SAP exec: Belt-tightening to continue, but business better

A top SAP executive said Wednesday that business is looking better, but the company is still reining in costs.

A top SAP executive on Wednesday said the company is "implementing a series of tough, tough actions to convert the company to a much leaner operation than it is today," but did not utter the word "layoff."

Speaking at a Credit Suisse technology conference in Arizona, John Schwarz, CEO of SAP's Business Objects unit, said SAP executive board member and Chief Operating Officer Erwin Gunst has been charged with leading the effort.

Gunst recently gained an additional measure of clout within SAP. Last week, the company announced he would take over as SAP's labor relations director on Jan. 1, replacing executive board member Claus Heinrich, who is leaving the company on May 31.

Gunst's purview will now include Global Human Resources, SAP IT and the SAP Labs network, SAP said.

"He's got a clean, complete carte blanche from [co-CEO Léo Apotheker] to go and look at every aspect of the business, to find ways to make us more efficient, more productive, more responsive, more agile, more able to respond to the market opportunities -- a more focused business," Schwarz said.

"In that context, even if the environment is tough -- and we expect it to be tough, frankly -- even if the revenue doesn't grow, we'll be able to at least protect, if not improve margin next year," he added.

SAP's profits fell 5 percent in the third quarter. Executives have said SAP experienced a significant drop in business during the second half of September.

The company has already made efforts to cut costs, including a hiring freeze, but so far has not announced any layoffs.

SAP spokesman Saswato Das declined to discuss Schwarz's remarks in any detail. "We're running a very tight ship and focused on delivering value to shareholders and customers," he said.

A source close to the company said Gunst's efforts are centering on business process improvements, cutting overhead and other measures, not layoffs.

Meanwhile, things are looking slightly up business-wise for SAP, Schwarz said.

"We've not seen a recovery of the selling environment to pre-September, but we've seen a predictable, manageable environment," he said. "We are closing deals, customers are buying."

The company is going after smaller deals, however: "We're not trying to drive multi, multimillion-dollar transactions, but more manageable chunks."

It is also trying to focus on customers in industries "where there's already an uptick taking place," such as health care and the public sector, he said.

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Chris Kanaracus

IDG News Service
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