An idea IBM didn’t want in 1972, and the 54 years that turned it into the software behind 99 of the world’s 100 largest companies.
SAP GUIApplicationABAPDatabaseAny RDBMSS/4HANA · 2015In memoryUniversal JournalACDOCACash positionAI assistant · since 2023Overview
In 1972 five engineers walked out of IBM in Mannheim with an idea IBM no longer wanted. They had no computer of their own: they worked at night on their customers’ mainframes. Fifty-four years later SAP employs more than 113,000 people, and 99 of the world’s 100 largest companies run its software.
This page tells how it happened: what the three letters mean, why the founders left IBM, how R/1 became S/4HANA, how a nine-person company grew to €36.8 billion in revenue, and the answers to the questions people ask most.
The three letters
It is the most searched question about the company, and the answer most people know is only one of three. The letters have meant two different things in German, and today they officially mean nothing at all. Pick a period.
1972 · Partnership in Weinheim
The partnership the five founders formed in 1972 was called Systemanalyse Programmentwicklung: system analysis and program development. It described exactly what they sold at first, analysis and programming for customers such as ICI.
Sources: SAP history 1972–1980; Wikipedia, SAP; ERP Today.
1976 · SAP GmbH
In 1976 a new limited company took over sales and administration: SAP GmbH Systeme, Anwendungen und Produkte in der Datenverarbeitung, in English systems, applications and products in data processing. This is the expansion almost everyone learns. The original partnership was dissolved five years later, in 1981.
Sources: SAP history 1972–1980; Wikipedia, SAP.
2005 · Official name
Since the 2005 annual general meeting the company’s official name has simply been SAP AG, and since July 2014 SAP SE, a European company. The three letters are now a name, not an abbreviation, although “systems, applications and products” is still how most people explain it.
Source: Wikipedia, SAP.
Letter by letter: S-A-P. Saying “sap”, like the liquid in a tree, is the classic sign of someone new to the SAP world. A few technical words, such as SAPGUI, are often said as one word.
1971–1972
SAP exists because IBM said no. The story starts with a computer maker leaving the business, takes a detour through a cancelled project and ends in a chemical company’s data center at night. Five chapters.
Chapter 1 of 5 · 1971
In 1971 Xerox left the computer hardware business it had built on Scientific Data Systems (SDS) and asked IBM to move its business systems to IBM technology. As part of the deal, IBM received the rights to the SDS software.
Without Xerox’s exit from computers there would have been no project, and without the project, no reason for the five to work together.
Sources: Wikipedia, SAP; ERP Today, “SAP’s history – fifty years and counting”.
Chapter 2 of 5 · 1971
In IBM’s Mannheim office, Dietmar Hopp, Hasso Plattner, Klaus Tschira, Hans-Werner Hector and Claus Wellenreuther set out to build an enterprise-wide system on that software: one program for the whole company instead of separate ones per department.
Keep the place in mind: Mannheim is where SAP kept its first office, and the region around it, first Weinheim and then Walldorf, has been SAP’s home ever since.
Sources: Wikipedia, SAP; ERP Today.
Chapter 3 of 5 · 1971–1972
The project lost momentum and the engineers were told their work would no longer be needed. Instead of dropping the idea, they decided to leave IBM and build it themselves, as standard software they could sell to many companies.
This is the version told by Wikipedia and ERP Today. SAP’s own history page simply says the five left IBM and founded the company.
Sources: Wikipedia, SAP; ERP Today; SAP history 1972–1980.
Chapter 4 of 5 · 1 April 1972
They founded Systemanalyse Programmentwicklung as a private partnership, based in Weinheim with an office in Mannheim. Their goal, in SAP’s words: standard business software that integrates all business processes and processes data in real time.
SAP celebrated its 50th birthday on 1 April 2022 at 20 locations around the world.
Sources: SAP history 1972–1980 and 2021–present; Netzwoche (2022).
