the leader in open integrated software solutions merrill lynch tmt conference london, june 12, 2002...
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THE LEADER IN OPENINTEGRATED SOFTWARE
SOLUTIONS Merrill Lynch TMT Conference
London, June 12, 2002
Werner Brandt,
CFO & Member of the Executive Board, SAP AG
SAP AG 2002, ML London, WB, June2002 2
Safe harbor statement
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “intend,” “may,” “will,” “expect,” and “project” and similar expressions as they relate to the Company are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the Company’s future financial results are discussed more fully in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 20-F for 2001 filed with the SEC on March 28, 2002. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
SAP AG 2002, ML London, WB, June2002 3
Agenda
SAP: Leading the Way in Business Software SAP: Leading the Way in Business Software
mySAP.com: The Growth Strategy
Leader in Open, Integrated Software Solutions
Infrastructure & Technology Update
SAP AG 2002, ML London, WB, June2002 4
6,265 mill. € Revenue
25,000Employees
15,000 Customers
in 120 Countries
One-Step Business
1999/2000
SAP Milestones over 30 Years
0.3 mill. € Revenue
9 Employees
R/1
1972
5.1 mill. €Revenue
60Employees
50 Customersin 2
Countries
R/2 Mainframe
1979 . . . . .
424 mill. € Revenue
3,200Employees
2,800 Customers
in 35 Countries
Client/Server
1992
7,341 mill. € Revenue
29,000Employees
18,000 Customers
in 120+ Countries
2002
Smart BusinessSolutionsmySAP Technology
SAP AG 2002, ML London, WB, June2002 5
Improving the Top Line...: CAGR 35% 10 Years
1991
€362m
42%
1992
€425m
18%
1993
€563m
33%
1994
€936m
66%
1995
€1.38
47%
1996
€1.9
38%
1997
€3.02
59%
1998
€4.32
43%
1999
€5.11
18%
2000
€6.27
23%
2001
€7.34
17%
R/3R/3
mySAP.commySAP.com
10
8
6
4
2
0
CAGR sales: 35%
€ bn
Target 2002: +15%
SAP AG 2002, ML London, WB, June2002 6
...into the Operating Line*: CAGR 35% 10 Years
1991 1992 1993
€8866%
€76-16%
1,000
800
600
400
200
01994 1995
€11653%
1996
€23098%
1997
€33345%
1998
€48246%
1999
€77561%
2000
€90116%
2001
€9425%
€1,24432%
€ mill.
*excl. stock-based compensation and TopTier acquisition cost: 1999 onwards
1,200
1,400
1,600 €1,47118%
mySAP.commySAP.com
R/3R/3
CAGR Operating income*: 35%
CAGR Net income*: 31%
2002 Target: >21% of revenue
SAP AG 2002, ML London, WB, June2002 7
SAPPHIRE highlights SAP‘s unique strengths
Leading in Products and Technology
Most complete E-Business Suite
Unparalleled Global Spread 50,000 Installations in
120+ countries
The Largest Installed Base 18,000 Companies run SAP
Matchless Business Experience Providing 21 Industry Solutions 30 years of blending industry
expertise
Providing Solutions for Customers of all Sizes
Unique Distribution Power Multi-channel and Advanced
Account Mgmt. Program supported by Superb Brand
SAP AG 2002, ML London, WB, June2002 8
Expanding Leadership in Business Software
Market Share FY2000 *
* Based on License Revenues
Market Share FY2001 *
SAP39%
ITWO13%
SEBL20%
ORCL19%
PSFT9% SAP
43%
ITWO 8%
SEBL 20%
ORCL17%
PSFT 12%
SAP AG 2002, ML London, WB, June2002 9
Opportunity for Further Market Share Growth
Source: IDC/ Gartner, Company Reports
Market Share FY2000
Market Share FY2001
Other67%
14%
7%
4%PSFT
ORCL
SAP
ITWO
SEBL
3%5%
Other67%
15%
6%
5%PSFT
ORCL
SAP
ITWO
SEBL
2%
5%
40,000 ($M)43,600 ($M)
SAP AG 2002, ML London, WB, June2002 10
SAP Continues to Win Market Share in 2002
Market Share Q1 2001*
Market Share Q1 2002*
SAP29,2%
ITWO15,0%
SEBL23,8%
ORCL17,7%
PSFT10,9% SAP
36,0%
SEBL 25,2%
ORCL15,2%
PSFT 13,7%
MANU3,5%
ITWO 6,0%
MANU3,9%
* Based on License Revenues
SAP AG 2002, ML London, WB, June2002 11
Agenda
SAP: Leading the Way in Business Software
mySAP.com: The Growth Strategy
Leader in Open, Integrated Software Solutions
Infrastructure & Technology Update Infrastructure & Technology Update
SAP AG 2002, ML London, WB, June2002 12
Today‘s Customer Requirements
All Customers Want Quick ROI Reduced Cost of Ownership Protection of existing IT
investments Lower switching costs
Many Customers Want Tightly integrated targeted
solutions (point-to-point) Complete end-to-end
solutions Guaranteed mission
readiness
SAP AG 2002, ML London, WB, June2002 13
How to capitalize on existing IT investments ?
