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    SAP Strong Quarter Suggests Business Software Appetite

    By
    Nicholas Kolakowski
    -
    October 27, 2011
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      SAP’s strong fiscal quarter suggests an appetite for business software among enterprises, particularly in “hot” areas such as mobility, cloud and business intelligence.

      For the third quarter of 2011, SAP reported software revenue of $1.18 billion, up 28 percent year over year. Total revenue (including service revenue) hit $4.8 billion, up 14 percent from the year-ago quarter. Operating profit reached $2.4 billion, a year-over-year increase of 146 percent.

      In an Oct. 26 statement published with those results, SAP co-CEO Bill McDermott suggested that SAP’s focus on mobility, in-memory computing and cloud services had helped drive what he characterized as the company’s fastest-growing revenue in a decade.

      Some analysts seemed generally upbeat about the company and its progress in the business IT space.

      “TBR believes that SAP has embraced a new pattern of corporate growth, marked by changing behavior with customers and partners,” Elizabeth Hedstrom Henlin, an analyst with Technology Business Research, wrote in an Oct. 26 research note. “SAP’s focus on dedicated, customer-minded software innovation will remain its key differentiator in the near term.”

      But others predicted some whitewater for the industry as a whole, which could affect SAP heading into the next few quarters.

      “We think IT spending is going to get tough in [calendar year 2012] (especially 1Q) and big app investments tend to be discretionary,” Ros MacMillan, an analyst with Jefferies & Co., wrote in an Oct. 26 statement. “We would rather be patient than to chase the stock after such a strong Q and where consensus acknowledges the conservatism of 4Q.”

      SAP’s 2011 road map involved new applications leveraging its in-memory technology platforms, in addition to its HANA system, which the company sees as a viable substitute for the traditional databases pushed by IBM and Oracle.

      In-memory technology allows businesses to reduce the time needed for data-crunching tasks, by moving data from traditional storage devices and into RAM. HANA, based on this technology, is designed to speed business-intelligence tasks. SAP applications running on HANA include Strategic Workforce Planning and ByDesign 2.6; other in-memory applications include Sales and Operations Planning and Cash and Liquidity Management.

      In 2012, SAP plans on launching Business Suite, Business ByDesign 3.0, Business All-in-One and BusinessOne. The company’s existing applications will also be retrofitted to work with HANA.

      Follow Nicholas Kolakowski on Twitter

      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. He lives in Brooklyn, New York.

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