this report outlines and analyzes the significant issues that surround the success of sap ag

8/3/2019 This Report Outlines and Analyzes the Significant Issues That Surround the Success of SAP AG

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This report outlines and analyzes the significant issues that surround the success of SAP AG, inparticular the recent growth of its subsidiary SAP America. Further, this study:

Analyzes factors accelerating or limiting growth of SAP's market share for client/serverenterprise solutons

Identifies SAP's challenges and opportunities Highlights industry issues and concerns from the perspective of SAP's partners, end users,

and competition.

Research Methodology

Workgroup Strategic Services' SAP vendor profile attempts to delineate the success factorsunderlying SAP's growth in both revenue and market share and to profile SAP's relationship and useof partners for the myriad elements of the consulting, sales, and integration of its R/3 application suite.Workgroup Strategic Services sought to determine the scope of the relationships within the salescycle as SAP and its partners drive sales and provide consulting and implementation services.

Primary research for this report included extensive telephone interviews with executives from SAP, itspartners, executives from competing software providers, and end user customers. Secondaryresearch material includes trade publications, SAP brochures and press releases, competitor productbrochures and press releases, and searches via on-line services.

The information contained in this edition of this vendor profile is current as of September 17, 1995.Many of the issues and strategies of SAP are still evolving. It is expected that SAP will continue toadd to its software and service portfolios and to develop a more broad based strategic identity.

2.0 Executive Summary

Introduction to SAPFour years ago, SAP AG was a virtual unknown outside of its European base. In 1992, SAPannounced its R/3 suite of applications that moved SAP AG into the leading position as a supplier inclient/server solutions.

SAP's R/3 system addressed the growing importance of the open systems arena. The R/3 system'smulti-language support combined with its database and hardware platform support quickly escalatedR/3 sales beyond its predecessor, R/2.

R/3 provides an integrated set of applications and tools for managing business data. It consists ofhundreds of business processes for running mid-to-large applications in material management, salesand distribution, financial accounting and human resources. R/3 utilizes a 3-tier client/server conceptthat requires a re-engineering of an individual business' processes in accordance with R/3. Installationis lengthy and requires a team of dedicated internal and external resources because the 3-tierclient/server architecture uncouples applications logic from the user interface and the database.Today, SAP AG has become the sixth largest independent software company in the world with over4,500 sites in 41 countries that rely on SAP solutions. The company is based in Walldorf, Germanyand employs over 6,100 people worldwide. SAP AG recently reported revenues of US$1.1B in 1994.

SAP is in an excellent position to continue achieving above average growth and maintain a significantportion of the client/server segment in the upcoming years due to the profitability of its platformpartners such as IBM, HP and Seimens Nixdorf and significant untapped market potential. Also, thecompany is continuing to expand its global presence in new emerging markets such as SouthAmerica while emphasizing growth in established countries like Japan. The Heidelberg project, thecode name for an easy to install and configure version of R/3, will widen the company's target

customer base into medium-sized companies, although this would admittedly involve higher sales andmarketing costs. However, the success of the Heidelberg project is dependent upon productpositioning and channel strategy.


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Even assuming that the buoyancy of new business wanes, long-term growth is assured thanks to theincreasing number of functions to be incorporated in the R/3 system and its new pricing concept,which is no longer based on the size of programs installed, but on the number of users per customer.Workgroup Strategic Services expects that SAP's strategy will increase SAP AG's worldwidecustomer sites from an estimated 4500 sites in 1995 to over 8600 sites by 1999 while maintaining anaverage annual growth rate of 17%.

Markets in which SAP is already very successful promise further growth in the form of additionalinstallations, consultant services and training. SAP is preparing for this prolific growth by addinganother 200 customer service and support staff and setting up nine customer training centers in theUS. Further, approximately 5,000 consultants will be trained for SAP systems in 1995, in addition tothe 2,200 trained in 1994.

Sales Strategy

SAP sells its R/3 application suite through its direct sales force only. SAP does not provide anyinstallation services, consulting or other services to the client. SAP remains neutral regardinghardware and implementation needs for the customer. SAP does have a very robust partnership

program to provide its customers with myriad choices for the system hardware, database architecture,and consulting and implementation providers used for the installation of its R/3 software. To clarify therelationship between the partners and SAP, the company has developed a tiered structure for itsimplementation partners, as well as specifically defined relationships for hardware platform vendorsand database or technology partners.

Findings: Summary of Strengths - Weaknesses - Opportunities - Threats (S.W.O.T.) Analysis

SAP's Strengths

Extensive use of Partners for Consulting and Implementation Certification for Logo and Implementation Partners SAP Certification Program for Vendor Hardware Platforms Variety of Platforms for Hardware, Database, Operating System SAP Sales Force Compensation Based on Sales and Customer Satisfaction Client Server Three Tier Architecture Suitability for Transaction Based Environments Market Inertia (R/2 Installed base, New R/3 sales) Multinational Features (Language, Currency Conversion, International Legal Requirements) Integration and Workflow Automation Large Research and Development Expenditures

SAP's Weaknesses

Shortage of SAP Consultants High Price of R/3 and Associated Consulting and Implementation Costs Long Implementation Cycle Complex Software Environment and Implementation Need to Force Fit BPRE to R/3 Data Fields (R/3 is not user customizable, requires SAP

Application Engineer) Pressure on Consultants to Provide Competitive Advantage via Business Process Re-

engineering (BPRE) SAP Business Model Forces the Use of Outside Consultants to Provide Re-engineering and

Implementation Services. Troublesome R/2 to R/3 Migration Path Marketing Effort is Weak Not Addressing Smaller Businesses as a Potential Market

SAP's Opportunities


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Leverage Platform Partner's Channels (use for Heidleberg to target smaller businesses) Heidleberg Project Target Medium to Small Size Businesses Target PDA and Mobile Users, tie into R/3 Environment Vertical Market efforts, (Banking Healthcare, Insurance) Promote Marketing Message of R/3 Hardware and Operating System Independence Joint Marketing with Microsoft (SQL Server and BackOffice) Intel Platforms (currently Sequent and Compaq/Win NT) IBM AS/400 with PowerPC Chip

SAP's Threats

Up and Coming Software Providers, in Particular BAAN Other MIS Software Providers are Moving Down to the Desktop with Client/Server

Architectures Heidleberg Project Requires the Same Sales Effort but Offers Lower Margins installed Base May Consider Other Software as They Migrate Toward Client Server

Architectures Businesses in General are More Cautious About Beginning BPRE Efforts PeopleSoft - Leveraging its Human Resource Module Installed Base to Sell Full MIS Solution Major technological change in mainstream computers. Antitrust and International legal issues

3.0 Company Overview

Four years ago, SAP AG (Systems Analysis and Program Development) was virtually an unknownoutside of its European base. The company was extremely successful in its own familiar settings witha main-frame product known as R/2. However, in 1992, SAP AG brought to market a client/serverproduct known as the R/3 System that allowed the company to take advantage of the downsizingmovement. This, combined with the company's strategic focus of expanding sales into the US market,

caused the company's sales to surge, putting SAP AG in the leading position as a supplier inclient/server solutions. The open concept of the R/3 product allowed the company to expand itsstrictly mainframe customer base to a market that is ten times larger than its predecessor.

