SAP Exec: New Software Vendors Should Target Specific Issues

Emerging software companies will find the best opportunities in selling products that solve specific vertical-industry problems and that leverage existing IT assets, a top SAP executive told entrepreneurs, venture investors, and technologists gathered at Technologic Partners' Enterprise Outlook conference Wednesday.

Dennis Moore, senior VP of cross applications for SAP Labs, went on to describe how SAP has attempted to address this trend itself with xApps, its suite of snap-on business-process applications designed to tie existing software components together to solve business-process problems. Moore said xApps, introduced a year ago, was the result of SAP's recognition that customers have changed the way they buy software because of the desire to achieve faster return on investment.

"There is no IT budget. The IT budget is zero," he told the audience. "The budget is owned by the line-of-business managers." No one is buying anything that won't pay for itself within a year, Moore said.

Reflective of the trend away from complexity and toward business-process innovation, Moore said SAP is looking to acquire small software companies doing "innovative little things," but that it's not interested in enterprise app vendors such as J.D. Edwards & Co. and Baan Co., both of which were acquired earlier this week.

But Moore cautioned software entrepreneurs against trying to capitalize on temporary market needs, pointing to the recent flood of products that attempt to help public companies deal with the implications of the Sarbanes-Oxley Act. That's something the big enterprise apps vendors are better equipped to tackle, Moore said. "There's about a two-week window in which they can sell that before the functionality appears in SAP or PeopleSoft."