SAP AG is the world’s largest inter-enterprise business software company and the fourth-largest independent software supplier on the globe. It operates as an online transaction processing system (OLTP). SAP operates in three geographic regions EMEA (Europe, the Middle East, and Africa), The Americas whose headquarters is located in Newtown Square, Pennsylvania, and APJ (Asia, Pacific, Japan) which includes Japan, Australia, India and Asia. They have 115 subsidiaries with research and development facilities in Germany, Turkey, Canada, China, Hungary, India, Israel, Bulgaria and North America. They have laboratory centers in France, Sofia, Hungary, Sao Leopoldo, Brazil, Palo Alto, California, Bangalore and Gurgaon, India, Ra’ Anana and Karmiel, Israel, Vancouver, Canada and Shanghai, China. SAP targets six industry sectors including consumer industries, discrete industry, financial services, process industries, public services, and service industries. SAP offers more than 2 dozen industry solution portfolios and more than 550 solutions for small and mid size companies. Its main marketing areas are products, consultation and training. A significant part of SAP AG’s success is making it easy for customers, partners, vendors and the world to reach sales and service representatives and technicians by telephone, fax and email.
SAP Developer Network (SDN) has broadened their exposure via blogs, discussion forums, down loads, code samples, online training materials, and an online technical library. The SAP ecosystem includes Industry Vale Networks (IVN), which pose industry specific problems and complications for co-solutions in eleven areas including banking, chemicals, consumer products, high technology issues, public sector details, and retail. Another part of the ecosystem is its user groups where it provides training, product releases, and other forms of needed partner information. There are online user groups in America, Germany, Australia, Ireland, the U K and other countries. The SAP Career Center is a free online method for recruiting talent. It lists job offerings for SAP and its partners, customers, and vendors.
Working for IBM during the early development of Artificial Intelligence (AI) had its advantages for five former employees Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus E. Tschira, and Claus Wellenreuther who joined together in Mannheim, Germany in 1972 and created a company which they called “German: Systeme Amwendungen Produkte,” which translates in English to “Systems Applications and Products (SAP).” In the 1960’s Xerox had positioned themselves as a major player in the computer industry. When they decided not to follow this path, they employed IBM to transfer their business system over to IBM technology. In the mix IBM acquired full rights to Xerox SDS/SAPE software and gave Xerox a credit of around $80,000 off the total transfer bill. IBM then gave the SDS/SAPE software to the five former employees in exchange for their founding stock in IBM. The five men’s shares at the time totaled about 8% of the total founding stock. SAP R/1 was their first software program. In 1972, SAP’s first customer was Imperical Chemical Industries (ICI) whom they still do consistent business with today.
By the end of 1979, R/2 had evolved. R/2 ran through 1991. R/2 was especially popular in Europe. It was among the top soft-real-time business applications on the market with multi-currency and multi-language built in. R/3 replaced R/2 on July 6, 1992. In 2007, mySAP.com hit the market. This product is the same as SAP ECC 7.0 and is a vital component along with R/3, which provides a three-tier client server model. The first tier of R/3 is SAP gui.exe and is a presentation tier, which interfaces to the user. Installed on the user’s main workstation it works with key strokes and mouse-clicks, as most programs do.
The second tier is an application tier, which handles business logistics. It interprets advanced business application programming, managing both input and output. It works as a single configuration file with all executables starting and stopping at the same time. It specifies the number and type of processes, the amount of memory used, and the length of the idle time before automatic log off. This process utilizes a set of executables known as kernels that enable the database application to run. The third tier is a data base tier for business data storage. It handles requests for addition, retrieval and modification of data. It maintains concurrency control. Its core components work in ABAP and Java.
In 1977, SAP moved its headquarters to Waldorf, Germany where they are still located today. In August 1988, its official name became SAP AG. They were Industry Week’s “Best Managed Company” in 1999. Under German law, they formed a corporation. Public trading started November 4 of the same year with shares listed on the Frankfurt and Stuttgart stock exchanges. In 1995, SAP AG appeared for the first time in DAX the German stock Index. Dow Jones included the company on their September 22, 2003 report.
