Yesterday, SAP warned investors that its first quarter profits would fall below year-ago levels due to a sales shortfall. The company, which posted a profit of $184 million in the first quarter of 1998, said sales growth in the first quarter of 1999 will fall below 20 to 25 percent.
In a research note, Morgan Stanley Dean Witter analyst Chuck Phillips said SAP was not moving quickly enough to release products and Web-enable its product line. Discounting any rebound in the second quarter, Phillips cut his rating on SAP stock yesterday to "neutral" from "outperform."
"The products we had been looking for to generate some [second quarter] momentum?are slipping one by one," he noted. "The front office products [sales force automation and customer relationship management] are hobbling out later this year but with less functionality than we had looked for."
More bad news came with a report issued this week by Boston, Massachusetts-based AMR Research that said SAP had confirmed some development problems with its customer relationship management (CRM) products. Additionally, the company said it would not ship the products until much later--if at all--this year.
AMR analyst Peggy Menconi said SAP admitted to having more difficulty than expected with the remote synchronization component of its sales and services management software, and may scuttle a plan for Web-based deployment of its CRM line and ship instead on the client-server platform.
Last November, SAP announced the first stage of its front office plan with version 1.1 of SAP Sales and Service. The sales module is intended to support sales force automation and mobile sales. Beta versions of the first release were expected to roll out the first quarter of this year, with a general release scheduled for the second quarter.
A SAP spokesman said there has been confusion surrounding what the company's promises actually were, as two initiatives were announced. One announcement concerned the addition of sales functionality to existing products, while another addressed the delivery of a stand-alone CRM suite.
SAP never promised general delivery of a CRM suite this year, the spokesman said. A full front-office suite, he said, includes integrated software customers use to automate sales, services, and marketing needs.
General availability of the sales and services applications will depend on the success of a trial currently underway with 10 customers, he added.
In the meantime, Oracle today stepped up its front office assault, announcing a suite of CRM applications that will work with SAP's R/3 Enterprise Resource Planning (ERP) applications.
The company said its new product, Oracle Application InterConnect, will enable out-of-the-box integration with SAP ERP applications, enabling companies currently using R/3 to quickly add new functionality targeted for their sales and marketing departments.