Thank You, Larry: SAP

Lucas van Grinsven

SHANGHAI: Germany's software maker SAP AG said PeopleSoft and Oracle had disappeared as major rivals in the Chinese market due to their messy takeover battle and that SAP was growing at least twice as fast as the market.

"Oracle has disintegrated. They have no people on the ground," SAP's head of greater China, Klaus Zimmer, said at the Reuters Asia Technology Summit in Shanghai. At the same time, Oracle's hostile bid "destroyed PeopleSoft's business in China".

The Chinese market is rapidly emerging as the most important market in the Asia Pacific region for SAP, the world's biggest producer of enterprise planning software. SAP's Chinese business overtook India and Korea last year, is on a par with Australia and aiming to exceed its Japan business, Zimmer said.

The growth is fuelled by local Chinese companies, many of them state-owned, which need business planning software to evolve from centrally planned behemoths to market-driven enterprises.

"State-owned companies need to become cost-efficient modern enterprises," he said. After two years of roughly doubling sales in China, SAP expected in excess of 60 percent growth this year.

"This year we will more than double the (expected) market growth of 32 percent," Zimmer said.

In that fertile market, its two main international competitors were fading to the background, Zimmer said.

"PeopleSoft was trying to come up last year. They gave us a hard time at banking, trying to penetrate through human resources (software). But the shadow of Oracle behind it scared the banks away. Banks are very conservative."

THANK YOU, LARRY

PeopleSoft is trying to fight off a hostile takeover by Oracle. A U.S. judge ruled earlier this month that Oracle could pursue its takeover attempts.

"Perhaps I should send (Oracle Chief Executive) Larry Ellison a thank-you note. PeopleSoft is now out of the picture. It's non-existent."

SAP's market share in China, as measured in May 2003 by market research firm IDC, was 28.7 percent. Oracle then measured nearly 10 percent, but has experienced setbacks in the region since, Zimmer said.

In head-to-head contract battles against Oracle, SAP was winning 95 percent of the time, he said.

Zimmer said his counterpart at Oracle had left, the third time he had witnessed a switch at his rival during his eight-year tenure in China.

"When the head leaves, his allies in the company leave."

Oracle's Asia Pacific technology officer, Kevin Walsh, said at the summit that China was one of the fastest growing areas for the company, but declined to give details.

Zimmer said he was winning back business from Oracle, such as from electronics manufacturer TCL Corp.

"The struggle was four years ago. Oracle started (with planning software in China) five years ago. In database (software) they have 80 to 90 percent of the market, so they had a very strong name. It was tough to fight against them.

"The market wasn't educated by then. The story was that SAP's system was rigid and painful and Oracle said it didn't have to be. And they were very cheap. In one of the deals we won back recently, Oracle's price was substantially lower than ours."

Local Chinese software makers posed no serious threat for SAP when bidding for big customers, he said. In fact, many of the major utilities, banks and industry companies owned by governments were ditching local software, despite efforts by the central government to use homegrown solutions.

"At all the state-owned companies we displaced local players. I see less obedience to this (government) request."