquisitions, in spite of recent strong profits and a doubling of market capitalisation to more than €50bn ($65bn) in the past three years.

In spite of record growth since Mr Kagermann steered SAP from the wreckage of the technology bubble in 2003, Mr Plattner, a member of the company’s founding trio, said last month that a purchase by Microsoft, Google or IBM was possible. The remarks led to a rally in SAP stock as investors speculated about takeover premiums.

But Mr Kagermann said Mr Plattner’s remarks had been misunderstood and that the company would remain independent.

“These were single remarks made by someone who was in a good mood,” Mr Kagermann said. Mr Plattner was “constantly under observation” by a media ready to interpret every remark for “the last little bit of news”, he said.

Asked if he thought recent speculation that rivals could bid for his company in the foreseeable future was overdone, he said: “Yes, of course – not least because our customers want a strong, independent SAP.”

Such confidence is at least in part based on a notion that Oracle’s spending spree will cause it problems. Oracle recently revealed plans to overhaul its business offerings in the next few years.

“I thought they were going to announce that they’d put all their products together,” Mr Kagermann said.

“Instead, they’ve told their clients they’re going to rewrite all programs from scratch. That’s a hell of a task.”

Oracle Acquires Demantra (Line56)

Adding sophisticated demand planning to the overall Oracle portfolio; addressing retail vertical again

SAP Advances With Frictionless Buy, but SRM Weakness Remains (Gartner)

Buying Frictionless will give SAP a good on-demand e-sourcing solution, but in the short term it won't fix gaps in its supplier relationship management products. The deal means little change in this software market.

The Demand-Driven Journey: Lessons Learned and the Road Ahead (AMR)

Over the past three years, demand-driven strategies have gained a lot of traction. Companies have gained value through investing in a system of processes and technologies to sense real-time demand across a network of suppliers, customers, and employees. The fact is companies that are further along in their demand-driven strategies report better results on cost predictability, perfect order performance, and new product launch execution.

We’ve spent the past year defining demand-driven process models and assessing company progress in demand, sales and operations planning (S&OP), manufacturing, supply management, and logistics.

To gauge where companies are on their journeys, we surveyed 455 companies in Europe and North America. The study looked at supply chain organizational maturity, industry-specific issues, and why demand-driven supply network (DDSN) leadership matters to business results.

Introducing Demand-Driven Service: Move Over DDSN (AMR)

Demand-driven supply networks (DDSNs) are often discussed in relation to consumer products, but sensing and responding to demand signals is a tremendous opportunity for post-sales services as well. Evolutionary and revolutionary business models are creating competitive advantages for companies that can proactively anticipate, understand, and address user needs, ultimately leading to increased profits and customer loyalty.

A recent AMR Research Alert article, “Profitable Service Lifecycle Management,” highlights the business case to adopt a service lifecycle management strategy and the high-level competencies that are needed. By discovering the service need, fulfilling it proactively, and then harvesting the knowledge, companies are building competitive advantages.

Duet: Bringing Together Business Productivity and Enterprise Applications (SAP)

Duet software, the first joint product for use with Microsoft Office and SAP, brings together business productivity and enterprise applications. This demo reviews and illustrates how easily you can enjoy the features, functionality, and benefits of this innovative software.

Microsoft and SAP: Revolutionizing How Information Workers Access Enterprise Business Applications

Duet software, formerly known as Project Mendocino, is the first joint product for use with Microsoft Office and SAP. Created by industry leaders Microsoft and SAP, Duet is designed to revolutionize the way information workers access enterprise applications. With Duet software, you will benefit from time and cost savings, increases in process compliance, improvements in decision making, and decreases in redundancy and data errors. Your employees will enjoy improved and more flexible SAP access and achieve greater productivity and efficiency.

Infor Becomes a 'Super Collector' With Planned SSA Global Buy (Gartner)

Infor will acquire SSA Global to extend its market presence and gain complementary products. Some product convergence is likely as Infor matches its newly acquired products to its business model.

