SAP Kicks off Q1 with Double Digit Sales, Profit Growth

In ERP News, SAP has reported impressive Q1 software sales and profit growth. SAP, the enterprise resource planning (ERP) giant, boasted double digit sales and profit growth in only their first quarter of 2010. SAP’s co-CEO, Bill McDermott, predicts that the sales volume will remain strong throughout the year.

McDermott explained that the double digit increase was probably a sign of global economic recovery and companies investing in ERP solutions to save money. He boasted double-digit growth across all key regions including SAP’s established and fast-growing markets, key segments and small and midsize businesses.

SAP earned a Software Related Services Revenue (SSRS) of 1.95 billion Euros according to the IFRS. Software revenue for SAP increased by 11% and the operating profit margin rose to 22% in Q1 of 2010. The company is in great shape after much debate over whether the new management regime would help or hurt sales.

SAP faced a decline in sales in 2009 due to the increased cost of the enterprise support to 18.3% of the net licensing fees. The 2009 decline was also a major factor in the decision to replace former CEO Leo Apotheker with co-CEOs Bill McDermott and Jim Hagermann Snabe. The CEO duo promised SAP customers they would not increase the cost of enterprise support and would improve business activity. Apparently customers bought the claim and purchased the enterprise support plans accordingly.

As for SAP, McDermott said that the company would keep tight controls on expenses in order to boost profit margins. He also said that they would keep staffing levels consistent-keeping a tight rein on hiring and job cuts. The company also plans to focus the rest of the year on development and marketing in the on-premise, on-demand and mobile devices sectors.

SAP’s first quarter growth is exciting news for the ERP vendor. SAP’s annual forecast looks sunny as they’re already off to a great start. The new regime’s plans show promise, especially with their decision to focus on the on-demand and mobile technology sectors. Although on-premise technology is still relevant, it is important for ERP solutions to tap into the on-demand market as well. Many people believe on-demand is the platform choice of the next generation.

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