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1、SAP ANNUAL REPORT 2005SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermanySAP ANNUAL REPORT 2005WIN.WIN.WIN.50001750FINANCIAL SUMMARYWin.Win.Win.When SAP helps businesses innovate,everyone wins.Our customerswin by becoming more productive,adaptable,and profitable.Theircustomers win by gaining better pro
2、ducts and services.And SAP winsby generating continued growth in revenues and profits.As the worlds leading provider of business software,SAP has beencreating win-win-win scenarios for more than three decades.Today,we serve a growing customer base that includes more than 32,000organizations in 120 c
3、ountries around the world.And we have built an unparalleled knowledge of the business processes that driveinnovation in more than 25 industries.But we have only just begun.In the years ahead,SAP will continue to demonstrate its leadership by making business software even more powerful,more flexible,
4、and more accessible to organizations of all sizes.Because we believe this is the best way to help ourshareholders win,too.WIN.WIN.WIN.SAP ANNUAL REPORT 2005SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermanySAP ANNUAL REPORT 2005WIN.WIN.WIN.50001750FINANCIAL SUMMARYWin.Win.Win.When SAP helps businesses
5、 innovate,everyone wins.Our customerswin by becoming more productive,adaptable,and profitable.Theircustomers win by gaining better products and services.And SAP winsby generating continued growth in revenues and profits.As the worlds leading provider of business software,SAP has beencreating win-win
6、-win scenarios for more than three decades.Today,we serve a growing customer base that includes more than 32,000organizations in 120 countries around the world.And we have built an unparalleled knowledge of the business processes that driveinnovation in more than 25 industries.But we have only just
7、begun.In the years ahead,SAP will continue to demonstrate its leadership by making business software even more powerful,more flexible,and more accessible to organizations of all sizes.Because we believe this is the best way to help ourshareholders win,too.WIN.WIN.WIN.Imprint1571401351301251201151101
8、05100959085800102030405060708091011120102Financial SummarySAP share in comparison with the DAX,the Dow Jones EURO STOXX 50,and the GSTI Software IndexJanuary 1,2005 to February 28,2006|in percent?SAP Share(Xetra)?DAX 30 Performanceindex(Xetra)?Dow Jones EURO STOXX 50 Price Index?Goldman Sachs GSTI S
9、oftware Index Price IndexTotal Revenuein million|change since previous year 7,3417,4137,0257,5148,513+17%+1%5%+7%+13%8,0006,0004,0002,000020012002200320042005Operating Incomein million|change since previous year1,3121,6261,7242,0182,331+64%+24%+6%+17%+16%2,0001,5001,000500020012002200320042005Softwa
10、re Revenuein million|change since previous year 2,5812,2912,1472,3612,783+5%11%6%+10%+18%2,4001,8001,200600020012002200320042005Pro-Forma Operating Margin(before stock-based compensation and acquisition-relatedcharges)in percent|change since previous year in percentage percents20.022.726.827.828.3+0
11、.2+2.7+4.1+1.0+0.52418126020012002200320042005Net Incomein million|change since previous year 5815091,0771,3111,4966%12%+112%+22%+14%1,200900600300020012002200320042005Relative Peer Group Sharein percent|change since previous year in percentage points Based on worldwide software license revenue of k
12、ey competitors,on a rolling four-quarter basis.ForMicrosoft and Oracle business solutions only.SAP 62+7?Oracle(incl.PSFT und RETK)16?9Microsoft 13?+2Siebel 9?0Revenue Breakdown by Activityin million|percent|change since previous year Training 3434%|+14%?Consulting 2,13925%|+9%?Other 731%|+28%?Softwa
13、re 2,783?33%|+18%Maintenance 3,175?37%|+12%Revenue Breakdown by Sales Destinationin million|percent|change since previous year United States 2,34327%|+24%?Rest of Asia-Pacific 5947%|+24%?Rest of Americas 6578%|+24%?Germany 1,810?21%|+2%Japan 406?5%|+5%Rest of EMEA 2,703?32%|+11%PUBLISHERSAP AGGlobal
14、 CommunicationsDESIGN AND PRODUCTIONKuhn,Kammann&Kuhn AG,Cologne,GermanyPHOTOGRAPHYClaudia Kempf,Wuppertal,GermanyWolfram Scheible,Stuttgart,Germany(page 4 and back cover)Uta Rademacher,Berlin,Germany(page 43)PRINTINGColorDruck GmbH,Leimen,GermanyCOPYRIGHT2006 SAP AGDietmar-Hopp-Allee 1669190 Walldo
15、rfGermanyTRADEMARKS AND SERVICE MARKSSAP,R/3,mySAP,mySAP.com,xApps,xApp,SAP NetWeaverand other SAP products and services and the associated logos are trade or service or registered trade or service marksof SAP AG in Germany and many other countries in the world.All other mentioned product and servic
16、e names are marks or registered marks of their respective companies.This Englishtranslation of the German SAP Annual Report is provided forconvenience only;the German original is definitive.ImprintYImprint157140135130125120115110105100959085800102030405060708091011120102Financial SummarySAP share in
17、 comparison with the DAX,the Dow Jones EURO STOXX 50,and the GSTI Software IndexJanuary 1,2005 to February 28,2006|in percent?SAP Share(Xetra)?DAX 30 Performanceindex(Xetra)?Dow Jones EURO STOXX 50 Price Index?Goldman Sachs GSTI Software Index Price IndexTotal Revenuein million|change since previous
18、 year 7,3417,4137,0257,5148,513+17%+1%5%+7%+13%8,0006,0004,0002,000020012002200320042005Operating Incomein million|change since previous year1,3121,6261,7242,0182,331+64%+24%+6%+17%+16%2,0001,5001,000500020012002200320042005Software Revenuein million|change since previous year 2,5812,2912,1472,3612,
19、783+5%11%6%+10%+18%2,4001,8001,200600020012002200320042005Pro-Forma Operating Margin(before stock-based compensation and acquisition-relatedcharges)in percent|change since previous year in percentage percents20.022.726.827.828.3+0.2+2.7+4.1+1.0+0.52418126020012002200320042005Net Incomein million|cha
20、nge since previous year 5815091,0771,3111,4966%12%+112%+22%+14%1,200900600300020012002200320042005Relative Peer Group Sharein percent|change since previous year in percentage points Based on worldwide software license revenue of key competitors,on a rolling four-quarter basis.ForMicrosoft and Oracle
21、 business solutions only.SAP 62+7?Oracle(incl.PSFT und RETK)16?9Microsoft 13?+2Siebel 9?0Revenue Breakdown by Activityin million|percent|change since previous year Training 3434%|+14%?Consulting 2,13925%|+9%?Other 731%|+28%?Software 2,783?33%|+18%Maintenance 3,175?37%|+12%Revenue Breakdown by Sales
22、Destinationin million|percent|change since previous year United States 2,34327%|+24%?Rest of Asia-Pacific 5947%|+24%?Rest of Americas 6578%|+24%?Germany 1,810?21%|+2%Japan 406?5%|+5%Rest of EMEA 2,703?32%|+11%PUBLISHERSAP AGGlobal CommunicationsDESIGN AND PRODUCTIONKuhn,Kammann&Kuhn AG,Cologne,Germa
23、nyPHOTOGRAPHYClaudia Kempf,Wuppertal,GermanyWolfram Scheible,Stuttgart,Germany(page 4 and back cover)Uta Rademacher,Berlin,Germany(page 43)PRINTINGColorDruck GmbH,Leimen,GermanyCOPYRIGHT2006 SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermanyTRADEMARKS AND SERVICE MARKSSAP,R/3,mySAP,mySAP.com,xApps,xAp
24、p,SAP NetWeaverand other SAP products and services and the associated logos are trade or service or registered trade or service marksof SAP AG in Germany and many other countries in the world.All other mentioned product and service names are marks or registered marks of their respective companies.Th
25、is Englishtranslation of the German SAP Annual Report is provided forconvenience only;the German original is definitive.ImprintYContents01ContentsLetter to the Shareholders02Executive Board04Solutions and Technology11Enterprise Services Architecture11Solution Portfolio 12Business Process Platform14S
26、ervices15Innovation and Growth19Research and Development19New Opportunities 21People at SAP23Transparency and Responsibility29Investor Relations29Corporate Citizenship32Corporate Governance34Report of the Supervisory Board43Compensation Report48Financial Information57Independent Auditors Report58Rev
27、iew of SAP Group Operations59Consolidated Financial Statements92Notes to Consolidated Financial Statements97Financial Statements of SAP AG Short Version151Five-Year Summary152Financial Calendar155Addresses and Publications for Shareholders156Imprint1570207111519252939435602Letter to the Shareholders
28、2005 was another outstanding year for SAP.We demonstratedthat organic growth is not only possible in our industry,butthat it is also a successful strategy to benefit our customers,partners,and shareholders.Customer satisfaction is at an all-time high and we extended our peer group share moresignific
29、antly than in previous years.Companies recognize SAP as a strong,reliable partner and trusted advisor forinnovating business with IT.This is all reflected in the 17%increase of the SAP share in 2005,which outperformed the Goldman Sachs GSTI Software Index.2006 will be another cornerstone year for th
30、e companyas we invest in people,new products,and new sales channelsto expand our addressable market to US$70 billion by 2010.When I look back over the past year,I am pleased with what wehave accomplished.In spite of the challenging environment,we significantly outperformed our direct competitors and
31、 the worldwide software market.In addition,we extended ourleadership in the small and midsize enterprise segment.I attribute our continued success to three long-term,core SAP values:our customer-centric approach,the excellence ofour product offering,and a clear focus on delivering on ourpromises to
32、our customers.HIGHLIGHTS OF 2005In 2005,we proved we are very well positioned,with our invest-ments in organic growth showing immediate return.We grewour software license revenue by 18%to 2.8 billion and thenumber of deals increased by 22%.Every region contributed toour success,most strongly in Nort
33、h America and Asia-Pacific.Our profitability rose by 0.5 percentage points to a pro-formaoperating margin of 28.3%,while our pro-forma earnings pershare were 5.01,an increase of 14%.On the product side,we accelerated our progresstoward enterprise services architecture(ESA),our leadingvision for the
34、next wave of computing now becoming a reality.We were the first software provider worldwide to develop anddeliver our entire mySAP Business Suite solutions based on this new architecture,and more customers than expected aremigrating to mySAP ERP.By industry,we made significant gains throughout theye
35、ar,with strong growth in process industries and a recordincrease of 63%in retail.To support our delivery of business solutions,we are extending our worldwide development partner ecosystem.Using our technology,these companies are developingcomplementary solutions to our own.Through this process of co
36、-innovation,customers have access to an even greaternumber of innovative solutions.Today,we have nearly 1,000 independent software vendors(ISVs)supporting our SAP NetWeaver platform,with 360,000 members in the SAPDeveloper Network.Three of the most significant partner-ships that we announced in 2005
37、 were our partnership withMicrosoft on Project Mendocino,with Siemens on healthcare,and with Intel to offer a high-performance analytics packagedsolution available on HP and IBM technology.To round out our product offering for our customers,we made some small acquisitions(Triversity and Khimetrics i
38、nretail,Lighthammer in manufacturing,and TomorrowNow in maintenance and support of non-SAP systems).In coopera-tion with TomorrowNow,we signed nearly 200 customers forour Safe Passage program.We also strengthened our dialog with our key share-holders.As in previous years,SAP set itself the highest o
39、bjec-tives for transparency in our communication with the financialcommunity.Investors around the world provided us withpositive feedback on our long-term strategy.Transparency is also a theme of SAPs corporate socialresponsibility initiatives.We believe that the most effectiveform of engagement is
40、to draw on our own unique strengthsand expertise.That is why,along with transparency,we arefocusing on education,good governance,and communitydevelopment.Dear Shareholders,Customers,Partners,and Colleagues,Letter to the Shareholders03Our results this year again demonstrate that companiesare seeking
41、a long-term partnership with a software vendorthey can trust.In this Annual Report,you will find fourexamples of companies around the world that are innovatingthrough SAP solutions to be more efficient,manage complexbusinesses,support high quality of products,and provide fastaccess to information.I
42、would like to emphasize that our success would not be what it is without the exceptional dedication and creativityof our employees.Located close to our customers in over 50countries,they are the reason we can offer the best products ofthe highest quality.In 2005,we added to our diverse talent poolwi
