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8/24/2009
08:50 AM
Bob Evans
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SAP Exec Sees Banks, Energy Leading 2010 Recovery

Companies in banking, energy, and manufacturing are starting to open up spending a bit as they begin to prepare for an economic turnaround, SAP executive John Schwarz said in a recent interview. As for acquisitions, many software companies are looking to be bought but have inflated views of their value.

Companies in banking, energy, and manufacturing are starting to open up spending a bit as they begin to prepare for an economic turnaround, SAP executive John Schwarz said in a recent interview. As for acquisitions, many software companies are looking to be bought but have inflated views of their value.From the Wall Street Journal:

"What we are seeing is people getting used to working in a new world," he said in an interview. "Spending is still based on assumptions of a tough economy, but we do see customers taking a longer view of their needs that are strategic and not just filling in a few gaps."

Banking, for instance, "has begun to plan for the future to think through how they invest to avoid the unpredictable results seen in late 2008." The manufacturing sector is building inventories again, and the energy sector is doing relatively well, Schwarz said.

Of particular interest to Schwarz, who's a member of SAP's top-level Executive Committee, is SAP's resurgence in the white-hot business analytics space around its product line from Business Objects, where Schwarz had been CEO when SAP acquired the company last year for $6.8 billion. While SAP's longtime strength has been in automating business processes with its ERP applications, the Business Objects product set is intended to help SAP customers anticipate future trends and market opportunities.

In that context, it was interesting to see the Journal article say that SAP "has begun to build up [Business Objects'] sales force to recapture some lost momentum, particularly seeking out non-SAP clients."

If the sales force was broken up or weakened during the integration with SAP, wouldn't it make more sense for the rebuilt team to pursue SAP clients where the company already has established relationships and brand equity? Then again, could it be that SAP feels its traditional applications don't yet work as smoothly as it would like with the analytics software from Business Objects?

After noting that the rebuilt Business Objects will seek out non-SAP customers, the Journal article says that SAP "is developing tools to enable the analytics software to work more tightly with the process software."

Hmmm-so perhaps for at least the short term, SAP seems to be saying that the analytics software for which it paid $6.8 billion will work better outside the SAP ERP applications environment than in it.

No doubt that dynamic is front and center in the minds of Schwarz and other SAP Executive Committee members as they evaluate potential acquisitions that he told the Journal are plentiful right now.

Targets "are very willing. Prices have come down, and growth rates they expected to see have moderated," he noted. "They are certainly willing to engage, but there are still many hot properties where price expectations are out of line with reality."

SAP is also looking to find ways to better "syndicate," in Schwarz's words, data coming from firms like Thomson Reuters or Nielsen Research into the corporate system, though he stressed the firm isn't looking to buy content providers.

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