Francis R.

Albright Introduction to Management MGMT 361-03, 07 &61 (Spring 2012) SAP Case Study February 14, 2012 Professor Dana E. Jarvis, MPA, MSW

As a Matter of SAP

Duquesne University of the Holy Spirit Pittsburgh, PA

Patriotism is when love of your own people comes first; nationalism, when hate for people other than your own comes first. Charles de Gaulle

Abstract In 2005 Germany was in the midst of a tumultuous economic time. Double-digit unemployment and poor economic growth was breaking the spirit of the German people. This situation was further exacerbated by an impending election that had the country tied up in a political stalemate. It was in this environment that SAP AG (SAP) a homegrown computer technology company that started as a tiny little company in Waldorf Germany found itself in a scant five years after it made the decision to go global. Following the lead of other large companies doing business internationally the organization recognized that if they were going to be able to continue to compete in the expanding global economy something had to change. That decision rocked the company to its very foundation and although they have weathered the storm the experience shook the German psyche and for a time created a deep mood of uncertainty in the work environment that was unlike anything the company had experienced before. The approach that SAP used to initiate there jump into the world-wide business community was unique at that time. Unlike many other multinational corporations the rationale that they employed to make this strategic decision represented a different twist on globalization. In the case of SAP this decision was not one to simply lowering labor costs by outsourcing labor to developing countries but rather searching out where the best talent in the various technical fields that SAP needed was located. The strategy has paid large dividends for the company but the process stressed the companys limits and created a significant ripple in the force making it an interesting study of how this company leapt into the worldwide business environment. Keywords: Globalization, technical expertise, software development, IT services, network development, computer programmers, international talent pool, global economy, competitive advantage.

Introduction Success can be seductive. It can trick us into focusing too rigidly on long-established patterns of thought. Thats why it is often so tempting to recycle yesterdays ideas to form the guidelines and dogmas of tomorrow. I hope that we can use the right vision and strategy to avoid this trap. Henning Kagermann, CEO, SAP AG

Among the nations of the world Germany ranks among the highest in the area of national pride. This collective national attitude has had both positive and negative consequences for the German people who allowed their amour-propre and the desire to dominate the European continent to be the catalyst for two World Wars. Conversely, Germany harnessed that same zeal to overcome the national embarrassment that the Holocaust brought to Germany. From the 1950s onwards, Germany (West) had one of the world's strongest economies. In German it was called Wirtschaftswunder to everyone else it was simply the economic miracle. The period from 1950 until 1970 was marked by general prosperity: the economy grew by a fabulous 107 percent before inflation in the first ten years, adding another real 55 percent in the second decade. It was at the tail-end of this period that SAP was founded (White). SAP is a company with a deep and interesting history. The corporate website is rich with information about the companys history as are many trade journals. In an effort to provide background information historical information from the SAP web site is summarized here. In 1972 five former IBM employees started a company they call Systemanalyse und Programmentwicklung (System Analysis and Program

Development - SAP). Their vision was simple; develop a standard application software for real-time data processing (SAP AG). Initially SAP was a private partnership under the German Civil Code. The base of operations was in the small German town of Weinheim and the company later opened an office in nearby Mannheim. In 1977 the corporate headquarters was relocated a short distance away in the town of Walldorf. From Humble Beginnings As mentioned previously the company was founded by five former IBM employees, Dietmar Hopp, Klaus Tschira, Hans-Werner Hector, Hasso Plattner, and Claus Wellenreuther. During the first year of operations SAP grew to nine employees and generated 620,000 (Deutsche Marks - DM), just under $200,000 (in 1972 US dollars). Over the next decade the company continued to expand organically and by its tenth year of operations it had reached the 100 employee milestone and generated DM 24 million in revenue (approximately $10.5 million in 1982 US dollars) (SAP AG). The second decade brought numerous changes to SAP; it began to offer services throughout Europe and eventually in the United States. Also during this time period the company went public (October 1988) and its initial public offering in the German stock exchange generated DM 180.0 million ($113.6 US) (Schuster, 1996). 4

