The 1994 results for German software giant SAP AG contained two notable events – its North American subsidiary grew eight times faster than the German division to approach it in size, and R/3 sales annihilated those of its predecessor R/2. Revenues for North America grew 157% to $367m, against only 19% growth in SAP’s home base of Germany, where revenues totalled $412m. The difference is perfectly understandable, given that SAP’s installed base in Germany is much larger than that in the US, that the German economy suffered greater recession last year, that the US market is much larger, and that it was only last year the mainstream US business press began trumpeting the SAP story, which created a snowball effect. As a result of stupendous growth in the US, the majority of SAP’s revenues now come from outside Germany, whereas its home base still represented over 50% in 1993. The tripling of its US business creates the problem of having to train people well enough to support our clients, said H ans-Josef Jeanrond, director of marketing for SAP France, in a presentation in Paris yesterday. As a result, SAP created its Partners Academy in Texas, where it will train 3,000 of its partners’ employees this year; it plans Partner Academies for Berlin and Asia. SAP AG’s 66% total revenue growth was due largely to demand for R/3, the client-server version of its integrated business management software. The shift in the market from mainframe to client-server systems was so much faster than anyone could have imagined two years ago that it compensated for flat economic growth in some markets, such as France, Jeanrond said.
AS/400 and Sybase versions
Indeed, SAP France saw its revenues grow as fast as those of the group, at 62%, to some $29m. Of those sales, said SAP financial director Vincent Migayrou, the group saw only one new R/2 client. The group’s figures show a decline of 50% in R/2 licences and a more-than-quintupling – 441% – of R/3 licences. As a result, R/3 sales accounted for 87% of the total, against only 38% in 1993. So, 1994 truly represents reward for our efforts and investment in R/3, he said. Migayrou noted that R/3 was winning about 10% of smaller companies, more than SAP is used to getting. Jeanrond said 71% of the whole group’s revenue came from the licensing and maintenance, with 20% from consulting and 7% from training. SAP France’s service revenues grew only 7.5% in 1994, which ties in with the subsidiary’s desire to pass this business into the hands of our partners, Migayrou said. He noted that the percentage was still artificially low because little service revenue had yet been seen from year-end licence sales, and he forecast 15% growth in sales this year. And the competition? Baan International NV’s Triton remains SAP’s principal competitor, particularly in the manufacturing sector, although he said we don’t see much from them when clients are looking for financial solutions. Neither has SAP yet seen much challenge from the Oracle Corp-Datalogics Inc team-up, despite Ray Lane’s boast a few months ago that he intended to eat SAP’s process manufacturing market share for lunch. Without specifying a date, Jeanrond said the market may see AS/400 and Sybase versions of R/3 this year. I’m very wary, because it takes more to create a product than just having it run in a lab, he declared.
