SAP

SAP (SAP SE) is a German enterprise software company headquartered in Walldorf, Germany, founded in 1972, that develops business application software, above all enterprise resource planning (ERP) systems used to run finance, manufacturing, supply chain, and human resources at large organizations.¹ It employed more than 110,000 people as at December 31, 2025,¹ has over 440,000 customers in more than 180 countries,² and in 2021 ranked as the third largest software company in the world by revenue, after Microsoft and Oracle, with annual revenues of €27.8 billion.³

History

SAP was founded in 1972 by five former IBM employees: Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther. In 1973 they finished their first accounting software, which formed the basis of the R/1 system; R/2 followed in the 1980s, and R/3 was generally released in 1992.⁷ R/3 installations grew from 9,000 in 1996 to 36,000 in 2000.⁷ A peer-reviewed history in the IEEE Annals of the History of Computing traces how the company's concept of standardized, integrated business software carried it from a small firm to a global market leader.⁸

From R/3 to ECC. In 2004 SAP launched SAP ERP, with the R/3 banner superseded by ERP Central Component (ECC), initially ECC5.0 and later ECC6.0.³ SAP ERP (formerly R/3) is available in 37 languages, in 120 countries, on more than 8 database management systems and more than 10 operating systems, and is extended by SAP CRM, SAP SCM, and SAP SRM, which together form the SAP Business Suite.⁷

The HANA pivot. SAP HANA, first released in 2011, generated $1.2 billion in revenue over its first three years, which the specialist publication ERP Today describes as the fastest-growing product in enterprise software history at that time. S/4HANA, launched in 2015 with the Fiori user experience and built only for the HANA database, grew from 370 customers at the end of 2015 to 18,000 by the article's writing.³

Products and architecture

SAP's current ERP portfolio spans S/4HANA, Business One, and Business ByDesign.⁹ Around the ERP sit cloud applications including SAP SuccessFactors for HR management and SAP Ariba for procurement, and the AI copilot SAP Joule, which is being continually enhanced to automate data analysis.¹⁰ S/4HANA is the latest generation of SAP's flagship ERP following R/3; it sits on top of the HANA in-memory database and includes cloud services, embedded analytics, machine learning capabilities, and a modernized user interface.¹¹ Hasso Plattner, a co-founder, and Bernd Leukert describe S/4HANA in their Springer book as a next generation of business applications exploiting the HANA database, a "quantum leap" in simplicity, flexibility, and speed.⁴

Three-tier client-server design. SAP R/3, launched in 1992, used a three-tier architecture of Presentation, Application, and Database layers on the ABAP platform, SAP's proprietary application-development environment.³

HANA's in-memory, columnar design. SAP says HANA's database aims to handle transactional and analytical processing together in a single DBMS, instead of dividing that work between distinct systems.¹² Its columnar engine exploits modern hardware, multiple CPU cores, large main memory, and caches, with content compression and maximum parallelization in the database kernel; relational data resides in tables in column or row layout that can be converted between layouts, and all data structures are optimized for cache efficiency instead of organization on traditional disk.¹² HANA grew out of the SAP Business Warehouse Accelerator (BWA), which combined a column-based storage engine with a row-store query engine; rising main-memory capacity and multi-core systems were its technical foundation.¹³ It evolved from a purely analytical engine into a platform serving the largest ERP installations with 5 million queries per hour and more than 50,000 concurrent users.¹³

AI layer. At SAP Sapphire in May 2026 the company announced its Autonomous Enterprise vision: Joule as the engagement layer, the SAP Autonomous Suite as the operational execution layer extended by Industry AI applications, and the SAP Business AI Platform as the unifying foundation.¹⁴ The Autonomous Suite includes 50 domain-specific Joule Assistants across finance, supply chain, procurement, human capital management, and customer experience, orchestrating more than 200 specialized tasks; the Business AI Platform unifies SAP BTP, AI Foundation, Business Data Cloud, and the Business AI portfolio, built on the SAP Knowledge Graph introduced in 2024.¹⁵

