Many CEOs have told us that business transformation needs to be done effectively and efficiently, without much disruption to the business. And it should be a continuous process, not a one-time event. Continuous business transformation, accomplished over time, requires a new degree of flexibility and adaptability in all parts of the enterprise. So how do you get ready to change and continue to change?

1. SAP INSIGHT
TOP TEN REASONS
CUSTOMERS
CHOOSE SAP FOR
BUSINESS
TRANSFORMATION

2. Table of Contents
CEO Notes 1
#1: Undisputed Market Leadership 4
#2: Primary Focus on Enterprise Applications 6
#3: Relentless Focus on Customer Value 7
#4: Deep Industry Capabilities 10
#5: Commitment to Quality 12
#6: Focus on Customer Satisfaction 13
#7: Superior Technology Architecture 14
#8: Clear Long Term Vision 15
#9: Strong Partner Ecosystem 18
#10: Safe Choice in an Uncertain Landscape 19
Conclusion 21

3. TOP TEN REASONS
CUSTOMERS
CHOOSE SAP FOR
BUSINESS
TRANSFORMATION
by Chakib Bouhdary & Alok Goyal

5. CEO NOTES
SAP is a customer-focused company. That's why SAP Because of this shift in customer needs, SAP
has grown organically, while other enterprise changed its approach to technology and developed
software companies have shrunk or stagnated. Even Enterprise Services Architecture® (ESA), the SAP
though these competitors believed they understood blueprint for a service-oriented architecture. ESA is
their customers, in reality, SAP knows its customers as flexible and adaptable as the companies must be.
better than anyone else. SAP has been the global SAP created ESA to allow companies to minimize
leader in enterprise applications, designing products the negative aspects of their IT complexity while
and services to meet the needs of enterprises, for 32 maximizing the capacity of their legacy systems,
years. More important, during each phase of the allowing them to integrate with one another and
technological evolution that has occurred over with those of suppliers and customers. More
those three decades, SAP has changed its approach, important, ESA will allow companies to develop
added capabilities, and simply did what it took to new composite applications that will provide a
meet customer needs and demands and continue to source of competitive advantage. In short, because
succeed. of customers - and working with them - SAP has
changed its technological approach time and time
For example, companies around the world now
again, accommodating new demands to make sure
realize they must transform their business in several
SAP customers are best-run businesses - which has
different ways:
led directly to global market leadership.
To compete in a global market;
To meet customer demands and needs more THE LOGICAL FALL-OUT
effectively than the competition;
Of course, any market leader will be criticized by
To innovate more quickly and efficiently than
those who aspire to lead and cannot. And SAP has
ever before;
been criticized by those who do not understand the
To continually develop products and services
source of its customer value proposition. To answer
with high quality as a given; and, those critics, and to bring together the best
To comply with a new spirit of government arguments to support the assertion that SAP is a
regulation. customer's company, SAP has researched the top
Most important, CEOs believe such transformation ten reasons why customers choose SAP for business
should be continual - not one time, but over time, transformation. To summarize, our research found
thereby requiring a new degree of flexibility and that companies choose SAP because of the following
adaptability for all parts of the enterprise. attributes:
SAP is a customer-focused company. That's why SAP
has grown organically, while other enterprise
software companies have shrunk or stagnated.
1
Beaudry, Anne, Pinsonneault, Alain. A decade of IT research has proven “the importance of an individual user's perception of an IT event in managing adaptation efforts …
(underscoring) the need for managers to understand how users appraise an IT event and to appreciate the importance of providing users with adequate resources so that they
can adapt to it.” P. 17, “Understanding user responses to information technology: A coping model of user adaptation,” MIS Quarterly, September 2005, Vol. 29, Issue 3.
1

6. 1. Market leadership: Well over 30,000 companies created industry-specific solutions for more than
use SAP in more than 120 countries. SAP is the 25 industries.
undisputed leader in the enterprise applications
5. Quality: SAP has a long-term commitment to
market.
ensuring the quality of its business software. SAP
2. Focus: Enterprise applications are 100% of SAP's was ISO 9001-certified in 1994.2 In 2002, a study by
business. It is all we do. Our major competitors the U.S. National Institute for Standards and
are much less focused. Oracle's application Technology estimated the cost of software bugs
business represents 24% of its revenue and only to U.S. businesses at US $60 billion a year; in 2003,
12.5% of its profits. the Standish Group estimated that only 34% of
software projects are on time and within budget.3
3. Customer value: The SAP approach specifically
Yet SAP, understanding the negative impact of
focuses on the value that a customer
these slippages on businesses, has worked to
organization needs from SAP products and
maintain world-class standards of quality and
services in all respects - from the strategy that
productivity. SAP shipped the mySAP™ ERP
begins the process to the end user, whose
solution one month early. By contrast, Oracle 11i
understanding and appreciation of the specific
was shipped four years later than originally
benefits of the system are the only way to ensure
anticipated.
the achievement of the strategic goals.1 The proof
of SAP's enduring customer value focus can be 6. Customer satisfaction: The numbers tell the
shown in its continuing attraction of new story: customer loyalty continues to increase.
customers and retention of existing ones. After Customer likelihood to implement SAP solutions
all, 30% of SAP's order entries come from new in the future has increased 10% from 2002 to 2005.
customers and a full 70% from existing Moreover, and perhaps more important,
customers. Just as important, new customers customer advocacy has increased. In North
have contributed 36% of contracts in 2005, America, customer likelihood to recommend
compared to 32% last year. SAP increased by 12% from 2002 to 2005.4
4. Industry depth: SAP penetration is greater than 7. Superior technology: SAP invests more in
50% in every one of the industries represented by R & D than any of its competitors. SAP has more
the Global 500 companies. The company has than 10,000 developers focused on driving
Customer likelihood to implement SAP solutions in
the future has increased 10% from 2002 to 2005.
Moreover, and perhaps more important, customer
advocacy has increased. In North America, customer
likelihood to recommend SAP increased by 12% from
2002 to 2005.4
2
ISO 9000 is the most prominent standard in the world for ensuring manufacturing quality.
3
Davenport, Thomas, “The Coming Commoditization of Processes,” Harvard Business Review, May, 2001.
4
SAP America customer satisfaction survey.
2

