SAP Performing Strong, Reaching More People
By Sam Sliman, President, Optimal Solutions Integration
SAP’s fourth-quarter and full-year financial performances for 2011 are the best ever in the company’s 40-year history. This news is generating considerable excitement in the tech sector, following as it does on the heels of dismal financial performances recently reported by Oracle and Software AG.
According to SAP, in the fourth quarter the company “gained significant market share and achieved double-digit growth across all regions." Full-year 2011 software and software-related service revenue increased by 16% over 2010. SAP also reports an operating margin of 33.1% in 2011, up approximately 10% over 2010.
What’s driving SAP’s remarkably strong performance? Solid leadership, accelerated product delivery, strategic acquisitions and a committed partner ecosystem are all strong contributing factors. But if we step back and look at a few major SAP trends and developments over the past year, a common growth theme emerges in SAP’s sustained effort to extend its applications to more people throughout the enterprise.
By 2015 SAP plans to boost total revenue to $26.9 billion, up from $15.8 billion in 2010. In 2010, the then-new SAP co-CEOs Bill McDermott and Jim Hagemann Snabe hinted at how SAP planned to fuel growth by publicly targeting one billion SAP end-users by 2015. (SAP currently has approximately 35 million end users.)
From SAP’s progress on the mobility front to the release of SAP BusinessObjects BI 4.0 to SAP’s rapidly evolving cloud strategy, it is clear that -- with its sustained focus on reaching more people -- SAP is well positioned to hit its target.
SAP mobility for the masses
According to IDC, by 2013 the number of mobile workers will grow to nearly 1.2 billion people, representing more than a third of the world’s workforce. Clearly, the demand among workers for mobile solutions that empower them to work smarter and faster will only grow stronger in the years ahead, and SAP has pulled out all the stops to ensure that it’s well positioned to satisfy the mobility demand.
SAP made a bold and decisive move on the mobility front by acquiring Sybase. Sybase is the global leader for SMS and MMS interoperability with reach to 850+ mobile operators, 4 billion subscribers and the processing of more than 1.4 billion messages per day. Add to this the thousands of enterprise customers currently using its mobility solutions, and it is undeniable that Sybase brings to SAP instant credibility in enterprise mobility. With the Sybase platform, SAP applications can reach pretty much all modern mobile devices at once, which ensures SAP’s enterprise mobility leadership as well as a steady and significant increase in SAP end users.
Further accelerating the development and delivery of mobility solutions, SAP has empowered its partner ecosystem to take the lead on mobility by authorizing select partners to sell mobile solutions from the Sybase portfolio as well as build and market mobile apps using the Sybase Unwired Platform. SAP estimates that 80 percent of future mobile application development in support of SAP solutions will come from partners.
In its Q3 financial results, SAP forecasted a $548 million pipeline for mobile computing. In Q4, SAP mobile application sales topped $126 million. With 17.5 million mobile users, SAP ranks among the leading enterprise mobility vendors.
SAP BusinessObjects 4.0 and the analytics/BI boom
SAP’s product development and market growth strategies moving forward hinge heavily on extending the scope and reach of its BI and analytics solutions, and increasing the number of people within an organization who utilize SAP BI and analytics applications.
The confluence of BI and mobility is arguably one of the richest growth areas for SAP, in terms of both BI adoption and increasing SAP end users. According to Gartner, by 2013, 33% of BI functionality will be consumed via handheld devices. For BI to further penetrate the enterprise and be adopted by a greater number of workers, the cost, speed, functionality and ease-of-use of traditional BI solutions needs to be greatly improved, and an ever-increasing array of BI applications must be ported to mobile devices.
To this end, SAP released BusinessObjects BI 4.0 in February of 2011. There’s not a shred of hyperbole in the statement “SAP’s BOBJ 4.0 release is huge.” Deeper and broader integration across SAP Business Suite solutions and non-SAP applications. A common, more intuitive user interface. A common, broader and deeper semantic layer. Support for multiple mobile platforms. Improved self-service BI capabilities. More immediate access and faster analysis of huge data sets. SAP HANA support. 64-bit computing… The list goes on.
Changes in SAP BOBJ BI 4.0 improve upon all facets of the BI promise. Most importantly, SAP has made BI dramatically more consumable and relevant to a greater number of workers. In so doing, the business value BOBJ 4.0 delivers is arguably greater, more immediate, and more meaningful than that of competitive offerings as well as prior BOBJ BI versions.
SAP also offers an on-demand version of its BusinessObjects BI solutions, further extending it reach and sparing customers who prefer a pay-as-you-go model the cost of buying servers, funding an implementation project, and budgeting for ongoing maintenance and support. SAP currently has more than 200,000 subscribers to its on-demand BI service.
For a glimpse at how SAP’s BI product roadmap will be heavily influenced by mobility in 2012, read SAP Business Analytics blog post by Steve Lucas, General Manager, Business Analytics and Technology, SAP: Putting Mobile First and the New Business Intelligence Priorities
SAP raining from the cloud
Sales of cloud-based SaaS applications will hit $17.3 billion in 2013, up 41 percent from an estimated $12.3 billion in 2011, according to Gartner. By comparison, Gartner predicts that sales of traditional on-premise applications will grow just 14% during the same period.
To hit its growth goals, particularly its goal of 1-bilion end users, SAP must sell more on-demand software products.
SAP's on-demand offering for SMEs, SAP Business ByDesign, has approximately 1,000 customers and is growing steadily. SAP’s LOB on-demand apps include Sales, Sourcing, Career, Travel, SAP EHS, and Carbon Impact.
The SAP HANA application cloud, now in private beta, will provide a flexible, simple and affordable way for SAP customers to reap the benefits of in-memory computing technology delivered on demand. SAP’s HANA-based platform will power the next generation of SAP on-demand applications, with many slated for availability in 2012.
SAP’s acquisition of Crossgate, which closed on November 1, 2011, adds to the SAP cloud portfolio, providing the ability for SAP customers to connect electronically with tens of thousands of trading partners and extend business processes to its community.
SAP’s acquisition of SuccessFactors significantly ups its on-demand ante. SAP gains SuccessFactors’ market-leading, cloud-based human capital management (HCM) solutions and also benefits from SuccessFactors’ cloud-seasoned leadership team and proven cloud technology. SuccessFactors’ 15 million customers also factor positively in the transaction, and move the needle in terms of both SAP’s evolving cloud position and SAP’s steadfast focus on increasing the number of SAP end users.