43、th more than 3,600 employees hired worldwide.SAPS WINNING FORMULASAP has always been at the forefront of business software,amarket we created almost 35 years ago.To ensure we continueto deliver best-in-class products,we look not only at what our customers need today,but also at what they will need o
44、verthe next five to ten years.Our research has shown that com-panies will increasingly need to be able to flexibly change theirbusiness models to gain a competitive advantage.This will only be possible through the right IT:a new generation of ITarchitecture we call ESA.This new architecture revoluti
45、onizesnot only how software is developed but also how it is imple-mented and used.2006:A CORNERSTONE YEAR FOR SAPWe have set high goals for ourselves over the next few years.SAP has a strong product pipeline and an excellent marketposition.In 2006,we will add new strategic products to makeour offeri
46、ng more attractive for users in enterprises of all sizes.In essence,2006 sets the foundation for our 2010 ambitions to expand our addressable market from US$30 billion to US$70 billion by 2010.Due to the increased enthusiasm for our next-genera-tion technology with over 300 customers in our ESA Adop
47、tionProgram,we have expanded our product road map for 2006with additional proof points.One focus this year will be toevolve our SAP NetWeaver platform into a Business ProcessPlatform,the flexible IT environment required to support thebusiness models of the future.We will also launch newproducts for
48、the midmarket and continue to expand our eco-system to involve ever more partners in our next-generationtechnology.THANK YOUIn closing,I would like to say thank you to those who areaccompanying us on our journey:our customers,partners,shareholders,and employees.We will continue to deliver high-quali
49、ty business software that meets and exceeds the expecta-tions of our customers,we are creating long-term value forour shareholders,and we are well positioned for the future.With IT that provides business model flexibility,we can enablecompanies of all sizes to reach new heights.Let us travel thisroa
50、d together.Sincerely,Henning KagermannChairman and CEO,SAP AG04Executive Board“IT is moving from a driver of productivity to a driver of accelerated innovation,competitive differentiation and growth.”Henning Kagermann(Chief Executive Officer)joined SAP in 1982 and has been a member of the Executive
51、Board since 1991.Mr.Kagermann has overall responsibility forSAPs Strategy and Business Development,Global Commun-ications,Global Intellectual Property,Internal Audit,andsponsors SAPs Top Talent Management program.The SAP Executive Board:Business leaders withexperience,vision,anda commitment to thesu
52、ccess of our customers.Executive Board05Werner Brandt(Chief Financial Officer)joined SAP in 2001 and has been a member of the Executive Board since2001.He is responsible for Finance and Administration,Shared Services,and SAP Ventures.Peter Zencke joined SAP in 1984 and has been a member of the Execu
53、tive Board since 1993.He is responsible forResearch and the Application Platform at SAP.“Our Business Process Platform is a breakthrough that empowers customers to seamlessly adapt best-practice processes and differentiate on top.”“Efficient risk and opportunity management are increasingly sources o
54、f competitive advantage.”06Executive BoardClaus E.Heinrich(Labor Relations Director)joined SAP in 1987 and has been a member of the Executive Board since1996.He is responsible for Global Human Resources,Quality Management,Internal IT,and SAP Labs.Shai Agassi joined SAP in 2001 and has been a member
55、ofthe Executive Board since 2002.He is responsible for Product Development,Technology,Industry Solutions,andProduct and Industry Marketing.“IT has evolved beyond the role of supporting the business to become a differentiating force that provides the path for our customers and partners to transform,a
56、dapt,and grow.”“Advancing technology opens up new possibilities in business,but it is still the employees who determine the success of a companys business model.”Executive Board07Gerhard Oswald joined SAP in 1981 and has been a member of the Executive Board since 1996.He is responsible forGlobal Ser
57、vice and Support and Custom Development.Lo Apotheker joined SAP in 1988 and has been a member of the Executive Board since 2002.He is responsible forSales,Consulting,Education,and Marketing.“As the trusted advisor for businesses large and small,SAP is determined to help each and every customer becom
58、e a best-run business.”“Long-term commitment to our customers is a core value that runs through the history of our company and is a foundation of our success.”The Executive Board appointed the following members of the SAP senior management team as Corporate Officers of SAP Group:Bill McDermott,Jim H
59、agemann Snabe(since February 6,2006),Marty Homlish,Peter Kirschbauer,Hans-Peter Klaey,Klaus Kreplin.AT KELLOGG,THE SPIRIT OF INNOVATION IS ALWAYS FRESH.08Success Story Kellogg“mySAP CRM helps us provide customer service levels that are among the best in our industry.”A.D.David Mackay,President and C
60、hief Operating Officer,Kellogg Company“My IT staff has a deep appreciation for SAPbecause theyre proud of what SAP has enabled us to do.”H.Ray Shei,Senior Vice President andChief Information Officer,Kellogg Company“With the new SAP portal,our vendors will readily know how much product we need,and wh
61、en we need it.”Basobi Holm,Senior Category Growth Manager,Kellogg Company“Kellogg continues to shorten the pathfrom the warehouse to the shopping cart.”Kelly Tobey,Ingredient Manager,Procurement,Kellogg Company“I know I can rely on Kellogg to consistently have high-quality products and great taste i
62、n every package.”Marci Cameron,ConsumerA TRADITION OF INNOVATION AND EXCELLENCEDelivering high-quality,great-tasting cereal and breakfast foodscomes with experience and a lot of support.Most of the worldhad never even heard of breakfast cereal when W.K.Kelloggbegan producing toasted corn flakes in 1
63、906.This was,ofcourse,one of many firsts for Kellogg Company which,a centurylater,is the worlds leading producer of cereal and a leadingproducer of convenience foods.Kellogg products are manufac-tured in 17 countries and marketed in more than 180 countriesaround the world.Behind this phenomenal reco
64、rd of productinnovation is a strong set of business support processes includ-ing world-class business software from SAP.A CORPORATE ASSETAs the former CIO of Keebler Foods Company and an early SAPcustomer,Ray Shei was instrumental in introducing Kellogg to SAP.“When Kellogg purchased Keebler in 2001
65、,”he explains,“they cited our technology which was centered on SAP as a key asset.”Today,Kellogg is a leading SAP customer in theconsumer products industry,using a full array of SAP solutionsto help manufacture and market such well-known brands asKelloggs Frosted Flakes,Pop-Tarts,Eggo,Kashi,Cheez-It
66、,Nutri-Grain,Austin,Morningstar Farms,Famous Amos,and Carrs.TIMELY DELIVERYFor Kellogg,business process innovation begins with suppliers,who will be able to log on to the companys SAP portal toensure that ingredients and packaging materials are delivered to the manufacturing facility in time for pro
67、duction.“Ourstandard process,”says Ray Shei,“meant that suppliers receivedmultiple spreadsheets to inform them of what supplies wereneeded.With the new SAP portal,our vendors will always knowwhat we need because the information is available online in real time.And that will mean we will receive the
68、best possibleservice.”REAL-TIME PRODUCTION DATAOnce the raw ingredients reach any of Kelloggs worldwidemanufacturing sites,mySAP Supply Chain Management helpsensure that they move through the production process asquickly as possible.“Supply chain management is critical,”saysDavid Mackay,President an
69、d Chief Operating Officer.“SAP will really help in the areas of inventory management andreplenishment.We will be able to monitor our production on a shift-by-shift basis by looking at real-time data,and can takeimmediate corrective action if theres a problem.”Around the world,millions of people trus
70、tthe quality of KelloggCompany,the worldsleading cereal manu-facturer and producer of convenience food.To help ensure thatquality,this century-old US$10 billion companytrusts SAP.A WORLD-CLASS PARTNERWith the help of SAP,Kellogg strives to deliver the rightamount of product for each retail customers
71、 requirements,sothat products go from warehouse to shopping cart in optimaltime.“mySAP Customer Relationship Management helps us provide customer service levels that are among the best inour industry.”says David Mackay.“When you can do that,itpositions your company to be a world-class partner.”“SAPs
72、 vendor-managed inventory solution provides us with abig advantage,”adds Ray Shei.“Where we previously had eightdifferent reports on retailer inventory,we now have a singlepoint of information and a common way of calculating dataaround the world.As a result,our order fill rate is close to 100%.Its b
73、een a good change.”Kellogg also mines its SAP data for a wealth of intelligence on thousands of retailers around the world.“We now haveimmediate access to a three-year rolling history of our retailersorders,”says Ray Shei.“With that information,we can trackour trade and promotional spending all in o
74、ne real-time sys-tem.The transactional data we get from our SAP solutions isphenomenal,”Ray Shei notes.“And with SAPs analytical tools,we can slice and dice our transactional data and make businessdecisions based on the results of any promotional program.”“My IT staff has a deep appreciation for SAP
75、,”he adds,“becausetheyre proud of what the SAP solutions have enabled us to do.”Solutions and Technology:Enterprise Services Architecture11The needs of our customers are evolving.And SAPs solutionsand technologies are evolving with them.Through innovationsin both business applications and platform t
76、echnologies,ourindustry-leading family of business software is becoming moreflexible,more adaptable,and more affordable to organizationsof all sizes.These new solutions give our customers evengreater agility,allowing them to rapidly adapt their IT land-scapes to changing business models and processe
77、s.CUSTOMERS WANT A BLUEPRINT FOR THE FUTUREThe world of business is changing at an ever-accelerating rate.Globalization continues to shrink distances and shorten timeframes.New alliances form that break traditional boundaries.Mobile technologies and the Internet require businesses to operate around
78、the clock and around the world.And newregulatory pressures increase the need for information andtransparency.In the face of these challenges,the role of technology is also changing rapidly.According to a study conducted by The Economist,businesses no longer view IT as merely a produc-tivity tool.Ful
79、ly 82%of respondents view technology as acritical factor in their ability to change their business processesand remain competitive in the years ahead.In such a complex environment,organizations needmultidimensional solution suites that can help them:?Ensure compliance:The first goal of any managemen
80、tteam is to remain compliant with current laws and regula-tions.?Consolidate the core:At the core of any organization areits“virtual assets”the information that defines an enter-prise and its future.To optimize the value of these assets,anorganizations information systems must work togetherseamlessl
81、y.?Optimize operational networks:Customers need tooptimize their operational networks the physical assetsrequired to conduct their business.?Manage relationships:In a fully connected world,organi-zations need to manage their relationships with a diversenetwork of customers,suppliers,and business par
82、tners often located around the world.?Enable new growth:To generate revenue growth,organi-zations need to deliver a steady flow of new products andnew business processes.?Manage performance:Ultimately,an organization needs tomeasure and manage how well it is performing at a specifictask and in its o
83、verall operations.SAP DELIVERS ENTERPRISE SERVICES ARCHITECTURENew customer challenges require dramatically new technolo-gies.In 2003,to meet our customers changing needs,SAPintroduced enterprise services architecture(ESA),its blueprintfor the future.Among its many advantages,ESA enables complexbusi
