April 21, 2005

B2B enterprise applications leader SAP just reported strong results for its first quarter. Its overall net income was up 11 percent, to about $331 million (SAP reports in Euros). In the U.S., SAP's revenues increased 35 percent year-over-year, based on constant currency rates.

The stellar growth in the U.S. shows how far SAP has come since 2002, when the U.S. was an underperforming geography and there was a revolving door for executives as a result.

SAP picked up increasing momentum here during the Oracle battleto acquire PeopleSoft, which allowed SAP to act as a "safe harbor" for the several months during which the drama dragged on.

The bulk of SAP's revenues are still coming from its enterprise resource planning (ERP) software, which grew 12 percent from Q1 2004 to Q1 2005, coming in at 174 million Euros. SAP's supply chain management (SCM) software generated roughly half the revenue of the ERP product, and delivered 9 percent year-over-year growth.

The real story may be customer relationship management, which grew 21 percent year-over-year and, at 86 million Euros, tucked in at just 2 million Euros behind SCM in revenue.

While SAP's CRM business is growing by leaps and bounds, one-time CRM sector leader Siebel has fallen behind, particularly after a bad first quarter that resulted in the hiring of a new CEO.

Not so long ago, Siebel claimed that it made ten times as much CRM revenue as SAP, illustrating how quickly tides can turn in e-business.

Interestingly, SAP's revenues declined 2 percent in Germany, the company's global headquarters. That was about the only spot of bad news in SAP's Q1 2005.

Source: Line 56