SAP Company Information

1 SAP COMPANY INFORMATION

1.1 SAP Overview
As market leader in enterprise application software, SAP has over 109,000 customers in more than 120 countries running SAP applications from distinct solutions addressing the needs of small businesses and midsize companies (80,000 of our customers are small and midsize enterprises) to suite offerings for global organizations (69% of the Forbes 2,000 companies run SAP software). Today, more than 13.5 million people worldwide use SAP solutions. SAPs unique ecosystem comprises over 10,000 partners around the globe, more than 1.5 million SAP Developer Network (SDN) and Business Process Expert Community (BPX) members, more than 1,800 partner solutions certified for SAP NetWeaver, and 16 Industry Value Networks. And nearly 50,000 SAP team members, including 13,150 consulting and education employees and 7,880 service and support staff, ensure that SAP remains the enterprise applications market leader. SAP applications and services enable organizations worldwide to operate profitably, adapt continuously, and grow sustainably. From back office to boardroom, warehouse to storefront, desktop to mobile device, SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. We do this by extending the availability of software across on-premise installations, ondemand deployments and mobile devices. SAPs unique ecosystem spans 140,000 installations in more 120 countries and in 37 languages. And with 185,000 certified partner employees, 77 trainings centers, 7 global support centers, 9 custom development centers, and genuine 24/7 support, SAP truly makes a difference in helping our customers optimize their organizational and IT performance and maximize their business and IT success. With subsidiaries in more than 50 countries, the company is listed on several exchanges, including the NYSE under the symbol "SAP."

SAP is Well-positioned for Growth

Trusted business partner for ~109,000 companies the largest installed base in the enterprise software sector Deep vertical expertise with strategic solutions for more than 25 industries Great innovation power with ~15,000 developers Largest ecosystem in the industry of system integrators, ISVs, OEMs, resellers, partners One of the top brands globally #26 according to Interbrand

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SAP Company Information 1.2 SAP Vision

Our vision is to help the world run better in order to create enduring prosperity for people everywhere. We help customers around the globe perform at a significantly higher level of effectiveness and efficiency by enabling closed-loop performance optimization to achieve profitable, sustainable growth. To succeed, we strive to build from our established leading position in the business software market and accelerate business and IT innovation for firms and industries. In reaching for this goal, we are also contributing to global economic development on a grand scale. We offer both on-premise and on-demand solutions that help companies of all sizes close the gap between strategy and execution. Our portfolio of software and services can help customers attain the insight, efficiency, and flexibility that enables them to respond to changes in the business environment with more agility and effectiveness and capture the full benefits of business networks. At the heart of our strategy stands accountability to our customers by helping them increase value and lower total cost of ownership. We intend to widen the market we address with additional valuable offerings for our customers including a growing portfolio of on-demand solutions and software solutions scaled to the demands of small businesses and midsize companies.

1.3 SAP Mission: Helping Companies Become Best-Run Businesses

Our mission is for companies of all sizes to see clearly, think clearly, and act clearly so that they can close the gap between strategy and execution and become best-run businesses. Best-run businesses drive clarity into their organizations by gaining insight for improved performance, efficiency for optimized operations, and flexibility to adapt quickly to changing circumstances. SAP provides the most complete horizontal and vertical solution portfolio for small, midsize and large enterprises to fully support customers pain points caused by todays challenging environment. By using SAP solutions, companies can reduce costs, optimize performance, and gain the insight and agility needed to close the gap between strategy and execution. With the release of SAP Business Suite 7, SAP introduced a next-generation software suite that helps businesses achieve these goals, with a degree of efficiency and flexibility higher than ever before. In the current environment, every organization is challenged to focus on short-term business value while preserving a coherent IT architecture and landscape. Recognizing this need, the new SAP Business Suite is designed to ease upgrades and help customers reduce IT costs with enhancement packages; gain stronger insights with select analytics capabilities from the SAP BusinessObjects portfolio; and achieve end -to-end process excellence through the modular deployment of industry best practices and service-oriented architecture (SOA).

SAPs Strategy for Growth

SAP has a clear growth strategy that centers on innovating on our stable core: Delivering the worlds best business applications: on premise, on demand, on device, with orchestration. Working closely with our customers and partners worldwide, SAP is delivering on a product strategy that enables customers to extend the availability of business software on premise, on demand, and on device all orchestrated as networked solutions on the markets most scalable, feature-rich, and stable core SAP platform. Accelerating innovation, delivering more business value through new technologies. We are accelerating product innovation and co-innovating with partners to harness the business value of new software features, complementary solutions, and disruptive technologies. While safeguarding our customers technology investments, we continually enhance their business value. We enable them to adopt innovation at their own pace, anytime, anywhere, and from any device, without disruption. As a result, they can meet the specific needs of their industries while operating in real time.

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Expanding our ecosystem by partnering to accelerate innovation and expand our market. Not only do we want to make our customers best-run businesses, we want to make the world run better. To reach this goal, we are aiming to expand to 1 billion users running our technology and software by 2015.

