Searching for Answers to Important SAP Market Share Questions

Dennis Byron submits: We can crunch the numbers SAP (SAP) released Wednesday from now until when the SAP 20-F comes out in March or April, and still not explore all the modeling possibilities. I have applauded SAP in the past for its transparency in meetings like this—both explaining past results and future plans—with pretty solid numbers. And simply because modeling nerds such as me like having this kind of data.

But I have been critical of SAP’s Core Enterprise Applications Vendor Share metric, most recently at the link noted. One interesting factoid that I saw in the SAP presentation January 30 was a list of the vendors it uses in its Core Enterprise Application Vendor Share market claims. Perhaps this list has been released before but I don’t recall seeing it.

Now I think my criticism is justified. Why Synopsys (SNPS) but not Cadence (CDNS)? Why some financial services software suppliers but not SunGard? Why Cerner (CERN) but not the HBOC-heritage product revenues within McKesson (MCK) or the Shared Medical Services heritage product revenue within Siemens (SI)? Why Parametric (PMTC) but not the UGS-heritage product revenue of Siemens and Autodesk (ADSK)? Why Intuit (INTU) but not Sage (London: SGE.L)? Why Lawson (LWSN) but not Exact (on Euronext Amsterdam)? Why Interwoven (IWOV) and Vignette (VIGN) but not the Documentum-heritage product revenue within EMC (EMC)? And on and on.

I suspect the reason is not a matter of SAP trying to hide anything but has something to do with the availability of the data, much of which is buried in large company financial reports. But that’s the issue. A market measurement needs to include both.

The real important questions from an investment perspective are:

Did SAP gain or lose ERP market share against Oracle (ORCL) and Microsoft (MSFT) in 2007? Probably it lost.

Did SAP gain or lose middleware market against Oracle, IBM (IBM) and Microsoft in 2007? Probably it gained based on the NetWeaver figures released on January 30 (even accounting for the Business Objects (BOBJ) and BEA (BEAS) acquisitions).

Did SAP gain or lose enterprise applications market share against Microsoft’s former Great Plains/etc. business buried within the Microsoft Business Division as well as other SME-oriented enterprise application offerings? Probably it held its place.

The core enterprise application vendor market share metric doesn’t help answer any of these questions. And I am not going to try to correct it because at least 20% of the vendors have gone or will go away (BEA, Business Objects, Cognos, Manugistics and Kronos; the latter because it has gone private).

I say “at least” because it is very likely more of this group will merge or be acquired in the next year.