Thursday, October 18, 2007

SAP wins at Wal-Mart but reports slowing growth in U.S.

SAP just reported its third quarter results, with a 11% growth in new license sales worldwide but a measly 3% growth in the U.S. New license sales growth was stronger in other markets: 14% in EMEA and 25% in Asia-Pacific. SAP said it now expects overall software and related sales for 2007 to reach the upper end of its estimate of 12% to 14%.

SAP's growth vs. Oracle's
These results do not look great in comparison with Oracle's most recent quarter (its Q1). Last month Oracle reported a 35% increase in new license sales, including a 65% increase in application software revenue. Of course, Oracle's results include the benefit of its new acquisitions of Hyperion and Agile Software. Its not clear to me how much of the increase is due to revenues from those product lines, but it certainly can't explain all of the difference from SAP's growth rates.

Although the SAP versus Oracle story is interesting, I'm more concerned with what SAP's results mean for the business software sector overall in the U.S. I note that the market has been strong over the past couple of years, based on financial results for the major vendors as well as observations of the general level of sales activity. Do SAP's quarterly results point to a slow-down? Oracle's results seem to indicate a more positive outlook, although Oracle will say that SAP's slowing growth is caused by Oracle's winning deals against SAP. Complicating the picture: SAP claims its market share is increasing in the U.S., which is hard to imagine in light of the disparate growth rates of SAP and Oracle, unless they are both taking market share away from smaller players.

Win at Wal-Mart
Separately, SAP announced that it had won a deal with Wal-mart for financial management software. Wal-Mart is known to run mostly in-house developed systems, but apparently felt that the horizontal nature of accounting applications justified a departure from this strategy. SAP will replace some legacy systems while integrating with other internal systems. Terms of the purchase were not disclosed, but--this being Walmart--there's no way this can be a small deal.

In light of SAP's battle with Oracle, the Wal-Mart deal gives bragging rights to SAP--assuming the implementation is successful. Unfortunately, it won't be a quick. The first phase of a multi-phase implementation is expected to finish in 2010.

Related posts
Oracle reports another blow-out quarter
SAP sales jump, defying Oracle's PR campaign
Oracle bids for BEA Systems
SAP to buy Business Objects


Anonymous said...

I honestly don't think Lawson competes on the same level as SAP on Financials products. But the SAP win at Wal-Mart is interesting, given Wal-Mart's previous selection of Lawson for HR/Payroll, and Lawson's assertions about how "Wal-Mart Loves Lawson" ...

Is this a confirmation of the "best of breed" approach, and the idea that Lawson and SAP are really in separate tiers (despite Lawson's belief that they are competitors)?

Or does the SAP selection reflect a frustration on Wal-Mart's part with Lawson, and the on-going HR/Payroll implementation, and not wanting a repeat performance with Financials?

Unknown said...

And we all know that Wal-Mart uses Oracle JD Edwards EnterpriseOne for Real Estate Management.