Today, SAP AG has become the sixth largest independent software company in the world and isknown for specializing in standard software for management purposes (i.e. financial accounting, orderand supply of materials, production planning), including training and consultancy services. Today,SAP AG has over 4,500 sites in 41 countries that rely on SAP solutions. The company is based inWalldorf, Germany and recently reported revenues of US$1.1B in 1994 and employs over 6,100people worldwide.

4.0 Product Overview

R/2 System SolutionThe R/2 System is an integrated, mainframe application that is designed to meet the informationmanagement needs of data-intensive environments. The R/2 System has 10 main modules thataddress corporate information management: sales and distribution, production planning and control,materials management, quality assurance, plant maintenance, human resources, financialaccounting, assets accounting, cost and managerial accounting and projects planning. R/2 optimizesthe high volume transaction processing capability of IBM and PCM mainframes and runs on only veryselect configurations as illustrated in Table 1.

Table 1

R/2 Configurations


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Hardware Operating System Data Communications DatabaseIBM 370/390 & compatibles VSE/SP CICS VSAM

DL1

ADBAS

MVS, MVS/XA CICS VSAM

IMS/DC

IMS/DB

ADABAS

DB2

MVS/ESA CICS VSAM

IMS/DC IMS/DB

ADABAS

DB2

Source: SAP America, Inc.

During mid-1992, SAP changed its strategic direction with the announcement of the R/3 System

which addressed the growing importance of the open systems arena. The R/3 system's multi-language support combined with its database and hardware platform support quickly escalated R/3sales beyond R/2. While R/3 sales continue to surge forth and R/2 sales dwindle, the R/2 platformremains a viable alternative (see Figure 1) to many corporations that have centralized, data intensiverequirements including materials manufacturing, petroleum production and pharmaceutical products.There remain thousands of R/2 customers with some highly identifiable names as illustrated in Table2. SAP plans on continuing to support the 2100 R/2 customers until the year 2000 and will releaseperiodic technical updates; however, their strategic focus remains with the R/3 System.

Table 2

R/2 Customers

Amoco Chemical Harnischfeger PolyGram Records, Inc.Cincinnati Gas and Electric H.J. Heinz Company Schindler Elevator Corp.Dupont USA Himont Shell Oil CompanyDow Chemical Hunt Wesson, Inc. Stockhausen, Inc.Eastman Chemical Company ICI Americas, Inc. Teradata ContractFord New Holland L&F Products TimkenGeneral Mills, Inc. Lee Company WestvacoGoodyear Tire and Rubber Olin Corporation Witco

Haarmann & Reimer's Ortho Pharmaceuticals


R/3 Systems Solution

SAP's R/2 provides complete operational process and financial control while the newer R/3 systemsoffers the same facilities under an "open systems" concept; i.e. it works with a variety of computingplatforms. R/3 encompasses the functionality of the R/2 System; however, with added benefits ofportability, inter-operability and scalability. Further, R/3 is designed to help companies meet their nextstrategic challenge: technology re-engineering. Companies using the R/3 System can promotebusiness process change while taking advantage of the improving price/performance ratios ofhardware platforms, relational database technologies and open systems standards. In addition toproduct quality (highly functional compared with other products available), the essential factors inR/3's success are its availability in over 16 languages and adherence to legal requirements inindividual countries, as well as distribution agreements entered with all the major hardwaremanufacturers and consultancies.


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Source: SAP America, Inc. and Workgroup Strategic Services, Inc.

As demonstrated in Table 3, R/3 runs under a wide range of configurations, operating systems anddatabase applications. Currently, R/3 runs on a variety of UNIX platforms, Microsoft NT and Digital'sOpen VMS. Client support includes IBM OS/2, Microsoft Windows 3.1 and NT and UNIX with the Motifgraphic user interface (GUI). Also, R/3 runs on Oracle, Informix DBMS and offers support for SybaseDBMS and Microsoft's SQL Server. R/3's ability to share data with a variety of third party toolsincluding Microsoft Access and Visual Basic, Oracles Forum and Powersoft's PowerBuilder hashelped to propel its sales and acceptance.

Table 3*

R/3 Configurations

Hardware Operating System Database Dialog

Bull BOS Oracle OSF/MOTIFData General DG-UX Oracle OSF/MOTIFDigital ULTRIX Informix Presentation Manager, Windows 3.1

HP HP-UX Windows 3.1

IBM AIX

SNI SINIXHP3000 MPE/iX ORACLE OSF/MOTIF

Allbase Presentation Manager, Windows 3.1

Sun Solaris ORACLE OSF/MOTIF

Presentation Manager, Windows 3.1

Intel based** Windows NT ORACLE OSF/MOTIF Presentation Manager

*List not complete

**certified platforms include AST, AT&T, Compaq and Sequent among others.


R/3 Description


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R/3 provides an integrated set of applications and tools for managing business data. It consists ofhundreds of business processes for running mid-to-large applications in material management, salesand distribution, financial accounting and human resources (See R/3's Core Solution). R/3 utilizes a 3-tier client/server concept that requires a re-engineering of an individual business process inaccordance with R/3. Installation is lengthy and requires a team of dedicated internal and externalresources because the 3-tier client/server architecture uncouples applications logic from the user

interface and the database.

The 3-Tier Client/Server Concept

The R/3 System breaks the information structure of organizations into three levels: database,application and presentation as demonstrated in Figure 2. Each piece is designed to support thedemands of its function. Databases form the highest computing level and reside on a centralizedserver, typically a mainframe computer. Beneath the first level falls the Application servers which holdthe processing logic of the system, preparing and formatting information from the database level forindividual offices or departments. The third level is the client workstations and PCs which handle allthe tasks related to the presentation for data, user interfaces and enable easy access to companyapplications and data. Using a three tier structure, R/3 attempts to maximize the power on each levelwhile creating an environment that offers the flexibility to be modified with the environment.

Figure 2

R/3 Three-Tier Architecture Chart


R/3's Core Solution

R/3 is designed for ease of use by staff at all levels. The GUI interface is in accordance withinternational standards, including windows, toolbars and graphic capabilities. The screen formats can


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be adapted to suit the tasks performed at any particular workplace. R/3 Core solutions include Sales& Distribution, Financial and Accounting, Human Resources and Manufacturing and Logistics.

Sales and Distribution

The Sales and Distribution module includes components for sales, shipping, billing, sales support and

sales information that provides real-time, on-line access to sales information while streamlining orderentry, delivery and billing functions. This module can be integrated with SAP's Materials Managementand Production Planning modules.

Financial Accounting

This module entails the support of all the planning, administration and processing responsibility ofhuman resource departments. Company specific organization structures and administrative policiesare integrated into the standard applications, complete with a multi-level, graded authorizationconcept to control access to sensitive data.

Asset Management- allows users to monitor assets such as office machines, computers, software;

does fixed asset reporting, maintenance and depreciation for companies on a worldwide basis.