By the end of 1991 as the company prepared to turn twenty one it had grown revenues to DM 707.1 million ($475.3 million US) and expanded its workforce to 2,700. It had also established a beach-head in the international market by establishing 14 international subsidiaries (SAP AG). Initially SAP entered the global market much like others in that they continued to maintain their nationalistic management style. The establishment of subsidiaries was achieved by exporting Germany-based talent to foreign markets and managing the subsidiary from Germany. Under this form SAP struggled. In 1999, for example, revenue growth was only 1.4 percent, a pitiful performance compared to the rest of the software industry, which grew almost 15 percent in the same year, according to IDC, a market research firm located in Framingham, MA. By 2002 it was apparent to SAP management that something needed to change (Frederico, 2006). As SAP prepared to close out its third decade its workforce now numbering more than 24,000 employees in over 50 countries had generated 6.3 billion ($5.6 billion US). However, the corporate management structure remained unchanged with total control emanating from the corporate headquarters in Germany. Storm clouds began to appear on the horizon and SAP was going to have to reinvent itself if it hoped to continue to be a leader in the software industry. According to an independent history and profile of the corporation published that appears on the website FundingUniverse.com a disturbing trend in SAPs sales became very apparent. In the latter years of the 1990s management realized that; SAP's sales to German companies, once its sole market, had fallen to 37 percent; North American sales accounted for one-third of all revenues; and the Asia-Pacific market was expected to reach the same level by the year 2000. 5

With two-thirds of all sales revenues now coming from its foreign subsidiaries. Between 1992 and 1996, it opened subsidiaries in South Africa, Malaysia, Japan, the Czech Republic, Russia, mainland China, and Mexico among others. Their software) was available in 14 foreign languages including Russian, Mandarin Chinese, and Thai (SAP AG). A Wall Street Journal article entitled, Time to Reboot: SAP Belatedly Learns that Being American Can be a Big Plus --- German Software Specialist Falls Behind on Internet, Marketing, Stock Options --- too Far From `The Valley, written by Neal E. Boudette, (2000) is very telling and sounded a warning that an iceberg lay ahead. SAP AG used to be held up as proof that software companies don't have to be American to be good. But that argument is wearing thin of late. The German firm has lost its stride in the past year. It was slow to jump on the ecommerce boom. It had to sell a chunk of its investment portfolio to ensure profit growth for 1999. More than 200 employees have left its U.S. unit. Several big American customers are blaming lousy earnings on problems with SAP software. And SAP stock -- once a darling of international investors -- lagged behind other European high-tech shares for most of last year (Boudette, 2000). A close reading of the article and subsequent research confirms that in 2000 SAP was adrift; it had become a monolithic emblem of how things used to be done. Additionally, 1999s financial results were the worst in the companys history and the talent drain in its U.S. operations numbered more than 200 (Boudette, 2000). SAP management didnt ignore these warnings but like the Titanic the rudder (management) was incapable of making a quick course correction and several years

passed before meaningful changes were made and at a significant cost in both monetary and human capital. Among the most significant issues that were contributing to SAPs poor performance was the undeniable yet unrecognized by SAP management that, electronic commerce has reinvented the way SAP's corporate customers do business, and the company was painfully slow to see how fundamental the change would be. Much of the problem, current and former employees say, stems from syndromes that have been festering for some time -- the dominance of its headquarters development team and the conviction that great engineering alone can conquer the company's ills (Boudette, 2000). Moreover, SAP was not in touch with the fast pace of development in ecommerce and although they claimed to embrace it Boudette points out that, under the hood it (SAP) is a German-engineered machine. Its stars are Walldorf's 5,200 programmers (Boudette, 2000). and this would prove to be one of the largest hurdles that SAP would have to overcome if it hoped to right the ship of state and steer it into lucrative waters. Co-Chief Executive Hasso Plattner acknowledged the imperative for a new approach when he said, "We are caught between Germany and Silicon Valley. We have to reconcile ourselves to the situation. We have to change because of this new economy (Frederico, 2006). However, what, when, who, and how, to change; the SAP credo had always been engineering talent is what sells the software. As one might imagine change does not come easily or quickly to a global giant sheltered in in the sleepy village of Walldorf, Germany. Nor is it readily accepted that change is need when the Stars dont see the need to change. Thus the good ship 7

SAP drifted rudderless until it was almost too late. By 2006 SAP CEO Henning Kagermann had the clear understanding that unless the company didnt start to make significant changes soon and quickly it was destined to become irrelevant; another inflexible corporate oak felled by the strong winds of change and the inability to lean in the direction of the prevailing winds of change (Federico, 2006). A case study prepared by Thomas R. Federico (2006) of the Stanford Graduate School of Business provides significant insights into the far-reaching dilemma that Kagermann faced. It also provides a great deal of information on his strategy to addresse these issues and the hurdles and challenges that had to be overcome to create an appropriate direction for SAP. According to Frederico (2006),Kagermann believed that emerging Internet-based technologies and standards known collectively as Web services soon would transform the $79.8 billion enterprise software applications industry, in which SAP held the leading market position. Key challenges that that Kegermann and SAP faced included: Costly research and development effort; Need for rapid capitalizing on SAPs new growth initiatives; Maintaining existing customer commitments; Completely changing the way SAP did business; and Defend itself against deep-pocketed competition.

