SAP AG (SAP) co-Chief Executive Officer Jim Hagemann Snabe predicts subscription-based services, fueled by mobile and cloud-computing products, will account for a third of the business-software maker’s revenue in 2015.
SAP is augmenting its traditional software license-revenue model with offers in which companies lease applications for shorter time periods. The company has acquired mobile-solutions provider Sybase Inc. (SY) and cloud computing-focused SuccessFactors Inc. (SFSF), and rolled out on-demand enterprise software as it seeks to boost 2015 revenue to more than 20 billion euros ($27 billion) from 14.2 billion euros last year.
“Where some parts companies want the control themselves they will buy it upfront because that’s where their competitiveness lies,” Snabe said at the Mobile World Congress in Barcelona yesterday. “In others they’ll want to consume as they go, and there will be a subscription market for that. I believe that in 2015 we will see a healthy balance between the two.”
SAP, based in Walldorf, Germany, will begin breaking out revenue from subscription services this year, spokesman Christoph Liedtke said. The company began regular offerings of software with subscription fees with the wider deployment of Business ByDesign and the acquisition of Sybase in 2010.
SAP is integrating its Hana technology, which enables processing of large amounts of data on the go, with mobile and cloud products. For example, a company employee can make ad-hoc changes to a sales presentation on his Apple Inc. (AAPL) iPad and present the results without delay, where otherwise he may have to ask colleagues to retrieve that information from a database.
SAP leads rivals by about 1 1/2 years in in-memory computing and is about a year ahead of competitors in solutions to make smartphones and tablets safe to use as business tools, Snabe said. The acquisition of SuccessFactors, which was completed last week, means SAP has also caught up in cloud services, which involves delivering applications on demand via the Web, he added.
Before today, SAP had gained 16 percent in the past 12 months, while Redwood City, California-based Oracle Corp. (ORCL) fell 11 percent and Salesforce.com Inc. (CRM), headquartered in San Francisco (FRC), added about 8 percent. SAP climbed 2 euro cents to 50.62 euros at 9:43 a.m. in Frankfurt.
Sanjay Poonen, the German company’s head of global solutions, said that Oracle and other database providers may be held back in responding to SAP’s Hana product.
“In-memory technology is so traditionally disruptive to database vendors because they have to rethink the database in a very different paradigm,” Poonen said in an interview. “The approach typically with the old database vendors is they are going to throw a lot more hardware at the problem to try and get the same kind of performance that we’re getting. And we’ll see how that plays out.”
SAP this week unveiled a partnership with Samsung Electronics Co. (005930) to bring more devices based on Google Inc.’s Android software into corporate use by reducing security risks in the software and enable corporate IT to manage the devices.
“From a business use of mobile, we are probably a year ahead, but it’s a very fast-moving market and if you look at the smartphones everyone gets it,” Snabe said. “This will be a fight for speed.”
“We’ve always said we’ll support all leading mobile platforms, and Windows Phone definitely belongs to that category,” Snabe said.
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