7. innovation through the SAP product line. SAP customers by providing complementary
product capabilities and broader access to SAP
8. Clear vision of innovation: SAP has always had
consultants.
a clear vision for its technology based on a
strategy setting defined goals for true innovation. 10. Stability: One reason why customers choose
Already, SAP generates more than 50% of its SAP solutions is that SAP offers a safe and stable
business with solutions that were new to the option amidst an industry turmoil, perhaps best
market in the last five years; moreover, SAP will characterized by Oracle's long drawn-out
generate more than 50% of its business five years acquisition battle with PeopleSoft and its
from now with new solutions. It is this type of continued focus on M&A-led strategy, as most
dedication to innovation that has made SAP a recently illustrated by the proposed merger with
pioneer through technology transitions - and Siebel. As Enterprise Applications Consulting
SAP's dedication to its customers that has helped (EAS) has found in detailed research of the
guide them through those transitions, from PeopleSoft merger, “the results of a prolonged
mainframe (SAP R/2®) to client server (SAP R/3®) hostile resistance to a hostile takeover attempt
to service-oriented architecture (ESA). In the [can have a far greater negative impact] with
current evolution to a service-oriented respect to customers of both the acquired and
architecture, SAP will develop greater levels of acquiring company.”5 After all, it is the
collaboration with industry-leading companies customers who risk their business and operating
such as Microsoft and Adobe. These partnerships profits, as opposed to the small share of profits
are essential, because the process is inherently that come from Oracle's applications business.
more open and because ESA is based on adding
This SAP Insight provides further evidence and
more capabilities to business processes as they
explanation for each of these attributes. We hope
evolve into new processes as a source of
that the frank discussion will be useful as you make
competitive advantage.
important technology investment decisions
9. Vast partner network: SAP has developed a affecting the future of your company.
strong, loyal, and unparalleled partner
ecosystem. These partners range from
technology companies to professional services
organizations. Partners enhance the value for
Already, SAP generates more than 50% of its
business with solutions that were new to the market
in the last five years; moreover, SAP will generate
more than 50% of its business five years from now
with new solutions.
5
Greenbaum, Joshua, p. 3, “Hostile Takeovers, Hostile Resistance, and Customer Choice: An Impact Analysis of the PeopleSoft Takeover by Oracle Corp,” Enterprise
Applications Consulting, Spring 2005.
3

8. 1 UNDISPUTED MARKET LEADERSHIP
SAP is the undisputed leader in the enterprise An expanding role as market leader in every
applications market, providing the scale, major function and geography. Historically, SAP
experience, and ecosystem required to was only considered the strongest in enterprise
continually create and increase customer value. resource planning - the “ERP leader.” Today,
SAP's leadership within every major functional however, SAP leads in almost every major functional
area allows companies to enjoy best-of-breed market. SAP's leadership in supply chain
capabilities in an integrated suite. Further, management (SCM) rivals its leadership in ERP.
continued leadership lowers customer Even in customer relationship management (CRM),
investment risk; SAP will continue to invest in SAP has more relative market share than Siebel.7
its customers' success. Finally, the company is Also, SAP's market leadership extends to all regions,
committed to technological innovation, the and not just EMEA.
foundation of SAP's appeal for customers.
Overall market leadership. With more than 30,000
customers in more than 120 countries, SAP
continues to grow faster than the market.6 SAP is
nearly three times as large as Oracle/PeopleSoft in
terms of new license revenue. While SAP was earlier
perceived to be a “large-company only” solution, it
is now a leader in the midmarket as well.
SOFTWARE REVENUE TOTAL REVENUE INDUSTRIES SOLUTIONS
SAP SAP
Discrete 16% FI 21%
#1 #1
SAP SAP
SAP SAP Process 27% #1
HR 22%
#1
SAP SAP
+15% +13% CP / Retail 19% #1
SCM 16%
#1
SAP SAP
Services 20% CRM 19%
#1 #1
Rest of Rest of
Market Market Fin. SAP SAP
20% SRM 23%
Services #1 #1
-3%
+5% SAP SAP
Public 19% PLM 13%
#1 #1
Source: SAP analysis, market analysis and financial analyst estimates Currency Conversion based on quarterly Euro- Market share data 2004 based on license revenues /preliminary
Fixings (Frankfurt am Main) Rest of Market defined as a subset of approximately 30 software vendors Sources: SAP Analysis 2005, based on preliminary data
In Every Aspect of Analysis, SAP Leads the Market
6
All data based on FY 2005
7
SAP analysis; based on FY '05
4

