SAP plans to maintain its acquisition pace

SAP plans to maintain its acquisition pace
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First Published: Wed, Aug 29 2007. 12 18 AM IST
Updated: Wed, Aug 29 2007. 12 18 AM IST
SAP AG, the world’s biggest business software firm that has acquired or invested in seven companies since last March, will continue the same pace of acquisitions this year depending on the market opportunity that potential targets present and customer needs, the German firm’s chief executive officer Henning Kagermann has said.
“We will look at a similar number and a similar size of acquisitions this year, depending on the opportunities and the capabilities we need fast. We are not excluding acquisitions if they fit into our strategies,” Kagermann told reporters on Tuesday. The SAP board of directors is here for its meeting, the first it is holding in the country.
SAP, known for its traditional focus on so-called “organic growth”, has accelerated acquisitions since 2006, spurred on by arch-rival Oracle Corp.’s acquisition spree. Oracle has bought 34 firms in the last two-and-a-half years at a cost of more than $22 billion (Rs90,145 crore).
An expert said SAP would attempt to use acquisitions to strengthen its offerings to clients from industries such as health care as it had done with a November 2005 buyout of retail software vendor Khimetrics Inc.
“Some of the gaps they may want to address are in the areas of hospital and medical software,” said S.R. Bala, founder president of IS Managers Forum, an association of chief information officers in India. “There is also a visible gap in their CRM (customer relationship management) strategy and they seem to be trailing behind competitors such as Oracle Corp. and,” he added.
Kagermann reiterated SAP’s $1 billion investment commitment to India till 2010 towards setting up a new global development services and support centre in Gurgaon and expansion at its Bangalore offices.
The firm said in a statement it has doubled its customer base in India to 2,000 since August 2006. Globally, SAP, which today has 41,200 customers, aims to reach the 100,000 mark by 2010.
Revenues in India, which has SAP’s third largest subsidiary after the US and Germany by employees, were €98 million (Rs548.45 crore) in 2006, an expansion of 30-35% over the previous year. The business has grown at over 25% in the first half of this year. SAP’s global revenues for 2006 were $18.91 billion, with more than 70% coming from its products business. Over 4,000 employees work for SAP in India.
“Markets in India are at an inflection point when it comes to the adoption of technology by businesses of all shapes and sizes. It took us nine years in India to reach the 1,000 customer mark, and only one to double it,” Kagermann said.
Since April last year, SAP has acquired seven companies. In April, 2006, it acquired Virsa Systems, Inc., a privately held supplier of compliance solutions, followed by Frictionless Commerce, a provider of supplier relationship management software a month later. This year, the company has been more aggressive and has acquired four companies including Pilot Software, a privately-held company specializing in strategy management software that it snapped up in February. In May, it made three buyouts: Finland‘s Wicom Communications, a provider of all-Internet protocol software for contact centres and enterprise communications; Norway’s MaXware, an identity management software firm; Connecticut, US-based OutlookSoft Corp., a software used in planning, budgeting and forecasting.
In May, SAP made a minority investment in Conformia Software Inc, a niche enterprise solutions provider.
Pankaj Mishra in Bangalore contributed to this story.
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First Published: Wed, Aug 29 2007. 12 18 AM IST
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