Financial Accounting- comprised of general ledger, accounts receivable/payable, legal consolidation,financial control, profitability analysis, business planning and coordination.

Controlling (Management Accounting) - comprised of cost center accounting, activity based costing,order and project accounting, product accounting, profitability analysis, profit center accounting, andcorporate management, which combined, coordinate planning, monitoring and management ofbusiness activities.

Human Resources

The HR Systems can be integrated with other SAP applications to connect core business operationsfrom human resources to the financial and manufacturing systems and covers all phases of thehuman resource cycle from selection and administration applications to career planning. The HumanResource system features such capabilities as the ability to scan resumes into the system and querythe system for specific skills or qualifications. The system also extracts and analyzes the informationin categories such as work history, skill and experience. Also, integrated is Interactive VoiceResponse (IVR) capability which allows callers to retrieve specific and unique information from a hostcomputer by responding to voice prompts given through a touch tone phone. The added technologywas a benefit from relationships from Resumix, Inc who is a leader in integrated staffing solutions andComputer Communications Specialists who specializes in IVR technology.

The Human Resources module has received high recognition, for example the HR Executive listedSAP's R/3 HR System as one of the top 10 products in 1993. During 1993, the HR System was

installed in over 100 companies worldwide. In 1994, SAP had 549 HR customers for the R/2 Systemsand 225 HR customers for the R/3.

Applicant Data Administration- manages job applications.

Master Data Management- manages personnel related data.

Payroll- supports all payroll activities.

Personnel Development Planning- tracks human resource management.

Reporting, Evaluation and Statistics- supports databases for report generating.


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Time Management- uses company definitions of work time to evaluate data from the past as well asthe future.

Travel Expense Accounting- supports business trip processing and reimbursement.

Manufacturing and Logistics- material requirements, master production scheduling, shop floor

control, capacity requirements planning, product costing.

Sales & Distribution- sales order processing, shipping, billing, computer-aided sales, inventorymanagement, invoice verification, warehouse management.

Manufacturing and Logistics

Manufacturing and Logistics supports an integrated information chain for the procurement ofmanufacturing and sales and distribution of goods and services.

Materials Management - covers tasks within material planning through purchasing to inventory andwarehouse management.

Plant Maintenance - supports activities associated with planning and performing repairs.

Production Planning and Control - manages all phases of manufacturing.

Quality Management - plans and implements inspection and tests for quality with manufacturing.

Sales and Distribution - supports sales order processing from inquiry to processing to shipping andinvoicing.

The R/3 System's open concept has quickly escalated its sales to over 2,400 client/server sites. TheR/3 System has allowed the company to quickly expand its customer base from the R/2 mainframefocus to include such industries as Consumer Goods, Automotive, and High Technology. R/3'scustomer list has quickly expanded to include a wide variety of industries and names as listed inAppendix A.

Special Delivery Program

In mid 1994, SAP announced the Special Delivery program, which includes hardware, software andsupport services, for $500,000. The Special Delivery was a complete R/3 system which included:financial, cost accounting and human resources software modules; HP 9000 hardware and Informixrelational database systems configured with Microsoft Tools and Novell networking for up to 32 users;and training from Delotte & Touche and ICS. In the future it was to have been ported to RS/6000, NTand UNIX platforms. This program was aimed at mid-size organizations in the health care, banking

and insurance segments who earn revenues of $50M to $200M. As of May 1995, the special deliveryprogram was scaled back due to lack of customer interest. Currently, it is being offered at thediscretion of SAP Sales Offices; however, the Special Delivery Program is being phased out.

SAP AG's Market Strategy

During 1994, Workgroup Strategic estimates that the client/server market was valued at US$6.2B andthat this figure will grow up to 50% in 1995 (Figure 3). Also, we estimate that SAP captured 9% of theclient/server market ahead of such companies as Lotus, Oracle, Microsoft, PeopleSoft and ComputerAssociates. Further, we expect the client/server market will grow to just under $US23 Billion at anaverage annual growth rate of 30% until 1999.


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Source: Workgroup Strategic Services, Inc.

Workgroup Strategic expects that the strong expansion of the client/server market will continue tohave a direct effect on SAP's annual revenue figures. The company is in an excellent position tocontinue achieving above average growth and maintain a significant portion of the client/serversegment in the upcoming years due to the profitability of its platform partners like IBM, HP andSeimens Nixdorf and untapped market potential. The company is expanding both its global andvertical strategies to include new emerging markets like South America while emphasizing growth in

established markets such as Japan. Also, the Heidelberg project will widen the company's targetcustomer base into medium-sized companies, although this would admittedly involve higher sales andmarketing costs. However, the success of the Heidelberg project is dependent upon productpositioning and channel strategy.

Even assuming that the buoyancy of new business wanes, long-term growth is assured thanks to theincreasing number of functions to be incorporated in the R/3 system and its new pricing concept,which is no longer based on the size of programs installed, but on the number of users per customer.Workgroup Strategic Services expects that SAP's strategy will increase SAP AG's worldwidecustomer sites from an estimated 4500 sites in 1995 to over 8600 sites by 1999 while maintaining anaverage annual growth rate of 17%.

SAP Growth through Globalization

EuropeIn order to capitalize on the client/server market's double digit growth SAP AG has been putting astrategic focus on growing the company on a global basis. In Europe, SAP AG is the market leaderwith its R/2 mainframe software with about 2,000 users. The company is Europe's largest supplier ofstandard application software systems for mainframe computers. The R/3 System sales have beenslow in the European markets. The strong divergence in the regional trend are attributable to twofactors. The European economy suffered strongly from the recent recession, so capital spending byEuropean customers has been very low. On the other hand, given its structure (R/3 client-server basiscompared with R/2's mainframe orientation), R/3 is targeted to new customers. Europe still has a veryhigh density of R/2 installations from the past few years. In the near term, this will limit the number of

potential new customers for R/3 in the domestic market and will result in a concentration ofdistribution activities on foreign markets. The penetration level by SAP AG of some regional markets


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is very low; however, markets such as the United Kingdom, France and Italy have enormous potentialfor SAP's products. Currently, sales in these countries are still at a level of $US18M and below.

Germany

Germany remains the company's largest installed base. Also, in Germany alone, SAP AG is the

largest supplier of standard application software systems for mainframe computers with a marketshare of over 80%. However, there still remain substantial growth opportunities; for example, SAPcustomers include only 4,000 of a total of 30,000 subsidiaries of major German concerns. However,the R/3 System sales have been slow for many of the same reasons listed above for the Europeanmarkets.

SAP America

After Germany, SAP America represents SAP's AG's largest international subsidiary with corporateheadquarters in Philadelphia, a Technology Development Center in Foster City, Calif. and sales andsupport offices throughout North America. During 1994, SAP America sales for the first time outsoldSAP Germany. The phenomenal growth in the US is expected to continue through the rest of the

century.

