Essay on SAP SWOT

Submitted By cdxdtc
Words: 1832
Pages: 8

Company Overview
SAP AG, commonly acknowledged as SAP, is the worldwide leader in corporate applications regarding to enterprises software and software-related services to manage business operations and customer relationships (MarketLine, 2014). SAP started its business from its headquarter Walldorf, Germany in 1972 and has already set offices in over 180 countries with more than 66500 employees and over 253500 customers. The core business and strategy emphases are laid on selling licenses for applications, database, analytics, technology, mobile and cloud, all mechanized by the SAP HANA platform for consulting and education services. The software and services empower companies of all sizes to perform better in the connections with their suppliers and customers so as to manage and track their daily operations (SAP AG, 2013a). Over the 40 years’ development, acquisition has played an essential role in SAP’s development. By referring to the latest annual report (2013b), the total number of acquired companies is six in FY2013, which are all small or middle-sized software and technology companies. According to SAP capital market information (2014), total revenues in FY2013 calculated on the basis of IFRS is 16.82 billion pounds. The purpose of this report is to explore the current position and potential future development of SAP through the evaluation of SWOT framework.

SAP SWOT overview
Strengths
Weaknesses
Robust innovation on research and development
Diversified geographical and market reach
Lack of product diversification
Opportunities
Threats
Promising market and growing strong customer loyalty
Increasing adoption of cloud computing
Intense competition in the industry
Uncertainty from exchange rate fluctuations

SWOT Analysis In Details
Strengths
Robust innovation on research and development
R&D is the root of fresh discoveries that shape future prospective for the company and will make global efforts in creating co-innovation with customers, partners and academia. SAP currently possesses 5500 validated patents globally and of these over 700 were authorized in FY2013. Besides, SAP’s R&D expenditure is increasing annually and in FY2013 the expenditure covers approximately 13.6% of total revenues (MarketLine, 2014).

Practical efforts have made in encouraging most employees to involved in developing innovative technology and software. According to Trittmann et.al (1999) who made a case study on SAP, they found that all 20 employees interviewed were involved in at least one software development project during past 12 months. Such strong endeavor in R&D allows SAP to further advance its leadership and expand current portfolio of service applications. On Feb. 2014, SAP developed a fresh technology infrastructure, which is based on the SAP HANA Cloud Platform for in-vehicle mobility services with BMW Group. This collaboration enables SAP to make one step closer toward creating the connected car as a reality (SAP News, 2014). Adhering to continuous research and development, SAP has guided the way in the applying advanced technology to do so better and faster than the competition.

Diversified geographical and market reach
SAP has developed globally and tremendously, with the majority of colleagues located in 14 labs of 12 countries (SAP AG, 2013a). It has enriched geographic presence with business in over 180 countries. For example, rest of EMEA has contributed the largest amount, approximate 32% of SAP’s total revenue in FY2013 and US has covered about 27.7%, while the rest of countries like Japan, Germany account for about 40% (SAP AG, 2013b).

SAP’s globalization vision brings the strength and experience from a worldwide team to face the increasing pace of innovative challenge. Daily News (2013) stated that SAP would invest 20 million euro to open its second innovation base in Istanbul, which was the first research and development center founded by a global software company in Turkey. Such expansion has significant…