SAP's recently appointed co-CEOs say they are focusing on technological innovation as a way to get the company back on a path to revenue and profit growth, and they have no plans to try to imitate archrival Oracle by launching an expensive corporate buyout campaign. One major goal is to get updated versions of SAP's Business ByDesign software-as-a-service suite into more customers' hands on schedule.
has no intention of getting into a merger-and-acquisition war with archrival Oracle
as a way of increasing revenue or expanding the company, SAP's
new co-CEOs said on March 15.
their first meeting with the West Coast technology media, the two recently
appointed co-CEOs, Bill McDermott and Jim Hagemann Snabe, said the enterprise
software company would continue to focus on organic growth of its business and
has no intention of trying to keep up with Oracle by replicating the multibillion-dollar
spending binge by which Oracle has acquired over 40 companies large and small
since the early 2000s, the co-CEOs affirmed.
can easily buy yourself growth in this industry," Snabe said. But in the
case of Oracle, he said, the industry is "seeing lots of acquisition to
build revenue growth, but very little innovation. We have done the opposite. We
have tried to innovate" through product development in strategic areas
such as business process management and through expanding business
intelligence, data mining and data analytics, he said.
only large acquisition SAP has carried out
in the past several years was the early 2008 buyout of Business Objects for
$6.7 billion. But Snabe and McDermott contended that this acquisition was
closely targeted to supply a strategic customer need for expanded business
analytics capabilities and to provide a platform for future innovation, rather
than being a bid for short-term revenue growth.
contrast to Oracle's acquisition strategy, Snabe said, SAP
gives customers application integration and consistency that doesn't require "middleware
to glue everything together."
McDermott said SAP wasn't ruling out future
acquisitions, "If it fits into our strategy and helps build our
relationship with customers." If an acquisition made sense, he said, "We
would not shy away from it."
and McDermott replaced former sole CEO Leo
Apotheker, who resigned
on Feb. 7. SAP shook
up its management in an effort to get back on track for improved revenue and
profit growth after it reported a 12 percent non-GAAP (Generally Accepted
Accounting Principles) decrease in operating income for 2009.
of the major problems facing the co-CEOs is how to improve sales of SAP's
Business ByDesign SAAS (software as a service) product. Business ByDesign is a
suite of on-demand business applications that represents a new revenue stream
and potential growth in the small and midsize business sector.
has had to wrestle with significant delays in developing and rolling out the
product to customers. However, Snabe and McDermott said SAP
has gotten software development back on track for Business ByDesign by applying
"Agile" software development techniques that enable highly focused development
teams to produce high-quality software at a steady pace that meets schedules.
techniques were implemented by two-thirds of the original Business ByDesign
development team, which helped them produce "higher-quality software that
was more to the liking of customers."
said the current release of Business ByDesign is on time and "of a higher
quality than we ever imagined." These same techniques will ensure that Version
2.5 comes out on time later in 2010, he said. This will enable the software to
go into production with more customers who want to use SAP
applications on the Web.