SAP: Google a rival to-be (InfoWorld)

Co-founder Hasso Plattner says search giant or a Chinese company could be next competitor

SAP: More on-demand, new prices coming (InfoWorld)

Despite SAP's early reluctance to provide its business applications on a subscription-based on-demand model, the company is now catching up fast

SAP CRM Moving to Hybrid Model (AMR)

Following last week’s release of the second wave of CRM on-demand that added more sales and marketing functionality to the product, SAP unveiled CRM 2006s at SAPPHIRE. The new release is billed as a “hybrid” on-demand/on-premises CRM suite. It’s the first step in the company’s strategy to move the entire mySAP CRM product to an on-demand mode.

What’s new in 2006s

Here’s a quick rundown of enhancements SAP has added to its CRM product:

• Web service enabled (the “s” in 2006s) to help move data in and out.
• Rolling the on-demand user interface across the entire on-premises CRM suite.
• A user interface (UI) configuration tool based on the on-demand configuration tool designed to let non-IT people configure the look, feel, and layout of the screens.
• More business-to-consumer (B2C) functionality (loyalty management and point management for travel, airlines, and hospitality), as well as campaign management, higher volume call center, and personalized e-commerce.
• Pipeline performance management, which SAP’s president of the product and technology group, Shai Agassi, demonstrated during his keynote. This includes a visual tool to manage the pipeline, conduct simulation, and perform other analysis activities.
• Improved marketing funds and configurable case management that can be more easily tailored (not just an industry version).
• Trade promotions management (TPM) and claims management for consumer products companies.

Architecture

As announced with the original on-demand launch, SAP will continue to use the “isolated tenancy” architecture in which each customer will have their own individual instance of the CRM application. However, SAP and IBM (the hosting partner) will continue to roll out quarterly upgrades though a template so that all instances are always kept on the latest version.

However, not all functionality for 2006s will be available on-demand. Areas in which tight back-office integration is required will likely remain only in the on-premises version. However, SAP remains committed to rolling out enhanced features each quarter for on-demand, and it will gain a larger portion of the on-premises footprint over time.

Keeping it in the family

SAP’s moves to on-demand were much anticipated as companies increasingly seek on-demand options for their customer management needs. In manufacturing, for instance, many companies have highly fragmented or custom-built customer management applications.

For these businesses, a jump right into a million dollar on-premises CRM project doesn’t sound particularly appealing, thus software as a service (SaaS) has become a popular option. If SAP was to maintain these customers for CRM, it needed to offer something comparable to salesforce.com. The popularity of salesforce.com’s SaaS model is evidenced in its latest earnings, posted the same time SAP was unveiling its CRM on-demand enhancements. For its first quarter, salesforce.com posted $104.7M in revenue, a whopping 63% leap from the same period last year, with paying subscribers growing from 45,000 the previous year to 444,000.

The move to a common interface should help SAP hold on to customers that might otherwise flee to options like salesforce.com. The first on-demand launch’s promise was that the application shared the same data model as the on-premises application. This let customers move from one to the other with minimal data transformation.

However, the two applications still had different UIs. Moving sales people from one UI to another can be a difficult process, and is one reason many companies have stayed on their temporary, on-demand CRM applications much longer. SAP CRM 2006s removes this objection, a much bigger advantage than simply having the same data model. While other competitors might have a broader functional footprint (at least for another year or two), none can say they have the same UI as CRM 2006s.

© Copyright 2006 by AMR Research, Inc.

SAP boss names three potential US buyers (FT)

SAP, the world’s biggest business software group, is open to an acquisition by US technology groups, according to its chairman.

Hasso Plattner, supervisory board chief at the German group, said in an interview with FT Deutschland, the FT’s sister paper: “There are only three potential buyers: IBM, Microsoft and Google. I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”

Mr Plattner, who holds 12 per cent of the company, said he would have to act in the interest of all shareholders, not just himself.

