SAP chief sees users upgrading, investing again

A third of R/3 customers have upgraded to new version

The migration is in full swing. Customers of SAP's flagship R/3 enterprise software are upgrading to the company's newer version, mySAP ERP, at a steady rate, Chairman and Chief Executive Officer Henning Kagermann said last week at a news conference in New Orleans at the company's Sapphire international customer conference.

Around one third of the company's installed based of about 22,000 customers have switched from R/3 to the newest version, which comes with the NetWeaver integration server platform, according to Kagermann.

"We aren't doing a forced migration," he said, pointing out that the company has extended maintenance for R/3 to 2012. "What we are telling customers, however, is that mySAP ERP is much more powerful, much richer in functionality than R/3. We want them to migrate because of value."

As for the agreement announced at Sapphire to establish better links between Microsoft's .Net development software and SAP's Netweaver integration server, Kagermann underscored the importance of deepening technical integration between the two companies' platforms, but added that this deal would not undermine integration work with IBM's webSphere.

Many of SAP's biggest customers use webSphere, he said, adding that "both Microsoft and IBM are important to our customers" in various market segments.

Still, Kagermann made little secret of his excitement to be able to leverage the Microsoft development community to link to SAP applications.

Sales in the US continue to grow healthily, said Bill McDermott, chief executive officer and president of SAP America "We're gaining 1% market share per month," he said, adding that his goal is to account for 40% of the German software group's total sales.

Last month, SAP reported that first quarter software revenue in the US rose 45% to €103 million ($US123 million, as of Wednesday), or 65% at constant currency rates. Constant currency rates exclude the impact of fluctuations in currency exchange rates.

"We believe now that the IT industry is ready to become a mature industry," Kagermann said, echoing remarks made by Larry Ellison, chief executive officer of rival Oracle, that a handful of big software companies will likely dominate the market.

Kagermann said a near three-year halt on new technology spending was over, with companies investing again in software systems and with SAP well-positioned to take advantage of this spending.

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