Company Analysis of SAP AG (SAP)

SAP AG

Company History , Development and Growth

The SAP of the past is just like any typical traditional computer software company- focusing on tangibles such as products and place while ignoring the intangibles such as customer care and service . While this traditional business approach had once its days in the sun , SAP quickly realized that the whole computer software industry is changing as globalization peeks to everyone 's doorsteps . Truly , success breeds failure because companies such as SAP started to see that the older methods will not work anymore . Drops in

profits are becoming obvious and markets have to do something about it . There are basically many factors to consider as mentioned above

Based on records , SAP managed to change its organization for the better as far as the issues mentioned above are concerned . However , one distinct and innovative move of the company was its decision to shift its focus on the intangibles or customer care - a variable that had been ignored by the computer software industry for years (Christensen , 2003 In 1990 , SAP built on its success by developing new concepts and new customer-focused initiatives . Upon realizing that new strategy should be implemented to increase consumer support , the company maintained this type of strategy and experienced tremendous success over the years

Business Model

The subscription business model has been generally utilized by SAP and other computer software organizations , but the implementation of this model has began to become famous up to the present . Rather than selling the computer software directly , SAP at present is implementing the procedure of selling their monthly or annual access to specific computer software . In effect , the organization is able to convert a one-time selling of computer software into a repeating sale

Impact on SAP AG

SAP AG absolutely benefits on this business model because they are always assured of a stable source of profit . This tremendously minimizes the instability and the risk-taking of SAP . Also , frequently , the subscription pricing mechanism is logically managed in to guarantee that the profits from the recurring subscriptions could be tremendously larger than the profit coming from basic single purchases (Davila , 2005 . In the subscription business model of SAP , it also impacts the improvement of the organization 's sales through preventing the client 's choice to either accept or deny any particular computer software . This leads to the limited client acquisition expenses , and enables the application of a personalized marketing . Nevertheless subscription business models also impose their limitations for SAP . The company has to invest huge amounts of money in to aid in the control and handling of subscriptions

Impact on the SAP Clients

SAP clients also take advantage of this business model . They are always assured that if they will purchase SAP products consistently , then they will tremendously take advantage from the convenience . theless , they will only have to do one specific SAP purchase decision , then they will just have to wait for the SAP product to come their way . This model is of tremendous aid...