SAP Watch

Apr 21 2010   6:21PM GMT

Does SAP’s TechniData buy signal that the market is heating up for sustainability software?

CourtneyBjorlin Courtney Bjorlin Profile: CourtneyBjorlin

SAP made another move aimed at bolstering its position in the sustainability software market today – announcing plans to acquire TechniData.

SAP was already partnering with TechniData to deliver a line of environment, health and safety applications. For instance, it sells an application for REACH compliance, a set of European Union regulations around the use of hazardous chemicals in the manufacturing processes.

Which makes the TechniData acquisition somewhat of a surprising move, according to Ray Wang, a partner with the Altimeter Group. SAP didn’t really need to buy TechniData – it already had an OEM partnership, he said.

TechniData, with 1,600 customers and sales last year of about $84 million, was likely an acquisition target for someone else, and SAP had to move fast, he said. The software is too important in SAP’s EHS portfolio, and supremacy in the sustainability software market is too important to SAP.

“SAP sees a huge opportunity for carving out a new brand in this space,” Wang said.

Interest in TechniData could signal that the market for sustainability software is heating up (no global warming pun intended), and other vendors clearly see an opportunity in carving out a brand here as well.

Two other vendors that in particular are really pushing into this area as well include SAS and IFS, according to a report from Ovum’s Warren Wilson.

SAS launched its sustainability software in April 2008. It includes dashboards, templates and analytical tools that help companies track various environmental indicators and study costs, forecast future performance, and weigh alternatives, according to the report. Its templates are based on the Global Reporting Initiative, a non-governmental organization that is working to develop global sustainability reporting guidelines. The data it analyzes mainly comes from customers’ building management systems, which track temperature and power consumption.

IFS, an ERP vendor that targets aerospace, heavy manufacturing, energy, IT and life sciences, sells Eco-Footprint Management, which integrates with its supply chain modules, the report says.

It stands to reason that customers would start sustainability software implementations with EHS applications. While we’ve been hit over the head from SAP with what great business sense sustainability makes (a must-read in that vein is a recent blog by CIO’s Tom Wailgum, if you haven’t seen it already), compliance will likely be the major driver for many organizations.

And with customers needing help complying with the REACH regulations coming on line in the next few years, applications like the ones TechniData makes are a gold mine for vendors.

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