The History And Evolution of SAP As A Company
SAP ERP is certainly not a new name in the market. It is an enterprise resource planning software that allows effective data processing and flow of information across different departments within an organization. SAP stands for Systems, Applications, and Products in Data Processing.
SAP holds a dominant place in more than 25 industries. This includes manufacturing, retail, financial services, HR services, public services, life sciences, consumer products, energy, and natural resources, to name a few. It can also handle the needs of common business processes such as sales & distribution, materials management, production planning, logistics execution, etc.
Since its establishment, SAP has been the world leader in the ERP Software industry and came up to become the third largest software company after Microsoft and Oracle in 2021.
The History Of SAP
It was in 1972 that five entrepreneurs and former IBM employees in Germany named Dietmar Hopp, Hasso Plattner, Hans-Werner Hector, Klaus Tschira, and Claus Wellenreuther, had a vision of the hidden business power of technology. They aimed at creating standard application software for real-time business processing. Beginning its journey with a single customer, the company began to cater to the demand of around 400,000 customers and continued to transform the IT industry. Let’s take a closer look at the company’s history that’s quite interesting to be aware of.
The founders of the company left their jobs at IBM and found a company called ‘Systemanalyse Programmentwicklung’ (meaning “system analysis program development”). The goal of this company was to create software that could integrate all business processes and make data available in real time.
With its headquarters in Weinheim, Germany, and an office in nearby Mannheim, the founders could still be found working a few miles away at the data center operated by their first customer, the German subsidiary of Imperial Chemical Industries.
Their hard work paid off towards the end of the year. The five entrepreneurs along with their two-strong workforce could complete materials, information, and accounting system known as “MIAS”.
The company launched its first financial accounting system – RF (“R” for “real-time”), the foundation for a modular system that later came to be known as “SAP R/1”. Software development and testing took place on customers’ mainframes at night and during weekends when no one was using them.
SAP R1 now had 40 reference customers. The development of purchasing software began at Thermal-Werke, a heat exchanger manufacturer. In 1975, SAP now had a familiar brand logo.
A new limited liability company was launched, trading as SAP GmbH Systeme, Anwendungen und Produkte in der Datenverarbeitun. In 1978, Asset Accounting (RA), which SAP used to build for insulation specialist Grünzweig+Hartmann, and Sales and Distribution (RV), which was commissioned by Thermal-Werke, reached its completion. In 1979, the company shifted its focus to developing SAP R2.
SAP R/2 was launched and was able to attain the same level of stability as its predecessor.
SAP celebrated its 10th anniversary with more than 250 customers across Austria, Germany, and Switzerland. The company also hired its 100th employee.
The German technology company ‘Heraeus’ became the first customer to install RM-PPS, SAP’s new module for production planning and control. The company continued to expand its office space. In 1984, the Swiss town of Biel became home to SAP’s first international subsidiary, SAP (Schweiz AG), and to SAP (International) AG, the hub from which SAP used to conduct its international business.
The employees now had access to four servers – three from IBM and one from Siemens along with 64 MB of main memory. Continuously expanding in size and revenue, the drive for standardization in software production, and the launch of the IBM Systems Application Architecture (SAA) motivated SAP to begin developing a new multiplatform-enabled generation of software: SAP R/3.
SAP began to go public gradually and became SAP AG, a publicly traded company. In two increments, it increased its capital stock from DM5 million to DM60 million. In October 1988, it got listed on the Frankfurt and Stuttgart exchanges, issuing 1.2 million bearer shares at DM750. Meanwhile, the company began to develop RIVA – a billing and administration system for utility companies.
With servers from IBM, Siemens, DEC, and Hewlett-Packard, and memory of 1,224MB, SAP launched a new user-friendly interface for SAP R/2, and new tools, such as the ABAP/4 programming environment. SAP R/3 began to take shape. In 1990, SAP invested DM135 million in the construction of a sales and development center, known initially as the “Entwicklungs- und Vertriebszentrum” (EVZ) – and now as “WDF01”.
SAP presented the first SAP R/3 applications at CeBIT in Hanover. The client-server concept, consistent graphical interface, dedicated use of relational databases, and support for servers from multiple vendors appealed to both SMEs as well as the subsidiaries of multinationals. SAP expanded its business across eastern Europe, signed a partnership agreement with Russia’s largest software company, ZPS, and also began to develop a Russian version of SAP R/2.
SAP released SAP R/3 in the market. In 1993, SAP worked along with Microsoft to port SAP R/3 to the Windows NT operating system. It was ported to Sun hardware, which enabled it to run on all relevant RISC platforms. A version of SAP R/3 was also delivered that supported kanji characters to the Japanese market.
In 1994, SAP R/3 System was released for Windows NT. In 1996, SAP launched a joint internet strategy with Microsoft. Customers were now able to connect online applications to their SAP R/3 systems. In 1997, the company celebrated its silver jubilee and SAP completed Release 4.0 of SAP R/3 and delivered it to pilot users at the end of the year.
