SAP Steps Up War with Siebel

The reorganization is intended to increase the global focus of SAP's operations. Toward that end, SAP has named Leo Apotheker to the newly created position of president of global field operations, reporting directly to co-chairman and CEO Henning Kagermann.

"The global consistency provided by the realignment of our field operations will ultimately help provide greater accountability and expand our relationships with both new and existing customers," Kagermann said.

Ongoing Battle

Germany-based SAP, the number two CRM provider with a reported 16 percent market share, repeatedly has bumped heads with first-place Siebel, which has 45 percent market share.

The battle between the two companies heated up when SAP entered the CRM arena two years ago and quickly captured a significant portion of the market. Since then, the CRM sector, which once enjoyed phenomenal growth, has flattened, leaving competitors to scramble for customers.

"Last year was not [the] best of all years for CRM -- it was down a bit, but it could have been down more," Andrew Bartels, vice president of research for e-business applications at Giga Information Group, told the E-Commerce Times.

Bad Blood

Siebel has held onto its place as the top CRM vendor despite SAP's efforts, but other ERP (enterprise resource planning) vendors, such as PeopleSoft, J.D. Edwards and Oracle, also have made strides. And CRM vendors will face even more competition when Microsoft tosses its hat into the CRM ring later this year.

"SAP was up a lot [because it] rightfully recategorized a lot of its order management modules as CRM," said Bartels. Still, revenue from SAP's CRM sales in 2001 totaled just $412 million, compared with the $2.05 billion reported by Siebel during the same period.

The clash between Siebel and SAP shows no signs of abating. SAP recently took Siebel to task in German courts for running ads in Europe that claimed Siebel was the preferred CRM company among SAP-dominated enterprises. The court sided with SAP, and Siebel had to remove the ads.

Executive Shuffle

In addition to Apotheker's appointment, SAP's current CEO overseeing the Americas, Wolfgang Kemna, has been shunted aside and named vice president of a new division called Global Initiatives. Kemna, who held the CEO post for two years after his predecessor served just a year, grew SAP's interests in the United States, helping boost business 5 percent domestically from the first quarter of 2001 to the first quarter of 2002.

But Apotheker, formerly president of the company's Europe, Middle East and Africa (EMEA) division, did better, growing the business segments under his umbrella by 11 percent in the first quarter of 2002 compared with year-ago results.

Former CEO Kemna now will turn his attention, at least in part, to developing and hawking the company's supply chain offerings.

Foggy Bottom Line

It is unclear how SAP's reorganization will affect its bottom line, but shares of both companies fell on the news. In addition, Goldman Sachs reduced its earnings forecast for both companies and 24 other software entities, saying companies will not increase spending on business applications this year.

According to a Giga Information Group report, total application vendor revenues grew 29 percent in 2000 but just 6 percent in 2001.

On the bright side, Bartels predicted, "For 2002 and beyond, we expect to see a rebound in demand. As we move into the year and recovery takes hold, and the fear of a double dip goes away, companies will turn to CRM revenue growth."