SAP facing pressure from Oracle and Netsuite

SAP is seeing pressure from all the sides. Oracle, due to the recent acquisitions has been pushing SAP down this past year. The new software sales from SAP plunged 33% last quarter, while Oracle's stock has been performing better than SAP's. It may be even losing market share as the companies start looking for alternatives to SAP because of various reasons.

SAP is "clearly losing market share," said Adam Wood, a Paris-based analyst at Exane BNP Paribas who rates SAP "underperform." "Because of the acquisitions Oracle has made recently, it's left them with a bigger product range for their existing customers."

So, maybe after all, all the acquisitions by Oracle have started showing their results.

On the other hand, SaaS oriented ERP new upstart, NetSuite has been seriously challenging and predicting the demise of SAP in the SMB market. NetSuite CEO Zach Nelson brashly and rather confidently (over?) says:

"If they are lucky, it will take SAP at least 8 years, and by then the game will be over and we will be the SAP of the mid-market."

But maybe his boast may not be all hot-air after all, as his company has recently gotten a certification in Germany that will help companies doing business there to comply with the stringent financial reporting standards - the first SaaS company to do so. According to the company, NetSuite, around 30-40 companies have switched from SAP to NetSuite including AsahiKasei, a Japanese Chemical company. A quote from the David Stover, Chief Financial Officer of Asahi Kasei Corp.'s Dorlastan fiber division, explains how the move may have affected its bottomline.

“We were spending 3% of our revenue on SAP. By switching to NetSuite, we reduced that cost to 0.1% of revenue.”

SAP has been promising to come out with Business ByDesign which has had its own share of issues. So, in a sense, SAP is late on the SaaS bandwagon, which companies like Salesforce.com have built to a big market at least in niche areas like CRM. Now, the time to do the same for BI and ERP is ripe.

There is also huge market for the Open Source ERP players at this moment, who are are also growing. We will cover these players in another post.

Reference Links:

1. SAP Loses Customers to Oracle on Ellison's Acquisition Binge
2. NetSuite gets German certification for SaaS ERP, takes jab at SAP
3. Potential IPO Candidate NetSuite Predicts SAP Failure