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SAP eyes midmarket for growth

The company expects midsize businesses will make up 40 percent to 45 percent of its total software sales by 2010.

BURLINGAME, Calif.--SAP expects the midmarket sector to drive its revenue growth in the next four years, and anticipates a boost from its lineup of new business software this year.

Half of the German company's software revenue will come from new products by 2010, CEO Henning Kagermann said Thursday. Midmarket companies--those with fewer than 2,500 employees--will account for 40 percent to 45 percent of total software sales, he said. That compares with the current level of roughly 30 percent.

"We're No. 1 in the midmarket, and nearly 50 percent of IT spending will be there. It's a key focus for us and a market where we've dedicated products," Kagermann said during a presentation to developers and reporters here.

The business software giant believes its midmarket sales will be fueled by such products as Mendocino, a program being tested that links Microsoft's e-mail and calendar programs with SAP's back-office business applications.

During the next four years, SAP anticipates finishing up plans for its Enterprise Services Architecture (ESA), as well as its MySAP all-in-one business process platform.

Many of the changes that are expected to come in the next four years will build off the achievements of last year, which "was an extremely successful year for SAP," Kagermann said.

In 2005, for example, the company increased its market share while also delivering ESA ahead of its planned date, he noted.

Also last year, the applications giant dished up its next-generation MySAP business suite and its service-enabled suite for NetWeaver.

SAP, which caters to large business customers, intensified its midmarket efforts in early 2000, said Leo Apotheker, who heads up the company's sales and marketing.

As the company expands its efforts in the midmarket arena, it will be looking to the Asia-Pacific region, which has largely midmarket customers, Apotheker said.