SAP
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SAP
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Table of Contents
What is SAP? - The Company and The Software PackageAs described in SAP's Web Pages (slightly modified here), at http://www.sap.com: Founded in 1972, SAP (Systeme, Anwendungen, Produkte in der Datenverarbeitung or, in English - Systems, Applications and Products in Data Processing) in Walldorf, Germany, is the leading global provider of client/server business application solutions. Its US headquarters is located in Wayne, PA. SAP markets two primary products: R/2 and R/3. Both share many features and provide similar functionality via an integrated suite of software application modules. The modules address the requirements of most companies and are available for selection based on a company's individual requirements. Today, thousands of companies in more than 85 countries have chosen SAP client/server and mainframe business applications to manage comprehensive financial, manufacturing, sales and distribution, and human resources functions essential to their operations. SAP's client/server suite alone has been installed in more than 7,500 companies worldwide. R/3 is accepted as the standard in key industries, such as oil, chemicals, consumer packaged goods, and high tech/electronics. This is not to imply that all SAP customers are large, global organizations - they are not. In fact, of the more than 12,000 SAP installations around the world, more than half are in small to medium-sized businesses. SAP AG employs a workforce of more than 12,000 and has offices in over 40 countries worldwide. SAP also offers consulting services, providing support and service for the installation and implementation of R/2 and R/3 software. Commanding a significant share of the worldwide client/server enterprise application software market, SAP is the number one vendor of standard business application software and is the fifth largest independent software supplier in the world, demonstrating strong performance in the third quarter of 1997. Revenues for the period increased by 82% to DM 1,417 million as against the prior year, while pretax profits rose by 86% to DM 251 million. In the first nine months of the year, sales grew by 61%, to DM 3.8 billion (US $2.2 billion). Pretax profits were up 64% to DM 833 million (US $472 million). SAP AG preferred and common shares are listed on the Frankfurt Stock Exchange, among other exchanges worldwide. SAP is a component of the DAX, the index of 30 German blue chip companies. In 1995, SAP established an American Depository Receipt facility to allow US shareholders to participate in SAP's progress with a dollar-denominated security. Each SAP ADR is worth one-third of an SAP preferred share trading in Frankfurt. SAP's ADRs trade over the counter under the symbol "SAPHY" and can be purchased through a broker like any other security. In order to enhance its profile in the US, the world's largest IT market, SAP plans to list its shares on a US exchange in the third quarter of 1998.
The History of SAPIn 1972, five systems analysts began working nights and weekends to create standard software with realtime data processing. Twenty-five years later their vision is a reality: SAP is the world's market and technology leader in business application software. On April 1, 1972 five former IBM employees founded SAP as Systemanalyse und Programmentwicklung (“Systems Analysis and Program Development”) in Mannheim, Germany. Their vision was to develop and market standard enterprise software which would integrate all business processes. The idea came to them through their work as systems consultants for IBM when they noticed that client after client was developing the same, or very similar, computer programs. The second part of their vision was that data should be processed interactively in realtime, and the computer screen should become the focal point of data processing. From a start-up software vendor to global market leader By changing its structure to a publicly-held corporation, SAP significantly strengthened its capital base and laid the foundations for its employees to enjoy more of a share in the company's success. In the end, it is SAP's employees – currently more than 9,000 of them - whose know-how, motivation and performance have nurtured the company's progress. And it is their commitment and innovative drive which will pace the company's future success and keep it ahead of the competition. Over one million R/3 users The development of SAP products has continually benefited from major advances in the hardware sector. Back in 1972, the limited storage capacity of computers posed one of the biggest challenges. In those days, mainframes only had 500 kilobytes of storage capacity. Slow data input and output meant that only partial applications with a limited data volume were feasible. It was against this technological background that SAP signed its first customer, the German ICI subsidiary in Östringen. With the successful implementation of its initial project, SAP had nine employees and, at the end of its first fiscal year, posted a profit on revenues of DM 620,000. In the second year of operation, two local businesses – the tobacco and cigarette manufacturer Roth-Händle and the pharmaceutical company Knoll - selected the newly developed SAP Financial Accounting (RF) System. This system quickly earned a reputation as an excellent standard package and installations expanded to 40 customers. But product development did not slow on this success, and a second standard product, the Materials Management (RM) System, with modules for purchasing, inventory management and invoice verification, soon followed. The benefits of SAP's integration philosophy showed through, with data from Materials Management flowing straight into Financial Accounting. SAP moves to Walldorf By the end of the 1970s, new generations of powerful computers provided the framework for a comprehensive software system, and a major step in the development of SAP software - the R/2 System – was taken in 1978. In the same year, as sales headed toward the DM 10 million milestone, SAP began operation of its own computer center in Walldorf which, when completed in 1980, united development teams under one roof. That year SAP's software became even more attractive with the addition of order history to the product range. At the end of 1980, 50 of the 100 largest industrial companies in Germany were SAP customers. R/2 System goes international In 1982, SAP celebrated its tenth anniversary, with sales soaring 48% to over DM 24 million. By the end of the year, 236 companies in Germany, Austria and Switzerland were working with the SAP standard programs. Sales continued to climb in the following year, increasing by 45%. In 1984 SAP took additional steps into the international arena with the founding of SAP (International) AG in Switzerland, whose focus was to increase sales of the R/2 System in international markets. Development teams began work on two new applications, Personnel Management and Plant Maintenance, while the Production Planning and Control System was installed at its first pilot customers. 