Founded in 1972 as a private partnership named Systemanalyse und Programmentwicklung (System Analysis Program Development). SAP GbR became in 1981 fully Systeme, Anwendungen und Produkte in der Datenverarbeitung (Systems, Applications and Products in Data Processing) abbreviated SAP GmbH after a five-year transition period beginning in 1976.[7] In 2005, it further restructured itself as SAP AG.[citation needed] Since 7 July 2014, its corporate structure is that of a pan-European societas Europaea (SE);[3][8][9][10] as such, its former German corporate identity is now a subsidiary, SAP Deutschland SE & Co. KG.[9] It has regional offices in 180 countries[4][11] and over 111,961 employees.[12]
When Xerox exited the computer hardware manufacturing industry in 1971,[15] it asked IBM to migrate its business systems to IBM technology. As part of IBM's compensation for the migration, IBM was given the rights to the Scientific Data Systems (SDS)/SAPE software repository.
Five IBM engineers from the AI department[16][17] (Dietmar Hopp, Klaus Tschira, Hans-Werner Hector, Hasso Plattner, and Claus Wellenreuther, all from Mannheim, Baden-Württemberg) were working on an enterprise-wide system based on this software, only to be told that it would no longer be necessary. Rather than abandoning the project, they decided to leave IBM Tech and start another company.[5][18]
In June 1972 they founded the SAP Systemanalyse und Programmentwicklung ("System Analysis and Program Development" / "SAPD") company, as a private partnership under the German Civil Code.[19]
Their first client was the German branch of Imperial Chemical Industries in Östringen,[20] where they developed mainframe programs for payroll and accounting. Instead of storing the data on punch cards mechanically, as IBM did, they stored it locally in the Electronic System while using a common Logical database for all activities of Organization.[clarification needed] Therefore, they called their software a real-time system, since there was no need to process the punch cards overnight (for this reason their flagship product carried an R in its name until the late 1990s). This first version was also a standalone software that could be offered to other interested parties.[21]
Since 1991, SAP has acquired more than 70 companies.
Enterprise resource planning
In 1973, SAP launched its first commercial product, the RF financial accounting system. This system served as the cornerstone in the ongoing development of other software modules of the system that eventually bore the name SAP R/1.[19]
This offered a common system for multiple tasks. This permitted the use of a centralized data storage, improving the maintenance of data. From a technical point of view, therefore, a database was necessary.[22]
In 1976 SAP GmbH Systeme, Anwendungen und Produkte in der Datenverarbeitung ("Systems, Applications, and Products in Data Processing") was founded as a sales and support subsidiary. Five years later, the private partnership was dissolved and its rights were passed on to SAP GmbH.[19]The headquarters moved the following year to Walldorf, Germany.
In 1979, SAP launched SAP R/2, expanding the capabilities of the system to other areas, such as materials management and production planning.
In 1981, SAP brought a re-designed product to market. However, SAP R/2 did not improve until between 1985 and 1990.
In 1992, SAP released SAP R/3. SAP developed and released several versions of R/3 through 1995.
In 2004, R/3 was replaced with SAP ERP Central Component (ECC) 5.0.[23] Architectural changes were also made to transition customers to a service-oriented architecture.
In 2006, SAP ERP 6.0 was released. SAP ERP 6.0 is the latest version has since been updated through SAP enhancement packs, the most recent being enhancement package 8 for SAP ERP 6.0 in 2016.[24]
Corporate restructuring
In August 1988 SAP GmbH became SAP AG, and public trading started on 4 November 1988. Shares were listed on the Frankfurt and Stuttgart stock exchanges.[18] In 1995, SAP was included in the German stock index DAX and, on 22 September 2003, SAP was included in the STOXX Europe 50.[25]
SAP AG era
The company's official name became SAP AG (a public limited company) after the 2005 annual general meeting.
