SAP AG is homing in on the North American financial services market.
The German software company has made major inroads in the general corporate market, virtually defining the niche for what is known as enterprise resource planning software.
It intends to remain no longer a "best-kept secret" in the financial services sector, said Paul Melchiorre, its senior vice president of global accounts in Chicago.
"When SAP decides to focus on a market," Mr. Melchiorre said, "we become a formidable player in a short time frame."
He explained that although SAP started in financial services in Europe several years ago, it has only in the last 12 to 18 months begun to pursue what it views as vast opportunities in U.S. insurance and banking.
"We had 150% growth in 1997, and we're looking at a tripling of our customer base in 1998," he said. "Our goal is to work with partners on building up financial system practices and educating them on R/3," the client/server enterprise application software.
Outside the United States, much of SAP's revenue comes from financial services. It has installed R/3 in back offices at 400 financial institutions in Europe, Canada, Latin America, and the Asia-Pacific region.
Three of the top four U.K. banks-Barclays, Lloyds/TSB, and Natwest-are live with R/3, and Deutsche Bank in Germany is a customer.
Live R/3 installations in the United States include those at First Chicago NBD Corp., the World Bank in Washington, Wells Fargo & Co., UMB Bank of Missouri, Putnam Investments, Allstate Corp., and Janus Funds.
First Chicago has 2,200 R/3 users in the United States and London. The largest client/server system in any back office in the United States has been installed by SAP at Allstate Insurance.
The SAP Financial Services system offers business management, risk management, Internet and intranet integration, year-2000 compliance, and euro compliance.
"Companies are in the process of deploying our software and getting return on investment," Mr. Melchiorre said. "They are starting to embrace package software and customized development."
SAP is going beyond its traditional back-office offering with what Mr. Melchiorre called "an aggressive approach for us."
"We're coming away from general ledger accounting operations to specific functionalities," said John Macdonald, SAP's manager of global industry marketing for banking and insurance, who is based in London.
"In banking, we've started to do risk management and profitability analysis," he said.
SAP is developing products and bringing them to market regionally. Whereas the company used to focus on domestic insurance, for example, it has had to adjust to regionalization and then globalization in the insurance industry.
"We're taking our functionality from Europe and 'North Americanizing' it," Mr. Macdonald said.
To bring products to market quickly, SAP has been forming partnerships. SAP and Andersen Consulting recently announced an alliance to help address the operational challenges facing the worldwide financial services industry.
The first project will be in claims processing for the property and casualty insurance industry-a function that represents more than 80% of an insurer's cost of doing business. The solution will be based on the SAP Business Framework and Andersen Consulting's claims design.
Explaining how the alliance was formed, Stephan James, managing partner of Andersen's global financial services practice in New York, said, "For the past 18 months, we've been trying to determine the issues that clients are facing, and we realized that there wasn't the technology available to allow them to increase revenue and cut costs."
Andersen will contribute industry-specific expertise, he said, and SAP will use its technological capability to create platforms for insurance and banking. "Our intent is to expand the applications of insurance to enterprise solutions," Mr. James said.
SAP also continues to have a strong relationship with Microsoft Corp., not only addressing the financial industry but as a broad-based technology partner. Mr. Melchiorre pointed out that about half of new R/3 installations are Windows NT-based and that Microsoft uses R/3 internally.
Based in Walldorf, Germany, SAP has development centers in Europe and the Far East, as well as in Chicago, Detroit, Atlanta, California, and Redmond, Wash., where Microsoft is headquartered.
SAP was founded in 1972 and employs more than 12,000 in 40 countries.
Mr. Melchiorre said, "Our biggest competitors right now are our customers not doing anything or being in fear of changing."
He noted that companies have had to divert resources to deal with year- 2000 issues. In replacing legacy systems, he said, SAP runs up against Oracle Corp. and PeopleSoft Inc.
"But when we go head to head, we have a high win ratio," he said.