DiData, business integration partner show strong sector growth

A long-standing partner of Dimension Data i-Commerce in the business integration arena, German-based Software AG (SAG), is showing good income and revenue growth, 53% and 36% respectively.

Represented exclusively in Southern Africa by Dimension Data, SAG reported significant first quarter results despite a rather difficult climate in the IT industry as a whole.

"It is pleasing to see a European technology vendor holding its own and showing good revenue and income growth at a time when most US-domiciled technology companies are battling," says Tony Smith, general manager: Business Integration at Dimension Data i-Commerce.

SAG`s new electronic business products achieved good growth, up 79%. Sales of EntireX - software for integrating Internet applications and enterprises` internal IT systems - were considerably higher than last year.

Revenue from Tamino XML Database only came close to that of last year as many companies reduced or postponed their investments in Internet-based e-commerce projects. Smith also attributes this to the solution`s position on the product lifecycle curve.

"Tamino XML is at a stage classically known in software companies as `crossing the chasm`," he says. "There has been a decrease in revenue growth which is typical of a when a company tries to move the product from early adopter technology into the mainstream.

"The early adopter technology market is slow right now as companies look more closely at their expenditure, and stick to their bread and butter."

Smith says the South African experience has been similar, with one or two early adopters of Tamino XML in 1990/2000. "This year will see more significant adoption," he predicts. "We have, for example, a new customer that has built its entire IT infrastructure on the XML Tamino platform, and we expect other customers to follow suit."

SAG`s middleware solutions, the EntireX range, have now become mainstream products with significant enhancements to functionality currently being made. Customers will soon be able to develop Internet-enabled applications that can access data in standard business applications like enterprise resource planning (ERP) or customer relationship management (CRM) systems with no further programming necessary.

According to international market analysts, SAG`s developments in this area will make it a major player in the Total Business Integration arena - an important growth market.

South African sales of the EntireX range have grown in excess of 100% over the past 12 months, and have outpaced the international market over the past two years.

"Last financial year, growth in this area was up 100%," says Smith. "We have a much higher number of middleware installations, relative to the market size, than most of SAG`s other territories, and this is directly attributable to an excellent local sales and support team. We are one of SAG`s largest channel partners, and South Africa is one of the few territories in which SAG has no direct presence. This has resulted in our dominant position, depth of skilled resource, and a very strong relationship with our principal."

SAG`s strategically most important segment - software licences - reported continued dynamic growth in the first quarter. Performance of classical products ADABAS and NATURAL was particularly strong. Revenue from these products achieved a 56% increase over the same quarter last year, which represents 60.5% of total licence revenue.

This situation is mirrored by the South African environment, where Dimension Data i-Commerce`s Business Integration Division`s SAG business unit generates more than 60% of its revenue from ADABAS and NATURAL.

"We still have one of the largest installed bases of ADABAS and NATURAL worldwide," says Smith. "These are blue-chip customers with significant database installations and high volume transaction processing. Look under the covers to see what runs most of the major South African financial services companies and you will find these two solutions. These companies need reliable transaction processing, and there is good quality in German engineering."

Smith says SAG`s April results are no surprise: "SAG took on a new management team three years ago, and the new American approach to business management, including higher focus on shareholder value, is paying dividends. In addition, the company became public within the last two years and has shifted from an internal focus to placing emphasis on revenue and income growth."

The revenue growth is also attributable to SAG`s takeover of US distribution partner, SAGA Systems Inc, which led to a strong increase in US sales, and a new distribution agreement with IBM Global Services. Software AG is currently forecasting strong revenue growth of around 50% for the second quarter 2001, along with a very positive operating income.