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As viewers of this past weekend’s U.S. Open can attest, being the Number one golfer in the world doesn’t guarantee you a spot in the final pairing.

And while SAP hasn’t completely lost its grip as the world’s largest business management software provider, it is losing market share to rival Oracle, according to market analysts.

First quarter license revenue plummeted a whopping 33% for SAP to $585 million. In March, Oracle reported a 12% slide in new licenses for its quarter that ended on Feb. 28. The Redwood City, CA-based software giant reports its fiscal fourth quarter results on Tuesday. Analysts are expecting Oracle to earn $0.44 per share or three cents a share lower than a year ago.

The change in market dynamics is occurring as Oracle is poised to add Sun and its Java software and Solaris operating system to its software cache. While Oracle has continued to grow through acquisitions, SAP has largely relied upon organic growth, save for a handful of deals such as its 2007 purchase of BusinessObjects.

But that could change. Earlier this month, SAP CEO Leo Apotheker told French newspaper Le Figaro that the company may be looking into additional acquisitions this year, though he wouldn’t speculate on the types of companies SAP might be interested in.

Analysts and pundits have identified a number of enterprise software vendors that may be up for grabs. The list includes Red Hat, a leader in the Open Source community and BMC Software, a big provider of business service management software. Don’t rule out Salesforce.com. Its stock is currently trading about midway between its 52-week lows and highs at $39 a share. Some stock pickers believe it will underperform the S&P 500 for the remainder of the year. If that happens, it could become even more attractive for a big enterprise software company like SAP to snatch up and help strengthen its position in the rapidly-growing Software-as-a-Service market.

It’ll be interesting to see how the next few months play out and whether SAP decides to open up its war chest to help it expand into new markets. Some industry watchers have even speculated that SAP itself may become an acquisition target for IBM or Microsoft.

Comments (2)

	1. 06-22-2009 15:34
	The slide in Q1 revenues is troubling for both SAP and Oracle. But what has to be really worrying them is that while their revenues are sliding, leading software-as-a-service vendors are experiencing strong growth. They either need to get in the game by expanding their own SaaS offerings or make an acquisition. Registered

Mel Duvall

	2. 06-22-2009 15:59
	Absolutely agree, Mel. Seems like corporate execs are all waking up to the advantages of having others host your back-end apps.    One thing: If Microsoft makes a play for SAP, you might see antitrust regulators on both sides of the pond get into the act. Wouldn't leave a whole lot of competitors in the ERP space. Registered

John Goff

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