SAP AG (SAP), the largest maker of business-
management software, predicted it can add $10 billion in revenue
from financial applications as banking clients become the German
company’s fastest growth driver.
The internal goal, shared at a meeting this week with
employees and sales partners, compares with $2.5 billion it
expects to receive from financial services providers this year.
To meet its objective, SAP would need to get about 3 percent of
banking customers’ annual spending on computer systems, rising
from 0.5 percent currently, it said.
Enlarge image
SAP’s financial software includes
programs to detect insurance fraud, allocate cash among bank branches,
analyze consumer behavior such as comments on Facebook Inc.’s and
Twitter Inc.’s social-media sites, as well as applications for risk and
compliance management. Photographer: Ralph Orlowski/Bloomberg
4:56
April 19 (Bloomberg) -- Jim
Hagemann Snabe, co-chief executive officer of SAP AG, discusses the
company's first-quarter profit reported today, growth in Asia and
business outlook.
He speaks from Walldorf, Germany, with Mark Barton and Anna Edwards
on Bloomberg Television's "Countdown." (Source: Bloomberg)
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“Banks, capital markets and insurance firms are embarking
on a multi-year transformation, which is dramatic,” Simon
Paris, who heads software for financial services, said at the
May 6 event in The Hague, Netherlands, that Bloomberg News
attended. Standardized and industry-specific programs are
“significantly more complete and cheaper than custom-built
applications,” he said.
SAP said the aim of adding $10 billion revenue is not an
official forecast and didn’t specify a timeframe. The company,
which doesn’t usually break out
sales by clients’ industries,
said its interim goal is for 3 billion euros ($3.9 billion) by
2015. The banking market that SAP can address is currently
valued at about $60 billion, spokesman Daniel Reinhardt said.
Most Valuable
SAP shares climbed as much as 2.3 percent to 63.98 euros,
and closed 0.5 percent higher in Frankfurt. The stock has gained
33 percent over the past 12 months, valuing SAP at 77.2 billion
euros and making it Germany’s most valuable company.
The software maker, based in Walldorf, Germany, says it’s
already getting a “share of wallet” of more than 3 percent
from banks including
Deutsche Bank AG (DBK) and
Commonwealth Bank of
Australia. It’s betting lenders and insurers will ditch legacy
software for cheaper and more powerful standardized products.
That drive may be accelerated as profit in the financial
sector gets squeezed by tougher capital requirements and
declining consumer loyalty because of new service providers,
Paris said.
SAP’s financial software includes programs to detect
insurance fraud, allocate cash among bank branches, analyze
consumer behavior such as comments on
Facebook Inc. (FB)’s and
Twitter Inc.’s social-media sites, as well as applications for
risk and compliance management.
Oracle Suite
Besides
Oracle Corp. (ORCL), which began selling a suite of
programs for global banks in September, SAP’s competitors
include specialists such as Geneva-based financial software
maker
Temenos Group AG. (TEMN)
UBS AG (UBSN) last month hired SAP’s chief information officer,
Oliver Bussmann, for the same role at the lender. The Swiss bank
is seeking to cut 5.4 billion francs ($5.7 billion) in annual
costs by 2015.
In 2010, banking was SAP’s 12th-biggest industrial sector.
It climbed to No. 4 last year and its pipeline of pending deals
is now the largest among all industries, Falk Rieker, SAP’s
global head of banking, said at the event.
SAP in March started operating its Web-based Financial
Services Network, which aims to streamline transactions between
banks and corporate clients. Eight banks have signed up to the
project, which will help SAP sell services to companies that
don’t use its flagship business-management software, said Sanjay
Chikarmane, who oversees the project.
This year, SAP’s net income is projected to reach 3.7
billion euros, double its level in 2010, while total revenue is
estimated to reach 17.8 billion euros, an increase of 90 percent
compared with 2006,
data compiled by Bloomberg show. The
software maker plans to boost sales to more than 20 billion
euros in 2015.
The company said yesterday it plans to offer even its
largest programs via the Web, reducing the time and cost for
deployment compared with software installed on customer
premises.