He is the only one of the four SAP co-founders still holding a position within the group.

“You have to be emotionless,” Mr Plattner said.

Asked about the widely speculated merger scenario involving IBM, Plattner said: “I do not want to invent rumours because there are no talks. However, I do not want to say that I dislike IBM so much that I could not imagine such a scenario at all.”

But he could not imagine talks with Oracle, SAP’s arch rival.

A takeover of SAP would be a stretch for most companies, given its market capitalisation of more than €50bn ($64bn) and the fact that it is in the middle of a period of immense organic growth.

Two years ago, observers were surprised when Microsoft approached SAP with a bid and worries of long-winded EU competition probes brought talks to an early end.

Mr Plattner said many European IT companies had been unable to compete with American rivals in the past because they were too nationally minded and had focused on small markets.

Bull in France and Olivetti in Italy were number ones in their domestic markets until being overrun by US groups.

“We would long have needed an ‘IT-Airbus’,” Plattner said in analogy with the construction of aircraft where Germany, France, Spain and the UK had bundled their forces to compete with Boeing.

Last week, SAP gave Henning Kagermann, its chief executive, an incentive to renew his contract as chief executive next year by flagging unprecedented bonuses for senior staff.

The supervisory board plans to pay out €300m to hundreds of employees if SAP’s share price doubles by 2010, with one-third of the sum reserved for the chief executive and the six other executive directors.

Mr Kagermann took over in the aftermath of the tech-bubble bursting and has led SAP to stellar sales and profit growth. He has yet to say whether he will renew a contract that ends in 2007.

A vital part of his success is melding technology and marketing expertise, throwing up the question of whether SAP would be able to find a replacement with a similar balancing influence on the executive board.

A decision could come as late as next spring, with Mr Kagermann’s deliberations coinciding with a debate in Germany on whether executives should sign three-year rather than five-year contracts.

Mr Plattner told shareholders at last week’s annual meeting the bonuses would help SAP realise “very ambitious” goals to double sales in the next five years.

SAP boss names three potential US buyers (FT)

SAP, the world’s biggest business software group, is open to an acquisition by US technology groups, according to its chairman.

Hasso Plattner, supervisory board chief at the German group, said in an interview with FT Deutschland, the FT’s sister paper: “There are only three potential buyers: IBM, Microsoft and Google. I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”

Mr Plattner, who holds 12 per cent of the company, said he would have to act in the interest of all shareholders, not just himself.

He is the only one of the four SAP co-founders still holding a position within the group.
“You have to be emotionless,” Mr Plattner said.

Asked about the widely speculated merger scenario involving IBM, Plattner said: “I do not want to invent rumours because there are no talks. However, I do not want to say that I dislike IBM so much that I could not imagine such a scenario at all.”

But he could not imagine talks with Oracle, SAP’s arch rival.

A takeover of SAP would be a stretch for most companies, given its market capitalisation of more than €50bn ($64bn) and the fact that it is in the middle of a period of immense organic growth.

Two years ago, observers were surprised when Microsoft approached SAP with a bid and worries of long-winded EU competition probes brought talks to an early end.

Mr Plattner said many European IT companies had been unable to compete with American rivals in the past because they were too nationally minded and had focused on small markets.
Bull in France and Olivetti in Italy were number ones in their domestic markets until being overrun by US groups.

“We would long have needed an ‘IT-Airbus’,” Plattner said in analogy with the construction of aircraft where Germany, France, Spain and the UK had bundled their forces to compete with Boeing.

Last week, SAP gave Henning Kagermann, its chief executive, an incentive to renew his contract as chief executive next year by flagging unprecedented bonuses for senior staff.

The supervisory board plans to pay out €300m to hundreds of employees if SAP’s share price doubles by 2010, with one-third of the sum reserved for the chief executive and the six other executive directors.

Mr Kagermann took over in the aftermath of the tech-bubble bursting and has led SAP to stellar sales and profit growth. He has yet to say whether he will renew a contract that ends in 2007.

