2. Who Am I ?
▪ SAP stands for Systems, Applications, Products in data processing.
▪ German multinational software corporation.
▪ Headquarter: Walldorf, Baden-Wurttemberg, Germany with regional offices in 180
countries.
▪ CEO: William R. Bill McDermott
▪ The company has over 425,000 customers all over the globe.
▪ The acronym describes the process that SAP allows marketing departments to use,
going from systems and processes to then sell more products
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3. Products
▪ Business suite software:
▪ ERP(Enterprise Resource Planning)
▪ CRM (Customer Relationship
Management)
▪ PLM (Product Lifecycle
Management )
▪ SCM(Supply Chain Management)
▪ SRM (Supplier Relationship
Management)
▪ Industry specific software
▪ Software for small and mid-size
enterprises
Products and Values
Values
▪ Driving customer value through
intelligent data
▪ Increased customer interaction, leading
to more customer satisfaction.
▪ Efficient communication with the
clients with more timely data
▪ Reduced data redundancy.
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4. 4
Market
Process Industry
Food and beverages,
paints, textiles,
pharmaceuticals
ONGC
Coca-Cola
Dulux Paints
Discrete Industry
Automobiles,
furnitures, toys,
smartphones
Tata Motors
Samsung
Consumer Industry
Durable goods, non-
durable goods,
services
Videocon
Pepsi
Nestle
Service Industry
IT, consulting, mass
media,
telecommunication
TCS
Deloitte
L&T
Infotech
Wipro
Financial Services
Banking and
insurance, healthcare
Bright House
Financial
AIG
Public Services
Revenue collection,
budget operation and
planning,
Market served by the company
5. Growth trend and Market Share
• The global cloud ERP market is expected to be worth $28B by 2022,
attaining an eight percent compound annual growth rate (CAGR)
between 2016 and 2022, accord
• ing to market research firm Statista.
• The cloud ERP market size is estimated to grow from $18.52B in
2016 to $29.84B by 2021, attaining a CAGR of 10 percent in the
forecast period.
• The North American cloud ERP market share is predicted to grow
from $8.4B in 2018 to $11.1B in 2022, attaining a CAGR of 5.7
percent, according to Statista.
• According to Gartner, by 2020, at least 35 percent of
new product-centric ERP deployments in large
enterprises will be software as a service (SaaS)
loosely integrated with on-premise manufacturing
execution systems (MES)
8. Data model Complexity
Analysis of raw data is difficult therefore accurate business decisions are hard to make.
▪ Configuration
Disparity in the configuration of the existing business systems and the system that SAP uses,
which implies that it takes a long time to integrate such systems in the business environment.
▪ Data Volume
Problems associated in loading large amounts of data into the system which makes it difficult to
retrieve a particular data.
▪ Poor Data Quality
To find errors in data would be like finding a pin in a haystack and if it is not identified in an earlier
stage later on goes on to accumulate to a significant value.
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Challenges Faced by the Company
Legal
Teradata, a business and cloud analytics firm has filed a lawsuit against SAP, in which it has
accused Vishal Sikka(Chief Technology Officer) of being aware of stealing trade secrets in building
the Hana platform from an aborted joint venture product between the two firms.
Technical
9. Financial Ratios and Analysis
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Ratio 2016 2017 2018
Current 1.20 1.17 1.59
Working Capital 1.20:1 1.17:1 1.59:1
Debt Equity 0.25 0.20 0.37
Asset Turnover 0.5024 0.5767 0.5215
Return on Equity 13.8149% 15.7308% 14.1393%
Return on Assets 8.2361% 9.4539% 7.9295%
Net Profit Margin 16.52% 17.13% 16.53%
10. 10
1.195 1.168
1.585
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2016 2017 2018
Current Ratio
1.20 1.17
1.59
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2016 2017 2018
Working Capital Ratio
0.25
0.2
0.37
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
2016 2017 2018
Debt Equity Ratio
CURRENT RATIO
The current ratio is decreased in 2017 and then increased to 1.58 in 2018. This ensures the company
ability to pay it’s short term obligation. Since it is above 1 all their liquidity requirements can be meet by
their present operational condition.
DEBT EQUITY RATIO
The company's debt equity ratio is increasing which indicates that the company has financed long – term
debt. This in turn indicates that the company is not able to generate enough cash to satisfy it’s debt
obligation.
Sources taken from SAP Balance Sheet
Asset Turnover Ratio
As we can see there is a progressive increase in Asset turnover ratio from year 2016 to 2017 which means efficiency of company to use its assets for generating sales revenue increased for the year.
In 2018 there is a substantial increase in Current Asset (Cash on hand) which is due to Cash inflow from issue of Eurobonds for financing the acquisitions of Callidus and Qualtrics which correspondingly led to decrease in Asset turnover ratio of the firm for the year 2018.
Return on Equity
In 2018,
Shareholder equity rose due to proceeds from borrowings for Qualtrics acquisition.
Net Income decreases due to increase in Income tax.
Industry average for ROE for Technology sector is 14% so they are doing good.
Return on Assets
Decrease in Net Income due to increase in tax.
Increase in Current Assets due to Cash inflow from Issue of Eurobonds which further led to increase in Total Assets.
Industry average ROA over 5% is considered good.
NET PROFIT MARGIN
The company registered an increased in 2017 but it dropped to 16.52 in 2018, still it is considered good
as it is above 10%.
