SAP's ByDesign could be a winner, making SAP the loser?
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SAP has a new SaaS suite, which may end up being its biggest competitor.
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Software giant has clamped down, although experts say there's still room for improvement.
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The Story: Look in the mirror, Mr. or Ms. IT buyer. You?ve got more muscle than ever ? and you did it without steroids.[ Slideshow: 2007's top underreported tech stories ]                                                    Despite the wave of consolidation sweeping the industry, buyers have actually gained more leverage than ever when it comes to making deals with their vendors, notes a PricewaterhouseCoopers analysis. ?Software buyers need to realize that the pendulum is beginning to swing in their favor and that there are an increasing number of alternatives in today?s software market,? concurs Gartner analyst William Snyder (no relation to this writer).There are a lot of reasons for the swing, but one certainly stands out: The shift to SaaS (software as a service). The poster child for this phenomenon is Salesforce.com. "Both its development and delivery models are having a disruptive effect on the entire CRM market,? notes Forrester Research analyst Bill Band. But it?s not just Salesforce: By 2011, Snyder says, fully 25 percent of all new business software will be delivered as a service as Salesforce and other vendors push upstream from the small-business market. Already, SaaS providers make up the majority of sales for several segments of human resources applications, and is well-established for supply-chain management.[ InfoClipzflash video primer: Software as a Service ]SaaS is just the first wave of services that are pushing pricing power over to buyers: The more recent move to Web services and the beginnings of SOA (service-oriented architecture) deployment are encouraging the use of modular software, which in turn cuts development costs, makes it harder for vendors to sell expensive suites, and lessens the need for expensive consulting services.And yet another factor is upping buyer?s power, notes Gartner?s Snyder: the emergence of third-party support options that are reducing software?s TCO (total cost of ownership). ?Maintenance services have been a quasi-monopoly for software vendors,? he said. ?For many years, only the software vendor had rights to the source code of the critical components of the system. This made it impossible to go to an open, competitive market to obtain upgrades, services and support, which in turn made it impossible to negotiate maintenance fees.?Interestingly another software trend ? the growth of virtualization ? is beginning to affect pricing for hardware, particularly servers. A report by Infiniti Research suggests that server shipments will start declining in 2008: ?The server market of tomorrow will be a value game and not a volume game.? And that means better pricing for hardware, too.Don?t let your head swell too much, but Gartner vice president Mark McDonald credits ?savvy CIOs? for containing costs that were once out of control. ?They?re saying, ?I want you to implement in a way that gives me the advantage over my competition? ? and they?re not accepting the traditional vendor model, which favors homogeneity and the economics of scale.?The Bottom Line: Chances are that you?re looking at SaaS, Web services, SOA, virtualization, open source, and other technology-delivery methods for a variety of specific reasons, without realizing the cumulative effect is to give you more pricing power. Now that you?ve got the power, use it.Complete list of 2007 underreported tech stories: 1.? Java is becoming the new Cobol 2.? Sun Microsystems is back in the game 3.? Hackers take aim at Mac OS X 4.? There are some threats you can worry less about 5.? Companies may have found a way around H-1B visa limits 6.? Open source?s new commercial strategy 7.? End-to-end Ethernet finally arrives 8.? Blade servers arrive for the masses 9.? BI is dead; long live BI 10. Balance of power shifts to software buyers
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Facing continued top-line weakness, the company may have to cut costs.
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The Story: With three of the largest competitors in the field taken over by software giants, you?d think that the best days of the business intelligence market were over. You?d be wrong.[ Slideshow: 2007's top underreported tech stories ]                                                    Far from heralding the death of BI, the loss of Business Objects, Cognos and Hyperion to SAP, IBM and Oracle may well signal ?a golden age for business intelligence,? says AMR Research analyst John Hagerty.Sure, that?s a brave statement. But the BI market has never been as narrow as many people assumed. There are significant players left, including SAS, SPSS, MicroStrategy, Actuate, and dozens of smaller, often specialized, vendors. ?Go beyond the core tools of reporting and analysis and you?ll see lots of data-mining and statistical tool vendors, as well as industry-specific developers,? says IDC analyst Dan Vesset.The acquisitions of the big guys now creates space for those other companies to flourish, says Rob Tholemeier, a former industry analyst turned private investor. The same thing happened to the database market, he notes: ?There are more database companies around now than when Informix was purchased.? BI, Tholemeier says, is likely to follow the same course. ?Innovation will come from the outside [companies] as the big guys expand their scale and scope,? concurs AMR?s Hagerty. Pricing, of course, is a major concern as markets consolidate. But because the supply of BI software is still ample, given the large number of independents, buyers still have significant leverage, says Vesset ? though that could change further out, he adds. Moreover, it will take the platform vendors some time to integrate their acquisitions, both in terms of code and business process. And while that process plays out, prices aren?t likely to spike.The Bottom Line: As investor Tholmeier puts it, ?Clearing out the old-timers leaves a huge vacuum for the dozens of innovative players ready to strut their stuff. The business intelligence industry is dead. Long live BI.? That change presents both a challenge for IT to understand the new BI, and the opportunity to drive BI?s benefits to a greater portion of the company.Complete list of 2007 underreported stories: 1.? Java is becoming the new Cobol 2.? Sun Microsystems is back in the game 3.? Hackers take aim at Mac OS X 4.? There are some threats you can worry less about 5.? Companies may have found a way around H-1B visa limits 6.? Open source?s new commercial strategy 7.? End-to-end Ethernet finally arrives 8.? Blade servers arrive for the masses 9.? BI is dead; long live BI 10. Balance of power shifts to software buyers
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Microsoft is, for once, trying to play nicely.  This is why it's failing.
