SAP Co-CEO Henning Kagermann Cites “Strategic Agility” As Key Business Success Factor In 2008 And Beyond

SAP Executives Léo Apotheker and John Schwarz Translate “Strategic Agility” Vision into Actionable Steps for Companies of All Sizes


ORLANDO, Fla. and BERLIN - May 2008 - According to Henning Kagermann, co-CEO of SAP AG (NYSE: SAP), “strategic agility” is the number-one cornerstone of a successful business in 2008 and beyond. Addressing capacity crowds totaling 25,000 CEOs, IT executives and users from customer and partner organizations at the first SAPPHIRE® conferences to welcome Business Objects as a part of the SAP organization, Kagermann noted that strategic agility—which requires the powerful combination of insight, flexibility and efficiency—allows organizations to respond more effectively to shifting business challenges and opportunities, and that IT is the key enabler for it.

At later keynote sessions, Léo Apotheker, co-CEO and president, Global Customer Solutions and Operations, SAP, and John Schwarz, CEO, Business Objects, an SAP company, and member of the Executive Board, SAP, translated the vision of strategic agility into a series of actions that companies are already taking to increase their value to customers. The keynote presentations were delivered at SAPPHIRE 2008, SAP’s international customer conferences, held in Orlando, Florida, May 4-7, and in Berlin, Germany, May 19-21. SAPPHIRE 2008 was also co-located with meetings of ASUG, the Americas’ SAP Users’ Group, in Orlando, and the Business Objects User Conference in Berlin.

Co-CEO Henning Kagermann Says SAP Is Transforming the Way People Work
During his keynote presentation at both events, SAP co-CEO Henning Kagermann observed that business network transformation has been rapidly materializing. Kagermann cited examples of companies that are increasingly drawing on the flexibility and expanded capacities of business networks to deliver superior aggregate customer value more quickly and to adapt to changing economic conditions and shifting industry boundaries. Kagermann pointed out that companies are rapidly adopting one or both of the following types of networks: collaborative networks, which drive innovation by bringing together companies, their partners and customers, and coordinated networks, which use automated processes to help organizations quickly and efficiently scale up operations profitably.

“Business networks are relevant to everyone,” said Kagermann, “and true business network collaboration can only be conducted on a services-based IT infrastructure that is flexible and efficient enough to allow companies to adapt their business processes to business needs. Since we introduced our product road map in 2003, we have demonstrated that service-oriented architecture is more than a conceptual direction or vision. In fact, SOA is in mass adoption, as evidenced by more than 38,700 productive SAP NetWeaver deployments and more than 10,000 productive systems of the latest, service-enabled version of SAP ERP. It’s clear that customers have bought into and are rapidly adopting our road map, and recognize that SOA allows for tremendous strategic agility in business environments, as well as the potential to change the way in which people work.”

Kagermann highlighted one of the ways in which SAP is transforming the way people work through a demonstration based on a new co-innovation collaboration between SAP and Research In Motion (RIM). The demo showed how connectivity between the SAP® Customer Relationship Management (SAP CRM) application and the BlackBerry platform allows users to easily exchange CRM data between platforms to ensure that they have easy, intuitive access to the latest information at all times. In addition, the demo showed how embedded Business Objects software is adding to the depth of information and insight available to the user at any time.

“Where will we go with SAP Business Suite to support strategic agility in the future?” said Kagermann. “From 2008 and beyond, we are focusing on three priorities: lowest possible TCO, continuous innovation and easy consumption of new functionality. Our new enhancement packages—which are unique in the industry—provide customers the ability to continuously consume SAP innovation without having to go through a software upgrade, minimizing disruption. Companies can add new functionality incrementally and only when needed. In addition, we are making new innovation easy for business users to consume through harmonized interfaces and embedded analytics that deliver exactly what users need to be productive. Moving into the future, SAP’s product offering will embrace SOA even more deeply to empower businesses and networks with new levels of flexibility, efficiency and insight.”

