SAP denies reducing SaaS investment

The company says it is continuing to invest in software-as-a-service product suite Business ByDesign, but at a slower pace

SAP has rejected reports it is cutting back on investment in its software-as-a-service strategy, and said it remains committed to becoming a key player in this market.

News reports circulated on the web last month that SAP had cut its investment in Business ByDesign this year by some €100m (£51m) and revised its rollout strategy for the on-demand product suite.

But, while company executives acknowledged the software maker has delayed the general launch of Business ByDesign, they dismissed any notion that it is scaling back on plans to become a key software-as-a-service (SaaS) player.

Asked about the company's plans for this market during a press meeting on Monday at the SAP Sapphire 2008 conference in Berlin, co-chief executive Leo Apotheker said: "Let's start by getting some facts straight. No-one is reducing any investment."

Apotheker explained that, in January last year, SAP announced "an accelerated investment" in Business ByDesign as the company believed then that there were strong reasons to go into the SaaS market quickly. To support this move, Apotheker added, the company needed to pump in additional investment.

"The decision we made very recently is to contine investing in Business ByDesign, but to take out that acceleration part and do it in the normal speed that we had planned originally," Apotheker said. "Therefore, we continue to invest significant resources, just not the accelerated part."

He noted that SAP will be continuing the rollout of Business ByDesign in six countries: Germany, the UK, France, the US, China and India — where current early adopters of the on-demand suite are located. Together, these markets encompass about 70 percent of the market opportunity for Business ByDesign, he added.

In January 2008, the SaaS product was also launched in Singapore.

"We will use the time we have gained to make sure all the things we want to bring to perfection will be ironed out," he said. "So you will see SAP being a player in this market as well, and we are confident that we have enough investment in place to make that happen."

Growth boosted by Asia, Europe
According to SAP co-chief executive Henning Kagermann, the company has remained largely unaffected by the US economic downturn, thanks to Asia and Europe.

In its first-quarter 2008 results, the company claimed not to have seen any spill-over effects in its business in Europe and Asia, where it continues to enjoy "very good business", Kagermann said.

While the US is SAP's largest market, it contributes only 30 percent of the software vendor's business "and not 60 or 65 percent like [it does] for our competitors", Kagermann said. He added that the company’s geographical stretch allows SAP to have a more balanced business portfolio.

Kagermann said the company gained some 4.2 percent share in the global market for enterprise software and software-related services during the first quarter of 2008, 3.3 percent of which was acquired through its 2007 merger with Business Objects.