SAP said on Thursday that 2009 preliminary software and software-related service revenues were 8.2 billion euros ($11.92 billion), a drop of around 5 percent at constant currencies.

While software and software-related service revenues for the fourth quarter dropped around 2 percent, that figure unexpectedly rose 5 percent in the Asian/Pacific/Japan region.

SAP, founded in 1972 in Walldorf near Heidelberg, cut its outlook three months ago on weakness in Japan and emerging markets, saying it expected its 2009 software and software-related sales to decline by between 6 and 8 percent.

Chief Executive Leo Apotheker said at the time he expected the fourth quarter to be SAP's "largest quarter by far" and that he preferred to be prudent in his outlook.

Previously, it had forecast a decline between 4 percent and 6 percent.

DZ Bank analyst Oliver Finger said on Thursday licence revenue in the fourth quarter topped expectations.

"The licence revenue is the most important trigger as it shows that SAP could catch up also some momentum in the top line. This is very important for the future development of support revenues," Finger added.

He said SAP presented "quite a solid set of numbers" but said a delay of price increases for maintenance fees could put some pressure on the stock price.

Software licensing and maintenance fees account for the major chunk of total revenues at SAP.
SAP shares gained more than 4 percent to its highest level since October 2008 before slipping back to 35.34 euros, up 1.9 percent, outpacing the German blue-chip index .GDAXI which was up 0.4 percent by 1618 GMT.

SAP's operating margin for the year was around 27.5 percent at constant currencies, exceeding SAP's target range 25.5-27.0 percent, SAP said in a statement on Thursday ahead of its scheduled Jan. 27 release date.

SAP has so far not given an outlook for 2010, saying only that while the worst of the economic crisis was over it was too early to speak of an upswing.

Oracle Corp's purchase of Sun Microsystems Inc is expected to shake up the tech sector as it turns the software giant into a player in the hardware market and gives it new clout in software.

The $7.1 billion deal, which Oracle reached after the collapse of Sun's talks with International Business Machines Corp, will make it the No. 2 player in the $17 billion market for high-end Unix computers used in corporate data centers. That puts Oracle behind IBM and ahead of Hewlett Packard Co.

The acquisition also gives Oracle control of Sun's Java software, one of the world's most widely used computer languages, and the Solaris operating system for Unix servers.

"This is a competitor that is much more formidable than Sun standing alone," said Howard Anderson, a lecturer at the MIT Entrepreneurship Center and former CEO of the Yankee Group.

"If I were a Sun customer I was starting to get nervous about Sun. I was worried about their viability. I'm not worried about that anymore. I know that Oracle is going to be there."

Analysts say Oracle, known for its aggressive marketing and tight cost controls, will cut Sun's bloated cost structure and energize a struggling company with 33,556 workers at the end of last year. Sun posted a loss of $1.9 billion in the first half of its current fiscal year.

Sanford Bernstein analyst Toni Sacconaghi predicted that once Oracle takes over Sun, it will likely need to cut another 5,500 to 10,000 positions.

PRODUCT BUNDLING

Oracle's goal is to boost sales of existing products as well as the ones it is acquiring by bundling its software with Sun's hardware, selling pre-configured machines that it promises will cost less and perform better than rivals.

"Across the board, this puts Oracle on much more of a competitive footing against IBM and HP. This puts them on an even footing from disk to databases, and everything in between," said Laura DiDio, an analyst with research and consulting firm ITIC.

Oracle has forecast that the acquisition would add $1.5 billion to operating profit in the first full year after closing, and said it intends to make the hardware division profitable.

Investors seemed to approve. Oracle shares outperformed the Nasdaq Composite Index in the two trading sessions after the deal was unveiled. They rose 3.8 percent to $19.53 on Tuesday.

But the risk is that it will be more difficult than Oracle anticipates to turn around Sun's struggling hardware business.

While Oracle Chief Executive Larry Ellison has a strong track record of integrating software companies into his business, he has yet to take on a hardware maker.

"We view the deal as a stretch for Oracle," said Sacconaghi of Sanford Bernstein.

Ellison's vision of offering a full soup-to-nuts product line might resonate with some customers, but not all.

