Thursday, October 19, 2006
RED HERRING | Time for a Change at SAP?
RED HERRING Time for a Change at SAP?: "However, some analysts feel that SAP will have to resort to the larger acquisition strategy to keep up with the consolidating industry.
“We view M&A as an important core competence in software as the industry consolidates, and we are skeptical of SAP’s ability to achieve consistent top line growth of [more than 15 percent] without M&A, given the mature state of the applications market,” said Mr. Goldmacher.
He also named two other factors behind SAP’s slow growth—its lack of adoption of an SOA (software-oriented architecture) strategy, which is a recent industry trend, and its push into the mid-market, which will lower its margins.
“We believe it will need to grow its top and bottom lines materially faster, something we are skeptical about, due to shortcomings in its SOA strategy, unwillingness to make large acquisitions, and our anticipated margin pressure due to its push into the lower end of the market,” said Mr. Goldmacher. "
“We view M&A as an important core competence in software as the industry consolidates, and we are skeptical of SAP’s ability to achieve consistent top line growth of [more than 15 percent] without M&A, given the mature state of the applications market,” said Mr. Goldmacher.
He also named two other factors behind SAP’s slow growth—its lack of adoption of an SOA (software-oriented architecture) strategy, which is a recent industry trend, and its push into the mid-market, which will lower its margins.
“We believe it will need to grow its top and bottom lines materially faster, something we are skeptical about, due to shortcomings in its SOA strategy, unwillingness to make large acquisitions, and our anticipated margin pressure due to its push into the lower end of the market,” said Mr. Goldmacher. "
