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Learning to live with co-opetition

Learning to live with co-opetition

Business application vendor, SAP, faces plenty of challenges these days. Competition is intensifying from rival Oracle, especially after its acquisition of PeopleSoft, and even its partner, Microsoft, is expanding into business analytics, an area in which the German company also aims to be a major player. In addition, new open-source offerings are emerging in the area of customer relationship management while hosting companies, such as Salesforce.com, continue to make inroads.

The list of challenges facing SAP CEO, Henning Kagermann, appears endless. Despite a heavy workload, the friendly, straight-talking executive found time to discuss these challenges.

How has the Oracle buying spree affected you so far? Are customers who use the Oracle stack to run their SAP applications in jeopardy of being caught in a competitive crossfire?

Henning Kagermann (HK): Our customers have no disadvantages. We will continue to support products from competitors as we have done in the past. We are professional enough to handle to co-opetition, a situation we have not only with Oracle. In applications, we're strong competitors but, on the other hand, our software runs well on Oracle databases.

And the impact of Oracle's acquisitions?

HK: The acquisitions were forced by market changes. Over the past four years, we gained market share and created a bigger distance to Oracle. So Oracle bought some market share to reduce this distance. As a result, they now try to compete on price.

You held merger talks with Microsoft, but these amounted to nothing. Are there ways for you to cooperate over and above your new joint product Mendocino?

HK: Nothing has changed. We have a good working relationship with Microsoft, Mendocino being a prime example but there are others, such as improving the interconnectivity of .Net and NetWeaver.

How serious is the threat of hosted services? And are you still planning to launch the hosted service announced earlier this year?

HK: We said in June that some announcements will come, and this is still true. Today, we already offer hosted services after having started more than a year ago to partner with hosting companies.


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