SAP revenues strong, but layoffs not ruled out

SAP revenues strong, but layoffs not ruled out

Strong software and related services revenues mean no cutbacks or downsizing planned, for now

SAP Asia-Pacific Japan has announced a 20 per cent growth in total revenue for Q3 2008

SAP Asia-Pacific Japan has announced a 20 per cent growth in total revenue for Q3 2008

SAP Asia-Pacific Japan has announced a 20 per cent growth in total revenue for Q3 2008 over the same period last year, but would not rule out layoffs if the economy worsened.

Total revenue for Q3 was 384 million euros, with software and related service revenues growing 24 per cent over the quarter to 294 million euros. Software revenue grew 40 per cent for the nine months to September 30, 2008.

Regional president, Geraldine McBride, said this was indicative of the region's role as a global growth engine for SAP worldwide.

“Our success this quarter highlights the attention we are paying to transformational growth within each country across the region. Our Q3 2008 average deal size per customer increased 27 per cent year-to-date. Almost 40 per cent of Asia-Pacific Japan deals came from new customers,” McBride told ARN, citing China and India as key growth markets.

In early October, SAP warned its third quarter software and related services revenue would come in lower than expected. SAP co-CEO, Henning Kagermann, said in his 26 years at the company he had never witnessed such a sharp decline in customer spending in such a short period of time. Last week, fellow co-CEO, Leo Apotherker, told IDG that SAP plans to reduce expenses during the fourth quarter.

McBride said SAP has taken measures to cope with the current economic climate, including a hiring freeze and cutting back on variable expenses, but the company has not ruled out layoffs in the future.

“We will continue to asses and monitor the situation carefully and make adjustments where necessary. Job security remains a top priority for SAP; we are not cutting out or downsizing – that would be far too extreme at this time. However, if current conditions get worse, we cannot rule out structural changes,” she said.

One significant move for SAP this year has been its decision to transition customers to a fuller-featured but more expensive Enterprise Support service.

The move wasn’t wholeheartedly welcomed by some customers, but SAP is touting its potential to lower the cost of ownership and bring IT budgets down.

McBride said since the introduction of Enterprise Support SAP has been working closely with customer and user groups to enhance the offering to align it more closely with customer expectations.

This week SAP sought to appease users unhappy with the changes to Enterprise Support, but made no changes to the cost structure, and announced it will extend maintenance for its ERP 6.0 platform and other products until 2017.

During Q3 SAP also introduced the Fast-Start Program for SAP Business All-in-One in the region, allowing customers to configure and cost their solutions online. So far the company said this had generated more than 100 new customers.

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