Financial software provider SAP will need to change its strategy for the future if it hopes to weather the recession, according to experts in the IT profession.

Analysts said SAP, which last week posted a 40% drop in software-related revenues, will need to change its sales strategy to weather the economic storm and should focus more on the mid market.

Thomas Otter, an analyst with IT research firm Gartner, said: ‘The big deals in terms of millions of pounds of software projects are history. They are becoming tougher to find for SAP and it has to grow and become better at being more nimble and able to close smaller deals quicker.’

Otter also said that SAP ‘needs to compete more effectively in the mid market’.

The company reported its software revenues were E543m (£462m) for the second quarter of 2009, compared with E898m in the same period in 2008. A company spokesman said: ‘The comparison quarter last year was our strongest in history, so it is a very tough one.’

However, the spokesman added: ‘We are cautiously optimistic and believe the worst is behind us and that things will improve in 2010.’

David Bradshaw, an analyst at technology research firm IDC, said: ‘Licences are immediately affected by the economic situation so it is not surprising that software-related revenues are down.

‘I believe this is temporary and there’s nothing to suggest anything has changed drastically in the long term.’

The latest blow comes as it emerged that SAP had to re-evaluate its online product Business ByDesign. A spokesman confirmed that the technology wasn’t ‘cost effective’ and that it was proving more expensive for the company to run than it was able to make from the software.

Bradshaw said: ‘The way SAP built it, it was expensive for them.’

Business ByDesign, which is currently being tested by 90 clients, is aimed at mid-market customers.

SAP said it rectified glitches but would not elaborate on what the problems were, or how they were resolved.

The company hopes to have the technology on general release next year, although they declined to comment on a specific timeframe.