Ask chief information officers about their enterprise resource planning system, and they will probably refer to it not as ERP, but as SAP, using the name of German enterprise software giant SAP AG (NYSE: SAP). CIOs often use SAP as a synonym for ERP, which has been great for the vendor. But SAP wants to go beyond that and is driving efforts toward mobile, big data and cloud computing. Indeed, SAP is basing its near-term growth on these three pillars, with a goal of achieving U.S. $27.4 billion (20 billion euros) in revenue by 2015.
“Mobility is a key factor, because people will prefer to access systems and Internet through mobile devices,” noted Sanjay Poonen, president for global solutions at SAP, during a meeting with journalists last weekend in Campos do Jordão, about 100 miles (170 km) northeast of São Paulo.
Going mobile is how SAP is addressing enterprise needs, because employees seek mobility, among other consumerization phenomena. “Mobile, cloud and big data are accelerators for our growth. They are innovation pillars, and we are building our platforms above them,” said Luís César Verdi, president of SAP Brazil.
SAP is customizing many systems to have mobile interfaces. In addition, the German company is working to combine mobility with cloud to simplify its IT enterprise environment. Verdi said Brazilian telecoms face challenges, and improving infrastructure and expanding coverage are key factors in cloud and mobile strategies alike. “Telecoms penetration is huge in Brazil, and sector is improving,” he said. Many Latin American countries face the same challenges, but Verdi said he doesn’t think those telecoms’ gaps could push back SAP’s goals because the company is first concentrating on mobile and cloud strategies in big urban centers.
In addition, SAP has to respond to challenges related to security and multiplatform devices, which are major concerns when providing mobile services for executives. To address those issues, SAP after its Sybase purchase last year unveiled Afaria, a mobile device management and security solution that provides a single administrative console to centrally manage, secure and deploy mobile data, applications and devices.
Mobile, big data and cloud strategy seem to be pleasing analysts. In addition, SAP reported third-quarter revenue of $4.7 billion, up 12% compared with the same quarter last year and its seventh consecutive quarter of double-digit growth. SAP also saw a double-digit gain in market share against rival Oracle Corp. and said innovation solutions now account for almost 10% of its revenue.
In the past years, SAP made significant acquisitions, such as those of Business Objects and Sybase — for which SAP paid $5.8 billion — with the goal of moving ahead of Oracle in the mobile data market. “Sybase realized eight years ago that data trapped in the data center were useless, so Sybase has worked on what they call unwired enterprise,” said Valsoir Tronchin, vice president for Latin America at Sybase, which remains a separate unit.
Enterprises should be ready to provide mobility to users, Tronchin said, citing as examples Research in Motion’s BlackBerry and Apple’s iPhone. “Blackberry was the greatest revolution for corporate data, email access in mobile devices. Then, with iPhone, Apple did the same revolution RIM did with corporate emails to applications. But we still just see apps for consumers. Now, SAP aims to do what Apple did in applications but focus on the enterprise market.”
Executive said SAP plans to have released about 100 mobile corporate applications by the end of 2012, more than double the 30 such apps currently available.
Next year, SAP will turn 40 years old, and it is expected that the company will present the results of its new strategy. “SAP is much more than an ERP company. Analytics and mobility will be bigger than ERP. That’s our goal,” said Sanjay Poonen, a senior vice president and general manager of SAP’s business applications division. Indeed, enterprise resource planning now accounts for less than half of SAP’s revenue.
Opportunities are also found in emerging markets such as Brazil, where SAP’s goal is to triple software revenue between 2010 and 2014. In the third quarter, revenue from innovation solutions (which includes business analytics and mobility) increased 47% compared with the same period last year. As a country, Brazil has become SAP’s third largest source of software revenue.
The SAP strategy seems to be on the right track as well as meeting the demands of major executives. The big question, however, is whether companies are prepared to use as many mobile services as SAP aims to provide.
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