SAP SE era
On 21 May 2014, SAP AG announced during the Annual General Meeting of Shareholders that 99% of the shareholder votes approved the conversion of legal form to a European stock corporation (Societas Europaea, SE) and at the same time, elected the first supervisory board of SAP SE. The conversion of the company's legal form would take place upon entry in the commercial register, expected to be in July 2014.[26][27]
On 7 July 2014, SAP announced it had changed its legal form to a European Company (Societas Europaea, SE). As a result, its German subsidiary was renamed to SAP Deutschland SE & Co. KG.[9][28] The conversion cost the company approximately €4 million.[29]
Focus on cloud
Since 2012 SAP has acquired several companies that sell cloud-based products, with several multi-billion-dollar acquisitions seen by analysts as an attempt to challenge competitor Oracle.[30] In 2016 SAP bought Concur Technologies, a provider of cloud-based travel and expense management software, for $8.3 billion, SAP's most expensive purchase to that date.[31] Analysts' reactions to the purchase were mixed, with Thomas Becker of Commerzbank questioning whether Concur was the right choice for SAP, while Credit Suisse called the acquisition an "aggressive" move.[32]
In 2014 IBM and SAP began a partnership to sell cloud-based services.[33] Likewise, in 2015, SAP also partnered with HPE to provide secure hybrid cloud-based services running the SAP platform.[34] Both HPE and IBM provide infrastructure services to SAP, and SAP runs its SAP HANA cloud solution on top. SAP has announced additional partnerships with Microsoft in order to give customers tools for data visualization, as well as improved mobile applications.[35]
SAP exceeded its revenue projections due to the expansion in its cloud business and the success of SAP HANA. The growth can also be partially attributed to the acquisitions of Concur and Fieldglass.[36] Since 2017, SAP is a founding member of the EU Cloud Code of Conduct.[37] Since May 2021 SAP has listed selected Cloud Service adherent to the EU Cloud Code of Conduct as one of the first Cloud Service Providers.[38]
The company announced plans in 2016 to invest heavily into technology relating to the Internet of things (IoT) as part of a strategy to capitalize on the growth in that market. For that purpose, €2 billion is planned for investment in relevant sectors by the end of 2020.[39] SAP will also launch a new product line called SAP IoT, which "will combine large amounts of data from things connected to the Internet with machine learning and SAP's real-time database S/4 HANA."[39]
On 13 April 2021 SAP announced the formation of the joint venture SAP Fioneer, a dedicated Financial Services Industry (FSI) Unit between SAP and investment company Dediq GmbH.[41][42] Dediq GmbH invested over €500 million in the newly formed unit and received an 80 percent share in return. SAP brought its products, organizational units and the sales network into the business and holds 20 percent of the shares.[43]
Corporate affairs
Ownership
SAP had the following ownership structure in early 2024:[44]
SAP uses a two-tier structure of boards with an executive board and a supervisory board.[45][46] In October 2019 Jennifer Morgan and Christian Klein were appointed as co-CEOs of SAP.[47] In April 2020 it was announced that Jennifer Morgan will leave SAP and Christian Klein will continue to operate as the sole CEO, citing that the current environment of the COVID-19 recession requires "companies to take swift, determined action which is best supported by a very clear leadership structure".[48]
The majority of the company's employees are in Germany and United States. About 20,000 employees are based in Germany[49] and about 19,311 employees are based in the United States.[50][51]
The Executive Board[52] currently has eight serving members.
