SAP, Oracle In European Market-Share Dance: Study

SAP AG leads in the $7.1 billion Western European enterprise resource planning (ERP) applications market, but lags behind its closest rival Siebel in the customer relationship management (CRM) market, according to an IDC report released Friday.

SAP rose two percent in ERP market share to 41 percent in 2004, compared with Oracle Corp.'s 11 percent market share ( pro forma, ) which combines JD Edwards and PeopleSoft applications, suggests IDC Corp. in the Western European ERP Applications Vertical Competitive Analysis 2005.

IDC program manager for European enterprise applications Bo Lykkegaard expects SAP to continue its lead in 2006, suggesting SAP will take the Western European ERP market with between 43 percent and 44 percent.

Oracle Corp. spent most of 2005 building momentum to bring in new license revenue as it tried to fill an "empty pipeline" acquired from PeopleSoft in 2004, Lykkegaard said. "PeopleSoft customers would pay upfront license fees and have the freedom to choose among its product lines," he said. "It gives a nice boost to the revenue stream, but problems appear the year after when you have to keep the momentum."

More non-traditional industries, such as financial services and government, are reaching for ERP options because it's becoming easier to deploy. Service-oriented architecture (SOA) platforms and pre-integration reduce complex barriers that inhibit ERP adoption, Lykkegaard said.

As for CRM, snagging Siebel clearly put Oracle in the strongest position in Western Europe. Oracle, which closed the deal on Siebel this year, isn't expected to experience the same pain. Lykkegaard expects Oracle to keep the momentum of new license sales.

Pro forma numbers for 2004, Lykkegaard said, show Oracle with 18 percent Western Europe CRM market share, compared with SAP's 11 percent.

Meanwhile, SAP's CRM business did pick up momentum in 2005. And its software-as-a-service (SaaS)CRM business, launched earlier this month, could have an impact in the second half of 2006, Lykkegaard said.

The Western European market for CRM applications reached $2.54 million in 2004. France, Germany, Italy, Spain, and the United Kingdom accounted for 72 percent of the total market.

SAP led in manufacturing, transport, and utilities. Siebel maintained strong leadership in finance and communications. Lykkegaard said the ability to transition software offerings to SOA will determine the future leader.