Business innovation

Business
Management

EXECUTIVE SUMMARY
The following report is based upon Systems, Applications & Products in Data Processing,
abbreviated as SAP SE which is a multinational leading European software development firm.
The report is divided into 3 main sections. The first section depicts that the relevant organisation
has had an immaculate innovation history. The second part of the project shows that SAP SE is a
tech firm having skilled and proficient employees who possess the talent to come up with
innovative features. This section also shows that market offers opportunities such as edge
computing and 5G networks to SAP SE to grow and sustain for long time period. The last section
shows that the software market consists of trends such as AI capabilities, IoT, cloud computing,
AR, VR, edge computing, 5G and many more which makes it an extensively competitive
industry.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................5
THE ORGANISATION AND INDUSTRY OVERVIEW.............................................................5
Introduction to the organisation and its innovation history........................................................5
Existing Innovation Performance and Capabilities of SAP SE .................................................8
The industry in 2017 till now....................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
APPENDICES...............................................................................................................................15
APPENDIX 1: SWOT Analysis................................................................................................15
APPENDIX 2: Porter Five Forces Model.................................................................................17

INTRODUCTION
Innovation can be referred to as the process of incorporating new technologies or systems
to facilitate development of an improved product or service. In other words, it can be said that
this is a procedure which provides assistance to an organisation in gaining an edge over
competitors present at marketplace. It guides an enterprise to adopt such measures or techniques
through which they can come up with market disruptive offerings (Vom Brocke, 2018). The
major purpose of corporations behind undergoing innovation at rapid intervals of time is gaining
high market share and enhancing the existent level of sales volume.
.
THE ORGANISATION AND INDUSTRY OVERVIEW
Introduction to the organisation and its innovation history
SAP SE is a market leading software development corporation which is most famous
across the globe for its ERP software. This organisation has a customer base of over 430,000
within the confines of 185 nations. It is a part of the Euro Stoxx 50stock Market Index. This
software manufacturer has a wide customer base owing to its innovative and unique approach
towards software development (Tidd, 2018).
4 P's of Innovation
To effectively come up with innovations at rapid intervals of time, SAP SE takes into
account 4 types of innovations. These together constitute the innovation mix and is exploited
with a view to enhance the market positioning. The 4 elements of this mix are discussed as
follows: -

Four
Dimension
of
Innovation
Space
Innovation
Type
Incremental Radical
Product-
what we
offer the
world.
Development of software for
purchase and inventory
management by clients.
In the year 1975, SAP SE came up with RM
system through which corporations using it
can effectively do their purchase and
inventory management along with

verification of invoices. This inflated the
market goodwill of the firm and established
a positive brand image of SAP SE in the
mindsets of clients.
Process-how
we create
and deliver
that
offering.
Development of a new
software to optimise business
performance of clients.
During the year 2009, SAP Business Suite 7
software was developed by SAP SE
especially to provide aid to organisations in
optimising their business performance and
also facilitate decrease in IT cost.
Position-
where we
target that
offering and
the story, we
tell about it.
Shift in target market to
enhance public reach.
During the year 2016, the management of
SAP SE underwent positioning innovation
and aligned its apps to facilitate a shift in its
target market from large scale companies to
small and medium scale entities (SAP lines
up its apps to target small and medium-sized
businesses: Is it serious this time?, 2016).
Paradigm-
how we
frame what
we do.
Acquisition of company to
inflate its product portfolio.
During the year 2019, SAP SE acquired
Hybris which provides aid to the respective
organisation in delivering next gen e-
commerce platform with alternative of on-
premise or cloud deployment.
The innovation history of SAP SE is given below: -
1972: Five former IBM employees started SAP SE with a vision to disrupt the
marketplace with its hi tech offerings. Hereby, standard application software for the purpose of
real time data processing was developed.
1979: The respective corporation began its operations upon its server named Siemens
7738 for the very first time.
1981: The concerned company makes its entry into IT trade show Systems held within
the confines of Munich, Germany. Further, SAP R/2 achieved extensive stability.
1986: Post denoting 3 years in the phase of development, organisational software for
HRM is accessible to clients.