ERP legacy~15 systems
ERP non-SAP~25 systems,
different versions
Technical systems
Trading
CollaborativeEngineering
e-Sales
SAP R/3~30 systems,
Versions 3.1I - 4.6B
E-Procurement10 units
SAP MarketsEnterprise Buyer
Professional Edition
15,000 interfaces
Development cost:~ 75,000 USD / interface
Costs of ownership: ~ 10,000 USD / year / interface
Overall:
150 Mio. USD / year
Challenge: Cost of Integration
The Cost of Integration – Customer Reality
SAP AG 2002, ML London, WB, June2002 14
IT Infrastructure for Adaptive Business
Information
Process
Transactions
User
Solution: Integration Platform for
Distributed environments Heterogeneous
landscapes Based on open
standards
Benefits Lower maintenance and
integration cost Reduced switching cost Prepare for incremental
business transformation
SAP AG 2002, ML London, WB, June2002 15
Bringing it All Together
SAP AG 2002, ML London, WB, June2002 16
Agenda
SAP: Leading the Way in Business Software
mySAP.com: The Growth Strategy mySAP.com: The Growth Strategy
Leader in Open, Integrated Software Solutions
Infrastructure & Technology Update
SAP AG 2002, ML London, WB, June2002 17
mySAP.com E-Business Platform
mySAP.commySAP.com21 In
du
stry So
lutio
ns
21 Ind
ustry S
olu
tion
s
Enterprise Portal
mySAP Enterprise Portals
Exchange
mySAP Exchanges
myS
AP
Ser
vice
s
mySAP TechnologymySAP Technology
SCMmySAP
SCM
CRMmySAP
CRM
PLMmySAP
PLM
SRMmySAP
SRM
HRmySAP
HR
FINmySAPFinan-cials
BImySAP
BI
SAP AG 2002, ML London, WB, June2002 18
Dimension of Process Scalability
mySAP.com
SAP Business One
mySAP All-in-One
Functionality / Industry Support
Business Size
Full functionality
Full functionality pre-configured, single database
Necessary functionality
SAP AG 2002, ML London, WB, June2002 19
Smart Business Solutions
Small enterprises and subsidiaries
“Off-the-shelf” product Easy to customize
Wide range of innovative functionality
Immediate impact Easy to use / running in a few
days Low cost of entry and
ownership Fulfillment through existing and
incremental channels Over 800 customers
SMB companies and subsidiaries Complete
Full functionality, end-to-end business transactions across the value chain, scalable
Easy to get started Pre-packaged
Adaptable Industry templates & configurable
Vertical Channels Proven ROI and over 2000
customers
SAP AG 2002, ML London, WB, June2002 20
Protect IT Investments
Solution: SAP R/3 Enterprise
ERP tuned to specific industries
Including SAP Web AS Packaging concept Available in Q3 2002
Benefits Proven business
functionality Incremental upgrades Greater connectivity Stepwise migration
to mySAP.com
SAPR/3 4.5
SAPR/3 4.6
SAPR/3 Enterprise
...
”Customers benefit from incremental upgrades, resulting in less maintenance and greater operational flexibility.“
Derek Prior, Gartner
SAP AG 2002, ML London, WB, June2002 21
xApps - From Transactions to Intelligent Action
Cross-functional, composite, collaborative, integrative applications Orchestrating heterogeneous underlying sources Decoupled from specific vendor applications Built on a unification platform for people, information and processes
Functional Transactions (Hindsight)
Bu
sin
ess
Vie
ws,
Eve
nts
(C
onte
xt &
Insi
ght)
SCM CRMPLMHR Finan-cials
Desk-top/
OfficeSupport
Legacy SRM
Merger & Acquisition
Resource &Program Mgmt
Employee Relationship Management
Sourcing
SAP AG 2002, ML London, WB, June2002 22
xApp Example: Resource and Program Management
Mail/Calendar(Communi-cation)
PLM(Product)
HR(Skills,Payroll)
Finan-cials
(Budget)
Projects(ProjectData)
Time(ActivityData)
Resource and Program Management
Initiate
Pro
ject
Skill C
atalog
& D
B
Search
T
alent
Co
ll. A
ssign
men
t
Pro
ject P
ipelin
e
Assess
Peo
ple
Assess
Pro
jects
Initiatives Optimize product portfolio Improve company competitiveness Increase employee satisfaction
Key technologies used Collaboration/Integration Visualization Knowledge Management
SAP AG 2002, ML London, WB, June2002 23
Agenda
SAP: Leading the Way in Business Software
mySAP.com: The Growth Strategy
Leader in Open, Integrated Software Solutions Leader in Open, Integrated Software Solutions
Infrastructure & Technology Update
SAP AG 2002, ML London, WB, June2002 24
License Revenue Analysis – by Solution Q1 2002
mySAP SCM20%*
mySAP CRM18%*
mySAP PLM8%*
mySAP BI/Portals &
mySAP SRM /Marketplaces
11%*
mySAP Financials /mySAP HR
43%*
* of license revenue
SAP AG 2002, ML London, WB, June2002 25
mySAP SCM and mySAP CRM Momentum 2001
300%
200%
100%
mySAP SCM as % of i2
Q1 2001 Q2 2001 Q3 2001 Q4 2001
41%
121% 132%
280%
mySAP CRM as % of Siebel
0%
0%
20%
40%
60%
80%
Q1 2001 Q2 2001 Q3 2001 Q4 2001
18%
31% 37%
69%
FY 2001
113%
FY 2001
37%
Q1 2002
117%
Q1 2002
26%
SAP AG 2002, ML London, WB, June2002 26
Growth Drivers 2002 and Beyond
2002 is expected to be another challenging year, software sales trends continue to be unsettled in a tough economic environment
2002 sales to be expected up by around 15% 2002 operating margin excl. stock based compensation and TopTier acquisition
cost to be expected up at least 100 basis points (2000: 20%) Operating margin excl. stock based compensation and TopTier acquisition cost
mid-term target of 25% License revenue growth drivers: CRM, SCM, Technology & ERP Migration path to mySAP.com:
Currently ~25% of global customers run mySAP.com ~15% of R/3 customers have migrated to mySAP.com By 2005: 80-90% migration to mySAP.com