SMBs drive growth for SAP

Uptake of SAP's technologies in the midmarket one of the drivers

SAP New Zealand has posted increased local revenue for 2006 of $45.8 million, compared with $39.8 million in 2005.

The results, posted to the Companies Office website last week, show net surplus for the year at $4.9 million, up from $3.2 million in 2005.

However, total revenue took a big dive in 2005, compared with 2004 revenue of $65.8 million. One of the reasons for the revenue dip was a services project for dairy giant Fonterra that SAP “took on ourselves”, says Ian Black, managing director of SAP New Zealand.

Computerworld reported in October 2006 that Fonterra had put a major IT project on hold, citing more pressing business priorities. For the two previous years, Fonterra had been planning to standardise its disparate manufacturing systems on SAP.

While Fonterra said other business priorities were behind putting the project on ice, other sources said it was postponed because the company’s debt ratios were too high.

But SAP’s software line of business has grown dramatically over the last couple of years, says Black.

“Software revenue is really the key performance indicator that we look to,” he says.

The drivers behind the recent growth are uptake of SAP’s technologies in the midmarket, Black says. SAP added 14 new SMB customers in 2006 — and a number of successful larger projects, primarily IRD’s purchase of SAP for the KiwiSaver project.

The company, which has 45 staff locally, also deployed about 20 payroll systems in New Zealand in 2006, he adds.

Among SAP’s priorities for 2008 are a continued focus on facilitating the adoption of new technology for SMBs, and to further develop its relationships with partners, such as IBM, HP, Soltius and others, he says.

Black says SAP has some significant projects in the pipeline; the company is building towards some big implementations in New Zealand.

For the last couple of years SAP has been working to ensure that its platform is SOA (service-oriented architecture) compliant, and that capabilities required by customers are available, says Black.

As a result, the company is now seeing a wider adoption of its NetWeaver suite from its customer base into a broader market, he says. As reported last week, NetWeaver is being implemented by Yellow Pages.

Technologies gained from recent acquisitions have also contributed to growth, Black says.

Another focus area for this year is in the connectivity space, or “industry value chain”, as Black calls it. This involves working with its customers’ supply chain — “joining the dots” between, for example, retailers and suppliers of goods and services — to make collaboration easier, he says.

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