Only recently has SAP AG's American subsidiary been profitable (Figure 5). SAP AG initially set up aUS based office in 1988 and, for the first few years after its inception, the revenue results weredisappointing. SAP America's recent high revenue and huge acceptance has been due to acombination of factors. In 1992, SAP America came under management by Klaus Besier, who drovethe subsidiary through increased advertising budgets and partnerships. R/3's platform partners, aswell as customers, include vendors such as IBM, Apple, Intel, Hewlett Packard, Compaq and DigitalEquipment who have been instrumental in the market penetration and acceptance of R/3. Also, Beiserwas able to offset US advertising and distribution costs with high platform costs. R/3 software typicallysells for 50% more in the US than in Germany.


Besier helped to drive the business, making it more profitable than its foreign counterparts, whileclaiming 40 of the 50 largest US companies in the chemical-pharmaceutical industry as clients. TheUnited States is still a maturing market in regards to client/server and there are plenty of opportunitiesto sell R/3 systems. In 1994, 120 of SAP's 200 US customers purchased the R/3 system. Also, SAP


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America sales grew from an estimated 13% in 1991 to 33% of overall SAP AG revenue in 1994. AsSAP AG continues to focus on the Americas with the R/3 Systems and future R/3 upgrades we expectthis figure to quickly increase to just over 38%.

SAP AG in Asia

After the US, Asia is expected to be the next major growth area for R/3, particularly Japan. During1993, Japanese R/3 sales brought revenue of an estimated $US5.6M. In 1994, which was the first fullyear for SAP in Japan, sales were $US30.6M greater than the $US18M originally targeted. In 1995,SAP AG expects this figure to double. Japan offers SAP AG huge growth potential and goodcustomer prospects for the R/3 System for a number of reasons. First, SAP publishes its software inthe Japanese Kanji characters. Second, the need is great, since the Japanese industry does not yethave standard enterprise MIS software. At present most of SAP's Japanese sales are generated bysoftware modules for financial applications. For better market penetration SAP has divided up theJapanese market into three segments: A, B, and C.

Segment A - 500 international companies operating in Japan, which as a rule are subsidiaries ofeither European or American multinationals.

Segment B - Japanese companies with 1000 or more employees and annual sales of over DM500m.

Segment C - middle-market companies.

SAP goals for these three segments for the year 2000 are: Segment A: market share of 50%,Segment B: market share of 15%. Segment C will be penetrated later. We believe that SAP will beable to reach these goals because of its product and market penetration strategy.

Figure 6



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Expansion beyond Japan into other parts of Asia is already a foregone conclusion. SAP is alreadypreparing for its entrance into the Chinese market with product presentations. China is not expectedto generate meaningful sales in the short term. SAP AG already derives revenue from other areas ofthe world including Africa; however, the revenue is very small in relation to the company's annualrevenue. The company is also penetrating new regional markets including South America andtargeting new customer groups (including service companies and smaller firms).

Table 4

SAP AG Subsidiaries

6 in Germany 2 in Austria 1 in Australia1 affiliate in Germany 2 in France 1 in Belgium

2 in Switzerland 1 in Canada

2 in USA 1 in Denmark

1 in Italy

1 in Japan

1 in Malaysia1 in the Netherlands

1 in Singapore

1 in South Africa

1 in Spain

1 in Sweden

1 in UK

Branch offices in Hong Kong, Malaysia, Japan and Korea.


Revenue

During 1994, SAP AG Revenue reached $US 1.1 Billion dollars. Workgroup Strategic expects thisfigure to increase significantly in the wake of the future of the R/3 products and its global positioning(Figure 6). Until the end of the century, we expect R/2 mainframe sales to decline; however, R/3System sales will more than make up for this decrease in activity with a growth rate of 30% until theend of the century. Also, a large number of newly-acquired R/3 customers, which has a multipliereffect vis-a-vis new installations and consultancy needs, will provide the main boost to business.

Figure 7


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SAP AG will remain strong because of its earning strength. The revenue per employee ratios areextremely high, see Figure 7, and if the company is able to maintain these ratios it will keep them in afinancially sound position. In 1993, product sales accounted for 62% of total sales, but increased tomore than 71% in 1994. The higher this percentage is, the stronger the return. In the case of SAP AGthis percentage is relatively high since the majority of the development costs of the products currentlybeing sold have all been absorbed in previous years.


Also, markets in which SAP is already very successful promise further growth since the clients alreadyunder contract generate new sales in the form of additional installations, consultant services andtraining, as demonstrated in Figure 8. SAP is preparing for this prolific growth by adding another 200customer service and support staff and setting up nine customer training centers in the US. With its

very strong market position, SAP should be able to achieve above-average growth in a very fast-growing market.


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Workgroup Strategic estimates that R/2 sales will decline by an average of some 10% per year whileconsulting and training revenues rise by some 30% per year on average. According to theseassumptions, the proportion of product sales out of total sales will reach roughly 71% in 1995 and willcome down to 68% in 1996. As a result, SAP is in a position to offer a high quality consultancy andtraining service despite the growing number of customers. Three main factors could potentiallyinterfere with our anticipated growth rates.

1. Major technological change in mainstream computers.2. Competition: new entrants could force prices down.3. Antitrust and International legal issues.

SAP AG's growth opportunity will come from its largest subsidiary, SAP America. As discussedearlier, SAP America sales grew from 13% of SAP AG's total revenue in 1991 to 33% in 1994.Workgroup Strategic Services expects this growth to continue in 1995 with SAP America contributingat least 38% to overall revenues. SAP America is investing heavily in the infrastructure that willsupport R/3 sales and support for the United States. Under the leadership of Klaus Besier, SAPAmerica has developed relationships with hardware, database, and consulting/integrator partners tosupport its direct sales effort. Additionally, SAP America has Competency Centers, the Partners

Academy, and Industry Centers of Expertise located across the United States, all meant to supportand nurture consultants and partners who support R/3.

The remainder of this profile will focus on SAP America, its competitive stance and future outlook.

7.0 Marketing and Sales Programs

AdvertisingDuring 1994, SAP America used the Ciociola & Co in New York for its advertising campaign andspent an estimated $3.5 million for targeted print advertisement that focused mainly on trade journals.

The predominant message of this campaign was integration - R/3 integrates the client's informationentry, processing and storage across the enterprise. In 1995, SAP America will more than double its1994 ad spending, with an $8 to $10 million advertising budget. SAP America is also seeking a newagency. Workgroup Strategic believes the Ciociola group was no longer a good fit given that SAP isseeking to change the direction of its advertising campaign.

SAP America has enlisted the help of its public relations firm, The Webber Group, to facilitate theprocess of researching a new ad agency. The Webber Group has narrowed the choices down to afew players and has selected one agency to perform a "test run". SAP America is being secretiveabout the agency choices because the company wants the new campaign to hit the industry with a"big bang". However, the company has indicated that one of their marketing goals is to change theperception of R/3 as being inherently complex and proprietary.

SAPPHIRE 95

SAPPHIRE is SAP America's annual R/3 and R/2 end-user conference, although it focuses primarilyon R/3. Also, the event is designed to appeal to potential customers since SAPPHIRE gives prospectsthe opportunity to talk with R/3 customers and find out how they use R/3. The 1994 SAPPHIREconference attracted 4,000 people.

