Metrics: Measuring the Impact of Software on Profits

There’s more than one way to measure the impact of software investments. Take the dispute between SAP and Nucleus Research over a study by Nucleus that challenges SAP’s claim that its customers are “32 percent more profitable” than companies who don’t use its software.

Nucleus analyzed 81 public companies that use SAP and found that they are, on average, 20 percent less profitable than peers that don’t use SAP products.

The research company collected return on equity data from SAP customers’ financial reports gathered from Bloomberg.com and compared the findings with industry averages provided by Hoovers.com, a business information website. Among the SAP customers included in the research are Anheuser-Busch (above average), DuPont (below average), Ericsson (above average), Kraft Foods (below average) and Volkswagen (below average).

William Wohl, a spokesman for SAP, says the study misrepresents SAP customers’ profitability in three ways: The sample size encompasses only “a quarter of 1 percent” of SAP’s customer base, and thus is statistically invalid; Nucleus’s comparisons to industry return on equity averages are inappropriate because they don’t compare companies to their peers; and its method for calculating those averages is misleading.