84、ness processes such as vendor selection,purchasing,andpayment to be represented as modular“enterprise services.”These services can be quickly assembled to compose newapplications and enable new business processes.As a result,they give customers the ability to change their businessprocesses efficient
85、ly and flexibly.And while the technology behind ESA is sophisticated,its effect is to simplify our customers IT environments likenever before,making them more open,flexible,and adaptableto the needs of today and tomorrow.Our ESA blueprint is designed to help customers transi-tion in relative ease,ba
86、sed on an evolutionary rather thanrevolutionary approach.This means that customers existinginvestments are protected,and each step in the process buildsin new capabilities as companies move toward modern solutionarchitectures.The ESA blueprint is also well documented andpredictable,enabling customer
87、s to plan their solution roadmaps with SAP for years to come.Enterprise Services Architecture12Solutions and Technology:Solution PortfolioSAP NETWEAVER:THE PLATFORM THAT ENABLESENTERPRISE SERVICES ARCHITECTURE AND THE SAPSOLUTION PORTFOLIOOur ESA vision comes to life through the SAP NetWeaverplatfor
88、m.Based on the latest open technology standards,SAPNetWeaver allows the integration of both SAP and non-SAPsolutions,so that customers and independent softwarevendors can combine processes and components with theassurance that they will fit together seamlessly.This powerful,highly successful platfor
89、m provides SAPcustomers with a wide range of benefits:?Innovative business processes SAP NetWeaver powersinnovative,industry-specific software and allows companiesto recompose existing systems to support innovativeprocesses.?Flexible business strategies With SAP NetWeaver,cus-tomers have the flexibi
90、lity,visibility,and control to effectivelyexecute,monitor,and refine their corporate strategies.?Superior business value SAP NetWeaver minimizes therisk and cost of introducing new processes because existingsystems remain unchanged while customers leverage themfor end-to-end enterprise processes.?Im
91、proved business performance SAP NetWeaver helpscustomers aggregate and analyze information throughoutthe organization,so they can gain the insights needed tomake the right changes.?Unmatched user experience Solutions built on SAPNetWeaver provide an efficient user experience through arole-based port
92、al interface.With SAP NetWeaver,customerscan extend business processes to all employees,suppliers,and customers.?Partner-developed solutions To date,more than 1,100solutions,developed by over 650 independent softwarevendors(ISVs),have achieved“Powered by SAP NetWeaver”or“Certified for SAP NetWeaver”
93、status.CUSTOMERS WANT SOFTWARE THAT ENABLESCONTINUOUS INNOVATION.SAP DELIVERS ADVANCEDSOLUTIONS FOR EVERY SIZE,INDUSTRY,AND BUSINESSPROCESSSAP has become the worlds largest independent businesssoftware provider on the strength of its powerful and dynamicfamily of advanced solutions.This family is le
94、d by mySAPBusiness Suite and now includes a growing array of solutionsfor small and midsize enterprises.mySAP BUSINESS SUITE:UNPRECEDENTEDPERFORMANCE AND SUCCESS BUILT ON SAP NETWEAVERBusinesses large and small have discovered that mySAPBusiness Suite is the worlds most comprehensive family ofadapti
95、ve business solutions,providing best-of-breed func-tionality built for complete integration,unlimited scalability,and easy collaboration over the Internet.Individually,mySAP Business Suite solutions helpcustomers manage their most critical business processes.Col-lectively,they form a tightly integra
96、ted suite that adds value toevery facet of an organization and its external value chain.The flagship of mySAP Business Suite is mySAP ERP.This industry-leading solution combines the worlds mostcomplete,scalable,and effective software for enterpriseresource planning(ERP)with a flexible,open technolog
97、y plat-form that can leverage and integrate SAP and non-SAP sys-tems.And,it provides end-to-end software functionality forenterprise management and support plus support forsystems management all powered by the SAP NetWeaverplatform.Additional mySAP Business Suite solutions:?mySAP Customer Relationsh
98、ip Management?mySAP Product Lifecycle Management?mySAP Supplier Relationship Management?mySAP Supply Chain ManagementSolution PortfolioSolutions and Technology:Solution Portfolio13mySAP ALL-IN-ONE AND SAP BUSINESS ONE:SOLUTIONS FOR SMALL AND MIDSIZE ENTERPRISESNearly two-thirds of SAP customers are
99、classified as small andmidsize enterprises(SMEs)with up to 2,500 employees.To remain profitable and competitive day after day,quarter after quarter,SMEs must manage their operations effi-ciently and cost-effectively while overcoming the uniquechallenges of todays global markets.SAP and its partners
100、understand these challenges.Thats why we offer SAP Business One and prepackaged mySAPAll-in-One solutions,which are designed specifically for SMEs.SAPs affordable solutions for SMEs can be implementedquickly and easily.And theyre scaled to grow as a businessgrows.?mySAP All-in-One Each qualified myS
101、AP All-in-Onepartner solution is a prepackaged,industry-specific versionbased on mySAP ERP with built-in content,tools,andmethodologies for cost-effective,turnkey implementation.mySAP All-in-One solutions offer out-of-the-box flexibilitycombined with the power of SAPs world-class business solu-tions
102、.They are sold,deployed,and supported by a growingecosystem of SAP channel partners.?SAP Business One SAP Business One is an easy-to-usebusiness and operational management solution for compa-nies ranging in size from ten to several hundred employees.It is simple yet powerful,allowing an immediate an
103、dcomplete view of business operations and customer activities.Developed by SAP,SAP Business One is delivered by SAPchannel partners that provide local services and support.UNPARALLELED INDUSTRY EXPERTISEBecause every industry operates according to distinct processesand practices,SAP has developed ta
104、ilored solutions for morethan 25 industries in six industry segments each supported bydedicated professionals who work exclusively with a singleindustry.Our industry solutions fit the way our customers dobusiness,delivering productivity-building tools and enablingbest practices that we have develope
105、d with industry leaders,large and small.Just as important,SAP has devoted decades to under-standing the trends,details,and challenges that customers inthese industries face every day.And we have developed a fullrange of practical,reliable solutions that have been extensivelyfield-proven at companies
106、 around the world.SAP Solutions and Services Portfolio:Delivering ESASAP NetWeaverBusiness Process PlatformBusiness ApplicationsMore Than 25 Industry SolutionsService and SupportPlanningBuildingRunningmySAP Business SuiteFinancial ServicesPublic ServicesService IndustriesProcess IndustriesConsumer I
107、ndustriesDiscrete IndustriesData,Events,DocumentsEnterprise ServicesmySAP All-in-OnexAppsSAP Business One1)CRMSCMERPSRMPLM1)not based on SAP NetWeaver14Solutions and Technology:Business Process PlatformCUSTOMERS WANT UNLIMITED FLEXIBILITY.SAP DELIVERS BUSINESS PROCESS PLATFORMTo fit the customer nee
108、ds of tomorrow,SAP will evolve SAPNetWeaver into a complete platform for business innovation or,stated more simply,Business Process Platform(BPP).By developing BPP,SAP will create the first true plat-form that combines a strong technology infrastructure withworld-class applications.This combination
109、has coined a newterm,which analysts are calling“applistructure,”to define anew class of solution platforms.BPP provides a set of ready-to-use enterprise services,aswell as the infrastructure to deploy and manage enterpriseservices and to create composite applications.And it delivers the power,adapta
110、bility,and virtuallyunlimited flexibility our customers need to face the challengesof the future.FASTER DELIVERY OF SOLUTIONSBPP will allow SAP and customers to improve efficiency by systematizing the reuse of components across solutions.And,it will reduce time to market for solutions by leveraging
111、our growing family of composite applications known as SAP xApps.BPP will also extend our reach to new areas of theenterprise,with collaborative processes bridging the gapbetween enterprise applications and business productivityapplications.And,it will enable us to build an ecosystem ofpartners who w
112、ill complement and extend our solutions,allowing us to reach an even larger market.Business Process PlatformRoad Map to Enterprise Services Architecture and Business Process Platform2005mySAP ERP is successor to SAP R/3mySAP Business Suiteon SAP NetWeaver(all industries)First ISVs have access to Bus
113、iness Process Platform2006Broad access for Independent Software Vendors(ISVs)SAP NetWeaver evolves into Business Process PlatformmySAP All-in-Oneon SAP NetWeaver(all industries)2007mySAP Business Suite on Business Process PlatformmySAP All-in-One on Business Process PlatformEnterprise Services Archi
114、tecture road map completedSolutions and Technology:Services15CUSTOMERS WANT SUPPORT THEY CAN COUNT ON.SAP SERVICES DELIVERS EXPERTISE,WORLDWIDESAP SERVICES ENSURING CUSTOMER SUCCESSSAP Services helps ensure that customers get the greatest valueout of their SAP solutions at lowest total cost of owner
115、ship(TCO).Customers and partners can choose when and how toengage SAP Services and can take advantage of a broad range of services and engagement modes,including product mainte-nance,enablement,and knowledge transfer services;qualityassurance services;expert guidance;and complete execution.SAPs serv
116、ices offerings are aligned with the customerlife cycle,focusing on the following key challenges:?Planning:SAP helps enable IT-powered business innovationby designing flexible,future-proof solution landscapes thatleverage ESA.?Building:SAP helps ensure project success by activelymitigating risks and
117、providing the expertise to ensure thatthe solution goes live on time and on budget and meets theneeds of the business.?Running:SAP helps enable“Best-Run IT”by improving IT service quality and efficiency through assessment andbenchmarking services as well as by leveraging SAPsoperational best practic
118、es.SAP Services continuously enhances its array of servicesby productizing the services and experience from the morethan 3,000 employees who provide service and support to morethan 32,000 customers.For maximum reach,the resultingmethodologies,best practices,and content are made availableto all custo
119、mers and partners through the SAP SolutionManager tool.SERVICE OFFERINGS FROM SAP?SAP Consulting:Provides all the advice and assistance cus-tomers need to reap maximum business benefit from theirSAP solutions,providing extensive hands-on experience,proven methodologies,and best practices.?SAP Educat
120、ion:Creates a wealth of instructor-led andonline courses to help users increase their proficiency andproductivity with any SAP solution.?SAP Active Global Support:Round-the-clock supportprovides customers with peace of mind for their SAP solu-tions.SAP offers a range of support options from industry
121、-leading SAP Standard Support,to SAP Premium Supportensuring continued business operations and reducing opera-tions costs,to SAP MaxAttention tailored to match thespecific needs of SAPs larger global enterprise clients.Inaddition,SAP Safeguarding delivers technical quality man-agement in an implemen
122、tation project.?SAP Custom Development:Allows direct access to SAP experts who can help develop custom enhancements toSAP solutions based on unique customer requirements.?SAP Managed Services:Operates,manages,and maintainsSAP solutions.Customers benefit from the power andfunctionality of hosted SAP
123、solutions with minimal risk andlower TCO.?SAP Ramp-Up:Enables customers to profit from new SAPsolutions first before they go into mass shipment.FACTS ABOUT SAP SERVICES:?Local presence in more than 50 countries?77 training centers?5 Global Support Centers?More than 3,200 employees in service and sup
124、port?10,000 SAP consultants?120,000 partner consultants?Complete support coverage of all industries,solutions,andlife-cycle phases?More than 30 years experience?9 custom development centers in Europe,Asia,and theAmericas?4 custom data centers?Genuine 24/7 supportServicesREINVENTING GOVERNMENT.16Succ
125、ess Story Hesse“We are transforming our public administration into a dynamic,process-oriented organization.”Harald Lemke,State Secretary and Chief Information Officer,The German Federal State of Hesse “The e-government portal is setting new standards accessing information is quicker;and it is easier