Changes in administration started for SAP AG in 1991 with Professor, Dr. Henning Kagermann admitted to the board. In 1993, another change occurred with the admission of Dr. Peter Zencke. In 1996, Claus Heinrich and Gerhard Oswald both became executive board members. In 1998, Dietmar Hopp and Klaus Tschira removed themselves from the executive board to the supervisory board. Hopp took the position of Chairman of the Supervisory board and Kagermann took Co-Chairman and CEO of SAP AG with Hasso Platt holding first Command position. In 2001, Werner Brandt joined the executive board as the Chief Financial Officer. In 2002, Leo Apotheker became a member of the executive board as President of Global Customer Solutions and Operations.
As of January 2007 SAP had more than 38,400 employees, in fifty plus countries and a customer base in excess of 36,200 around the world. In 2009, its revenue was 14,883.5 billion Euros. One Euro is equivalent to 1.3640 American dollars. SAP AG’s profit for 2009 was 3,609.3 billion Euros. As of January 1, 2010, its employee base was 47,578 with operations in more than 120 countries, with a customer base of 100,600 and inquiries world wide from more than 12 million people per day. In 2010, their fiercest competition is IBM, Microsoft, Oracle and CA Technologies.
SAP R/3, same as SAP ERP or ERP Central Component (ECC) dominates the large business application market. The purpose of the ERP/ECC software package is to build and develop other products that can function within the central component. There are several separate modules, which each are capable of running interdependently, but all pull data from a common foundation. When the 2004 ERP edition emerged, it completely changed the architecture of the program merging SAP Business Warehouse (BW), SAP Corporate Finance Management (CFM), SAP Strategic Enterprise Management (SEM) and Internet Transaction Server (ITS) into SAP ECC. SAP Business Warehouse (BW) incorporates Business Intelligence (BI) and offers info-cube algorithm processing which is a special data structure with related numbers calculated in advance to help improve performance. These info-cubes include materials requirement planning (MRP) and distributions requirement planning (DRP), as well as training courses, slides, texts, audio and visual effects and video films. The ERP software includes SAP financials (FI), logistics (LO), human resource management (HR), and industry solutions (IS) into one software program. SAP SEM: A Set of Integrated Analytical Application Components Operating on Multidimensional SAP BW Data Structures:
SAP AG delivers software that converts to 35 different languages through online analytical processing (OLAP) including English, Thai, Chinese, Korean, Taiwanese, Japanese, Croatian, Czech, Hungarian, Polish, Rumanian, Slovakian, Slovene, Turkish, German, Swedish, Spanish, Portuguese, Norwegian, Italian, French, Finnish, Dutch, Danish, Bulgarian, Russian, Greek and Hebrew.
Customer Relationship Management (CRM) is an e-business application and part of mySAP 2007. This software includes Internet Sales Scenarios (IPC), Internet pricing and configuration, mobile and field sales and service, the customer interaction center, employee self-service (ESS) and more. Enterprise Resource Planning (ERP) is synonymous with SAP R/3 with updates occurring in June 1988, March 1999, December 1999, April 2001, and March 2003 and at least four additional upgrades after that, including the 2007 ENTERPRISE PORTAL (EP) and SAP Exchange Infrastructure (XI). The combination of the 2007 EP and XI is synonymous with SAP Process Integration (SAP PI). This enterprise application includes sales and distribution (SD), covers ordering, and order filling, billing and billing supports such as fax-mail, delivery scheduling, financial management, accounting, production, planning, personnel, human resources, archived documents, and more. It operates on Windows 2000, UNIX, and many other platforms.
