Oxford Economics Analysis finds SAP made an overall contribution of £687 million to the UK’s GDP in 2020, with its partner ecosystem driving a further £940 million
LONDON, UK — SAP SE (NYSE: SAP) today announced the findings from an independent analysis by Oxford Economics, a leader in global forecasting and quantitative analysis, which shows that SAP UK made an overall contribution of £687 million to the UK’s GDP in 2020.
Following the recent announcement that SAP is making a €1/4 billion investment in the UK over the next five years as part of its growth strategy, the Oxford Economics report quantifies and qualifies the existing impact that SAP UK is making in the UK economy, in alignment with the United Nations Sustainable Development Goals.
Of the £687 million gross value added contribution to UK GDP, some £410 million was generated by SAP itself, while its procurement stimulated another £37 million along its domestic supply chain. The payment of wages by SAP and the firms in its supply chain, supported a further £240 million contribution to GDP.
At the national level, SAP’s activities had a significant impact on UK employment, supporting a total of 6,150 jobs across the UK. The company itself employed 2,457 people and its procurement spending is estimated to have stimulated another 540 jobs along its supply chain. A further 3,160 jobs were supported by the payment of wages by SAP and the firms in its supply chain.
Driving the UK’s levelling up agenda
The report has highlighted the impact that SAP’s procurement contributes to the levelling up agenda. The business proactively procures goods and services in deprived areas where local business needs support. Some £9.8 million (28%) of its procurement spend in the UK went to suppliers located in the 10% of local authority districts with the lowest one-year business survival rates. Likewise, 27% of its spend went to suppliers in the 10% of local authorities with the highest economic inactivity rates among its residents.
Growing the partner ecosystem
SAP is driving considerable investment in the UK via its partner ecosystem. Its network of nearly 1,000 partner firms in the UK earned an estimated income of £940 million from selling SAP licences, developing apps, and offering consultancy services to run or service SAP for other companies. Around 7,200 jobs in SAP’s partner ecosystem in the UK are dependent on SAP software.
Supporting social enterprise
SAP also seeks to foster social enterprises. This is through its own procurement plan called 5 & 5 by ’25, where the company aims to divert 5% of addressable procurement spending to social enterprises and diverse businesses by 2025. In 2020, some £347,000 of its procurement spend was with Social Enterprises. It also donated money to Social Enterprise UK, which aims to create a favourable environment in which social enterprises can thrive.
Enabling sustainable growth
The report shows SAP has a limited environmental impact on the UK. In total, across its direct and indirect footprint, it is estimated to have prompted 8.1 kt in CO2 emissions in 2020. Notably though, through its carbon offsetting programmes such as the SAP Forest UK (with The Carbon Community), SAP achieves significant carbon reductions in the UK. It managed carbon emission reductions of 2.6 Kt in 2020, equivalent to 62% of its own (direct operation) footprint.
Michiel Verhoeven, Managing Director SAP UK & Ireland, said: “SAP’s vision from day one has been to help the world run better and improve people’s lives; a purpose that we are all very proud of and fully committed to embracing in the United Kingdom. We are supporting the UKs biggest brands and emerging businesses, tackling the world’s greatest environmental challenges and helping business get back to best as we slowly emerge from the pandemic.
“During a time that has been understandably challenging for the global business environment, I am proud to be the UK Managing Director of a company that is making such a positive impact in the UK economy, and is absolutely committed to creating positive economic, environmental, and social impact worldwide.”
About Oxford Economics
Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on more than 200 countries, 250 industrial sectors, and 7,000 cities and regions. Our best-in-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact.
About Oxford Economics’ Impact Analysis
The impact of SAP UK on the UK economy is calculated using an economic impact assessment. This involves quantifying the company’s economic contribution to the UK and its constituent nations and regions across three channels of expenditure (summarised in Fig. 1). The channels of impact are:
- Direct impact relates to the employment and economic activity generated at SAP’s offices spread across the UK.
- Indirect impact captures the economic activity stimulated by SAP’s procurement of inputs of goods and services from its UK supply chain.
- Induced impact comprises the wider economic benefits that arise from the payment of wages by SAP, and the firms in its UK supply chains, to staff who spend a proportion of this income in local retail, leisure, and other outlets.
The total impact is the sum of the three channels.