A vital part of his success is melding technology and marketing expertise, throwing up the question of whether SAP would be able to find a replacement with a similar balancing influence on the executive board.

A decision could come as late as next spring, with Mr Kagermann’s deliberations coinciding with a debate in Germany on whether executives should sign three-year rather than five-year contracts.

Mr Plattner told shareholders at last week’s annual meeting the bonuses would help SAP realise “very ambitious” goals to double sales in the next five years.

SAP Buys Frictionless Commerce (AMR)

SAP is buying privately held Frictionless Commerce, a supplier relationship management (SRM) software provider. This should be a good deal for customers of both companies.

SAP broadens customer base (InfoWorld)

The company continued its assault on the small and midsize business market at its Sapphire customer event Tuesday

Business-software vendor SAP AG kicked off its Sapphire customer event Tuesday by announcing deals with several customers, both big and small, underscoring the software vendor's aim to broaden its customer base.

Infor to acquire SSA in $1.4bn deal (FT)

SSA Global, a provider of software that powers companies’ customer relationship and human resources management systems, on Monday became the latest enterprise software group to be taken private.

It announced a $1.4bn deal to be acquired by Infor Global Solutions.

Infor, which is controlled by Golden Gate Capital and Summit Partners, the private equity groups, said it would pay $19.50 a share in cash for SSA, a premium of 25 per cent above Friday’s closing price for SSA shares.

SSA’s shares jumped more than 22 per cent to $19.04 by midday trading in New York.

The deal will add to Golden Gate’s growing stable of enterprise software companies. In November, Golden Gate announced a $1bn deal to acquire Geac, a Canadian software group specialising in financial and supply chain management systems.

Enterprise software has emerged as a favourite target for private equity groups working in the technology sector.

“We are seeing increased consolidation in the marketplace,” said Judy Sweeney, an analyst at enterprise software research group AMR Research. “[Private equity groups] are looking for financial gains by assembling these companies for economies of scale.”

Silver Lake Partners, another Silicon Valley buyout group, last year said it would buy Serena, an infrastructure software provider, for $1.2bn.

Last March, Silver Lake and six other private equity groups announced a deal to buy SunGard, a financial services software group, for $11.3bn in one of the biggest private equity deals of all time.

Enterprise software is viewed as a mature business, with little growth in new customer accounts.

However, many enterprise software companies see steady or even growing inflows of cash from providing maintenance and other services to existing clients.

Because Wall Street tends to value enterprise software groups based on new deal flow, many private equity groups consider the sector to be chronically undervalued, and some have been taking advantage of what they see as an opportunity to capture lucrative cash flow.

Jim Schaper, Infor’s chairman and chief executive, said the combined companies would have $1.6bn in annual revenues.

SSA and Infor said they expected the deal to close in the third quarter. SSA Global was advised by Schulte Roth and Zabel LLP and JPMorgan Securities. Infor was advised by Kirkland & Ellis LLP.

Infor Acquires SSA Global (Line56)

SSA loved to acquire and consolidate ERP companies; now it has been bought by Infor, leaving one fewer applications player

SAP stresses master-data management (InfoWorld)

Agassi says companies looking to consolidate IT resources must first define a list of master

SAP on Tuesday emphasized the importance of users continually maintaining master data, a single version of attributes that best describe products or customers, as corporations work to rearchitect their IT systems.

SSA taken over by ERP arch-rival (CMC - InsightExec)

It came out of the blue and it certainly won’t have gone down well inside Oracle, but the takeover of arch-acquirer SSA by rival Infor changes the landscape of the enterprise applications market.

SSA Global Technologies, which last year gobbled up CRM firm Epiphany, is itself being acquired for about $1.3 billion by Infor to create the world's third-largest corporate software developer.Infor Chairman and CEO Jim Schaper said: "With this acquisition, Infor will become the third-largest enterprise software provider in the industry with approximately $1.6 billion in revenue."