Product Lifecycle Management (PLM) hit the market on February 23, 2000 as a complete software package for product design, production, sales, maintenance and marketing. It includes separate programs such as SAP Catalog Content Management (CCM), SAP Convergent Charging, SAP Convergent Invoicing, SAP Manufacturing, SAP Service and Asset Management, and SAP Central Process Scheduling.
Supply Chain Management (SCM) is an e-business application added with mySAP 2007, which plans logistics and production for huge amounts of data. It includes an advanced planner and optimizer (APO), SAP Logistics Execution System (LES), which handles everything from raw materials to final delivery and billing, SAP Business-to-Business Procurement (BBP), and SAP Environment Health and Safety (EHS), which handles dangerous goods.
Supplier Relationship Management (SRM) is a software package that offers, supply strategy development, spending analysis, supply selection, contract management, self-service procurement, service procurement, supplier registration, and collaborative replenishment. SAP AG stand-alone software packages included are SAP Analytics, SAP Enterprise Buyer Professional (EBP), SAP Enterprise Learning, SAP Incentive and Commission Management (ICM), and SAP Supply Chain Performance Management (SCPM).
Most SAP AG products are single sign on (SSO) stand-alone software packages. Many of these stand-alone software packages are included in major packaged purchases. Some available stand-alone packages not mentioned so far in this text include SAP Governance, Risk, and Compliance (GRC), SAP Solution Composer, SAP Test Data Migration System (TDMS), SAP Training and Event Management (TEM), SAP CCMS Monitoring Program, SAP eCATT, and SAP Central Process Scheduling.
SAP Net Weaver Application Server (Web AS) began promotion starting in January 2003 with market release in March of the same year. It is a part of the SAP Business Suite and an integrated technology platform and foundation, sold as a service-oriented application. Net Weaver provides both run time and development environments and is used for custom development and integration with other systems. It is compatible with Microsoft.net, Java EE, and IBM Web Sphere and referred to as an application infrastructure (Applistructure). SAP advertises Net Weaver architecture as flexible, integrated, open to board integration, and provided by a financially stable vendor. Net Weaver experienced upgrading and re-release on October 24, 2005. The core components of SAP Net Weaver are SAP Application Server, Business Intelligence, Composition Environment, Enterprise Portal, Identity Management, Master Data management, Mobil and Process Integration. SAP claims to be the only enterprise applications software vendor that is both building service-orientation directly into its solutions and providing a technology platform offering guidance to support companies in the development of their own service-oriented architectures spanning both SAP and non-SAP solutions.
SAP xAPPS provides access to its software through a Citrix XenApp Enterprise Edition Environment experiencing about 800,000 user sessions per month. At the end of the 1990’s SAP AG installed the first Citrix XenApp server to its international training center for central delivery applications. The addition of Citrix reduced administration and hardware costs. This positive experience caused SAP to install Citrix company-wide. The company’s Citrix infrastructure is composed of 720 servers, 85% of which are in St Leon-Rot, with their remaining servers based in the U.S. and Asia, utilizing ten administrators worldwide. SAP has since added Citrix XenServer and optimized their processing and working storage space. This addition reduced total costs by 35 %. It reduced the physical servers needed from over 700 to about 200. It further cut their CO2 output dramatically. These reductions paid for the XenServer, Platinum Edition that brought with it the addition of Citrix “World Flow Studio” enabling the shift of unused workloads automatically and temporarily shutting down unneeded physical servers. SAP is now accessing the implementation of Citrix XenDesktop.
Two software programs provide industry solutions SAP for Retail (ISR) and SAP for Utilities (ISU). SAP ISR offers an industrial program for managing goods and payments, purchasing operations, stock turnover, and product availability. BayWa buildings material company purchased this program with a 152% return on their investment expected in five years.
SAP ISU provides solution support for water, power, gas, and electricity in both the public and the private sector. Huntsville, Alabama installed this program for handling customer service, billing, human resources, accounting, and purchasing for their 160,000 electric, 47,000 gas, and 84,000 water customers.
