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    SAP’s Strong Revenue Suggests Enterprise Software Momentum Into 2012

    Written by

    Nicholas Kolakowski
    Published January 25, 2012
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      SAP enjoyed significant increases in software revenue in the fourth quarter of 2011, suggesting that the market’s appetite for enterprise IT products remains strong despite some turbulence in the overall economy.

      Total revenue for the quarter topped $5.8 billion, a year-over-year rise of 11 percent. Software and support revenue rose 16 percent and 13 percent over the year-ago quarter, respectively, while total operating expenses declined 11 percent.

      “We are well positioned to exceed our [about $25 billion] revenue target and reach a 35 percent operating margin in 2015,” Warner Brandt, CFO of SAP, wrote in a Jan. 25 statement.

      SAP also indicated that its SuccessFactors acquisition will close in the first quarter of 2012. The latter company’s cloud-based “human capital management solutions” will buttress SAP’s overall cloud assets. The cloud has become an increasingly contentious battleground for enterprise IT providers over the past several quarters, as businesses look more to online subscription services to fulfill their daily needs in a more efficient way. Specifically, SuccessFactors assets will allow SAP to push back against Salesforce.com and Oracle.

      Certainly software is eclipsing hardware as those IT providers’ primary revenue driver. Oracle, for example, saw its fiscal first-quarter 2012 revenue rise largely on the strength of software licensing and product support, even as hardware systems revenue exerted a slight but noticeable drag. Meanwhile, other companies that specialize solely in software and services-such as IBM-have enjoyed strong revenue and profits over the past few quarters.

      SAP famously struggled to find its way in the wake of the global recession, which impacted its clients’ bottom lines and willingness to spend heavily on enterprise IT. The company’s revenue dipped throughout 2009, eventually leading to the ouster of then-CEO Leo Apotheker in February 2010.

      Following that boardroom switchover, SAP saw its revenue increase. It acquired Sybase for $5.8 billion in May 2010, an expensive move nonetheless viewed as a way to expand SAP’s mobile offerings and stay competitive via new revenue streams. From that point forward, the question became whether the company could maintain its momentum while integrating assets from Sybase and other acquisitions.

      SAP’s new quarterly numbers suggest that momentum is indeed continuing into 2012. But as that same corporate interest in software is also bolstering the fortunes of its competitors, it’s likely that SAP will face strong competition over the next 12 months.

      Follow Nicholas Kolakowski on Twitter

      Nicholas Kolakowski
      Nicholas Kolakowski
      Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air.

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