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Business at SAP
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A successful year for SAP
SAP enjoyed a successful 2004 although, as in 2003, the trend
on the foreign exchanges was disadvantageous to the Company
and competition in SAP’s segment remained fierce. Key success
factors included strong software sales, the expanded product
offering, the progress on the Company’s open integration and
application platform, and the upsurge in channel partnership
signings.
- SAP met, and in some cases even exceeded, the operational
goals it had formulated at the beginning of 2004. In 2004,
SAP posted a 10 % year-on-year rise in software revenue – the
first time license sales had improved since 2001 – and fulfilled
its own forecast exactly. Total revenue also grew significantly
for the first time since 2001. This was accompanied by a rise
in operating margin: As SAP forecast, it rose one percentage
point. Pro-forma earnings per share increased to €4.37, above
SAP’s target range of €4.20 to €4.30. SAP succeeded here
even though gains by the euro against the U.S. dollar in 2004
reduced the recorded value of revenue earned in dollars.
Following its 20 % loss against the euro in 2003, the U.S. dollar
declined approximately 10 % against the euro in 2004.
- SAP fortified its market position in 2004. The Company’s
own analysis indicates that it won 56 % (2003: 53 %) of the
business software license space that it contests with its peers.
The peer group is defined as Oracle Corp. and PeopleSoft,
Inc. (which are currently merging), Siebel Systems, Inc., the
relevant business units of Microsoft Corp., and SAP.
- Driving forward SAP NetWeaver was a central plank in
strategy. The Company successfully pushed development
forward to general release and synchronized all of the technology
platform’s components in a total package, winning
some 1,500 reference customers and more than 2,000 partners.
SAP NetWeaver is an open platform and is the technical
foundation for mySAP Business Suite solutions and
packaged composite applications known as SAP xApps. With
SAP NetWeaver, companies can flexibly implement, execute,
and improve their business processes. Moreover, SAP
NetWeaver is the technology platform for Enterprise Services
Architecture, SAP’s blueprint for solutions aligned to Webservice
standards.
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SAP completed preparations for the general availability of the
successor to SAP R/3 – mySAP ERP – and shipped it to some
1,300 customers. From 2005, mySAP ERP will be available to
all customers. Powered by SAP NetWeaver, mySAP ERP
combines complete, scalable software for enterprise resource
planning (ERP) with a flexible, open technology platform.
- The Company’s investment in extending its small and midsize
business (SMB) solutions is increasingly bearing fruit.
In the SMB segment in 2004, it achieved above-average software
revenue growth and strengthened its market position.
Moreover, SAP announced the specification of the new
SAP Business One version and increased the number of
customers and partners.
- The Company concluded key contracts with a number of
customers in 2004. The United States Postal Service (USPS),
which is the largest postal organization in the world, will
manage its human capital resources using mySAP Business
Suite. The aim is to improve personnel planning and
management, and the related administrative processes, and
achieve better customer satisfaction.
PepsiCo, Inc., a leading
food and beverage company, has selected mySAP Business
Suite to streamline its demand and requirement planning,
supply-chain management, inventory, and distribution
processes.
PepsiCo requires a single, integrated process linking supply chain and inventory with customer-facing activities.
- To give its customers the timeframe and cost information
that they need to plan their software maintenance and
upgrade projects, SAP announced in 2004 the “5-1-2” release
and maintenance strategy. This strategy offers customers five
years of mainstream maintenance for SAP solutions at the
standard maintenance fee, followed by one year of extended
maintenance at a 2 %-higher fee, and then the option of
two more years at a 4 %-higher fee. After these eight years,
customer-specific maintenance begins, which, with a few
exceptions, comprises the same range of services.
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