SAPPHIRE 1995 was held in Phoenix, Arizona between September 17 and 20. It was booked tocapacity with over 5,000 registrations. SAPPHIRE 95 includes an exhibit which is intended to informattendees about the wide range of R/3 3

rdparty solutions that can be implemented to expand R/3's

capabilities. Also, SAP America's major platform partners participate in the exhibit by producingseminars. Seminars include a broad range of topics, such as SAP's future technology direction, R/3

case and customer studies, calculating R/3's return on investment, and learning more about specificR/3 applications, workflow and other topics. SAP America normally avoids releasing important


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announcements prior to the event and discusses its plans during SAPPHIRE. This year SAP Americais expected to discuss its plans to target the middle market and its strategy concerning ALE, openinformation warehouse, business modeling and workflow.

SAP Sales Strategy

SAP's Partnering RelationshipsR/2 and R/3 software is sold directly from SAP. The company does not provide any installation orimplementation services to the client and they remain neutral regarding hardware and implementationchoices. SAP does have a very robust partnership program to provide its customers with a myriadchoices from the system hardware, database architecture, and consulting and/or implementationproviders. To clarify the relationship between the partners and SAP, the company has developed atiered structure for its implementation partners, as well as specifically defined relationships forhardware platform vendors and technology partners.

SAP's Partner Programs use a Best of Breed approach, providing customers with a choice ofdiverse business expertise. The three tenants of SAP's strategy are as follows:

The customer picks the expertise. Flexibility for the customer Allows the customer to build on existing relationships with consulting, platform and technology

partners

According to SAP, the following criteria are factors in picking a partner

Market presence - Does the company have the required size and stability for a givensegment?

Strategic direction - Is the company's strategic direction in line with SAP goals? Will thecompany be able to provide leading edge service and support in the future?

Familiarity with technologies that add value to customer and/or SAP - Is the companyknowledge base and expertise of the nature that will add to SAP's R/3 applications?

Understanding of SAP's business and customer needs - Does the company have the propertraining and knowledge of SAP and the proposed customer to determine customer needs forconsulting, integration, workflow automation and other areas of the proposed R/3environment?

In developing alliances, SAP lets the partner provide the services, training, and follow on support.SAP requires a formal partnership agreement that outlines expectations for both parties.

SAP's Partner business plans includes goals for:

Performance Customer satisfaction Staff training and certification Knowledge of SAP products Responsiveness to customer

All agreements with logo or implementation partners are for one year with an option to renew at thediscretion of SAP. Each partner is aligned with a SAP Partner Manager that evaluates customersatisfaction, performance against the business plan, and operating perception (i.e., is the partner easyto work with). The Partner's business plan and partnership agreement call for continuedcommunication and training of employees. The SAP Partner Managers use the above criteria andcustomer satisfaction surveys in order to make a decision on the renewal of the partnership

agreement.


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SAP uses an annual AWARD of EXCELLENCE for partners that meet its annual criteria. Most of thecooperative efforts between SAP and partners happen at the local level, with the SAP and partnersstaff working together at the customer site to provide a solution.

Partner Programs

Platform Partner - Hardware vendors whose platforms are certified by SAP and do not provide valueadd services. SAP takes a long term approach in choosing hardware platform partners. Partners mustcertify their systems and establish a Competency Center in Walldorf, Germany. The vendor must staffthe Competency Center with engineers that are certified and will maintain the vendor's hardwarecertification. Some Platform Partners are also logo partners and provide consulting or installationservices.

Technology Partner - Database application vendors that work with SAP to insure compatibility andoptimization of underlying database architectures.

Logo Partner - Large scale integrators that provide consulting and re-engineering services. SAP hasover 13 logo partners that offer full service consulting and will act as a project manager in bringing in

other partners where their expertise is needed.

Implementation Partners - Large integrators that perform system installation and some consultingservices, usually within a vertical market or technology area. Implementation partners must have anational presence for service, as well as a commitment to training and support. Nationalimplementation partners have a smaller portfolio of services than the logo partners as they usually donot provide re-engineering services.

Regional Implementation Partners - Integrators with a smaller service portfolio, usually integratorswith a very specific vertical market or technology niche. Regional implementation partners have asmaller set of skills and geographic coverage. Typically, they offer vertical market or a specifictechnology expertise.

Please refer to Appendices B through D for a list of SAP partners.

Training Resources for Partners

In June 1994, SAP introduced the Partner Academy as a response to the shortage of available SAPconsultants. SAP's Partner Academy provides application consultant certification by training in thecore functional areas of the R/3 System.

The Partner Academy is able to consolidate training to 5 weeks by using accelerated learningtechniques and expecting consultants to have a core knowledge of their functional area. The first fourweeks of the Academy is dedicated to hands on training and learning how SAP is equipped to handle

customer needs. The last week is devoted to the final test for certification. All consultants are groupedinto cross functional teams and are assigned a case study. The team must work together in order tobuild a model company based on R/3. Final certification is based on tests during the training periodand on the success of the model company. Certification is issued to the company and individual for aparticular release of R/3. To maintain quality assurance, SAP provides Delta Training to re-certifyconsultants for new versions of the R/3 System.

Competency centers provide end user training and are staffed with pre-sales support personnel fromSAP. The Competency Centers are where the customer's hardware, networking and applicationdevelopment needs are determined.

Industry Centers of Expertise


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SAP provides its consulting partners, technical support staff, and customers with a central resourceand clearinghouse for the development of customized technology solutions for vertical marketsthrough its Industry Centers of Expertise (ICOEs). SAP maintains several centers including; the HighTechnology and Electronics ICOE located in Foster City, California; the Oil and Gas ICOE in Houston,Texas and Ontario, Canada; the Utilities ICOE in Toronto, Canada; and the Automotive ICOE inChicago. The centers are designed to work with representatives from each vertical segment in order

to widen the appeal of the R/3 System to the vertical segment. Together representatives and SAPconsultants determine and incorporate features needed by each vertical market. The goal of the ICOEis to combine targeted software solutions and industry-specific consulting services to shorten theimplementation cycle and to tailor the R/3 environment more closely to the needs of vertical marketcustomers.

International Sales

SAP uses its Global Account Executives to sell to multinational customers. To help sell internationally,SAP uses native country managers in each region. SAP partners selling internationally must have 2logo partnership agreements per region in place to give customers a choice of solution providers.SAP distributes software directly in all countries. There are no incentives to refer business to partners

or to keep an account in-house.

SAP's Sales and Implementation Cycle

The initial contact from a potential customer may be from SAP's direct sales force, or a referral from apartner. The sales cycle can range from six to eighteen months depending on the complexity of the ITenvironment and the proposed re-engineering effort. SAP's Account Executives will evaluate thecustomer's needs and will work with a SAP Product Engineer to develop an on-site customizeddemonstration. The Account Executive will give the client a list of Platform Partners, Logo Partners,and/or Implementation Partners for re-engineering, system configuration, and the installation of thehardware and network.

