SAP big in the news! Good signs for the IT industry?

SAP is making headlines almost every day. Three interesting, related trends can be identified based on some recent announcements:© 2006 Financial Times Deutschland, © AP

1. Europe’s leading IT and software company just announced a stellar 2005 financial year and the future is looking even more promising according to SAP’s management. Given this strong growth, SAP is hiring thousands of new people – apparently also here in Germany / Europe.

2. From an employee perspective, SAP has been named the No 1 employer here in Germany. Wau! Beating BMW and other brand companies, this is impressive! Congratulations to all who work for SAP.

3. Last but not least, CEO Henning Kagermann is cited in the Financial Times that “Indien wird langsam teuer”. “Wir haben uns vorgenommen, dort nur noch eine bestimmte Zahl an Mitarbeitern einzustellen und uns dann nach anderen Standorten umzuschauen.” Moving out from India and into China and Eastern Europe!

Takeaways / Questions: So what are the lessons learnt from these three trends?

a.) Being successful does not mean that you need to treat your employees badly! US companies tend to be highly successful, but employees are often treated harshly and the “hire and fire” principle is the No 1 business rule for many US managers. So SAP seems to have found a good “compromise” here. Could this be a role model for other European companies as well?

b.) If SAP can be considered representative for the overall IT industry, then SAP’s growth is a good sign for the whole IT/SW industry, isn’t it? After a couple of harsh years, growth in this sector would be much needed. Or is SAP benefiting from the consolidation in this industry? It remains to be seen I guess.

c.) Costs still play an important role for large companies. If costs rise too much, companies react and move away. SAP’s indication to move out of India because of rising costs and inferior infrastructure is an interesting development for other IT companies, who are also interested in taking advantage of low cost countries. SAP’s announcement to (re-) consider Eastern Europe is even more promising, highlighting the strength of the old continent over new or raising countries.

Anyway….SAP seems to rock on all ends at the moment…

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One Comment on “SAP big in the news! Good signs for the IT industry?”

  1. Christian Merz Says:

    re a) That’s why the German employees plan to establich a “Betriebsrat”? Why does SAP hire more and more middle management from the US?


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