Review of Operations Review of SAP's Group Operations Research and Development RESEARCH AND DEVELOPMENT
RESOURCING R&D
Investing in R&D
We believe that in the medium term we must continuously
improve our portfolio of products if we are to maintain and
build on our current leading position as a vendor of business
software. R&D activities in 2006 centered on delivering
applications for the enterprise SOA road map, launching
new solutions for information workers, and enlarging our
offering for midsize companies.
Adjusted R&D expenses rose 20% to €1,287 million (2005: €1,071 million; 2004: €900 million). We spent 14% of total revenue (applying the adjusted measure) on R&D in 2006 (2005: 13%; 2004: 12%).
The importance of R&D was also reflected in the breakdown of employee profiles. In 2006, our total FTE headcount engaged in development work was 11,801 (2005: 10,215; 2004: 8,744). This is 30% of all Group employees and represents a 16% rise in the number of R&D employees since the previous year. Of the employees working in R&D, 52% (2005: 57%; 2004: 64%) are employed in Germany, 22% (2005: 18%; 2004: 12%) are in our high-growth development centers in China and India, and 26% (2005: 25%; 2004: 24%) are in our other development locations.
The expenses for R&D include employee salaries and
the cost of externally procured development services.