1991: Following successful installations with select pilot customers, the firm brings SAP
R/3 within general public, thereby gaining an impeccable extent of development.
2000: SAP SE became the market leading provider of e-business software solutions that
integrate processes within and among companies, also becoming the 3rd biggest independent
software provider across the globe. Further, the entity gained entry into electronic market as well
as corporate portal (Snihur, 2018).
2018: SAP SE introduced C/4HANA in a bid to provide aid to organisations in serving as
well as retaining customers in a stupefying manner.
The above milestones depict that SAP SE has been constantly coming up with new
technologies and systems in order to disrupt the global marketplace and gain a high market share.
Existing Innovation Performance and Capabilities of SAP SE
Innovation is regarded to be an imperative and inseparable component of a business
organisation. In this regard, it is acknowledged that this serves as the route map for the enterprise
to attain growth and development in rapid course of time. SAP SE is a market leading software
company which leverages its capabilities as well as resources in order to attain a competitive
edge at market place. This is acknowledged to be that part of the company which enables a firm
to build extensive goodwill and inflate its current market positioning (Santos, 2018). In this
regard, it is recognised that this software firm comes up with new software and other
technologies to cater to the needs and demands of clients, thereby gaining high satisfaction from
them. This entity makes use of Digital Transformation, Machine Learning, Artificial intelligence
(AI), Blockchain, Big Data, Internet of Things and Cloud Computing to develop high quality
software. Such offerings have the potential to suit the business environment of client and develop
offerings for them such that they can sustain in marketplace for a long period of time in future
context (Rachinger, 2019). As the software sector is constantly advancing with new types of
techniques and technologies coming up at market place every single day, the management of
SAP SE implements them to develop an impeccable experience for people.
To ascertain the performance and capabilities of respective software development firm in
a more effective manner, management of this corporation has made use of SWOT analysis.
SWOT Analysis
This is a business management model which provides aid in gaining an insight into the
microenvironment of a company. The SWOT analysis applied to SAP SE in context of
innovation is presented as underneath: -
Strengths:

SAP SE is the leading software company among its competition in the IT sector. It has
very dignified and skilled professionals working for it in respective groups and team to achieve
organisational goals and objectives. This corporation has been in the marketplace for so long
owing to which it has become more popular among various clients and businesses as well that
made its high brand awareness with increased face value. It also has high goodwill at arena as the
organisational offerings are developed with the standard quality over past years that are always
valued by customers. SAP SE has built up great relationship with its dealers, vendors, retail
outlets and all the other stakeholder groups as it believes in establishing strategic partnerships
with each and every genuine stakeholder (Prange, 2018).
Weaknesses:
SAP SE is very ineffectual in the market research department. Since past 2 years it has
not practised the process of market researching. This is the reason why the organisation makes
all of the decisions and selection according to the 2-year-old data.
Threats:
The market share of this company is in a state of gradual downfall because of high
competition in marketplace. Extensive rivalry in the use of technology among the market is what
is making SAP SE lag behind in the queue of other ventures (Ottosson, 2019).
Opportunities:
With the usage of internet to facilitate digital marketing activities, the respective software
firm can gain the attention of a greater number of persons prevailing at marketplace. This would
provide aid to SAP SE in setting interaction with new and potential customers, thereby getting
over the constraints of national and international boundaries (Janjić, 2019). In this regard, this
entity also has the potential to leverage some innovations in upcoming 3-5 years which are
discussed in detailed manner as follows:-
5G Network: It is acknowledged that 5G wireless networks will be facilitating a gain of
1000 times in the capacity, support connection for a minimum of 100 billion devices and provide
clients with the experience of 10 Gb/speed. All of them imply an excessively lower latency as
well as response time. Looking upon this, many firms would be eager to adopt this technology to
gain an edge at market place (Gemünden, 2018). In this regard, SAP SE possesses all the
resources, competencies and capabilities to leverage 5G network services in the best manner.

