SAP at tipping point to becoming accepted standard for enterprise apps

On the back of a record performance in 2005, a strong line-up of launches set for this year and the company's evolution of its products from a suite of business solutions to a widely adopted business process platform, SAP Africa is predicting further strong growth over the next 12 months.

"The company's performance over the past year or so suggests that we're at the tipping point to becoming the accepted standard in enterprise solutions," says SAP Africa chief executive, Claas Kuehnemann.

He says Africa will be a strong contributor to SAP's global objective to double in size and quadruple its number of customers by 2010.

Kuehnemann says the business applications industry is still coming to terms with the wave of consolidation of the past couple of years. A recent study found that there were 199 merger and acquisition deals worth a total of $36 billion in the worldwide enterprise applications market in 2005.

"For those involved in this consolidation, integrating and stabilising acquisitions while trying to develop next-generation applications is still going to take some time. This creates risk and uncertainty for customers of those companies involved in mergers or acquisitions.

"We see some of that feeling of risk and uncertainty coming through when we analyse what was behind our strong performance of the past two years. The underlying factor is that customers are buying into SAP's long-term architecture and technology strategy. We are the only player in this market that has stable next-generation offerings in place that are actually being implemented by customers," says Kuehnemann.

Globally in 2005, SAP's software revenues increased by 18%, operating income grew by 16% and the company gained seven percentage points of worldwide share against its peer group. Its global peer group market share is now 62%. SAP's peer group share in the Europe, Middle East and Africa (EMEA) region now stands at 71%.

In Sub-Saharan Africa, SAP followed a strong 2004 with software revenue growth of 22% in 2005, a faster rate of growth than SAP overall. SAP Africa's contributions included wins, significant upgrades and extensions in the financial services, retail and mining sectors.

"Flexibility to introduce new business processes or change existing ones, and the ability to reduce overall IT costs are what organisations want in their enterprise systems. Our latest releases, all based on service-oriented architecture, enable further improvements in both respects and we've seen local customers beginning to invest in the new technology," says Kuehnemann.

He says the company's launch of business solutions for SMEs is exceeding expectations, with successful implementations in areas as diverse as the chemical industry, office automation and cross-industry customer relationship management.

"From what we've seen, a factor in SAP's growth in the SME sector is that this is a highly fragmented market that is now seeing the leader in enterprise applications coming in, bringing an additional dimension of quality, trust and support to an area that until relatively recently was served by many disparate offerings."

Kuehnemann says that serving the SME market through channel partners creates business opportunities for local companies, with many expressing a desire to become SAP partners.

SAP's 2006 product pipeline is the strongest in the company's history and it believes the new offerings and go-to-market strategies will continue to expand its potential markets.

"Steady growth in the South African economy and a determination by many countries in Africa to transform their economies using technology enhances the expansion of our potential markets. The transparency and access to best practices that SAP brings help in their drive to improve governance," says Kuehnemann.

At the same time, the company has deepened its African commitment with the opening of SAP's first research facility in Africa. Kuehnemann says the Pretoria-based facility is integrated with the organisation's global research network. "This means that its research provides services not just in Africa but also to the whole of the SAP world."