Database Reference
In-Depth Information
5.1.5 R / 3 Enterprise
In April 2002, SAP announced that its revenues had climbed 9.2%, but its first-quarter profit fell
steeply because of a larger-than-expected drop in license revenue from the sale of new softwares.
Many customers had been reluctant to invest in the huge cost of moving to the mySAP system given
the recession and continuing market uncertainty. Accordingly, SAP announced it would introduce
a product called R/3 Enterprise; it was an interim product, which would be targeted at customers
not yet ready to make the leap to mySAP. R/3 Enterprise is a collection of web software that can
be added easily to the R/3 platform to provide a company with the ability to network with other
companies and perform many e-commerce operations. SAP hopes this new software will show its
R/3 customers what mySAP can accomplish for them once it is running in their companies.
5.1.6 SAP NetWeaver
SAP's managers believed these initiatives would allow the company to jump from being the third
largest global software company to being the second, ahead of main competitor Oracle. They also
wondered if they could use its mySAP open system architecture to overcome Microsoft's strangle-
hold on the software market and bypass the powerful Windows standard. Pursuing this idea, SAP
put considerable resources into developing a new business platform called SAP NetWeaver that is
a web-based open integration and application platform that serves as the foundation for enterprise
service-oriented architecture (SOA) and allows the integration and alignment of people, informa-
tion, and business processes across business and technology boundaries. Enterprise SOA utilizes
open standards to enable integration with information and applications from almost any source
or technology and is the technology of the future. SAP NetWeaver is now the foundation for all
enterprise SOA SAP applications and mySAP Business Suite solutions; it also powers SAP's partner
solutions and a customer custom-built applications. Also, NetWeaver integrates business processes
across various systems, databases, and sources—from any business software supplier—and is mar-
keted to large companies as a service-oriented application and integration platform. NetWeaver's
development was a major strategic move by SAP for driving enterprises to run their business soft-
ware on a single SAP platform.
5.1.7 mySAP Business Suite
In 2003, SAP changed the name of its software from mySAP.com to mySAP Business Suite because
more and more customers were now using a suite licensing arrangement to obtain its software
rather than buying it outright. Part of the change in purchasing was because of the constant
upgrades SAP was rolling out; in a licensing arrangement, its clients could expect to be continually
upgraded as it improved its ERP modules. This also had the effect of locking its customers into its
software platform for its raised switching costs. However, while SAP continued to attract new large
business customers, the market was becoming increasingly saturated as its market share continued
to grow—it already had around 50% of the global large business market by 2003. So, to promote
growth and increase sales revenues, SAP began a major push to increase its share of the small and
medium business enterprise (SME) market segment of the ERP industry.
5.1.8 Small and Medium Business Enterprise
The small size of these companies, and so the limited amount of money they had to spend on
business software, was a major challenge for SAP, which was used to dealing with multinational
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