No data centers planned to support cloud growth - SAP

Monday, March 28, 2011

On-demand solutions represent one of SAP's (NYSE: SAP) three main strategic pillars in Latin America this year, but that does not mean the firm is about to dish out regional data center investments any time soon.

"At this time, we aren't going to set up data centers in Latin America to satisfy this market," SAP's sales vice president for Argentina, Colombia, Chile, Peru and Venezuela, Leonel Graff, told BNamericas.

Some cloud-based SAP solutions are currently available to Latin American clients, but Graff said the full offering will be implemented in the region throughout the course of the year.

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"The idea is to offer this in a centralized manner," he said. "Perhaps, at some point in time, if the volume starts to become significant, then things can change. Today, we don't have any plans" to open data centers in Latin America.

SAP's strategy differs from those of major competitors such as Microsoft (Nasdaq: MSFT), whose Latin American cloud computing bet includes a US$500mn Brazil data center said to be the "size of a soccer stadium," according to previous reports.

Aside from on-demand solutions, SAP will focus on traditional implementations and also software for mobile devices. Mining and retail clients are showing significant demand for mobile solutions, according to Graff, who oversees business in all of South America except Brazil.

Skyrocketing oil prices mean that SAP will be especially attentive to needs of companies in the power sector, Graff said, noting that important oil and gas industry clients include Colombian state oil firm Ecopetrol (NYSE: EC), Argentine oil company YPF, Peruvian state oil company Petroperu and Venezuelan state oil company PDVSA.

Representing roughly 8% of worldwide sales, SAP's Latin American division posted a 48% increase in software revenue last year, driven by a 91% surge in Brazil.

Globally, SAP saw sales increase 17% to 12.5bn euros (currently US$17.7bn) in 2010, while net profits crept up 4% to 1.82bn euros.