The brash billionaire has previously bragged that his software will increasingly allow businesses to use inexpensive x86 computers to handle complex tasks that once required the use of Sun's high-end Unix systems, Sacconaghi said.

Dell Inc competes with Sun in selling x86 servers, a $30 billion market where Sun has just a 2.5 percent share versus 22.3 percent for Dell, according to Gartner Research.

RIVALRY WITH MICROSOFT

While there are questions about Oracle moving into the hardware business, the benefits of it buying Sun's software units are clear. Ellison said Java would be the most important software asset he had acquired, after spending more than $30 billion on 54 companies.

Both Oracle and IBM develop software using Java, which Sun licenses out to most software makers. Java code is used in Web applications, as well as devices ranging from cellphones to PCs and servers, and it competes with a group of programming standards from Microsoft Corp known as .Net.

While Java is not a growth business -- revenue was flat in Sun's most recent fiscal year at $220 million -- Ellison will likely seek to use the clout that comes with controlling Java and setting industry standards as a weapon in his long-running battle with Microsoft.

Under Oracle's stewardship of Sun, Microsoft could also face more competition in the database market, where its SQL server competes with Sun's mySQL software.

Microsoft Chief Executive Steve Ballmer was he was "very surprised" by the Sun-Oracle deal when asked about it while traveling in Moscow on Monday.

DEFENSIVE MOVE?

Some analysts said Oracle wants to buy Sun to boost revenue as it grapples with a recession and currency headwinds. New software sales fell 6 percent in its most recent quarter.

Analysts, on average, expect Sun to post full-year revenue of $13 billion, more than half the $23 billion projected for Oracle, according to Reuters Estimates.

"We think it is largely a defensive move to keep its positioning within the industry and to get some software assets at a fairly good price," said Edward Jones analyst Andy Miedler.

A spokeswoman for Hewlett-Packard said her company, a close partner of Oracle and Sun, will look to strengthen its ties with the larger Oracle.

IBM Chief Financial Officer Mark Loughridge said on an earnings call on Monday that the deal will have no impact on his business: "They now have the same address and the same mailbox but we are talking about the same team we have been competing against for some time and winning on the field."

An acquisition of Sun Microsystems by IBM would change the course of Oracle and SAP's use of Java, analysts have warned.The Wall Street Journal reported on Wednesday that IBM and Sun are in discussions that would see Big Blue pay $6.5 billion to get Sun's servers, storage, open source software, and, of course, its crown jewel: Java.

"People view this as a merger of two hardware companies, but the software is a bigger aspect that may change IBM and other large software companies," said Ian Finley, a vice president at AMR Research.

Michael Cote, an analyst at RedMonk, pointed out that IBM controlling Java "could be something people who depend on Java will freak out about."

AMR's Finely added, "If IBM enforces control over the Java Community Process the way Microsoft controls .Net, and WebSphere becomes perceived as better middleware because of it, then IBM gets an inherent advantage. Plus, it could de-stabilise the foundations of Oracle and SAP's products because Oracle's Fusion and SAP's NetWeaver are both tightly wedded to Java."

Such divisive action, however possible, would not happen easily or quickly. Java's community process could hamstring any efforts by IBM to wrangle too much control of Java standards, said Al Gillen, program vice president for system software at IDC. "In a community-based environment, if IBM does something with Java the community doesn't like, members can fork Java," Gillen explained. "I think IBM gets that."

Financial processes are the essence of banking, so automating these processes is a key goal for banks struggling to increase both efficiency and data integrity, according to Mastering banking risk through embedded governance, risk and compliance, a survey and paper from the Economist Intelligence Unit, sponsored by SAP. However, most banks still focus mainly on restraining costs and avoiding regulatory sanctions rather than developing an enterprise view of risk. This conservative approach has ironically increased risk exposure at the enterprise level even as it contributes to stronger risk management practices within functions and business lines.

Bank executives rank the proliferation of manual processes as the greatest problem with current financial processes. They see fewer errors as the biggest benefit of automation. And they believe that the high-level of investment required is the single largest obstacle. Eighty-two percent of bank respondents have attempted to automate at least some of their processes; such banks had experienced the following tangible improvements:

Faster processing speed claimed by 74 percent of respondents.
Sixty-five percent of respondents cite fewer control errors.
A decrease in headcount according to 52 percent of respondents.
From the respondents, 49 percent claimed a reduction in the number of poor quality decisions.