126、 for citizens to contact their government.”Minister President Roland Koch,The German Federal State of Hesse“With SAP and fine-tuned logistics,state government employees receive the best quality of office supplies at the lowest prices.”Klausdieter Schecker,President,Wolfgang Walter GmbH“With better c
127、ost-benefit transparency through SAP,we are more accountable to our 6.1 million citizens than ever.”Katharina Schuch,Oberfinanzdirektion Frankfurt am Main,State Government of Hesse“Hesse is doing it the right way using tax money to offer its citizens better service.”Manfred Wagner,Citizen,State of H
128、esseHESSES E-GOVERNMENT PLATFORMBusinesses are not the only organizations finding it difficult tocope with change.Social,political,and technologicalchangesare also challenging governments both large and small todeliver services better,faster,and with fewer resources.TheGerman Federal State of Hesse,
129、one of Germanys 16 federalstates,or Bundeslnder,has risen to the challenge by radicallytransforming its public administration with an innovative ITstrategy and the SAP NetWeaver platform.E-GOVERNMENT:A NEW WAY OF LOOKING AT PUBLIC ADMINISTRATIONLike Switzerland and the United States,Germany has a fe
130、deralstructure consisting of individual state governments as well as afederal government in Berlin.Hesse is best known for the citythat dominates its economic landscape Frankfurt am Main.The city is one of Europes most thriving global business cen-ters,drawing upon a diverse range of industries for
131、its economicbase,including banking,chemicals,pharmaceuticals,machines,automobiles,materials research and processing,and optics.Hesses political leaders have been quick to harness the oppor-tunities that todays technology can offer its citizens.“Moderninformation technology is part of our total strat
132、egy for a soundgovernment and a thriving economy,”says Minister PresidentRoland Koch,leader of the German state.“Informationtechnology plays a vital role in making the state of Hesse a great place to live,work,and do business.”A PROMINENT ROLE FOR IT AND SAPBy creating links across the SAP NetWeaver
133、 platform and bybuilding an integrated portal for employees,citizens,suppliers,and policy makers,the Hessian state government has achievedgreater efficiency and transparency.A transformation on thisscale required making IT a top priority,which is why Hessebecame one of the first governments in the w
134、orld to elevate therole of chief information officer(CIO)to a cabinet-level post.Harald Lemke,a cabinet secretary and the states CIO,plays aleading role in helping Hesse achieve better,more effectivegovernment.One of Lemkes first challenges was to choose anIT platform.After an exhaustive review of s
135、everal options,Hessechose SAP because,in addition to its high performance,SAPNetWeaver offers optimal support for the state governmentsstrategic goals.“IT will play a vital role in helping Hesse com-pete on both a national and international level in the vital areasof education,infrastructure,researc
136、h,and business,”saysLemke.“SAP is clearly the best strategic business partner to helpus achieve those goals.”E-GOVERNMENT:LESS LIKE GOVERNMENT AND MORELIKE BUSINESSHesses approach to e-government goes well beyond creating aninformation portal.It represents a profound,comprehensivechange in the state
137、s administrative and organizational processes.From the reform of the states budget and accounting processesto the goal of creating strategic,output-oriented planning and controlling as well as the implementation of modernpersonnel management Hesse is using the SAP NetWeaverplatform to transform its
138、government bureaucracy into aprocess-oriented organization.EMPLOYEES WINLike many governments,Hesse has looked for ways to increaseemployee productivity while lowering overall costs.Theemployee portal will play a central role in providing workerswith the necessary information they need for their dai
139、ly work,as well as employee self-services in the future.To enhanceefficiency and flexibility across the entire administration,forexample,Hesse has also completely revamped key internalprocesses like budget preparation,accounting,finance,person-nel administration,and procurement.And workflow-drivenpr
140、ocesses allow employees from different departments to worktogether more efficiently than ever before.CITIZENS WINThe state of the public coffers is giving policy makers and gov-ernment administrations less financial leeway.Citizens demandthat their tax money be managed efficiently.At the same time,h
141、owever,they expect governments to deliver even more servicesat higher levels of quality.Hesses SAP platform helps policymakers meet these challenges by providing them with betterfinancial transparency and comprehensive information forplanning and controlling.As a result,planning is more accu-rate,an
142、d a broad overview of budget trends and figures isavailable.The e-government platform also gives citizens theability to interact with their government in ways unimaginableeven a decade ago,giving them direct access to services andinformation.SUPPLIERS WINGovernments rely on a host of suppliers and s
143、ervice providersto deliver citizen services.Before Hesse integrated its IT system,tracking costs and identifying redundancies between ministrieswas frequently impossible.Hesses e-government platform nowallows suppliers to consolidate orders from different depart-ments and to directly monitor supply
144、levels throughout theorganization.The result is more transparency and better pricesthrough supply bundling.Suppliers also enjoy greater costadvantages and faster delivery times through seamless integra-tion and leaner procurement processes.BE A FRONT-RUNNEROver the next five years,state officials pl
145、an to be even furtheralong the path of integration in the areas of citizens portal,processes,workflow management,document management,and process standardization.This is not only viewed as a sourceof cost savings and increased efficiency,but also as a way tosuccessfully compete with other states,regi
146、ons,and evencountries.Minister President Koch views his states future withgrowing confidence.“With sound policies and an equally soundSAP infrastructure,Hesse will continue to consolidate itsposition as a global European hub for information,finance,and communication.”The State of Hesse,oneof Germany
147、s 16 federalstates,or Bundeslnder,is meeting todays chal-lenges head-on with aninnovative combinationof forward-thinkingpolicies and a modernpublic administration all supported by an inte-grated SAP IT system.Hesses e-governmentplatform is a win for the states government and the 6.1 millioncitizens
148、it serves.Innovation and Growth:Research and Development19To continue to win in the ultracompetitive software industry,in 2005,SAP invested more than 1 billion in developing thetools and technologies of tomorrow.Research and develop-ment projects are distributed globally across SAPs infrastruc-ture.
149、SAPs global research and development network helpstransform ideas,trends,and technologies into breakthroughsolutions to enable customers to be best-run businesses,regardless of their size or industry segment.In addition to theglobal research and development network,SAP Venturesengages in venture cap
150、ital investments to promote excitingnew technologies with potential value for our customers and SAP Inspire sources and drives promising internal ideaswith significant business value towards realization.INNOVATIVE RESEARCHThe SAP Research group is a worldwide organization thatidentifies emerging IT
151、trends,conducts vital research anddevelopment for new technologies,and fosters the best entre-preneurial talent to support future growth.The group is head-quartered in Germany,with additional facilities in Australia,Canada,France,South Africa,the United Kingdom,and theUnited States.SAP Research empl
152、oys an outside-in approach,lookingto universities,industry research centers,and other institu-tions for technological trends that may be relevant to SAP andits customers.It is highly collaborative,engaging academia,technology partners,and customers in its research projects,addressing future-oriented
153、 topic areas such as wearable com-puting,future manufacturing,real-time awareness,SemanticWeb,or technology for socioeconomic development.Above all,SAP Research is pragmatic,always looking for ways to applynew technologies to actual customer challenges.An example of how SAP Research is working to re
154、movebarriers to interoperability is its involvement in ATHENA(Advanced Technologies for Interoperability of HeterogeneousEnterprise Networks and Their Applications),one of the largestresearch projects co-financed by the European Commission inthe area of e-business.SAP Research is leading the consort
155、iumof 21 partners.The knowledge gained and tools developed arealready being deployed in the“xCarrier”project,which is cre-ating a solution that will allow shippers to seamlessly integrateservices from different carriers ranging from parcel carriersto ocean carriers and to execute end-to-end business
156、 processes.Other examples of research projects include the“Digital Communities”initiative with Intel and various cities;Collaborative Business Items(CoBIs)with BP;wearITworkand SNOW with EADS and Austrian GESPAG;eJustice projectwith the Austrian Federal Chancellery;and PROMISE withBombardier and Cat
157、erpillar,for example.PRODUCT DEVELOPMENTSAP development units are responsible for the entire SAPproduct and solution portfolio.With operations in Bulgaria,Germany,France,India,Israel,China,Japan,and North America,the SAP developmentunits integrate ideas and leading-edge technologies thataddress the
158、needs of specific industries and geographic regions,and keep SAP and its customers at the forefront of businesssuccess.Today,the product pipeline from SAP is stronger thanever,comprising the solutions in our enterprise services archi-tecture(ESA)road map,solutions that reach new businessusers,and so
159、lutions for the midmarket.Delivering on the ESA Road MapSAP developers continue to deliver on our ESA road map as described in the“Solutions and Technology”section of this annual report.For example,cross-functional teams aredeveloping SAP NetWeaver into our Business Process Platform(BPP).They are al
160、so responsible for the delivery of the mySAP Business Suite as well as SAP industry solutions.Research and Development20Innovation and Growth:Research and DevelopmentProduct Innovation for Business UsersSAP continues to bring new innovation to a broader array ofbusiness professionals,including new f
161、unctionalities andproducts that leverage the flexibility and openness of the ESAapproach:?Mendocino:In 2005,SAP and Microsoft introduced the firstjointly developed product from the two companies.Code-named Mendocino,and built in keeping with our ESAvision,the new solution will provide a strong bridg
162、e betweenSAPs business applications and Microsofts desktop produc-tivity tools,opening up new opportunities to bring SAPfunctionality to a larger class of end users,and helping cus-tomers gain enormous productivity gains.First shipments to customers were made at the end of 2005,with generalavailabil
163、ity of Mendocino planned for mid-2006.?SAP Analytics:In 2005,SAP unveiled more than 100 indus-try-specific analytic applications that empower users bypulling all relevant information whether historical or up-to-date from a wide variety of enterprise systems to deliverclear and comprehensive business
164、 insights.Powered by theSAP NetWeaver platform,these applications are unique intheir ability to deliver data in the business context of thespecific process at hand letting a business manager know,for example,not only the days sales figures but also whetherthese figures are on target compared to past
165、 performanceand the current years revenue goals.?SAP CRM on-demand solution:SAP has created the firsthybrid CRM solution that transcends conventional on-demand(Internet-delivered,pay-as-you-go model)and on-premise solutions(traditional in-house enterprise solu-tions),while integrating with core ente
166、rprise solutions.Thisunique hybrid approach pioneers a model that combineshigh availability and low risk with exceptional efficienciesand deployment speed.Initially offered with sales forceautomation tools,the family of SAP CRM on-demand prod-ucts will be expanded in 2006 to include solutions for se
167、rviceand marketing.Midmarket SolutionsSAP continues to expand its offerings for small and midsizeenterprises,including mySAP All-in-One and SAP BusinessOne.In 2005,SAP introduced the first qualified mySAP All-in-One partner solutions based on SAP NetWeaver.Going forward,these solutions will be deliv