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Oracle's Ellison has made SAP enemy No. 1. But SAP is fighting back the right way: by getting customers.
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Wall Street analysts debate whether year-end Sarbanes-Oxley deadline will sap demand for corporate software systems.
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When Hewlett-Packard Co. (HPQ.N) warned of a profit shortfall last week, it blamed problems it had combining two SAP systems, something that the computer maker believed would be relatively simple when they were putting together a deal to buy Compaq two years ago.
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More and more young designers are gambling on the mass market. But is it all risk and no profit?
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Success of alternative apps like Firefox may be putting pressure on the software giant.
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SAP reported a 10 percent rise in revenue for the fourth quarter, but earnings fell 6 percent compared to a year earlier, dragged down in part by the cost of&#160;launching Business ByDesign, a new offering for the mid-market, the company said Wednesday.Revenue for the fourth quarter totalled &#8364;3.24 billion ($4.77 billion as of Dec. 31, the last day of the period reported), up 10 percent from &#8364;2.95 billion a year earlier, but net income fell 6 percent to &#8364;756 million.Software and related services revenue grew at 13 percent year on year, while consulting activities, representing around a fifth of SAP&#39;s revenue, remained stagnant.For the full year, revenue rose to &#8364;10.25 billion, up 9 percent from &#8364;9.39 billion, while net income rose to &#8364;1.92 billion, up 3 percent from &#8364;1.87 billion.The results do not include any revenue gains from&#160;SAP&#39;s $6.8 billion acquisition of&#160;business intelligence software vendor Business Objects, which the companies only completed on Jan. 16, 2008, although they do include &#8364;61 million in acquisition-related costs.SAP&#39;s operating margin for the year fell from 27.4 percent in 2006 to 26.7 percent in 2007, but if the effects of exchange rate fluctuations and the company&#39;s investment in Business ByDesign were excluded, the operating margin would have risen to 28.2 percent, Chief Financial Officer Werner Brandt said in a conference call.Developing Business ByDesign cost the company &#8364;125 million in 2007, &#8364;40 million of it in the fourth quarter, and the company expects to spend at least a further &#8364;175 million in 2008. An additional &#8364;50 million of expenditure will fall in late 2008 or early 2009.Sales and related services for subscription-based products like the new ByDesign contributed just &#8364;53 million in the fourth quarter, up 47 percent year on year.Looking ahead, CEO Henning Kagermann expects mid-market products like ByDesign to boost growth in 2008, he said during the conference call.Another growth driver will be SAP&#39;s acquisition of Business Objects, which will help the company increase its penetration of the business user sector, Kagermann said.SAP expects full-year revenue from software and software-related services to grow at between 24 percent and 27 percent. Excluding the contribution of Business Objects, SAP&#39;s existing activities will contribute between 12 and 14 percentage points, the company said.
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This book attempts to demolish the notion that ''new is better.&quot; For the most part, it succeeds. Sergio Zyman and coauthor Armin A. Brott build a solid foundation for their argument that innovation can be disastrous for the bottom line. Innovation is like a sugar high, they say -- a quick fix that just doesn't work.
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Symantec&#39;s takeover of Veritas could transform the firm into a &quot;disruptive influence&quot; in the software market, but risks failure if it does not manage to integrate product lines.
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The IT industry winners and losers, as voted by you Reg Tech Panel â¦
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Executive handbags A slanging match has erupted between Oracle and SAP as the Silicon Valley giant tries to burnish its business apps credectials.â¦
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If a company isn't failing at some things, it probably isn't innovating.