Bloomberg News

SAP Aims to Enter New Product Categories, Snabe Says

November 17, 2011

(Adds executive comment from second paragraph.)

Nov. 17 (Bloomberg) -- SAP AG, the world’s largest business-management software maker, aims to add product categories to its portfolio to accelerate sales growth.

“We need to make sure we are the leaders in the categories in which we play, and we need to, once every one and a half years or so, add a new category,” co-Chief Executive Officer Jim Hagemann Snabe said in Barcelona at a conference organized by Morgan Stanley today. “We bet a lot of SAP on one category for many years.”

The comments are “puzzling” and may signal that SAP plans to purchase a company such as Parametric Technology Corp., SAS Institute Inc. or Temenos Group AG, said Sebastien Thevoux- Chabuel, an analyst for Oddo Securities in Paris. Snabe, who took on the executive role at Walldorf, Germany-based SAP together with Bill McDermott last year, wouldn’t elaborate on what new categories SAP is targeting.

“One should be ready for an acquisition out of the blue,” Thevoux-Chabuel wrote in a note.

Spokesmen for the three companies didn’t immediately respond to messages seeking comment. Parametric Technology, based in Needham, Massachusetts, develops product life-cycle management software, Cary, North Carolina-based SAS is focused on statistics and analytics and Geneva-based Temenos makes banking software.

Beyond SAP

SAP has added three categories since last May: Sybase Inc., a mobile-computing software maker that it bought; Hana real-time analytics technology; and Business ByDesign, software that can be accessed over the Internet. The three made up 10 percent of third-quarter sales, Snabe said.

SAP aims for the new products to make up a quarter of revenue as it targets 20 billion euros ($27 billion) in annual sales by 2015. Apple Inc. is an example of how companies can diversify revenue with new product areas, Snabe said.

“They add new categories once every one and a half to two years,” he said. “The sum of the new categories, two years later, is 40 percent of the total revenue.”

--Editors: Thomas Mulier, Kenneth Wong

To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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