But what-if it’s a company-wide thing? Or worse, what-if it’s an economy thing? I’m getting that big what-if feeling from SAP’s (SAP) first-quarter 2007 financials announcement. There’s no one thing you can point to. But…
• …a third of SAP software revenue growth is a one-time restoration of two thirds of a previous reversal (with the other third gone forever).
• …revenue from their new kind of license is only up 11% from the average of the previous three quarters (while pure plays using this sort of license model exclusively say they’ll grow 50% in 2007).
• …SAP consulting revenue, which reflects the actual uptake in the previous quarters’ license sales, is flat (in other words, are big customers really installing this SOA/BPP stuff that is “getting traction” or did customers just get a good deal from SAP to license the new stuff at the end of 2006).
• …margins are and will be depressed from “investing” in marketing services offerings SAP really doesn’t have yet (SAP does not expect “volume readiness” until early 2008)
• …take seasonality into account when you look at SAP results for the rest of 2007 (and don’t forget constant currency)
On the plus side, SAP says
• It’s winning three out of four deals when head to head with its next largest competitor (remember, that’s about 10% or 15% of sales activity in my opinion)
• 24% of customers and 31% of customer contracts were “new,” important metrics based on SAP’s emerging strategy (as I discussed two weeks ago)
• In terms of the Oracle (ORCL) lawsuit concerning Tomorrow Now, Henning says it wasn’t so
• It did not see the “U.S.,” “March,” and “enterprise” trends that IBM (IBM) talked about earlier this week
Net/net if you have that same what-if feeling that I do, in my opinion it’s real and it’s company wide, not economy wide (at least yet). SAP does not want to go into what it called “Sapphire season” with a downer message for the financial community but I think you should think of 2007 as a “building year.” Until “volume readiness” of the new offerings in 2008, what more can you expect?