SAP posts 26% software license growth

New software license sales at ERP giant outstripping those of rival Oracle

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SAP posts 26% software license growth Co-CEO leadership has revived SAP (Getty Images)
By  Daniel Shane Published  July 27, 2011

Enterprise applications vendor SAP recorded 26% growth in new software license sales during the company's second fiscal quarter of 2011.

In the three-month period up to June 30, Europe's largest software company posted revenues of €802 million derived from new application licenses. Including support services and maintenance, overall software sales were up 20% to €2.58 billion. Net income saw a 25% uptick to €588 million.  

"We are witnessing a structural change in the IT market - customers are shifting more of their investments toward software as it continues to become a larger and more important component of the overall technology stack. As a result, we are seeing strong demand from customers," Jim Hagemann Snabe, co-CEO of SAP, said in a statement. "We focused our strategy on innovation at the right time and are now reshaping the industry with our mobility, in-memory and cloud solutions. Innovation is driving growth again at SAP."

The performance means that SAP, whose main product is an ERP system, is now outstripping its main competitor in the business applications space, Oracle, in terms of new software license sales. In its most recent reporting period, 4Q11, the Silicon Valley-based vendor notched up application revenue growth of 19% to $3.74 billion.

At the depths of the recession in 2008/09, software sales at Walldorf, Germany-based SAP fell through the floor. In 2Q09, for example, revenues plummeted by 40%. A rally of poor turnouts, as well as a controversial increase in software maintenance fees, led to the departure of then CEO Leo Apotheker in early 2010. He was replaced with the co-CEO structure headed up by Jim Hagemann Snabe and Bill McDermott.

SAP has also intensified its focus on innovative new offerings. Following the $6 billion acquisition of Sybase in 2010, the vendor has developed HANA, a high-performance data analytics solution.

As the graph below shows, since switching to the dual leadership system, SAP's fortunes have improved markedly.

 New software license revenue growth (percent) at SAP and Oracle  Many Eyes

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