168、ered based on our ESA vision onBusiness Process Platform.SAP VENTURES AND SAP INSPIRESince 1996,SAP Ventures has been investing in companies thatoffer exciting new technologies and applications.Independent from SAPs overall strategy,SAP Ventureshas the freedom to pursue a portfolio of different oppo
169、rtuni-ties.At the same time,it carries the benefit of SAPs knowledgeand market experience,which it can pass on to its portfoliocompanies.Examples of investments from 2005 include AvokiaInc.,Black Duck Software,Inc.,Factory Logic,Inc.,Ping IdentityCorporation,and iTAC Software AG.SAP Inspire actively
170、 solicits and cultivates ideas fromemployees,partners,and customers.In 2005,the group hasinvestigated more then 400 ideas submitted online to SAPInspire and three ideas received Board approval and funding.Five think-tank sessions were held in SAP Labs in Tokyo,Shanghai,Montreal,Sophia Antipolis,and
171、Walldorf.In addi-tion,SAP Inspire is currently investigating the potential ofdeveloping a solution for natural disaster and civil crisismanagement as a result of an idea submitted shortly after thetsunami catastrophe in Southeast Asia.The Global Research and Development Network of SAPInnovation and
172、Growth:New Opportunities21As we build on our strong position in core markets,SAPcontinues to seek opportunities in new market segments.Ourstrategy for capturing these opportunities includes focusing onmidmarket customers,key industry segments,and emergingeconomies.In addition,we are increasing our e
173、fforts to attractnew customers through the Safe Passage program,throughsolutions aimed at a wider range of business users,andthrough our Business Process Platform(BPP).THE MIDMARKETIT spending among small and midsize enterprises(SMEs)with up to 2,500 employees currently outpaces that of largercompan
174、ies a trend that is expected to accelerate in the yearsahead.SAP already leads the world with IT solutions for thismarket.In 2005,some 30%of order entry was achieved withSMEs.The aim is to grow that share to a range of 40%to 45%by 2010.SAPs success in the SME marketplace is achievedthrough partnersh
175、ips with qualified,committed,and effectiveresellers,Independent Software Vendors(ISVs),and otherpartners.Through programs such as SAP PartnerEdge,whichoffers a variety of incentives for successfully developing andselling SAP software-based solutions,our future success willinvolve partners to an even
176、 greater degree.By the end of 2005,SAP and its ISV partners offered atotal portfolio of nearly 600 qualified mySAP All-in-One solu-tions,which are available in more than 50 countries and usedby more than 7,700 customers worldwide.SAP Business One,supported by nearly 1,100 channelpartners,is availabl
177、e in more than 37 country versions and hasattracted more than 9,000 customers up to now.KEY INDUSTRIESSAP is the leading provider of enterprise software solutions invirtually every major industry.Going forward,we will continueto refine and expand our solutions for more than 25 industries.Through new
178、 solutions,strategic partnerships,andsmall acquisitions to enhance our solution portfolio,we willexpand our capabilities in key industry sectors that representexceptional opportunities for growth:?Retail:SAP is the global leader in the retail market.We see asignificant growth opportunity as retailer
179、s move away fromin-house development and adopt standardized software suchas SAPs.In 2005,we acquired two leading companies,Khimetrics and Triversity,whose successful retailing solu-tions will help SAP gain even greater traction in the yearsahead.?Financial Services:SAP has a highly successful portfo
180、lio of solutions for the financial services market,including thebanking and insurance segments.To stay current withevolving industry needs,SAP recently established the firstIndustry Value Network for Banks.This group bringstogether industry experts,including executives from leadingfinancial services
181、 companies,to collaborate with SAP todevelop advanced solutions based on our BPP strategy.?Public Sector:SAP is the global market leader in helpinggovernments transform and improve service to citizens.In2005,SAP embarked on a groundbreaking effort to helpgovernment agencies and organizations measure
182、 the value oftheir IT projects in economic,social,and political terms beyond mere financial metrics.?Healthcare:To meet the needs of the rapidly growinghealthcare market,SAP recently announced a global strate-gic alliance with Siemens to deliver an integrated informa-tion technology offering.The res
183、ulting solution will enablehealthcare organizations to conduct collaborative businessplanning,in-depth financial analysis and accounting,human resources tasks,and more.New Opportunities22Innovation and Growth:New OpportunitiesEMERGING ECONOMIESSAP continues to achieve outstanding gains in virtually
184、all ofthe geographic areas in which we operate.In addition,we aremaking a special effort to increase our presence in several of the worlds emerging economies,including Brazil,Russia,India,and China.In 2005,SAPs revenue in those countriesgrew 30%.These nations are experiencing economic growth ratesth
185、at are well above the global averages.And through a combi-nation of business expansion,privatization,and low penetra-tion by enterprise software providers,they offer outstandingopportunities for SAP.THE SAFE PASSAGE PROGRAMAt a time when many of our competitors are undergoingmergers and acquisitions
186、,SAP has achieved great success inoffering their customers a“safe passage”to our solutions.The Safe Passage program is a comprehensive offeringthat addresses the concerns of customers facing the uncertain-ties arising out of market consolidation activities and resultingend-of-life of competitive sol
187、utions.It includes access to SAPsbest-in-class solutions,protection for a customers existinginvestment in competitive solutions,immediate integrationbenefits through the SAP NetWeaver platform,and migrationsupport services.During 2005,SAP introduced specialized Safe Passage programs for customers ru
188、nning PeopleSoft,J.D.Edwards,Siebel Systems,Inc.,and Retek Inc.solutions,aswell as specific support elements for the SME segment of themarketplace and for business process outsourcers.By the close of 2005,hundreds of customers were in discussions withSAP regarding the Safe Passage program and more t
189、han 200 had already participated in the program.THE EXTENDED BUSINESS USER MARKETBy delivering Mendocino,SAP Analytics,and the new SAP CRM on-demand solution,SAP is reaching a broader array ofbusiness professionals with tools that suit their particularrequirements essentially expanding our potential
190、 market toinclude virtually 100%of all business users.For example,Mendocino builds a strong bridge betweenthe desktop productivity solutions from Microsoft and SAPenterprise solutions in ways that add speed and efficiencies indaily work tasks.SAP Analytics provides business users withextremely user-
191、friendly analytical tools.And SAP CRM on-demand solution puts sales,service,and marketing capabilitiesin the hands of customer-facing professionals as an importantfast-start to CRM functionality.THE PLATFORM MARKETWhere SAP is traditionally known for its application software,we are now adding a repu
192、tation for leadership in the platformspace providing true“applistructure”the convergence of applications and infrastructure technology,designed to beused by both SAP and non-SAP customers.With robust capabilities built on open standards,SAPNetWeaver becomes instantly attractive to ISVs as a platform
193、upon which they can develop and market new innovativesoftware solutions.In 2005,more than 1,000 ISVs registeredtheir commitment to bring forward a wave of new softwareinnovation to meet customer challenges all built with thesame platform delivered with every SAP solution.This buildingecosystem demon
194、strates the maturity of the SAP NetWeaverplatform strategy and brings a new level of value to customersand prospects.Innovation and Growth:People at SAP23With a reputation for providing outstanding career opportuni-ties and a stimulating work environment,SAP is an employerof choice in the global sof
195、tware industry.In 2005,we addedover 3,600 employees to our corporate family chosen from apool of more than 300,000 applicants.Our commitment toemployees has also been recognized externally through sever-al national best employer awards,among others,in Germanyand Latin America in 2005,presented by th
196、e internationallyrenowned Great Place to Work Institutes.SAP was also recog-nized with the top award for fairness in the“Best Workplacesin Europe 2005”list.PERSONALIZED CAREER PATHSFrom the moment employees enter the world of SAP,we striveto identify,nurture,and regularly evaluate their unique talen
197、tsand abilities.By doing so,we help ensure a personalized careerpath for each individual and the ongoing development offuture leaders for our company.Through a well-organized performance and talentmanagement process,employees are encouraged to developcareers as project specialists,experts,or manager
198、s.Each careerpath offers its own route to professional development,recognition,and higher levels of compensation.LEADERSHIP DEVELOPMENTBecause managers play a key role in SAPs overall talent devel-opment programs,our company provides people managerswith the knowledge and tools they need to become mo
199、re effec-tive leaders.Designed with the help of leading business experts,ourglobal and regional leadership development programs provideongoing training to cultivate the entrepreneurial capabilities ofeach manager.Through global and local programs like these,each ofour more than 3,000 managers is res
200、ponsible not only forcontributing to the production of real business results,but alsofor playing an active role in helping to build employee motiva-tion,commitment,and engagement.These programs are supplemented by regular surveyresults and 360-degree feedback processes to ensure that ourorganization
201、 remains focused on the development of manage-rial excellence.EDUCATIONAL OPPORTUNITIESKnowledge is power,and through our company intranet SAPCorporate Portal,employees have access to an extensiveknowledge base covering technology,applications,and busi-ness.Our global learning programs are designed
202、to immediatelyenhance real-world skills and combine on-and off-the-jobtraining.People at SAP:A Winning TeamSAP Corporate Portal:Window to SAPs WorldDiversityEducationCorporate Values and Code of Business ConductOpennessLeadershipCORPORATE PORTALCareer PathsProjectExpertsManagersSpecialist24Innovatio
203、n and Growth:People at SAPREWARDING EXCELLENCESAP rewards outstanding performance with outstandingcompensation and benefits packages.Our programs includeprofit-sharing and stock-option programs,as well as supple-mentary benefits tailored to the cultural and legal customs ofeach country in which we o
204、perate.STRONG CORPORATE VALUESFor more than 33 years,SAP has been guided by deeply heldcorporate values,which have given our company the strengthand longevity to help shape the path of our industry whileinfluencing the success of thousands of businesses worldwide.SAP values include customer focus,qu
205、ality,and theunwavering pursuit of product excellence.In addition,thevalues consist of integrity,commitment,and a passion for ever-higher levels of achievement,with the knowledge that ouractions today will help define our industry now and in thefuture.Our values are reflected in every aspect of our
206、culture,and continue to guide our efforts to be a best-run business.And in 2005,they were reinforced by five new corporaterequirements:agility,high performance,simplicity,co-innova-tion,and talent development.COMMITMENT TO ETHICAL BUSINESS PRACTICESIn recent years,governments around the world have i
207、mple-mented a growing number of regulatory initiatives to ensureethical corporate conduct.SAP seeks to comply with all ofthese statutes.And in 2003,we supplemented our complianceefforts with our own Code of Business Conduct,which definesthe standards that each employee must meet in all business,lega
208、l,and ethical matters.A CULTURE OF OPENNESSSAP fosters a culture of openness,in which all employees areencouraged to express their opinions and perspectives.Information channels are ubiquitous and include the wealth of knowledge available on our company intranet,as well as a monthly e-mail newslette
