SAP Intends To Triple Customer Base In Four Years

SAP executives outlined an aggressive growth plan yesterday and unveiled research showing that most of its customers plan to eventually retool their corporate software environments around SAP's new service-oriented architecture, a drastic change from its traditional client-server environment.

SAP plans to nearly triple its customer base within four years, increasing it from 35,000 customers to 100,000 in 2010, said Shai Agassi, president of the product and technology group, at its annual analyst meeting in Las Vegas. SAP plans to get this growth by winning more small and midsize business, and by getting businesses of all sizes to build their environments on its SOA-oriented NetWeaver platform. By the end of 2007, SAP expects to have 10,000 customers running on NetWeaver, Agassi said.

It's a strategy that will require SAP's current customers and any new ones to share its view of how business computing platforms should be structured, and consider SAP as more than just the world's largest provider of enterprise-resource planning applications. In one sign of SAP's ambitions, Agassi showed the results of a customer survey that asked, "Would you consider NetWeaver as your corporate standard technology platform that can best accelerate your business strategies?" Thirty-five percent said yes, 21% said yes by 2008, 5% said yes by 2010, 34% were undecided, and 4% said never.

SAP is working to convince uncertain customers about NetWeaver through talk of an "ecosystem" of software companies, consultants, developers and customers that will build and support SOA applications. SAP announced yesterday that management and technology consulting firm BearingPoint will open a center at the SAP PartnerPort collaboration hub in Waldorf, Germany, on Dec. 12, where it will work with SAP on SOA-oriented applications and business processes for BearingPoint's European customers.

SAP also announced the first enhancement package for MySAP ERP 2005, the first business suite built on NetWeaver. At its TechEd conference in September, SAP said that rather than require customers to make costly upgrades every few years, they could pick what they wanted from steady releases of so-called enhancement packages without having to alter their core ERP platforms; SAP plans to hold off upgrading its core suite until 2010. The first enhancement package includes hundreds of enterprise services for human resources and financial applications, and new services specific to the retail industry and manufacturing industry.

The company's executives, meanwhile, occasionally took swipes at archrival Oracle in meetings with analysts and press yesterday. Oracle also is moving its software to a service-oriented architecture, although at this point, it's looking like SAP has a head start -- Oracle doesn't plan to start delivering applications on its SOA-based Fusion technology for a few years. SAP's approach is to have composite applications that run on business processes on the database, operating system, and hardware, instead of apps that sit on middleware on the database, operating system, and hardware. "The big innovation happens at the top," Agassi said. "The database and OS become less and less visible. You don't build to the database as you did before, and don't care about OS as much as you did before."

Agassi also took a shot at Oracle's growth-through-acquisition strategy, which includes such "best of breed" vendors as PeopleSoft and Seibel. "Best of breed died so long ago Larry bought the bodies," he quipped during a lunch with media yesterday.

Still, SAP has a lot of convincing to do on its own strategy, considering a third of its own customers remain undecided about NetWeaver. But, in the typical fashion of an IT vendor conference, SAP did trot out several new SOA devotees.

Among them was Dan McWeeney, business-process analyst at Colgate-Palmolive, which runs about 95% of its business on SAP. McWeeney says his team has built a proof-of-concept application using the Ruby on Rails open-source development language. "Pretty much every open source language can consume SOA easily," he said. McWeeney said the application for human-resources management was easy to develop and plug into the back-end SAP system, with little knowledge requirements of SAP.