Chapter 5 of 5 · 1972
The first customer was the German subsidiary of Imperial Chemical Industries (ICI) in Östringen, for payroll and accounting programs. The founders worked mostly in ICI’s data center, and development and testing ran at night and at weekends on customers’ mainframes. By the end of the first year SAP had nine employees and DM620,000 in revenue.
Instead of punch cards processed overnight, data was typed on a screen and stored in a shared database at once. That “at once” is the R, for real time, in every product name up to R/3.
Sources: SAP history 1972–1980; ERP Today; gruender.de.
The plot twist
In 1994 IBM signed the largest contract in SAP’s 23-year history.
The company that had no use for the idea in 1971 became one of its biggest buyers. By 1987 IBM servers were already bringing SAP software to smaller customers.
Source: SAP history, 1981–2000
What made them different
The founders
All five came from IBM’s office in Mannheim. Two of them ran SAP for decades; one left after eight years; and between them they later funded a university institute, a Bundesliga club and foundations for science, medicine and art.
CEO of SAP AG from 1988 to 1998, then chairman of the Supervisory Board until 2003. Since 1990 he has backed TSG 1899 Hoffenheim, which climbed from the lowest amateur leagues to the Bundesliga in 2008.
Led SAP until 2003, then chaired the Supervisory Board until May 2024, after 52 years with the company. Founded the Hasso Plattner Institute in Potsdam in 1998, whose in-memory research fed into SAP HANA.
Left the Executive Board in 1998, together with Hopp. His Klaus Tschira Foundation in Heidelberg promotes science, especially computer science and mathematics. He died in 2015.
Sold most of his SAP shares. His Hector Foundation supports art, including the Hector Art Prize at the Kunsthalle Mannheim, and HIV research.
The first founder to leave: SAP’s own history says he left in 1980 for health reasons, the year SAP moved into its own building in Walldorf.
Did you know
The founders wrote and tested code on customers’ mainframes, mostly at night and at weekends. The first SAP-owned machine, a Siemens 7738, arrived in 1978.
Source: SAP history, 1972–1980Sources: SAP history; Wikipedia articles on SAP and Dietmar Hopp; Computerwoche; gruender.de. Initials stand in for portraits.
The product
Every SAP generation followed a change in computing: mainframes, client–server, the internet, in-memory databases, the cloud and now AI. Pick one to see what changed, what the world looked like and what the name means.
Generation 1 of 6 · What changed
SAP’s first product was RF, a financial accounting system. Data went into a database and was processed straight away, instead of on punch cards run overnight: that is the R, for real time. RM materials management followed in 1975, joining purchasing, inventory and invoice verification, then asset accounting (RA) and sales and distribution (RV) in 1978. Integrating the applications around central data storage is what set SAP apart.
RFRMRARVUnder the hood
Curious fact
Nobody called it R/1 at the time. The product was sold as RF and the R system; the name R/1 was given afterwards, once R/2 existed.
Sources: SAP history 1972–1980; ERP Today; Wikipedia, SAP R/3.
Generation 2 of 6 · What changed
R/2 was designed from the start for international markets, with several languages and currencies, which made it the system of choice for large European multinationals in the 1980s. It gained HR software in 1986, production planning, the ABAP/4 programming environment and a new interface in 1989, and SAP’s first industry solution, for utilities, also in 1989.
ABAP/4HRMulti-currencyRIVAUnder the hood
Curious fact
Sources disagree on R/2’s birthday. Development started in 1979; SAP’s own history dates the launch to 1981, while ERP Today says 1980 and Wikipedia 1979.
Sources: SAP history 1972–1990; Wikipedia, SAP R/3; ERP Today.
Generation 3 of 6 · What changed
Shown at CeBIT in 1991 and released in July 1992, R/3 moved SAP from the mainframe to client–server: SAP GUI on the desktop, application servers running ABAP, and a database server. A 1993 agreement with Microsoft brought it to Windows NT. The modules consultants still name every day, FI, CO, MM, SD, PP and HR, became a worldwide standard with it.
