SAP Unveils New “Game Changing” Approach to Midmarket

SAP Details Additional Delivery, Customer Engagement and Business Models Enabled by New “Enterprise SOA by Design” Solution to Reach Untapped Market of Midsize Companies

Frankfurt, GermanyAt its annual conference to report full-year fiscal results, SAP AG (NYSE: SAP) today revealed further details about a next-generation solution and an additional business model that will reshape the way midsize companies purchase, adopt and finance software applications. Complementing SAP’s existing portfolio for midsize companies, the solution will leverage a new “enterprise service-oriented architecture (enterprise SOA) by design” platform and will be available to customers through on-demand and hosted delivery for significantly lower total cost of ownership. To more efficiently reach untapped midmarket segments with the new solution, SAP detailed plans to invest in an additional business model which will operate in parallel with its established business.

At the conference, SAP CEO Henning Kagermann outlined plans to introduce a new midmarket solution offering breakthrough innovations in faster, lower-risk implementation, continuous adaptability and easier user adoption. The new solution will deliver the benefits of enterprise SOA under a new “try-run-adapt” model leveraging the Internet and telesales, and can be managed entirely remotely, from day-to-day operations to upgrades. The solution is beginning initial market validation, and SAP plans to introduce more details about the product road map and its associated components at an event later in the current quarter, Kagermann said.
“We are combining the power of the new platform that SAP has developed over the last three years with a new approach in the way software is delivered and consumed to reach a broad segment of midsize companies with requirements not addressed by either traditional or on-demand solutions available today,” said Kagermann, in remarks during the earnings conference. “This game-changing, ‘enterprise SOA by design’ addition to our product portfolio will open up an additional business that will deliver steady, continuous growth and, together with the ongoing advancement of our established business, accelerate SAP’s long-term industry leadership.”

Additional Business to Support Midmarket Growth

The new solution and business model build upon SAP’s market leadership and add depth to the expanding portfolio of solutions from SAP and its partners to address the diverse requirements of midsize companies. Earlier this month, SAP introduced the enterprise SOA-based version of its market-leading SAP All-in-One solutions, offering innovations in simplicity, flexibility and rapid deployment to its partners and the established base of midsize companies which comprise more than 65 percent of SAP customers. Now, with the additional, “enterprise SOA by design” solution, SAP will address a $15 billion market which remains underserved by existing business applications.

According to Kagermann, SAP will invest in an additional business model to support the introduction of its new solution to reach the untapped market. This commitment of resources will drive new go-to-market strategies, including internal processes and infrastructure to support a higher volume business, new customer engagement models and a large and diverse partner ecosystem. SAP’s recently formed global SME unit, headed by Hans-Peter Klaey (see Nov. 13, 2006 announcement, titled “SAP Names Hans-Peter Klaey to Lead Global Small and Midsize Enterprise Business Organization”), will oversee the go-to-market strategy, organizational alignment and multi-channel delivery for the new solution.

“The feedback of analysts, and initial customers and partners in our recent evaluations has validated our expectations of strong demand for the new solutions and that we now have a window of opportunity for accelerated investment to realize the full market potential for SAP,” Kagermann said. “The combination of a largely untapped market, a game-changing product and an innovative business model represents an additional business for SAP. The investment we are making in internal organization, infrastructure, and delivery channels will ultimately pay off in sustained lower cost of ownership over the long term for our future midmarket customers. The commitment we are making to deliver enterprise SOA to the midmarket will result in innovation for our customers and in long-term growth for SAP.”

A full replay of SAP’s earnings conference is available at www.sap.com/investor.

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