SAP CEO Refutes Reports Of Asian Price Cuts, Interest In Oracle

SAP's executive board met with the press to discuss a broad range of issues and hinted at a software-as-service version of its small-business suite.

Rochelle Garner, Contributor

April 14, 2005

3 Min Read

SAP is not inviting overtures from Oracle. Nor is it planning to cut prices in Asia, SAP CEO Henning Kagermann said Thursday, contrary to previously published news reports.

"I had said [during an earlier interview] that, as a CEO, you have to listen at least once to every proposal, because that's your responsibility. They said 'would you even listen if' -- and I said 'why not'," said Kagermann. "[My comments were] in the context of how PeopleSoft's board behaved, which I thought was not the right way. You have to look at every opportunity, and we saw that PeopleSoft didn't do so well."

Kagermann, along with other members of SAP's executive board, discussed a wide range of topics with the press at the Palo Alto, Calif., offices of SAP Labs. Together, they said SAP is taking away market share from Oracle in the business applications arena, denied interest in acquiring ailing Siebel Systems, refuted speculation that it would get into the hosting business, and described its approach to the midmarket. Still in SAP's quiet period before its next quarterly report, management would not discuss financial results.

Both Kagermann and fellow executive board member Leo Apotheker shook their heads over a Reuters article, distributed Thursday, in which rival Oracle suggested SAP would cut prices in Asia to gain market share.

"We have no intention of doing that," said Apotheker, president of SAP's Global Field Operations. "In Asia, SAP is gaining market share, significantly." He said he could not detail the amount until after next week's financial report.

But Apotheker did say that 31 percent of all SAP's revenue comes from the midmarket. "If you do the math, you will see about 1 billion euros, or $1.3 billion, making us the largest midmarket player in the world," he said. Kagermann added the midmarket segment should make up 40 percent of SAP's business by 2010.

And what of Microsoft, which clearly sets its sights on moving into the midmarket? "Microsoft is going to the midmarket via the indirect channel," said Apotheker. "We believe the better way is to have a model that's a combination of direct and indirect. The direct is the trailblazer for the indirect. It can open up vistas, open up opportunities for our channel that they would have a hard time doing on their own. Microsoft doesn't have that capability in the applications space."

Then there was the question of whether SAP would get into the on demand, or hosting market. The answer: no. "Today there is no need," said Kagermann, who said the Walldorf, Germany company prefers to work with third-party service providers for such offerings. "We don't want to become ourselves a hosting company."

But not getting into the hosted business, a la IBM Global Services, does not mean SAP wouldn't offer a net-centric version of its small-business application. One is an infrastructure play while the latter delivers applications as a service.

In his investors report released Thursday, Prudential Financial analyst Brent Thill wrote SAP is readying its own CRM software to be delivered over the Internet.

Could SAP make Business One, which closely resembles NetSuite, available by subscription? "There are chances to do a lot of different things said," Shai Agassi, SAP executive board member.

"Our largest customer event of the year will be in two weeks' time in Copenhagen," immediately added an SAP spokesman. "We'll have an announcement in this [subscription] space about the integration of Business One to the market family of SAP products. "

While hardly explicit, the implication is clear: There soon could be a software-as-service version of SAP's small business suite.

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