SAP’s new CEO Leo Apotheker says the software giant will focus on its core software business, even as its rivals expand beyond their traditional boundaries.

The latest trend in the tech industry–at least among its biggest companies–is to offer products and services that used to be provided by partners. H-P (HPQ) expanded into consulting last year when it bought EDS, Cisco announced in March that it was moving into the server business, in April SAP’s (SAP) software rival Oracle agreed to buy hardware maker Sun Microsystems (JAVA), and in June, Intel (INTC), which makes chips, agreed to buy a software company.

SAP has no such ambition, says Apotheker. Whereas Cisco (CSCO), Oracle (ORCL) et al. say that they can reduce complexity for customers by developing all-in-one products, SAP plans to keep making software and work with partners to achieve the same goal. “People want to reduce complexity, but they don’t want it all to come from one company,” he says.

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Software maker SAP (SAP) is about to make its second foray into the world of online software.

In September 2007, SAP unveiled an online version of its management software aimed at small businesses. The product languished, with the company’s co-CEOs last year saying that they wouldn’t sell it because it didn’t make any money.

SAP plans to unveil a new online software strategy later this week. This time the target audience is the large businesses that make up SAP’s core customers, says John Wookey, the SAP exec in charge of the project. Wookey has spent the last six months crafting the company’s online-software strategy.

SAP’s software, which businesses use for tasks like balancing the general ledger and tracking inventory, is installed on servers that businesses buy and operate themselves. Businesses pay a hefty upfront fee for it and ongoing payments for product support. Online software is accessed over the Internet through a Web browser. It’s run on servers operated by the vendor, and customers typically pay a monthly subscription fee. Online software is commonly viewed as a threat to companies that sell traditional software because it tends to be less expensive for customers and less profitable for sellers.

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At a table in Las Vegas, a town fueled by big bets, IBM (IBM) software chief Steve Mills outlined one he doesn’t want to make: Buying application provider SAP (SAP).

“We’re not changing our strategy,” said Mills, who guides Big Blue’s software strategy for CEO Sam Palmisano. “We have consistently shied away from going deep into the applications space,” he said last week at a series of business meetings.

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SAP (SAP) and Teradata (TDC) plan to announce Monday a joint effort to make the German company’s software work better with Teradata’s database systems, the latest example of tech companies combining hardware and software.

A growing number of vendors have begun offering servers that come bundled with particular programs, styling the combinations as appliances that are easier to install and manage than components sold separately. Oracle (ORCL) in October announced a joint effort with H-P (HPQ) to offer a “data warehouse” machine that was designed to better search through corporate information better than standalone hardware and software from the two companies.

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Nothing warns the heart of the Street more than a nice cost-cutting story.

Merrill Lynch analyst Raimo Lenschow this morning raised his rating on the German enterprise software giant SAP (SAP) to Buy from Neutral, upping his price target to $43.80 from $38.30, “predicated on the 2009 cost-saving story,” which he says the market isn’t getting. To reflect the increased belt-tightening, he upped his EPS estimates for the company to 2.11 Euros a share from 1.91 for 2009; for 2010, he goes to 2.31 Euros, from 2.21.

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Adding fuel to the raging fire on which stock valuations are now burning, SAP (SAP) co-CEO Henning Kagermann this morning warned in a statement that market developments of the last few weeks have been “dramatic and worrying to many businesses,” which has triggered a “very sudden and expected drop in business activity” late in the company’s third quarter.

“Throughout the third quarter we felt quite positive about our ability to meet our expectations,” he said. “Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations.”

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Software giant SAP is getting sued for failing to deliver an “out-of-the-box integrated end-to-end solution that increases … effectiveness.” Amazingly, the meaning of these buzzwords may cost SAP over $100 million.

This blog’s hatred of tech jargon is no secret: We think that more people would be interested in technology if insiders didn’t describe the stuff in a made-up language. Despite our protests, the tech industry refuses to abandon these terms. Maybe the threat of legal action will scare it straight.

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