Monday, July 12, 2004
Many major applications vendors are reporting a slide in license revenue sales in the most recent quarter. License revenue is traditionally considered a better indicator of overall trends, since it pulls maintenance revenue and professional services in future period. Here are some numbers for the most recent quarter vs. same quarter last year, as calculated in research from Schwab Soundview Capital Markets:Based on interviews in the field, Soundview attributes SAP's positive momentum to the following:
Oracle Applications: down 6% PeopleSoft: down 15% Siebel: down 14% SAP: Up 15%
Clearly, SAP is executing well and is continuing to build market share.
- Success in moving down-market. "SAP began morphing its organization to target smaller deals a couple years ago to better leverage a maturing applications market and to accommodate changing customer buying patters."
- Focus on under-served verticals. "According to [system integrators] surveyed, SAP is taking share in verticals historically under-penetrated, including broad-based US, with increased traction in higher education, public sector, and retail."
- Competitor problems. "Close competitors Oracle and PeopleSoft appear to be somewhat distracted by their trial and other best of breed apps competitors including Siebel and Manugistics, appear to have some underlying execution issues (large deal focus, poor sales execution)."
- Perception of SAP as the safe choice. "Customers surveyed are shying away from those vendors who might be acquisition targets or are less financially viable. Importantly, SAP's products are generally credible and vision compelling, which enables customers to think more seriously about move to a single source vendor."
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SAP sales and earnings are ... up