Market
The market for business software is a global growth market. Factors such as constantly developing corporategovernance law and reporting regulations, increasingly globalized business and trade, the drive for sustainability, and the pressure of competition compel businesses to continuously adapt in a changing environment. They must not only bring innovative and competitive products to market, they must also continuously optimize their own structures, streamline processes, and extend customer and partner networks. Without leading-edge IT solutions, these are impossible challenges for companies whether in the advanced economies or in developing countries and emerging economies.

1.4 Brief History of SAP

Note: A more in-depth company history is available at: http://www.sap.com/company/history.epx SAP was founded in 1972 and is today one of the world's largest independent business software providers and one of the three largest independent software companies based on market capitalization. Founded as "Systems Analysis and Program Development" in Mannheim, Germany, the SAP R (later called R/1) system also launched in 1972. Moving to Walldorf in 1977, SAP gained its first two international customers in Austria. SAP R/2 launched in 1979 and the early 1980s saw the company grow to a customer base of 250 European companies. In 1985, as its client base expanded outside of Europe, SAP established its first U.S. headquarters in Wayne, PA. th Dow Chemical became SAPs 1,000 customer in 1988, as the company went public in Germany. SAPs first true 3-tier software system, SAP R/3, launched in 1992; the system first became web-enabled four years later. 1998 was a milestone year for SAP. The Company was listed on the New York Stock Exchange, and launched business information warehouse, business-to-business procurement and supply chain management solutions. By 2000, SAP had 36,000 installations worldwide, 1,000 partners, 22 industry solutions, and 13,500 customers in 120 countries. 2003 witnessed the launch of the SAP NetWeaver technology platform, and a year later, SAP announced a timeline (2007) for the service-enablement of its own solutions. The SAP business process platform was introduced in 2005, while 2006 saw the introduction of SAP CRM on-demand and an enhanced road map for SAP ERP, delivering innovation without disruption. An enterprise portal and role -based access to data are just two innovations that SAP has brought to the market. In 2008, SAP acquired Business Objects, significantly expanding its footprint in the business intelligence and business user market. SAP published its first sustainability report and announced new solutions that help companies become more sustainable. The SAP Supervisory Board named Lo Apotheker co-CEO alongside Henning Kagermann. The following year, SAP launched SAP Business Suite 7 in New York and introduced a synchronized release schedule for all core Business Suite applications, enabling customers to take advantage of a more modular, reduced-risk IT approach. In 2009, with the effects of the global financial crisis being felt by the business world, SAP initiated personnel cutbacks and other cost-saving measures. It also supported its customers with special programs designed to help them emerge from the crisis with the strength to succeed. Thanks to these programs and cutbacks, SAP managed to improve its operating margin despite the difficult economic times. After 27 years with SAP including

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18 years on the Executive Board Henning Kagermann left SAP and was succeeded by Lo Apotheker, who became SAPs sole CEO. In February 2010, the Supervisory Board named Bill McDermott and Jim Hagemann Snabe co-CEOs of the company. Chief technology officer Vishal Sikka also joined the Executive Board. Angelika Dammann followed Sikka in July, becoming the first woman to serve on the Executive Board as she assumed responsibility for global human resources and labor relations. On July 30, 2010, SAP announced the completion of its acquisition of Sybase, a market leader and an SAP partner in managing, analyzing, and mobilizing business information. The synthesis of the two companies is going to produce solutions for wireless companies. In 2010, SAP strengthened its focus on real-time innovation. The SAPPHIRE Now event drew more than 50,000 customers and other attendees who joined the event either live or on-line, setting a new record. In addition to a comprehensive overview of SAP's product strategy, they witnessed numerous innovations chief among them is in-memory technology which ushers in a new era of real-time processing in business applications.

1.5 SAP Product History

The timeline below provides a quick history of SAP software.

1973

1975

1978 1979

1981

1989

1992

1993

1994 1996

SAP completed its first financial accounting software application. It formed the basis for the continuous development of other software components in what later came to be known as the SAP R/1 system. R stands for realtime data processing. The Materials Management system reached maturity. Integration, later a trademark of SAP, was now visible: data from Materials Management transferred directly into Financial Accounting. Invoices were verified and posted in a one-step process. A thorough examination of SAPs IBM database and dialog control system triggered a rethinking of the SAP software. By the end of the decade, the next software generation for mainframe computers (SAP R/2) was announced. SAP managed, for the first time, to cover all business processes in one solution The SAP R/2 system attained the high level of stability of the previous generation of programs. Increased mainframe performance made it possible to extend the customer base. SAP presented its new user-friendly interface for the SAP R/2 system. New tools, for example, the programming environment ABAP/4, gave rise to new developments. SAP R/3 began to take shape. The general release of the SAP R/3 applications took place. The client/server concept, the uniform structure of graphical interfaces, consistent use of relational databases, and the ability to run on computers from different manufacturers met with tremendous approval. SAP started to work with Microsoft, the worlds largest software producer. One of the aims of this collaboration was to port the SAP R/3 system to Windows NT. The SAP R/3 system on Windows NT was released for the general market. Release 3.1 of SAP R/3 was Internet-enabled. SAP R/3 3.1 provided the

