SAP Reports Channel Sales Up 31 Percent In '07

Small and midsize companies are the fastest growing segment of SAP's business and sales through the giant software vendor's channel partners increased more than 31 percent in 2007, the company said Wednesday.

In outlining their projections for 2008 SAP executives made it clear that expanding sales efforts for the company's small and midsize enterprise (SME) products is a priority in the new year.

SAP also said that Business Objects founder Bernard Liautaud is stepping down as chairman and chief strategy officer of the business intelligence software company following its acquisition by SAP earlier this month for $6.8 billion.

"SME is a huge greenfield opportunity," said deputy CEO Leo Apotheker during a Web conference detailing SAP's Q4 and 2007 financial results. SAP CEO Henning Kagermann said the potential worldwide SME market for SAP's products is $45 billion.

While the bulk of SAP's revenue still comes from sales of its flagship SAP Business Suite applications for large companies, an increasing percentage of the company's revenue comes from sales of its SAP Business All-in-One application package for midsize customers, SAP Business ByDesign software-as-a-service applications for midsize companies, and SAP BusinessOne for small customers.

Some 30 percent of the vendor's product orders in 2007 were from SME customers, Apotheker said, with SAP signing up 7,400 new SME customers during the year. Sales of BusinessOne grew 37 percent in 2007 while sales of Business All-in-One grew 18 percent during the year. SAP now has 150 customers for Business ByDesign, which just launched in September, but Kagermann said it has the potential to be a $1 billion business by 2010.

Overall sales through SAP's indirect channel partners grew 31 percent in 2007. "The indirect channel is picking up very nicely," Apotheker said, adding that the company would continue to build its partner network in 2008, including recruiting more resellers and complementary content providers.

Last week SAP announced management changes in its channel and SMB organizations, installing a pair of new executives who joined the company from Avaya.

For the fourth quarter ended Dec. 31 SAP reported revenue of 3.24 billion Euros ($4.79 billion), up 10 percent from the same period one year earlier (14 percent in constant currencies). Earnings from continuing operations reached 758 million Euros ($1.12 billion).

For all of 2007 the company reported revenue of 10.25 billion Euros ($15.16 billion), up 13 percent from 2006 (17 percent in constant currencies). Earnings from continuing operations reached $1.94 billion Euros ($2.87 billion)

SAP is projecting growth in sales of software and related services of 12 to 14 percent this year, not including the addition of Business Objects. That growth will be 24 to 27 percent when Business Objects is factored in.

Liautaud is expected to join the SAP Supervisory Board in June following that company's annual shareholder meeting. Until then he will serve in an advisory role to SAP CEO Henning Kagermann.

Liautaud co-founded Paris-based Business Objects in 1990 and served as CEO until September 2005 when the company hired John Schwarz, formerly president and COO of Symantec, as CEO. Schwarz continues to lead Business Objects as an SAP business unit following the SAP 's acquisition.