Edge Computing: This is regarded as a technological trend which brings data storage and
computation closer to businesses, and hence, ameliorates the response time and saves bandwidth.
Edge computing will create an unstructured architecture over a set of distributed cloud services
in future course of time. In this relation, SAP SE is a market leading firm that is empowered with
specialized resources to employ edge computing and enhance its overall market standing within
the confines of concerned industry.
The industry in 2017 till now
Enterprise software industry is regarded to be an exceptionally evolving sector that has in
past and is presently undergoing several technological advancements. It is expectant that this
market would witness a number of innovations in upcoming period of time. A report put forward
that enterprise application market is expectant to produce $213.43 billion by the end of the year
2020, registering an overall CAGR of 7.4% within the forecast period of 2014 to 2020
(Enterprise Application Market At $213.43 Billion Contender By 2020, 2020). The in depth
analysis of this sector portrays that there are a number of trends that have been explored and
leveraged by the firms operating within this market over the course of time.
One of the most apparent trends that were explored by companies over last 3-4 years and
still leveraging is regarded to be Artificial Intelligence which has made the work of human
resources quite easier. Further, Internet of Things is yet another trend that has been providing
edge to software development corporations so that they can meet the never ending expectations
of clients in an impeccable manner. The emergent market trends are acknowledged to be edge
computing, hybrid cloud approach, multi cloud solutions, edge computing, 5G network and
many more (Chatzoglou, 2018). These would render aid to the entities functioning within the
confines of this industry in grabbing a large market share by developing enterprise software that
have the potential to disrupt the market at large. Enterprise software vendors are furiously re-
tooling their sales and delivery models. By 2020, over 80% of software vendors will change their
business model from the traditional license model to a subscription solution (6 EVOLVING
MARKET TRENDS IN ENTERPRISE SOFTWARE, 2020).
The above-mentioned trends and patterns have given the enterprise software sector a
separate position in market. For gaining a more detailed insight into this industry, it is important
to identify the competition prevailing within the confines of this sector and the nature of rivalry.
In this relation, companies functioning across the globe make use of a business management
model named Porter Five Forces which provides comprehensive knowledge of the industry to
which a firm pertains.

Now, for conducting effective analysis of software sector, Porter Five Force model has
been applied as follows:-
Porter Five Force
Porter Five Forces is a business management model which helps to determine the
positives and negatives of an industry. Also, it aids in ascertaining the level of competition and
enhancing the profitability of sector. The manager of SAP SE has applied Porter's five force
model to ascertain its positioning within the confines of software industry. Drawing upon the
discussion done in Appendix 2, the same is presented as follows:-
Force Intensity
Threats of new entrants Low
Threat of substitutes Low
Bargaining power of suppliers Low
Competitive rivalry Low
Bargaining power of customers High
CONCLUSION
In accordance with above discussion, it can be said that innovation is an integral
component of each and every corporation. Also, it is identified that the capabilities and resources
of a firm provide assistance to it in incorporating innovation within its existent product portfolio
to make it compatible with the needs and demands of market. Apart from this, it is recognised
that enterprise software industry is rapidly evolving owing to trends such as AI, IoT, cloud
computing, Augmented Reality and many more. The market would be disrupted by organisations
leveraging upcoming trends such as 5G network and edge computing within next some years.

REFERENCES
Books & Journals
Abdelkafi, N. and Pero, M., 2018. Supply chain innovation-driven business models. Business
Process Management Journal.
Biemans, W., 2018. Managing innovation within networks. Routledge.
Chatzoglou, P. and Chatzoudes, D., 2018. The role of innovation in building competitive
advantages: an empirical investigation. European Journal of Innovation Management.
Gemünden, H.G., Lehner, P. and Kock, A., 2018. The project-oriented organization and its
contribution to innovation. International Journal of Project Management. 36(1).
pp.147-160.
Janjić, I. and Rađenović, T., 2019. The importance of managing innovation in modern
enterprises.0 Ekonomika. 65(3). pp.45-54.
Ottosson, S., 2019. Developing and Managing Innovation in a Fast Changing and Complex
World. Springer Books.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube solution.
Business Horizons. 61(2). pp.309-322.
Rachinger, M. and et. al., 2019. Digitalization and its influence on business model innovation.
Journal of Manufacturing Technology Management.
Santos, G. and et . al., 2018. Critical success factors in the management of ideas as an essential
component of innovation and business excellence. International Journal of Quality and
Service Sciences.
Snihur, Y. and Tarzijan, J., 2018. Managing complexity in a multi-business-model organization.
Long Range Planning. 51(1). pp.50-63.
Tidd, J. and Bessant, J., 2018. Innovation management challenges: From fads to fundamentals.
International Journal of Innovation Management. 22(05). p.1840007.
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Vom Brocke, J. and Mendling, J., 2018. Business process management cases. Digital Innovation
and Business Transformation in Practice. Berlin et al.: Springer.
Online
6 EVOLVING MARKET TRENDS IN ENTERPRISE SOFTWARE. 2020. [Online]. Available
Through:<https://blog.centralts.com/6-evolving-market-trends-in-enterprise-software>.
Enterprise Application Market At $213.43 Billion Contender By 2020. 2020. [Online]. Available
Through:<https://latesttechnewsblog.com/2019/07/05/enterprise-application-market-a-
213-43-billion-contender-by-2020/>.
SAP lines up its apps to target small and medium-sized businesses: Is it serious this time?. 2016.
[Online]. Available Through:<https://www.zdnet.com/article/sap-lines-up-its-apps-to-
target-small-and-medium-sized-businesses-is-it-serious-this-time/>.

