Making SAP appealing again

April 11, 2012: 10:37 AM ET

The German giant is trying to shake off its dusty enterprise image -- and it is throwing hundreds of millions into that effort.

sapFORTUNE -- When you think SAP (SAP), you probably think uber-boring enterprise resource planning software. But the Walldorf, Germany-based company is trying hard to change that image.

SAP unveiled a series of initiatives to boost its market share in databases and mobile apps at a press conference in San Francisco on Tuesday morning. To that end, the company is launching a $155 million venture fund to spur development for applications built on HANA, its newish in-memory database technology. It is also putting up $337 million (convert to euros and you'll get an easier-to-remember round number) to help customers switch to HANA. On the mobile front, SAP announced it is acquiring enterprise mobile app provider Syclo for an undisclosed sum, among other developments.

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"We have the ability to be the fastest-growing database company in the world," Vishal Sikka, executive board member and head of technology and innovation at SAP, told a roomful of press and analysts.

HANA is promising. It is the fastest-growing product in SAP's 40-year history, and raked in over $200 million in revenue last year. But up until middle of 2011 the company wasn't even in the database business, and the vast majority of SAP applications actually run on databases made by its rival Oracle (ORCL).

SAP believes it can become the number two database player by 2015. That's an ambitious goal, even for co-CEOs Bill McDermott and Jim Hagemann Snabe. But it's not impossible, especially if the company is able to generate developer interest and create loads of fast, business-ready apps on top of HANA. Of course, it's still early days for HANA, and Oracle is sure to fight back hard. (Oracle declined to comment for this story.)

MORE: Oracle earnings: Some growth, plenty of SAP-bashing

SAP's got its work cut out on the mobile side too. Becoming iTunes for the enterprise will take time, if it happens at all. But the company is starting to better articulate its vision and strategy on both the mobility side and in regards to HANA. What remains unclear is its master plan for the cloud -- the biggest and most threatening transition in its line of business.

In a recent interview with Fortune, the company's new head of all things cloud, Lars Dalgaard, said he expects all SAP applications -- even core ERP -- will someday soon be in the cloud. Dalgaard is expected to take the stage and lay out his cloud strategy at SAP's upcoming annual conference, Sapphire Now. The young, outspoken executive is also getting a seat on the company's executive board. Assuming he can thrive in SAP's corporate culture, Dalgaard (and HANA and mobile) may end up playing a key role in SAP's transformation from a powerful yet aging ERP provider to a more innovative enterprise player.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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