Co-CEO Léo Apotheker Expands Upon the Role of IT in Strategic Agility
In his keynote presentations, SAP co-CEO Léo Apotheker observed that with the business world getting “flatter,” differentiation is becoming more challenging due to greater connectivity and “hyper competition.” Apotheker stated that worldwide competition is going beyond leveraging the reduced cost of labor. Existing and new competitors are rapidly becoming global, product variants are increasing and product life cycles are shortening.

The best response to hyper-competition is not to simply develop more products and variants faster, notes Apotheker, since this is not a sustainable solution. Instead, companies need to be able to innovate the model of their business, not just their products or services, by changing their fundamental value proposition, profit model or resources behind production in a way that is not easy to copy and that naturally differentiates the organization. This requires great levels of collaboration found more abundantly in business networks than in independent organizations.

“Business networks create sustainable competitive advantage in a flat world,” said Apotheker. “Companies such as Harley-Davidson, Procter & Gamble, Colgate-Palmolive and Nokia have shared excellent examples in these keynotes of business networks in action. To succeed as these organizations have, it’s important to recognize that business networks have become a key new source of competitive advantage in business today; that your ‘entry ticket’ into a business network is operational excellence within your organization and that your ability to collaborate is key to your contribution to the success of the network. SAP can deliver this operational excellence and business network collaboration.”

In order to achieve the level of operational excellence and collaboration required to participate successfully in a business network, you must have an IT infrastructure that offers great flexibility, efficiency and insight, stressed Apotheker. Apotheker described SAP’s own business network, its partner ecosystem, as delivering co-innovation to SAP customers to provide rapid time to value, filling “white space” gaps and solving immediate business challenges. In his keynotes, Apotheker used examples to make this point in Orlando, leveraging the experiences of Coca-Cola Enterprises, working with SAP, Cisco Systems, Inc. and Datria Systems, Inc; in Berlin, he highlighted the co-innovation relationship with RIM.

“Looking ahead,” Apotheker said, “companies with the most powerful and flexible business networks will continue to emerge as market leaders. To support best-run networks, companies must employ flexible, adaptive and open IT architectures that can exchange information, processes and innovation beyond business boundaries to capture the collective intelligence and capabilities of the entire network. Since SAP has completed its SOA road map, it has the tools, methodologies, services and business software, and now the insight with software from Business Objects, to support the many types and sizes of organizations—including small, midsize and large enterprises—that comprise a business network.”

SAP Executive John Schwarz Cites Advantage of Tightly Linked Strategy and Execution
John Schwarz, CEO, Business Objects, an SAP company, and member of the Executive Board, SAP, used his keynote presentations to reflect on his first 100 days as an SAP executive. Schwarz shared the synergies and customer benefits he has witnessed as a result of close collaboration between the two organizations and the availability of combined product offerings.

Schwarz went on to describe how Business Objects solutions enable business users to make more informed decisions by converting raw data into trusted information, which in turn guides strategy and helps customers optimize business performance. A key to what differentiates Business Objects is its ongoing commitment to interoperability with any database, application or IT system, and support for the heterogeneous computing environments that companies are increasingly encountering as they engage in business network transformation.

Schwarz pointed out that, according to a report by the Harvard Business Review, nine out of 10 organizations fail to achieve their performance goals due to gaps between strategy and execution. Combining Business Objects’ expertise in strategy with SAP’s expertise in business process efficiency and flexibility allows customers to close the loop between strategy and execution—which puts organizations in a unique position to solve this long-running challenge. Both companies have also brought together their strong momentum and solutions addressing business users’ need for user-friendly but powerful tools that give companies insight into their business and network, make better business decisions and ultimately help optimize their company’s performance.

“By offering a solution that connects insight with execution, SAP and Business Objects are energizing organizations and networks with new levels of business performance and are taking market share from the competition,” said Schwarz. “The unique combination of tightly integrated insight and execution is helping SAP and Business Objects customers achieve new levels of strategic agility in the marketplace. Our debut together at SAPPHIRE has been a great opportunity to showcase that we have most complete portfolio, innovative technology and customer-focused ecosystem—all of the elements required to transform the way the world works by connecting people, information and businesses.”

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.