SAP taps into mid market for growth

Enterprise software maker SAP reported revenue of €2.02bn for its most recent quarter, up 13 per cent relative to the same period last year. Net income rose 16 per cent to €289m.

The company's core business of software licence sales grew 16 per cent to €576m. Europe realised nine per cent growth, America 27 per cent and Asia Pacific 23 per cent.

Léo Apotheker, president of customer solutions and operations at SAP, cited sales to small and medium sized organisations as the main source for the growth.

"We fuelled growth through volume business. We increased the number of deals by 23 per cent, driven more and more by the indirect salesforce," he said.

The German home market was a major weak spot for SAP in the past quarter, with software sales declining by 13 per cent. The vendor blamed the poor results on delayed investments by government organisations due to elections, as well as a reorganisation of SAP's salesforce.

Sales in Japan fell by 11 per cent, as the vendor struggled to compete with applications developed in house.

The US in particular is at the forefront of the battle between Oracle and SAP over dominance in the market for enterprise applications. Both companies have created defector programmes that offer rebates to users that switch vendors.

Apotheker claimed that SAP's Safe Passage programme has helped the vendor gain 21 new customers, including Samsonite and biotechnology company Amgen, but that the battle with Oracle is putting pressure on prices.

"We have a competitor which believes that pricing is its only weapon left," he said. "We know how to deal with that as well."

SAP claimed to be the "clear leader" in North America, and said that it further increased its lead over the competition.

Oracle reported a 52 per cent sales increase for its enterprise software division to $350m in the last quarter. The company did not provide a regional breakdown for its applications business.

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