1985 was characterized by further expansion. The Walldorf headquarters had grown to 10,000 square meters of space, while at the Swiss subsidiary a new headquarters was occupied. SAP systems were now in use in most European countries, and SAP began to penetrate markets outside Europe - with customers in South Africa, Kuwait, Trinidad, Canada and the US. The DM 100 million sales mark exceeded The 15th year of the company's history was again characterized by powerful growth. Branch offices were opened in Munich and Hamburg, and subsidiaries established in four European countries - the Netherlands, France, Spain and the UK. Staff grew to 750, and sales more than doubled to DM 245 million, with 850 companies now using SAP's software systems. In 1987, SAP announced its strategy for a new generation of software, and the R/3 System was born. SAP goes public During the next year, 1989, SAP shares began trading on the Zurich stock exchange. SAP expanded its alliance and strategic cooperation approaches by taking a majority investment in TOS GmbH in Freiberg. Through the "International User Conference" in Lausanne, Switzerland, and the first "SAPPHIRE" user conference in North America, SAP demonstrated its solid commitment to direct international customer contact. This crucial commitment was to become more and more important to SAP's success in the coming years. Over 1,000 employees In 1990, SAP's capital stock was expanded to DM 85 million with the issue of preference shares. SAP strengthened its commitment to small- and medium-sized businesses by an investment in the software company Steeb and the acquisition of software vendor CAS. In the same year, SAP and Siemens Nixdorf founded SRS GmbH in Dresden, gaining a firm foothold in the East German market. Sales grew strongly to over DM 500 million, and the number of staff grew to 1,700. SAP develops Russian R/2 version In its twentieth year, SAP opened a new Development and Sales Center in Walldorf. The two-year project cost roughly DM 140 million and represented the company's largest single investment to date. In preparation for additional development, SAP's share capital was expanded by DM 15 million to DM 100 million through the issue of 300,000 preference shares. SAP was now firmly established as a global company, with South Africa, Malaysia and Japan the newest additions to its 15 subsidiary companies. By 1992, almost half of the DM 831 million in product revenues were being generated outside Germany, and the availability of the software in 14 different languages was adding significantly to its attractiveness. Shipment of the client/server system R/3 SAP took top position among German software vendors in 1993. On an international scale, the company moved to 7th place among software companies, establishing a clear lead in the global business applications software market. Sales surpassed the important DM 1 billion mark for the first time in 1993, and the global customer base stood at 3,500 companies. SAP made an investment in iXOS Software GmbH with the aim of developing and marketing graphical user interfaces and optical archiving of documents. New development center in Foster City, California 1994 was yet another record-breaking year with sales jumping 66% to over DM 1.8 billion. By the end of the year, SAP employed more than 5,000 staff worldwide, and 200 of the more than 4,000 customers were using the R/3 System in production operation. A Swiss customer was the first customer to go live with R/3 on Microsoft's Windows NT – a mere four months after the platform became available. Since its rollout in 1992, R/3 had now been installed more than 1,000 times. SAP development received ISO 9000 certification, and R/3 Release 2.2 was completed on schedule and included a wide range of enhancements in Logistics. SAP continued to expand its sales organization and strategic alliances. In Germany, SAP acquired a 52% stake in DACOS Software GmbH with the aim of developing an integrated software solution for the retail industry. The 19th subsidiary opened in Mexico City. The Annual Stockholders' Meeting agreed to a DM 400 million capital increase out of retained earnings, bringing total capital to DM 500 million. The resulting 1:4 stock split was positively received by the market and led to a significant increase in stock price levels. Microsoft chooses R/3 In 1995, R/3 became the largest source of overall revenues, with a DM 1.7 billion share of total sales of DM 2.7 billion. Growth prospects were strengthened still further with the new R/3 Release 3.0, a functional and technical milestone in R/3 development. With this version the important areas of production planning and control were now comprehensively covered. Another technical addition was the availability of R/3 on the widely used IBM AS/400 platform. The indirect sales channel concept was introduced in Germany, with SAP forming partnerships with value-added resellers so as to better support small- and medium-sized businesses. A new Service and Support Center opened in Walldorf with room for some 750 employees. SAP now employed more than 7,000 staff. Global profile: SAP represented in 40 countries With 1,400 stockholders and guests, the number of attendees to the 1995 Annual Stockholders' Meeting was more than triple the 1994 figure, and the ASM approved changing the par value of SAP shares from DM 50 to DM 5. Shortly thereafter SAP entered the German stock index (DAX). Both events had a positive effect on share prices. Sales reach DM 3.7 billion in SAP's anniversary year R/3 becomes Internet-enabled Source: http://www.sap-ag.de
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