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ability to integrate numerous SAP R/3 Internet applications, allowing customers to expand their business transactions quickly and easily across the Internet and intranet. The new business application programming interfaces (BAPIs) in this release enabled third-party vendors, customers, and SAP to integrate their own application components with the functions and over 800 business processes in the system via networks, intranets, and the Internet. SAP began developing industry-specific software solutions. AcceleratedSAP rapid implementation methodology was introduced. SAP R/3 4.0 was released. It encompassed far-reaching new functions to improve the management of the supply chain and product and market implementation time. The SAP R/3 Business Engineer was introduced as a new platform for configuring, implementing, and managing real-time changes to SAP R/3 business processes. SAP R/3 4.5 was introduced. It complemented SAP R/3 4.0 in delivering a new dimension of industry-specific manufacturing excellence. New tools and functionalities included AcceleratedSAP for Upgrades, Profitability Analysis, Profit Center Accounting and Central User Management, by which administrators could maintain all systems from one central system. SAP introduced SAP R/3 4.6B. It delivered significant enhancements especially for usability to make it as easy as possible for SAP R/3 users to perform their tasks. The redesigned software reflected the way users work, making it easier to learn, easier to use, and easier to adapt to individual requirements. SAP delivered mySAP.com. The new mySAP.com strategy heralded the beginning of a completely new direction for the company and the product range. SAP began shipping SAP R/3 4.6C in general availability to all customers. SAP R/3 4.6C was developed especially to support mySAP.com. It contained primarily functional enhancements for Internet applications that helped implement new, Internet-based business processes. This release contained more than 70 Easy Web Transactions, comprehensive cross-component role templates, and optimized support for role configuration in conjunction with the mySAP Workplace (now known as SAP NetWeaver Portal). With SAP R/3 4.6C, the SAP NetWeaver Portal and the SAP GUI for HTML, the existing SAP R/3 transactions and applications could then be used entirely via the Internet. SAP presented the new e-business architecture, mySAP Technology, where the watchwords were openness and integration. SAP introduced SAP xApps, SAPs new cross-applications. SAP introduced Enterprise Services Architecture and SAP NetWeaver, SAPs new integration and application platform. The new SAP CRM 4.0 was designed right from the start as an integrated solution. As all applications in mySAP Business Suite, SAP CRM 4.0 was powered by SAP NetWeaver.

1998

1999

2000

2001 2002 2003

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2004 SAP NetWeaver 2004 was shipped to its first customers. SAP announced a timeline for the service-enablement of its own applications. By 2007 all SAP solutions would be enterprise Service-Oriented Architecture (enterprise SOA)-compliant. SAP and Adobe Systems Incorporated announced the joint delivery of interactive forms based on Adobe software as part of the SAP NetWeaver open integration and application platform. With the integrating of Adobe Portable Document Format (PDF) capabilities into current versions of all SAP applications, interactive forms based on Adobe software enable enterprises to generate easy-to-use interactive forms and templates that extend SAP systems to customers, partners, and suppliers. SAP announced development of its Business Process Platform. Enterprise Services Architecture (ESA) became a reality. Based on ESA and the underlying integration and application platform, SAP NetWeaver, SAP began providing its customers with solutions for end-to-end business processes. With SAP NetWeaver, organizations can integrate people, information, and processes within the organization and beyond. SAP introduced SAP CRM on-demand. SAP introduced mySAP ERP 2005, the next generation of enterprise resource planning (ERP) software (now referred to as SAP ERP) and an enhanced road map for SAP ERP, delivering innovation without disruption SAP announced the first service-enabled applications with 300+ enterprise services productized. SAP introduced the industrys first services-enabled ERP suite designed to simplify and expedite customers road maps to enterprise service-oriented architecture (enterprise SOA). SAP announced plans for the industrys first enterprise SOA appliance created to help organizations simultaneously upgrade core ERP functionality while also starting to benefit from new, innovative composite applications and technologies that leverage the speed, flexibility and innovation that flow from a services-based approach. SAP unveiled plans for a composite application hub that would facilitate the exploration, distribution and deployment of hundreds of innovative composite applications built by system integrators (SIs), independent software vendors (ISVs), SAP and customers. SAP announced Duet software, the first joint product for use with Microsoft Office and SAP software. Created, sold and supported by industry leaders Microsoft and SAP, Duet provides users improved and more flexible SAP access, thereby resulting in greater productivity and efficiency. SAP announced the now completed acquisition of Virsa Systems, Inc. SAP unveiled the Governance, Risk and Compliance (GRC) Management business unit. This dedicated unit leverages SAPs deep expertise and existing software for wide-reaching compliance requirements, such as the SarbanesOxley Act (SOX). SAP delivered on its promise of established enterprise SOA in all SAP

