SAP Recent Developments
In 2018, SAP introduced a new sales, audit and pricing model for its Digital Access licensing policies addressing long-standing issues relating to how users should pay for indirect access to SAP software.
SAP M&A Activities
In April 2018, SAP acquired CallidusCloud, which is the No. 1 vendor for Sales Performance Management, continuing its expansion across different functional areas of Customer Relationship Management market. That follows its recent acquisition of Gigya for identity management, especially in helping customers tackle privacy concerns raised by the enactment of General Data Protection Regulation for privacy protection in Europe.
Ownership: Public - SAP : NYSE
Functional Market: Analytics and BI, Collaboration, Content Management, Customer Relationship Management, eCommerce, Enterprise Performance Management, ERP Financial Management, ERP Services and Operations Management, Human Capital Management, IT Service Management, Product LifeCycle Management and Engineering, Project Portfolio Management, Procurement, Sales Performance Management, Supply Chain Management, Treasury and Risk Management,
Key Verticals: Aerospace & Defense, Automotive, Banking and Financial Services, Communication, Construction and Real Estate, Consumer Packaged Goods, Distribution, Education, Government, Healthcare, Insurance, Leisure & Hospitality, Life Sciences, Manufacturing, Media, Non Profit, Oil and Gas, Professional Services, Retail, Transportation, Utility,
SAP Key Enterprise & Cloud Applications
Ariba Network: Sourcing, Procurement, & Finance, Concur Expense, Concur Invoice, Concur Travel, Fieldglass: Flexible Labor Management, SAP Business ByDesign (ERP for Midsize Business), SAP Business One Cloud (ERP for Small Business), SAP BusinessObjects Cloud for Analytics, SAP Hybris Cloud for Customer, SAP Hybris Cloud for Sales, SAP Hybris Cloud for Service, SAP Hybris Commerce, SAP Hybris Marketing, SAP Jam Collaboration, SAP Jam Communities, SAP SuccessFactors Employee Central, SuccessFactors Performance Management, SuccessFactors Recruiting
In April 2018, SAP acquired CallidusCloud, which is the No.
1 vendor for Sales Performance Management, continuing its expansion across different functional areas of Customer Relationship Management market.
SAP also introduced a new sales, audit and pricing model for its Digital Access licensing policies addressing long-standing issues relating to how users should pay for indirect access to SAP software.
SAP has built one of the most popular ERP products in the history of enterprise applications with widespread support from some of the biggest companies in the world.
For years they have entrusted SAP with their complex business processes that often involve the use of in-house systems that handle everything from financial management to production planning.
With the advent of Cloud Computing, these customers including HSBC, Nestle, and Siemens are following SAP as they migrate their internal systems to Cloud-based services like eCommerce, Recruiting, Sourcing, and more recently ERP from the vendor.
After consolidating its gains in the on-premise space, SAP has begun to replicate that success in Cloud delivery as well.
The acquisition of Concur for travel and expense management has extended its reach in the Cloud, adding millions of users along with the ones that it already picked up from Ariba, SuccessFactors, Fieldglass and Hybris.
The next phase of its growth will come from driving greater wallet share among its customers with S/4HANA, its next-generation ERP products, while upselling and cross-selling with Cloud products for dedicated purpose like Core HR or multiple functions like Business Network, which spans everything from contingent labor procurement to supplier relationship management.
In the second quarter of 2017, SAP signed 6,300 S/4 HANA customers, doubling the number since the beginning of 2016.
By the end of 2017, SAP expects to have 1,000 of these go-live S/4 HANA customers, paving the way to a critical mass of users actively running a new generation of applications for financial management, logistics as well as other mission-critical functions.
What’s more remarkable is the fact that some of them will be accessing S/4 HANA via the Cloud with implementations that take as little as four weeks, proving that ERP can be readily consumed as anything else in the Cloud.
Regardless of the delivery, the common thread of these implementations is the massive amounts of data that they generate and the insights that follow with the latest advances in artificial intelligence, machine-learning, Internet of Things as well as predictive analytics all coming together in the form of SAP Leonardo.
What customers can expect is to better harness different data sets that come across their SAP systems by turning to the SAP Leonardo system, which encompasses a range of technologies and services combined with design thinking workshops to put into practice innovative ideas like leveraging Blockchain as a ledger system for shipping containers because of its immutable characteristics.
SAP’s Digital Business Services can turn such use cases into prototypes in as little as six weeks, underscoring the fact that the vendor is wasting little time to bridge the systems that it has built for decades with those that are still on the drawing boards.
In June 2017, SAP opened its first Leonardo Center in Paris, followed by similar facilities in New York; São Leopoldo, Brazil; and Bangalore, India.
One of such Leonardo projects is Connected Coffee Machine, which enables Cafes Richards’ 160 technicians to remotely perform machine analytics or even repair or adjust coffee machines across its stores.
That sums up the ability of customers to pick up real-time signals from their SAP systems that ultimately allow them to save time and money, while delivering better user experience.
