Businessmodel of SAP

Customer Segments

SAP has a mass market business model, with little differentiation between customers. Its customers are any enterprises that wants software for the purpose of managing operations and employees.

Value Proposition

SAP offers two primary value propositions: innovation and brand/status.

The company has a long history of introducing innovating projects, ranging from its groundbreaking ERP software to its recently released SAP HANA in-memory platform. Beyond this background, it also has three major initiatives specifically dedicated to innovation:

SAP Labs – These are facilities focused on enhancing core SAP products and developing new cutting-edge offerings based on SAP HANA. The company operates 16 labs in high-tech clusters in 13 countries worldwide, and has worked on projects for 98 of the 100 most valuable worldwide brands.

Innovation Center Network – This program aims to combine the agility and creativity of a startup with the resources of a major corporation. It identifies multidisciplinary teams (featuring product experts, engineers, designers, business developers, etc.) and connects them so they can collaborate on a wide variety of projects. Specifically, they develop unconventional concepts with the goal of opening up new markets for SAP’s products; examples include smart traffic solutions and customized cancer therapy.

Global SAP Co-Innovation Lab (COIL) Network – This program aims to improve the capabilities of SAP’s customer and partner ecosystem through a network of global expertise and leading technologies. Specifically, it enables members to engage in innovative project-based efforts. Resulting products are displayed at COIL events, facilities, and the SAP Community Network.

SAP maintains a strong brand. It is well-established because of its long history, which includes many firsts. It is well-regarded because of its success. The company is the top player in the enterprise applications industry in terms of revenue from software and related services. It is also the third largest independent software producer based on market capitalization. It has over 12,000 partner firms and over 300,000 customers, with its client base including 87% of the Forbes Global 2000.

Channels

SAP’s main channel is its direct sales force. The company also sells its products through resellers, systems integrators, service providers, infrastructure providers, and third-party software vendors. SAP promotes its offerings through its website, online advertising, and participation in webinars and in-person events such as conferences and forums.

Customer Relationships

SAP’s customer relationship is primarily of a self-service nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website features a section called SAP ONE Support Launchpad, a collection of self-help tools and resources including articles and product overviews. SAP also offers online training and certification courses.

There is also a personal assistance component in the form of paid live training classes and phone,     e-mail, and live chat support. Moreover, the company offers consulting services for areas such as business transformation services, cloud professional services, and custom application development. Finally, there is a community element with a forum called the SAP Community Network (SAP).

Key Activities

SAP’s business model entails designing and developing new software products.

Key Partners

SAP maintains the PartnerEdge Program, through which it aligns with companies who want to do the following:

Build Solutions – The company assists firms that develop applications and software based on SAP platforms. Types of partners include developers and independent software vendors (ISVs), as well as OEMs seeking to bundle SAP technologies with their own products.

Sell SAP Solutions – The company works with firms that resell SAP offerings. They may be assisted at any point of the customer lifecycle ranging from sales to implementation. Specific forms of support include training and marketing resources.

Service SAP Solutions – The company works with firms that offer consulting and implementation assistance to customers as they implement and integrate SAP solutions.

Run SAP Solutions – The company works with firms that seek to host and run SAP offerings for their clients so the customers can focus on growing their businesses.

SAP’s specific partners for the above purposes include Hewlett-Packard Enterprise, Smart Utility Systems, Macromicro, Innovapptive, OpenText, Accenture, Intel, and IBM.

Finally, SAP maintains the Startup Focus Program, through which it works with promising startups in the predictive analytics, real-time analytics, and Big Data space. It helps the firms build applications on the SAP HANA platform, providing them with funding, sales/marketing support, and access to its community of thought leaders and customer base of over 300,000.

Key Resources

SAP’s main resource is its technology staff members, who are constantly working to introduce new, cutting-edge technologies. The company also relies heavily on its sales/marketing team so that it can keep bringing in new customers. Finally, its many research facilities represent a significant priority.

Cost Structure

SAP has a value-driven structure, aiming to offer a premium proposition by supplementing its products with training and consulting services. Its biggest cost driver is sales/marketing expenses, a fixed cost. Other major drivers are cost of services, a variable cost, and R&D and administration expenses, both fixed costs.

Revenue Streams

SAP has three revenue streams:

• Cloud subscription sales
• Software licensing fees
• Service (training and consulting) fees Pricing information for each is not readily available.