Small & Midsize Company Solutions
Sap having established a long running control in the large business market is now reaching out into the small and medium sized business markets. Smaller companies run 100 to 1000 employees and mid-size companies run 1000 to 2500 employees. Smaller companies do not need the fully integrated systems like the larger ones and this provides significant savings. Cost of implementation is around $10-$20 million, which is a fraction of what large companies expend. SAP Business One is an option offering preselected programs at an affordable price. Introduced as a rental product SAP Business by Design came on the market on September 19, 2007. The leasing of this software boosted SAP AG’s revenues into the double digits. SAP Business All-In-One is the third option and offers everything from a larger industry package on a smaller scale.
Platforms & Framework
SAP platforms and framework consists of SAP Enterprise Services Architecture and the Sap Net Weaver Platform. The Net Weaver platform is composed of the Net Weaver portal, SAP Business Objects Portfolio (formerly SAP Net Weaver BI), Net Weaver visual composer, Auto ID-Infrastructure, Composite application framework, and Net Weaver Development Infrastructure.
The mySAP.com workplace and SAP R/3 system are mandatory for any mySAP.com environment. The mySAP.com workplace middle ware provides a generic gateway between the common Internet protocol and the SAP protocol worlds. The middle ware consists of Internet transaction servers (ITS), Business connections (BC) and D comm. connectors. The ITS transforms SAPgui (graphical user interface) screens into HTML pages that can be displayed in a common web browser. SAP’s ITS consists of Application Gateway (AGATE), the Web Gateway (WGATE), and a common web server. The SAP BC converts the proprietary RFC format to the extensible markup language (XML). The BC’s convert IDOCs to the XML format supporting Sap’s Business Application Programming Interface (BAPI) and ALE scenarios.
The benefits of their software programs include efficient processing, money saving reductions in inventory, improved customer service, and higher profits just to name a few. Implementing the system is an expensive investment ranging from $50 million to as much as $500 million for large companies. Why is the installation cost so high? A major cost is staffing a technical support organization team (TSO). This team addresses, creates, implants, and supports the organizations needs. This requires programmers, project managers; database administrators, at least one solutions architect, an internal set of members, external consultants, and several test teams at the very least.
The process of changing from one system to another is called cutover or crossover. As with all products, which offer great advantages and a competitive edge, there are some disadvantages. Locking into a contract, makes it highly unprofitable to switch vendors, and is the main disadvantage. Identifying the shortcomings of the present system pinpoints remediation by the installation of the new SAP software. Failure to analyze company needs and purchasing the wrong package will result in expensive customization and changeover expenses. Return on investment is long term and not overnight, and there is no guarantee of project success. Converting a large company to SAP AG can take several years. There are examples of implementation into existing companies available for inspection on the Internet.
Sizing & Blueprinting
The next step employs sizing and blueprinting. At this point, the total cost of ownership (TCO) is calculated. Comparisons of all available stack options and alternatives occur. Delta analysis defines the difference in costs and results making sound decisions possible. The next step is risk factoring. Availability, down time, and disaster recovery are issues. They require financial estimating and realistic analysis. There will be hardware failures and power outages and there could be disasters. If those events are not calculated and planned for, they could prove financially devastating.
A list of vendors and technicians must be prepared to handle daily maintenance and emergency repairs. This list should include local, national and off shore providers. No category should have less than three entrees and five is preferred. Actual staffing is next. The selection of data center technicians, network and infrastructure specialists, and database professionals is completed. Training follows staffing and presents one of the most important stages. Training will go beyond introduction of the new program and beyond actual usage into areas such as security, and documentation.
All players need to be SAP certified. A skill-set matrix is established and testing follows training. This implementation and recording assures that all employees are properly trained and capable of proceeding. The matrix will identify levels of expertise usually 1 through 4, designed to meet the individual company or corporation’s situational expectation.
