A global corporation far away from the tech strongholds – 50 years of SAP
Were there when SAP was founded half a century ago: Hasso Plattner (l) and Dietmar Hopp. Photo: Ronald Wittek/dpa
© dpa-infocom GmbH
In 1972, five former IBM employees founded a company that would revolutionize the business world: SAP. They are preparing for the future with a new strategy.
Half a century ago, five former IBM employees laid the foundation for a heavyweight in the German economy.
On April 1, 1972, Dietmar Hopp, Hasso Plattner, Klaus Tschira, Hans-Werner Hector and Claus Wellenreuther founded the company «Systemanalyse Programmentwicklung». Their goal was to develop standard software that would map business processes in real time.
50 years later it is clear that they succeeded. The cumbersome name has been replaced. Today the company still has three letters and is known worldwide: SAP.
A giant emerged in the southwest: one of the most valuable corporations in Germany and Europe’s largest software manufacturer. The company is based in Walldorf near Heidelberg, a rather quiet and less glamorous location, far away from the tech strongholds in the metropolises. In 2021, SAP generated sales of around 28 billion euros and after-tax profits of around 5.4 billion euros.
“Even if we thought we had good chances when we started, we could not have imagined when we founded SAP that one day we would develop into such a global corporation with over 100,000 employees worldwide,” says founder Hopp. When it was founded, they still declared “a few old hands on IT” to be crazy. The project was almost a small revolution at the time. “The prevailing opinion at the time was that the processes in the companies were too different to be able to develop standard software for them,” says Hopp.
He and Plattner, who was still Hopp’s assistant at the time, found out about major processing problems at one of their IBM customers and developed a pilot application. They left IBM, secured the rights to the software and agreed with their customers “adequate payment, computer use at night and on weekends and free use of offices,” says Hopp. “That was when SAP was born.” A start-up from another time.
After the IPO in 1988, Hopp was spokesman for the board for ten years before he chaired the supervisory board for five years. In 2005 he left the board. Today, Hopp is best known as a patron of the football club TSG Hoffenheim, in whose rise to the Bundesliga he was significantly involved with his money and he not only made friends among football fans.
In addition to Hopp, Plattner in particular is known to the general public among the founders. SAP gave the two managers billions. In the league of the richest Germans, they play at the top.
Unlike Hopp, Plattner is still active at SAP. The former board spokesman has been head of the supervisory board since 2003. Last year, the 78-year-old announced that he would stand for re-election for another two years in 2022. This was not well received everywhere: Shareholder representatives, for example, criticized the term of office with regard to the necessary control distance and what they saw as a sluggish succession plan.
Christian Klein has been the sole spokesman for the board since April 2020. He previously ran the company for several months together with the American Jennifer Morgan after parting ways with longtime CEO Bill McDermott in Walldorf. Morgan’s split in the middle of the pandemic came as a surprise. At that time, she was the first woman to head a Dax company.
Klein can also show superlatives: When he took over the top position with Morgan in 2019, he became the youngest CEO of a Dax group at the age of 39. Klein is a child of the region. He grew up not far from the company headquarters in Walldorf. The 41-year-old is a real SAP native: He has been with the company since 1999, where he started as a dual student. The business economist seems relaxed in appearance. He rarely wears a tie and likes to wear a white T-shirt under his suit.
Klein has made a strategic shift. He wants to turn the software company into a cloud company. Customers should switch from the licenses, for which they pay a high one-time fee, to a subscription model in the cloud and thus regularly flush money into the till. 2022 is a very special year because of the company anniversary, Klein wrote to the shareholders in the annual report. “Also, 2022 will be a pivotal year for our own transformation as we focus even more on our cloud goals across the organization.” By 2025, revenue from cloud businesses is expected to more than double.
Founder Hopp sees SAP very well positioned with Klein. It is admirable how Klein is driving the transformation. “He has to completely change many processes within SAP that many employees have become accustomed to over the years,” says Hopp. “This is really a big task that he tackles with full vigour.” If SAP consistently follows the path it has taken, he sees the company on the right track. The market potential is still enormous, since almost all companies have to continuously develop their IT strategy.