as a matter of sap
TRANSCRIPT
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
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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 company’s 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.
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Introduction
Success can be seductive. It can trick us into focusing too rigidly on long-established patterns of thought. That’s why it is often so tempting to recycle yesterday’s
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 company’s 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
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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).
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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 SAP’s sales became very apparent. In the latter years of the 1990’s
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.
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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 e-
commerce 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,
1999’s financial results were the worst in the company’s history and the talent drain in
its U.S. operations numbered more than 200 (Boudette, 2000).
SAP management didn’t ignore these warnings but like the Titanic the rudder
(management) was incapable of making a quick course correction and several years
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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 e-
commerce 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” don’t see the need to change. Thus the good ship
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SAP drifted rudderless until it was almost too late. By 2006 SAP CEO Henning
Kagermann had the clear understanding that unless the company didn’t 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 SAP’s 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 Kagermann’s 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
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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 company’s 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 SAP’s 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 main-
frame 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).
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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) SAP’s 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 SAP’s 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 Frederico’s (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. Frederico’s (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 wasn’t 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: SAP’s Plan to Globalize Hits Cultural
Barriers.”
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Five years ago, Germany’s 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 company’s top ranks
by last year, up from one-third in 2000. The newcomers sought to inject a faster
pace and open SAP’s 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.
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Veteran software developers protested the loss of autonomy and
“Americanization” of the company. “We used to be kings here,” says
Rainer Hüber, a developer who’s 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
person’s 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 SAP’s 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
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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 SAP’s 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 company’s
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,
SAP’s 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
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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 company’s
restructuring in his interview with Frederico’s 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
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software/high tech mecca, Silicon Valley’s 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 STATESAmericans value straight talking and 'getting to
the point'.
Respect is earned through conspicuous achievement rather than through age or
background.Self-deprecation is often misunderstood by Americans as a sign of weakness. Sell your
plus points.
Humor is frequently used in business situations but is unlikely to be appreciated
when matters become very tense.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.
Compromise is often sought - at the brink. This can often equate to the end of a quarter or
financial year.
Do not be offended by seemingly overly personal questions.
Dress code in the States is very variable - check on the appropriate mode before
departure.Short-termism is endemic; structure proposals to emphasize quick wins rather than long-term
objectives (although these should also be included.)
You may encounter an 'American is best' view to doing things - be prepared to counter this
with quantitative and qualitative counter- arguments.
Many Americans never leave the States. Be prepared for a parochially American view of
the world.
Enthusiasm is endemic in business. Join in. Do not exhibit a jaundiced, 'old world' approach as this will be interpreted as
defeatist.New is good. Change is ever present in
American corporate life and therefore so is the easy acceptance of new ideas, new models
etc.
Gift giving is unusual in the States and many companies have policies to restrict or forbid
the acceptance of presents.
Americans tend to work longer hours and take fewer days of vacation than their European
counterparts.
Try to be punctual for meetings - if you are late apologize.
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.
Americans often socialize with work colleagues outside the office - and this often
includes the family.
Titles are an unreliable guide to relative importance within an organization due to their
proliferation.
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 INDIAIndia 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?
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.
Both society and business are extremely hierarchically arranged and many Indians find it extremely difficult to work in a non-hierarchical
structure.
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.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.
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.
Managers are expected to give direct and specific instructions to subordinates - and subordinates are expected to carry out the
instructions unquestioningly.
Do not expect too much initiative from subordinates, contractors etc. Plan in great detail
and explain exactly what needs to be done.
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.
Time is fairly fluid. Be prepared for meetings to start and finish late and for interruptions to occur
on a regular basis.
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.
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.
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.
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.
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.
Small gifts are often given and received - this is usually part of the relationship building process and should not be taken as attempted bribery.
Gifts should be wrapped and not opened in front of the giver.
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.Try to be sensitive to local religious conventions.
Don't offer alcohol to a Muslim or beef to a Hindu.
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
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BUSINESS CULTURE IN GERMANYGermans 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.
In-depth, long-term planning is both expected and respected. Such planning helps, in large
measure, to shape the future.
The greatest amount of respect is due to the person with the greatest depth of technical merit. Therefore, education is highly prized.
Once decisions have been made, everybody is expected to carry them out without question,
regardless of their agreement or disagreement with the original decision.
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.
Outbursts of emotion in the workplace (anger, frustration etc.) are seen as signs of weakness
and lack of professionalism.
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.
Relationships between bosses and subordinates tend to appear somewhat formal.
Appraisal systems are difficult to implement. Germans are expected to perform their tasks
professionally and correctly. Why should positive feedback be necessary?
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.
Teams built across hierarchical lines tend to be difficult to arrange and manage as they
interfere with the normal structures and rules.
Meetings tend to be formal, unless on a one-to-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.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.
The truth does not lie in a compromise or middle ground between two conflicting ideas.
Compromising can be seen as weakness, diffidence or uncertainty.
It is better to say nothing than to comment on topics about which you have no particular
knowledge or expertise.
Internal information flow is top-down on a need-to-know basis. It is expected that
superiors are better informed than others are.
More reliance is placed on the printed than the spoken word and it is always important,
therefore, to put information, decisions etc. in writing.
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.
Punctuality is important - do not be guilty of stealing time.
Germans may seem extremely formal - even amongst themselves. This over-
formality is a sign of respect as is using the formal Sie and Herr or Frau with
people they may have known for many years.
Source: http://worldbusinessculture.com/Business-in-Germany.html
21
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 SAP’s
corporate 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 company’s 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.
22
http://www.sap.com/corporate-en/our-
company/people/diversity/index.epx
http://www.sap.com/corporate-en/our-
company/people/diversity/index.epx
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 women’s 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 identityor expression
23http://www.sap.com/corporate-en/our-
company/people/diversity/index.epx
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 doesn’t hunt when he’s 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 wasn’t 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
25
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