Tuesday, 15 September 2009

SAP sells applications hosting business to T-Systems

(By Philip Carnelley, 15 Sep 09, 08:30) In a surprising withdrawal from the market, SAP has sold its applications hosting business to Deutsche Telekom’s IT services unit, T-Systems. The terms were not disclosed. With €12bn of revenues last year (around 10% of which is the UK) T-Systems can easily absorb SAP’s operation, which numbered 90 clients. It already does a lot of this type of work, and no staff or assets will transfer to T-Systems. Indeed, T-Systems landed a major contract just last week with a deal to manage Continental Automotive’s entire SAP systems.

On the one hand we commend SAP for “sticking to its knitting” – an example that a lot of companies could learn from. But the timing is a surprise; at a time when its new license revenues have nosedived, the comforting annuity-based nature of apps management – a sector of the market which our forecasts show is still growing albeit only around 3% – is something one would think SAP would like to keep in the background. Also, it would seem a sensible platform from which to move to offering software-as-a-service (SaaS). Yet SAP has said this move doesn’t affect its fledgling SaaS offerings – it still intends to build and host the SaaS versions of its products. We look forward to hearing more about the future of SAP’s Managed Services operation in due course – early indications are that it intends to keep the unit but perhaps it will become a pure SaaS operation.

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