SAP's Recent Developments in the Dutch Market

SAP has continued to strengthen and forge new relationships in the Dutch market. Among its key partners, the strong local Dutch IT services players include Atos Origin, Capgemini / Sogeti, Ctac, Logica, Ordina and Uphantis, as well as the larger global players and the very small niche specialists. More recently, SAP and PinkRoccade Healthcare announced a partnership in March 2009 to develop solutions for Dutch healthcare organisations.

Partnerships are crucial even more so in a country like the Netherlands where businesses tend to favour working with local software and IT services players over the larger international/global providers to address local requirements. The large multi-national companies such as ABN AMRO and Shell however tend to be more open, working with different types of local, global and offshore players and these tend to leverage the global/international SAP services partnerships.

While a large part of SAP's business stems from manufacturing (just over 40%), there has been growing activity in the public sector. SAP has made some significant progress through its partners, such as the recent deal signed with the Ministry of Defense in February 2009 that was secured by Capgemini consortia and Logica to redesign processes around materials management and logistics and translate these designs into a SAP-based system.

However, on a more negative note, there has been bad publicity surrounding the deal with the Province of Noord-Holland, which was undertaken by both SAP and Ctac. Last year, the province of Noord-Holland announced that they had spent €500,000 on a SAP accounts module Grantor Management. According to the province, the implementation of this new grant module failed and exceeded the initial budget - an additional €500,000 was still required to complete the project and thus, was put to a stop. Last month, the province of Noord-Holland revealed that they would no take legal action against SAP nor Ctac.

The deal comes as a blow to SAP, particularly as the public sector presents major growth opportunities compared to other vertical markets in 2009. This deal will inevitably impact SAP's reputation as well as its partner Ctac among local provinces. However, SAP has plenty of reference in other parts of the Dutch public sector to try and offset this negative publicity. Also, the fact that no legal action will be taken against SAP or Ctac implies that the province was unable to concretely prove SAP/Ctac as liable. In addition, there will continue to be some ongoing cooperation with the software and IT services players.

The Dutch market relies heavily on the manufacturing and export business, and consequently the recession has hit the Netherlands particularly hard due to the strengthening Euro against the pound sterling for instance. Despite the impact this has on the IT services in 2009, the SAP services still presents opportunities particularly in the outsourcing space.

In addition, the Dutch government is focusing on open standards and open source initiatives, and as one of the few growing sectors in 2009, it is important for both SAP and its services partners to articulate a clear message and marketing campaign about the openness of SAP solutions. The Dutch SAP services market is expected to grow by 3.5% this year, according to latest PAC figures. The decline in consulting and systems integration activities will be offset by strong growth in application management and hosting.

PAC will be publishing its InBrief reports shortly, which provides an graphical/analytical overview of the SAP services market for key countries including the Netherlands. Also look out for "SAP in the Netherlands" profile to be published in the coming weeks!