SAP: High demand for ERP in China
A booming manufacturing sector in China is set to boost SAP's business in the country.
During the first quarter of 2002, the German business software maker sealed contracts for its Enterprise Resource Planning (ERP) solutions with Beijing Telecom, pharmaceutical firm Juhua Group, steel manufacturer Jianshu Shagang Steel Group and air cargo firm Emery, among others, SAP said in a statement.
SAP's traditional ERP solution called R/3 is now part of mySAP.com and provides ERP functionalities which help businesses manage areas such as product planning, purchasing, warehousing, transportation and human resource.
Announcing these deals at its e-business conference Sapphire in Florida Friday, SAP CEO and Co-Chairman Henning Kagermann said: "We have consistently achieved 50 percent annual revenue growth over the last few years (in China)."
This year, the company expects to exceed its past performance, SAP Greater China President Klaus Zimmer told CNETAsia.
"The World Trade Organization accession represents a turning point for all Chinese businesses and many companies are realizing that e-business transformation can help them attain global competitiveness," said Zimmer.
Moaiyad Taher Hoosenally, Frost & Sullivan Asia-Pacific industry manager of Enterprise Communications, said SAP's ERP offerings has a host of opportunities from Chinese-based companies as well as multi-national firms relocating to the country.
Companies such as Samsung, Toshiba, Sony and Dell Computer have announced plans to shift selected production activities from various parts of Asia to the mainland.
CRM, SCM gaining momentum
Apart from ERP, SAP has gained traction with new e-business applications such as mySAP Customer Relationship Management (CRM), mySAP Supply Chain Management (SCM) and mySAP Product Lifecycle Management (PLM).
mySAP.com debuted in 1999 as the company's first step towards an open, Web-based architecture. Shanghai Mitsubishi Elevator, FAW-Volkswagen, electric appliances manufacturer Haier and Jinbei GM Automotive are among its CRM and SCM users.
Shipping conglomerate China Ocean Shipping Co recently invested in mySAP Financials, one of SAP's largest customer wins in the country.
Analysts believe that such new applications will drive SAP's long-term growth, as the global ERP market is beginning to mature.
"It is SAP's strategy to migrate existing ERP customers to mySAP," said Frost & Sullivan's Hoosenally.
Market researcher IDC projected a compound annual growth of 11 percent for the worldwide ERP market from 2001 to 2006, reaching US$39.6 billion at the end of the forecast period. Comparatively, the CRM sector is expected to register about 18 percent growth from 2000 to 2005, attaining revenues of US$14 billion.
To date, SAP has more than 300 clients in China. The company does not detail its customers by product line.
In a brokerage report dated June 4, First Union Securities maintained that SAP's massive base of 44,500 R/3 installations worldwide provides the company with an enormous cross-selling opportunity.
"The upgrade opportunity for SAP to move R/3 clients to mySAP is still significant given that only 15 percent of the installed base have migrated to mySAP from the older R/3 products," First Union Securities said.