About SAP in my books
In my book “The Rules of Super Growth Stocks Investing“:
- Section 2-3
And the book “The Rules of 10 Baggers“:
- Section 7-2
Company Profile
Origin of the company
When Xerox (ticker: XRX) exited the computer hardware manufacturing business in 1971, it asked IBM to migrate its business systems to IBM technology. As part of IBM’s migration compensation, IBM obtained the rights to the Scientific Data System (SDS)/SAPE software repository, and five IBM engineers subsequently founded SAP.
Founding of the company
SAP (ticker: SAP) was founded in West Germany in 1972. The five founders (Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschirra and Klaus Wellenreut) in Germany When Weinheim first founded the company, it was named “Systemanalyse und Programmentwicklung” (System Analysis and Programming), and later the company name was shortened to SIA based on “Systeme, Anwendungen und Produkte in der Datenverarbeitung” (Data Processing Systems, Applications and Products).
Services provided
SAP’s main product is enterprise resource planning (ERP). It is the world’s largest ERP software vendor, and together with Oracle, it dominates the global ERP software market.
According to Forbes magazine, SAP is the world’s third largest software company after Microsoft and Oracle.
Initial Public Offering
SAP was listed on the Frankfurt and Stuttgart stock exchanges in October 1988. Ten years later, SAP’s American Depositary Receipts (ADRs) were first listed on the New York Stock Exchange (NYSE) on August 3, 1998.
SAP Products
Importance of SAP products
Since SAP sells Enterprise Resource Planning (ERP), it is a typical very complex and large-scale software with several characteristics:
- SAP is extremely important to the back-end operations of an enterprise. Without it, the daily operations of the enterprise will come to a halt.
- Due to its high fees, almost all companies around the world that use its software are medium and large enterprises.
- Because its products are very complex, companies must hire large technology consulting firms such as Accenture to assist them in completing the introduction.
Software composition
Its products usually include the following main software:
- Human Capital Management (HCM) Software
- Customer Relationship Management (CRM) Software
- Enterprise Performance Management (EPM) Software
- Product Lifecycle Management (PLM) Software
- Supplier Relationship Management (SRM) Software
- Supply Chain Management (SCM) Software
- Business Technology Platform (BTP) Software
- SAP AppGyver programming environment
Product Development History
Traditional version
- In 1972, SAP R/1 was launched on the market.
- Six years later, in 1979, SAP released the SAP R/2.
- In 1982, SAP redesigned business solutions.
- In 1992, from SAP R/2 to SAP R/3, SAP followed the development trend and realized the transition from mainframe computing to client-server architecture.
- SAP’s Internet-based mySAP.com redefines the concept of business processing.
- In March 2011, after acquiring the business intelligence software company Business Objects, SAP officially released a new generation of business analysis solutions BusinessObjects 4.0, which adopted a unified common architecture, provided a good user experience, and realized real-time business analysis.
Cloud-based version
- Since 2012, SAP has acquired several companies that provide cloud computing services, notably Concur Technologies, SAP’s largest acquisition in history in 2014. It has also established strategic alliances with IBM and Microsoft to expand its enterprise service channels.
- In 2015, SAP S/4HANA was launched as a native business suite developed for the SAP HANA Cloud platform.
- In 2016, SAP launched SAP HANA Express Edition, which can be executed on personal computers or cloud computing platforms, making it convenient for students and other small-scale developers to use.
Latest Operation Status
Catch up with the AI trend
In September 2023, SAP released an artificial intelligence agent called Joule, which can retrieve data, extract insights, answer questions, and combine agents from different fields (such as supply chain, procurement, and finance) to Businesses are here to break the phenomenon of information silos.
SAP is introducing collaborative AI agent technology to Joule, its generative AI smart assistant that truly understands the enterprise, expanding Joule’s capabilities to support 80% of SAP’s most commonly used operational tasks while embedding Joule more deeply into the company’s various business functions. solution.
The new SAP knowledge graph solution will be launched on SAP Datasphere and Joule in the first quarter of 2025, providing users with deeper business insights by seamlessly matching relevance and context in SAP’s data environment, enabling enterprises to make better data-driven decisions.
The solution significantly reduces the complexity of manual data modeling by providing ready-to-use relationships between business entities such as purchase orders, invoices, and customers. SAP Knowledge Graph integrates AI into SAP’s unique business semantics, effectively reducing the risk of inaccurate or irrelevant results, and enabling enterprises to more easily build intelligent applications and use generative AI more effectively.
2024 Q3 Financial Report
SAP announced its third quarter financial report on October 23, 2024, with the following highlights:
- Revenue rose 9% year-on-year to 8.47 billion euros, beating analysts’ expectations of 8.45 billion euros.
- Adjusted earnings per share came to 1.23 euros, beating market expectations of 1.21 euros.
- The cloud division’s revenue increased by 25% year-on-year to 4.35 billion euros, and the cumulative orders for the cloud business also increased by 25% to 15.4 billion euros.
The artificial intelligence boom has driven strong demand for cloud computing. SAP’s third-quarter results exceeded market expectations, and it also raised its full-year financial forecast, which boosted its stock price.
The good news of its performance drove SAP’s share price up by more than 5% on the 22nd, and its market value increased by US$26 billion in one go, squeezing out Dutch semiconductor manufacturing equipment maker ASML to become the leader in market value among European technology companies.
Business Outlook
Looking ahead, SAP raised its forecast for adjusted operating profit this year to between 7.8 billion and 8 billion euros, up from its previous estimate of 7.6 billion to 7.9 billion euros, mainly based on strong cloud and software revenue. SAP estimates that cloud and software revenue this year will be between 29.5 billion and 29.8 billion euros, an increase of 10% to 11% year-on-year, compared with the previous forecast of 29 billion to 29.5 billion euros.
SAP CEO Christian Klein pointed out that about 30% of cloud contracts in the third quarter used AI, and he is optimistic about the continued growth of cloud business and AI-related services.
Key acquisitions
- In 2007, SAP announced that it would acquire business intelligence software company Business Objects for 4.7 billion euros in cash, officially entering the business intelligence field.
- In 2010, SAP announced that it would acquire business software developer Sybase for $5.8 billion in cash.
- On September 19, 2014, SAP acquired travel and payment software provider Concur Technologies for $8.3 billion at $129 per share.
- On November 11, 2018, SAP spent $8 billion in cash to acquire software company Qualtrics.
Capital market Performance
Market Cap
As of December 30, 2024, SAP’s market value is US$289.24 billion, which is a large-cap stock in the US stock market.
Price-to-Earnings Ratio
As of December 30, 2024, SAP’s price-to-earnings ratio is 98.62 times.
Stock price performance
SAP alone has contributed nearly 40% of the increase in Germany’s DAX 30 index so far in 2024. SAP shares rise more than 70% in 2024, driven by corporate clients’ shift to cloud computing and the company’s decision to embed business artificial intelligence into core business processes.

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