SAP was founded in 1972 as Systemanalyse und Programmentwicklung (“System Analysis & Program development in Data Processing”) by five former IBM engineers in Mannheim, Baden-Württemberg (Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther).
As part of the Xerox exit strategy from the computer industry, Xerox retained IBM to migrate their business systems to IBM technology.
As part of IBM’s compensation for the migration, IBM acquired the SDS/SAPE software, reportedly for a contract credit of $80,000.
The SAPE software was given by IBM to the founding ex-IBM employees in exchange for founding stock provided to IBM, reportedly 8%. Imperial Chemical Industries (ICI) was SAP’s first ever customer in 1972.
The acronym was later changed to stand for Systeme, Anwendungen und Produkte in der Datenverarbeitung (“Systems, Applications and Products in Data Processing”).
In 1976, “SAP GmbH” founded, and moved its headquarters the following year to Walldorf. SAP AG became the company’s official name after the 2005 annual general meeting. AG is short for Aktiengesellschaft (corporation).
In August 1988, SAP GmbH transferred into SAP AG (a corporation by German law), and public trading started November 4. Shares are listed on the Frankfurt and Stuttgart stock exchanges.
In 1995, SAP was included in the German stock index DAX. On 22 September 2003, SAP was included in the Dow Jones STOXX 50. In 1991, Prof. Dr. Henning Kagermann joined the board; Dr. Peter Zencke became a board member in 1993.
Claus Heinrich, and Gerhard Oswald have been members of the SAP Executive Board since 1996. Two years later, in 1998, the first change at the helm took place. Dietmar Hopp and Klaus Tschira moved to the supervisory board and Dietmar Hopp was appointed Chairman of the supervisory board. Henning Kagermann was appointed as Co-Chairman and CEO of SAP next to Hasso Plattner.
Werner Brandt joined SAP in 2001 as a member of the SAP Executive Board and Chief Financial Officer. Léo Apotheker was a member of the SAP Executive Board and president of Global Customer Solutions & Operations from 2002, and was appointed Deputy CEO in 2007.
Apotheker became co-CEO alongside Kagermann in 2008. Henning Kagermann became the sole CEO of SAP in 2003. In February 2007, his contract was extended until 2009. After continuous disputes over the responsibility of the development organization, Shai Agassi, a member of the executive board who had been named as a potential successor to Kagermann, left the organization.
In April 2008, along with the announcement of Apotheker as co-CEO, the SAP supervisory board also appointed three new members to the SAP Executive Board, effective 1 July 2008: Corporate Officers Erwin Gunst, Bill McDermott, and Jim Hagemann Snabe.
With the retirement of Kagermann in May 2009, Apotheker took over as the sole CEO. He was replaced by new co-CEOs Bill McDermott, head of field organization, and Jim Hagemann Snabe, head of product development, effective February 7, 2010.
Milestones in Technical Solutions
In 1973, the SAP R/1 solution was launched. Six years later, in 1979, SAP launched SAP R/2. In 1981, SAP brought a completely re-designed solution to market. However, SAP didn’t significantly improve until the period between 1985 and 1990.
The most major improvements came not from the founders or employees, but from a partnership with an educational institution. In 1985, four years after SAP R/2 emerged, SAP had big plans, but few resources to improve upon their ERP.
At the same time, nearly 9000 km (5600Mi) away, at California State University at Chico (CSUC) (“Chico State”) a graduate student in the precursor of the College of Business at Chico State informed a couple of senior professors about SAP, and wondered if they might ask SAP for an evaluation copy to use in the database management or production managment classes.
Chico State professors contacted SAP, and soon the conversation went from “evaluation” to “development”. Both sides agreed to become partners.
Chico State remained SAP’s only educational partner for the first few years, vastly improving and extending modules within R/2, which led to the development of R/3 with a few new modules. SAP and Chico State developed and released several versions of R/3 in 1992 through 1995.
By the mid 1990’s, SAP followed the trend from mainframe computing to client-server architectures. The development of SAPs internet strategy with mySAP.com redesigned the concept of business processes (integration via Internet).
SAP was awarded Industry Weeks Best Managed Companies in 1999. By 1997, SAP had partnered with over 25 educational institutes, including Massachusetts Institute of Technology (MIT).
Business and markets
SAP is the world’s largest business software company and the third-highest revenue independent software provider (as of 2007).
It operates in three geographic regions: EMEA (Europe, Middle East, Africa), the Americas, and Asia Pacific Japan (APJ), which represents Japan, Australia, India, and parts of Asia.
In addition, SAP operates a network of 115 subsidiaries, and has R&D facilities around the globe in Germany, Turkey, Canada, China, Hungary, India, Israel, Bulgaria, and North America.
SAP focuses on six industry sectors: process industries, discrete industries, consumer industries, service industries, financial services, and public services. It offers more than 25 industry solution portfolios for large enterprises and more than 550 micro-vertical solutions for midsize companies and small businesses.
SAP and Enterprise Service-Oriented Architecture
Service-oriented architecture moves the ERP (Enterprise Resource Planning) landscape toward software-based and web services-based business activities. This move increases adaptability, flexibility, openness, and efficiency.
The move towards E-SOA helps companies reuse software components and not rely as much on in-house ERP hardware technologies, which makes ERP adoption more attractive to small and mid-sized companies.
According to a press fact sheet from SAP, “SAP is the only enterprise applications software vendor that is both building service-orientation directly into its solutions and providing a technology platform SAP NetWeaver and guidance to support companies in the development of their own service-oriented architectures spanning both SAP and non-SAP solutions.”