SAP GUIABAPFICOMMSDUnder the hood
Curious fact
The R still meant real time, and the 3 meant three tiers. Releases ran from 1.0A in 1992 to 4.6C in 2000 and 4.7 in 2002–2003.
Sources: SAP history 1981–2000; Wikipedia, SAP R/3.
Generation 4 of 6 · What changed
mySAP.com (1999) took SAP to the internet, and SAP NetWeaver (2003–2004) became the technology layer under everything. R/3 was renamed SAP ERP Central Component: ECC 5.0 in 2004, then ECC 6.0, released at the end of 2005 and generally available as SAP ERP in 2006. Enhancement packages kept it growing up to EHP8 in 2016, and from 2013 the Business Suite could already run on HANA.
NetWeaverECC 6.0EHP8Business Suite 7Under the hood
Curious fact
Mainstream maintenance for ECC 6.0 ends at the close of 2027 and extended maintenance at the end of 2030. A paid private-cloud transition option reaches 2033, but it is a subscription, not a maintenance extension.
Sources: SAP history 2001–2010; Wikipedia, SAP R/3; SAPinsider (support deadlines).
Generation 5 of 6 · What changed
Launched on 3 February 2015 at the New York Stock Exchange, SAP S/4HANA is a new suite written for HANA, the in-memory database SAP launched in 2011. Finance tables merged into the Universal Journal (ACDOCA), and SAP Fiori apps took over from many classic screens. S/4HANA Finance 1503 came first, S/4HANA 1511 in November 2015, and the cloud edition went live at SAPPHIRE NOW in May 2015.
HANAACDOCASAP Fiori1511Under the hood
Curious fact
S/4 stands for SAP Business Suite 4, and because it only runs on HANA, product and database share one name.
Sources: Wikipedia, SAP S/4HANA and SAP HANA; SAP history 2011–2020; SAP fact sheet (2026).
Generation 6 of 6 · What changed
RISE with SAP (2021) packaged the move of core ERP to the cloud as one subscription, and GROW with SAP (2023) did the same for midsize companies. Joule, SAP’s generative AI copilot, was announced in 2023 and became SAP’s new front end in 2024. SAP Business Data Cloud, built with Databricks, followed in February 2025, and in 2026 SAP talks about the Autonomous Enterprise and Joule Work.
RISEGROWJouleBusiness Data CloudUnder the hood
Curious fact
In Q3 2026 cloud revenue of €6.7 billion made up about two thirds of SAP’s €10.3 billion quarter. Ten years earlier, licences and support still dominated.
Sources: SAP history 2021–present; SAP statements for 2025 and Q3 2026; SAP News (February 2025).
Consultants use these names every day. Here is what each piece actually stands for.
| Name | What it means | Source |
|---|---|---|
R | Real time: data processed when it is entered, not in an overnight batch. Used from RF in 1973 until the late 1990s. | SAP history; Wikipedia |
R/3 | Real time, three tiers: presentation (SAP GUI), application servers and database. | Wikipedia, SAP R/3 |
ABAP | First Allgemeiner Berichts-Aufbereitungs-Prozessor, a general report preparation processor; later Advanced Business Application Programming. | ERP Today |
ECC | SAP ERP Central Component, the name R/3 took in 2004. ECC 6.0 is SAP ERP 6.0. | Wikipedia, SAP R/3 |
HANA | Once SAP High-Performance Analytic Appliance. Former SAP executive Vishal Sikka called the architecture behind it “Hasso’s New Architecture”. | Wikipedia, SAP HANA |
S/4HANA | SAP Business Suite 4, which runs only on the SAP HANA database, hence one name. | Wikipedia, SAP S/4HANA |
Timeline
SAP splits its own history into six eras. Pick one to see its milestones. Gold dots mark the firsts that changed the company.
No computer of their own, one first customer and a big idea: standard software working in real time.