9. A growing leadership base. Despite M&A activity by SAP Leads Peers
SAP's competitors, SAP continues to strengthen its Peer Group Shares – Total Software Revenue
market lead.8 In the last three years, SAP's license
Rolling 4 quarters
revenue has grown at 10% annually, while Oracle's (based on software revenue in US$)
new license revenues have declined by 0.6% 58%
57%
annually.9 Oracle's new license revenues in Q1 '05 50%
51% 52%
53% 53% 54%
55% 55%
48% SAP1)
shrank by 9% (compared with Q1 '04), while SAP's 44% 45%
new license revenue grew by 24%.10 Globally, as well
as in the United States with five platforms, SAP's ORCL& PSFT& RETK2)
lead over its competitors is steadily growing. 22%
More technological innovation value for customers. MSFT1)2)
12%
SAP's market leadership gives SAP the scale and the SEBL1) 8%
ecosystem leverage that creates more value for its Q2 01- Q3 01- Q4 01- Q1 02- Q2 02- Q3 02- Q4 02- Q1 03- Q2 03- Q3 03- Q4 03- Q1 04- Q2 04- Q3 04-
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05E
customers. SAP, for example, invests more in R & D Source: SAP Analysis based on Company Data and Financial Analysts Estimates
1) Forecast by Company Data and Financial Analysts (SEBL, MSFT) and SAP internal estimates
2) Fiscal year is not calendar year - Comparison based on most recent quarter (e.g. SAP Q1 vs. Oracle Q3)
than any of its competitors. SAP has more than
10,000 developers focused on driving innovation
through the SAP product line. In contrast,
Oracle/PeopleSoft has fewer developers per
platform.11 SAP can bring newer technologies and
more industry-specific capabilities to market at a
faster pace and at better levels of quality.
SAP invests more in R & D than any of its competitors.
SAP has more than 10,000 developers focused on
driving innovation through the SAP product line. In
contrast, Oracle/PeopleSoft has fewer developers per
platform.11
8
SAP analysis; based on company data and financial analyst estimates as of April 14, 2005; comparison based on most recent quarter (e.g. SAP Q1 vs. Oracle Q3)
9
Based on application license revenues in U.S. dollars
10
SAP analysis.
11
Five code bases are Oracle E-Business Suite, PeopleSoft Enterprise, J.D. Edwards EnterpriseOne, J.D. Edwards OneWorldXE, and Retek.
5

10. 2 PRIMARY FOCUS ON ENTERPRISE
APPLICATIONS
Applications are in SAP's DNA. For 32 years SAP Oracle's strategic focus, in contrast, is on
has created a truly global organization databases. Oracle has been in the applications
committed to developing the best enterprise business for less than 16 years; as a result, less than
applications that can be used in every region 24% of Oracle's revenue base and 13% of its profits
and every country. These applications help come from applications. Hence it is not surprising
customers become best-run businesses no that revenues from Oracle's applications continued
matter where they operate by creating strategic to decline, even after Oracle acquired PeopleSoft
value without disrupting operations. and J.D. Edwards. Because Oracle continues on a
strategy of growth by acquisition (with the recently
announced merger with Siebel perhaps providing
the latest example), observers expect SAP to gain
share in enterprise applications driven by its single-
minded focus and Oracle to continue struggling to
digest multiple acquisitions.
Oracle Concentrates on Databases
Oracle’s New License From Database
Database vs. Applications
Applications
$2,926
$2,738 $2,664
$702 $605 $615
2002 2003 2004
Number of Years in Applications Revenue as Applications Operating
Applications Business % of Total Profit as % of Total
32 100% 100%
~14
24%
13%
SAP Oracle
SAP's Laser Focus On Enterprise Applications
6