"Process automation used to be purely cost-driven - a matter of squeezing out the inefficiencies left over from legacy paper-based processes," said Dan Armstrong, senior editor at the Economist Intelligence Unit and manager of the research. "Now it's more about providing managers with quick access to accurate enterprise-wide data, and using it to inform the bank's risk and reward decisions."

The findings were based on the responses of 71 bank executives across the world who took part in larger financial process automation survey in the fourth quarter of 2008. Key findings include:

Biggest Problems with Current Financial Processes. Bank executives that participated in the survey paint a rather negative picture of their financial processes. Half say there are too many manual processes in their organizations; 38 percent say methodologies are inconsistent and the remainder point to poor visibility and accountability, overly restrictive and redundant controls, incompatible applications and the need to massage data to make it comparable.
Benefits to Automate Financial Processes. The majority of bankers surveyed claimed that the biggest benefit of financial process automation is the elimination of errors due to manual processes and data integrity. Cost reduction was a distant third at 31 percent, which indicates that many banks have progressed beyond efficiency as the primary rationale for automation.
Barriers to Financial Process Automation. However, the upfront costs of financial process automation continue to represent a significant barrier to automate a banks financial process, according to survey respondents. Six in ten bankers cite upfront costs as one of the top two obstacles. No other impediment was cited by more than 30 percent of the respondents. However, only 8 percent of executives say that processes are already sufficiently fast, accurate and efficient, and need no further improvement.

"SAP has found the survey results revealing, as they will enable us to work even closer with our customers in helping them address the immediate issues they have today in managing credit, market and operational risk," said Martin Schroter, vice president, Solution Management, Banking, SAP AG. "SAP delivers governance, risk and compliance solutions with integrated business insight to support a bank's end-to-end cross-enterprise business processes and access controls to improve business process management and automation for detecting, remedying, mitigating and preventing access and authorization risk across the enterprise."

SAN DIEGO - April 08, 2009 - SAP AG (NYSE: SAP) today announced that ICW Group Insurance Companies is now operating the SAP® ERP Financials solution to drive enterprise-wide efficiencies on a single, integrated system laying the foundation for financial excellence. Capitalizing on the early success of its recent SAP deployment, as well as its existing deployment of SAP® BusinessObjects™ business intelligence (BI) solutions and information management (IM) solutions, ICW Group was able to glean real-time visibility of its cash flow and reduced its general ledger accounts from 6,800 to 800. ICW Group will next implement insurance-specific solutions from SAP for claims, with ‘collections and disbursements’ creating an end-to-end IT infrastructure to better meet customer needs and drive competitive advantage.

“When the financial crisis hit we knew it was of utmost importance to continue our implementation of SAP to gain full cash flow transparency and create an edge over the competition,” said Michael Freet, senior vice president and CFO, ICW Group. “The success we achieved immediately after going live with SAP is a true testament to the power and user-friendly attributes of the solution. We now have an integrated and flexible IT roadmap in place that allows us to remain competitive during the recession and be prepared for growth opportunities during the recovery.”

As an innovative insurance company licensed in all 50 states, ICW Group offers a broad range of insurance products that include auto, workers’ compensation, catastrophe, commercial property and surety. Previously, ICW Group had a number of disparate legacy systems that were not scalable. As they began to grow and diversify, ICW Group needed one trusted version of their business data that could be easily disseminated to employees, regulators and agents. The company selected SAP BusinessObjects IM and BI solutions to consolidate and cleanse data, as well as deliver actionable reports to improve visibility across the organization. ICW Group relies on SAP BusinessObjects to replace gut-feel and spreadsheets with timely and reliable data for better decisions making, including support for predictive analytics, which enables precise pricing for insurance policies.

ICW Group selected HCL AXON as its implementation partner to replace its financial management software. HCL AXON team members worked closely with ICW over a four month period, and together drove a smooth and efficient transition of the Group’s systems and data, as well as supporting employee communications and training.

