SAP software to steer Cup team

By ADAM GIFFORD

Team New Zealand have agreed to be the New Zealand guinea pig for SAP's new mid-market business software.

While SAP has traditionally been seen as software for large firms, in recent years the German company has made several attempts to sell into small- and medium-sized businesses.

It will want to make inroads to that sector of the market to turn around falling revenues and a run of losses in New Zealand in recent years.

SAP has become one of the America's Cup defender's "family of five" leading sponsors, which includes the right to run its logo on the spinnaker.

Team New Zealand chief executive Ross Blackman said his organisation was always trying to get the best technology it could find.

He said the move to SAP from a mix of low-end systems and spreadsheets would allow the team to better manage what has become a complex business.

"We have a huge number of items, generally custom-built, and lots of small transactions. We have thousands of suppliers we have to keep track of," Blackman said.

He said the system was being installed too late to have much impact on the current campaign, but "it's good to know that from day one next time we will have SAP there".

SAP Australia and New Zealand managing director Chris Bennett said SAP was supplying the system as part of its sponsorship. Team New Zealand will initially use the financial module and may roll out the other components later.

Scoping work starts early next month and the system, a preconfigured version of SAP R/3, should be working by November. SAP claims it has been set up in as little as five weeks in several Australian sites.

It will be run on site on a Microsoft SQL Server database running on an HP server, although it is possible to serve it up remotely.

Bennett said SAP saw small and medium business as an important new market.

Although there is fierce competition in the sector among the likes of Great Plains, Navision, Scalo, Geac and JD Edwards, Bennett said not many comprehensive solutions were on offer. "An organisation running a $30 or $40 million company in many cases needs the same level of complexity as a larger company."

He said SAP had been through some tough times on both sides of the Tasman since the market for ERP (enterprise resource planning) software stalled in late 1999, although it was now picking up.

Figures filed with the Companies Office show SAP New Zealand made a loss of $3.4 million last year on revenue of $17.3 million, compared with a loss of $3 million on revenue of $17.2 million in 2000.

But SAP's global accounts, prepared earlier in the year, showed the New Zealand operation generated revenue of around €8 million ($16.8 million) selling enterprise software and consulting services, but posted a loss of €858,000.

Last year SAP paid just shy of $1 million tax, but received a tax credit of $1.66 million the previous year.

The last time it made a profit here was 1998, when it made $6.1 million on revenue of $36.5 million.

"Those are statutory figures which are different from the management figures we run the business by," Bennett said.

"We have taken some active steps to improve our operations in New Zealand and Australia, with a focus on costs, customer satisfaction and lifting profitability. We saw a lift in profitability last year over 2000 and we will see a lift again this year."

Worldwide, SAP reported that revenues for the second quarter of this year were €1.78 billion, down 4 per cent on the same period last year.

It attributed the decline to exchange rate variations.

The operating margin was down 5 percentage points to 18 per cent, with earnings before interest, taxes, depreciation and amortisation of €377 million.

Revenues in the Asia-Pacific region, which includes New Zealand, were down 5 per cent to €209 million.

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