January 26, 2005

2004 financial results for SAP are public and the enterprise applications giant had a very good year. Reported in Euros, revenues were at 7.5 billion for last year, up from 7 billion the previous year, which represents a seven percent increase, year-over-year.

In constant currency terms, SAP's year-over-year revenue jump would have been 10 percent in 2004.

SAP's success is built on the U.S. and European marketplaces in particular. In the U.S., SAP has aggressive hiring plans (part of plans to hire 3,000 new employees globally), and in Europe SAP reports a turnaround for its business in France, not the strongest of its regional markets.

Analyst David Bradshaw of Ovum says that "SAP's success is remarkable, all the more so for its uniformity across its three main markets of the U.S., Germany, and EMEA excluding Germany."

Bradshaw also draws attention to SAP's ability to become more profitable despite reduced margins on the services side. Given "that [SAP] had felt some pressure on consulting rates...it is all the more remarkable that SAP still increased its operating margin from 25 percent in 2003 to 27 percent in 2004," he notes.

Bad news for Oracle, now SAP's main enterprise applications competitor, is that Oracle's U.S. business in Q4 2004 was 27 percent bigger than in Q4 2003. While Oracle may have the overall lead in North American applications, growth metrics like that confirm that SAP won't be easily unseated from its perch of global applications leadership.

Article by: Demir Barlas,
Source: Line 56