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Partners, Customers and SAP Unite to Co-Innovate For the Public Sector and Consumer Products, High-Tech and Retail Industries


May 16, 2006

Dedicated Industry Value Networks Translate Customer Challenges into Comprehensive, Industry-Specific Solutions Based on SAP NetWeaver®

ORLANDO, Fla. - SAP AG (NYSE:SAP) today announced the formation of four new “industry value networks” (IVNs) serving the consumer products, retail and technology industries and the public sector. Driven heavily by customer participation and SAP’s deep industry expertise, these networks bring together customers, partners and SAP to co-innovate and quickly develop solutions to solve industry-specific customer challenges. The solutions developed through these IVNs will leverage the SAP NetWeaver® platform to create end-to-end business solutions while avoiding costly integration projects between software from partners and SAP solutions through the usage of enterprise services. The end result will enable customers to extend and enrich their investments in SAP® solutions, helping optimize asset utilization and lower IT investment risk. The announcement was made at SAPPHIRE® ’06, SAP’s international customer conference, being held in Orlando, Florida, May 16-18.

“At SAP, we believe that a vibrant ecosystem of partners, customers and SAP can deliver more innovation than any single company,” said Jim Hagemann Snabe, general manager, Industry Solutions, SAP. “SAP is creating such a trusted ecosystem by focusing a group of companies to invest in co-innovation with the largest enterprise applications customer community. The expansion of our IVN initiative will allow customers in the public sector and consumer products, high technology and retail industries to benefit from our valuable partner ecosystem to help accelerate innovation and productivity.”

For partners, IVNs represent a significant opportunity and the logical next step for independent software vendors (ISVs) and system integrators (SIs) who have built solutions that are certified as “Powered by SAP NetWeaver®” and have a strong need to create a vertical focus in their business. Customer and partner IVN members may also participate in SAP’s newly launched Enterprise Services Community, helping ensure that enterprise services relevant for the industry are properly defined and become a basis for future software development resulting from collaboration within the IVN, such as for SAP® xApp™ composite applications.

“Well structured partner networks can provide vendors with significant benefits over traditional relationship models,” said Stephen Graham, group vice president, Global Software Business Strategies at IDC. “SAP’s industry value network provides an important foundation for a new type of engagement model involving customers, services firms and technology vendors.”

Currently, SAP has value networks covering six industries, including banking and, most recently, chemicals. SAP plans to expand this initiative to additional industries throughout the year.

IVN for Consumer Products
Members of SAP’s IVN for consumer products will collaborate to deliver solutions and integration scenarios to address key industry issues, including compliance, food safety, meat tracking, and wine and spirits management.

Food safety is one of the most important regulatory compliance topics in the consumer products industry. Due to a lack of supply chain visibility at certain points in the harvesting process, a significant percentage of fresh crops often deteriorates after harvest, leading to billions of dollars in annual losses. Corporate losses resulting from recalls can amount to hundreds of millions of dollars per incident. Additionally, losses due to counterfeited food products are rising to upwards of tens of billions dollars each year. To address these issues, TraceTracker, a provider of software to facilitate the complete documentation and tracing of food products from ‘fork-to-farm,’ has joined the consumer products IVN to bring customers a comprehensive offering to support global traceability for regulatory compliance, improved food safety and brand protection.

“SAP has what it takes to be the perfect partner, especially for the type of disruptive technology TraceTracker offers,” said Knut Jřrstad, president and founder of TraceTracker. “SAP is a truly global enterprise, with the right dynamics and view of corporate social responsibility that continued globalization requires. We have a strong relationship with SAP and work closely with our partners in the Consumer Products industry business unit at SAP. Together, we are creating great solutions that address our customers’ need for global coordination of corporate information.”

In addition to TraceTracker, companies including Conformia, Invensys, OR Soft, SmartOps, and Vistex are among the initial partner members of the consumer products IVN.

IVN for High Tech
To address the specific needs of high-tech manufacturers, members of the high-tech IVN are initially collaborating to develop solutions around manufacturing execution, product compliance, price management and service parts management.

Manufacturing execution, for example, is a business issue for high-tech companies given the level of outsourcing and offshoring of supply chain operations. High-tech manufacturers often lack the capability to sense and respond to changes on the manufacturing floor. To address this challenge, Visiprise has collaborated with the high-tech IVN to develop a “Powered by NetWeaver” solution that increases perfect order fulfillment by providing shop floor event notification and work-in-progress traceability through manufacturing performance-management dashboards.

“We have a considerable number of shared customers in the high-tech market ranging from OEM, contract and medical device manufacturers,” said Sean McCloskey, chief executive officer of Visiprise. “Providing an end-to-end solution for high-tech manufacturing is exactly what our customers have been requesting.”

