Burda Digital Systems Generates New Revenue Streams with SAP® Solutions

Burda Digital Systems Selects SAP NetWeaver® as the Foundation for its Enterprise SOA Road Map; Goes Live in Half the Estimated Rollout Time

LAS VEGAS - December 04, 2006 - SAP AG (NYSE: SAP) today announced that Burda Digital Systems, the IT services arm of Hubert Burda Media, has successfully created a new business model to expand its revenue streams and reduce costs leveraging SAP® software and the IT flexibility of enterprise service-oriented architecture (enterprise SOA). The new model bundles the best-practice business processes cultivated over Burda Digital Systems’ 18-year history to offer them externally as standalone services, delivered via the service-enabled mySAP™ ERP 2005 application and the SAP NetWeaver® platform. Rolled out in half the estimated time, the enterprise SOA-based solution is already delivering benefits such as 20-percent cost reductions tapping business process synergies across the enterprise and seamlessly integrating SAP software with legacy applications and open-source offerings. The announcement was made at SAP’s fourth annual Analyst Summit, being held in Las Vegas, December 4-5.

Hubert Burda Media owns 260 magazines including the German editions of Elle, Playboy, InStyle, as well as many other German publications, and employs more than 7,200 people worldwide. In the highly competitive media industry, where traditional revenue generators such as print media are under increasing pressure, Hubert Burda Media was looking to expand its business model to generate new revenue streams.

“Our goal was to get this project off the ground immediately, and in our search for the right vendor to deliver enterprise SOA, SAP stood out as the clear choice,” said Gerhard Thomas, CEO, Burda Digital Systems. “With its service-enabled platform and clear SOA road map, no other vendor could deliver for us today. Enterprise SOA delivers the IT flexibility and innovation we needed to support Hubert Burda Media’s new business model and enable rapid business change to capitalize on new business opportunities. We are already seeing measurable business value with enterprise SOA and expect that will only increase over time.”

Business Model Innovation at Burda Digital Systems
The media industry has undergone significant transformation in recent years, during which sales of print magazines have decreased, the competitive landscape has become increasingly crowded, the print media distribution value chain has struggled for end-to-end process ownership and the future of the current distribution models has become uncertain. As the IT services arm of Hubert Burda Media, Burda Digital Systems has perfected best practices in media industry core processes, such as circulation, sales and distribution management.

Leveraging the flexibility of enterprise SOA, Burda Digital Systems decided to package these core business processes into marketable components matching the specific needs of diverse customers. Whereas this model of business task outsourcing (BTO) is being adopted by companies across all sectors looking to outsource administrative functions such as human capital management, the Burda Digital Systems model represents a unique offering covering media companies’ core processes such as circulation, sales and distribution management. Customers of Burda Digital Systems’ new BTO offerings can choose to outsource one or many of their processes to Burda Digital Systems.

Business Innovation by Design – Executing on Strategic Goals
In an initiative termed “Project VIS/4,” Burda Digital Systems designed three key IT strategic goals to support Hubert Burda Media’s overall business objective of generating new revenue streams: implementing new IT governance, driving operational excellence and enabling IT flexibility for new business models. The VIS/4 project delivered on its promise in half the estimated rollout time, specifically:

• IT governance: Gradual transition for users, breaking down information silos and boundaries and exposing process-oriented functionality via SOA.
• Operational excellence: Immediate cost reduction of 20 percent by process automation and improved data consistency, while improving efficiencies during a staggered deployment of end-to-end business processes.
• IT flexibility for new business models: Unlocked additional revenue opportunities by establishing new collaboration activities with BTO customers and delivered customer-specific flexible operational models for out-tasked process steps encapsulated via SOA.

SAP NetWeaver and mySAP ERP 2005 Enable Business Innovation and IT Flexibility
Burda Digital Systems is pursuing a synergistic strategy that has as its core SAP’s enterprise SOA-based platform, integrating SAP solutions with open source and non-SAP offerings seamlessly. For both its internal IT business and its new external customers, Burda Digital Systems is leveraging Web services built on the SAP NetWeaver platform to create composite applications, also referred to as “enterprise mashups.” These new composite applications pull data from various sources—SAP applications such as mySAP ERP 2005 as well as non-SAP legacy applications, open source offerings and homegrown systems —and deliver the information to the user via SAP NetWeaver® Portal.

Close Alignment of Business and IT as Basis for Innovation and Reducing Costs
“The key success factor for our project was a holistic change management approach covering processes, IT systems and organizational structures,” continued Thomas. “By implementing an enterprise SOA approach, we stopped focusing on systems functionality but started to discuss the design of process together with our lines of business.”

During the project, Burda Digital Systems’ role as IT arm changed significantly. It became a true partner for the Hubert Burda Media business, introducing innovations to decrease costs, free resources for additional business and enable offerings for new business areas. As a consequence of this first successful project, Hubert Burda Media has already defined four new projects to benefit widely from enterprise SOA.

“Burda Digital Systems is a clear example of the business value companies can achieve with enterprise SOA,” said Klaus Kreplin, executive vice president, SAP NetWeaver, Product and Technology Group, SAP. “Regardless of the industry, companies need flexibility to quickly maximize new business opportunities while optimizing existing IT investments. With SAP’s service-enabled platform and clear SOA road map, organizations can leverage the power of enterprise SOA today. We are seeing tremendous positive response from customers of all sizes across industries choosing to work with SAP to make their enterprise SOA vision a reality.”