SAP Revenues, $M:
|Type/Year||2015||2016||YoY Growth, %|
|Total Revenues, $M||21883||23280||6.38%|
|Enterprise Applications Revenues, $M||13515||14596||8%|
|Cloud Applications Revenues, $M||2568||3235||25.97%|
* Enterprise Applications Revenues = License + Support & Maintenance + SaaS
** All revenue figures are estimates based on public records, Cloud and Non-Cloud business models in Apps Run The World's vendor database, and annual survey results including vendor feedback.
SAP Revenue Breakdown By Type, $M:
|Type||License||Services||Hardware||Support & Maintenance||SaaS|
|% of Total Revenues||13%||37.3%||0%||35.8%||13.9%|
SAP Enterprise Applications Revenues By Functional Markets, $M:
|Split by Functional MArkets||% of Total Revenues||2016 Enterprise Apps Revenues, By Functional Markets, $M|
|Analytics and BI||9%||1313.6|
|Customer Relationship Management||8%||1167.7|
|Enterprise Performance Management||3%||437.9|
|ERP Financial Management||28.95%||4225.5|
|ERP Services and Operations Management||9.5%||1386.6|
|Human Capital Management||11.65%||1700|
|IT Service Management||0.3%||43.8|
|Project Portfolio Management||1%||146|
|Sales Performance Management||0.3%||43.8|
|Supply Chain Management||10%||1459.6|
|Treasury and Risk Management||1%||146|
SAP Enterprise Applications Revenues By Verticals, $M:
|Split by Verticals||% of Total Revenues||2016 Enterprise Apps Revenues, By Verticals, $M|
|Aerospace & Defense||1%||146|
|Banking and Financial Services||9%||1313.6|
|Construction and Real Estate||2%||291.9|
|Consumer Packaged Goods||10%||1459.6|
|Leisure & Hospitality||1%||146|
|Non Profit||1%||146||Oil and Gas||12%||1751.5||Professional Services||4%||583.8||Retail||4%||583.8||Transportation||4%||583.8||Utility||2%||291.9|
SAP Revenues By Region, $M
|Region||% of Total Revenues||2016 Total Revenues, $M||2016 Enterprise Applications Revenues, $M||2016 Cloud Applications Revenues, $M|
SAP Direct vs Indirect sales
|Region||Direct Sales||Indirect Sales||Total|
No. of Customers: 253000
No. of Enterprise Applications Customers: 253000
No. of Cloud Customers: 30000
No. of Cloud Subscribers: 50 million
SAP has more than 335,000 customers including 87,000 core customers that have been running its enterprise applications.
The 248,000 figure also contains many of the customers served by its indirect channels covering products like All In One, Business One and Business ByDesign.
On the Cloud side, SAP has more than 30,000 customers running its travel and expense management applications.
Concur has grown steadily since becoming part of SAP.
Some of its newer products like Concur Invoice has picked up 2,000 plus customers doubling its growth in the small and medium business segment while achieving 50% increase in sales to enterprise accounts in 2016.
Concur TripLink for tracking itineraries has more than 8,000 customers in 2016, compared with 5,000 in 2015.
SuccessFactors for Human Capital Management now has more than 6,200 customers with more than 100 million users around the world.
SuccessFactors Employee Central for Core HR has nearly doubled its base to more than 1,800 in the second quarter of 2017 from about 1,000 at the end of 2015.
With recent management changes that consolidated the Cloud group under Robert Enslin, while promoting Jennifer Morgan and Adaire Fox-Martin to the executive board with broader sales responsibilities, SAP is taking a more concerted effort to drive more synergy across its product lines.
While there are sales teams dedicated to individual Cloud applications, SAP is also empowering its field operations to take a holistic approach in pitching its extensive product portfolio to the right customers.
SAP’s near-term opportunities revolve around the S/4 HANA, its latest ERP applications suite that have matched and exceeded the product scope of its predecessor ECC.
Over the past two years, S/4 HANA has made available such modules as warehouse management and constraint planning.
That followed the delivery of such features as production planning, sales and distribution, procurement and inventory management, along with a new general ledger.
Not only is SAP capable of providing existing SAP ERP users with like-for-like features in S/4 HANA to ensure consistency and continuity on how business processes would be handled, the increased scope of S/4 HANA is the impetus to attract net new customers, whose makeup now approaches nearly half of 400 to 500 S/4 HANA customers that the vendor typically signs up in a quarter.
Cloud delivery of S/4 HANA will become more widespread in the coming years, complementing an array of well-established SAP applications like Business Planning and Consolidation that have been extended to S/4 HANA Cloud.
Other near-term opportunities will involve the latest enhancements in machine learning, artificial intelligence as well as predictive analytics all leveraging SAP Leonardo.
SAP estimates that it will be able to ship about 20 machine-learning applications in 2017 and 50 next year.
On the heels of opening SAP Leonardo Innovation Center in multiple cities around the world, the vendor aims to accelerate the development of such machine-learning applications with perhaps hundreds of them from its customers.
For the time being, the scaling out of SAP Leonardo is predicated on how quickly its professional services organization can co-innovate and templatize AI use cases with a large number of customers.
