Nice article from BW about SAP and high tech in Europe in general
'A MAJOR REBIRTH' FOR TECHNOLOGY? (int'l edition)
Europe is out to make up for lost time and forge a role as a global technology leader
Europe has a long tradition as an obstacle course for entrepreneurs. From
Hasso Plattner's industrial software concern to Pierre Chambon's biotech
startup, Transgene, technology companies have faced a risk-averse
culture, a morass of regulation, and a dearth of capital. So it hasn't been
surprising to see Europe fall far behind the U.S. in many areas. ''We missed
a few steps,'' concedes Plattner, co-founder and co-chairman of $3.5 billion
German software giant SAP.
But if the forces sweeping Europe, from the euro to the Net, succeed in
lifting its lackluster economy toward its potential, could the region take its
place as a global technology leader? If so, in which industries will Europe
shine?
Success is no given, but Europe certainly has a chance. Its best
universities and scientific foundations--from Germany's Max Planck
Institutes to the Institut Louis Pasteur in Paris--are first rank. More
important, over the past 10 years, European companies have established a
solid presence in three key technologies likely to see explosive growth:
wireless communications, business software, and biotechnology. Around
the leaders --SAP, Finland's Nokia, Sweden's L.M. Ericsson, the
Netherlands' Baan, and even France's fast-growing Genset--a crop of
startups is sprouting. To go further, Europe needs to hold on to its brightest
scientists and entrepreneurs and channel its capital intelligently. William A.
Etherington, IBM's general manager in Europe, is among the optimists. ''We
believe Europe is on the threshold of a major rebirth,'' he says.
The region is already ahead in wireless communications. Ericsson and
Nokia are turning Scandinavia into a wireless society. The trend is also
evident to the south. ''Our mobile-phone market is growing at 100% a year,
and I don't expect it to slow anytime soon,'' says Guillermo Fernandez Vidal,
a vice-president at Spain's Telefonica. Growth in European cellular
subscribers is 56% yearly--15% higher than the world average. Unlike the
U.S., Europe has a single digital standard--and will soon be a united market
of more than 300 million potential consumers of wireless products.
Deregulation ushered in Scandinavia's wireless breakthrough. In more
hostile terrain, ironically, it is the old obstacles that have fostered creativity.
SAP is Europe's leading software company. From its start in the country
town of Walldorf in 1992, SAP has become Europe's answer to Microsoft
Corp. Sales have quadrupled in five years. Market cap is now second in the
industry, behind Microsoft.
SAP pioneered the technology that knits companies together. Its
''enterprise'' systems put all corporate information--from inventory in
Singapore to accounts payable in Newark--at the CEO's fingertips. More
than any consultant, SAP is effectively helping to restructure the global
corporation. Its next goal is to connect a company's system to those of
customers and suppliers. The idea is to link global trading partners so that
they perform as a unit in everything from shipping schedules to electronic
commerce.
SAP is hardly alone. Europeans are designing the most advanced systems
in everything from data mining to telecom billing to online banking. Software
from France's Dassault Systemes lets manufacturers assemble products
on a computer--eliminating mock-ups. Belgium's Lernout & Hauspie
Speech Products is a global contender in the speech-recognition software
that is essential to talking E-mail and Web browsers in cars.
MIND MELD. L&H is distinctly transatlantic. It has headquarters in Brussels
and Boston and buys companies on both continents. Last summer,
Microsoft bought 15% of its stock--boosting confidence among clients and
investors. The drift is evident: Europe's high-tech economy is melding with
America's as its companies benchmark themselves against U.S. players.
Says Pierre Haren, president of Paris software company Ilog, which has
been investing in U.S. software production: ''The Atlantic doesn't really exist
for us anymore.''
Successes against global rivals have helped European software startups
gain access to financial markets once closed to them. Venture capital is
pouring in, priming the pump for new issues on the NASDAQ as well as on
six interlinked high-tech markets across Europe. At the 21-company Neue
Markt, part of the Frankfurt exchange, total market capitalization doubled, to
$11.5 billion, in the first three months of this year.
Access to capital has proved just as critical to European biotech.
University-bred startups in Cambridge, Munich, and Paris have proven,
cutting-edge technology in genomics and potentially powerful anticancer
compounds. Health and pharmaceutical companies, from Johnson &
Johnson to Novartis, are pumping millions into venture funds and licensing
agreements. Initial public offerings have grown from a trickle to a steady
stream. In April, France's Transgene was comfortably oversubscribed when
it listed on the NASDAQ. Germany's Morphosys and Iceland's Decode
Genetics Inc. plan to follow. The rush to the market has attracted global
financiers who fear that the U.S., with seven times as many biotech listings,
may be saturated.
CLIMATE CHANGE. But Europe won't lead in tech without talent. A brain
drain has hit especially hard in France, where taxes and financial limits have
pushed thousands of entrepreneurs into temporary exile. While rules are
easing, the market is more likely to make the difference. A common
currency will make clear which countries reward wealth generation--and
which punish it. Rivalry for jobs and investment may well engender a
friendlier climate for investors and reverse the talent drift.
Europe's long fragmented high-tech markets have held back progress for
decades. But there are advantages, oddly enough, from this experience.
Europeans, geared to foreign markets, are quick to embrace tech
standards. This should create strength in the new world of electronic
commerce. For consumers, Europe's leadership in smart cards--credit
cards with chips--provides a ready mechanism for buying on the Net.
The transformation from high-technology laggard to digital star is clearly a
work in progress. But the Continent has come far in a short time. A decade
ago, Americans with modems hid them from customs officials in Europe's
protected monopolies. Five years ago, a cultural rift prevented German
software makers from selling in France.
Now, Europe is poised to join the world's high-tech leaders--to shine from
cell phones to biotech and beyond.
By Stephen Baker |
