SAP runs licence checks?

As you’d expect there has been a lot of reporting today on SAPs results. I particularly like the piece from ZDNet today entitled “SAP posts healthy results, but will shed 3,000 jobs ” – obviously not about the shedding of jobs but about some of the content of the discussion about SAP increasing its revenue by clamping down on licence usage.  This is based on comments from Gartner. But what becomes more interesting is the last statement .

“SAP is not alone in this,” Payne said. “Oracle and other software companies are going through the same process of auditing and customers notice when their software runs slower as it is being checked.”

Well I can’t ignore this and need to put my experience of this area to print:

  • As all IT departments know businesses in most cases do not maintain an open line to their SAP system for SAP access(there are a few companies who have a special arrangement but these are few relative to the customer base). When SAP come onto the system it is by the permission of the client with the line being opened and good practice is to switch on transaction tracking to ensure that the visitor only goes where it is agreed.
  • Licence Audits from SAP are not new – they have happened for years.
  • The real fun comes if you discover that new roles and users are incorrectly set up.
  • The process is initiated by the customer by a standard SAP transaction and the data submitted to SAP.
  • The amount of system resource consumed is minuscule in comparison to the main business transactions and business reporting.

So as far as SAP running unauthorised licence audits – that is not the case and slowing of system resource has nothing to do with licence audits!!!!

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Software Maintenance – it’s a matter of leadership

There’s a great article in Information Week. It’s an open letter to Oracle CEO Larry Ellison on the subject of software maintenance content and fees. It has a bit of the comedy about it but actually it couldn’t be closer to the truth, and does reflect the view of a large number of CIOs out there…….and do you know what ? – it could be what differentiates software vendors.

Who’s feeling brave?

Update: Rimini Street also announced their financial results today at the same time as SAP (coincidence?) and showed a quadrupling of sales, indicating a change in the way CIO’s see software maintenance as a result of economic pressures.

SAP Press Conference – Comments from Henning Kagermann and Leo Apotheker

A synopsis of some comments from Henning and Leo at their press conference

  • Significant Ecconomic conditions are driving companies to revise their strategy or even delay strategy decisions
  • Good performance despite difficult times
  • Now 82,000 customers
  • 2008 a good year with Business Objects integrated well and contributing well
  • Public Sector growth countering difficulties in other sectors
  • But need to look at last quarter showing only 8% growth compared to much better growth in previous quarters
  • Business by design is now operating in 5 countries and SAP are the only company to develop not just a new product but a new business model – SAP are the first company to develop a new product like this.
  • Customer Satisfaction is now at the highest level achieved.
  • Quotes Forrester as IT spend to reduce by 3% this year
  • Enterprise Support was developed at the request of our customers and we are seeing Customer acknowledgement of the value, the price will be what it is within the industry
  • Trust and confidence at this time is the most sought after commodity.
  • All staff will have a salary freeze for this year on the fixed elements – bonus targets related to performance will be paid.

SAP Forward forecast and restructuring cost

Within SAPs reporting of  results was included as expected no detailed forecast of the trading environment going forward and also details of actions taking place within the business to keep things on an even keel.  Within the forward picture reference was made to a provision of up to 300m euros for restructuring although it wasn’t clear whether this relates to just the Business Objects acquisition or the planned reduction in staff, although naturally reducing staff numbers wouldn’t generally generate that degree of cost.

Business Environment and Cost Containment Measures for 2009
The Company expects the 2009 operating environment to remain challenging. In addition, 2009 will no longer include the positive effects from the acquisition of Business Objects, and the 2009 first-half results will be a difficult comparison to the strong results reported in the first half of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008.
SAP will continue with its cost saving measures initiated in October 2008 and will take further steps to reduce expenses. SAP will continue to maintain tight cost controls on all variable expenses, including third-party related costs, as well as capital expenditures. Additionally, to enable the Company to adapt its size to today’s market conditions and the broader impact of the global recession, SAP intends to reduce its workforce globally to 48,500 positions by year-end 2009, taking full advantage of attrition as a factor in reaching this goal (SAP will provide further information on its website at www.sap.com). The Company expects the reduction of positions to provide euro 300 million to euro 350 million in annual cost savings beginning in 2010.
“We believe the cost containment measures will allow us to adapt to the tough market conditions and ensure the long term competitiveness of the Company. Moreover, we expect 2009 to be a year of limited visibility, making it increasingly difficult to project sales in this environment,” said Leo Apotheker, co-CEO of SAP. “In 2009, we will continue to deliver to customers products targeted at specific business processes to alleviate pain points caused by the challenging environment since customers need flexibility, agility and visibility into their businesses now more than ever. These products are designed for fast implementations and quick returns on investment.”
Mr. Apotheker concluded, “This is not the first time we have experienced tough economic times and we believe we are well-prepared to endure it. With competitive products, a solid business model, a high percentage of recurring revenues and flexibility in the cost base, we expect to emerge from this challenging environment a stronger and more competitive company, while maintaining a firm hold on our industry leading position.”
Business Outlook
The Company provided the following outlook for the full-year 2009.
Due to the continued uncertainty surrounding the economic and business environment, the Company will not provide a specific outlook for software and software-related service revenues for the full-year 2009. The Company expects its full-year 2009 Non-GAAP operating margin, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects of approximately euro 9 million and acquisition-related charges, to be in the range of 24.5% – 25.5% at constant currencies. This includes one-time restructuring charges between euro 200 million to euro 300 million expected to result from the reduction of the workforce, which negatively impacts the Non-GAAP operating margin outlook by approximately 2 – 3 percentage points. The 2009 Non-GAAP operating margin outlook is based on the assumption that 2009 Non-GAAP software and software-related service revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects, will be flat to a decline of 1% at constant currencies (2008: euro 8.623 billion).

SAP Results in – its tough

SAP this morning posted its results for 2008 – its tough going but its margin still grew by 1.1% with sales up year on year based at current currencies. Leo Apotheker, joint CEO, continues to take action to safeguard their position with a continued tightening on expenses and capital, and an intention to reduce employee numbers from 51,800 to 48,500 or 6% over the course of the year through natural attrition. There were no mentions of enforced redundancies.