When Xerox exited the computer hardware manufacturing industry in 1971, it asked IBM to migrate its business systems to IBM technology. As part of IBM's compensation for the migration, IBM was given the rights to the Scientific Data Systems (SDS)/SAPE software, reportedly for a contract credit of $80,000.
Five IBM engineers from the AI department (Dietmar Hopp, Klaus Tschira, Hans-Werner Hector, Hasso Plattner, and Claus Wellenreuther, all from Mannheim, Baden-Württemberg) were working in an enterprise-wide system based on this software, only to be told that it would no longer be necessary. Rather than abandoning the project, they decided to leave IBM Tech and start another company.
In June 1972, they founded the SAP Systemanalyse und Programmentwicklung ("System Analysis and Program Development" / "SAPD") company, as a private partnership under the German Civil Code.
Their first client was the German branch of Imperial Chemical Industries in Östringen, where they developed mainframe programs for payroll and accounting. Instead of storing the data on punch cards mechanically, as IBM did, they stored it locally in the Electronic System while using a common Logical database for all activities of Organization. Therefore, they called their software a real-time system, since there was no need to process the punch cards overnight (for this reason their flagship product carried an R in its name until the late 1990s). This first version was also a standalone software that could be offered to other interested parties.
Enterprise Resource Planning
In 1973, the first commercial product was launched. SAP completes its first financial accounting system - RF. This system serves as the cornerstone in the ongoing development of other software modules of the system that will eventually bear the name SAP R/1.
This offered a common system for multiple tasks. This permitted the use of a centralized data storage, improving the maintenance of data. From a technical point of view, therefore, a database was necessary.
In 1976, SAP GmbH Systeme, Anwendungen und Produkte in der Datenverarbeitung ("Systems, Applications, and Products in Data Processing") is founded as a sales and support subsidiary. Five years later, the private partnership is dissolved and its rights are passed on to SAP GmbH.
The headquarters moved the following year to Walldorf, Germany. Three years later, in 1979, SAP launched SAP R/2, expanding the capabilities of the system to other areas, such as material management and production planning. In 1981, SAP brought a re-designed product to market. However, SAP R/2 did not improve until the period between 1985 and 1990. SAP released the new SAP R/3 in 1992. SAP developed and released several versions of R/3 through 1995. By the mid-1990s, SAP followed the trend from mainframe computing to client/server architectures. The development of SAP's internet strategy with mySAP.com redesigned the concept of business processes (integration via Internet). As a result, R/3 was replaced with the introduction of SAP ERP Central Component (ECC) 5.0 in 2004. Architectural changes were also made to support an enterprise service architecture to transition customers to a services-oriented architecture. The latest version, SAP ERP 6.0, was released in 2006. SAP ERP 6.0 has since then been updated through SAP enhancement packs, the most recent: SAP enhancement package 8 for SAP ERP 6.0 in 2016.
In August 1988, SAP GmbH became SAP AG, and public trading started on 4 November 1988. Shares were listed on the Frankfurt and Stuttgart stock exchanges. In 1995, SAP was included in the German stock index DAX and, on 22 September 2003, SAP was included in the STOXX Europe 50.
The company's official name became SAP AG (a public limited company) after the 2005 annual general meeting. In 2014, SAP changed from an AG to a European Company (Societas Europaea or SE).
Focus on cloud
Since 2012, SAP has acquired several companies that sell cloud-based products, with several multibillion-dollar acquisitions seen by analysts as an attempt to challenge competitor Oracle. In 2014 SAP bought Concur Technologies, a provider of cloud-based travel and expense management software, for $8.3 billion, SAP's most expensive purchase to that date. Analysts' reactions to the purchase were mixed, with Thomas Becker of Commerzbank questioning whether Concur was the right choice for SAP, while Credit Suisse called the acquisition an "aggressive" move.
In 2014, IBM and SAP began a partnership to sell cloud-based services. Likewise, in 2015, SAP also partnered with HPE to provide secure hybrid cloud-based services running the SAP platform. Both HPE and IBM provide infrastructure services to SAP, and SAP runs its SAP HANA cloud solution on top. SAP has announced additional partnerships with Microsoft in order to give customers tools for data visualization, as well as improved mobile applications.
SAP exceeded its revenue projections due to the expansion in its cloud business and the success of SAP HANA. The growth can also be partially attributed to the acquisitions of Concur and Fieldglass.
The company announced plans in 2016 to invest heavily into technology relating to Internet of Things (IoT) as part of a strategy to capitalize on the growth in that market. For that purpose, €2 billion is planned for investment in relevant sectors by the end of 2020. SAP will also launch a new product line called SAP IoT, which "will combine large amounts of data from things connected to the Internet with machine learning and SAP's real-time database S/4 HANA."
In 2015, the company launched 4HANA, the newest generation of the SAP Business Suite. It was written natively for the SAP HANA platform. It offers cloud, on-premises and hybrid deployment options to customers, with its benefits including a smaller data footprint, higher throughput, faster analytics and faster access to data. It also allows existing SAP Business Suite customers to upgrade to this product from SAP Business Suite.
In 2016, SAP introduced SAP HANA, Express Edition which is meant to run on personal computers or on cloud computing platforms for students and other small-scale developers.
On January 29, 2019, SAP announced plans to cut approximately 4,000 positions at the company in a strategic plan to shift to more modern cloud-based technologies such as blockchain, quantum computing, machine learning, Internet of Things, and artificial intelligence.