SAP's Basis Engineers use the Account Executives and Product Engineers information to determineconfiguration and system size for a demonstration version of the R/3 software. Basis Consultants arecertified by SAP through a 16 week training course that focuses on the isolation layer of the software,the basis layer that keeps the application separate from the database architecture. Basis consultantactivities at the customer site are billable hours in addition to the software cost.

Once the customer environment is ready for the software installation, a Basis Engineer will load R/3onto the customer site. Typically, this is a 2-4 day effort for the initial installation of the software onto anetwork. Basis consultants will go back into a customer site to fine tune the demo once all of thepieces are installed.

The full implementation of SAP's R/3 software can take up to two years depending on the complexityof the environment. The majority of the time is spent re-engineering the information flows within the

company before the system and software are installed. Outside consultants usually perform the re-engineering consulting activities, the cost of such consultants can range from 2 to 15 times the cost ofthe R/3 software. According to Digital Equipment Corp., hardware costs equal the R/3 software, whileconsulting activities will run about three times the cost of the R/3 modules. Annual SAP support is15% of the software price, with the first six months of support free.

The growing interest in the R/3 System combined with the increasing reliance on outside consulting iscreating a bidding war for SAP consultants. SAP consultants earn between $80 - $120,000 annually.Virtually all of SAP's Logo and Implementation Partners are actively recruiting SAP consultants whichis helping to drive shortages, thereby increasing consultant fees and salaries. SAP hopes that byactively recruiting and training SAP personnel they will be able to train an additional 5,000 consultantsworldwide in 1995, this is in addition to the 2,200 trained in 1994.

Strengths - Weaknesses - Opportunities - Threats (S.W.O.T.) Analysis


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SAP's Strengths Extensive Use Of Partners For Consulting And Implementation

SAP relies exclusively on its partners to provide consulting and implementation services for thecustomer. SAP does not make any recommendations regarding the proposed hardware platform orwhich partner will implement the system. All partners compete amongst themselves for the contract; itis up to the customer to make the decision about who will consult and implement the project.

Certification for Logo and Implementation Partners

SAP's Logo and Implementation Partners are reviewed on an annual basis and have to meet verystringent guidelines for certification and their ability to support customers.

SAP Certification Program for Vendor Hardware Platforms

SAP provides certification programs and centers to ensure the vendor's hardware will support R/3environments. SAP works very closely with hardware partners to optimize the supporting hardware.

Variety of Platforms for Hardware, Database, Operating System

SAP's R/3 application will run on a wide range of operating systems, database architectures, andtypes of processors. All of the underlying platform components are certified by SAP to ensurecompatibility when building mixed environments.

SAP Sales Force Compensation Based On Sales And Customer Satisfaction

SAP's direct sales force receives a 5% commission on the amount of an R/3 sale. In some cases, thecommission structure and high price of the R/3 software allows some SAP sales people to make moremoney than high level executives within the company. SAP also uses customer satisfaction surveysto determine compensation levels for its sales force. The use of customer satisfaction surveys as anincentive forces the sales person to manage the use of partners and internal SAP resources toprovide the most effective solution for the customer.

R/3 Client/Server Three Tier Architecture

SAP's R/3 architecture is a true three tier architecture; this gives the customer the flexibility toimplement and mix and match a one, two or three tier environment. Customers have the flexibility touse different client/server schemes for different functional areas and then tie the entire systemtogether through R/3. SAP's R/3 also allows the customer a wide choice of underlying databasearchitectures.

Suitability for Transaction Based Environments

SAP's integration and use of a three tier client/server architecture, and the compatibly with databasesand upcoming Microsoft SQL Server environments, provides a robust environment for transactionbased enterprise solutions.

Market Inertia (R/2 Installed Base, New R/3 Sales)

SAP has a significant installed base of R/2 mainframe based users. SAP states it will support andenhance R/2 until the year 2000. SAP's mainframe users that are evaluating client/server solutionswill be very likely to move to R/3 if the proper migration tools are available. SAP is also currently ridinga wave of high demand for its R/3 software. Assuming this sales trend continues, SAP's challenge is

to train more internal and external consultants.


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Multinational Features (Language, Currency Conversion, International LegalRequirements)

SAP's R/3 has significant multi-language, currency and international legal requirements capability.SAP's target market of F1000 businesses with international sites consider this functionality veryimportant in their efforts to re-engineer international business.

Integration and Workflow Automation

R/3 includes significant integration and workflow automation features that are used for process flowand manufacturing or financial integration.

Large Research And Development Expenditures

SAP continues to spend an average of 25% of its revenues for ongoing research and development.SAP continues to investigate new technology such as advanced communications and improved objectoriented programming tools.

SAP's Weaknesses

Shortage Of SAP Consultants

SAP acknowledges the shortage of qualified R/3 consultants, both inside and outside of the company.SAP is ramping up a significant training effort to qualify consultants for SAP sales and to providetraining for Logo and Implementation Partners. Some of the Platform Partners, particularly IBM andDigital, will use the internal consultants managing its R/3 implementation to provide externalconsulting services once the project is completed. In fact, both IBM and Digital report that theirconsultants will be very savvy in implementing R/3, having managed the process and pitfalls for theirown companies before driving external sales of R/3.

High Price Of R/3 And Associated Consulting And Implementation Costs

R/3 modules, customer support costs (15% of the software cost annually), and the expense of theoutside consultants and implementation partners can add up to an enormous project cost. Usersagree that the consultants can cost two to fifteen times the actual software or hardware expense.Many customers feel they are at the mercy of the SAP consultant partners, and tend to question thequality of the consulting compared to the cost of the services.

Long Implementation Cycle

Due to the need for some element of re-engineering, and the integration of the various modules, theimplementation of R/3 can range from six months to over two years. The long time frame for installing

R/3 can be attributed somewhat to what consultants call 'scope creep.' This is the ad hoc addition offeatures while the project is underway. Customers are very prone to asking for additional features,somewhat like a child in a candy store, without realizing the impact of new features on the cost or timeframe for the project.

Complex Software Environment And Implementation

R/3 is a very complex software application to implement. Most companies must re-engineer part oftheir information flows to accommodate the R/3 data fields. Clients or their consulting partners maydecide to change some of the data fields within R/3. However, customization of these data fields mustbe performed by a SAP Engineer, not the customer's in-house staff.

Need To Force Fit BPRE (Business Process Re-Engineering) To R/3 Data Fields


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R/3 data fields and modules are more structured than its competitors. This can be a problem forcustomers with unique requirements for information systems. Some customers like the additionalstructure, but they tend to fall into certain information technology scenarios. Those companies that aretransaction based, or use R/3 for manufacturing for example, find the R/3 structure can be veryefficient in their re-engineering efforts.

Pressure On Consultants To Provide Competitive Advantage Via BPRE

Virtually all of the high tech system providers are implementing R/3. SAP also has the largest marketshare of the competing MIS software vendors. With most of the competitors within a given industrygroup moving to R/3 environments, essentially creating a level playing field, customers must rely onthe outside re-engineering consultants to provide a competitive advantage through the newinformation flows. In a sense, the re-engineering and inherent advantage is only as good as thecustomer's consultant partner. This weakness is lessened by the customer satisfaction incentive forthe partners and direct sales force of SAP. SAP's hands off policy regarding specificrecommendations for the use of partners means that it can avoid direct blame for an ineffectualproject, but it also has limited control to correct any problems or mistakes in the consultingimplementation cycle.

