SAP Cost-Cutting, Oracle Case Emphasize Analytics Competition

SAP will reportedly enact cost-cutting measures in the second half of the year, according to a German magazine citing its chief financial officer Werner Brandt.

Much of that belt-tightening involves steps such as curtailing business travel, according to Reuters, which translated Brandt’s remarks on a corporate video. “We have to cut costs considerably in the second half to reach our internal target,” the wire service quotes him as saying.

That news comes on the heels of SAP agreeing to pay Oracle some $306 million in damages related to a 2010 copyright-infringement trial. Oracle accused SAP’s now-closed TomorrowNow division of illegally downloading a trove of support documentation and customer-support software, which eventually resulted in court proceedings and a $1.3 billion judgment. Lawyers for both companies reportedly agreed to the $306 million in order to spare the time and expense of further legal action.

Both news items highlight the competitive world of business-software vendors in general, and the long battle between SAP and Oracle in particular. Both companies have been expanding their reach into data-analytics and business-intelligence tools, with its share of inevitable collisions.

In conversations, SAP executives suggest that Oracle is “very much about the stack,” i.e. most interested in offering businesses a combination of branded hardware and software that works in sync. However, that focus on the stack seems a little blurrier these days with Oracle entering the public-cloud market; its Oracle Cloud will offer dozens of enterprise applications, including many related to database and analysis.

SAP is taking a different competitive angle, one that invests heavily in its HANA in-memory database technology. To hear company executives tell it, HANA functionality will eventually undergird the company’s analytics, ERP, CRM and other offerings, and allow third-party developers to build a variety of industry-specific apps capable of mining huge datasets for insight.

In the end, both companies target approximately the same user base—hence the battle. “Oracle’s got 100+ enterprise applications live in the #cloud today, SAP’s got nothin’ but SuccessFactors until 2020,” was Oracle CEO Larry Ellison’s first (and thus far, only) Tweet. But SAP has a growing presence in the cloud, as illuminated by the $62 million it earned from cloud subscriptions and support last quarter, a significant rise from the $4.8 million it earned in the same quarter a year ago.

Research firm Gartner rated SAP the top analytics and performance management software vendor in 20111, by revenue, ahead of Oracle, IBM, and other competitors. SAP will fight to keep that position, but those rivals see the analytics niche as a particularly profitable one—and they’ll almost certainly keep evolving in order to seize their own piece of it.

 

Image: Elnur/Shutterstock.com

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