Source: SAP history, 1972–1980
The mainframe decade: R/2 conquers German-speaking industry, SAP goes public and starts its first subsidiaries abroad.
Source: SAP history, 1981–1990
Client–server changes everything. R/3 takes SAP from a German success to the world’s third-largest independent software vendor.
Source: SAP history, 1991–2000
NetWeaver, ECC 6.0 and the first big acquisitions, the first CEOs who were not founders, and a financial crisis.
HANA, the cloud acquisitions and S/4HANA: SAP rebuilds its core while buying its way into cloud software.
Source: SAP history, 2011–2020
RISE with SAP, Joule and Business Data Cloud: the move to cloud ERP and AI agents, and SAP at the top of Europe’s stock markets.
From zero to the top
Revenue and headcount at milestone years. The log scale shows each step of ten times as the same height; switch to linear and the first 25 years almost disappear. Tap or hover a bar for the story behind it.
2025€36.8 billionCloud revenue reaches €21.0 billion, up 23%.
Revenue before 1998 was reported in Deutsche Mark and is converted at the fixed rate of DM1.95583 per euro. Figures: SAP history pages (1972–2010), SAP filings for 2007–2008, SAP’s 2013 AGM presentation (2009), Wikipedia (2013–2025, from SAP annual reports). Years shown are milestones, not every year.
2025€36.8 billionCloud revenue reaches €21.0 billion, up 23%.
Revenue before 1998 was reported in Deutsche Mark and is converted at the fixed rate of DM1.95583 per euro. Figures: SAP history pages (1972–2010), SAP filings for 2007–2008, SAP’s 2013 AGM presentation (2009), Wikipedia (2013–2025, from SAP annual reports). Years shown are milestones, not every year.
2026113,076 people113,076 full-time equivalents at 30 September 2026.
Headcount from SAP history pages up to 2009 (some rounded by SAP, such as “about 60” or “more than 19,000”), Wikipedia’s table from SAP annual reports for 2013–2019, and SAP statements for 2025 and 30 September 2026 (full-time equivalents).
2026113,076 people113,076 full-time equivalents at 30 September 2026.
Headcount from SAP history pages up to 2009 (some rounded by SAP, such as “about 60” or “more than 19,000”), Wikipedia’s table from SAP annual reports for 2013–2019, and SAP statements for 2025 and 30 September 2026 (full-time equivalents).
Quick test
Ten moments from SAP’s history. Say the year out loud, then open the card to see how close you were.
For six years the founders developed on customers’ mainframes, mostly at night and at weekends.
The same year as Dr. Oetker, Beiersdorf, Merck and L’Oréal, when SAP had 25 employees.
The same year SAP moved its headquarters to rented space in a bank in Walldorf.
Sooner than SAP expected, helped by about 100 orders for asset accounting.
SAP GmbH became SAP AG that year, and Dow Chemical became the 1,000th customer.
Signed in Munich on 30 April 1993; the first R/3 on Windows NT followed in 1994.
In the R/3 boom years, when SAPPHIRE drew 8,000 registrations in the US alone.
On 3 August 1998, the same year Hopp and Tschira left the Executive Board.
On 3 February 2015, with the on-premise edition available the same day.
At the annual general meeting in May 2024, to Pekka Ala-Pietilä.
Sources: SAP history pages for each decade; Wikipedia, SAP S/4HANA.
Leadership
SAP likes to be led by two: four times it has had co-CEOs. Founders stayed at the top until 2003, first Hopp with Plattner, then Plattner with Henning Kagermann, who that year became the first sole CEO who was not a founder.
Supervisory Board chairs
A rivalry worth a story
Hasso Plattner, known for playing electric guitar at customer events, had a long rivalry with Oracle’s Larry Ellison. Computerwoche even tells a sailing story about the two of them, carefully marked as “allegedly”.
