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SAP ERP HCM Software Review


SAP Company Viability Review

Given SAP's size, its market share, its 40+ year industry tenure, and its base of 102+K customers, the overall health and viability of the company appears strong. Further with a new executive team that comprises one of the industry's archetypes for leadership, SAP brings an impressive mix of talent, drive, and vision that faces few comparable rivals. That's not to say that the company hasn't experienced its share of hardship though. Indeed, this latest market downturn wound up costing the company thousands of jobs and severely put a dent in the organization's efforts for innovation as revenues and operating margins suffered. Further, a series of miscalculations have cost the company dearly in terms of customer churn and goodwill—fueled in large part by executive turnover, maintenance fee escalations (which the company retracted, or at least delayed), a late-to-market SaaS initiative (Business ByDesign/Career OnDemand), and a growing discontent with customers over the Total Cost of Ownership (TCO) for on-premise solutions.

Despite these setbacks, SAP continues to be one of the most financially secure enterprise software vendors within the ERP or HCM software space. In fact, the company appears to be on an upswing with reported figures for 2011 that outperformed analysts' revenue estimates ($4.7B versus $4.5B) and boosted the company's operating profit by 10%. This 12% uptick in software/services revenue over 2010 is significant on many levels; not the least of which is the stark contrast between SAP's fiscal success and chief-rival Oracle's recent drops in shares (the most in 9 years)—an achievement that prompted Bloomberg analysts to say, "They outshone Oracle". Indeed, even famed research group Gartner piped up on this news; and according to the firm's Donald Feinberg indicated, "[SAP is] benefiting from Oracle's customer base being upset about the prices and contract negotiations and…it's finally coming out".

Aside from conjectures of some Oracle defections, SAP's success of late could be attributable to myriad factors, two of the most salient of which are the recent $3.4B acquisition of SaaS HR software company SuccessFactors along with a sizeable increase in demand for the company's HANA in-memory computing technology (hitting sales of just over $200M and exceeding company projections by 60%). Indeed, as it pertains to SuccessFactors (SFSF), spokespeople for SAP have indicated that the SuccessFactors HR offering could well become the replacement system for the on-premise ERP HCM—an obvious sign that (while late to the game) SAP is building out an impressive (and cloud-based) end-to-end HRMS and talent management solution.

SAP's HANA however (which uses in-memory analytics to allow for instant and simultaneous analysis and database recording), is perhaps the most significant potential success for the company though. In large, part this potentially massive success by SAP hinges on the idea that the 15K businesses using SAP's Business Warehouse will get rid of their largely Oracle databases in favor of SAP's HANA. Further, as reported by Information Week, 60% of SAP's current customer-base are leveraging SAP enterprise applications with an Oracle database; a potentially huge untapped market as of yet.

While SAP is expected to continue its strategy with SuccessFactors integration, HANA's in-memory functionality, and conservative growth for the near term, current announcements also shed light on future directions; including the recently completed acquisition of Crossgate AG (a premier B2B networking provider) and a new $2B billion plan for development in China—designed to move the company from the number 2 spot in the Chinese market to number 1. All these moves signal that not only is SAP doing well, but it's also not standing still.

Next - SAP ERP HCM Strengths and Weaknesses >>

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SAP ERP HCM Software Review



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