209、r to all employees from the SAPExecutive Board.In addition,SAP CEO Henning Kagermann,as well as other members of the Board and Senior ExecutiveTeam,frequently meet with teams at all levels of the organiza-tion to share ideas on the direction of the company.Knowledge and ideas are also shared in on-s
210、ite and“virtual”meetings that cross time zones,borders,and companydepartments.Spontaneous meetings are encouraged by theavailability of open meeting areas in SAP offices around theworld.In addition,presentation series and discussion forums,such as FutureScope and CIOSAP,offer the chance foremployees
211、 to learn and converse about current customerissues as well as future trends in technology and business.Innovation and Growth:People at SAP25STRENGTH IN DIVERSITYSAPs employee family includes people of virtually every cul-ture,race,ethnicity,gender,nationality,religion,age,disability,marital status,
212、education,and sexual orientation.This diversityis among our greatest corporate assets and results in an organi-zation that is rich in cultural wealth and open to a broad rangeof ideas and perspectives.DiversityPercentage of Women30%Average Age37 yearsAverage Seniority5.3 yearsRepresented Nationaliti
213、es by Employees in Germany88Number of Employees(Full-Time Equivalents)35,873THE SPIRIT OF INNOVATIONInnovation has always been the hallmark of SAP.And to keepthe innovative spirit thriving,SAP has implemented a varietyof programs and networks.For example,SAP provides compensation and peerrecognition
214、 as incentives for inventions.As a result,our GlobalIntellectual Property team generally files several hundred newpatent applications per year.And to promote organizational innovation,employeesare asked to submit their ideas on how to improve internalprocesses into an idea management system.Ideas ar
215、e evaluatedand the best are rewarded with monetary prizes.In 2005,more than 1,000 ideas were submitted andmore than 200 were put into practice.PANTALOON RETAIL BLENDS TRADITION AND TECHNOLOGY.26Success Story Pantaloon“SAP solutions allow us to pursue our growth strategy with confidence.”Kishore Biya
216、ni,Founder and Chief Executive Officer,Pantaloon Retail(India)Limited“With SAP,all our business functions are linked together,so our value chain is transparent.”Chinar Deshpande,Chief Information Officer,Pantaloon Retail(India)Limited“With my personalized SAP employee portal,I now have the tools I n
217、eed to do my job more efficiently.”Gurpreet Saini,IT team,Pantaloon Retail(India)Limited“Working with Pantaloon,we are shortening the path from the factory to the shelf.”Dr.Rakesh Mittal,Director,Pantaloon Production House“Pantaloon understands what my family wants:Great style,great quality,and grea
218、t value.”Shavana Chopra,Customer,PantaloonsA SHORTER PATH FROM MIND TO MARKETHow do you manage diverse operations and double-digitannual growth?For Pantaloon Retail,only one softwareprovider had the answer.Like a mirror in one of its many dress-ing rooms,Pantaloon Retail(India)Limited reflects its n
219、ationsrapidly changing profile:Smart,complex,successful,and ableto blend tradition and technology into a unique new style.Founded in 1987 as a textile manufacturer,the Mumbai-basedcompany has become a vertically integrated and highly diverseenterprise,with businesses that include major clothing labe
220、ls,the flagship Pantaloons fashion store chain,the all-in-oneCentral Mall,Big Bazaar hypermarkets,Food Bazaar super-markets,and more than 3.0 million square feet of retail spaceunder its management.And it has succeeded by recognizingthat Indian families want quality and value as well as anexciting s
221、hopping experience.FINDING A PARTNERIn the first six months of 20052006,Pantaloon has experiencedbreathtaking growth,with revenues rising more than 100%annually to approximately 200 million.With its existingbusiness software solutions unable to keep pace,the companysearched for a provider that could
222、 support its diverse operations today and in the future.After an extensiveevaluation,Pantaloon chose SAP.Kishore Biyani,founder and Chief Executive Officer of Pantaloon,recalls,“We looked at systems from around the world.Butbecause we are not only a retailer,but also have consumerbrands,manufacturin
223、g,and shopping centers,we wantedsomeone who could bring all of our businesses and processestogether.We felt that SAP,with their platform technology andspecialized retail industry solution,would be the best partner to help us grow to the next level,”he says.Pantaloon Retail(India)Limited is one of In
224、diasleading retailers andmuch more.Its rapidlygrowing operations alsoinclude fashion designand manufacturing,supermarkets,hyper-markets,real estate fundmanagement,and con-sumer financial services.For help in managingthis complex array of businesses,Pantaloonturned to SAP.DISCOVERING NEW SEASONSToday
225、,Pantaloon has made SAP the cornerstone of its ITstrategy,with solutions that include mySAP CustomerRelationship Management,mySAP Supply Chain Management,SAP NetWeaver,and SAPs specialized solutions for the appareland footwear industry.The company is counting on SAPsolutions to enhance its focus on
226、meeting customers changingdesires.“In a country this diverse,”Mr.Biyani explains,“we need to respond to customers the way they would like us to respond.SAP helps us reduce the time it takes to move a product from mind to market.To give an example,”he says,“we previously had only four fashion seasons
227、 each year.Now we are providing fashions for seven seasons.With SAP to help us bring new products to market more quickly,we can move to nine seasons per year.”A WIN-WIN FOR SUPPLIERSSAP solutions will also support Pantaloons suppliers,who arecritical to the companys ability to respond more quickly t
228、ochanging customer tastes.“Our suppliers will get direct benefitsfrom our improved value chain,”says Chinar Deshpande,Pantaloons Chief Information Officer.“We will order the rightquantities at the right time,and we will be able to make pay-ments on time.Its a win-win situation.”Mr.Biyani adds,“Witho
229、ur encouragement,a lot of supplier companies are going to be working with SAP.”A NEW DESTINATIONAs SAP solutions are being implemented at Pantaloon,spirits are running high throughout the organization.“The SAP soft-ware implementation is a very exciting time for our company,”says Mr.Deshpande,“and e
230、very one of the 8,000 people in ourorganization is involved in it.”The implementation is promotedinternally through a dedicated radio station and monthlynewsletters.Theres even an internal TV station featuring SAP-centered news,drama,and comedy programming.In a bow to tradition,Pantaloon has named t
231、he implementa-tion project“Sarthi,”or charioteer,in honor of the role thatLord Krishna played in the Hindu epic of Mahabharata.Theproject mascot,a horse,appears on T-shirts,mouse pads,and posters throughout the company.As Mr.Biyani explains,“Sarthi and our mascot symbolize that SAP is taking ourpeop
232、le,and our company,on a journey to a new destination.”Transparency and Responsibility:Investor Relations29Investors interest in 2005 focused on enterprise servicesarchitecture(ESA)and its importance for the future success ofSAP.SAPs improving position in the fast-growing small andmidsize enterprise
233、segment,especially the specific solutionsfor over 25 industries,also attracted a great deal of attention.SAP explained its growth strategy to institutions and privateinvestors through a record number of events and one-on-onediscussions.Three core values underpinned all of SAPsinvestor relations work
234、:credibility,transparency,and timeliness.SAP SHARES SIGNIFICANTLY OUTPERFORM GSTI SOFTWARE INDEXStock markets in different countries did not advance uniformlyin 2005.Despite increasing profits,shares stagnated on the U.S.stock exchanges.The Japanese Nikkei index,meanwhile,climbed 40%over the same pe
235、riod.Despite the increasingprices for oil and commodities,the major European indexes inLondon,Frankfurt,Paris,and Zurich also achieved growth indouble-digit percentages.For example,the DJ EURO STOXX 50index gained 21.3%in 2005 to reach 3,579.The German DAXindex closed at 5,408 at the end of the year
236、 up 27.1%comparedto 2004.SAPs stock initially struggled to keep up with thesefigures,falling to 114.50(Xetra closing price)on April 18,2005.The relevant Goldman Sachs Technology Index(GSTI)Soft-ware Index(GSTI Software Index)also lost approximately 15%by mid-April 2005.Profit warnings from U.S.softw
237、are vendorsat the start of the year rattled the markets confidence in thefuture development of the IT industry.The announcement ofSAPs first-quarter results provided the impetus for a turn-around.Subsequently,SAPs stock rose almost continuously,hitting 155.80 on December 2.At year-end on December 30
238、,2005,SAP stock closed at 153.16,some 17%above the year-endvalue of 2004 and easily outperforming the GSTI SoftwareIndex,which declined 5%in 2005.SAPs market capitalization(the share price multiplied by the number of shares out-standing)was 48.5 billion on December 31,2005,compared to41.5 billion at
239、 the end of 2004.Due to a rising U.S.dollar,the SAP American Deposi-tary Receipt(ADR)price did not increase as steeply,closing atUS$45.07 on December 30,2005 a year-over-year increase of2.6%.In the United States,most foreign companies issue ADRsinstead of shares.Four SAP ADRs represent one SAP share
240、.ANOTHER DIVIDEND INCREASE RECOMMENDEDAs in the previous years,SAP wishes to share its success with its investors by paying a dividend.The Executive Board and the Supervisory Board will recommend at the annual generalmeeting of shareholders that SAP pay a dividend of 1.45 pershare.This corresponds t
241、o an increase of 32%or 0.35 com-pared to the previous year and total distributed dividends of 449 million.Investor Relations:Credible,Transparent,and Up-to-DateKey Facts About SAP Stock/ADRsListingsGermanyBerlin-Bremen,Frankfurt,StuttgartUSA(ADRs)New York Stock ExchangeStock symbolsWKN716460ISINDE00
242、07164600ReutersSAPG.F or.DEBloombergSAP GRQuotronSAGR.EU.NYSE(ADRs)803054204(CUSIP)Indexes Weighting on Dec.31,2005 DAX 305.62 Prime All Share4.63 Dow Jones STOXX 501.12 Dow Jones EURO STOXX 501.81 30Transparency and Responsibility:Investor RelationsLITTLE CHANGE IN SHAREHOLDER STRUCTUREAt the end o
243、f the year,SAPs subscribed capital was 316.5 mil-lion,which corresponds to 316.5 million SAP shares.32.2%ofshares were held by three of the founders of SAP and their trustsand holding companies.2.1%were in SAP treasury ownership.As in the previous year,the largest group of shareholdersbesides the fo
244、unders was U.S.institutions and retail investors(20.6%),followed by institutional investors in continentalEurope,excluding Germany(10.4%).German institutionsowned 9.6%of the shares at the end of the year,followed by institutions in the United Kingdom and Ireland(7.1%)andin the rest of the world(1.5%
245、).The remaining shares were inthe hands of private or unidentified investors(16.5%).SAP maintained its profit-sharing programs for itsemployees and executives.For more information,refer to theSAP Group Review of Operations.INCREASED SHARE BUY-BACKIn 2005,SAP bought back a total of 3.21 million share
246、s(2004:1.14 million shares).The average price of the shares repur-chased was 129.77.For more information,refer to the Notes of this annual report.INCREASED COMMUNICATION WITH INSTITUTIONS In light of its significantly expanded portfolio of solutions,SAP continued to increase its contact to instituti
247、onal and retailinvestors in 2005.As in previous years,SAP set high goals fortransparency and openness in its communication with theshareholders.In some 700 one-on-one discussions held by SAPduring investor road shows and investor events worldwide,SAPinformed institutional investors and analysts abou
248、t its businessprogress.It ran regular telephone conference calls and analystmeetings about the quarterly results.Investor presentations at the SAPPHIRE conferences inCopenhagen and Boston,as well as the SAP Investor Day inNewtown Square,Pennsylvania,were other platforms for com-munications with the
249、financial markets.Around 85 partici-pants at the SAP Investor Day heard SAPs overview of its solu-tion portfolio for small and midsize enterprises and about itssolutions for a wide spectrum of industries.As a SAP customer,the U.S.Navy provided the highlight of the event as it presentedits own major
250、SAP project.Return on SAP Stock(Ordinary Shares)WKN 716460/ISIN DE 0007164600Initial investment 10.000Date of investmentDec.31,1995Dec.31,2000Dec.31,2004Period of investment10 years5 years 1 year value at close of 20051)42,612.7012,738.2511,775.43Average annual return in%15.604.9617.75Performance co
