Essay regarding SAP AG 2006

SAP AG 2006

CASE: SM-153

TIME: 08/08/06

SAP AG IN 2006:


Success can be sexy. It can technique us into focusing as well rigidly on long-established patterns of thought. That's why it is often so attractive to reuse yesterday's suggestions to form the recommendations and dogmas of the next day. I hope that individuals can use the proper vision and strategy to avoid this pitfall. вЋЇHenning Kagermann, CEO, SYSTEMS APPLICATIONS AND PRODUCTS AG


On a windy April nighttime in Walldorf, Germany, Henning Kagermann had taken a sip of his tea and picked up the 60-page record lying in the desk. A few months earlier, Kagermann, CEO of SAP AG, had requested his Corporate and business Strategy Group with organizing a strategic evaluation, informally nicknamed the " Sun-Tzu document” in deference to the famous Chinese basic. It defined the tactical opportunities and challenges that SAP should expect to face between 06\ and 2010, and evaluated the existing forces surrounding the organization software market in 2006: scientific change, loan consolidation, and shifting customer requires. Kagermann presumed that appearing Internet-based technology and specifications known collectively as " Web services” soon would transform the $79. almost eight billion venture software applications industry, in which SYSTEMS APPLICATIONS AND PRODUCTS held the primary market placement. 1 Though sales of SAP's existing products acquired begun to rebound in 2004 after a multi-year slow down, Kagermann had committed SAP to deploy new Web services-based technology on a massive scale right at the end of 2007. (See Show 1 for an overview of SAP's monetary performance. ) He also had declared several expansion initiatives that hinged on the implementation of SAP's lately defined Net services strategy, which was based upon a construction SAP referred to as the Business Services Structures 1

" Worldwide Organization Applications 2006-2010 Forecast, ” IDC, #201791, May 2006. Figure denotes 2006 estimated worldwide marketplace size based upon software certificate, maintenance, and subscription earnings but eliminating consulting, support, and training revenues. SYSTEMS APPLICATIONS AND PRODUCTS leadership situation determined by evaluating SAP's june 2006 enterprise applications software earnings to competitors Oracle and Microsoft. Thomas R. Federico prepared this case under the direction of Mentor Robert A. Burgelman while the basis to get class discussion rather than to demonstrate either powerful or inadequate handling of an administrative scenario. The creators extend their particular deepest appreciation to Ms. Anamarie Vergel Franc and Mr. Conrad Voorsanger of the SAP AG Corporate Talking to Team and their administrative personnel for their assistance and logistical support. Copyright laws В© 06\ by the Table of Wholesale real estate flipper of the Leland Stanford Jr . University. Almost all rights set aside. To purchase copies or perhaps request permission to duplicate materials, e-mail the Case Composing Office in: [email protected] stanford. edu or write: Circumstance Writing Workplace, Stanford Graduate School of Business, 518 Memorial Approach, Stanford University or college, Stanford, CA 94305-5015. Simply no part of this publication might be reproduced, trapped in a retrieval system, found in a spreadsheet, or transmitted in any contact form or in any respect –– electric, mechanical, copying, recording, or perhaps –– with no permission with the Stanford Graduate School of Business.

SYSTEMS APPLICATIONS AND PRODUCTS AG in 2006: Driving Corporate and business Transformation SM-153

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(ESA). As he flipped through the report, Kagermann reflected upon the sweeping internal change that SAP still required to complete in order to achieve his stated goals. In addition to requiring an expensive research and development efforts, capitalizing on SAP's new growth initiatives necessary far-reaching transform that would test the very main of the company: its command, its tradition, its principles, its techniques. On the one hand, Kagermann felt self-confident that SAP eventually will make the adjustments necessary to prolong its financial success in a future focused by Net services; the business had weathered several technology and industry cycles above its 33-year history. On...