2005

2006

2007

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products. SAP and Adobe Systems Incorporated announced their collaboration on a new product, SAP Enterprise Learning designed to help customers create a unique learning environment through the combination of SAP Learning Solution with Adobe Acrobat Connect Professional, a Web conferencing solution. SAP extended its identity management capabilities in SAP NetWeaver with acquisition of MaXware. SAP extended its leadership in delivering solutions to the CFO with the acquisition of OutlookSoft Corporation. SAP now delivers a comprehensive solution for CFOs, spanning ERP, governance, risk and compliance, and corporate performance management. SAP launched a new on-demand product, SAP Business ByDesign, designed entirely based on enterprise SOA to bring a comprehensive and adaptable business software solution to midsize companies. SAP acquired Business Objects. Together, SAP and Business Objects, an SAP company, offer the industrys most comprehensive portfolio of business performance and optimization solutions for organizations of all sizes. SAP acquired Visiprise, a privately held manufacturing execution software company headquartered in Alpharetta, GA. In February, SAP unveiled a new software suite, SAP Business Suite 7, designed to ease upgrades and help customers reduce IT costs with enhancement packages, selected analytics capabilities from the SAP BusinessObjects portfolio; and modular deployment of industry best practices and service-oriented architecture (SOA). In May, SAP launched SAP BusinessObjects Explorer, groundbreaking new software that brings together search and navigation capabilities from the SAP BusinessObjects portfolio with SAP NetWeaver Business Warehouse Accelerator software, enabling customers to navigate business data and giving them a clearer view across their organizations. In July, SAP announced the availability of feature pack 2.0 for the SAP Business ByDesign solution for midsize companies, expanding functionality and providing more value to customers by offering business support for 35 end-to-end process scenarios. We also introduced additional charter clients for SAP Business ByDesign in North America.
At CeBIT in March, we announced together with Sybase Inc. two new solutions for mobile workers to carry out key business and customer relationship management processes via iPhone and Windows Mobile. Built on the industry-leading Sybase Unwired Platform, the mobile solutions extend the capabilities of SAP Business Suite applications, including SAP CRM, and also can be customized to tap into a variety of backend data sources, including databases, Web services, files, and any enterprise application that uses service-oriented architecture. Also in March, we announced the general availability of SAP StreamWork the new on-demand, collaborative decision-making software aimed at transforming the way people work. SAP StreamWork brings together people, information, and proven business methodologies to help teams naturally and fluidly work toward goals and

2008

2009

2010

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outcomes. On July 30, 2010, SAP AG announced the completion of the acquisition of Sybase. Through this transaction, SAP intends to accelerate the reach of SAP solutions across mobile platforms and drive forward the realization of SAP's in-memory computing vision. In April, SAP announced its intent to acquire TechniData AG, the world's leading provider of product safety and environmental, health, and safety (EHS) solutions. Through this acquisition, SAP intends to expand its sustainability product portfolio, as well as its market and thought leadership in sustainability.

In August, feature pack 2.5 for the SAP Business ByDesign solution became generally available. The new feature pack delivers significant customer-centric innovations including real-time, in-memory analytics, support for mobile devices, customizable rich user interface and increased flexibility. SAP also introduced three new starter packages for Business ByDesign that provide customers with a solid starting point for their adoption of the complete Business ByDesign solution. In December 2010, SAP reached another key milestone in its mission to harness the transformative power of in-memory computing with the availability of SAP High-Performance Analytic Appliance (SAP HANA) software. This first version of SAP HANA is the result of a robust coinnovation program between SAP and key partners and customers. Customers include Coca-Cola Hellenic, Future Group, Hilti and many others. SAP also introduced the SAP BusinessObjects Strategic Workforce Planning application, the first in a new generation of in-memory applications based on SAP HANA.

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1.6 SAP Company Locations

Global Headquarters SAP AG Dietmar-Hopp-Allee 16 69190 Walldorf, Germany Phone: +49/6227/7-47474 Fax: +49/6227/7-57575 SAP Americas Headquarters SAP America, Inc. 3999 West Chester Pike Newtown Square PA, 19073 Phone: 610-661-1000 Fax: 610-595-2187

Globally, SAP has office locations in nearly every major geographic region of the world. For a complete listing of our sales and development locations in more than 50 countries worldwide, please refer to: http://www.sap.com/usa/contactsap/countries/index.epx. SAP has over 40 office locations in North America, the majority of which are located in the United States. The primary U.S. locations are listed below and can also be viewed on our Web site at: http://www.sap.com/usa/contactsap/directory/index.epx.

1.7 SAP Innovation, Research and Development

To continue to win in the extremely competitive software industry, in 2009, SAP invested more than 1.6 billion in the development of the tools and technologies of tomorrow. Research and development projects are distributed globally across SAP's infrastructure. SAP Research is our worldwide research organization that is dedicated to capitalizing on pioneering trends and technologies in IT that we can incorporate into the development of our products. The group consists of 11 interconnected research centers on five continents. Each research center is located in close proximity to an SAP development center or a university campus. SAP Research operates a model of co-innovation: Hand-in-hand with prestigious universities, partners, customers, and product development groups at SAP, SAP Research employees pursue groundbreaking ideas and create prototypes always striving to generate the greatest possible customer

