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Transforming Business Operations with SAP SE Case Study

Discover the Benefits of SAP SE's Innovative Solutions

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Introduction

German software giant SAP SE is headquartered in Walldorf, Baden-Württemberg. To handle client relationships and business processes, it creates enterprise software. The business is the top vendor of enterprise resource planning (ERP) software in the entire world. SAP is the second-biggest German company in terms of market capitalization, the third-largest publicly traded software firm in the world by revenue, and the largest non-American software company by revenue (Arena et al. 2020). In addition to ERP software, the company also sells database software and technology, cloud engineered systems, and other ERP software products, such as human capital management (HCM) software, customer relationship management (CRM) software, product lifecycle management (PLM) software, supplier relationship management (SRM) software, and supply chain management (SC) (Arena et al. 2020).

Introduction

Fast facts about SAP SE:

  • More than 110,000 employees from across 160+ countries
  • 22,000+ partner companies globally in different parts of the world
  • €27.84 billion total revenue (non-IFRS) in Fiscal year 2021
  • 245 million + subscribers in our cloud user base
  • 100+ development locations worldwide
  • Number 1 company in software company in Dow Jones Sustainability Index for 15 years (Benzmann 2021).

Fast facts about SAP SE:

Vision and mission statement

Mission statement

SAP (NYSE: SAP), the industry leader in enterprise application software, makes businesses of all sizes and in all industries run more efficiently. SAP enables individuals and organisations to collaborate more effectively and to use business knowledge more wisely in order to stay one step ahead of the competition, from the back office to the boardroom, the warehouse to the storefront, the desktop to the mobile device (Benzmann 2021).

Vision statement

“Our vision is to help the world run better and improve people s lives. Our solutions help people, businesses, and institutions achieve economic development, social progress, and environmental impact.” (Guo, Nikolay and Wan 2019).

Situation analysis of SAP SE

One of the biggest publicly traded businesses in the world is SAP. SAP is one of the most dependable brands on the market, and by investing in its R&D, it has a good market capture. At the same time, it may develop in the market by acquiring new businesses and applying low inflation rates. Despite having tremendous potential, it falls short in other areas. It invests very little money in its technology and falls short of industry benchmarks like the net profitability ratio. Since the majority of consumers use digital platforms, the company can sell its products through digital marketing and boost sales. It may also have issues like rising employee pay levels, which can be resolved by using effective marketing techniques (Gutmann, Kanbach and Seltman 2019).

Industry Structure and economic feature

The goal of SAP's strategy is to make every company run intelligently and sustainably. SAP, a world leader in enterprise application software, assists businesses in various sectors to operate at their peak potential: 87 percent of all worldwide trade is produced by SAP customers. Its advanced analytics, internet of things, and machine learning technologies assist in transforming customers' companies into intelligent corporations. In 25 industries throughout the globe, our end-to-end suite of applications and services empowers commercial and public customers to operate effectively, adapt continually, and make a difference. SAP makes the world function more smoothly and enhances people's lives with the support of a global network of clients, partners, employees, and thought leaders (Scheer 2022).

According to the needs of the business, the SAP enterprise structure contains a number of organisational units that are mapped to the business structure, such as Company codes, Sale organisations, storage facilities, manufacturing facilities, divisions, distribution channels, and shipping points. Legal business entities, profit centres, sales offices, etc. make up organisational units. They oversee a variety of corporate operations (Gutmann, Kanbach and Seltman 2019).

SAP SE Strategic

Business Level Strategies 

At the business level, historically, SAP has introduced products and made significant modifications to underlying functionality every five years. However, because of the cost and danger involved, most businesses wouldn't risk waiting more than eight to ten years between upgrades. The main SAP ERP and SAP Business Suite apps will henceforth be updated via enhancement packages released every six to twelve months. Customers receiving maintenance receive these upgrade packages at no cost, and deployment is optional. Every improvement package contains new and enhanced capabilities for numerous product categories and vertical sector applications. Additionally, SAP plans to pursue non-manufacturing sectors like retail, insurance, education, finance, and public sector using the same "blueprint." (Tanveer et al. 2019).

Corporate Level Strategies

The SAP SE’s governing body is the Executive Board. The role of the executive board is to commit to understanding the interests of the SAP and is bound by the policy of the company. The executive board is subject to the requirement of the stock corporation law. The executive board provides the supervisory board with regular, immediate and comprehensive reports about the essential issues within the business and the corporate strategy and potential risk factors (Khodjayev 2021).

Competitive Analysis and Advantage in the industry

SAP SE is at an advantageous position in the industry due to the following reasons:

  1. The company uses a single system that manages different business processes which include logistics, inventory and accounting.
  2. The solution’s modularity simplifies the integration of the new applications with the system (SAP ERP modules)
  3. Information security and policy of differentiation of access to information
  4. Improving the quality of use of cooperate resources and assets, increasing customer satisfaction (Lechowski and Krzywdzinski 2022).
  5. The company provides a unified platform for the application of mobile and cloud technologies, in-memory computing.

SWOT Analysis

Strengths

1. SAP invests a significant amount of finances on research and development to improve their business and in order to introduce new products and services to the global market.

2. SAP is currently in the secure position among the major leading technological companies in the world which makes it the most trustworthy company in the world.

3. The company holds the capability to provide highly innovative products and services to the global market and this makes them stay ahead of it’s time and technology.

4. The company has their personal and reliable supplier network with the availability of sufficient raw materials to offer to their supply chain.