Trenitalia, for example, is incorporating machine learning into scheduled maintenance work for some 30,000 trains, all of which are already part of the SAP ERP systems that it runs.
The use of such tools based on SAP Leonardo for predictive asset maintenance could help the Italian train operator cut its maintenance costs by up to 10%.
Not every SAP customer will embrace new tools with gusto.
Some of them may take three to five years before they migrate from ECC to S/4 HANA because of their complex system landscape and unique requirements.
The challenge is to help these customers mitigate their risks, while offering them more compelling reasons than ever to stick to SAP because of its robust ERP platform accentuated by promising technologies like Leonardo.
For more than a decade, SAP has invested heavily in improving its user experience culminating in the 2013 introduction of Fiori that aims to fundamentally change how its applications are being developed, presented, and consumed.
The goal is to not only cement SAP’s reputation as a world-class enterprise applications vendor with hundreds of millions of users, but also one whose products are simple to build and intuitive to use.
The design thinking has been part of the evolution of the technology marketplace ever since Steve Jobs made Apple a colossal success by essentially reducing a supercomputer into a form factor of a mobile phone, yet making it easy to use with a smartly-designed touch screen.
SAP Fiori was meant to be the equivalent of that touch screen for its many applications, guiding users through different processes like workflow approvals, drill-down menus and self-service tasks.
Through the years, SAP has added new components such as Datango for end-user training, which along with SAP Workforce Performance Builder(WPB) has been renamed SAP Enable Now.
More recently, SAP has added Co-Pilot, a digital assistant designed to boost user experience for S/4 HANA users.
All these tools are designed to get SAP users up to speed faster through a combination of eLearning, collaboration, knowledge transfer and digital performance support technologies.
Against that backdrop is a growing number of digital performance support products like Ancile and WalkMe that have made a good living selling their walk-through navigation tools that sit on top of SAP applications as well as those from its rivals.
If SAP Fiori succeeds in enhancing the user experience and making its products simple to use, there’s really no need for such digital performance support tools.
Alternatively, the same argument can apply to the more products SAP offers, the greater investment dollars that it has to make to ensure that its applications sport a unified look and feel and they are all designed to be extremely easy to use.
On the former, it could take a while before the uniform look and feel will cover its many products.
For instance, Concur, which was acquired by SAP in December 2014, has not adopted Fiori.
On the latter, the bar for usability is being raised constantly and not even Apple can claim that it has the most intuitive user-interface given the growing popularity of voice assistants like Alexa from Amazon.
As SAP plans to incorporate artificial intelligence into many of its products, the mixed results of Fiori suggest that its future may depend on getting the user experience right because of the high stakes involved in not just sustaining the interests of its customers, but keeping them engaged for life.
SAP’s ecosystem continues to grow covering more than 13,000 partners around the world.
In 2017, SAP strengthened its partnership with Google with additional certification of SAP technology and applications including SAP Netweaver and S/4 HANA on Google Cloud Platform.
Similarly SAP has reaffirmed its alliances with a range of major vendors including Dell over the past year.
The ecosystem is expected to expand further as more ISVs start realizing the value of the SAP Cloud Platform, formerly SAP HANA Cloud Platform.
The name change underscores SAP’s aligning its future with its entire product portfolio, not just the SAP HANA database.
With increased emphasis on add-on products like Altiscale(acquired in 2016 for its Big Data As A Service ofrerings based on Hadoop and Spark) as well as the Leonardo Innovation Services from SAP and its partners, the SAP Cloud Platform already features more than 1,000 applications from SAP as well as intellectual property from over 600 partners all vying to bank on a technology-agnostic platform as a service.
Unlike ISVs that pin their future on a single cloud infrastructure like Amazon Web Services, Azure or IBM, SAP’s PaaS strategy is to support different clouds in order to cater to the diverse needs of its customers.
What’s equally compelling is the co-innovation work that SAP is involved in with customers like Schindler, the elevator manufacturer, to put mission-critical business data to work as part of SAP Business Data Network.
The result is to reimagine the growth potential of SAP through the lenses of companies like Schindler.
Subscribing to the network allows Schindler and other companies to extend their reach to partners and customers all benefiting from some kind of SAP products including white-label apps to make sense of ERP data as well as financial transactions needed to keep their business running on a real-time basis.
If that pans out, the SAP ecosystem will be able to support not just hundreds of thousands of customers, but millions of them.
The SAP ecosystem will cover not just its partners, but many communities that it serves.
SAP has stepped up its investment in emerging regions like Africa Code Week where it sponsors boot camps and coding workshops targeting half a million youngsters in 35 countries.
Then there is its outreach programs by hiring as many as 850 autistic adults by 2020.
All of these underscore the fact that SAP is not just looking after its own interest, but also scaling out its ecosystem to connect the haves and have-nots.
That perhaps is the ambition of SAP as it aims to convert more nonusers and nonbelievers than ever to become part of its ecosystem with a combination of advanced technologies and good deeds.
SAP Cloud Infrastructure InsightsIBM Cloud, Amazon AWS, Microsoft Azure, NTT/Dimension Data Cloud Platform, Google Cloud Platform, Dimension Data
Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.
Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).
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