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SAP

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by

Toms Mikoss

on 1 April 2014

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Transcript of SAP

by Agnija, Agris, Līga, Mārtiņš, Toms
what's SAP?
who?
A
multi-national
company
Founded in
Germany
65+ thousand
employees
16+ billion
€ yearly
revenue
Got there mainly via
organic growth
Acquired 57
other companies
what?
Enterprise Resource Planning (
ERP
)
Customer Relationship Management (
CRM
)
Product Lifecycle Management (
PLM
)
Supply Chain Management (
SCM
)
Supplier Relationship Management (
SRM
)
for whom?
Traditionally focused on the
REALLY BIG
companies

Recently started serving
Small and Medium Enterprises (
SMEs
)
history
1972
established
1973
SAP RF (R/1)
1981
200 customers
SAP R/2
first trade show
1984
163 employees
first international office
1988
940 employees
1000 clients
company goes public
1992
3157 employees
50% international revenue
SAP R/3
1996
first online solutions
Coca-Cola as client
1998
19000 employees
traded in NYSE
1999
mySAP.com
2005
25000 customers
35000 employees
120 countries
2009
economic crisis
job cuts
2011
crisis recovery
present day in case
The Market
Rivalry
HIGH
Barriers to Entry
Threat of Substitutes
Bargaining power of buyers
Bargaining Power of Suppliers/ Partners
Major:
Microsoft & Oracle
Minor:
Start-ups
LOW
Dot.com Bubble
More flexible start-ups
HIGH
Core functions varies little among products
Continuous need for improvements
Customer can choose cheapest
There are some switching costs
MEDIUM / HIGH
MEDIUM
Partnerships are mutually beneficial
Fierce talent head-haunting
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
PEST ANALYSIS
PORTER'S 5 FORCES
DOT.COM bubble
(late 90s - early 00s)

Recession
(early 00s)
Growing
SME
business
Technological leaps for all businesses
(also for competitors)
Offshore outsourcing is acceptable
(India)
Web solutions becomes standard
Offshore outsourcing is convenient
(India)
Hostile takeovers to consolidate the market
The Company
- First goes public in 1988 on the Frankfurt stock exchange
- Currently the price is 59 EUR
Product Strength
Customer Loyalty
Market share
Low Selling Costs
Experience Curve for Pricing
Use of Life Cycle
Investment in R&D
Advantage of Growth Potential
Supplier Strength
Low Customer Concentration

DIMENSION
LOW
MEDIUM
HIGH
INTERNAL ANALYSIS
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
Highly saturated market
Disruptive innovation from competitors
Offshore & Nearshore labour
New products & acquisitions to further reduce RnD
New partnerships
Continuous innovation
Open Standards
Strong core knowledge
- Revenue increased almost 4 times in last 15 years
- Decrease in 2003 due to growing strength of EUR (if currency effects excluded: +3%)
- The global financial crisis has impact on SAP revenues in 2009
- In 2010 two-digit growth
- The revenue growth in 2011 is due primarily to an increase in software revenue and an increase in support revenue
- Expenses increased 3,6 times vs. 4x revenue increase in last 15 years
- In 2003 SAP reduced expenses on 3rd party software licenses; used fewer 3rd party services, reduced labor costs, etc.
- Reduction in 2011 is due primarily to the reduction of the TomorrowNow litigation provision which increased expenses in 2010
PRODUCT
STRATEGY
Matrix structure
Offshore workers
Growing market share
Strategic partnerships
Superior BI product
Customer responsiveness
Hard to adjust to SME needs
Costly RnD
PRODUCT
STRATEGY
High overhead expenses
Multiple failed org. struct.
SWOT ANALYSIS
Alternatives
"on device" SAP solutions
Application based SAP
Deeper customization
dynamic business demands
dynamic decisions
clients need
latest data
to make
best decisions
smartphones
are everywhere, tablets
are on the rise
cloud computing
is the future
invest in mobile,
real time
data management
and
analysis platform
on the cloud
Yes, can.
questions?
The Finances
Can
remain the market leader?
- Increase in 2003 mainly due to cost savings
- Increase in 2006 due to tax matters (effective tax rate 30%)
- Significant increase in 2011 resulted from the litigation (with Oracle concerning TomorrowNow)
- Highest price in March 2000 - 71 EUR
- In October 2002 the price decreased to 10 EUR
Full transcript