Although worrisome these were not his greatest concern. That dubious honor went to Kagermanns principal concern: Such a rapid and radical course correction, would require far-reaching change that would test the very core of the company: its leadership, its culture, its values, its processes (Federico, 2006). Kagerman was confident that eventually SAP would successfully implement the steps necessary to 8

insure success in the Web Services market; after all the company had overcome significant technological challenges many times during it history. The great unknown, however, remained what impact would these radical changes have on the corporate culture and how would entrenched employees, the companys human capital, react? Throughout its entire history the company had never faced a comparable situation (Federico, 2006). To understand just how significant the change would be it is necessary to clearly understand where the company came from and contrast that with where Hagermann and SAPs management believed the company had to go not only to insure long-term profitability but the survival of the company. SAP came of age in the era of expensive, centrally located and complex mainframe computer systems. These systems were far from user friendly and required a great deal of technical expertise to operate the software let alone write the code to develop it. Subsequently, for most of its history, SAP focused on selling complex, standardized applications to the large enterprise market segment. Typically, companies paid SAP millions of dollars for the rights to use the basic version of a software application, a charge known as the license fee, and then incurred additional costs to customize the software to their specific needs, deploy it within their information technology (IT) infrastructure, and maintain and upgrade it in the future. This business model worked well for SAP in the old days and had generated billions of Deutchmarks mostly from large companies since its launch in the early 1990s. Technological advances and people-friendly software was rapidly decreasing the demand for software integration systems such as those SAP was used to developing (SAP AG).

The new market was in the domain of the PC. It had to be versatile, user friendly, flexible and relatively inexpensive. Moreover, businesses were no longer willing to endure expensive upgrades, perpetual licensing fees or outrageously expensive customization. Something else that was changing significantly was the size of the enterprise that needed services. According to Fredrico, (2006) SAPs traditional focus had been on large enterprises. Subsequently, SAP had developed a skewed vision of what they considered to be a Small, Mid-market Enterprise (SME). This vision was a sharp contrast that of SAPs competitors who had a completely different understanding of what a SME was. For example SAP included companies up to $1.5 billion in revenue in their SME customer segment. Consequently, a company such as Harley-Davidson, which reported $1.34 billion in revenue in 2005 and had nearly 10,000 employees working in more than 20 countries, was considered a midmarket customer by SAP. Clearly SAP was used to dealing with a very elite group of customers and in the view of some insiders at SAP devolving to servicing the SME market was untenable. Kagermann was convinced; however, that this was what the Web Service market demanded and that SAP would have to adjust (Frederico, 2006). Anthony Cross a Lead Product Manager of Microsoft offered this contrasting opinion for Fredericos (2006) research. Microsoft considers any company with more than 500 PCs or 1,000 employees to be an Enterprise company, not an SME. I would hardly categorize a billion dollar company as small or midsize. To say the least the impending shock to the system was going be dramatic and a positive outcome was far from a foregone conclusion.

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Kagermann and the SAP management team moved swiftly and in a sweeping series of sudden and abrupt changes completely reorganized the company and brought literally thousands of new employees onboard many in high level management positions, something that was in the past considered to be unthinkable and outraged the Stars (Frederico,2006). To his credit Kagermann had developed a plan that was intended to soften the blow to the corporate culture. Fredericos (2006) research describes his effort like this, His plan was titled the Cascade effort, whereby SAP intended to propagate understanding of the corporate strategy throughout the organization. By doing so, the Cascade project aimed to tie strategy to execution within each business unit, align business units that needed to execute together, and generate feedback regarding the push for strategic change. As a part of Cascade, each Board area and business unit developed its own strategic business plan (SBP) that identified and documented organizational goals, an execution plan, success measures, and critical dependencies. Each SBP also had to clarify linkages to and support of the Corporate SBP. Unfortunately, Cascade fell far short of the waterfall of information that Kagermann had hoped, most likely because it simply wasnt given enough time to be assimilated by the Stars. Writers Phred Dvorak and Leila Abboud (2011)provided a comprehensive overview of the steps SAP took to right the ship of state in their May 11, 2007, article in the Wall Street Journal entitled Difficult Upgrade: SAPs Plan to Globalize Hits Cultural Barriers.