11. 3 RELENTLESS FOCUS ON CUSTOMER VALUE
SAP continually creates value for customers by Customized business cases: SAP invests in
focusing application development and ongoing customers' success by helping create robust
support on producing benefits while reducing business cases and business-specific road maps.
costs. SAP's intense organizational In 2004 more than 250 corporations worked
concentration on customer value drives higher with SAP's Value Engineering team in North
performance for its customers, and helps them America. In addition, SAP is working with
become best-run businesses faster. ASUG12 and other third-party companies to
SAP's senior leaders understand that their develop benchmarks and methodologies that
customers' executives are continuously challenged help SAP customers learn about world-class
to transform their businesses. These executives must best practices and develop their own solutions
find ways to respond with agility to their customers' based on these practices.
increasing expectations, intensified global Industry-specific capabilities: SAP provides
competition, rising shareholder expectations, and industry-specific solutions for more than 25
regulatory demands. IT is a key enabler of all aspects industries. The process of developing these
of this process, but can form a bottleneck in terms solution portfolios revolves around SAP's work
of rising costs and complexity. SAP is continually with industry-leading companies. SAP listens to
fostering real innovation with its product line,
the problems articulated by their leaders, learns
investing with partners and go-to-market resources
about the best practices these leaders have
to simplify complexity and ensure that its customers
developed in response, and then invests in
achieve their objectives for innovation growth.
Moreover, SAP has developed key services to help creating industry-specific solutions imbued
customers gain the benefits necessary to justify their with these best practices. The proof point of
software investments. SAP's industry focus is the company's number-
one position in discrete and process
DRIVING BUSINESS BENEFITS manufacturing, consumer products, retail,
SAP creates business value for its customers by professional services, financial services, and the
investing in some of the key underlying enablers public sector.13
needed for any significant business transformation, A customized approach to user adoption
as follows: and change management: Most large
Innovation 10% 20-30% Reduction
in IT Costs
40%
Operation 90% Reduced IT complexity
Economies of scale in support
Economies of scale in infrastructure
Fewer integration points
60%
Lower Costs of Operation
Lower maintenance costs
Lower upgrade frequency
Lower integration costs through NetWeaver
Today 3 years from
now
SAP Increases the Focus on Innovation
7

12. transformation initiatives fail because of Flexibility and adaptability: SAP's product
organizational resistance to change - not to the development is now centered on ESA, which is
IT driving the change. In fact, IT research enabled by the SAP NetWeaver® platform. ESA
studies from 1989 to 2002 showcased the provides organizations with the flexibility to
overwhelming importance of user adoption to add capabilities without requiring the upgrade
success with implementation.14 A key aspect of of underlying applications. With ESA, 77% of
SAP's value proposition focuses on enhancing SAP customers expect that intervals between
the user experience. For example, Enterprise upgrades will be longer, while 35% of Oracle
Services Architecture (ESA), the SAP blueprint customers expect the upgrade intervals to get
for a service-oriented architecture, is based on shorter. In addition, ESA allows companies to
open standards. ESA involves the users in the flexibly add third-party capabilities and
actual development process for composite integrate them with other applications, thus
applications, which encourages them to providing a level of flexibility that never existed
articulate their preferred type of interface. In before.
addition, SAP has rolled out tools to leverage Speed to value: Companies must be able to
knowledge gained during blueprinting and implement applications quickly to respond
implementation for end-user training and more effectively to business problems and build
documentation. Statistics show that SAP can competitive advantage. Three-quarters of SAP
lower the training bill by more than 30-40%15 as implementations take a year or less.16
a result of these techniques. To help users gain
direct access to the business processes they need
for their jobs through user-friendly portals, SAP
has developed partnerships with companies
such as Microsoft and Adobe.
A key aspect of SAP's value proposition focuses on
enhancing the user experience.
12
America SAP User Group.
13
SAP Analysis 2005, based on 2004 license revenues market data.
14
For a full run-down of the research in this area, and the conclusions drawn from it, please see Beaudry and Pinsonneault, op cit.
15
SAP analysis, based on experience with customers. 16 Internal SAP data.
8

13. DECREASING IT COMPLEXITY AND economies of scale and embedded functionality
COSTS offered in SAP NetWeaver.
In addition to driving business benefits, SAP also 2. Lowering costs of operations and increasing
helps CIOs contain rising IT costs. SAP works with their functionality: SAP offers the most
customers to lower their total IT costs as a comprehensive support services at the lowest
percentage of revenue, and reduce the budget cost. SAP offers standard support at 17%
required to maintain existing applications to allot a compared to 22% for Oracle, thus lowering
larger share of the IT budget for process innovation. ongoing maintenance costs. In addition, SAP
SAP addresses these issues in the following ways: NetWeaver architecture helps reduce upgrades.
With SAP NetWeaver new functionality does not
1. Lowering IT complexity: Niche applications
require expensive upgrades but is developed as
have created a spaghetti-like application
composite applications, which build on the
landscape in many companies, leading to higher
underlying applications and increase their
integration costs and lower flexibility. SAP
functional range. Moreover, the built-in
NetWeaver offers the most comprehensive open-
integration capabilities within the SAP NetWeaver
standards functionality that helps companies
platform lower the cost of integrating SAP and
develop road maps to transform their IT
non-SAP applications.
networks, lower integration costs, and create
economies of scale in support and infrastructure.
Research shows companies can reduce their IT
budgets by ~1% annually just through the
DRIVING VALUE AT COLGATE-PALMOLIVE
Colgate-Palmolive Company is one example of a customer that
transformed its businesses because of SAP's unique value
proposition, realizing business benefits while decreasing IT costs.
Colgate-Palmolive is a US$10 billion company, with 36,000
employees operating in more than 200 countries. Company
management developed the strategic goals of enhancing the
competitive position of the consumer products business, continually
improving margins, enhancing service to the retail trade and internal
customers, improving responsiveness to promotions, and enabling a
transformation to globally standard operations. By focusing on the
supply chain planning process first and then extending the
capabilities across the globe, Colgate-Palmolive has achieved
US$150 million worth of business benefits and US$280 million in
cost savings.
CASE STUDY
9

