Thomas OtterI spent some time this week looking at SAP’s results, so I thought I’d share some thoughts here too. Thanks to my colleague john Rizzuto for his input.
SAP is showing modest acceleration off the bottom. The worst is seemingly behind it, but isn’t roaring back just yet. No reason not to be constructive, but we are cautious about becoming too optimistic too fast. The quarter is evidence that SAP is continuing its gradual recovery from the economy, and, more importantly, repairing its image and relationships with end users and customers. SAP’s rebuilding of its image in the eyes of its customers is obviously the most important thing for it to successfully execute its strategy, as in order to grow, it needs to up-sell an awful lot of stuff (Bobj and Sybase). The anecdotal evidence shows it is regaining trust, but there is work left to do.
It isn’t really gaining share in the sector from what others apps vendors are reporting. If you look at the HCM space, the leading SaaS HCM vendors have all reported strong numbers, and their growth is coming at the expense of the ERP vendors.
Even with the aid of a strong currency tailwind, the US numbers were rather good. Germany performed well, the return of Kleinemeier to lead the region has had a positive effect on sales performance and execution, and customer sentiment. The numbers in the rest of Europe are concerning, but may be a result of macro issues beyond SAP’s control.
In January, we said this about SAP.
Regardless of SAP’s organizational structure, the biggest challenge it faces is revitalizing its position as a technology leader without adversely affecting the performance of its current product portfolio. In undertaking this daunting task, SAP will benefit from its strong foundation, which has made it one of the few companies able to deliver a global, integrated suite of applications that covers a broad range of functions across many industries. SAP has previously succeeded under similar circumstances, such as the R/2 to R/3 transition, in which SAP managed to protect technology investments while also offering technology advancements. To succeed this time, SAP must walk a fine line between remaining overly focused on short-term sales and margins and becoming overly invested in pursuing leading technology that may not immediately benefit its installed base.
SAP’s field organization continues to a solid job at selling product that SAP has had for some time, but SAP’s real test to roll out some compelling new product. The second half of the year will be much more interesting. SAP needs to relaunch Business ByDesign well next week, and then show solid early adoption by year end. SAP also needs to clearly show how Sybase will add to SAP’s short term and long term growth. Sybase must bring more to SAP than just the mobile upsell.
For Gartner clients, I’d suggest you have a look at the two notes. Sybase acquisition, more than mobile. and SAP’s Purchase of Sybase Adds Complexity to the Mobile Software Market and our Sapphire coverage outlines SAP’s plans for onpremise, on device and on demand.
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4 responses so far ↓
1 Jason Corsello July 29, 2010 at 9:03 am
Great post Thomas. I do sense increasing stabilization at SAP. Although the management shake-up continues to evolve, I think the worst is behind them. Now the challenge is finding that “momentum” that will come from aligning the strategy, products, delivery, sales, etc.
2 @collsdad July 29, 2010 at 9:13 am
I agree with you Thomas. SAP has placed two massive bets to secure its independent long-term future and both of the have to work. BBD and ‘in memory’ computing, though the latter is more of a disruptive play than a concrete vision piece, however passionately it is delivered.
I agree again that Sybase does indeed need to be more than just a mobility play but given the lack of mobility in the current application stack either on-premise or on-demand it is the key focus of the acquisition, no debate.
A very good post though I would be interested to hear an informed assessment from the sidelines of the real morale and motivation of the field organisation as one of the companies key transformational topics was also to become ‘more employee focused’.
3 Thomas Otter July 29, 2010 at 11:07 am
Jason.
Yes,spot on.
@collsdad.
I sense that SAP execs are doing a much better job on employee engagement, probably the best since it was a founder run shop. Recent anecdotal evidence for me was SAP throwing a summer party for all the Walldorf employees and family. I don’t remember one of those for ages.
I meet a lot of SAP employees, either through work or socially, and the general “stimmung” is much improved.
Developer motivation seems a bit better too, as the efforts to dismatle an over complex development process to become more agile start to have an impact. There is still a lot to do though.
4 Pixelbase » This Week in SAP August 2, 2010 at 8:43 am
[...] Gartner’s Thomas Otter chimes in with his thoughts on SAP results [...]