SAP foresees rising profits in Ariba

The HANA in-memory platform has been the most successful new product SAP AG rolled out in recent years. However, the enterprise software maker says it is looking to its recently acquired e-commerce network firm Ariba for even greater profits in the future.

While HANA specializes in hardware requirements, the German software maker has no plans to move into hardware sales, according to Jim Hagemann Snabe, CEO of SAP. Rather, the company will leave that sector to SAP partners, he said during an interview with reporters at the CeBIT technology trade show on Tuesday.

Snabe noted that networked companies promise to be a big market for SAP and its new acquisition, Ariba is on track to bring in huge profits for the firm. He said a McKinsey & Co. study reported in 2011 that 50 per cent of networked companies are expected to experience increased sales, higher profit margins and grow market share.

Ariba is a software and information technology services company based in Sunnyvale, Calif. which was acquired by for $4.3 billion in 2012. A is leading business-to-business e-commerce solution provider.

Ariba, which now has a network that links one million trade partners in 190 countries, Snabe said, is SAP’s response to the networked enterprise trend.

Network members, Snabe said, spend as much as $450 billion in-network annually. SAP earns a share of that expenditure as a network enabler.

During the third quarter of 2012, Ariba reported network infrastructure revenue totaling $47.3 million and subscription revenues of $95.3 million.

Snabe said customers using e-commerce network products are able to reduce transaction cost by automating their purchasing processes and, moving away from fax and email and avoiding the rekeying of data.

For example, heavy equipment manufacturer Caterpillar Inc. was able to slash its purchasing costs by as much as 70 per cent, he said.

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