Sources: SAP history 2001–2024; Computerwoche, “Diese Männer haben SAP geprägt”; Wikipedia, Dietmar Hopp.
Acquisitions
SAP grew mostly by building, but it has made more than 70 acquisitions since 1991. These are the ones above a billion dollars, by the price reported at the time.
The lighter bar is Qualtrics, whose stake SAP sold in 2023.
The one that came back
SAP paid $8 billion for Qualtrics and in 2023 agreed to sell its stake for about $7.7 billion, in a deal that valued the company at $12.5 billion.
Made in Israel
SAP Business One, the ERP for small companies, came from the Israeli company TopManage, bought in 2002. By 2006 it had 10,000 customers.
The biggest at the time
SAP described Concur, closed at the end of 2014, as the largest SaaS acquisition in history. BusinessObjects was priced at €4.8 billion in 2007.
Sources: Wikipedia, List of mergers and acquisitions by SAP; SAP history; ERP Today (Qualtrics, 2023); Computing (BusinessObjects, 2007).
Brazil
SAP’s first Latin American subsidiary opened in Mexico City in 1994. Brazil became something more than a market: one of the places where SAP builds its software, and a country whose tax rules give SAP’s localization teams plenty of work.
SAP’s research and development hub for the region sits on the Unisinos university campus near Porto Alegre. A third expansion, opened in 2022 with an investment of about R$120 million, added a 14,000 m² LEED Gold building. Its work is used worldwide in agribusiness, oil and gas, retail and supply chain, and about 80% of its interns are hired.
Source: IT Forum (2022, Portuguese)In 2011 SAP announced plans to expand in Brazil, India, Russia and China. In 2017, when it launched SAP Leonardo, São Leopoldo was one of only four Leonardo Centers worldwide, next to New York, Paris and Bangalore.
Source: SAP history, 2011–2020Brazil’s taxes, its electronic invoices and SPED have shaped SAP’s Brazilian country version for two decades, from the first NF-e solutions to SAP DRC, and the consumption tax reform to 2033 is the next chapter.
Related: SAP e-reporting in BrazilSAP today
Full-year 2025 results, the Q3 2026 statement and SAP’s fact sheet of July 2026. In March 2025 SAP passed Novo Nordisk to become Europe’s most valuable listed company; that ranking moves with the markets every day.
Latest quarter · Q3 2026
Read the claim carefully
SAP’s fact sheet says that SAP customers generate 84% of total global commerce. It is a statement about how big SAP’s customers are, not about how much of the world’s commerce passes through SAP software.
Sources: SAP Q4 and full-year 2025 statement and Q3 2026 statement (filed with the SEC); SAP fact sheet, 23 July 2026; AIN (March 2025).
Myths
MythSAP is an American company.
FactSAP is German. It was founded near Mannheim, has been based in Walldorf since 1977 and has been a European company (SE) since 2014. The confusion is understandable: the US is its largest single market, 32.7% of sales in 2023, and its shares have traded in New York since 1998.
MythSAP was an IBM spin-off.
FactIBM never owned any of it. Five employees left IBM to build on their own an idea IBM had dropped. The irony came later: in 1994 IBM signed the largest contract in SAP’s 23-year history.
MythSAP officially means Systems, Applications and Products.
FactThat was the name of the 1976 company. The 1972 partnership was Systemanalyse Programmentwicklung, and since 2005 the official name has simply been SAP, today SAP SE.
MythSAP was born in Walldorf.
FactIt was born in Weinheim, with its first office in Mannheim, and the founders mostly worked in their customer ICI’s data center. SAP moved to Walldorf, into rented space in a bank, in 1977.
Myth77% of the world’s transaction revenue touches an SAP system.
FactThat line appeared in SAP presentations around 2017. SAP’s 2026 fact sheet says something else: SAP customers generate 84% of total global commerce, a measure of how big its customers are. In that fact sheet, 77% is now a different number: the share of SAP employees who own SAP shares.
