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Technology Stocks : Red Brick Systems -- Ignore unavailable to you. Want to Upgrade?

To: Smilodon who wrote (174)	2/6/1998 10:05:00 PM
From: Ray Rueb	Respond to of 304

A good question, which really belongs in the SAP group, but I will answer it here. >>Due to the Y2K issue, a lot of companies have sought to replace problem systems rather than fix them. However, once the lead time for implementation exceeds their deadline, they must focus resources on fixing legacy systems. Compounding that problem is that a lot of potential ERP customers, especially the larger ones have already bought their systems. Result is a possible slowdown for the enterprise software companies. Combine this with their very high valuations could lead prices off a cliff. >>Names I am investigating are PeopleSoft, SAP, Baan and maybe Seibal (I know they are a little different) >>Any knowledge of this area? I have the following experiences: 1) one of my Brazilian clients pulled all resources off of our project right in the middle of deployment (we were just beginning UAT) and put them on Y2K. I believe there is a serious problem in Latin America and Third world countries involving Y2K. They will solve it the way their culture allows... TREMENDOUSLY INCONVENIENCE THE CONSUMERS for 4 to 6 weeks in 00/01 and 00/02, while they scramble to fix their systems. 2) One of my clients is a major international bank, and we are deploying a system to 13 countries. While at their site (in southern FL) the only people who were working longer hours than us were the Y2K people. 3) This same client had a full page clause in our contract about Y2K compatibility. We compromised by guaranteeing the integrity of our software processes while forcing all their data extractions to use YYYYMMDD format for all date fields. If their data says 00000101, then thats their problem, not ours. Our software uses Oracle DATE types, so we are not only Y2K compliant, but Y3K compliant. I shudder to imagine our systems running that long, but if things like that didn't happen there wouldn't be a Y2K problem. 4) Look at the market price of COBOL consultants: Dinosaurs who I wouldn't give 30K to are currently earning 80K+. in 1998 and 1999 the pressure will only increase. BUT, look for big salary crash come March 2000; Earn it while you can guys, more power to ya. As far as ERP companies go: 1) SAP has a "quick startup" version called ASAP. Truly 10 months or less. I'm sure that by January of 1999, SAP will be claiming a 4 month implementation schedule. I see no forseeable downside in SAP before 2001. 2) SAP has over 10,000 worldwide clients and is now penetrating midsized companies and offering a huge selection of training classes. Training is growing at a 90%/year rate, I believe, the fastest growing segment of SAP (but beware of percentages and ratios, see below). 3) PSFT claims they're gaining on SAP by saying that in year X SAP had 10x revenues and now has only a 4x revenue lead. WHAT SH*T!!!! Both companies doubled in size and OF COURSE THE RATIO WENT DOWN (simple mathematics). The reality is that SAP is stealing PSFT customers, NOT THE OTHER WAY AROUND. 4) Look at the available 3rd party infrastructures. How many PSFT or BAAN consultants do you know, and how many SAP? Also, who is in the popular press more? 5) My money is where my mouth is... I currently own many SAP shares, and I'm looking for more money to BUY. Betting against SAP is like shorting MSFT; Do you really want to bet against a 3+ Billion dollar company that grew at 86% for 1996 and 60% for 1997? Even if revenue growth does "slow" to 40%, that will still make SAP a 5 Billion dollar company by year's end. BUY-HOLD, BUY-HOLD. 6) There are rumors that SAP will trade as a NYSE stock rather than as an ADR. If this actually happens in 3Q (personally I doubt it because of the differences between German and American accounting practices), this ALONE would boost prices by 40%. 7) During the panic last October, SAP was the top of the gainer list because it went even for the day when everyone else had losses. Actually, I believe this great performance was not just because SAP is a great company, but also because the DAX was closed while the DOW tumbled, and was still open the next day when the DOW went way up. So, do I sound BULLISH on SAP or what?