14. 4 DEEP INDUSTRY CAPABILITIES
SAP delivers the most comprehensive suite of In semiconductors, for example, SAP has a robust
industry-focused functionality, based on its solution to address design registration and channel
work with industry-leading companies. This management issues. Similarly, within the
functionality extends the capabilities of the telecommunications industry, SAP provides a very
existing software solution and helps customers specific solution to budget, deploy, track, maintain,
refine their own processes - according to a and phase out network assets (network life-cycle
wealth of industry best practices. In management). Such industry-specific solutions exist
transferring these best practices, SAP helps across every major industry and sub-industry.
customers out-perform non-SAP customers
A leading semiconductor equipment manufacturer
across industry segments.
recently switched to SAP from Oracle to support its
For more than 30 years, SAP has worked to better enterprise-wide processes. One executive explained
understand the specific issues that pose such that while selecting an earlier version of Oracle, he
challenges for participants in individual industries. found that more than 2,700 customizations were
SAP teams work with process owners in leading required to meet his company's specific needs.
companies within each industry sector, learn how While evaluating an upgrade to Oracle 11i, this
they solve their most pressing business problems, company found that 1,400 customizations would
and embed this learning into its products. In short, still be required. When this company evaluated SAP
SAP translates its work into best practices that are solutions, it found the need for only five
built into industry-specific solutions, which in turn customizations within mySAP Business Suite.
drives value to all customers.
SAP has unparalleled access to leaders in every
industry. SAP has between 50% and 100% of the
Global 500 companies as customers in every single
industry (see Figure 7). SAP's share of wallet within
this elite group of customers increased to 24% in
2004 from 14% in 2001.
n.b. the Public Sector is not covered by the Global 500
Source: Fortune Magazine, Global 500 2003; SAP Analysis 2005
80
Account coverage increased
SAP customer
from 73% to 74% because of 7 70
Global 500 comp
new clients within Global 500 60
50
40
30
20 78%
86% 80% 90% 93% 54% 47%
40% 100% 86% 81%
10 87% 75% 76%
100% 100%
100% 63%
0
Serv.P
Util
HT
O&G
Chem
CP
Pharma
Bank
Telco
ME&C
A&D
Mill
Ins
Media
Mining
Retail
Auto
Wholes
SAP Dominates in All Industries CP / Retail Discrete Process
Financial
Services
Services
10
1

15. SAP CUSTOMERS OUTPERFORM The same difference in performance is true in many
COMPETITORS other industries, as the following examples
Across industries, the most important result from illustrate:
SAP's focus on industry best practices is that SAP In consumer packaged goods, SAP customers
customers outperform their competitors. In were 63% more profitable than non-customers
industrial machinery and components,17 for
in 2003.
example, SAP customers have outperformed their
In aerospace and defense, SAP customers grew
peers on key metrics such as operating margin and
eight times higher revenue than that of non-
days inventory in hand. In addition, SAP customers
have 102% better profitability than non-SAP SAP customers in 2003.
customers. Moreover, they reduced inventory at
While it would be overreaching to attribute the
rates eight times faster than non-SAP customers.
success of these companies solely to their
implementation of SAP solutions, their partnerships
with SAP have certainly played a role in their ability
to be more adaptive and innovative compared with
peers.
SAP customer’s
performance
Non-SAP companies’
performance
Industrial Machinery & Components Engineering, Construction & Operations
(Three-year Trend) (Three-year Trend)
Operating Days of Inventory Operating Days Sales
Margin on Hand Margin Outstanding
18.3%
2.0% 0.6% 0.5%
Increase
Increase Increase Increase
4.4% 15.3% 4.5%
88.9% Decrease
Decrease Reduction Reduction
102% better profitability than non-SAP 19% improved profitability trend compared to
customers non-SAP customers
8 times faster inventory reduction than Significantly improved collections than non-
non-SAP customers SAP customers
SAP Customers Are Top Performers
17
Analysis for this industry and other industries cited here is based on Stratascope; it includes only public companies in the United States.
11
1

