SAP has a proud 40-year history that is founded on their mantra of innovation. Their success has come from their innovative culture. The company was founded in 1972 when five like-minded former IBM employees came together and created a company with the vision of providing clients with technological innovations. The company was called Systemanalyse und Programmentwicklung (SAP) which was German for System Analysis and Program Development. The company's vision was to provide standard application software for real-time processing of data. It was formed as a private partnership under the German Civil Code with the headquarters in Weinheim, Germany Mohapatra, 2009.
The company began with only one customer, Imperial Chemical Industries (ICI) and at the time, they had just nine employees. At the end of the first year, the company had generated DM 620,000 in revenue Volkmann, Tokarski, & Grunhagen, 2010()
In 1973, the company designed its first financial accounting system which was known as RF. This attracted more customers and helped the company to grow its bottom line. One year later in 1974, SAP demonstrated flexibility by converting the RF financial system from the DOS operating system to OS. This was done over a period of 8 weeks. By the end of the first two years, SAP had a list of 40 customers. The company then launched their RM system in 1975 which helped companies handle more processes such as inventory management, invoicing and purchasing. This was then followed by integration of all applications to form an enterprise resource planning system (ERP) Adam & Sammon, 2004()
In 1981, the private partnership was dissolved and its rights passed on to SAP GmbH which was first formed as a sales and support subsidiary to SAP in 1976. By this time, the company had about 30 employees and a revenue base of DM 3.81 million. At the same time, the company redesigned its product and launched SAP R/2. Seven years later in 1988, SAP GmbH transferred into SAP AG which was short for Aktiengesellschaft (corporation). The company started publicly trading on November 4th on the Frankfurt and Stuttgart stock exchanges. The company was listed on the Dow Jones in September of 2003 Volkmann et al., 2010()
Over the years, SAP has also acquired several companies. In 2008, it acquired Business Objects which was a business intelligence company. The company's products were added to SAP's portfolio. Two years later in 2010, the company acquired Sybase which was the largest business service and software provided and specialized in management of information and use of mobile data. In 2011, SAP AG acquired SuccessFactors Inc. To enable it gain competitive advantage against Oracle Corporation in cloud computing. In May of 2012, SAP AG stated its plans to acquired Ariba Inc. subject to shareholder and regulatory approval.
The company focuses on six sectors of the industry which are discrete industries, process industries, consumer industries, financial services, service industries and public services. The company has a market capitalization of $86 billion with a well-balanced shareholder structure. The shareholders continuously participate in the success of SAP through dividend payouts and share buybacks. In the 2011 financial year, the company had total revenue of 14.23 billion euros and profit after tax was 3.44 billion euros. The shareholders were given a dividend of 1.1 euros per share in the first half of 2012 which was an increase from the 0.6 euros per share that they were given the previous year SAP, 2012()
SAP prides itself in having a robust business model where software revenue is the most important driver of revenue. The company generates additional revenues from other services such as customer support, maintenance and consultancy. Software revenue is realized through sales of licenses for the use of SAP products. The company provides their software licenses as a package with maintenance service which is calculated monthly. This model allows the company to gain one-time revenue through software licenses and recurring revenue from monthly maintenance services. This has allowed the company to maintain strong growth while at the same time allowing them to be shielded from economic fluctuations that come as a result of recurring revenues forming a significant part of the company's total revenue SAP, 2012()
Global market overview
SAP is the largest business software company in the world and has the third-highest revenue as an independent software provider. The company operates in four geographic regions: America which includes the United States of America and Canada, APJ which are the countries in the Asia Pacific region and Japan, EMEA which are the countries in Europe, Middle East and Africa and LAC which are the countries in Latin America and Caribbean. The company has a network of 115 subsidiaries which operate in the 120 countries it operates and it has a full-fledged research and development facilities in Germany, U.S., India, Canada, Brazil, France, Turkey, Hungary, China, Israel, Ireland and Bulgaria.
In April of 2012, SAP was named the overall market share leader in the worldwide BI (business intelligence) market which includes business intelligence, corporate performance management, analytic and performance management applications. According to the report by Gartner Inc. SAP has a market share of 23.6% based on the company's 2011 revenue which was a growth from the market share of 19.5% in 2010. Other companies which are SAP competitors such as IBM, Oracle, SAS Institute and Microsoft come behind SAP Bora, 2012()
The business intelligence, analytics and performance management software market was the second-fastest growing in the world in 2011 and this led greatly to the improvement of SAP's market share. Gartner's 2012 CIO survey highlighted analytics and business intelligence as the primary priority for organizations in the year 2012 and with SAP as the market leader in this fast growing sector, the company is expected to continue growing its market share significantly and to remain shielded from actions undertaken by competitors. This is because the company is continuously investing in research and development and it plans to open and expand its current range of services to provide packaged analytics, business intelligence and performance management solutions for companies. Moreover, with the company's products being accessible either on the cloud or mobile, many business users are finding them easy to adopt since they fit their busy schedule and help to direct their attention towards the business intelligence and analytics provided by the SAP software Bora, 2012()
SAP has five market categories in which it operates. These are mobile, applications, analytics, database and technology. The company has integrated the first three categories to help increase their market leadership in existing market categories of mobile, applications, and analytics. SAP has positioned itself as a cloud solution provider as well as database and technology company. SAP's products are focused on creating a future for real-time analysis of business information while bearing mobile and social capabilities that are important for business users to access any information they need to make better-informed decisions for their companies or organizations. This helps SAP's customers improve their operational and financial performance greatly.
The company's services are active global support, business maps, consultancy, custom development, education, financing, managed services, ramp-up, user performance management, BPO services, solution manager and packaged services Lau, 2005.
Among the most important services provided by SAP is the enterprise services workplace. This is a central place for SAP customers to view consolidated information about all their available enterprise services being provided by SAP. This solution allows customers to provide different entry points for different roles based on the permissions the organization sets. This service is cloud based and thus allows the customers huge flexibility, adaptability, efficiency and openness. It reduces their infrastructure and technology costs by allowing them to reuse their available software components while not relying on their hardware technologies to serve the ERP solutions. This has enabled ERP adoption to be much easier for the company's clientele and has made it a more attractive option for small and medium-sized companies.
Technologies and future products
SAP has always strived to be a leader in technological innovation among its competitors. Its main product which is the SAP ERP is sold as part of the SAP business suite. The SAP ERP system has a three-tier architecture involving database, client side and application server. The ERP is run on mainframe or server architecture but with the company's acquisition of SuccessFactors Inc., the ERP system is now cloud-based and features a range of mobile applications.
SAP's products include Business ByDesign which is a SaaS (software as a service) product which offers a fully integrated ERP for the clients on demand basis. This is the main business intelligence suite for SAP and received a great boost when the company acquired Business Objects in 2007. SME product include SAP business all-in-one and SAP business one. These products are also ERP products but are tailored for SMEs which have little operational expenditure for infrastructure and technological improvements. The company's latest product is the SAP high performance…