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value for future markets. To this end, single customers get involved early on in our research undertakings with special "lighthouse projects", and dedicated "living labs" demonstrate technological research in real world settings, thus making prospective SAP solutions a tangible experience. In addition to the global research and development network, SAP Ventures invests in companies that develop promising technologies and applications. Independent from SAP's overall strategy, SAP Ventures has the freedom to pursue a portfolio of different opportunities and is therefore able to invest in entirely new fields that offer the promise of very high profitability. At the same time, it carries the benefit of SAP's knowledge and market experience, which it can pass on to its portfolio companies. Examples of recent investments include aspiring enterprises such as Connectiva, Imprivata, Iovation, iYogi, LinkedIn, Loglogic, Newgen, and Qumu. SAP product development units, known as SAP Labs, are responsible for the entire SAP product and solution portfolio. With operations in Bulgaria, Germany, France, India, Israel, China, Japan, and North America, SAP development units integrate ideas and leading-edge technologies that address the needs of specific industries and geographic regions, and keep SAP and its customers at the forefront of business success. By creating knowledge, encouraging innovation, and investing in people and technology, SAP Labs in Bulgaria, Canada, China, France, Germany, Hungary, India, Israel, and the U.S. focus on R & D and solutions development. SAP's strategy for organic growth is built based on the individual strengths of various locations and workforce. By applying SAP standards and guidelines for development to ensure consistent quality, each lab location is run autonomously and is responsible for its own organizational growth. As a result, SAP benefits from higher flexibility and stronger innovation. The main purpose of SAP Labs is to discover and understand new technology trends around the world. The focus is on short-term innovation projects that are closely aligned with current SAP solutions and customer requirements. SAP Labs have taken a trend-setting role in areas such as voice-recognition technology, doublebyte language, mobile business, collaborative customer relationship management, and SAP Business ByDesign.

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SAPs Global R&D Organization

Development Labs
Bulgaria Canada China Germany France Hungary India Israel United States

Research Centers
Australia Canada China France Germany Great Britain Korea South Africa Switzerland United States

Co-Innovation Labs
India Japan United States

R & D Commitment
We recognize that we must continuously improve our portfolio of products if we wish to maintain and build on our current leading position as a vendor of business software. In 2010, our research and development (R&D) expense increased by 8% to 1,724 million (2009: 1,591 million); we spent 13.8% of total revenue on R&D in 2010, comparable to our R&D spend last year (2009: 14.9%). The increase in the R&D quotient in 2010 reflects our sustained focus and engagement in development. The R&D quotient was influenced by a 17% increase in total revenue and by a 7% increase in the number of R&D employees. The following table lists annual adjusted R&D expenditure, along with the change since the previous year in percent:

2010

2009

2008

2007

2006

Adjusted R&D expenses (in millions of Euros) Growth (year-over-year)

R&D Employees

1,724 8%

1,591 -2%

1,627 11%

1,461 9%

1,344 23%

The importance of R&D was also reflected in the breakdown of employee profiles. At the end of 2010, our total full-time equivalent (FTE) count in development work was 15,884 (2009: 14,814). R&D employees account for 32% (prior year: 31%) of all SAP employees worldwide.

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SAP Research
SAP Research is the global technology research unit of SAP, with a network of 19 research locations on five continents, covering a portfolio of seven research practices. The group significantly contributes to SAP's product portfolio and extends its leading position in the market by identifying and shaping emerging IT trends and generating breakthrough technologies through applied research.

Research
SAP Research is committed to shaping the IT solutions of tomorrow through applied industrial research. Our goal is to anticipate and evaluate emerging IT trends and to further mold these trends into valuable breakthrough innovations. Promising trends are investigated through collaborative research projects, leading to future developments and technologies for both SAP and the IT world in general. Using the fundaments of applied research, we explore promising ideas and turn them into prototypes, with the ultimate goal of creating product enhancements and new solutions that benefit our stakeholders and customers. One of the core projects in 2011 and beyond that drives our vision is the Business Web a cloud infrastructure that is optimized for mobile devices and allows businesses and their employees to collaborate easily, to access data from systems and smart items, and to carry out business processes anywhere and at any time. SAP Research will contribute innovations from our various research practices to help make this vision a reality.

Research Practices
In our exploration of current trends, we have created a strategic framework made up of seven research practices and a cross-prototyping area around which to focus our activities. This research portfolio is founded on trends that we have identified as promising and is a combination of technology and business strategy. Each of these areas contributes innovations to help make the business Web vision a reality.
Research practices include the following:

Business Intelligence Business Network Orchestration Internet Applications and Services Mobile Computing and User Experience Security and Trust Software Engineering and Tools Technology Infrastructure

Co-Innovation
The business model of SAP Research is based on co-innovation through collaborative research. We currently have a global community of more than 800 partners from industry, academia, and governments, as well as SAP customers. In addition to contributing to external projects (bi- and multi-lateral, publicly funded, and grants), our researchers collaborate with SAP's development and field organization on internal projects transferring and implementing the research results. The SAP Research Living Labs further emphasize the principle of co-innovation by bringing customers, researchers, developers, and further stakeholders together to investigate, test, and demonstrate technological research in real-world settings turning prospective SAP solutions into tangible experiences.

1.8 SAPs Commitment to Quality

Quality Vision
SAP's vision for quality management is to consistently deliver high-quality solutions focused on improving customer satisfaction.

