Sap Analysis

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Individual Selected Case Analysis

SAP® AG

E-SOLUTIONS FOR THE NEW, NEW ECONOMY

Electronic Commerce

Management 671
Radford University
April 2001

Karl Zartarian
Individual Selected Case Analysis

SAP AG: E-SOLUTIONS FOR THE NEW, NEW ECONOMY

ContentsPage

I.INTRODUCTION3

II.DESCRIPTION OF THE COMPANY4

III. EVOLUTION OF THE E-BUSINESS PLATFORM6

IV. DESCRIPTION OF THE INDUSTRY8

V.ANALYSIS OF PORTER’S FIVE FORCES10

VI.STEEP AND SWOT ANALYSIS12

VII.BUSINESS MODEL16

VIII.TARGET MARKETS17

IX.COMPANY CORE COMPETENCIES18

X.COMPANY AND INDUSTRY FINANCIAL INFORMATION20

XI.KEY COMPANY CHALLENGES22

XII.PROBLEM STATEMENT23

XIII.STRATEGIES AND RECOMMENDED ACTIONS24

XIV.SUMMARY27

XV.REFERENCES28

INTRODUCTION

The Internet and e-commerce have changed industry and the way companies’ performances are measured. We have heard for the past decade, “The world is shrinking.” This has never been truer than in today’s economy. SAP is a company that is striving to provide e-business solutions in order to help companies become more profitable in today’s competitive and volatile environment.

SAP’s most recent marketing campaign states, “Every business is an e-business, or soon will be.” Companies communicate with each other through E-Commerce both internally and externally. The Internet has escalated this communication process by supplying a venue for communication on a real-time basis. SAP has re-invented itself from a provider of Enterprise Resource Planning (ERP) software, to a provider of e-business solutions to enhance efficiency and reduce costs.

When the “dot.com” fervor arrived, the fundamentals of evaluating a business were neglected. The focus was on potential earnings versus current profitability. Profit was an afterthought and investors and analysts could have been accused of being irresponsible. SAP stresses “The NEW, NEW ECONOMY” by placing the focus back on profitability, the traditional rules of business. Also, “Profitable growth is the yardstick. Companies must offer value to customers, present real barriers to competitors and deliver real profits to investors.”

The software industry is under pressure for growth. This has been exacerbated by the decline in the tech industry segment with which the software vendors are aligned. In order to successfully grow and meet investor expectations, these vendors must either change or become extinct.

SAP has taken significant steps to change with the economy and is ready to capitalize on its strategic vision. Recent financial reports reflect this. By utilizing their strengths and core competencies, as well as key strategic alliances, SAP is in as good a position as any software vendor in the industry for strong growth.

This case analysis will document SAP’s present situation, investigate the overall industry, discuss the challenges SAP faces, and provide recommended actions for the future.

DESCRIPTION OF THE COMPANY

SAP’s recent 20F SEC filing report best describes their company.

SAP is a leading provider of collaborative e-business solutions for the Internet economy. With its headquarters in Walldorf, Germany, SAP is the world's leading inter-enterprise software company and the world's third largest independent software supplier overall. SAP employs over 24,000 people in more than 50 countries. On December 31, 2000, SAP had more than 30,000 software installations at over 13,500 customers, and more than 10 million users all over the world. With more than 900 partners that offer complementary software, services and hardware, the Company has established a wide-ranging SAP partner system. The Company operates in three geographic regions, namely Europe, the Americas and Asia-Pacific. SAP has three lines of business operating segments: product, consulting and training. Certain subsets of the Company...
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