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Five years ago, Germanys largest software company decided it had to become less German. To get more global, SAP AG hired thousands of programmers in countries such as the U.S. and India. It assigned them to key projects that almost all had been handled from its home base in the small town of Walldorf, Germany. It adopted English for corporate meetings, even in headquarters. SAP recruited hundreds of foreign managers, and non-Germans made up half the companys top ranks by last year, up from one-third in 2000. The newcomers sought to inject a faster pace and open SAPs insular culture to more outside influences (Aboud, Dvorak, 2011). This approach immediately irked the German workforce and the country as well. In his article Culture Clash at SAP "Americanization" May Spell Trouble for German Software Giant's Global Designs, David L. Margulius (2007) of Info World summed it up like this: Germans, like Americans, are generally afraid these days of losing good jobs overseas. Plus, they feared the business impact of the "Americanization" of SAP, as Americans flooded into top management positions. They may have a point: SAP succeeded by giving the world a very German software model -highly structured, with enforced standardization of business processes -- the discipline that global customers needed. Not exactly the chaotic entrepreneurial American way. The Wall Street Journal article described it like this: The resulting tensions show how the challenge of globalization goes far beyond navigating different languages and time zones. In Walldorf, longtime employees feared the company was changing too much, too fast. 12

Veteran software developers protested the loss of autonomy and Americanization of the company. We used to be kings here, says Rainer Hber, a developer whos spent his entire 25-year career at SAP in Walldorf (Aboud, et al.,2007). They spoke of being betrayed when in fact what happened was the same thing that happens in growing companies everywhere. For the first time they were forced to face some cold realities. These included the potential that they may not be irreplaceable. They might not be as valuable to the company as the though (or were lead to believe). The Wall Street Journal goes on to say that, In August 2005, a German employee complained to a local newspaper that Mr. Agassi's "boys come in at very high levels, without even being seen by the staff here (Abboud, et al, 2007). Five months later, Germany's national Handelsblatt newspaper published an article headlined "SAP and Globalization -- March of the Americans" in which one German manager was quoted saying, "It's clear Agassi would like to get as many functions as possible to the U.S. Mr. Agassi [Shai Agassi, President of SAP's Product and Technology Group] says his mission was "to bring the best talent we could find anywhere into SAP, regardless of location;" (Abboud, et al., 2007) the Stars simply refused to believe that this was the goal and the rancor droned on. Mr. Agazzi (2007) in a blog posting responded to the comment by saying: That comment was given as a response to a comment made by one of the employees in a German article saying Shai tried to move as many jobs from Walldorf to Palo Alto as possible.

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Globalization is hard, as cultures tend to become perfect separating lines in times of hardship. I believe SAP globalizes more than any of its peers and probably more than most global companies we know. I did not make SAP globalize, but I was a great supporter of the move to globalize and became a symbolic figure to demonstrate the true global nature of the company (as the article says, a lightning rod.) There are many great global executives at SAP today, and that shift is not one that can be easily turned back because of one persons departure. SAP globalizes because talent in our industry is distributed around the entire world, and the company is committed to get the best talent it can find into the company. The software industry has been blessed with what feels like an infinite supply of engineers coming mostly from China and India but also from places like Israel and Bulgaria. This industry is lucky that it can accelerate growth and innovation I can only hope other industries get this influx of talent as well. At the same time, that influx of amazing talent changes dramatically the social contract for many employees in the home countries of global companies. That change is documented in many articles and books one of the best is The world is flat by Tom Friedman (Aggassi, 2007) Perhaps the most egregious contributor to employee dissent was the thought that, heaven forbid, some foreigner could perform the same function, not necessarily in a less costly manor as this was not SAPs motivation for going global, but rather that these interlopers could actually do it better! Management went to great length in reacting to the furor and in an effort to quell the rebellion at home. In April 2006 SAP executives hosted a town-hall meeting in 14

Walldorf on the "Americanization of SAP," where workers aired concerns over the increasing use of English and the hiring of engineers overseas. A few months later, a handful of SAP workers won enough support to start a workers' council, roughly equivalent to a labor union, something else, which previously was considered unthinkable at SAP (Abboud et al., 2007). But did it Work While it is undoubtedly true that there are staunch hardliners that would happily argue ad nauseam to the contrary the reinvention of SAP has been an overwhelming success as indicated by the financial results from 2006-2010 shown in the two tables included here that were generated with data from SAPs Corporate website. With results such as those exhibited here and recognizing what could have been, it would seem to me that the hardliners should have by now gotten over themselves.