With advanced technology from SAP, ICW Group employees now have more time to move up the curve and focus as a true financial advisory resource for driving enterprise strategy and growth. Many manual and spreadsheet processes have been automated in SAP software, freeing valuable hours to conduct financial analysis, planning and monitoring. The new and more detailed information captured in SAP software provides both accounting and business leaders more timely access to information. In addition, each ICW Group line-of-business can also work more efficiently by accessing real-time facts and figures to enhance departmental decision- making. All of this lays the foundation for more efficient financial operations, as it allows ICW Group’s CFO to focus on being a strategic advisor to the business, instead of allocating time against secondary tasks that ICW Group’s previous financial systems could not support.

Last year ICW Group selected the SAP ERP Financials solution and insurance solutions for claims management and ‘collections and disbursements’ (see “ICW Group Turns to for Improved Claims and Billing Processes”). The deployment of SAP software has already provided ICW with early benefits:

Increased data granularity when compared to legacy systems. Operational data is now seamlessly integrated with the general ledger to a much greater degree of detail.
Elimination of database management activities by financial professionals.
Ability to rapidly analyze the financial and operational data.
Increased efficiency through access to—and analysis of—real-time financial data.

“Because of its aspirations of growth and the commitment to its customers and employees, ICW Group is an inspiration at a time of uncertainty,” said Richard Daukant, senior vice president, Financial Services North America, SAP AG. “Having realized that the existence of its multiple products and applications across the claims, billing and financials areas was creating too much work based on the level of complexity of those products and applications, ICW Group knew it needed to complete deployment of an integrated and scalable system to create the financial backbone for effectively supporting its insurance needs. With the insight and tools provided by SAP, the Group can now close the gap between its business strategy and everyday execution.”

Having an end-to-end platform with SAP’s flagship enterprise resource planning (ERP) application, SAP® ERP and SAP BusinessObjects BI solutions, ICW Group’s new analytics solution is the foundation of its financial statements. ICW Group can generate its financial results fast and have the visibility needed to base business decisions on facts. Joining the SAP solutions and SAP BusinessObjects solutions on an integrated platform will allow ICW Group to use market-leading reporting, analytics and dashboards to better evaluate and manage credit, market and operational risk. Improved insight will enable the Group to plan by taking risk into account, while at the same time giving it the opportunity to monitor and remediate internal controls across all its systems.

When asked about the successful go-live at ICW Group, Ian Greenhalgh, SVP of Sales and Marketing for HCL AXON in the Americas, said, “We are delighted to be a part of ICW Group’s successful financials go-live and look forward to working with them to delivering benefits as we continue to roll-out the SAP platform into key operational areas of the business.”

Now that ICW Group’s financials are operating on an integrated platform, it is currently implementing SAP® Claims Management and SAP® Insurance Collections and Disbursements applications, which it plans to have implemented in the third quarter. With claims software from SAP, ICW Group plans to accelerate cash flow, optimize reserves, reduce leakage and ensure efficient processing, allowing customers access to easier methods for processing their claims and quicker response times and payments. Collections and disbursements software will help ICW Group consolidate systems and manage payments, billing and receivables, improving the reconciliation process while enhancing customer service.

About ICW Group
Privately held ICW Group represents a group of multi-line property and casualty insurance carriers providing workers' compensation, surety, commercial property, DIC and personal and business auto insurance. Its member companies consist of Insurance Company of the West, Explorer Insurance Company and Independence Casualty and Surety. Based in San Diego, Calif., ICW Group continues to transform itself into an insurance industry leader dedicated to meeting the needs of its agents and the people and companies they insure. More information is available at http://www.icwgroup.com/.

About SAP
SAP is the world’s leading provider of business software (*), offering applications and services that enable companies of all sizes and in more than 25 industries to become best-run businesses. With more than 82,000 customers in over 120 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol “SAP.” For more information, visit www.sap.com.

About HCL AXON
HCL AXON is a Business Transformation consultancy that focuses on delivering significant business value to large, complex organizations through the innovative deployment of SAP technologies. HCL AXON has over 4,500 experienced professional who leverage the implementation of SAP to deliver sustained business improvement. For more information, visit www.hcl-axon.com