February 4, 2009 / 8:12 PM / 8 years ago

UPDATE 1-SAP launches biggest software upgrade in 3 years

4 Min Read

(Adds details on package, comment from SAP co-CEO)

By Jim Finkle

NEW YORK, Feb 4 (Reuters) - German software giant SAP AG (SAPG.DE) introduced the biggest upgrade to its business software in almost three years on Wednesday, saying it will help companies save money as the deepening recession hurts profits.

SAP, the world's top maker of business management software, will sell the new Business Suite 7 in bundles designed to help companies manage needs unique to their industry. For example, retailers get packages that help them coordinate product pricing with cash register systems, along with personnel issues and customer satisfaction data.

While customers can buy a whole bundle at once, they can also start by adding a single module that just handles one area, such as purchasing.

Those modules can be implemented in less than three months, which is quicker than the current average, and help companies reduce costs within a year, SAP said.

"We are living in challenging times. It's really a significant crisis," SAP Co-CEO Leo Apotheker told investors and analysts at an event about the product in New York.

He promised the new functionality and features will help companies run their operations more efficiently so they can better weather the economic storm.

"At the end of the day, crisis or no crisis, you have to continue to manage a business," he said.

Still, analysts say SAP faces an uphill battle in introducing new products in such difficult times. SAP itself last week announced plans to cut spending, including eliminating 3,000 jobs.

"I don't think anybody has a clue as to what is going to happen with the selling of this product because there is so much uncertainty," said AMR analyst Bruce Richardson.

He added that SAP's challenge is to effectively market the product as one that pays quick dividends, even in the midst of the recession. Business Suite 7 can also help businesses manage areas including accounting, sales, and manufacturing.

"It's about convincing customers that there is a sense of urgency to do something quick," Richardson said.

In most cases, businesses are only willing to invest in new technologies if they see convincing evidence that it will generate a quick return on their investment -- either by saving money or boosting their productivity.

About 35 percent of companies are delaying or canceling software upgrades originally planned for this year, according to market research firm Information Technology Intelligence Corp.

A major upgrade often costs millions of dollars as large corporations pay upfront costs for the software in addition to hiring technicians and consultants to help integrate the new programs with existing systems.

Businesses also tend to proceed cautiously with upgrades out of fear that glitches could interfere with their operations.

SAP -- whose chief rival is Oracle Corp ORCL.O -- counts Airbus [ARBU.UL], Procter & Gamble (PG.N), Motorola MOT.N, Apple (AAPL.O) and Audi (NSUG.DE) among its biggest customers. Its shares rose 1.62 percent to 28.51 euros in Frankfurt while SAP's New York shares fell 1.3 percent to $36.07. (Editing by Derek Caney, Phil Berlowitz)

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