16. 5 COMMITMENT TO QUALITY
SAP has a 30-year commitment not only to shift to an Internet-based architecture for SAP's
product quality but also to the quality of flagship SAP R/3 product line, was ramped up one
implementation and support. The combination month ahead of schedule, resulting in a highly
of this proven commitment and track record satisfied customer base. In contrast, it took Oracle
helps ensure that customers can rely on their four years to release a stable version of Oracle 11i.
SAP investments.
QUALITY OF GO-LIVE SERVICES
A key part of its customer value proposition is SAP's
commitment to product and service quality. “Switching on” underlying application
Specifically, three key aspects of quality are infrastructure to support complex, mission-critical
fundamental to the enterprise application life cycle, business processes is an arduous, risky task.
as follows: Companies risk business continuity when they go
1. Quality and timeliness of application releases live with major IT implementations. SAP provides
2. Quality of go-live services perhaps the most comprehensive services during
3. Quality of ongoing support and maintenance this critical phase. SAP begins to work with its
customers three months in advance of go-live dates
QUALITY AND TIMELINESS OF to ensure a smooth transition. A testimony to SAP's
APPLICATION RELEASES customer go-live support is the fact that, on average,
two companies in North America go live every day
SAP is an engineering company at heart, with a
on SAP applications, and more than three times that
conservative approach to releasing only the highest-
number globally.
quality software to its customers. Nothing can
provide better evidence than the fact that SAP met
QUALITY OF ONGOING SUPPORT
the ISO 9001 standard for quality manufacturing
AND MAINTENANCE
management in 1994. Worldwide, the same
standards have been applied to more than 130,000 SAP offers the most comprehensive support services
companies.18 at the lowest price to its customers. Priced at 17% of
license value, SAP's basic support is much lower
As a result, over many generations of technology, than Oracle's 22% maintenance fees. Oracle does not
SAP has consistently delivered superior products offer many mission-critical services such as business-
that manage mission-critical processes for its process support and global hotline as part of its basic
customers. mySAP ERP, which marked a significant support; these services are standard for SAP.
As a result, over many generations of technology, SAP
has consistently delivered superior products that
manage mission-critical processes for its customers.
mySAP ERP, which marked a significant shift to an
Internet-based architecture for SAP's flagship SAP R/3
product line, was ramped up one month ahead of
schedule, resulting in a highly satisfied customer base.
In contrast, it took Oracle four years to release a stable
version of Oracle 11i.
18
For more information about the ISO, its standard setting, and the future for quality standards see www.iso.org.
12