APPENDICES
APPENDIX 1: SWOT Analysis
Strengths:
SAP SE has a very efficient and user-friendly website which plays a quite crucial role in
the growth of business. It drives a huge online traffic on the site which makes the brand more
appealing. This entity has well-structured and functional web portals with interactive approach
towards every visitor. Within this era of emerging trends and technologies in the information
technology sector, it started capitalising upon automation techniques at various stages of
operations like in production, sales, marketing and other departments of company. Yet another
remarkable capability of SAP SE is its optimum utilisation of resources to give maximum output.
All of these strengths provide assistance to the respective software developer in bringing about
innovations within its software packages.
Weaknesses:
Among the legal expertise, staff there is a lack of high qualification and low efficiency of
its legal departments. It has an unbalanced product distribution structure as some of its products
cover a bigger section of the market while some other offerings have relatively lower market
holding. All of these weaknesses hinder SAP SE from coming up with innovations at market
place. Further, the increased cost of operations linked to bringing such innovations is another
cause of concern for the organisation.
Threats:
In the global market, this entity needs to monitor its expansion and workings as it suffers
from various threats arising from international policies. Heavy chances are there in the market of
decrement in entailment of offerings rendered by this firm as there are a lot of substitute brands
available in software sector. To deal with all of these before mentioned threats, it is significant
for the management of SAP SE to realise that innovation is the key. The firm should constantly
capitalise upon its resources as well as capabilities with a view to come up with innovative
products. Such offerings would possess the potential to meet the expectations and demands of
different customers prevailing at market place. This implies the entailment of competitive edge
over rivals present within the confines of same sector.
Opportunities:

SAP SE also has the capability as well as skilled human resource to generate revenues by
selling its products through various international online sale portals and promoting itself on a
number of e-commerce websites. Apart from this, the macro business environment in which the
enterprise operates constantly comes up with new technologies and systems. Thus, SAP SE can
gain advantage of these to launch innovative IT products at rapid intervals of time.

APPENDIX 2: Porter Five Forces Model
Threats of new entrants: The extent of this force in software industry is usually low due
to high capital requirement which provides opportunities to existing firms to ensure its growth.
There are various governmental regulations which create difficulties for new entrants to gain
access into the software industry (Biemans, 2018). Further, it is difficult to achieve the
economies of scale within this market. This provides assistance to respective software
development firm to launch offering with innovative features and gain an edge over competitors
within concerned industry.
Threat of substitutes: In relation to SAP SE, the threat of substitutes is acknowledged to
be low because the alternatives that are available are of high quality which makes the software
expensive. As the software and other offerings of SAP SE are of less cost and standard quality as
compared to its rival firms, buyers would not easily switch to other software companies.
Bargaining power of suppliers: The magnitude of this element within software sector is
regarded to be low as there are lot of suppliers owing to which they have lesser control over the
prices (Abdelkafi, 2018). SAP SE should purchase raw materials from those vendors who
provide them the raw materials at a low cost to increase their bargaining power.
Competitive rivalry: The competitive rivalry in the context of software industry tends to
be low. Although the competitors of SAP SE are several such as Adobe, Workday, Symantec but
they provide software of high cost. In this relation, the respective firm develops software which
is of lower cost and high quality. The offerings produced within software sector are unique that
win the hearts of customers which ensure growth and high sustainability.
Bargaining power of customers: The magnitude of this factor is acknowledged to be
high within the confines of software sector. This is due to the reason that buyers are sensitive to
the prices as well as quality. Furthermore, there are large number of top notch companies such as
IBM Oracle, Microsoft, etc. which provide power to clients to negotiate prices with SAP SE. The
concerned firm should provide good quality offerings at affordable prices by focussing upon
innovation. This would aid the entity in dealing with high bargaining power of clients.