By Tim Weber
Business Editor, BBC News website
Don't yawn: "enterprise software" may sound boring, but it spells big bucks.
You are looking at a $60bn (£33bn) market. And now the giants of the industry are squaring up to fight for domination.
HQ: Walldorf, Germany
Sales: 7.5bn euros (2004)
Profit: 2bn euros (2004)
Customers: 26,000 firms in 120 countries
In the red corner is Oracle, the world's second-largest software company, well-known for databases and brash boss Larry Ellison.
In the blue corner is SAP.
"SAP who?," you might ask.
Well, SAP is the third-largest software firm in the world, with headquarters near Frankfurt, Germany.
Its public profile may be as understated as boss Henning Kagermann, who on a bad hair day looks more like a distracted physics professor than a chief executive.
But the three letter acronym - which stands for "Systems, Applications and Products in Data Processing" - is synonymous with software that makes many of the world's largest companies tick.
Think of it as a corporate nervous system that tells the boss where money is spent, whether production is ticking along, and where and how profits or losses are being made.
About 26,000 companies in more than 120 countries are running SAP software, which now extends to logistics, customer relationship management and other back office processes.
Henning Kagermann wants SAP to push into new markets
In 2004, market leader SAP made a pre-tax profit of 2bn euros (£1.4bn, $2.6bn) on sales of 7.5bn euros.
But it's a tough, fragmented market.
Right now SAP has the software to "address" about half of the $60bn market, says Mr Kagermann.
A recent internal restructuring, which put 36-year-old Israeli whiz kid Shai Agassi in charge of technology development at SAP, is designed to open up the rest.
Mr Kagermann bets on a new "business process platform" that integrates with software developed by other firms, both to complement and compete with SAP's own products.
That could give SAP enough software diversity to meet the needs of highly specialised industries and small- and medium-sized businesses.
The problem: Oracle's strategy is very similar.
The US giant makes most of its money with software that manages huge amounts of data (including the BBC News website).
It has worked hard to find new revenue streams - in the same fields as SAP.
In 2004, annual sales reached at $10.2bn, and net profits at $2.7bn.
Henning v Larry
And Oracle appears to be losing its patience.
To grab market share it bought smaller rival Peoplesoft in a $10.3bn hostile takeover.
Larry Ellison is on a takeover spree to boost Oracle
To needle SAP, Oracle also outbid its German competitor in a $640m takeover battle for retail industry software maker Retek.
SAP, in turn, bought a company that supports Peoplesoft customers - to lure them away from Oracle.
Mr Ellison is famous for his aggressive management style, the colourful dissing of rivals (he calls SAP "sap"), and his yachting ambitions.
Now he sets clear targets.
"I have to beat SAP in the UK on market share this year, Larry has told me," says Ian Smith, Oracle's UK managing director.
Getting the integration of Oracle and Peoplesoft right is key to meeting this target.
"We have promised Peoplesoft customers not only to support but to develop their software for the next 10 years," says Mr Smith; "when they are ready we will migrate them to Project Fusion", the name for Oracle's forthcoming silver software bullet.
The 50% formula
Mr Kagermann himself does not want to be drawn on direct comparisons with Oracle.
HQ: Redwood City, California
Sales: $10.1bn (2004)
Profit: $2.7bn (2004)
Customers: 250,000 - (23,000 for e-business suites)
But he works hard to woo Peoplesoft customers with special offers and "safe passage" promises of supporting their software "until 2010 or 2011".
"I'm optimistic that there are enough clients who are interested in SAP," says the soft-spoken Deep Purple fan, who refuses to eat anything during the working day because it might make him tired.
And Mr Kagermann hopes to repeat a trick pulled off by SAP over the past five years: in 1999, SAP's complex R3 software generated 90% of revenues. Today it accounts for less than 50%.
"In five years I want 50% of our revenues to be generated by software that doesn't exist now," says Mr Kagermann, who admits that this is "an ambitious target".
There are plenty of people spoiling to make life difficult for SAP and Oracle, and question their very business models
Oracle and SAP question the 'no software' model of salesforce.com
One is Marc Benioff, the chief executive of salesforce.com, which offers "customer relationship management" services.
His gospel - delivered with the intensity of a preacher - is "no software".
Why buy applications when you can have them on demand through the internet, Mr Benioff asks.
He promises clients secure customisable services that spare them IT drudgery like maintaining servers and patching software.
Oracle and SAP are united in scoffing: companies feel safer when they control their own software, and 'on demand' works for just a few applications, they say.
And then there is Microsoft.
The software giant has tried for years to develop - and buy - its way into the enterprise software market.
So far it has focused on small and medium-sized businesses.
But as both Oracle and SAP rush into this segment, a confrontation with Microsoft looks inevitable.
Unless, that is, Microsoft revives a plan hatched last year, when it proposed to merge with SAP.
Back then, Mr Kagermann and SAP's founder-shareholders politely rejected the approach.
Should their ambitious plans for a new software platform falter, they will have to have a rethink.