17. 6 FOCUS ON CUSTOMER SATISFACTION
The greatest testament to the power of SAP's And, according to an Information Week survey,21
customer value proposition is that SAP customers two-thirds of PeopleSoft customers and more than
have become its biggest advocates. In fact, the results 50% of Oracle customers are not confident that
of SAP's organizational focus on monitoring Oracle can integrate the two product suites. Also, in
customer satisfaction illustrate how well it is the same survey, more than 85% of those surveyed
working. SAP's leading industry capabilities and thought the acquisition would have a negative
commitment to world-class implementations with impact on their applications strategy.
real organizational change-management techniques,
A significant migration to SAP from Oracle,
for example, create a higher rate of user adoption.
PeopleSoft, and J. D. Edwards is beginning to take
One sign of the growing dissatisfaction with Oracle
place. The reason given is almost always the same:
has shown up in the number of customers migrating
SAP's unique value proposition offers customers
to SAP.19
more security - and a greater level of innovation -
A steady increase in customer satisfaction provides with far less risk than remaining with the
the best evidence that SAP meets and exceeds its competition.
customers' expectations. And as a result, SAP SAP CustomerSatisfaction On the Rise
customers are becoming its staunchest advocates. SAP Overall Satisfaction N. America
The numbers tell the story: customer likelihood to 2002-2005 (2002 = 100)
implement SAP in the future has increased 10% from 115
2002 to 2005. Moreover, and perhaps more important,
customer advocacy has increased. In North America, 110
customer likelihood to recommend SAP increased by 105
12% from 2002 to 2005.20 Because SAP has developed a
singular organizational focus on customers, 100
customers have become more loyal, more likely to
95
reinvest in SAP solutions, and more open to
recommending SAP to other potential customers. 90
2002 2003 2004 YTD '05
MAKING THE SWITCH TO SAP
Many companies have switched to SAP from Oracle. After a difficult process
attempting to run its business on Oracle software, for example, one consumer
products company became frustrated with the results. As a result,
management made the switch back to SAP and has been a happy customer
ever since.
At first, Oracle's 11i product attracted the attention of management. Then, the
company learned the Oracle 11i product was incomplete, with many quirks
remaining to be worked out. Moreover, Oracle experts seemed stumped on
how to fix the problems with the new solution. Frustrated by its efforts to
stabilize the Oracle platform, the consumer products firm made the transition
to SAP. Management believed it made the right decision when it began to read
about other high-profile companies, who had been Oracle customers, made
the switch to SAP. The company rolled out its SAP implementations worldwide
from 2002 through 2004.
CASE STUDY
19
As of the publication of this point of view, a full companies have migrated.
20
SAP America customer satisfaction survey.
21
“Customers Not Confident Of Oracle-PeopleSoft Integration,” Rick Whiting, Information Week, December 16, 2004.
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18. 7 SUPERIOR ARCHITECTURE
SAP's architecture is clearly superior to Oracle's, Second, SAP's architecture operates in real time,
providing flexibility, choice, and greater value. automatically communicating any input with all
Because SAP focuses product development on associated components in a business process at the
process and industry functionality, SAP's product time of input. These components perform
line does not disappoint customers. appropriate actions and validations prior to
acceptance, thus assuring data and process integrity.
In the world of technology, SAP's superior
Oracle's batch-synchronized processing does not
architecture not only provides flexibility but also
offer these advantages. Instead, due to a data-centric
choice for customers, delivering a high level of
approach, Oracle customers and their users
value.
experience inconsistent data, which in turn
First, SAP's process-centric architecture delivers real hampers their ability to make decisions or plan in
business value because it eliminates or minimizes real time. Oracle's customers incur higher data
custom development. SAP embeds best practices for cleansing and correction costs, as well as higher
major processes into the software functionality. In compliance costs.
contrast, customers require custom development
Finally, SAP's architecture promotes flexibility,
and extensive reconfiguration when mapping
adaptability, openness, and an even greater focus on
Oracle's data-centric architecture to their business
superior business processes through the
process. Such data-centricity generally results in
development of its service-oriented architecture,
higher costs for custom development, maintenance,
Enterprise Services Architecture (ESA). In contrast,
and migration.
Oracle locks in customers with limited choices in
databases, application servers, and business
intelligence. SAP's development of ESA has opened
the door to a new era in IT systems management.
Business value
Oracle’s data centric platform requires extensive
Process Process Data customization to map to business processes
Centric Architecture Centric Results in higher custom development costs,
maintenance costs, migration costs and limited
ability to leverage industry best practices
Real-time visibility
Oracle’s batch synchronized architecture:
Real Time Transaction Batch Leads to inconsistent data
Execution Architecture Processing Hampers real-time planning and decision making
Results in higher data cleansing and correction
costs, increased compliance risks
Flexibility
Inter- Oracle locks-in customers with limited database,
Vendor applications server and business intelligence
operability Openness choices
Lock-in
The Superiority of SAP Architecture & choice Results in increased costs to invest in superior
functionality or limited flexibility
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19. 8 CLEAR LONG-TERM VISION OF
INNOVATION
SAP has always had a clear vision for its SAP will generate more than 50% of its business with
technology based on defined goals. SAP has solutions that are not available today.
been a pioneer through technology transitions
The next era of computing will be based on open
and guided customers through the change,
standards and a service-oriented architecture. This
from mainframe (SAP R/2) to client server (SAP
will engender a seismic shift from today's
R/3) to service-oriented architecture (ESA). In
technology architecture, involving completely new
the current transition to a service-oriented
paradigms for underlying software and hardware
architecture, SAP will develop greater levels of
infrastructure, in the way software is developed and
collaboration and participation with industry-
deployed, and in usability, adaptability, flexibility,
leading companies. That's because the process
and integration. In developing a taxonomy for this
is inherently more open and because ESA is
new era, The Berkman Center for Internet &
based on adding more capabilities to business
Society at Harvard Law School created a model for
processes as a source of competitive advantage.
the maturity of an open-standards strategy that
In turn, SAP will offer even greater value for
should include the following elements:
customers, allowing them to innovate as they
Interoperability
evolve new processes.
Open technologies
Companies make long-term investments in Architecture framework
enterprise application software, with five- to ten- Architecture development model
year investment horizons not uncommon. Given Communication and compliance
that technology changes rapidly, it is critical for Close linkage with business processes
companies to choose application partners that have Linkages among operating units and agencies
a clear vision, one that can not only meet today's Active management
needs but adapt to the changing needs of tomorrow. Strategy for software acquisition
SAP is committed to a strategy of growth through Collaborative communities22
technology innovation; today, SAP generates more
SAP developed ESA with each of these elements in
than 50% of its business with solutions that came to
mind, testifying to its maturity and sophistication in
market in the last five years. Five years from now,
the global software arena.
Mainframe Client Server Services Oriented Architecture
