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SAP targets public sector

SAP America hopes a new subsidiary will help it outmuscle PeopleSoft in providing software solutions for public-sector organizations.

SAP America has announced the start-up of a new subsidiary.

SAP America Public Sector will provide planning, administrative, and information management systems for government, education, and nonprofit organizations in the United States, based on the German company's R/3 multifunction business application package.

"We have chosen to make a focused effort in the public sector market," said L. Steve Borchers, director of SAP's public sector division. "This is an extension of what we've done well globally."

SAP, like competitors PeopleSoft, Baan, and Oracle, is looking to expand its customer base by offering applications specialized for particular industries.

All four companies are pitching their products to telecommunications, oil, and gas companies, and to utilities, educational institutions, and the public sector.

SAP already boasts a number of public-sector customers, including Duke University, Central Michigan University, the City of Phoenix, Arizona, the Georgia Department of Education, and MIT.

The global software giant has a strong presence in the public sector in Europe and hopes to establish that same presence in the U.S. market with this move, according to software analyst Byron Miller of Giga Information Group .

"It is an attempt to make sure people understand they are serious about the public sector," Miller said.

More than 300 public institutions in Europe, Latin America, the Asia-Pacific region (including Australia), and Canada are using SAP software applications.

SAP pointed out that the R/3 system has supported public sector organizations since it was first introduced in the early 1990s. By forming the new organization, SAP said, it is investing considerable resources to support those customers and alert others about the product.

The move also meets PeopleSoft head-on, Giga's Miller said. PeopleSoft is SAP's primary competitor in the public-sector market.

"They're saying, 'we're here and we're serious,'" Miller said.

John K. Greaney, Jr., director of SAP's Public Sector Center of Expertise, said the move will help the company continue the momentum it has established in the market so far. "It's more than just the software. It's about getting the software, implementing it and operating it."

SAP plans to tailor R/3 to meet the many functional and technological demands facing public-sector organizations, such as budget and human resources management, financial accounting, real estate, and maintenance management, according to Greaney.

A suburban Washington location is planned for the new organization.