SAP- Under the Enterprise 2.0 Gun?

Dan Farber and Larry Dignan of ZDNet report:

SAP’s first fourth quarter miss in seven years has analysts painting a grim picture in the enterprise applications market as new trends such as services oriented architecture (SOA) win out.

The picture goes something like this: SAP’s big miss in the fourth quarter is likely to give it a small first half deal pipeline, says Pacific Crest analyst Brendan Barnicle. Meanwhile, both Oracle and SAP are struggling to hit big growth numbers for their traditional enterprise applications. Toss in a price war between SAP and Oracle and you have issues–unless you’re a tech buyer looking for upgrade your enterprise applications.

Zooming the picture out a bit Barnicle notes that new technologies are working against both SAP and Oracle. "On-demand solutions, open-source applications and service-oriented architecture (SOA) are all working against SAP and Oracle. With SOA, enterprises can more easily build custom applications and are less dependent on packaged applications from SAP," says Barnicle

….and…

The biggest problem facing SAP and Oracle is that CIOs  increasingly view enterprise applications as plumbing that can run in the background as more lightweight front ends are added onto them. This is the enterprise 2.0 effect Dion Hinchcliffe reports about.

Peter Goldmacher, an analyst at Credit Suisse, adds that "in addition to more competition and likely pricing pressure from a reinvigorated Oracle, we believe SAP is poorly positioned to benefit from other, non app related growth areas in software, primarily SOA."

Comments

  1. For a view on the historic pricing for ERP systems from Oracle, SAP and others you might want to take a look at this IDC report recently released that provides some insight on the average pricing for ERP solutions from SAP, Oracle and others. It breaks out product vs. service and also by customer size (revenue which seems to have a direct correlation to number of employees). There is a link to the report here: http://vantelo.com/rss/2007/02/09/aberdeen-report-total-cost-of-erp-ownership-october-2006/

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