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Quality Mission
The mission of quality management at SAP is to:

Research and develop new methods and standards Proactively communicate and share knowledge Apply the knowledge to enhance our products, processes, and services Continually monitor and improve our performance against set targets Strive for prevention of failure, defect reduction, and increased customer satisfaction

Quality Policy
Quality is the basic requirement for the satisfaction of our customers and the resulting competitiveness and economic success of SAP. The Executive Board dedicates itself to the implementation and monitoring of the following principles: SAP strives to further intensify the close cooperation with its internal and external customers and partners, and the performance-oriented communication with its suppliers. The continual improvement of our products, processes, and services combined with innovation is at the center of our endeavors. For this purpose, we strive to further optimize our organizational, operational, and technical processes. Quality management supports the business-oriented behavior of all parties involved. Promoting employee satisfaction and quality awareness are major managerial functions in the entire company. Commitment, professional competence, and personal responsibility are required from all SAP employees to achieve the goals based on the global quality policy principles. Employees know the input requirements to comply with quality in their area. Internal education is provided to help SAP employees fulfill their tasks. The quality goals based on this policy are regularly defined, implemented, and monitored by the responsible parties within the framework of quality management at SAP.

CMMi, Six Sigma, and Lean

SAP Global Delivery achieved CMMI Level 3 certification in October 2008. Level 5 certification is underway. Company-wide Six Sigma and Lean initiatives are also in place.

Quality: ISO 9001 and Beyond

SAP has developed and implemented three quality management systems certified according to ISO 9001:2000.

SAP Global Development ensures that SAP solutions meet the highest possible standards SAP Active Global Support provides tailored services to maintain the quality of installed solutions SAP Global IT takes responsibility for the stability and quality of our internal IT. SAP IT is certified according to the requirements specified in ISO 27001:2005 The three SAP quality management systems have been certified according to requirements specified in the ISO 9001:2000 standard. SAP IT, in addition, is certified according to the requirements specified in ISO 27001:2005. With a focus on continuous process improvement and compliance to customer and applicable regulatory requirements, the ISO standard ensures that a certified company demonstrates its ability to consistently provide solutions and services that meet customer expectations and regulatory requirements, and to improve customer satisfaction by applying the system effectively. Each system defines standardized, certified processes for its domain. And use of a system enables employees to share and apply best practices within their domain.
Below are the current ISO certificates:

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Global development certificate (PDF) Ensures that SAP's standard development life-cycle process, used at SAP Labs Germany (Walldorf, St. Leon-Rot), Hungary (Budapest), Bulgaria (Sofia), Canada (Montreal), China (Shanghai), India (Bangalore), Israel (Ra'aanana), and USA (Palo Alto), complies with ISO 9001:2000 requirements. Global support certificate (PDF) Ensures that SAP's processes for corporate support planning and coordination comply with ISO 9001:2000 requirements; applies to Europe, Middle East, Africa, North America, Latin America, and Asia Pacific. Global IT certificate (PDF) Ensures the compliance to ISO 9001:2008 requirements for IT solutions, technology and support. Global IT certificate (PDF) Ensure the compliance to ISO 27001:2005 requirements for IT solutions, technology and support

SAS70 Certification
SAS 70 is of limited relevance to SAP, as its scoping and applicability relate to outsourced services which: Affect the way that the company's transactions are initiated, processed and reported in their accounting records, supporting information, and specific financial statement accounts. Have an extensive effect on the control environment. Affect the way that the financial reporting process is used to prepare the client's financial statements. While SAP Managed Services was SAS 70 certified and maintained a Type II review, SAP no longer offers direct hosting services, but leverages our extensive partner network to deliver the ultimate software hosting and management service for the SAP Business Suite family of business solutions. (AT&T is SAP's principal hosting partner. Multiple other vendors offer hosting capabilities to support SAP solutions.)

SAP Champions New Software Quality Standard

Though well established in other sectors of industry, seals of quality for premium products are something of a novelty in software development. In conjunction with partners from industry and business, in 2009 SAP began working to transform a vision into reality: namely, to develop a software model that makes it possible to assess the performance and cost-effectiveness of software products and at the same time is simpler to apply in practice than existing frameworks such as the ISO 9126 quality standard. Operating under the aegis of Capgemini sd&m, participants in the planned three-year QuaMoCo ("Software Quality: Flexible Modeling and Integrated Controlling") project are SAP, Siemens, itestra, the Fraunhofer Institute for Experimental Software Engineering (IESE), and the Technical University of Munich. The German Federal Ministry for Education and Research (BMBF) is sponsoring the project to the tune of 3.7 million Euros as part of its program to promote information and communications technologies ("IKT 2020" Research for Innovation). The new software quality model will cover a range of products, including packaged software, embedded systems, security-relevant applications, and entertainment systems. To this end, the project partners will work on developing a basic model that can be easily adapted to suit individual domains and thus offers the same level of detail that is already customary in other industries. On this basis, it will be easier to derive criteria for the software's reliability, security, and ease-of-maintenance and to provide proof of compliance with these criteria. SAP Research is involved in the QuaMoCo project in close cooperation with the Global Quality Governance department. SAP intends to incorporate our experience with SAP product standards into the new software quality model and evaluation method, thus hoping to establish internationally accepted standards for software products and reinforce SAP's role as an innovation and quality leader. Although the software industry is of central economic significance, the established quality standards it currently uses (such as ISO 9126) are simply too general to make them easy to apply in practice or to allow the quality of software to be measured and evaluated in a straightforward manner. The Global Quality Governance office at SAP is therefore always very eager to investigate practical criteria for the area of software quality assessment.