Now the data center itself is constructed. A new center built or an existing one transformed. The designing will include physical requirements including proper power allowances, racking, networking and server requirements. The first consideration for development of a custom program is the high availability issue (HA) which determines and describes the amount of time the system will take to satisfy the needs of its user. Development of the software subsystem called the solution stack delivers functioning solutions. Next, the solution vision is determined. This stage defines the state that the user visualizes as the result of program installation. Finally, there is installation where all components, foundations, applications, and portals are in place.
The most common components to be installed are the R/3 Enterprise for transaction processing, mySAP BI (Business Information Warehouse), mySAP CRM (Customer Relationship Management), mySAP KW (Knowledge Warehouse), mySAP PLM (Project Lifecycle Management), mySAP SCM ( Supply Chain Management), mySAP SEM ( Strategic Enterprise Management), mySAP SRM (Supplier Relationship Management), and mySAP HCM (Human Capital Management.) With this, all in place the breaking point of the program and stress test planning begins with the new installation pushed beyond normal operational capacity exceeding its limits. All helpdesk and support staff takes their positions.
The next issue faced is the “challenge of change.” There will be many changes and some staff will find it harder to cope than others will. There will be hesitancy, denial, resistance, and communication is the universal solution. As all of these processes came together, the SAP representative has instructed the project administrator to create an operation’s manual, which should now be complete. A proper manual includes system documentation, day-to-day operation tasks, checklists, and how-to instructions. These manuals are distributed and training sessions begin.
Final preparation starts with performance of a functional test case. An improvised set of variables or conditions tests the business process for performance. Constructed as a key performance indicator (KPI) testing uses predefined queries to report tools and real time data. The technical support organization (TSO) already established takes position. Cutover is the last step before going live. With the old system shut completely down, SAP AG performs a “going live check”, and locks down the new system. No more changes, SAP is live.
Is the state at which all preparation, installation, and testing is complete and the SAP system is turned on for all end-users.
PARTNERSHIPS & VENDORS
In 1985, a graduate student at Chico State part of California State University ask his professors to contact SAP and see if they could obtain a copy of their software to use in the database management classes and SAP and the college became partners. By 1997, SAP had collaborated with more than 25 educational institutions including MIT. During the spring semester 2000, Chico State developed an ultra thin .84 Mb internet browser to fit on a floppy disk.
SAP Business Ware (BW) accelerator and enterprise search are appliances, which consist of a blend of both hardware and software and were developed for SAP AG teaming with several vendors including Hewlett-Packard, IBM, Fujitsu, Siemens and Sun. SAP AG and Microsoft one of their competitors offer a vendor partnership known as Duet.
In June 2007, SAP AG opened a co-innovation laboratory in Pal Alto, California for joint venture efforts with other software vendors. Novell, Questra, and Wonderware all have projects working there. This project was a co-venture between SAP AG, Cisco, Hewlett-Packard, Intel and NetApp. In 2008, SAP AG signed a global partnership agreement with HCL Technologies a $5 billion Tech-Service provider whose headquarters is India based. As of September 28, 2010 SAP AG had affiliations with over 700 Universities worldwide.
ACQUISITIONS & LAW SUITS
In May 2010, SAP AG purchased Sybase at a cost of $5.8 billion. This acquisition incorporates the transfer of data to and from customer’s “smart phones,” and strengthens their rental capabilities. Where SAP AG has majored in the sales of software, their competitor Oracle has greatly surpassed them in rentals. Now they will have a competitive edge becoming strong competition in this market. Sybase shares began to surge with the announcement of the merger. SAP AG took out a $2.75 billion loan and paid the rest in cash. Sybase continues to operate as a separate entity with none of its management personnel replaced. This purchase gives proof of SAP’s struggle to overthrow Oracle for first place in software gross revenues. SAP already has 97% of the market share in pharmaceuticals. SAP’s next planned strategic move is to bundle products at a reduced fee both purchase and rental with the upcoming renewals making it a no-brainer to choose them over Oracle. SAP will also integrate Net Weaver into Sybase architecture and platforms as an additional tactic for outmaneuvering Oracle.