Christian Klein[53] - Chief Executive Officer (CEO)
45 employee representatives were elected in 2022 to the SAP SE Works Council, including 15 candidates from the Ver.di and IG Metall trade union lists. They represent 17,000 employees of Germany.[61]
Headquarters is responsible for overall management as well as core engineering activities related to product development. Worldwide customer support is not provided by the field organizations but by a unified organization called Active Global Support (AGS).[62]
Finances
For the fiscal year 2017 SAP reported earnings of €4 billion, with an annual revenue of €23.5 billion, an increase of 6.3% over the previous fiscal cycle.[63] SAP's shares traded at over US$154 per share, and its market capitalization was valued at US$180 billion in December 2023,[64] making it the largest German company by market capitalization.[14]
The key trends for SAP are (as at the financial year ending 31 March):[65][66][67]
As of 2016, SAP was the world's fourth-largest software and programming company.[71] The corporation operates in Europe, Asia, Africa, the Middle East, North America, and South America.[72]
SAP focuses on 25 industries and six industry sectors: process industries, discrete industries, consumer industries, service industries, financial services and public services.[73] It offers integrated product sets for large enterprises,[74] mid-sized companies and small businesses.[75]
Partnerships
SAP partners include Global Services Partners with cross-industry multinational consulting capabilities,[76] SAP University Alliances,[77] Global Software Partners providing integrated products that complement SAP Business Suite solutions,[78] and Global Technology Partners providing user companies with a wide range of products to support SAP technology, including vendors of hardware, database, storage systems, networks, and mobile computing technology.[79]
SAP has also partnered with Apple to work on the mobile experience for SAP enterprise customers. As part of the partnership, a new SAP HANA Cloud Platform SDK would be delivered exclusively for iOS. As a result, developers can build applications based on the SAP HANA Cloud Platform for the iPhone and iPad devices. The partnership was announced in May 2016.[85]
In 2019 SAP announced a three-year partnership "Embrace" with Microsoft that should allow its clients to move their business process into the cloud, although significant portions of that partnership were reduced to two years. SAP teams up on cloud sales with Microsoft [86]
In 2020 SAP announced that together with Wipro it will co-develop and market "solutions for the retail and fashion industry."[87]
SAP Labs are research and development locations that develop and improve SAP core products. SAP Labs are strategically located in high-tech clusters around the globe.[88]
The four most prominent labs of SAP SE are located in Germany, Japan, Israel and the US. Labs Walldorf was founded in 1972 and became SAP's primary location. At the beginning, the focus of SAP's expansion was entering highly developed IT markets; in 1993, Palo Alto became a part of SAP Labs. Aiming to acquire talented employees, SAP opened another lab in Bangalore in 2003.[88]
SAP Labs in Czech Republic, Slovakia and Poland were established in 2016. The lab in India is SAP's largest outside Germany as of 2016.
In order to manage SAP Labs, SAP Labs Network (SLN) was created. SLN is a global unit that manages regional Labs and shares best business practices. It coordinates and distributes development projects among individual SAP Labs locations, accelerates product delivery, gives SAP full access to talent, and drives SAP corporate strategy regarding innovation and business growth.[89]
SAP Research
SAP Research is the global technology research unit of SAP SE with a network of 21 research locations worldwide.[90] Each center is located in close proximity to an SAP development center or on a university campus. The group significantly contributes to SAP's product portfolio and extends its leading position in the market by identifying and shaping emerging IT trends and generating breakthrough technologies through applied research. In contrast to SAP's product groups and development labs that work on new functions and releases, its researchers explore opportunities that have not yet been developed into products.