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In this context, the German government sees the QuaMoCo project, which brings together companies and research institutions from all over Germany, as an opportunity to establish a "Made in Germany" seal of quality for software.

1.9 SAP Customer Information and User Groups

1.9.1 Customer Role in the SAP Ecosystem
SAP believes that maximizing your success requires an ecosystem approach that puts you, the customer, at the center. The approach leverages the expertise of a network of individuals, communities, standards, solution providers, local and global partners all supporting your business goals. Our customers demand solutions that fit their specific needs now. SAP customers trust they can turn to the SAP ecosystem to collaborate more effectively, compensate for weak areas, decrease time to market, improve performance, and access information more effectively. The SAP ecosystem addresses the persistent need for business agility by helping companies like yours tap into a trusted network of partners, customers, and individuals so you can react quickly and get the job done. Through the SAP ecosystem, we connect customers with a diverse set of providers and a broad set of resources that are essential to help your company succeed and become a best-run business. By bringing together award-winning solutions, comprehensive services, and the power of the ecosystem, SAP provides an unprecedented collaboration to accelerate innovation, development, implementation methodologies, and delivery of end-to-end solutions that meet your needs today and tomorrow as your business changes and evolves. The SAP ecosystem includes:

Partnerships that provide customers with complementary solutions Co-innovation initiatives that help fuel innovation among customers, partners, and SAP Communities that provide an ongoing source of knowledge and collaboration Communities
Rather than simply being treated as a consumer of collaborations between SAP and partners, every customer has the opportunity to be a co-innovator. SAP ecosystem communities encompass customers, partners, and individuals who work together to share critical business needs, ideas, and technical and business expertise and experiences to co-innovate in providing solutions to meet customer needs. To learn more about SAP communities of innovation, please see the following URL: http://www.sap.com/usa/ecosystem/communities/index.epx.

Customer Satisfaction
Our customers' success is at the center of SAP's strategy and the foundation of the SAP ecosystem. SAP is striving to continuously improve customer value. That is why we have established a variety of actionable customer satisfaction metrics in order to determine the extent to which our customers expectations are being met. A great number of these metrics are generated through the Global Customer Satisfaction Survey. SAP's software customers are surveyed in an online and phone survey process that includes 25% of our customer base each quarter. The survey is available in 27 languages and contains questions on most lines of business. The results are used to monitor developments in customer loyalty, as well as to derive strategic and operational measures for improvement.

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Results are available at the end of a quarter and are then communicated to SAP's Executive Board. They are also shared for any project that has the potential to generate added customer value. However, results are company confidential and cannot be shared externally. IMAGIN AG, a German market research firm, is our global partner for the execution of the survey. Internally, Customer Satisfaction is driven by a virtual team consisting of 100+ regional and LOB stakeholders. Other deliverables of the survey are performance indicators for customer satisfaction in all customer-facing areas (Products, Account Management, Service and Support etc.). The Customer Satisfaction team also provides detailed root cause analysis and internal consulting services in designated improvement areas.

SAP Customer Advisory Council

SAP strives to maintain a close watch on the IT requirements of our customers through regular feedback from customer advisory councils, dedicated to each individual Industry Business Unit (IBU). Each advisory council is composed of representatives from some of the world's leading companies in their respective industry. The customer advisory councils provide feedback, validation, and advice to guide the development of SAP industry-specific solutions, reflecting changing business processes in their sectors and the consequent need for IT updates and improvements through the corresponding value chains. Each customer advisory council holds summit meetings with SAP during the calendar year: the frequency of these meetings depends on the charter or rules of engagement determined by the respective council.

SAP EcoHub
The SAP EcoHub is an online solution marketplace where customers can discover, evaluate, and buy proven solutions from SAP and our partners. SAP EcoHub centralizes information about SAP and partner solutions and includes features such as feedback, ratings, and demos to help you discover, evaluate, and buy solutions to complement your investment in SAP software. The SAP EcoHub site provides a 360-degree view of offerings to help you make faster and better-informed buying decisions. You can also review certification levels of SAP partner solutions and better understand integration requirements to help you alleviate risks and minimize costs. SAP EcoHub represents the unique convergence of easy access to knowledge about SAP and partner offerings, as well as rich community-powered context. The site provides additional knowledge and insight to support your software-investment decisions and deliver the following business benefits:

Enhanced business agility Deploy the right solution to help meet changing market demands Reduced research time Quickly identify solutions for your business with instant access to relevant SAP and partner solutions Better investment decisions Validate your findings on each SAP solution by tapping into expert opinions and rankings by the SAP community to make better investment decisions Minimized integration risk Discover and engage with the right partner to minimize the integration risk associated with buying solutions from lesser-known and less-proven software providers Easy deployment Access extensive information about the partner solution certification for integration Lower IT procurement costs Expedite the software buying life cycle to reduce costs associated with IT procurement

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1.9.2 SAP User Groups
SAPs user base is comprised of millions of users across a customer base of more than 109,000 businesses. As SAP continues to increase its market share, our community of diverse user groups has evolved into numerous SAP-supported and independent organizations, the most notable of which is ASUG (Americas SAP Users Group). SAP user groups are independent, not-for-profit organizations of SAP customer companies, and partners dedicated to educate members, enable customer involvement, and influence SAP's strategy. Today, global user groups span 30 unique chapters across 6 continents these groups help approximately 120,000 individual members to achieve their business goals. SAPs industry-centricity as a solution provider also contributes to its immense diversity of users. Industry-specific user groups, industry councils, and other groups provide a common ground for discussion, support, and solution feedback for SAPs 25+ industries and their constituents. The aim of the numerous SAP user groups is to consolidate the interests of SAP users and champion them to SAP.

Among the largest SAP user groups are the German-Speaking SAP User Group (DSAG) and the Americas SAP Users Group (ASUG). In 2007, the umbrella group SUGEN the SAP User Group Executive Network was founded as the global voice of all user groups. The user groups collaborate closely with SAP. However, they understand themselves to be separate associations, both organizationally and financially. The groups represent the users opinions and address their members interests to SAP. Together with SAP, they want to improve products and make them more user friendly. SAP, in turn, benefits from the practical experience and country-specific know-how of the user groups. In return, their members influence the SAP product portfolio and future developments. The members of the SAP user groups quickly receive comprehensive, product-specific information to improve their business processes. The exchange of experience among the members also consolidates the influence on strategic development and SAPs portfolio to create need-based solutions for all customers.
The network has two main advantages: Exchange of knowledge and experience Exertion of influence The exchange between the user groups and SAP occurs within various initiatives and programs:

360 feedback by SAP customers This is a series of surveys of various user groups worldwide to provide SAP with ongoing, independent, and customer-driven feedback concerning experiences with SAP products and services. Within each survey, participants are asked to give feedback on the entire life cycle, from selecting to operating the SAP solutions and services. Upgrade Program The upgrade program allows SAP user groups to provide highly detailed feedback on all aspects related to upgrades of the SAP ERP application. The results allow both SAP and the user groups to better understand SAP customers upgrade intentions and to allocate appropriate resources. The programs ideal target audience consists of organizations that are currently running a software release prior to SAP ERP 6.0. ASUG/SAP Benchmarking and Best Practices This survey-based initiative identifies the strengths of SAP customers and provides information on opportunities for improvement. The topics range from supply chain management and human capital

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management to the total cost of ownership of a solution. Participants learn about current and emerging methods to help them improve their business performance. Influence Program The Influence program gives members of the SAP user groups direct access to SAP, allowing them to continually provide input for SAPs next generation of solutions and services. The initiative formalizes SAP customers input on existing and future SAP solutions and takes short -, medium-, and long-term product road maps into account. Voice of the Customer This program provides SAP with the current pulse of SAP users and supports continuous communication between customers and SAP on key products and support strategies. Various programs exist, such as ASUG Voice of the Customer, in which ASUG members have the chance to voice their thoughts on SAP products, strategy, and account relationships.

1.10 SAP Rankings and Awards

2010: In January, we announced that SAP was positioned by Gartner Inc. in the leaders quadrant of the Magic Quadrant for Corporate Performance Management (CPM) Suites report. In April, SAP announced that it was named the market share leader in business intelligence (BI), analytics, and performance management software, according to the 2009 market share report issued by Gartner Inc. In the report, SAP ranks No. 1 with 22.4 percent share of the worldwide market. In mid-June, Gartner named SAP as a leader in the customer information services (CIS) industry in the market research firms Magic Quadrant for Utilities Customer Information Systems report. The annual report tracks changes in the CIS market and analyzes market dynamics. Inclusion in the Magic Quadrant is based on the business wants and needs of customers in the CIS market. SAP has been identified alongside six others as providing the most exemplary CIS solutions based on completeness of vision and ability to execute. The SAP PartnerEdge program received industry top honors with the distinguished 5-Star partner program award rating for 2010 from Everything Channel, a leading IT channel industry publishing firm.

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SAP Company Information 1.11 SAPs Performance in the Last 10 Years

CAGR Total Revenue*: 9.6% CAGR Operating Income*: 10.0%
Amounts in $USD
82,000 105,000 95,000

46,100 38,000 32,000

Legend

19,000 17,500

21,600

26,000

53,000
51,536

43,861 39,355 35,873 29,610

32,205

17,003

47,578 16,538 15,689

Number of Customers Number of Employees

14,032

28,410

28,797

11,847
10,599

9,317 7,938 6,607

Revenue

7,042

Operating income

2,587 1,324 1,604

2,124

3,000

3,408

3,747

4,178

3,884 3,435

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

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