Business model and ecosystem

SAP's revenue has shifted decisively toward subscriptions. Cloud revenue is its largest revenue stream, followed by software support revenue,¹ and the vast majority of license customers also enter support contracts that generate recurring revenue.¹ In the first half of 2026 cloud revenue grew 21%, from €10,124 million to €12,244 million, driven by Cloud ERP Suite revenue of €10,739 million (up 24%), while software licenses revenue declined from €377 million to €247 million, reflecting the cloud transition.¹⁴ In 2025 SAP introduced a "subscription revenue" measure, the sum of cloud revenue and time-based on-premise license and support revenue, which will replace the share of more predictable revenue from 2026 onward.¹

RISE, GROW, and license portability. RISE with SAP preserves customization and eases brownfield ECC conversions, while GROW with SAP offers a faster, standardized greenfield path; the 2027 ECC support deadline forces migration on SAP's timeline rather than the customer's, and the "clean-core" discipline via the Business Technology Platform marks a change from traditional ABAP modification practices.¹⁶ Since 2013, the Cloud Extension Program has allowed customers to reallocate on-premise licenses to cloud subscriptions, and customers may abandon usage rights of certain existing licenses and request corresponding maintenance termination without purchasing new SAP solutions.⁵

Partners. The implementation economy around SAP is large in practice even though no reliable market-size valuation is available: per IDC, about 77% of SAP customers will rely on a partner for their S/4HANA migration, and an estimated 60% of migrations started remain in service providers' backlogs.²

By the numbers

Market-size estimates for SAP's ERP share diverge sharply by methodology. One market study cited in a 2026 Forrester Wave summary puts global ERP revenue at about $66 billion in 2024, up 11% from 2023, with Oracle (including NetSuite and Fusion Cloud) and SAP leading at roughly $8.6–8.7 billion each, about 6.6% share each, ahead of Microsoft at $5.4 billion (~4.0%) and Workday at $3.3 billion (~2.5%).¹⁷ ERP Research, by contrast, estimates SAP at roughly 23% of the global ERP market by revenue, the largest vendor, with Oracle (including NetSuite) second at about 14%, Workday about 6.5%, Microsoft Dynamics about 6%, and Sage about 4.8%.¹⁸ The two figures differ sharply.

On install base the sources agree in direction: SAP has the largest ERP install base, approximately 141,399 customers, versus roughly 100,000 each for Microsoft Dynamics and Oracle (Fusion and NetSuite) and about 5,000 large enterprises for Workday.¹⁷ Headcount was over 107,000 in October 2024² and more than 110,000 as at December 31, 2025,¹ rising to 112,019 FTEs on June 30, 2026 after 2025 restructuring programs.¹⁴ SAP's stock hit an all-time high of $306.60 in July 2025 before pulling back; after Q1 2026 earnings shares dipped more than 6% despite 27% year-over-year cloud revenue growth, with cloud backlog reported at €21.9 billion, up 25%, in May 2026.¹⁹

How it compares with Oracle, Microsoft, and Workday

SAP dominates industries like manufacturing, automotive, pharmaceuticals, and large-scale distribution, which require deep process libraries and advanced global finance.¹⁷ TechTarget's comparison judges S/4HANA particularly well-suited to companies in the automotive, aerospace and defense, utilities, and oil and gas industries, while Oracle Cloud ERP is especially well-suited to the service sector and is cloud-native.¹¹ A CIO advisory rates SAP as having the deepest functionality for complex, multi-entity global manufacturing, supply chain, and finance, with unmatched statutory and industry coverage, but also the highest implementation cost and complexity in the category.¹⁶ S/4HANA is now often branded as "SAP Cloud ERP", and consultancies view SAP's strength as the combination of AI efforts with strong supply chain and manufacturing foundations for large, complex operational environments.²⁰

Implementation cost and the 2027 deadline

SAP projects are expensive because the software is deep and heavily customizable. Larger SAP solutions such as ECC 6.0 or S/4HANA have software costs from roughly $50,000 into the millions of dollars, with implementation costing 2 to 8 times the licensing amount; Business One and ByDesign licensing runs roughly $10,000 to $250,000 per year with implementation of about $50,000 to $500,000.⁹ Extensive S/4HANA customization is possible, but it can result in increased complexity and higher implementation costs, with customizations requiring long-term maintenance.¹¹

