May 14 (Bloomberg) -- SAP AG, the world's largest business- management software maker, may open a software development center in Russia to improve access to customers in the country, Chief Executive Officer Henning Kagermann said.

Walldorf, Germany-based SAP may open the center in the coming two to three years, Kagermann told journalists at a meeting in Vienna yesterday, before SAP's annual Sapphire customer conference which starts today.

``You have to distribute around the world for proximity to clients and in places where you feel you can attract the next generation of engineers,'' he said.

Almost 30 percent of SAP's 40,000 employees are software engineers at one of SAP's eight global laboratories. SAP, whose software helps companies manage tasks such as accounting and payroll, has accelerated investments to win smaller clients and slow an advance of rival Oracle Corp. in the $56 billion market.

Russia belongs to a group of countries commonly called the BRIC, which includes Brazil, India and China, where the economies are growing faster than in the U.S. and western Europe. Outside Germany, SAP has set up software laboratories in Bulgaria, Hungary, China, India, Israel, the U.S. and Canada.

``If you look at R&D, we're now 65 percent of capacity in Walldorf,'' Kagermann said. ``It's pretty good to see one third outside.''

`Enough Time'

SAP aims to more than double its client base to 100,000 by 2010 by selling more software to smaller businesses. Its most recent product, codenamed A1S, belongs to a range of products targeting companies with less than $1 billion in revenue and fewer than 2,500 workers. It is sold online via subscription. Kagermann said last month that ``a few thousand'' customers will be using the product by the end of next year.

The A1S product will ``cover 80 percent of the world'' in terms of markets in the first two years, Deputy CEO Leo Apotheker said yesterday.

``This year we'll prove that the product is ready,'' the CEO said. ``Next year, we'll prove that the business model works.''

Shares of SAP stock rose 13 cents, or 0.4 percent, to 34.66 euros in Frankfurt. The stock has dropped 17 percent in the past year, the worst performance among the 30 members of Germany's DAX Index, which gained 26 percent. Co-founders Dietmar Hopp, Hasso Plattner and Klaus Tschira each own about 10 percent of SAP.

Following a March report in German magazine Wirtschaftswoche that U.S. buyout firm Silver Lake Partners wants to persuade at least one of the three founders to sell a stake, SAP has repeatedly said that the three men remain committed to the company. SAP hasn't received any approaches from private equity firms, Kagermann said yesterday.

`Last Piece'

SAP agreed last week to buy privately held OutlookSoft Corp. in the U.S. to add 700 clients and gain products that help companies meet compliance needs and manage financial forecasts. It was SAP's second purchase in 2007 after Pilot Software Inc.

``OutlookSoft was more or less the last piece we need'' to provide a complete offering in the market of so-called business intelligence software, Kagermann said. He reiterated SAP's strategy of making smaller ``tuck-in'' acquisitions.

Redwood City, California-based Oracle paid more than $20 billion for acquisitions since 2004. SAP spent no more than 500 million euros on acquisitions in 2006.

SAP said today it agreed to buy two closely held companies, Norway's Maxware, which makes identity management software, and Finland's Wicom Communications, a maker of Internet-based communication software. Financial details weren't disclosed.

Management Overhaul

The German software company also said today it has agreed to jointly sell financial software with Sungard, a maker of software that helps companies manage balance sheets. Sungard is based in Wayne, Pennsylvania.

SAP reiterated its earnings forecasts for this year, saying related service sales, excluding currency moves, will rise between 12 percent and 14 percent this year, compared with 12 percent growth for 2006.

SAP's supervisory board in February extended Kagermann's contract until 2009. A month later, chief software architect Shai Agassi stepped down, after being told that he would have to wait two years before becoming CEO. Kagermann then overhauled management, and SAP promoted sales head Apotheker to deputy CEO.

Kagermann said he won't comment on his personal plans beyond 2009 or on possible candidates to be his successor.

``Today I have enough on my plate and I want to do it as best as possible,'' he said. ``It's important someone who is leading the company is a strong one.''

Last Updated: May 14, 2007 12:20 EDT