In February, Leo Apotheker resigned as Chief Executive officer replaced by the duo of Bill McDermott and Jim Hagemann Snabe who now share the job as SAP AG’s co-chief Executives. McDermott’s annual salary for 2010 is $3.7 million Euros. McDermott is expressing the company’s desires to continue acquisitions of other systems, similar to the Sybase purchase. This is a huge step for a company that has relied on internal growth in the past.
On March 22, 2007, Oracle Corporation filed a lawsuit against SAP AG for malpractice. Oracle claimed that SAP AG purchased “Tomorrow Now” and before the purchase was complete took advantage of former Oracle customers and Oracle product lines from the Oracle website connection with Tomorrow Now and appropriated them for their own usage. SAP admitted to down loads but denied theft, agreeing to accept responsibility for Copyright infringements and make payment restitution. They are willing to pay in the tens of millions of Euros range but say that Oracle’s claim of $1 billion Euros damage is an overstatement. SAP AG acquired Tomorrow Now for $10 million in 2005 and closed it down in 2008. Hearings are set to begin in the Oracle lawsuit in November 2010.
Energy and conservation are important issues to SAP AG. They are deeply involved. They have educated themselves in the most crucial areas of commercial consumption and waste reduction. One of the organizations monitoring “Green” sites gives awards in three categories annually silver, gold and platinum. In 2009, SAP opened its first environmentally friendly “green” laboratory in Sao Leopoldo in Rio Grande do Sul, Brazil employing a staff of 375. This site earned the Leadership in Energy and Environment Design (LEED) Gold Certification for the building.
In May 2009, SAP AG added 200,000 square feet onto their Pennsylvanian headquarters winning a LEED Platinum Certificate the highest designation given by the U. S. Green Building Council (USGBC). The expansion is a four-story building. It earned the maximum points for its efficiency planning. The design will save over one million gallons of water per year as a 50,000-gallon cistern collects rainwater used for landscape irrigation and low-flow toilet flushing.
The green-efficient building dropped its carbon emissions by fifty percent. Sensors automatically reduce the lighting and adjust thermostats. The air conditioning system creates ice for cooling purposes. Floor to ceiling glass exteriors with a green-planted roof add ascetics and environmental friendliness. SAP AG committed to purchase 19 million kilowatt hours of wind generated renewable energy certificates (REC’s) which accounts for eighty percent of their electricity needs and is responsible for the emission cuts. SAP AG has committed to a goal of emission reduction down to 275 kiloton’s annually by 2020.
SAP AG made a statement in January 2010 announcing they were freezing prices for existing SAP Enterprise Support contracts at their 2009 levels for the next renewal period. On September 28,2010 at 2:06 PM ET Bloomberg Business Week reported SAP AG volume at 3.3 million shares, opening price 36.75 Euros per share, day high 37.00 Euros, 52 week high on 7/15/2010 38.00 Euros, dividend .50 Euros, and dividend yield 1.375%..
In the industry, SAP AG represents innovation, success and creativity. SAP AG was named the highest-ranked software company in 2010 by Dow Jones with sector-leading scores in 11 of the 20 key dimensions including customer relations management, risk and crisis management, innovation management, human capital development, corporate citizenship, and labor practice indicators. SAP AG is currently on the “Global 100 List” for most sustainable corporations in the world. Listed on the FTSE4GOOD Index, the Global Challenges Index, and named as one of the “Top 50 Green Companies in China.” by Business Watch Magazine keeps SAP AG’s name in the forefront of the industry. Nomination for the 2010, German Sustainability Award in the category of Sustainable strategy came as no surprise.
SAP AG will continue to excel based on programs, which promote innovation from partners and internal employees and from their emphasis on growth strategies and emerging technologies. To find out more follow SAP AG on Twitter @sapnews. For media contact, you may reach Evan Welsh at [email protected]
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