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Cultural Differences

As is evidenced by the information from the SAP website and the additional information gleaned from other corporate sources it appears to be evident that as a Company SAP is committed to celebrating the great diversity that is represented by the companies human capital. With the conflicts that emanated from the companys decision to go global apparently behind them SAP is moving forward to fully integrate all of its employees and every geographic location in a winning culture characterized by success of each individual. This change was deemed necessary according to Kagemann because historically, SAPs highly autonomous culture traditionally deemphasized structured processes and cross-organizational collaboration in favor of functional excellence and speed to market. Now that SAP had become a large and complex 16

organization, coordinated execution across groups and regions was proving an increasing challenge (Frederico, 2006). Kagermann was not going to give up this critical component of the companys restructuring in his interview with Fredericos research which quotes Kaggermann as saying exactly what the German contingent of Stars had feared the most. We come from an organization where Walldorf was the center of the world, and the other SAP locations were just planets revolving around that sun. Some people in Walldorf still behave like this. And now you have to tell them you are not the sun, you are just one of the planets. There is no center of gravity any longer. This takes time for us, and all you can do is repeat, repeat, repeat the message. And remind them that Walldorf will still be the largest development center even in five years. We simply cannot hire that quickly in other locations (Frederico, 2006). As time went by and the insurrection in Germany had settled this this global juggernaut soon began to realize that on the other side of the mountain they had just climber was another mountain; this one more complex, unwieldy and perhaps even more challenging - Clash of Business Cultures. The following pages contain tables that reflect the various aspect of how business is conducted in the countries of Germany, the Unites States and India. Obviously one of the first and most significant clashes (at least in Germany) was the insistence by the SAP Executive Board the English would be the language that SAP would use English for corporate meetings, even in headquarters... (Abboud et al., 2007). Another very significant area that SAP ran aground was the always dangerous coral reef of executive compensation; at issue here stock options. The American 17

software/high tech mecca, Silicon Valleys entrepreneurial executive types were accustomed to receiving generous stock options as part of their compensation package. Hasso Plattner, one of the founders of SAP, who according to Boudette (2000), who at that time own[d] roughly [a] 20% stake in SAP is worth about $4.4 billion explained the clash like this, Back then, he says now, stock options would have upset SAP's culture. "We have a different philosophy in Germany; I wasn't going to sacrifice the company for a few American managers" (2000). In spite of significant attrition during this time Plattner held on tightly to his concept that superior engineering was the way to better sales results. In his article Boudette (2000) described the exodus and Plattners resistance to implement change, But even as SAP America's sales force thinned out, Mr. Plattner continued to put his faith in engineering, telling staffers that the departed could be replaced by "Harvard MBAs." By November 1999, SAP America had lost its chief executive; president; top Latin American executive; chief information officer; and a slew of regional U.S. sales and development directors. The parent company's global accounts chief and chief executives in Japan, Britain and Brazil also jumped ship. (Boudette, 2000) Needless to say that attitude was ultimately adjusted and SAP has now offers one of the preeminent compensation packages in the industry. Of course not everything was as serious but there were a myriad of little things that would be encountered during this assimilative process; far too many to detail here but as an example the following advice given to new foreign executives,

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[about] how to get along with German engineers work hard, and impress them with content. SAP sponsored cultural-sensitivity classes that taught, for example, that Indian developers like frequent attention while Germans prefer to be left alone. Another tip: Americans might say excellent when a German would say good (Abboud et al., 2007).

