SAP back on track, says Infosys

Infosys claims it has faith in SAP's new management

Indian services firm Infosys has claimed that customers can now feel secure that German software giant SAP is on the road to recovery.

Rajesh K Murthy, head of Infosys' SAP Practice for the Enterprise Solutions Business Unit, said last year that SAP lost the trust of many customers after a hike in support costs.

"SAP had a difficult time. It launched the new, more expensive support offering just before the Lehman Brothers crash and, by pushing the strategy at the same time as the downturn, it managed to really aggravate customers. In hindsight, they should have done the [price] rise in a different way," he said.

"There was also a perceived lack of satisfaction among employees, which
could be attributed to a few reasons. For the first time in the history of the company, there was a reduction in man-power, there were products which were not performing well in the market, like SAP Business All-in One and SAP Business ByDesign), accompanied by reduced research and development spend
Employees no longer felt the pride of working for an innovative company."

"Last year, even when Oracle grew, SAP did not, and they have very similar portfolios. There was no reason for this as, if anything, SAP had a more impressive stack of offerings."

Murthy has faith that SAP's recent management changes will improve customer satisfaction and employee moral. At the most senior level, the SAP board replaced Leo Apotheker with Bill McDemott and Jim Hagemann Snabe as co-chief executives.

"The focus on the customer is increasing. McDermott is very client savvy and client facing, while Snabe has respect for R&D and a lot of credibility with employees," he said. "Also the promotion of Vishal Sikka to the Board is a positive step as this is a clear reflection of the increasing important of technology in SAP's strategy."

"We, like the customers, felt let down by SAP's confused direction application problems, but we feel more hopeful now. During the year we will see a turning point in SAP.

"McDermott said he expects double-digit growth. I think this expectation is extremely bullish, but I believe it should grow 4 to 8 per cent or so, which is significant considering the drop last year."