The business model of SAP Research is based on co-innovation through collaborative research: in collaboration with universities, partners, customers, and SAP product groups, SAP Research drives the development of ideas and prototypes into software.[91] To that end, customers are involved early on in the research process through special Lighthouse Projects. Meanwhile, dedicated Living Labs demonstrate technological research in real-world settings, thus turning prospective SAP solutions into tangible experiences.[92]
Among the most recent successes of SAP Research are the opening of the Future Factory in Dresden—a joint effort of SAP Research as well as industrial and academic partner organizations to foster research and development for the manufacturing industry—and its participation in the Cooperative Research Centre on Smart Services (Smart Services CRC) in Australia.[92]
SAP has donated several millions of dollars to a variety of global health causes including the Product Red campaign and the Global Fund.[93][94] In addition, SAP has distributed free software in South Africa as part of an effort towards developing future markets there.[95] The company also encourages employees to volunteer through social sabbaticals, sending teams of people to different countries to aid non-profits. SAP employees have volunteered in China, India, Brazil, and South Africa.[96]
On September 3, 2024 it was announced that CTO and Executive Board Member Juergen Mueller reached a mutual agreement to leave the company by the end of the month due to incident of inappropriate behavior at a company event.[97][98] Following the news of this incident it was reported on September 13, 2024 that German prosecutors have opened a formal investigation of sexual harassment between him and the female employee. [99]
In March 2024, SAP agreed to pay R500 million as part of an agreement with South Africa's Special Investigating Unit. The agreement indemnifies them against further financial claims related to the bribery, but does not absolve any parties from criminal prosecution.[103]
US-Iran sanctions
In 2021 SAP admitted in a United States court that it exported software to firms in Iran, contrary to US sanctions against Iran, which led to a fine of $8 million.[104][105][106]
East African allegations
In February 2019 SAP was accused of 'improper conduct' linked to state contracts in Kenya and Tanzania. An anonymous whistle-blower claims, through a firm of attorneys, that SAP used Twenty Third Century Systems (TTCS) to bribe officials at the Tanzania Ports Authority (TPA) to win a US$6.6 million enterprise resource planning software tender that involved the provision of software licenses and services.[107]
South African allegations
In July 2017 allegations were made that SAP had been involved in business transactions with the controversial and politically influential Gupta family in South Africa. SAP was accused of paying CAD House, a Gupta-controlled company, R100 million in order to secure a Transnet deal. SAP denied the allegations, claiming that the money was paid as "an extension of the sales force", despite CAD House having no prior SAP experience.[108][109]
The dealings of the Gupta family with SAP were revealed in a widely publicized e-mail leak.[110][111]
As a consequence of the allegations SAP launched an investigation that led to four of its South African managers being placed on administrative leave along with the seizure of their mobile phones and computers.[112] Claas Kuehnemann was named as acting managing director for Africa while the investigation continued.[113]
On 26 October 2017 SAP announced that it had voluntarily reported itself to the U.S. Securities and Exchange Commission (SEC) for a possible violation of US law, including the Foreign Corrupt Practices Act (FCPA), related to the South African bribery allegations. SAP's own investigation, conducted by law firm Baker McKenzie, revealed that SAP had paid $7.7 million in commissions to third-parties linked to the Gupta family while securing contracts worth $48 million with Transnet and Eskom.[114][115][116]
Panamanian bribery
Since May 2015, the company has dealt with a series of high-profile bribery investigations,[117][108][107] including one that led to them paying $3.9 million to settle U.S. Securities and Exchange Commission civil charges over a former executive's scheme to bribe Panama government officials in order to win lucrative technology contracts.[117][118]
Allegations of intellectual property theft and fraud
In 2018 and in an ongoing court battle, Teradata accused SAP of IP theft and fraudulent behaviour.[119][120] In 2021, in the German weekly news magazine Der Spiegel, additional claims were made of questionable behaviour with regards to SAP's funding of researchers at the University of Mannheim - who were in effect paid by SAP to investigate competitors technology.[119][121] In a later article, Der Spiegel magazine maintained that SAP had been neglectful in maintaining strict governance for years.[122]
In June 2022 the German business magazine Manager Magazin published an article stating the management style of the leadership might be responsible for an increased compliance risk.[123]
Bullying claims and misogyny
In May 2022, multiple claims were made of bullying and sexual harassment within the company, with many cases of unwanted advances by senior male managers on female colleagues.[124] When complaints were made or information made available, HR were found to be unhelpful or hostile. For example, in one case a female employee was groped by a male manager in Sydney while at a company event, but he was never brought to account. In another case, a female employee was sexually targeted by a manager and asked to keep her web camera on during the day. She then complained and was placed under "performance management" - a precursor to being asked to leave the company.[125] Several female executives, including the Co-CEO left the company, adding to concerns that women were negatively treated, despite SAP then hiring several other senior women from Microsoft.[126]