It was a remarkable year for the company as it became one of the first German companies to sign the United Nations Global Compact announced by the organization’s Secretary-General. SAP became the world’s leading provider of e-business software solutions that integrated processes within and between companies. SAP Community also went live to provide its ecosystem and partners with a forum for communication and interaction that was “open” all day, every day.
SAP acquired TopTier, Israel’s market leader in this domain, and added enterprise portals to its solution portfolio. SAP also developed mySAP.com into a comprehensive technology for business applications and created an architecture to help companies integrate a wide variety of IT systems.
mySAP ERP was made available as part of the mySAP Business Suite, the company’s most comprehensive, flexible, and extendable ERP offering to date. In 2004, the company launched the first version of SAP NetWeaver, which enabled SAP to offer fast, open, and flexible business applications to support end-to-end business processes on SAP and non-SAP systems.
SAP launched SAP Business ByDesign, a product customized to the needs of small and midsized enterprises, and SAP’s first on-demand solution at a special event in New York City. In 2008, SAP completed its procurement of Business Objects, which made it the market leader in business software, enterprise performance management, and business intelligence.
SAP Business Suite 7, a software suite designed to help businesses optimize their performance and reduce IT costs, was unveiled at a launch event in New York City. In early May, the next-generation software suite was released to customers across the globe.
SAP planned to acquire Sybase for US$5.8 billion to make its business applications available to mobile users. Sybase is the California-based largest business software and service provider specializing in information management and mobile data services.
SAP HANA was launched, and customers could now analyze data in seconds. Its mobile-business applications also started to attract customers. In 2012, the company acquired Ariba to become the market leader in the B2B e-commerce segment and to deliver end-to-end cloud procurement solutions. SAP also acquired SuccessFactors in the same year.
The entire SAP Business Suite was moved to SAP HANA, and it became the fastest-growing product in the history of enterprise software. SAP acquired hybris, a well-known name in e-commerce technology. This acquisition made it capable of delivering the next-generation e-commerce platform, with the choice of on-premise or cloud deployment.
The next generation of enterprise software was launched with a new business suite, SAP S/4HANA, which was built entirely on the SAP HANA advanced in-memory platform. This launch was soon followed by SAP S/4HANA, cloud edition, giving customers the choice of combining on-premise and cloud solutions in a hybrid scenario.
Apple and SAP joined hands to combine powerful native apps for iPhone and iPad with the cutting-edge capabilities of the SAP HANA platform. Their joint effort aimed to deliver an SAP Cloud Platform SDK for iOS, along with a training academy to enable developers, partners, and customers to build native iOS apps on the SAP Cloud Platform, thus providing access to core data and business processes on SAP S/4HANA.
SAP launched its expanded SAP Leonardo, its digital innovation system. This system brought together differentiating software capabilities in machine learning, the Internet of Things (IoT), Big Data, analytics, and blockchain on the SAP Cloud Platform, together with SAP experience, deep process and industry knowledge, and advanced design thinking methodology.
Google and SAP announced a strategic co-innovation partnership aiming to make SAP HANA available on Google’s public cloud platform. This made SAP HANA available on the three largest public cloud platforms: Amazon AWS, Microsoft Azure, and Google Cloud Platform.
SAP launched a new suite of applications, called SAP C/4HANA, to help businesses serve and retain customers. Following its acquisition of market leaders hybris, Gigya, and CallidusCloud, SAP now ties solutions together to support all front-office functions, such as consumer data protection, marketing, commerce, sales, and customer service.
SAP announced a multiyear technology partnership with Intel to optimize Intel platforms for end-to-end SAP enterprise software applications, including SAP S/4HANA. Later, it also announced an extensive go-to-market partnership with Microsoft that began from conceptualization to sales. This partnership aimed to accelerate customer adoption of SAP S/4HANA and SAP Cloud Platform on Microsoft Azure.
SAP announced the industry cloud initiative at the SAPPHIRE NOW Reimagined online event. The industry cloud is the innovation platform and space where customers and partners build industry cloud solutions and applications complementing the intelligent suite built on the SAP Business Technology Platform.
SAP partners with Dediq GmbH, an investment company, to set up SAP Fioneer, to better serve the fast-changing banking and insurance sector. SAP announced its plans to set up the world’s largest e-commerce network – SAP Business Network, which brought together Ariba Network, SAP Logistics Business Network, and SAP Asset Intelligence Network.
The Future of SAP
SAP has solutions for different industries – retail, utilities, oil & gas, telecommunications, and healthcare, to name a few. But this does not limit its growth. Ever since its establishment, the company has continued to evolve and become one of the largest tech companies across the globe. No doubt, the company will continue to build solutions and change people’s lives for the better.