These are busy times for German enterprise application vendor SAP AG, with an increasing Canadian headcount, a North and Latin American reorganization, and a continuing war of words with rival Oracle. SAP Canada president Bob Courteau recently spoke with ComputerWorld Canada senior writer Jeff Jedras about the challenges and SAP’s plans for Canada.
SAP recently announced it was reorganizing its Canadian, American and Latin sales forces into one organization, SAP Americas. What is this going to mean for SAP Canada and your Canadian clients?
We try to line-up against local business requirements so we organize ourselves to be successful in a Canadian context, with a full profit and loss responsibility and a Canadian president. But what we also do is bring the global capability of SAP to bear to help customers achieve their business objectives. With Latin America coming onto the team, we’re going to be able to expand that opportunity more broadly. It gives us greater critical mass. We have quite a few clients that, as part of the North-South trading relationship, operate very regularly among those countries.
You’ve also been growing your Canadian operations significantly, through both organic growth and acquisition?
(Canadian) software license revenue this year increased 44 per cent coming off a great year last year, and to deal with that we’re adding people in all parts of the organization: consulting, sales, operations and our education group are all hiring and growing. On top of that, SAP Labs Canada is one of our top performing labs globally, and the company just made a decision to double the size of [the Canadian] organization, effectively going from 100 to 200 people.
We also did an acquisition at the end of last year, acquiring a company called Triversity, which will have a global development mandate for retail applications right here in the Toronto market. We increased our headcount by 41 per cent year over year from 2004 to 2005, so we’ve got about 800 employees now at SAP Canada.
SAP’s battle with Oracle for market share has been well publicized, and has gotten heated at times. Oracle CEO Larry Ellison recently called out SAP for being “proprietary”, saying “SAP believes that they can modernize their applications without changing them.” How do you respond?
I think the numbers don’t lie. If you look at our success in the marketplace, which has been borne of focused development, customer attention and building processes customers can take advantage of, it’s been working.
The share numbers play that out. If you look at business application growth in Canada, IDC said it grew about 3.4 per cent last year. [We] grew at 44 per cent. Honestly, this is an engine that’s working. (Three years ago, globally) we had about 45 per cent market share, and the combination of Oracle and PeopleSoft had 35 per cent.
If you measure it today, we’re at 62 per cent share, Oracle/PeopleSoft has dropped to under 20 per cent, and Siebel has dropped from 20 per cent down to eight per cent. Oracle would probably be better off answering questions about their own inability to create market share, even through acquisition. We’re doing well. Our share growth in North America in the same period has effectively doubled, right in Oracle’s backyard.
What differences have you noticed in the Canadian market in terms of how companies are approaching enterprise software and how they’re using it?
With Sarbanes-Oxley in the U.S., the forces on executives to sign off on financials and the importance of being able to give accurate forward projections, visibility is critical in both Canada and the U.S. What I’d say is different about the Canadian marketplace is the phenomenon of an increased Canadian currency. It’s causing different challenges in terms of people being competitive. Historically, we might have been able to compete on a lower cost of labour, but that’s not necessarily the case now, so people are trying to figure out how to compete on innovation.
That has caused a lot of people to start getting their organization’s strategy together around improving revenues, increasing visibility and looking at productivity. It has also caused people to start thinking about putting in enterprise-wide applications versus departmental point solutions. We’ve also had a strong economy, so while things are going well for many Canadian companies, they’re trying to get their innovation agenda and infrastructure in order.