Reliance On Outside Consultants For Re-Engineering And Implementation Services.

While SAP's reliance on partners for consulting and implementation does provide flexibility for thecustomers in picking who they want to work with, it also forces all SAP customers to go outside theirown firm for help in R/3 installations. Many resent this need for the use of very high priced consultinghelp.

Troublesome R/2 To R/3 Migration Path

SAP's R/2 user base will continue to be supported by SAP, but those moving to client/server platformsface an uphill battle in converting the previous R/2 data structures to something SAP's R/3 softwarecan use. The concern of the R/2 users is whether they will be left behind regarding featureenhancements and customer support needs.

Weak Marketing

SAP is about to begin a significant advertising effort. Up until now, SAP's marketing message hasbeen weak at best. SAP's sales are growing rapidly but more so through the recommendations of itspartners and a direct sales effort targeting the very largest multinational companies. One of therecommendations from Digital is that SAP needs to market the hardware and operating systemindependence of R/3. Further, Digital recommends SAP try to police the sales message from itsPlatform Partners; inaccurate or misleading sales messages are not corrected by SAP headquarters.Digital finds that the platform partners tend to muddy the waters regarding their relationship with SAP.

Not Addressing Smaller Businesses As A Potential Market

SAP's focus on the very large companies for its target market leaves a whole population of companiesthat still require the same re-engineering benefits, but are too small for the SAP direct sales or theLogo Partners to be considered a viable target for sales. According to an inside sales person at SAP,companies making $50-250 million a year could not get return phone calls from SAP sales.

SAP's Opportunities

Leverage Platform Partner's Channels For Heidleberg

SAP has yet to leverage its Platform Partner's distribution channels to increase sales. SAP's PlatformPartners sell to smaller businesses which are too small for its Logo Partners; however, they stillrequire similar re-engineering and consulting services. If SAP can determine a way to provide


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incentives and support to the Platform Partner's reseller/integrator channels, the company would haveaccess to new markets. SAP should keep in mind that these smaller businesses are usually in agrowth pattern, and will eventually become a future customer of SAP's Logo Partners.

Heidleberg Project

The Heidleberg Project is an easily configured and installed version of its R/3 software. SAP's goal isto provide a fully functional package that requires less consulting and implementation services toinstall. The company is targeting the Heidleberg Project for companies that are too small for the LogoPartners to service. The reseller channels of SAP's hardware partners would be a very appropriatemechanism to target the medium size firms that SAP's Logo Partners ignore. The potential problemwill be the perception of distribution channel conflict if specific sales incentives are used for resellers.At this time, a company in California has the Heidleberg Project up and running, due to the jointefforts of SAP and Digital. SAP is evaluating whether the Heidleberg Project would be an appropriateproduct for the reseller channels of its Platform Partners.

Target Medium To Small Size Businesses

SAP's focus on selling to only very large businesses can be viewed in some ways as a missedopportunity. While it makes sense to target the very largest customers, particularly in light of the useof its Logo Partners, there is a largely untapped market of smaller businesses that are facing the verysame competitive pressures, problems and concerns as the F1000 clients. SAP's challenge in thisregard is to find a way to efficiently sell to and support the smaller business without sacrificing itsmargin structure or ability to support the customer.

Target PDA And Mobile Users, Tie Into R/3 Environment

Myriad businesses are using mobile communications and Personal Digital Assistants for its outboundfield sales, remote offices and other uses. SAP is working on better integration of portable devices.This is clearly an opportunity for SAP to leverage new technology within its application modules.

Vertical Market Efforts, (Banking, Healthcare, Insurance)

SAP is specifically targeting vertical industries with its ICOE program and the enhancement ofmodules for Banking, Healthcare, and Insurance markets. This is a chance for SAP to build depth inits customer base and to leverage those partners with a particular vertical market expertise orcustomer base.

Promote Marketing Message Of R/3 Hardware And Operating System Independence

SAP has an opportunity to market its hardware and operating system independence, highlighting thevariety of choices for the customer. In doing so, SAP must make it clear that it is the customer's

choice of environments and consulting/implementation partners. "Have it your way."

Joint Marketing With Microsoft (SQL Server And Backoffice)

Microsoft will be promoting its SQL Server/R/3 compatibility. SAP will be able to garner more sales asMicrosoft uses SQL Server as a lever to drive sales for its BackOffice application suite. SQL Servercompatibility also provides increased compatibility with database architectures.

Intel Platforms

SAP is moving toward Intel-based platforms, currently certifying AST, AT&T, Sequent and Compaqsystems for R/3. As more Intel-based vendors certify their systems for R/3, SAP customers have more

choices at lower price points. Many of the smaller companies that would look at the HeidlebergProject are using Intel systems. Providing SAP software on Intel systems opens up a huge marketthat is still waiting for robust enterprise software.


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IBM AS/400 With PowerPC Chip

SAP's R/3 is now certified on AS/400 systems that use the PowerPC processor. This provides SAPwith a significant opportunity in selling to IBM's large AS/400 installed base. IBM's timing of thePowerPC processor availability and the certification of R/3 for those systems gives its customers moreoptions in developing an information infrastructure. IBM and SAP should be able to leverage this

captive audience with the promise of efficient MIS solutions, backed by IBM service and support.

SAP's Threats

Up And Coming Software Providers, In Particular BAAN

BAAN is targeting the same market as SAP's Heidleberg. BAAN does NOT want to target the verylargest firms, but finds a significant opportunity to sell to the rest of the F1000 companies that are toosmall for SAP's Logo Partners. BAAN has a clear marketing message that its software is easier toinstall and configure, highlighting the fact that its Trident information system software can becustomized by the user at any time as information needs and processes change. BAAN's message isthat companies are continually re-engineering, and they should be able to change the enterprise

information system at any point in time without the huge commitment to consultants and theassociated expense. BAAN is also evaluating how it can leverage the reseller/integration channels ofits partners.

MIS Software Providers Are Moving To The Desktop With Client/Server Architectures

Virtually all of the mainframe-based MIS software providers are developing PC-based softwarepackages. Most of the vendors provide UNIX and RISC-based packages, but all are slow to movetoward the Intel-based processors as a server environment. With the Pentium and future Intelprocessors becoming standard on server platforms, software providers with such compatibility willhave a significant marketing message for future sales.

Heidleberg Project Requires The Same Sales Effort But Offers Lower Margins

Heidleberg Project may create channel conflict if SAP drives sales through reseller/integratorchannels. One strategy SAP may use is to provide a prospective Heidleberg Project customer will aLetter of Understanding at the beginning of the sales cycle. This letter would outline the expectationsfor the customer including how much application/configuration consulting the customer can expect,how many demonstrations will be performed, and a time table for the sales process. SAP isattempting to drive sales for the lower margin Heidleberg but realizes the sales effort can be just asinvolved and time consuming as a sale of R/3 software.