BUSINESS CULTURE IN THE UNITED STATES

Americans value straight talking and 'getting to the point'. Self-deprecation is often misunderstood by Americans as a sign of weakness. Sell your plus points. Remember that time is money in the States wasting people's time through vagueness is lack of a sense of purpose which will not produce good results. Do not be offended by seemingly overly personal questions. Short-termism is endemic; structure proposals to emphasize quick wins rather than long-term objectives (although these should also be included.) Many Americans never leave the States. Be prepared for a parochially American view of the world. New is good. Change is ever present in American corporate life and therefore so is the easy acceptance of new ideas, new models etc. Americans tend to work longer hours and take fewer days of vacation than their European counterparts. Despite the seeming lack of hierarchy within an American organization, the boss is the boss and is expected to make decisions and is held accountable for those decisions. Titles are an unreliable guide to relative importance within an organization due to their proliferation. Respect is earned through conspicuous achievement rather than through age or background. Humor is frequently used in business situations but is unlikely to be appreciated when matters become very tense. Compromise is often sought - at the brink. This can often equate to the end of a quarter or financial year. Dress code in the States is very variable check on the appropriate mode before departure. You may encounter an 'American is best' view to doing things - be prepared to counter this with quantitative and qualitative counterarguments. Enthusiasm is endemic in business. Join in. Do not exhibit a jaundiced, 'old world' approach as this will be interpreted as defeatist. Gift giving is unusual in the States and many companies have policies to restrict or forbid the acceptance of presents. Try to be punctual for meetings - if you are late apologize. Americans often socialize with work colleagues outside the office - and this often includes the family. Business is a serious thing in the States and it is important that you are seen to be serious in your intent and commitment.

Source: http://worldbusinessculture.com/Doing-Business-in-The-USA.html

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BUSINESS CULTURE IN INDIA

India is one of the most diverse countries in the world and therefore all generalizations about Indian culture should be treated with caution. Try to research each client thoroughly before entering into any negotiations. Is it a traditional, family-run business or a more modern hi-tech operation working with western business methodology? Both society and business are extremely hierarchically arranged and many Indians find it extremely difficult to work in a non-hierarchical structure. Most decisions are made at the top of an organization and it can, therefore, be a waste of time and resource to spend too much time negotiating at the middle levels of a company if top level approval has not already been given. Managers are expected to give direct and specific instructions to subordinates - and subordinates are expected to carry out the instructions unquestioningly. Meetings can seem very informal and it is possible for several meetings to be conducted by one person at the same time and in the same room. Try not to become irritated by this informal approach. As relationships are important, many meetings will begin with fairly lengthy small talk. Take the time to engage in this process - it is very important to the development of solid, long-term relationships. Teams expect to perform closely defined tasks under the strong control of a leader. It is not considered intrusive for the leader to take a detailed interest in the work of individuals within the team. Do not be surprised if people seem ready to agree to most things - it is difficult for Indians to show direct disagreement. People will tend to tell you what they think you want to hear. Always seek detailed clarification of any agreements reached. Gifts should be wrapped and not opened in front of the giver. Try to be sensitive to local religious conventions. Don't offer alcohol to a Muslim or beef to a Hindu. India, more than most other countries, places great value on the quality of inter-personal relationships. Do not try to push things along too quickly in the early stages - take the time to develop relationships. Trying to introduce a flatter, more egalitarian approach into a society in which the caste system still flourishes can prove extremely difficult and painful for all concerned. The boss is definitely the boss in India and is expected to 'play the part.' Senior managers are not expected to engage in work which could be undertaken by somebody lower down the organization. Do not expect too much initiative from subordinates, contractors etc. Plan in great detail and explain exactly what needs to be done. Time is fairly fluid. Be prepared for meetings to start and finish late and for interruptions to occur on a regular basis. Contracts should be viewed as a starting point rather than as fixed agreements. A contract is a statement of the best set of circumstances at a given point in time. English language levels are, on the whole, very high in India and amongst the educated classes, several other (non-Indian) languages might also be spoken.

Small gifts are often given and received - this is usually part of the relationship building process and should not be taken as attempted bribery. Women will be respected in business situations if they have a position of authority. People show respect to the hierarchical level rather than being affected by any gender issues. Before travelling to India on business check the calendar for local festivals, public holidays etc. there are lots of them.

