Inside SAP: A vendor dossier

SAP is Europe's biggest success story in software. It is now over 30 years old and has grown to employ over 30,000 staff, leading a pack of US vendors that contains Oracle, PeopleSoft, Siebel and a large chunk of Microsoft. Its business is serious but, as Tony Hallett finds out, it is hardly an overly serious business.

SAP is a class act. Not only does it seem to be slowly shedding an image of large software packages that cost millions and then don't always work properly but it has been grinding away at a whole range of applications-selling competitors recently.

Take some recent announcements. At the company's Sapphire user conference in New Orleans this year, SAP Americas CEO Bill McDermott said: "We're trying to keep up with the resumés from the competition. We're the place to be right now."

Don't believe him? Well how about second quarter results - up over last year, with licence sales on a continuing positive trend and revenue from small business sales (broken out for the first time) standing at 28 per cent of $2.2bn in three-month revenue.

For the record, a small business to SAP means fewer than 2,500 employees. Mid-market means customer revenues of $200m to $1.2bn a year. Yes, it is still mostly a big-company company. (For more, see our SAP fact file.)

So it's doing well, it's organised, its image is looking good right now - dig those effective adverts in airports around the world and a marketing function that has stepped up a gear since relocating to New York. But would you do business with them?

If you never visit SAP's global headquarters, at Walldorf, just outside Heidelberg, don't expect a lot of dull Germans, caricatures from a VW advert. A balanced marble ball in the main reception (see photo), over a metre in diameter is, some say, a tip of the hat to the importance of good engineering - a sphere being such a hard shape to craft perfectly.

The balanced marble ball in SAP's Walldorf headquarters.

But staff from around the world, some wearing jeans and playing table football - sorry, fußall - is testimony to the simple fact that a software company needs a spirit of fun, innovation and inclusiveness to thrive.

Five ex-IBMers founded SAP (it is short for Systems Analysis and Program Development) in 1972. While four of those names hardly drip off the tongue, co-founder Hasso Plattner embodied the company for several decades. With his global outlook, passion and charisma, not to mention the small matter of technical and business nous, he did what dozens of others in Europe have failed to do: steer a software vendor to a position of global leadership.

He has recently left the frontline. The current CEO is Henning Kagermann. It's a bit like comparing Arsene Wenger to Sir Alex Ferguson. (Apologies to those not familiar with football.) Kagermann is like the former, namely professorial. Plattner is the Ferguson figure, determined. Or so the cliché goes.

But what's the view of a veteran employee few potential customers would know of? Herbert Illgner has been at SAP for 11 years, seeing the 'x10 in 10' phenomenon - growth from fewer than 3,000 staff to over 30,000 in a decade. He has served as CIO and a number of other positions. Now he is head of SAP's production unit, pulling together all product development.

"This used to be a technology-driven company," he tells me, as I sit in a basic room in Walldorf, feeling overdressed in a grey suit (no tie). "Now it is more about process. But it is always about problem solving."

He and other veterans - a few have been there over 20 years - attribute a lot to Plattner, who unfortunately may still be most famous for his perma-tan and yachting duels with Oracle boss Larry Ellison. Plattner, say those who know him, is a pragmatic risk-taker, someone who realised early on that success would come from embracing the US market and partnering with the likes of IBM, HP, DEC, Informix and Oracle (the latter two for databases) over the years, back when partnering wasn't a no-brainer. (Continued on next page...)