In addition to Visiprise, other partner members of the high-tech IVN include Accenture, Bristlecone, MCA Solutions, Technidata and Vendavo. Additional members are being recruited to develop solutions for other high-tech business processes.

IVN for Public Sector
Members of SAP’s IVN for public sector will focus on developing solutions to help governments and public agencies and organizations transform tax and revenue management processes by addressing key pain points such as outdated legacy systems, lack of current tax solutions being integrated with other systems, and growing demand from citizens for high-performance services. As public sector organizations around the world move away from costly legacy and custom-built systems, they are looking for flexible integrated solutions that will allow them to adapt their environments to comply with changing tax rules and laws.

The IVN community working on the tax and revenue management issue include, Accenture, BearingPoint, Deloitte, EAI, ESRI, Hewlett-Packard, iLog, Realtime, RuleBurst, TATIS, and WindStar. This group will also focus on developing solutions to help customers address issues with collections management, border management, rules and regulations, integrated tax, analytics and property tax management.

RuleBurst—an Australian-owned, global company that provides software solutions for the administration of complex business rule—has joined the public sector IVN to develop a composite application that helps public sector customers automate rules processing to manage complex business rules and regulations.

“By choosing an SAP solution for tax and revenue management, a customer benefits from SAP’s extensive experience building enterprise solutions for the largest government agencies,” said Surend Dayal, CEO of RuleBurst Limited. “RuleBurst allows those agencies’ business and policy experts to rapidly extend SAP’s business processes and to change system behaviors quickly as legislation, regulations and government policy evolve. Together, SAP and RuleBurst provide an unbeatable combination: highly agile applications that automate business processes while enabling staff to make accurate, consistent and auditable decisions.”

Accenture has also joined the public sector IVN to develop an SAP xApp and services to help tax agencies to address complex revenue challenges. The solution integrates all of the functional components of a tax management program, including taxpayer accounting, correspondence, case management, contact management, business intelligence and revenue accounting. Built on SAP applications for tax and revenue management, the Accenture Rapid Revenue Solution combines Accenture’s deep tax and revenue industry understanding—based on more than 20 integrated tax implementations around the world—with SAP experience from more than 1,600 projects worldwide.

“Today, high performance for tax agencies means aligning technology and business solutions with strategic planning to provide better service and increased collections while maintaining operation costs,” said Ann Rettie, managing director, Revenue and Customs, Accenture. “The Accenture Rapid Revenue Solution delivers increased benefits to users while reducing costs and lowering risk for agencies. Accenture is pleased to be part of the IVN for public sector, working jointly with SAP, our customers and ISVs to enable co-innovation and to deliver complete industry solutions for tax and revenue agencies on an open platform.”

“Deloitte is pleased to continue its long-standing relationship with SAP as a charter member of the IVN,” said Alan Krasner, principal, Deloitte Consulting. “SAP and Deloitte have worked together on the tax and revenue management solution since 1999, with the pilot implementation at the Florida Department of Revenue. Based on the Department of Revenue strategy of leveraging the tax and revenue management solution, including business warehouse and CRM components, annual benefits now exceed the Department of Revenue operating budget. The IVN will provide a vehicle for SAP to solidify its position as the most comprehensive commercial off-the-shelf solution in this market.”

IVN for Retail
Members of the IVN for the retail industry are working together to develop solutions to address key industry issues around store and multi-channel management. Specific focus areas include integration with point-of-sale solutions; connectivity for mobile devices such as handhelds and kiosks; customer loyalty programs; and customer analytics.

The IVN for retail is collaborating with HP to ensure the timely, relevant and reliable delivery of business information, such as promotion and pricing information, from retail headquarters to the store level.

“Accurate information is critical to retailers as they address the problems of customer intimacy, satisfaction and convenience,” said Gayle Papadopoulos, vice president and general manager, worldwide retail solutions, HP. “HP is proud to join the SAP industry value network for retail and offer the entire portfolio of HP products and solutions, including output management solutions, digital media and imaging solutions, wireless and handheld technology, and world-class HP hardware and services to retailers across the globe.”

Some of the IVN members working on solutions specific to the retail industry include Cap Gemini, HP and Solquest.

About SAP
SAP is the world’s leading provider of business software*. Today, more than 33,200 customers in more than 120 countries run SAP® applications—from distinct solutions addressing the needs of small and midsize enterprises to suite offerings for global organizations. Powered by the SAP NetWeaver® platform to drive innovation and enable business change, SAP software helps enterprises of all sizes around the world improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations. SAP solution portfolios support the unique business processes of more than 25 industries, including high tech, retail, financial services, healthcare and the public sector. With subsidiaries in more than 50 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE under the symbol “SAP.”

(*) SAP defines business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, product life-cycle management and supplier relationship management.

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

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