The deadline. SAP will provide mainstream maintenance for SAP Business Suite 7 core applications, including SAP ERP 6.0, until the end of 2027, followed by optional extended maintenance until the end of 2030 at a premium of two percentage points on the maintenance basis, available for three years from the beginning of 2028.⁵ On February 4, 2020, SAP announced an innovation commitment for S/4HANA until the end of 2040.⁵ The conversion backlog is substantial: about 35,000 customers still used ECC in 2024 with roughly 15% migrated, leaving about 30,000 to convert,² and trade press reports that perhaps more than half of SAP's core ERP customer base may still run on-premises software while most new AI capabilities are limited to the cloud.¹⁵ At Sapphire 2026, SAP's presentations emphasized AI over its ERP platforms, framing S/4HANA, RISE, and GROW as the means to AI benefits amid the 2027 deadline.²¹

Regulatory change. Effective July 10, 2026, SAP agreed to key adaptations to its on-premise ERP maintenance and support practices under a 10-year commitment following a European Commission decision adopted under EU competition law, applying globally to all current and future SAP customers across all on-premise products.⁵

Controversies and criticism

2024 bribery settlement. In January 2024 SAP agreed to pay approximately $220 million in criminal and civil penalties to resolve a US Department of Justice investigation into a widespread bribery scheme, entering a three-year non-prosecution agreement over FCPA violations.⁶ The SEC announced that SAP agreed to pay $98 million in disgorgement and prejudgment interest and a $45 million civil penalty, for using third-party intermediaries to unlawfully win government contracts in South Africa, Indonesia, Malawi, and Ghana between roughly 2013 and 2018.²²

TomorrowNow litigation. In the Oracle v. SAP case, Oracle alleged that SAP's subsidiary TomorrowNow gained repeated unauthorized access, in many cases using pretextual customer log-in credentials, to Oracle's password-protected customer support website, copying thousands of copyrighted Oracle software products, with unusually heavy download activity for PeopleSoft and J.D. Edwards products in late November 2006.²³

Licensing and timeline criticism. Customer-side advisers argue that the 2027 ECC support deadline forces migration on SAP's timeline rather than the customer's,¹⁶ and the EU-mandated changes to maintenance practices effective 2026 address on-premise support terms under competition law.⁵ In early 2024 SAP's restructuring targeted about 8,000 positions as the company pivoted to AI and cloud.¹⁹

References

1. SAP 2025 Annual Report on Form 20-F, SAP SE
2. SAP Industry Overview, Houlihan Lokey (October 2024)
3. SAP's history — fifty years and counting, ERP Today
4. Plattner, Hasso, and Leukert, Bernd. The In-Memory Revolution, Springer
5. SAP Support Strategy and Maintenance Commitments, SAP
6. SAP Resolves Foreign Bribery Investigation with $220M Criminal Resolution, US Department of Justice
7. The Architecture of SAP ERP (textbook)
8. The SAP Story: Evolution of SAP within the German Software Industry, IEEE Annals of the History of Computing
9. SAP ERP: Products, Pricing & Guide, ERP Research
10. 2025 Clash of the Titans, Panorama Consulting Group
11. SAP S/4HANA vs. Oracle Cloud ERP, TechTarget
12. The SAP HANA Database – An Architecture Overview, IEEE Data Engineering Bulletin
13. SAP HANA – The Evolution of an In-Memory DBMS, BTW 2017
14. SAP Half-Year Report 2026, SAP SE
15. SAP Unveils New Central AI Hub, Application Agent Suite At Sapphire Event, CRN
16. Buyer's Guide: Enterprise Resource Planning, CIOPages
17. 2026 Forrester Wave ERP: NetSuite vs SAP & Dynamics (summary)
18. ERP Market Share 2026, ERP Research
19. The End of the ERP Era? SAP Wants AI Agents To Run Your 'Autonomous Enterprise', Forbes
20. SAP vs. Oracle vs. Microsoft: Which ERP Is 'Best' in a Cloud and AI World?, Third Stage Consulting
21. SAP unveils agentic AI tools to partially automate ERP suite, TechTarget
22. SEC Charges SAP for Bribery Schemes in South Africa, Indonesia, SEC
23. Oracle v. SAP Amended Complaint (TomorrowNow case)

Initially written Sep 17, 2026 · Reviewed: Sep 17, 2026; Sep 30, 2026; Oct 15, 2026 · Edited: Sep 30, 2026; Oct 15, 2026

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