Wednesday, 30 April 2008

SAP disappoints and scales back SME ambitions

SAP shares have dived this morning after announcing weak Q1 sales. See Reuters report for the full details.

US results - where revenues actually declined - were particularly disappointing. All this is in line with the trends I have been banging on about constantly. The area which is really suffering at the moment (and will continue to do so) is the installation of new systems where the ROI takes in excess of a year to be achieved. Most new SAP installations fall into that category. 'Add-ons' to existing installations should hold up well, however.

Significantly, SAP is scaling back its SaaS Business Bydesign software aimed at the SME market. SAP is one of many software companies who, having made their name and fortune in enterprise software for large corporations, believed that moving down into the SME market was both simple and theirs by right. It ain't! Here they face a whole new raft of competitors like Sage and Microsoft who have very different sales and revenue models.

Coming hot on the heels of lack-lustre results from Oracle, SAP's Q1 results and outlook will not help an already jittery tech market - even though the reasons can easily be explained (as I have attempted above and on many other previous occasions!) and apply only to specific areas and companies. Ie 'tarring all tech with a SAP brush' is plainly silly.

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