Major Technological Change In Mainstream Computers.

Software vendors tie their fate to market forces such as hardware and network computing platforms.Although it seems unlikely, a shift in the core set of technologies used in providing enterprisesolutions will force a reinvestment of research and development funds as well as the time to marketpressure in developing applications for a new paradigm of computing.

Antitrust And International Legal Issues.

Given its use of independent partners, SAP America does not seem to be prone to antitrust actions inthe United States. However, SAP AG and SAP America's Global Account Executives must becognoscente of the potential for international political actions that may impact SAP's sales effort orinstalled base. SAP's multinational presence can be effected by nationalization efforts by a hostcountry, or the outbreak of war.

R/2 Installed Base Consider Other Vendors As They Move To Client/Server.


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With the problematic migration path for R/2 users, SAP runs the risk of this customer base evaluatingother information system software as they move to client/server architectures. Since the Logo andImplementation Partners are completely independent, they will recommend the best system for theircustomer needs. In this scenario, SAP's R/3 may not be the recommended environment.

Businesses In General Are More Cautious About Beginning BPRE Efforts

Many business are becoming more cautious about re-engineering efforts. Early adopters of the re-engineering concept have experienced many problems in the implementation and roll-out of a newinformation systems. Those businesses also find the increase in productivity or reduction in overheadexpenses is not what was expected. Negative press reports about the cost and implementation timeframe of re-engineering also causes business to reconsider such an extensive effort.

Peoplesoft Leveraging Its Human Resource Installed Base To Sell Full MIS Solution

PeopleSoft is well known for its Human Resource software and is now adding functional modules toits application suite. PeopleSoft's sales approach is to provide a specific pricing model that shows thetotal cost of the software, installation, and training. Customers that use the Human Resources module

from PeopleSoft will be very likely to add the other modules to fully integrate all aspects of theinformation system.

Appendices

Appendix A -Customer Lists By Industry

SAP Consumer Packaged Goods Customers

Anheuser Busch

Apple

Black and Decker

Borden

Brach Van Houten Holding

Bristol Myers Squibb

Casa Pedro Domecq

Cheeseborough Pond's

Colgate Palmolive

Con Agra Frozen Foods

Coors Brewing Company

CPC International

DowBrands, Inc.

Eveready Battery Company


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FoxMeyer

General Mills, Inc.

Georgia Pacific

Hill's Pet Nutrition

J.J. Heinz Company

Hunt Wesson Inc.

Imperial Tobacco Limited

James River Corp.

Keebler Company

Kraft General Foods

Mrs. Baird''s Bakeries

Nestle Beverage Company Nestle USA, Inc.

OSSRAM Sylvania

Philip Morris International

Philip Morris USA Polaroid Corporation

Procter & Gamble Company

Revlon Inc.

Schering-Plough HealthCare

Schwan's Sales Enterprises

SCIMED Life Systems

Schwans's Sales Ent.

Stouffer Food Corporation

Thomas J. Lipton

Unilever de Puerto Rico

Van den Bergh Foods Company

SAP Utility Customers

Centra Gas


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Cincinnati Gas & Electric

Manitoba Hydro

Nova Gas Transmission

Pacific Gas & Electric

Trans Canada Pipeline

Westcoast Energy Inc.

Wisconsin Electric Power

SAP R/3 Customer List for Oil & Gas

Alberta Energy

Amoco Corporation

Caltex Petroleum Corporation

Centra Gas

Cerdec Corporation

Chevron Corporation

Crown Petroleum Corporation

Exxon Company USA

Husky Oil Limited

Imperial Oil Limited

Mobil E&P (Nigeria)

Mobil Marketing & Ref

Nova Corporation of Alberta

Petro Canada Products

Petrotrin (Trinidad)

Schlumberger Oil Service

Shell Canada Limited

Shell Oil Company Inc.

Suburban Propane


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Suncor Inc.

Texaco Inc.

Westcoast Energy

SAP High Technology Customers Semiconductors

Analog Devices, Inc.

Applied Micro Circuits Corp.

Broooktree

Burr Brown Corp.

Chipcom Corp.

Intel Corp.

Fujitsu Compound Semiconductor

Kyocera International

Molex Inc.

Motorola Inc.

National SemiConductor

Rockwell International Corporation

Siliconix

SAP High Technology Customers Software

Adobe Systems

Autodesk, Inc.

FileNet Corp.

Informix Corp.

Landmark Graphics Corp.

Mentor Graphics

Micrografx Inc.

Appendix B

SAP Logo Partners


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Andersen Consulting

Cap Gemini America

Coopers & Lybrand

CSC Consulting

Dynamic Data Solutions

Ernst & Young

IBM Consulting Group

ICS Deloitte

KPMG Peat Marwick

Origin Technology

Price Waterhouse

Appendix C

SAP Technology Partners

Apple Computer, Inc.

Informix Software, Inc.

Microsoft Corporation

Oracle Corporation

Software AG

Appendix D

SAP Platform Partners

Apple

AT & T

Bull

Data General

Digital Equipment Corporation

Hewlett Packard

IBM


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Sequent

Siemens Nixdorf

Sun Microsystems

Appendix E

SAP CUSTOMERS IN INDIA

Automotive

Apollo Tyres

Hero Honda

Nissan Motor Co. Ltd.

Mahindra & Mahindra Ltd.

MRF

Volvo CE

Hwashin Co Ltd

Tata Motors

Consumer Products

HUL

Engineering, Construction & Operations

GMR Group

Hindustan Construction Company

Healthcare

Wockhard

Manufacturing,Oil and Gas

Jindal Steel

ONGC
http://www.sap.com/india/about/company/successes/pdfs/Apollo_Tyres.pdfhttp://www.sap.com/india/about/company/successes/pdfs/HeroHonda_ERP.pdfhttp://openpdf%28%27/solutions/business-suite/srm/pdf/CS_Nissan.pdf');http://openpdf%28%27/solutions/business-suite/scm/pdf/mahindra_50058287S.pdf');http://www.sap.com/india/about/company/successes/pdfs/MRF.pdfhttp://openpdf%28%27/solutions/business-suite/scm/pdf/volvo_50057614S.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Hwashin.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Tata_Motors.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Wockhard.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Wockhard.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Tata_Motors.pdf');http://openpdf%28%27/india/about/company/successes/pdfs/Hwashin.pdf');http://openpdf%28%27/solutions/business-suite/scm/pdf/volvo_50057614S.pdf');http://www.sap.com/india/about/company/successes/pdfs/MRF.pdfhttp://openpdf%28%27/solutions/business-suite/scm/pdf/mahindra_50058287S.pdf');http://openpdf%28%27/solutions/business-suite/srm/pdf/CS_Nissan.pdf');http://www.sap.com/india/about/company/successes/pdfs/HeroHonda_ERP.pdfhttp://www.sap.com/india/about/company/successes/pdfs/Apollo_Tyres.pdf


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Utility and Telecommunications

Suzlon Power

Reliance Infocomm ltd

this report outlines and analyzes the significant issues that surround the success of sap ag

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