SAP

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SAP AG is the largest European software enterprise and the third largest in the world, with headquarters in Walldorf, Germany.

Contents

History

SAP was founded in 1972 by five former IBM engineers in Mannheim, Baden-Württemberg (Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther).

As part of the Xerox exit strategy from the computer industry, Xerox retained IBM to migrate their business systems to IBM technology. As part of IBM's compensation for the migration, IBM acquired the SDS/SAPE software, reportedly for a contract credit of $80,000. The SAPE software was given by IBM to the founding ex-IBM employees in exchange for founding stock provided to IBM, reportedly 8%. It may be noted that, at the time they left IBM, the ex-employees were quite senior engineers in IBM Germany rather than founding engineers in the sense of Hewlett-Packard's founders.

The acronym was later changed to stand for Systeme, Anwendungen und Produkte in der Datenverarbeitung ("Systems, Applications and Products in Data Processing").

In 1976 "SAP GmbH" was founded and the following year it moved headquarters to Walldorf. SAP AG became the company's official name after the 2005 annual general meeting (AG is short for Aktiengesellschaft).

In August 1988, SAP GmbH transferred into SAP AG (a corporation by German law), and public trading started November 4. Shares are listed on the Frankfurt and Stuttgart stock exchange.

The founding members Dietmar Hopp, Hasso Plattner, Klaus E. Tschira and Hans-Werner Hector form the executive board. In 1995, SAP was included in the German stock index DAX. On September 22, 2003, SAP was included in the Dow Jones STOXX 50. In 1991, Prof. Dr. Henning Kagermann joined the board; Dr. Peter Zencke became a board member in 1993. Claus Heinrich, and Gerhard Oswald have been members of the SAP Executive Board since 1996. Two years later, in 1998, the first change at the helm took place. Dietmar Hopp and Klaus Tschira moved to the supervisory board and Dietmar Hopp was appointed Chairman of the supervisory board. Henning Kagermann was appointed as Co-Chairman and CEO of SAP next to Hasso Plattner. Werner Brandt joined SAP in 2001 as a member of the SAP Executive Board and Chief Financial Officer. Léo Apotheker has been a member of the SAP Executive Board and president of Global Customer Solutions & Operations since 2002, was appointed Deputy CEO in 2007, and then became co-CEO alongside Kagermann in 2008.

Henning Kagermann became the sole CEO of SAP in 2003. In February 2007 his contract was extended until 2009. After continuous disputes over the responsibility of the development organization, Shai Agassi, a member of the executive board who had been named as a potential successor to Kagermann, left the organization.

Milestones technical solutions

In 1972 the SAP R/1 solution was launched. Seven years later, in 1979, SAP launched SAP R/2. In 1981, SAP brought a completely re-designed solution to market. With the change from R/2 to R/3 in 1992, SAP followed the trend from mainframe computing to client-/server architectures. The development of SAP’s Internet strategy with mySAP.com redesigned the concept of business processes (integration via Internet). SAP was awarded Industry Week’s Best Managed Companies in 1999.

In 2003 launched its technology platform SAP NetWeaver, followed by the announcement in 2005 of the development of a Business Process Platform.

Business and markets

SAP is the world's largest business software company and the third-largest independent software provider in terms of revenues. It operates in three geographic regions – EMEA, which represents Europe, Middle East and Africa; the Americas (SAP America, headquartered in Newtown Square, Pennsylvania), which represents both North America and Latin America; and Asia Pacific Japan (APJ), which represents Japan, Australia and parts of Asia. In addition, SAP operates a network of 115 subsidiaries, and has R&D facilities around the globe in Germany, North America, Canada, China, Hungary, India, Israel and Bulgaria.

SAP focuses on six industry sectors: process industries, discrete industries, consumer industries, service industries, financial services, and public services. It offers more than 25 industry solution portfolios for large enterprises and more than 550 micro-vertical solutions for midsize companies and small businesses.

Products

SAP's products focus on enterprise resource planning (ERP), which it helped to pioneer. The company's main product is SAP ERP. The name of its predecessor SAP R/3 hints at its functionality: the "R" stands for realtime (even though it is not a realtime solution), the number 3 relates to a 3-tier architecture: database, application server, and thin client (SAPgui). R/2, which ran on a Mainframe architecture, was the first SAP version.