One Computer for Many Many Devices per Person
Monolithic Architecture Multi-layer Architecture
Static Business Processes Adaptive Business Processes
Dedicated Hardware Virtualized Hardware
End to End Security Layers of Security
A Shift in the IT Paradigm
22
P. 38, “Openness Maturity Model,” in Roadmap for Open ICT Ecosystems, published by The Berkman Center for Internet & Society, Harvard Law School, Jeffrey Kaplan,
Founder and Director, Open ePolicy Group, August 2005.
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20. As the Harvard study suggests, the new age requires SAP has developed ESA with an evolutionary,
a fundamental shift in the unbundling of the collaborative, pragmatic approach. Oracle has
software stack, wherein the monolithic, single proposed Fusion, which represents a complete
vendor approaches of the past will give way to change in its existing product lines to a totally new
multi-tier architectures that will abide by open solution. At present, however, that change is only a
industry standards and be able to “connect vision with little or no progress made toward
dynamically.” Such a world will require significant delivery. In contrast, SAP is working with its
collaboration among industry players to drive customers to guide them through the journey to
standards and create more value to the customer. open standards with as little disruption as possible
Companies will play in the layer where they have to existing operations, ensuring that SAP's legacy of
core competence. high-quality software is maintained.
SAP is on Track Business
mySAP ERP
ESA Process Solutions ESA
with ESA delivered on
Launched Platform (BPP) on BPP Delivered
Netweaver
Launched
2003 2004 2005 2006 2007
Netweaver 1,300 mySAP 500 Enterprise BPP available Complete Suite
Launched ERP customers Services for ISVs and all industry
signed delivered solutions
All-In-One delivered on
1500 + 150,000 available on BPP
Netweaver developers on BPP
references SDN
released
100 mySAP
2210 partners ERP customer
onboard success
stories
published
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21. SAP launched ESA in 2003 and continues to invest Oracle announced the Fusion road map in early
all its engineering resources to realize a structured 2005, but did not include a concrete road map,
and pragmatic path to a service orientation. In fact, partner collaboration, customer upgrade path, and
SAP is already more than halfway to realizing its other details. In addition, its bid to create a new
goals, and through the years, has delivered every application that is different from any of its five
single promise. Today, ESA has more than 1,500 existing applications code bases poses time and
references, more than 2,200 partners, and more than quality risks for customers.
500 services already delivered. ESA is not just a
concept or a marketing hype; it is a reality that SAP
and its customers live and breathe every day.
The next era of computing will be based on open
standards and a service-oriented architecture. This
will engender a seismic shift from today's
technology architecture, involving completely new
paradigms for underlying software and hardware
infrastructure, in the way software is developed and
deployed, and in usability, adaptability, flexibility,
and integration.
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22. 9 STRONG PARTNER ECOSYSTEM
SAP has developed a strong, loyal, and an context of the environment they know best,
unparalleled partner ecosystem. These partners Microsoft Office. Mendocino will simplify the way
range from technology companies to information workers access and use their SAP
professional services organizations. The applications, revolutionizing their potential, and
partners enhance the value for SAP customers resolving another user issue.
by providing complementary product
SAP has also teamed with H-P to deliver
capabilities, and also provide a broader access
breakthrough business intelligence flexibility and
to SAP consultants.
performance. The development project has
As outlined previously, SAP recognizes the produced the industry's first low-cost, appliance-
importance of the partner ecosystem both for the like offering designed to provide breakthroughs in
partners' and the customers' mutual success. The both performance and flexibility for the SAP
ESA vision is supported by leading technology NetWeaver Business Intelligence component.
companies across many different domains such as
In contrast, Oracle continues to adopt a “go it
security, productivity applications, storage,
alone” approach. In an era where the application
middleware, networking, and performance
stack is unbundling, Oracle is attempting to
management. Partners such IBM, Adobe, and
integrate vertically by being the “all-in-one” stack
Microsoft endorse SAP's strategy and dedicate
provider of application servers, databases, and
significant resources to the partnership.
applications. Such a strategy may alienate partners
Moreover, Microsoft has begun to develop while reducing flexibility, choice, and value for
groundbreaking arrangements with technology customers.
partners that will offer unique and unprecedented
Partner resources are only likely to decline for
value to customers. With Microsoft, for example,
Oracle as these companies are forced to support a
SAP will develop Mendocino,23 which will address
completely new platform as well as existing
the inefficiencies and inconsistencies inherent in the
platforms no longer supported by Oracle itself.
gap between desktop productivity tools and
enterprise applications - and the pressing need to
connect users with enterprise processes in the
SAP Broadens the Idea of Partner
23
Code name of the project, not an actual product name.
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23. 10 SAFE CHOICE IN AN UNCERTAIN
LANDSCAPE
SAP continues to provide the safest, most stable Oracle's bid to “beat” SAP through acquisitions is
option in the technology industry. SAP's questionable, since most technology M&As -
strategy of growth through innovation and particularly enterprise application software - have
scope contrasts with Oracle's strategy of failed. History tells us that once-successful
growth through merger and acquisition, one companies such as i2 and BaaN have nearly perished
that is inherently risky for customers. After all, through their extravagant acquisitions. In a detailed
technology mergers, like most mergers, rarely study of the Oracle-PeopleSoft merger, for example,
meet expectations. Merger history further Enterprise Applications Consulting noted:
demonstrates that Oracle's challenges are
“… enough of the larger acquisitions involving
immense since it is taking multiple risks
publicly-held companies (in the software
simultaneously, compounding the odds against
industry) have foundered to make guarantees of
success.
M&A success difficult to predict. … The reasons
One of the reasons customers choose SAP is because for failure … revolve around a consistent set of
SAP offers the only safe and stable option in an problems. Cultural mismatches are probably the
industry rocked by turmoil. The best evidence is most common problems. … Poor due diligence
demonstrated by Oracle's long drawn-out and financial miscues are another common set
acquisition battle with PeopleSoft and its recent of problems. … Technical integration is also a
acquisition of Siebel Systems. In neither case could major problem.”
the merger be called “friendly.” In both cases, the
“A far greater negative impact can be seen in the
difficulties Oracle faces in merging cultures and
results of a prolonged resistance to a hostile
technology are legion.
takeover attempt, such as took place in the
Oracle's mergers are inherently risky both for PeopleSoft acquisition by Oracle. This is
Oracle and its customers. The customers' risk, particularly true with respect to customers of
however, is far greater. At stake is their business and both the acquired and the acquiring company.
operating profits - as opposed to the small share of This impact can outlast the cessation of hostilities
Oracle profits generated by its applications business. and severely limit the ability of a company like
Oracle faces Are you willing to take a
four key challenges risk with your choice?
Platform consolidation is
difficult to achieve
Technology Cultural clashes are
M&A’s have difficult to transcend 100%
rarely Technology transitions are
succeeded challenging to charter
Larger scale merger skills 12.5%
are limited Oracle’s Risk Your Risk
Oracle's Four Daunting Challenges
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