September Means Falls Ahead
October 8, 2008
SAP stumbled. I first thought of the phrase “fell on its sword”. Either one may make the German software giant wince. After a fun day of meetings in the cold northern suburbs of Scarberia near Toronto, I had the misfortune to read some of the chilling stories about the maker of the world’s most exciting software system, R/3. For example, to catch up on the financial outlook, navigate to Dawn Kawamoto’s “Analysts Cut Google and SAP Price Targets and Earnings Estimates” here. SAP also kept its lederhosen muddy with its unresolved legal squabble with Oracle. If you need to catch up on the TomorrowNow issue, click here. To put a bit of excitement in the SAP world, I found the financial outlook for SAP a chop in the latissimus dorsi as well. You can get Bloomberg’s take on this self-inflicted wound by clicking here.
SAP has been taking hits because of a price hike. The company has been sending me fuzzy messages about its NetWeaver TREX search system, and I have yet to hear that its investments in other companies have been delivering significant revenues. These are anecdotal issues, however, and my concerns are broader than SAP:
- If other entgerprise software vendors are hit with a sales chop, what will happen to these cash hungry search and content processing companies? My hunch is that the type of shut downs I documented with mini cases of Entopia, Delphes, and a couple of other outfits may become more common.
- SAP customers will do what when their present systems go south? The notion of ringing up SAP and getting a deal will be shortlived. A company searching for revenue will allow some other fees to drift skyward. I anticipate some cranky enterprise customers in the next three months.
- Who will swoop in to snatch low hanging fruit? Will high priced vendors get the nod? I don’t think so. My opinion is that SAP licensees will go shopping and confine their buys products and services that fit within a constrained budget.
What’s this mean? I am hopeful that SAP’s problem is isolated. However, if the problems are exacerbated by slicing oneself with one’s own sword, I think a bigger problem will arise. Is Mercado mired in an SAP type of problem? I heard about two high profile search companies who suffered very anemic sales over the last 12 weeks. I want to track incidents of self injury in an unsettled market. Add your anecdotes and examples, please.
Stephen Arnold, October 8, 2008
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2 Responses to “September Means Falls Ahead”
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For SAP’s sake: no muddy lederhosen. Their Walldorf-Headquarter is distant enough from Bavaria, so SAP Octoberfests will be much more civil…
With TREX I’ve had the same experience, but I understand that. Put yourself into the shoes of a TREX product manager. When you call your marketing guys to launch a campaign/attent a conference/tradeshow what will be the (imaginary) answer?
a) You do what?
b) What is this search thing about?
c) Isn’t this tiny product buried in one of our suites where we already do marketing for?
The general observation that search is squeezed between other products will be even more true internally (taking into account the strength of SAPs products).
Martin,
I grabbed the lederhosen reference for metaphorical purposes. The addled goose is not too good at geography or German vestments. A happy quack for this important clarification.
Stephen Arnold, October 10, 2008