InformationWeek

Enterprise Apps Vendors Soar

By Jeff Sweat and Tom Stein

he big three of enterprise applications-SAP, PeopleSoft, and Baan-cont inue to rack up big numbers. But if they want to keep their high double-digit growth rates, analysts say, they must increasingly think smaller.

All three software vendors, having built their fortunes on large accounts over the past few years, are starting to reap the benefits of programs aimed at midsize customers. "That's the real battleground for these suppliers," says Judy Hodges, an analyst with International Data Corp. in Framingham, Mass.

SAP, which reported last week that its second-quarter earnings rose 56% to $229 million on 52% higher revenue of $785.5 million, says 90% of its new customers are midsize companies. "Our midmarket initiative is really taking off," says SAP America CEO Paul Wahl.

PeopleSoft, which is also pushing into the midrange market, posted second-quarter earnings of $22.3 million, a 94% increase over its year-earlier figures, on 80% higher revenue of $184.4 million. Analysts say the PeopleSoft numbers are particularly impressive given the company's restructuring of it s sales force to go after vertical markets.

Baan, aided by partnerships with financial and sales-force automation software vendors, landed some big deals in the quarter, helping push its earnings up 138% to $16.4 million, on 65% higher revenue of $146.1 million. Baan is also starting to see the fruits of a channel program aimed at vertical industries.

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