SAP Business ByDesign™ Unveiled

First Live Midmarket Customers Experience the Power of the Most Complete On-Demand Business Software Solution

Auckland, New Zealand

SAP AG (NYSE: SAP) today unveiled SAP® Business ByDesign™, the most complete on-demand business software solution specifically addressing a new market of prospective, fast-growing midsize customers. Designed around four key principles — completeness, ease of use, adaptability and significantly cutting total cost of ownership (TCO) — SAP Business ByDesign delivers an on-demand software solution with built-in service and support. It offers a personalised trial for invited customers to explore, evaluate and experience the solution, and competitive pricing at US$149 per month per user, with lower price points for efficiency users.

Complementing the existing portfolio of SAP solutions for small businesses and midsize companies, the solution is already helping an inaugural group of live customers to improve business processes across their organisations. SAP Business ByDesign is available today for selected early customers in the United States and Germany, with the opportunity now opening for early customers in China, France and the United Kingdom.

“With SAP Business ByDesign, today we are adding a completely new business model to our successful established one and are changing the on-demand marketplace,” said Henning Kagermann, CEO, SAP AG. “SAP Business ByDesign is designed to dramatically simplify IT for midsize companies by substantially reducing the cost of ownership and combining efficiency with business flexibility. The technical advantages of SOA enter the level of business processes and allow customers to exploit the full potential of new business trends without becoming IT experts. Such an affordable, easy-to-use and complete offering has been missing for midsize companies in the sweet spot until today.”

First Customers Tap Value of Easy-to-Use Business Software

Over the last six months, SAP has worked with selected customers and partners to validate SAP Business ByDesign. Among the first 20 live customers in Germany and the United States are: STEMME AG, a utility and sports aircraft manufacturer; Judge Consulting Group, a provider of business technology consulting services; MANTZ airmotions GmbH & Co. KG, a manufacturer of air fresheners for homes and vehicles; and Compass Pharma Services LLC.

Compass Pharma Services LLC provides outsourced contract packaging, manufacturing and distribution services to the world’s best-known pharmaceutical companies. The company’s success depends on its ability to quickly respond to short-run, just-in-time orders while providing visibility to major customers that require a range of information across the different functional areas. The company’s current systems do not allow its functional departments to interact and share information—information that is essential to its customers. Compass is implementing SAP Business ByDesign to provide a single, on-demand business solution that can streamline operations.

“SAP has done a tremendous job of translating our business requirements into an easy-to-digest business flow within SAP Business ByDesign; it’s clear that SAP really took the time to understand how smaller businesses think and operate,” said Kevin Flanagan, CEO, Compass Pharma Services LLC. “We now plan to spend less than 25 percent of our original IT budget and are excited to be one of SAP’s first SAP Business ByDesign customers.”

Extending Reach of SAP Portfolio into Worldwide US$15 Billion Market

SAP Business ByDesign complements the existing SAP Business One, SAP Business All-in-One and SAP Business Suite solutions, allowing SAP to address the business requirements of all sizes of companies from the smallest businesses, through all types of midsize companies and larger enterprises.

The new SAP Business ByDesign is the most complete on-demand business software solution targeted exclusively toward new midmarket prospects in the size range of 100 to 500 employees — growing companies that typically have not invested in these types of integrated business solutions. SAP estimates that there are more than 60,000 such companies in Germany and the United States alone and sees a worldwide market potential of more than US$15 billion.

SAP Business One is designed for the small business segment, while SAP Business All-in-One is built specifically for midsize companies that need deep industry-specific functionality and extensibility to meet their precise requirements. In making today’s announcement, SAP said it had aligned the product names of its solution portfolio, adjusting the name of its existing midmarket solution to SAP Business All-in-One.

“SAP’s new on-demand solution for the midmarket represents a bold initiative, featuring innovations in ease of use and ease of configuration while incorporating the learning gained by SAP’s years of experience in the applications business,” said Henry Morris, senior vice president for Worldwide Software and Services, IDC. “This unveiling is a promising start for SAP, with these challenges to be addressed before product release: firming up the go-to-market model with wide reseller support, demonstrating needed application scalability for midsize companies who intend to grow and solidifying linkages between existing applications and the new solution.”

Game-Changing Business Solution Built on a Future-Proof Platform

Fundamentally different from competitive midmarket solutions, SAP Business ByDesign is a game-changing business solution that drives faster time to value, drives easier consumption and helps minimise customers’ overall IT costs dramatically by reducing the need for user training, hardware investments, service, support and IT staffing. Fully leveraging enterprise service-oriented architecture (enterprise SOA), the solution was built from the ground up on SAP NetWeaver®, providing a future-proof platform for business that provides for a high degree of flexibility to adapt business processes in order to address evolving market demands. This offers midsize customers the assurance that their investment today is protected as their IT solution is able to scale to their requirements as their businesses grow and evolve over time.

Product Pricing, Availability and Road Map

Prices in the United States will start at a price of US$149 per user, per month (including software, infrastructure, services and support), with a minimum of 25 users licensed per customer. Group pricing for efficiency users, those needing limited access to the software (such as for self-service entering of time and expenses, and purchase confirmations), will be at US$54 per month for a set of five users.

By the end of 2008, SAP will have invested between EUR 300-400 million in go-to-market and service and support innovations. In addition to successfully changing the brand perception and purchase consideration of SAP via global advertising campaigns, SAP said it has built consumer-style Internet-based marketing campaigns to attract and convert prospects for SAP’s unique midmarket offerings.

SAP is currently engaging with pilot customers in the United States and Germany; is validating the solution with customers in the United Kingdom, France and China; and will continue to build upon a strong demand in these markets throughout the balance of this year. During 2008, the product is planned for expansion to additional markets such as New Zealand, Australia and India in Asia-Pacific; Italy, the Netherlands, the Nordic region, South Africa and Spain in EMEA; and Canada and Mexico in the Americas. SAP aims to further extend the country road map in 2009.

Expanding Role for Partners

SAP will rely significantly on its partner ecosystem strategy to drive the SAP Business ByDesign offering. SAP is currently engaging with early solution reseller and service partners, as well as with complementary content partners such as ADP.

“As an SAP partner, we are pleased to expand our relationship by integrating ADP’s payroll services into this innovative solution,” said Gary Butler, chief executive officer of ADP. “With our experience serving thousands of midmarket employers, ADP is uniquely positioned to provide SAP Business ByDesign clients an effective platform that leverages our expertise and global footprint. SAP Business ByDesign provides clients with a cost-effective, flexible business solution enhanced with a world-class payroll solution.”

SAP anticipates inclusion of the SAP Business ByDesign offering as part of the SAP PartnerEdge programme in 2008. Current SAP reseller partners will be invited to apply and qualify, with the expectation that they will build a new business around SAP Business ByDesign that reflects the volume nature and requirements of the solution.

SAP Business ByDesign Website for Customers, Prospects and Partners Live

SAP has opened an expanded website providing information on SAP Business ByDesign, including details on the solution, live customers, partner engagement and how companies can register for an exclusive preview. For information on SAP’s complete offering for small business and midsize companies go to: www.sap.com/sme.