Questions SAP should answer during its Q4 earnings call
- 22 January, 2013 18:42
As it has in the past, SAP spilled the beans a bit early on its fourth-quarter and year-end performance with the release of preliminary results last week. Now the vendor is about to do a full announcement along with the usual conference calls with press and analysts.
Those calls will provide an opportunity for SAP officials to be asked some important questions. Here's a look at what may be in store for them on Wednesday.
When will newer product lines such as the HANA in-memory database and mobility become really big businesses?: HANA software sales for 2012 were ¬390 million (US$519 million), with mobility contributing ¬222 million, according to the preliminary results. While HANA sales outpaced SAP's internal expectations, analysts may be looking for guidance on when these product lines will become much more significant contributors to the bottom line, particularly mobility. Together, they currently represent only a tiny percentage of SAP's total annual revenue, which was more than ¬16 billion in 2012.
What's with the sales organization shakeups?: SAP made two significant changes to its sales organizations last year. The first was the ouster of North American President Robert Courteau after a weak first quarter in that region. But earlier this month, as part of a more extensive shakeup affecting multiple regions, Courteau's replacement, Geraldine McBride, also left the company.
While Wall Street may look at such moves purely for their potential impact on the bottom line, customers could feel the effects as well if SAP's sales culture undergoes rapid shifts.
SAP has said the most recent changes were meant to help the company "more closely align with customers." During the conference calls, SAP officials may be pressed to explain exactly what that means.
Can SAP fight multiple wars successfully?: SAP has a full plate from a marketing standpoint. First, it is trying to make HANA the underlying centerpiece of its technology portfolio, while dislodging databases like Oracle's from its customer base. It's also attempting to cast itself as a top player in cloud computing, even though SaaS (software as a service) contributes only about 5 percent of the company's total revenue at this point. SAP is also trying to push itself as a player in mobility.
All of these initiatives "seem to be struggling with focused execution and attention," said software industry analyst and consultant Vinnie Mirchandani of Deal Architect. SAP officials may find themselves pressed to explain how they'll keep all those plates spinning steadily as 2013 unfolds.
HANA as a Trojan horse?: SAP recently said it had reached 1,000 HANA customers. It's not clear how many of those customers are running anything in production with HANA, nor what percentage of them are new to SAP technology, versus installed base members investing in the platform.
SAP co-CEO Bill McDermott has referred to HANA as a "Trojan horse" that helps it penetrate into non-SAP customers, something crucial to the database's revenue growth. If SAP has had success doing this, expect to hear about it on the call.
Sorting out the SaaS strategy: SAP has decided to break its cloud business into a number of segments and categories.
Thematically, they are grouped under the headers of people, suppliers, money and customers. SuccessFactors and Ariba, both of which SAP acquired in the past year or so, cover the first two and are the most well-established. But SAP's Financials OnDemand and SAP 360 Customer products, which hit on the latter two categories, are fairly new entrants. It will be interesting to see whether SAP provides any sense of how those offerings are ramping up in sales.
Another key topic could concern Business ByDesign, the SaaS ERP (enterprise resource planning) suite for midmarket customers and divisions of large enterprises. An update on its customer count may come on Wednesday.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com