SAP 'not reducing' SaaS investment

BERLIN--SAP has refuted reports it is cutting back on investment in the company's software-as-a-service (SaaS) strategy, and says it remains committed to becoming a key player in this market.

News reports flooded the Web last month that SAP had cut its investment in Business ByDesign this year by some 100 million euros (US$154.9 million) 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 SaaS player.

Asked about the company's plans for this market during a press meeting Monday at the SAP Sapphire 2008 conference in Berlin, Germany, Co-CEO 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 unveiled it would push "an accelerated investment" in ByDesign as it believed then that there were strong reasons to go into the SaaS market quickly. To support this move, he added, the company needed to pump in additional investment.

"The decision we made very recently is to contine investing in 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, United Kingdom, France, United States, 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," Apotheker 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 CEO Henning Kagermann, the company remained largely unaffected by the U.S. economic downturn--thanks to Asia and Europe.

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

While the United States 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", he said. Kagermann added that its geographical stretch allows SAP to have a more balanced business portfolio.

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

Eileen Yu of ZDNet Asia reported from SAP Sapphire 2008 in Berlin, Germany.