SAP's forecast encourages consultants, partners

In an already tight economy, SAP AG's earnings announcement pleased the SAP consulting and partner communities. SAP announced first quarter revenues up 29% over last year, from 1.2 billion euros to 1.5 billion euros, and first quarter net income rose 109%, to 117 million euros, compared to last year's 56 million euros.

Commerce One Inc. has a strong partnership with SAP's SAPMarkets division, which provides e-marketplace development and collaborative e-business processes. While Commerce One's results were not as rosy as SAP's, with its first quarter 2001 posting an operating loss of $25.5 million, compared to last year's $14 million, the company seemed optimistic about its future, especially with its SAP partnership.

"We (will) continue to go to market very strongly with SAP in the marketplace base," said Robert Tarkoff, senior vice president, worldwide business development at Commerce One. "Their marketplace offering, both private and public, is built on the MarketSide operating environment. ... As far as the sales force, we continue to work very closely to define where the best strategic deployment of our relative sales forces are within each geography to attack this market most efficiently," he said.

SAP and Commerce One will continue to develop products jointly and improve the capabilities and functions of their current marketplace offering, according to Tarkoff.

Meanwhile, independent SAP consultants are very excited about SAP's financial report, according to Craig Snyder, a SAP consultant specializing in the QM module of SAP.

"I don't think a lot of us were surprised," Snyder said. "But, of course, remember that the first quarter results in 2000 were pretty disappointing. Many attribute this to SAP's slow roll-out of mySAP.com."

Y2K problems played a role in last year's sleepy growth, according to Snyder.

"I find most of the consultants blame it on the Y2K problems, not SAP. Companies who had not started an SAP implementation were not about to start one near the Y2K eve. ...With all the gloom and doom of Y2K, no MIS group was going to be caught flat-footed," he said.

Many companies limited their SAP projects and made sure others were completed by October or November of 1999, he said. The money that companies did spend toward their information systems went toward updates and patches, not new SAP systems or modules, and other funds were set aside for worst-case scenarios, according to Snyder.

After companies felt that the Y2K issue was not going to cause a massive system meltdown, they began funding new projects, Snyder said. Even so, it does take time for new projects to get underway, for decisions to be made, for contracts to be signed and consultants to be hired, he said.

"I think we are just now starting to see an uptick in the SAP market again for consultants," Snyder said. "I think demand will continue to climb, but will probably never reach the 1997 or 1998 levels, when companies were racing to install SAP to resolve their Y2K issues."

Snyder believes that the large projects of the late 1990s involving Fortune 500 companies are almost over, and SAP needs to work with small and mid-size businesses for new installations, as well as rally forth with product development for its installed customers.

"The worse thing SAP could do at this point is reduce their R&D groups," Snyder said. "If they need to cut staff, it must be somewhere else. ... I think SAP is in an excellent position to hold their market share and continue to grow."

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