Globes reported today that SAP’s recent announcement that it was cutting 6% of its global workforce (3,000 jobs) would likely include some layoffs to its Israel division.  

Despite its reaching €3.5 billion revenue for the fourth quarter in 2008, SAP’s software sales were down 7%. According to Globes,

SAP co-CEO Leo Apotheker said, “The cost containment measures will allow us to adapt to the tough market conditions and ensure the long term competitiveness of the company. We expect 2009 to be a year of limited visibility, making it increasingly difficult to project sales in this environment.”

Currently based in Ra’anana, SAP has had a presence in Israel since 1998 and has over 900 employees. According to the Israel R&D site, Matimop, the Israel division of SAP focuses on the following four areas: SAP Netweaver (BPM), SAP Business One (Small business solutions), supply chain execution, SAP Master Data Management (MDM).

The article also reports that despite looming layoffs, the company is hiring sales people. Here is a video example of Business One in action. 

SAP Business One

News:
Last month, enterprise software company, Magic Software Enterprises reported that it earned record revenues for the third quarter of 2007. On the same day, it also announced that Guy Bernstein would replace David Assia as Chairman of the Board.

Background:
According to a company description, Magic Software provides

“enterprise application development, deployment and integration technology. Magic Software’s platform-independent methodology lets companies achieve agility by quickly assembling composite applications, allowing programmers to create services and architects and business analysts to orchestrate and reuse these services to enable business processes. Through partnerships with industry leaders such as IBM and SAP and more than 2500 ISVs worldwide, Magic Software technology is used by more than 1.5 million customers around the globe.”

Headquartered in Israel, Magic Software was founded by David Assia and others in 1986 and was the first company to be co-listed on both the NASDAQ and the Tel Aviv Stock Exchange (TASE). It is a subsidiary of the Formula Systems and Emblaze Group of companies.

Analysis:
The third quarter is the second consecutive quarter in which Magic Software has had record earnings. Back in August, Timothy Prickett Morgan of ITJungle explained that Magic Software’s high second quarter earnings was the result of “restructuring and revamped product line.”

Since March, Magic has restructured its leadership with changes in its President/CEO, CFO and two new board members. As Assia was also the co-founder and former CEO of Magic Software, last month’s announcement that Chairman David Assia will be replaced by Guy Bernstein marked a strong changing of the guard and the direction of the company away from its management roots.

Accompanying such changes at the top, have been several announcements of high-stake deals and industry recognition. In May, Magic Software achieved IBM business partner specialty designation and a Magic Software subsidiary signed an initial $1.3 million agreement with KLM Cargo in June. In July, it signed its 200th SAP Business One partner and in October made a generous donation of its integration software to Penn State University.

Of course, in addition to Morgan’s reasons for Magic Software’s increased revenue, the information technology industry’s continued mass migration to implement service-oriented architecture (SOA) in recent years has certainly helped increase the demand and sales potentials for Magic Software’s products.

According to the website, Magic Software’s iBOLT Business Integration Suite,

“enables customers to easily design, develop and deploy automated business processes, including Business Process Management (BPM) and Business Activity Monitoring (BAM).”

Its eDeveloper,

“is a composite applications toolset, delivering an extremely productive, state-of-the-art technology for developing and deploying composite Web and Client/Server applications across and beyond the enterprise.”

Both products shorten the process times and offer to help increase profitability. While providing the means for other companies to increase profitability, Magic Software’s record earnings have helped the company resurface into the black earlier this year and continue its climb. What Magic Software offers and does next in 2008, should be watched closely.

Additional Resources:
The role of composite applications in an SOA
ebizQ.net Webinar: A Guide to Building Composite Applications
Oracle Extends Application Integration Architecture