Founded by five former IBM employees in 1972 and based in Walldorf, Germany, SAP AG is the No. 1 vendor in the Enterprise Business Applications market, (with approximately 30% of worldwide market), and one of the largest independent software companies in the world. The Company consists of SAP AG and its network of 62 operating subsidiaries and has a presence or a representation in over 100 countries.
For the year ended December 31, 1999, the Company's revenue was approximately Euro 5.1 billion, as compared with Euro 4.3 billion for the year ended December 31, 1998 (See Figure 1). Approximately 80% of its revenue comes from the international market (outside Germany). Although SAP experienced a drop in net income during the first half of 2000, it continues to be profitable (See Figure 2). Net income was Euro 601.0 million and Euro 526.9 million for fiscal 1999 and 1998, respectively.
Figure 1.
Figure 2.
SAP's first generation of software was introduced in 1973 and consisted of a modest financial accounting operation. In 1981, the Company introduced its second generation of application software, the R/2 System, that had the capacity to be installed enterprise-wide on mainframe computers. SAP's primary product is the R/3 System for client/server (distributed) architectures that was brought to market in the early 1990s.
In response to the impact of the Internet, SAP undertook a significant revamp of its product offerings during 1998 and 1999. The first step, initiated in 1998, was to finalize the EnjoySAP development initiative to improve the user-friendliness of its products. In parallel with that effort, the Company advanced its New Dimension products initiative to create independent, modular business solutions and sharpened its focus on the rapid development of Internet-based products. SAP has unified all of these initiatives under its comprehensive Internet strategy, mySAP.com, which was announced in May 1999.
The Company launched mySAP.com in October 1999.
In addition to dividing the system into components, SAP has begun development of a series of pre-configured R/3 templates ("AcceleratedSAP") for use within specific industries. By using pre-configured applications known as SAP Accelerated Solutions, SAP offers small to medium sized organizations inter-enterprise solutions. Today there are seven certified partners offering application hosting for the Internet solution "mySAP.com". The accelerated solution verticals are:
- Automotive
- Consumer Products
- Enterprise
- Financials
- High Technology
- Human Resources
- Public Sector
- Retail
- Service Providers
- Chemicals
On December 14, 1999, SAP announced the addition of procurement functionality. Available through SAP's Business to Business Procurement framework, the "mySAP.com Buying Solution" supports real-time purchasing transactions directly or via the mySAP.com Marketplace. The Marketplace is SAP's on-line trading community supporting a business directory of over 2,500 companies. The procurement tool is based on an open standard and designed to support back office systems - SAP and non-SAP - running in parallel.
With the Buy side covered and a partnership with Requisite Technology to deliver content management and a catalog-finding engine, SAP partnered with INTERSHOP Communications, Inc. to provide Sell Side Solutions.
The mySAP.com Selling Solution and its "Internet Sales component" links buyers and sellers via the "SAP Business Connector". The connector leverages XML to transmit orders, invoices and other documents through personalized workplace portals.
An additional component is the Internet Sales application which complements existing SAP sell side solutions, including the Online Store which extends SAP R/3 to the Internet. Also available is the Internet Pricing and Configurator component that allows companies to sell simple and complex configurable products over the Internet.
In addition to the core ERP capabilities and the buy/sell-marketplace functionality, SAP announced a Supply Chain Management Solution. The solution is designed to cover all major functional areas, including demand and supply planning, distribution and production planning, manufacturing scheduling, materials and inventory management, production control and maintenance, transportation management and warehouse management.
In December, 1999, SAP announced Internet enabled Supply Chain Management applications. The Advanced Planner and Optimizer (SAP APO), Logistics Execution System (SAP LES) and Business Information Warehouse (SAP BW) are designed to integrate information and decisions from the entire supply chain into an automated infrastructure.
The Supply Chain Management applications offer features such as:
- Collaborative Planning, Forecasting and Replenishment (CPFR), which enable buyers and sellers to collaborate on demand and order forecasting and to update their plans based on the dynamic exchange of information over the Internet.
- Internet-Enabled Vendor-Managed Inventory (VMI) enhances collaboration with suppliers and customers via the Internet to allow a manufacturer to proactively replenish orders.
- Collaborative Supply Planning enables a manufacturer to use its supply network planning model to derive supply chain production requirements and publish the results to suppliers.
- Promise to Be Available supports dynamic sourcing and commitment of orders, taking into account information about availability across production plants and distribution centers.
- Shipment Tendering enables shippers and carriers to exchange detailed information about planned shipments, bids, rates and conditions in order to negotiate an agreement.
SAP is delivering the mySAP.com components through personalized functionally rich portals based on the mySAP.com Workplace. The portals tie together market intelligence, sales execution, groupware, product information, order fulfillment and engineering-to-order information.
The interface is designed to provide users access to the internal and external applications, business content and services required for their jobs. Individuals can customize their interface by choosing news feeds, research, and stock portfolio information. By selecting the content and layout individuals can personalize their "dashboard" to maximize their information-to-time ratio.
To round off the mySAP.com offering, interested prospects can test-drive solutions using the SAP Internet Demonstration and Evaluation Service (IDES). This allows customers to evaluate, implement and operate mySAP.com solutions online. Once a purchase decision has been made, customers can choose to implement their solution in a hosted environment, from SAP or one of its partners. Customers who choose applications hosted with an SAP application service provider also have the option of receiving their SAP solutions and upgrades via satellite.
By the end of 1999, the Company had more than 12,500 customers, and more than 10 million users all over the world. With more than 900 partners that offer complementary software, services and hardware, SAP has established a wide-ranging SAP partner system. The Company's customers include multinational enterprises as well as medium- and smaller-sized businesses, with approximately 60% of SAP customers greater than $200 million in revenue. SAP went public in 1984 (1998 on NYSE) and its shares trade on the New York, Frankfurt, and Stuttgart stock exchanges.
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