Source: http://www.worldbusinessculture.com/Business-in-India.html 20

BUSINESS CULTURE IN GERMANY

Germans are uneasy with uncertainty and ambiguity. They like to analyze problems in great depth before reaching a conclusion and are uncomfortable with 'feelings' or 'hunches' in the business setting. The greatest amount of respect is due to the person with the greatest depth of technical merit. Therefore, education is highly prized. The boss is expected to know his/her subject and give clear leadership. As there is a strong respect for authority, subordinates will rarely contradict the boss in public. Employees expect to be given precise, detailed instructions regarding specific tasks, but then expect to be left to carry them out without undue interference or supervision. Appraisal systems are difficult to implement. Germans are expected to perform their tasks professionally and correctly. Why should positive feedback be necessary? Teams built across hierarchical lines tend to be difficult to arrange and manage as they interfere with the normal structures and rules. Germans usually arrive extremely well prepared-for meetings with all the facts and figures at their disposal. The idea of attending an important meeting with no firm opinion would be quite unusual. It is better to say nothing than to comment on topics about which you have no particular knowledge or expertise. More reliance is placed on the printed than the spoken word and it is always important, therefore, to put information, decisions etc. in writing. In-depth, long-term planning is both expected and respected. Such planning helps, in large measure, to shape the future. Once decisions have been made, everybody is expected to carry them out without question, regardless of their agreement or disagreement with the original decision. Outbursts of emotion in the workplace (anger, frustration etc.) are seen as signs of weakness and lack of professionalism. Relationships between bosses and subordinates tend to appear somewhat formal. German companies tend to be hierarchical and departmentalized. Each department seems to guard its power base and information is expected to flow through proper channels. Meetings tend to be formal, unless on a oneto-one basis. If you want to find out opinions, possible trends of thinking etc., it is often more successfully done in an informal one-to-one meeting. The truth does not lie in a compromise or middle ground between two conflicting ideas. Compromising can be seen as weakness, diffidence or uncertainty. Internal information flow is top-down on a need-to-know basis. It is expected that superiors are better informed than others are. Humor is generally out of place in the work place. You should certainly avoid humor in all difficult or important business situations. However, when socializing with Germans you will find that they are as keen to enjoy themselves as you are.

Germans may seem extremely formal even amongst themselves. This overPunctuality is important - do not be guilty formality is a sign of respect as is using of stealing time. the formal Sie and Herr or Frau with people they may have known for many years. Source: http://worldbusinessculture.com/Business-in-Germany.html

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Workforce Diversity In addition to Cultural differences SAP has had to become adept, as most modern corporations have, at managing diversity in the corporate environment. The Information presented here has been gleaned from SAPs corporate
http://www.sap.com/corporate-en/our-company/people/diversity/index.epx

web site.

SAP Global Diversity Days 2010

The 2010 Diversity Days Theme was I am diversity at SAP: for the 4th year in a row, SAP celebrated the companys rich, colorful, and diverse culture during Global Diversity Days. This week of events across the global encourages employees in various SAP office locations to demonstrate their culture, lifestyle, issues, creativity, and unique talents to their colleagues and the wider SAP ecosystem. The week comprised both global (virtual) and local (on-site) activities and feature a variety of activities and educational elements. More than 7000 employees participated in 2010.

The events took place in 27 SAP locations in 16 countries on six continents.

http://www.sap.com/corporate-en/our-company/people/diversity/index.epx

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2010 Diversity Highlights

Diversity trainings in Germany 2010: 39 Gender Trainings

12 Intercultural Trainings (Innovation from Intercultural teamwork) Attendees: 419 in Gender Trainings 252 in Intercultural Trainings GlobeSmart: 14,106 total users (As of October 2010) 26,6% SAP employees We reached 100% on the Corporate Equality Index 2011 of the Human Rights Campaign Foundation Commitment to the Diversity Charter Vielfalt als Chance Charter Member 2007 Employee diversity networks for: Business womens network In 2010, new chapters in Israel and India were founded Cultural networks Family and career Mental and physical ability Older employees Sexual orientation/gender identity or expression

http://www.sap.com/corporate-en/our-company/people/diversity/index.epx

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What the SAP Experience Can Offer to Others In my view there are a number of lessons that can be learned from analyzing the SAP saga not the least of which is If you like to eat you need to know how to hunt. One of my mentors once told me that because the wolf doesnt hunt when hes full he is destined go hungry. This is exactly the situation SAP found itself. Sitting back fat and happy in Waldorf the Stars were content to simply feast off of prior successes. They paid little attention to what was actually happening to the industry in which they were the recognized leader. They knew that there were other predators out there but they viewed them as pesky scavengers, hardly worthy of their concern. What they failed to realize though was that the winds had shifted and their competition was downwind of the prize and was making progress. Fortunately, the alpha male in the pack sensed that something was afoot. He recognized that there hunting skill had grown weak and if something wasnt done quickly his pack would simply cease to exist. Niccolo Machiavelli is noted as saying that "Whosoever desires constant success must change his conduct with the times," yet another poignant message from the SAP experience. The world we live in is in a constant state of change. In order to survive we must be vigilant and recognize change early enough so that there is time to plan and prepare for the consequences of the change or to take action to get out of its way. SAP came dangerously close to missing the boat in fact it is my opinion that many of the problems that came about would have been far less onerous if SAP had been out in front of the market shift. Human beings have an intrinsic distain for change and changes that happen too rapidly and for reasons that are not thoroughly comprehended are particularly disturbing. This trait is highly characteristic of Germanic peoples. The chart previously 24