SAP ERP is one of five major enterprise applications in SAP's Business Suite. The other four applications are:

  • customer relationship management (CRM) - helps companies acquire and retain customers, gain deep marketing and customer insight, and align organization on customer-focused strategies
  • product lifecycle management (PLM) - helps manufacturers with a single source of all product-related information necessary for collaborating with business partners and supporting product lines
  • supply chain management (SCM) - helps companies enhance operational flexibility across global enterprises and provide real-time visibility for customers and suppliers
  • supplier relationship management (SRM) - customers can collaborate closely with suppliers and integrate sourcing processes with applications throughout the enterprise to enhance transparency and lower costs

Other major product offerings include: the NetWeaver platform, Governance, Risk and Compliance (GRC) solutions, Duet (joint offering with Microsoft), Performance Management solutions and RFID. SAP offers a systematic approach to enterprise SOA, which is the technical standard that enables various enterprise software applications to exchange data effectively. Through enterprise SOA, SAP is focusing on enabling more flexible business processes as well as creating technical connections between IT systems and building a common language for business.

While its original products were typically used by Fortune 500 companies, SAP is now also actively targeting small and medium sized enterprises (SME) with its SAP Business One and SAP Business All-in-One. On September 19th, 2007 SAP announced a new product named SAP Business ByDesign complementing its portfolio for SME. SAP Business ByDesign was known under the code name "A1S" before.

SAP officials say there are over 100,600 SAP installations serving more than 41,200 companies in more than 25 industries in more than 120 countries.

Organization

Functional units of SAP are split across different organizational units for R&D needs, field activities and customer support. SAP Labs are mainly responsible for product development where as the field organizations spread across each country are responsible for field activities such Sales, Marketing, Consulting etc. Head office located in SAP AG is responsible for overall management as well as core Engineering activities related to Product Development. SAP customer support, also called Active Global Support (AGS) is a global organization to provide support to SAP customers worldwide.

SAP Labs

SAP Labs is the research and development organization of the parent company. SAP has its development organization spread across the globe. Many, but not all, labs locations are hosting SAP Research groups.

Prominent labs are located in Palo Alto, USA; Bangalore and Gurgaon India; Ra'anana and Karmiel, Israel; Montreal, Canada and Shanghai, China. SAP Labs located in Bangalore is the largest development unit in terms of number of employees outside the SAP headquarters located in Walldorf, Germany.Other SAP Labs locations include France, Bulgaria and Hungary.

Each SAP Lab has prominent area of expertise and focus. SAP Labs in Sofia, Bulgaria for example specializes in development of Java based SAP software products. Whereas, SAP Labs in U.S. is famous for its focus on innovation and research. Then again, SAP Labs India contributes to all areas of the SAP product value chain- Research & Breakthrough Innovation, Product Development, Global Services & Support and Customer Solutions & Operations.


Competitive landscape

SAP competitors are primarily in the Enterprise Resource Planning Software industry. SAP also competes in the Customer Relationship Management, Marketing & Sales Software, Manufacturing, Warehousing & Industrial Software, and Supply Chain Management & Logistics Software sectors.

Oracle Corporation, SAP's major competitor, filed a case against SAP for malpractice and unfair competition in the Californian courts on 22nd March 2007. The complaint alleged that a Texas subsidiary, SAP TN, which provides discount support for legacy Oracle product lines, used the accounts of former Oracle customers to systematically download patches and support documents from Oracle's website and appropriate them for SAP's use. Later SAP admitted wrong-doing on smaller scale than Oracle claimed in the Lawsuit.

SAP has admitted to inappropriate downloads however the company denies the theft of any intellectual property.

SAP is known to grow organically as opposed to its main rival Oracle which has been spending US$20 billion since 2004 acquiring 30 smaller competitors. SAP was able to increase its annual profits by 370% since 2002.

In something of a departure from its usual organic growth, on Oct 7, 2007, SAP announced that it will acquire Business Objects, the market leader in business intelligence software, for $6.8B.

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