SMB transformation earns SAP a rap

A push into the SMB market and increased commitment to engaging new channel partners resulted in a 12 percent profit jump in 2003 for the Australia and New Zealand subsidiary of software giant SAP.

The company on Thursday announced demand for its SMB software had surpassed expectations and it had grew its channel partner base from six to 15, signing 20 new customers in the process.

There are also 13 potential channel partners waiting in the wings to join the SAP channel, according to Geraldine McBride, CEO at SAP ANZ.

Across the Asia-Pacific region, external sales revenue grew 14 percent for the fourth quarter of 2003, over the same period in 2002 on a constant currency basis.

License revenue growth for the region was 17 percent higher and external revenue saw increases of 13 percent. The business enjoyed significant wins through China, India and Thailand.

McBride said the 2003 results, earned in a year dubbed to be in recession by industry analysts, were a resounding endorsement of the company's strategy to grow its business in the SMB space.

“In a year in which industry analysts reported slumps between five and nine percent, our product revenue rose by nine percent,” she said. “Our profit grew by 12 percent, which is an outstanding result, particularly when taken into account against the year's reported downturn.

“Earning double digit growth in what was a flat year, signifies the success of SAP's restructure and commitment to delivering a balanced scalable platform for businesses, regardless of their size,” she said.

While preferring to keep local dollar figures confidential, McBride said new business made up 30 percent of the results, with the remaining 70 percent coming from existing customers, giving return business and “expanding their footprint”. SAP ANZ signed more than 30 new accounts in the period.

The results reflected SAP's worldwide performance with the company reporting a record operating income of 1.7 billion Euros, which represents a six percent increase compared to the previous year.

Net income was reported  as 1.1 billion Euros, or 3.48 Euros per share. Software revenues were 2.1 billion Euros, representing a decrease of six percent when compared with 2002.

SAP claimed the region saw 600 new customers, primarily from the mid market, sign up for its Customer Relationship Management, Enterprise Resource Planning, web, financial, and business solutions.

McBride said market doubt created by acquisitions such as the Peoplesoft takeover of JD Edwards presented her with a surfeit of opportunities -- in recruitment, partnerships and customers relationships.

“Many customers have signalled their appreciation that SAP, with its 32 year history, is a solid proven option and not embroiled in those types of acquisitions,” she said. “Merging software companies is not like merging hardware companies as they (software companies) have a much greater reliance on their intellectual property.”

“I have had many, many people knocking on my door, who are keen to work with SAP as they see it as a long term viable organisation,” she said.

Business won in ANZ included contracts with Linfox, the Oroton Group, Cucina Appliances and Tasman Insulation. McBride says on her turf the strongest market sectors included manufacturing, consumer packaged goods, retail and government, with increasing interest being seen in the banking and finance industries.