50 years of SAP: the global company next door

Status: 04/01/2022 08:11

The company “Systemanalyse Programmentwicklung” (SAP for short) was founded in Walldorf 50 years ago. Today, the group is the world leader in the business software market. But the trend toward cloud solutions is intensifying competition.

By Tim Diekmann and Jochen Braitinger, SWR

At first glance, Walldorf is a completely normal small town near Heidelberg. About 16,000 people live here. There is a bathing lake, a Swedish furniture store and a highway connection. But above all there is SAP. Far from the big cities, the five founders – Hans-Werner Hector, Dietmar Hopp, Hasso Plattner, Klaus Tschira and Claus Wellenreuther – built a global corporation in the region, whose headquarters are still in Walldorf.

Tim Diekman

Walldorf is a SAP city

The small town in the Rhein-Neckar district and the large global corporation: they live in friendly symbiosis. SAP is Walldorf. And Walldorf is SAP. CEO Christian Klein, who grew up in the region, knows this too. “You come into contact with SAP and you see the great culture that SAP represents. And then the path was already mapped out.”

At his first internship, Klein tells the ROE, still had to distribute heavy monitors from the basement of buildings. Meanwhile, Klein, as CEO, determines the entire fortune of the global corporation. The 41-year-old manager sees the foundation for success in the corporate culture. He is proud “that he has motivated the employees and that the company means something to them.” Working at SAP is not just a job, because “in the end we change the world”.

“Everyone works with SAP in some way”

Around 105,000 people work for SAP around the world. The company has more than 400,000 customers and proudly mentions that 87% of global business volume is generated by SAP customers. The market power of the group is enormous. This is also highlighted by the Landesbank Baden-Württemberg (LBBW) analyst, Mirko Maier, in an interview with tagesschau.de: “Someone who works in IT in an industrial company can’t avoid SAP. Everyone works with SAP in some way.” According to Maier, individual software components can be used to control an entire company, “from purchasing to control, accounting and human resources.”

With its individually tailored operating software business model, SAP has become one of the most valuable corporations in Europe. With a market capitalization of around €120 billion, the software developer is in a league with US aircraft maker Boeing and US bank Goldman Sachs. Volkswagen, Airbus and Siemens leave the Walldorf-based company far behind.

But even if almost no company can do without SAP applications, the software maker pales in the light of other global corporations. Apple, Microsoft & Co. also offer their software and products for private use. As a commercial company, SAP is unknown to many individuals.

There is room for improvement in the cloud business

On its 50th anniversary, SAP faces great challenges. ServiceNow, Salesforce and Workday compete for customers as new providers with more flexible solutions. There is potential above all in the area of ​​cloud solutions, ie applications that are no longer installed centrally on company computers, but can be accessed worldwide from the Internet. According to a survey by the German-speaking SAP User Group, an association with more than 60,000 members from 3,700 companies, only about 30 percent of respondents had good experiences with SAP cloud applications, but twice as many with other providers.

But it is precisely in this business area that SAP sees its future. By 2030, most applications will be in the cloud. “The cloud business is a very big step for SAP, which is also related to the question: What do I do with my existing customers who use the software on their PC on site? The applications adapt to the company, almost to the measure. But the cloud “Apps are out-of-the-box suits. So now they have to make the wearer of a tailored suit also find good out-of-the-box suits. It takes a lot of time and costs money,” says CEO of SAP. Klein.

Did the change fall asleep?

The CEO sees himself on the right track: “We have very, very strong growth in our core cloud business.” Critics, on the other hand, say that SAP fell asleep during the change. Andreas Hahn, a member of the SAP works council, puts it more diplomatically: “We have a lot to catch up on, so more is being invested there. On the one hand, in time quotas, on the other hand, of course , in the budget and also in the personnel”.

But the investments would be worth it, says Maier, an analyst at LBBW, because “the capital market loves things predictable. With the cloud business, where I generate recurring income from rented software, there are fewer and fewer negative surprises. The company can be planned to a certain extent. The evolution of sales is already positive. What is still missing are the effects on the margin.”

And the SAP city of Walldorf could also benefit from this. Because increased profits also mean increased business tax revenue. For the current year, Walldorf expects revenue of 160 million euros. That’s significantly more than big neighbor Heidelberg gets.

By April 1: 50 Years of SAP: How It All Began

Eberhard Reuss, SWR, April 1, 2022 09:12 am

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