251、mparators in%DAX 30 Performance Total Return Index9.15 3.4127.07REX General Bond Total Return Index5.925.894.08S&P 500 Composite Total Return Index10.40 3.9420.89GSTI Software Index Price Index8.11 14.089.711)Assuming all dividends were reinvestedSource:DatastreamTransparency and Responsibility:Inve
252、stor Relations31EXTENDED PROGRAM FOR RETAIL SHAREHOLDERSServing retail investors is also a top priority for SAP.Thequarterly shareholder magazine SAP INVESTOR is one of thekeystones of SAPs services for private investors.Others are the monthly e-mail newsletter,the shareholder hotline,the e-mail ser
253、vice from ,and a robust Web sitewith plentiful information about SAP and our stock.Addition-ally,all major events at which members of the SAP ExecutiveBoard speak about SAP are broadcast live on the Internet.In2005,the SAP investor relations team took part in several stockmarket days and shareholder
254、 conventions including,for thefirst time,events in the United Kingdom and Austria.Resources for retail investors in the United States weresignificantly enhanced in 2005.SAP appeared at many eventsheld by the National Association of Investors Corporation(BetterInvesting)and Money Show investment conf
255、erences.Among the highlights were the BetterInvesting Compufest inBuffalo,New York,the BetterInvesting National Convention inAtlanta,Georgia,and the Money Show in Orlando,Florida interest in investing in SAP was particularly strong at theseevents.SAP also held numerous corporate presentations forfin
256、ancial consultants and brokers from major financial servicesproviders,as well as quarterly“squawk box”telephone con-ferences.INTERNATIONAL ACCLAIM FOR INVESTOR RELATIONSACTIVITIESAs in past years,SAPs investor relations work won praise frommany quarters in 2005.?A survey by Institutional Investor Ma
257、gazineshowed that both buy-side and sell-side analysts bestow SAP the number-one rankings among European software companies in thecategories“Best Investor Relations,”“Best CEO,”and“Best CFO.”?SAP attained third place in the same magazines U.S.InvestorRelations Survey,making it one of only three non-
258、U.S.companies placed in the top three.?In this years Thomson Extel survey,SAP was placed secondamong all German companies,and fourth in Europe overall,for its financial news service.?For the first time,SAP was awarded third place among all 30 DAX companies for the“Beste Investor RelationsDeutschland
259、”(BIRD)prize.?SAP earned IR Magazinesaccolade for the best use of virtualconferencing among all continental European companies,given in recognition of SAPs policy of broadcasting all of itsinvestor events on the Internet.Cash Earnings According to DVFA/SG1)20052004 million millionNet income before m
260、inority interest1,496.41,310.5Minority interest2.94.9Net income1,499.31,315.4Depreciation and amortization220.1229.9Write-ups 3.1 2.4Change in reserves and accrued liabilities45.649.1Change in deferred taxes16.119.2Other material non-cash expenses and income6.3 4.7Cash earnings according to DVFA/SG1
261、)1,784.31,606,4Cash earnings per share according to DVFA/SG1)in 5.645.081)German Association of Financial Analysts and Investment Consultants(DVFA)and Schmalenbach Society for Business Management(SG)method32Transparency and Responsibility:Corporate CitizenshipSAP believes that every business has a r
262、esponsibility to play an active role in society.And the most effective form of engagement is to draw on our own unique strengths andexpertise.Therefore,SAP focuses its worldwide corporatecitizenship activities on the themes of education,transpa-rency/good governance,and community development.EDUCATI
263、ONTo promote learning at all levels of the socioeconomic spec-trum,SAP engages in a wide range of educational programs,including:SAP University AlliancesEducation is fundamental to the creation of an open societyand economic development.And through the SAP UniversityAlliances program,SAP supports th
264、e development of scientificand technological education by providing educators andstudents around the world with access to SAP solutions.Launched in 1988,the SAP University Alliances pro-gram now has more than 500 participating institutions.SAPinvests nearly 130 million annually in the program throug
265、h a combination of cash and in-kind donations.To date,more than 2,200 educators and 100,000 studentshave taken part in courses supported by SAP software solutions.These courses enable students to put theory into practicethrough demonstrations,hands-on exercises,case studies,andresearch projects.In a
266、ddition,the program provides educatorswith essential curriculum support.Most program membersaccess SAP software that is hosted from one of 17 UniversityCompetency Centers worldwide.During 2005,new member universities in Germany,India,Russia,the United Kingdom,and North America joinedthe program.In a
267、ddition,the SAP University Alliances pro-gram conducted its first joint teaching pilot,in conjunctionwith Fachhochschule Brandenburg in Germany and IndianaUniversity in the United States.This successful pilot programsimulated the complexity of realistic business problems that required students to co
268、operate and collaborate despite the obstacles of distance and time zones.FIRST LEGO LeagueWhile the SAP University Alliances program serves the needs ofuniversity-level students,SAP recognizes the importance ofinspiring and motivating children to get involved with technol-ogy from an early age.Creat
269、ed by the LEGO company and FIRST Foundation,FIRST LEGO League International introduces childrenaround the world to the fun and experience of solving real-world problems by applying math,science,and technology.In 2005,SAP became one of four corporate sponsors ofthis program,and also launched a global
270、 employee volunteer-ing initiative.More than 170 SAP employees participated,help-ing local children design and build robots for a competition.Participating employees deployed their own technicaland coaching skills while helping young people develop theabilities needed to work together as a team in t
271、his innovativecompetition.As a result,one employee-led team has qualifiedfor the 2006 international finals in Atlanta.Corporate Citizenship:Meeting Responsibilities.Leveraging StrengthsCorporate Citizenship at SAPEducationFIRST LEGOLeagueSAP UniversityAlliances Transparency and GovernanceSAP Solutio
272、nsUnited Nations Global CompactTransparency SAP and EmployeesCommunity InvestmentDisaster Relief EffortsLocal InitiativesTransparency and Responsibility:Corporate Citizenship33TRANSPARENCY AND GOVERNANCE To help promote ethical conduct in business and governmententities around the world,SAP draws on
273、 its experience indeveloping solutions that promote transparency and regulatorycompliance.United Nations Global CompactSAP is a signatory member of the United Nations GlobalCompact.The companys corporate citizenship focus on trans-parency and good governance is particularly aligned with the 10th pri
274、nciple of the compact,which deals with the effortto eliminate corruption.TransparencyIn 2005,SAP became a partner in the Global Corporations forTransparency International initiative to support the ongoingwork of Transparency International(TI),the worlds leadingorganization in the fight against corru
275、ption.For example,SAPsupported the TI Latvia chapter in developing and conductinga seminar on business integrity.Held in the capital city of Riga,the event was attended by more than 50 business and publicsector representatives from the Baltic and Nordic regions ofEurope.SAP also supported TIs develo
276、pment of a toolkit forsmall to midsize enterprise(SMEs),which will eventually beused in a number of markets around the world.In recognition of SAPs own ethical performance,thecompany has again qualified for inclusion in major ethicalinvestment indices:FTSE4Good and Dow Jones SustainabilityIndex.COMM
277、UNITY INVESTMENTAs SAP addresses issues on a global level,the company encour-ages individual employees to become involved in the commu-nities where they live and work.Disaster Relief EffortsThe past year witnessed an exceptional number of nationaldisasters.In response,SAP Solidarity Fund,an independ
278、enttrust for employee donations,supported disaster relief effortsin Southeast Asia after the tsunami,in the Kashmir regionafter the earthquake,on the Gulf Coast of the United States,and on behalf of hurricane victims throughout Central America.Together with all subsidiaries,SAP donated more than 7 m
279、illion.Local InitiativesWith more than 35,000 employees around the world,SAPengages in a wide range of local community initiatives manyof which are led by SAP staff members.Some examples from2005 include:?SAP North America held its first“Week of Service,”a nationalvolunteering initiative,in which mo
280、re than 1,500 employeesdonated a total of over 10,000 hours to local charities.?SAP Africa supported the ICT Academy on CIDA City Cam-pus,a Johannesburg-based university that serves the specialneeds of students in the developing world.?SAP supported many local programs,including theAstronomieschule
281、e.V.Heidelberg,which provides programsfor local young people to study astronomy.In addition,asco-founder of the World Childhood Foundation,SAP co-hosted a fund-raising concert event in Paris in partnershipwith DaimlerChrysler.For SAP,making a lasting contribution to the world is asimportant as makin
282、g a profit.Therefore,we will continue topursue new opportunities where corporate and individualskills can be applied to solving social challenges.34Transparency and Responsibility:Corporate GovernanceGood corporate governance means responsible company man-agement and control oriented to long-term va
283、lue.It involvesthe Executive and Supervisory Boards efficiently cooperatingtogether,respect for the interests of shareholders,and open,transparent corporate communications.SAP was one of thefirst German companies to get to grips with the rules of corpo-rate governance and follow not only the standar
284、ds that apply in Germany but also international requirements.This report on corporate governance at SAP in 2005,prepared by the SAPExecutive Board and issued jointly with the SAP SupervisoryBoard,is a requirement of the German Corporate GovernanceCode(“Code”),section 3.10.CORPORATE GOVERNANCE AT SAP
285、SAP sees corporate governance as a process of continuousadaptation.SAP led the way in Germany by publishing its ownPrinciples of Corporate Governance(“Principles”)even beforethe Code entered force.Ever since their first publication,theCompany has been continuously updating them in the light ofchangi
286、ng national and international standards,to the extentthey apply to SAP and are not inconsistent with SAPs circum-stances.SAP revised its Principles again in 2005,with amend-ments introduced in March and October.Moreover,SAPcomplied with the provisions in the Corporate GovernanceStandards of the New
287、York Stock Exchange(NYSE)and theU.S.Sarbanes-Oxley Act(SOA)that are relevant to SAP as a for-eign company listed on the NYSE.SAP also updated its reporton significant deviations from the NYSEs corporate gover-nance rules in line with its latest corporate governance devel-opments.SAPs Principles,comp
288、liance declaration pursuant tothe German Stock Corporation Act,section 161,and report onsignificant deviations from the NYSEs corporate governancerules are online TO SAPS PRINCIPLES OF CORPORATEGOVERNANCE IN 2005In 2005,SAP amended its Principles twice as a result of Germanand international developm
289、ents in corporate governance.RECOMMENDATIONSThe version of SAPs Principles adopted in March 2005 con-tained additional provisions on the prohibition on loans toExecutive and Supervisory Board members in accordance withSOA,section 402,and on the publication of individual Execu-tive and Supervisory Bo
290、ard members remuneration in acompensation report.Further amendments to SAPs Principles were necessaryfollowing changes to the Code in June 2005.The recommenda-tions:SAP did not implement the following recommendations:“as a rule,a chairperson or member of the Executive Boardshall not become chairpers
291、on of the Supervisory Board orchairperson of a Supervisory Board Committee”(section 5.4.4 of the Code)and“Supervisory Board members shall be electedindividually”(section 5.4.3 of the Code).SAP set out andexplained these deviations from the Code in its compliancedeclaration in October 2005.All of the
292、 other new provisionswere incorporated into SAPs Principles.The recommendationin Code section 5.3.2,regarding the specialist knowledge andskills of the audit committee chairperson requires special men-tion:SAP has implemented this recommendation by appoint-ing Dr.Erhard Schipporeit,CFO of E.ON AG,as