presented on page 21 of this document that sets out the characteristics of the business world in Germany contains several very relevant traits that support this belief. 1. Germans are uneasy with uncertainty and ambiguity. They like to analyze problems in great depth before reaching a conclusion and are uncomfortable with 'feelings' or 'hunches' in the business setting. 2. In-depth, long-term planning is both expected and respected. Such planning helps, in large measure, to shape the future. 3. German companies tend to be hierarchical and departmentalized. Each department seems to guard its power base and information is expected to flow through proper channels. 4. Internal information flow is top-down on a need-to-know basis. It is expected that superiors are better informed than others are. Finally the last but certainly not the least of the lessons to be learned from this study of SAP AG is Everything takes longer than you think.

Including the development of this report; thank you so much for your patience and understanding. Pax Dei! Francis R. Albright

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References Agazzi, S. (2007, May 14). The Long Tailpipe - Shai Agassi's Blog: WSJ Article. The Long Tailpipe - Shai Agassi's Blog. Retrieved February 28, 2012, from http://shaiagassi.typepad.com/the_long_tailpipe Boudette, N. E. (2000, January 14). Time to Reboot: SAP Belatedly Learns that Being American can be a Big Plus --- German Software Specialist Falls Behind on Internet, Marketing, Stock Options --- too Far From `The Valley. Wall Street Journal, p. 1. Retrieved February 18, 2012, from http://search.proquest.com/docview/308415419?accountid=10610 Doing Business in Germany - German Business Culture - German Culture World Business Culture. (n.d.). Business Ettiquette on the World Stage. Retrieved March 2, 2012, from http://worldbusinessculture.com/Business-in-Germany.html Doing Business in India - Indian Business Culture - Indian Culture - World Business Culture. (n.d Business Etiquette on the World Stage. Retrieved March 2, 2012, from http://www.worldbusinessculture.com/Business-in-India.html Margulius, D. L. (2007, May 17). Culture Clash at SAP | Applications - InfoWorld. Retrieved February 16, 2012, from http://www.infoworld.com/t/applications/culture-clash-sap-167 SAP AG -- Company History. (n.d.). Find Funding with Banks, Investors, and Other Funding Sources | Funding Universe. Retrieved February 29, 2012, from http://www.fundinguniverse.com/company-histories/SAP-AG-CompanyHistory.html SAP Annual Report 2010 - Chart Generator. (n.d.). SAP Annual Report 2010 - Home. Retrieved March 2, 2012, from http://www.sapannualreport.com/2010/en/additional-information/chart-generator/ 26

SAP Global - Diversity. (n.d.). SAP Business Management - Our People. Retrieved February 27, 2012, from http://www.sap.com/corporate-en/ourcompany/people/diversity/index.epx Schuster, A. (1996). Underpricing and Crises - IPO Performance in Germany. Informally Published Manuscript, London School of Economics, Financial Markets Group, England. Retrieved from http://www2.lse.ac.uk/fmg/workingPapers/discussionPapers/fmg_pdfs/dp252.pdf Stepanek, M. (2000, January 10). Gumberg Library Home Page - Duquesne University. Gumberg Library Home Page - Duquesne University. Retrieved February 17, 2012, from http://web.ebscohost.com.authenticate.library.duq.edu/ehost/pdfviewer/pdfviewer ?sid=42e62ce0-83f3-423d-b720-c0dd691fc4f4%40sessionmgr4&vid=2&hid=15 Top Tips on American Business Attitudes and Doing Business in USA - World Business Culture. (n.d.). Business Ettiquette on the World Stage. Retrieved March 2, 2012, from http://worldbusinessculture.com/Doing-Business-in-The-USA.html White, L. H. (n.d.). The German Miracle: Another Look | Lawrence H. White | Cato Institute: Commentary. The Cato Institute. Retrieved February 11, 2012, from http://www.cato.org/publications/commentary/german-miracle-another-look

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