5. SAP has the availability of high skilled workforce to work efficiently which helps them to provide their customers with the best quality services

6. SAP has a long distribution network that is able to reach the largest area in the market.

7. SAP provides a wide range of services which contains 25 separate industrial solutions formulated across the different ranges of industries. The company includes mining and manufacturing to financial services and higher education (Martin and Ebbers 2022).

 

Weaknesses

1. SAP still uses the cloud-based system which is the ‘business ByDesign ERP system’ for medium to small businesses.

2. The company does not spend enough money on innovative and new technology.

3. SAP has not demonstrated a culturally diverse and inclusive workplace environment.

4. The company has disappointing results in the net profitability ration and the net distribution percentage failing to meet the standard industry average.

5. SAP does not engage in effective financial planning for instance, the asset ratios of the company are misleading which leads to the creation of errors in financial plans (Martin and Ebbers 2022).

 

Opportunities

1. The accusation of a few companies can be a great opportunity for SAP SE so that they are able to expand the company to become an ERP supplying company internationally.

2. The lowering of the inflation rates will make the company stable and more attractive to the potential customers.

3. The new environmental polices in the company can bring new opportunities to introduce new and more products to the market.

4. There is an open opportunity for the company to introduce new technology in the market which will lead to the launching of a new pricing strategy in order to get a high share in the market.

5. The green drive concept by the government produces eco-friendly products that environmental activists and other eco-friendly customers will like to buy (Martin and Ebbers 2022).

 

Threats

1. Oracle is one of the major competitors and the biggest business threat for SAP in the market.

2. The new technologies that stand as a barrier for the company is the use of cloud-based ERPs which are getting popular and the open sources threaten the SAP company in significant manner.

3. Unpredictable changes in the consumer behaviours which can lead to fewer buys resulting to a typical buying pattern.

4. An irregular supply of innovative products can lead to competition in the market increasing the innovative product sales.

5. The slightest fluctuations in the sales and currency of the countries in which the SAP SE is located.

6. The rise in the pay level of the employee is a huge threat to the company as it affects profitability.

7. SAP company might face serious loss due to the imitation and representation of their products at a low-cost (Martin and Ebbers 2022).

 

 

PESTLE Analysis

Political factors:

 

1. Risk of military invasion

2. Level of corruption

3. Intellectual property protection

4. Taxation

5. Wage legislation

6. Mandatory employee benefits

7. Favoured trading partner (Niemann et al. 2021).

Economic factors:

 

1. Type of economic system in the country of operation

2. Skill level of the workers I application software industry

3. Education level in the economy

4. Discretionary income

5. Economic growth rate (Niemann et al. 2021).

 

Social factors:

 

1. Leisure interests

2. Demographics and skill level of the population

3. Cultural factors related to the country of operation (Niemann et al. 2021).

 

Technological factors:

 

1. Rate of technological diffusion

2. Impact on value chain structure in technology sector

3. Impact on cost structure in application software industry (Neborachko, Pkhakadze and Vlasenko 2019).

Environmental factors:

 

1. Weather

2. Climate change

3. Recycling

4. Endangered species

5. Waste management in technology sector (Neborachko, Pkhakadze and Vlasenko 2019).

Legal Factors

1. Discrimination law

2. Employment law

3. Data protection

4. Consumer protection and e-commerce

5. Health and safety law  (Neborachko, Pkhakadze and Vlasenko 2019).

 

Target Market Analysis of SAP SE

The target market of SAP SE is:

Demographic Characteristics of Market

  1. Both genders
  2. Age group 20-50+ years
  3. Territorial area where the company is located
  4. Diverse cultural and ethical background (Martin and Ebbers 2022).

Psychological Characteristics of the Market

  1. Knack for innovative technology
  2. Cost effective products preferences (Martin and Ebbers 2022).

Behaviors of the Target Market

  1. Supports new products in the market
  2. Supports cost effective products (Neborachko, Pkhakadze and Vlasenko 2019).

Strategies appealing to the market

  1. Introduction of new and innovative products
  2. Introduction of cost-effective products (Neborachko, Pkhakadze and Vlasenko 2019).

Marketing Mix of SAP SE

Product Strategy

The product strategy is created to encourage the purchase from the global customers and clients. The product offerings include the following artificial intelligence, IoT, Blockchain, Quantum computing and machine learning (Niemann et al. 2021).

Pricing Strategy

The pricing strategy is to generate revenue from the following areas:

  1. SAP App center
  2. SAP Store
  3. SAP enterprise learning(Press 2023).

Promotional/ Advertising Plan

The promotional marketing strategies used by SAP are is free trials to try potential consumers and penetrate new market. The products are sold at discount to maintain customer base. SAP uses marketing strategies like commercials as tools which are shown through traditional media channels like television, billboards business magazines  (Press 2023).

SAP SE Competitive Analysis

Strength’s comparison with competitors

SAP is at an advantageous position due to its popularity in market as compared to other alternative competitors and the use of innovative marketing strategies have been beneficial for their company  (Scheer 2022).

Weaknesses’ comparison with competitors

The weakness of the company is that SAP’s profitability might be hampered by the cultural context and unpredictability of the consumers (Press 2023).

Organization’s Competitive Advantage

SAP is at a competitively higher position as they have significantly better market hold than most other competitors (Press 2023).

Key success factors

  1. Experience of industry and industry-specific tools
  2. Proactive communicators
  3. Situational awareness
  4. Technical strength alongside the bench strength of resources

Problems and Issues in SAP SE’s Organization

  1. Lack of cultural diversity in the organization
  2. Lack of culturally sensitive workers(Press 2023).

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