293、 a member andthe chairperson of the audit committee.During the Super-visory Board meeting in October 2005,the independence of theSupervisory Board members representing the shareholders asrecommended by Code section 5.4.2 was determined by meansof a special resolution.Trust and Transparency:German Co
294、rporate Government,Code Section 3.10 andCorporate Governance ReportTransparency and Responsibility:Corporate Governance35SUGGESTIONSThere are only three suggestions that SAP does not follow outof the 19 in the Code.SAP believes that it is not necessary toconvene a general meeting of shareholders in
295、takeover situa-tions,as suggested in Code section 3.7 because the law has use-fully standardized the rules for such processes.Moreover,it isnot possible to predict the effects on the takeover of conveninga general meeting of shareholders and announcing the mea-sures that the shareholders are to deci
296、de upon.Therefore,it isnot possible to clearly differentiate between the legal require-ments in the German Securities Acquisition and Takeover Actand the acts and omissions of the Executive Board suggested inthe Code.SAP will therefore not follow this suggestion.Nor does SAP appoint Supervisory Boar
297、d members atdifferent times,as suggested by Code section 5.4.4.It holdsblock votes and adjusts the terms of office as appropriate.SAPconsiders this to be practical,particularly with regard to theGerman system of codetermination,since the applicable legalprovisions in the German Codetermination Act r
298、equireemployee representatives to be elected at the same time for fiveyears.Therefore,the Codes suggestion could only apply to theshareholder representatives.In turn,this would lead tounequal treatment.SAP has not agreed to pay Supervisory Board membersperformance-oriented remuneration based on the
299、Companyssuccess as suggested in Code section 5.4.5.SAP believes that this suggestion does not take into the account the SupervisoryBoards role as a monitoring body,since agreeing remunerationbased on the Companys long-term success would no longerensure the necessary distance between Supervisory Boar
300、dmembers and the management duties of the Executive Board.At SAP,variable remuneration is linked to the dividend andgoverned by SAPs Articles of Incorporation.SAP believes thatit thus ensures transparent,appropriate remuneration forSupervisory Board members that,in particular,takes theirlegal respon
301、sibilities into account.Furthermore,in light of thejudgment of the German Federal Supreme Court,the legalpermissibility of long-term,variable,performance-based remu-neration,particularly stock options,is questionable.authorized to convene meetingsreportsauthorized to convene meetingsreportsSAP AG Co
302、rporate Governance StructureMeeting of ShareholdersOne Share One VoteExecutive Board7 MembersSupervisory Board16 Members8 elected by Shareholders 8 elected by employeesreportsappoints members,supervises managementelects membersformally approves acts annuallyformallyapprovesactsannually36Transparency
303、 and Responsibility:Corporate Governance2005 COMPLIANCE DECLARATION PURSUANT TO THEGERMAN STOCK CORPORATION ACT,SECTION 161The changes to SAPs Principles in March 2005 did not requireany additions to the compliance declaration.Instead,for thefirst time,SAP complied with the Codes recommendation topu
304、blish individual Executive Board members remuneration.Since SAP did not implement all of the recommenda-tions added to the Code in June 2005 and include them in itsPrinciples,the Executive and Supervisory Boards resolved inOctober 2005 to publish a revised compliance declaration.Thefollowing points
305、were added:?Chairperson or member of the Executive Board becomingchairperson of the Supervisory Board or chairperson of aSupervisory Board committee?No individual election of Supervisory Board members by thegeneral meeting of shareholdersThe Code,section 5.4.4,recommends that,as a rule,the for-mer c
306、hairperson of the Executive Board and members of theExecutive Board do not become the chairperson of the Super-visory Board or chairperson of a Supervisory Board committee.SAP cannot rule out the possibility that these kinds of appoint-ments will take place in the future.It is not currently possible
307、to foresee whether this will be the case as a rule.Moreover,the chairperson of the Supervisory Board and chairpersons ofSupervisory Board committees are appointed by the membersof the Supervisory Board,who should be guided solely by theactual qualifications of the persons standing for election.In ad
308、dition,SAPs Principles do not require SupervisoryBoard members to be elected individually.Block voting is theusual practice and has proved its worth because it ensures thatGeneral Meetings of Shareholders are conducted expeditiously.Block voting is legally permitted provided that,before thevoting,th
309、e chairperson of the General Meeting of Share-holders informs the shareholders at the meeting that they havethe option of voting against all of the candidates if they do not want to vote for one of the candidates.SAP has met thisrequirement in the past and will continue to do so in thefuture for the
310、 election of Supervisory Board members.SAPbelieves that block voting fulfills the conditions required forshareholders to exercise their voting rights.It does not recog-nize a particular need of shareholders to elect SupervisoryBoard members individually.CODE OF BUSINESS CONDUCTThe Code of Business C
311、onduct for employees and the Execu-tive Board expresses the high standards that SAP requires fromits employees and how it deals with customers,business part-ners,and shareholders.SAP sees its Code of Business Conductas the standard applicable to all dealings involving customers,business partners,com
312、petitors,and vendors.By implementingthe Code of Business Conduct,SAP safeguards against mis-leading SAPs investors,business partners,and customers andagainst unfair competitive practices and corruption.RISK MANAGEMENT AT SAPIn German stock-corporation and commercial law,there arespecial requirements
313、 for internal risk management that applyto SAP.SAPs corporate management has therefore introduceda global risk management system that supports risk planning,identification,analysis,handling,and resolution.To meet therequirements of SOA section 404,Management Assessment ofInternal Controls,it is also
314、 setting up company-wide processesthat document and continually evaluate the effectiveness ofthe internal controls,with the aim ensuring that its financialreporting is reliable.The processes are supported by a standardsoftware product,which SAP developed for the purpose,themanagement of internal con
315、trols(MIC)tool.Although theU.S.Securities and Exchange Commission(SEC)has extendedthe deadline for building up the documentation and regularlyevaluating the effectiveness of internal controls in accordancewith SOA,section 404,to December 31,2006,SAP has kept to itsoriginal schedule for implementing
316、the internal control struc-ture.As a result,SAP completed nearly all of the company-wide control design assessment and control testing in 2005.Transparency and Responsibility:Corporate Governance37Furthermore,KPMG Deutsche Treuhand-GesellschaftAktiengesellschaft Wirtschaftsprfungsgesellschaft(KPMG)c
317、arried out a dry run audit in various business units to checkthe SAP Group companies level of preparation for the manda-tory implementation of the requirements of SOA,section 404.Based on the results of the SAP internal control design assess-ment,the control testing,and the dry run audits,SAP is con
318、-fident it can fully meet the requirements of SOA,section 404,by December 31,2006.Another control mechanism that SAP has implement-ed is standardized reporting across the Group.The internalaudit service and the Supervisory Board are also closelyinvolved in risk management.APPLYING INTERNATIONAL CORP
319、ORATE GOVERNANCESTANDARDSAs a NYSE-listed company,SAP is subject to U.S.financiallegislation and to the rules of the U.S.Securities and ExchangeCommission and of NYSE.In response to accounting irregu-larities,notably by U.S.companies,SOA was enacted in July2002.It is a major plank in the efforts to
320、strengthen corporategovernance and win back the confidence of the financial mar-kets.SAP fully supports its aims and principles,so although itinvolves considerable expenditure,SAP meets the SOA require-ments that apply to the Company.Besides continuing to implement the requirements of SOA,section 40
321、4,as listed below,SAPs implementation ofinternational corporate governance rules focused on theimplementation of the requirements concerning the establish-ment and membership of an audit committee in the NYSECorporate Governance Standards,section 303A.06,which areset out in the NYSE Listed Company M
322、anual.With changes inmembership of SAPs audit committee,the Company was ableto fully comply with these requirements,in particular theSOAs criteria for ensuring the independence of audit commit-tee members.The audit committee also adopted rules of pro-cedure to meet another requirement in the NYSE Co
323、rporateGovernance Standards.In 2005,for the first time,SAP submitted a writtenaffirmation statement in accordance with the NYSE CorporateGovernance Standards,section 303A,in which it declares,among other things,that the membership and organization ofthe audit committee complies with the requirements
324、 of theNYSE Corporate Governance Standards,section 303A.06.In accordance with the NYSE Corporate GovernanceStandards,SAP has as in the past two years stated the extentto which the German corporate governance rules that apply to it deviate from the rules that apply to U.S.companies listedon the NYSE.
325、SAP revised and adapted the report in March andOctober 2005 due to the above-mentioned changes to SAPsPrinciples of Corporate Governance and to changes in law in2005.Ongoing shaping ofcorporate wide riskaligned insuranceprograms as a corerisk response strategyGlobal Risk Management ObjectivesRiskMan
326、agementFrameworkInsurance StrategyDocumentation&Assessment of Internal ControlsRollout of effective internal controls documen-tation and assessmentprocesses mandated by Sarbanes-Oxley Act as a core process riskresponse strategyResponsibility for SAPsongoing external and internal risk reportingEstabl
327、ish best-practice-orienteduniform risk management method-ologies,processes and tools for all of SAPs lines of business38Transparency and Responsibility:Corporate GovernanceTRANSPARENCY,COMMUNICATION,AND SERVICE FOR SHAREHOLDERSSAP is careful to ensure that its shareholders can obtain acomplete pictu
328、re of the state of the Company from full infor-mation posted promptly on its Web site.Among other infor-mation,SAP posts all of its financial reports,all relevant newsabout the Companys governing bodies,corporate governancedocumentation,news in frequently-asked-question format oncurrent business mea
329、sures,news of measures requiring ad-hocdisclosure,the Companys press releases,and news of directorsdealings notifiable pursuant to the German Securities TradingAct,section 15a.Shareholders are also able to participate in the AnnualGeneral Meeting of Shareholders online on the Internet.Theycan vote a
330、ccording to their shares at the meeting by instructinga proxy of their choice or one of the proxies provided for thatpurpose by SAP.In good time for the meeting,all shareholderscan access all of the shareholder meeting paperwork on theCompany Web site.The German Stock Corporation Act,as most recentl
331、yamended by the German Corporate Integrity and AvoidanceRight Modernization Act of November 2005,provides muchsimplified registration and proof of identity for shareholders.Under the new legislation,the closing date for both registra-tion and identification purposes is 21 days before the generalmeet
332、ing of shareholders.SAP amended its articles of incorpo-ration accordingly by resolution of the shareholder meeting onMay 12,2006.The amendment also made it simpler for foreignSAP shareholders to participate in the shareholder meetingand vote according to their shares.FINANCIAL STATEMENTSThe May 200
333、5 annual general meeting of shareholders electedKPMG auditor.SAPs financial statements are prepared inaccordance with German GAAP(the German CommercialCode)and U.S.GAAP:SAP AG publishes company accounts toGerman GAAP;the consolidated statements for the SAP Groupare prepared in accordance with U.S.GAAP.The ExecutiveBoard is responsible for preparing the financial statements,which the Supervisory Bo
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