MythR/1, R/2 and R/3 mean one, two and three tiers.
FactThe R means real time in all of them. Only the 3 of R/3 is tied to its three tiers: presentation, application and database. R/1 is a name given afterwards to the first system, RF, and R/2 was a mainframe system.
MythS/4HANA directly replaced R/3.
FactA whole generation sits in between: R/3 became SAP ERP Central Component in 2004, and ECC 6.0 is still the SAP many companies run. The Business Suite moved to HANA in 2013, and only in 2015 did S/4HANA arrive as a new suite.
MythSAP only makes ERP.
FactERP is the core, but SAP has made more than 70 acquisitions since 1991: SuccessFactors for HR, Ariba for procurement, Concur for travel and expenses, Signavio for processes, WalkMe for digital adoption and more.
In 1972 it stood for Systemanalyse Programmentwicklung, German for system analysis and program development. In 1976 the company that took over the business was named Systeme, Anwendungen und Produkte in der Datenverarbeitung: systems, applications and products in data processing, the expansion most people know. Since 2005 the official name has simply been SAP, today SAP SE.
Letter by letter: S-A-P. Saying it like the word sap is the classic sign of someone new to the SAP world, although some technical names, such as SAPGUI, are often said as one word.
Five former IBM employees from Mannheim: Dietmar Hopp, Hasso Plattner, Klaus Tschira, Hans-Werner Hector and Claus Wellenreuther, on 1 April 1972.
In 1971 Xerox left the computer business and asked IBM to migrate its systems; IBM received the rights to the Scientific Data Systems software. The five were building an enterprise-wide system on that software when they were told it would no longer be needed. Rather than drop the idea, they left IBM to build standard software of their own. This is the account given by Wikipedia and ERP Today; SAP’s own history simply says they left IBM and founded the company.
German. SAP was founded near Mannheim, has had its headquarters in Walldorf since 1977 and has been a European company (SE) since 2014. The US is its largest single market, and its shares have been listed on the New York Stock Exchange since 1998, which is why many people think it is American.
SAP is a listed company with no controlling shareholder. At the end of 2024, 83.8% of its shares were free float; the rest were mainly the founders’ holdings and SAP’s own treasury shares.
The first customer, in 1972, was the German subsidiary of Imperial Chemical Industries in Östringen, for payroll and accounting programs. The first product was RF, a real-time financial accounting system launched in 1973 and later known as R/1.
R stands for real time: data processed when it is entered rather than in overnight batches. The 3 in R/3 refers to its three-tier client–server architecture of presentation, application and database. R/2 was the mainframe generation, and R/1 is a name given later to RF.
ECC, or SAP ERP 6.0, is the successor of R/3 and runs on several databases. S/4HANA, launched in 2015, is a new suite that runs only on SAP HANA, with the Universal Journal in finance and SAP Fiori as its user experience. The Universal Journal and SAP roadmap pages of this site go into the details.
S/4 stands for SAP Business Suite 4. HANA is SAP’s in-memory database, launched in 2011, and S/4HANA cannot run without it, hence one name.
Yes, for now. Mainstream maintenance for SAP ERP 6.0 ends at the close of 2027, and extended maintenance, at extra cost, runs from 2028 to the end of 2030. The SAP ERP private edition transition option is a paid private-cloud subscription for 2031 to 2033, with conditions, and not a maintenance extension.
SAP’s 2026 fact sheet says 99 of the world’s 100 largest companies are SAP customers and 86 of them use S/4HANA, while about 80% of all SAP customers are small and midsize companies. In 2022 SAP reported more than 440,000 customers in over 180 countries.
Christian Klein has been CEO since 2019, sole CEO since April 2020, with a contract extended to April 2028. Pekka Ala-Pietilä has chaired the Supervisory Board since May 2024, when Hasso Plattner stepped down.
In 1988, when SAP became SAP AG and listed on the Frankfurt and Stuttgart exchanges with 1.2 million shares at DM750 each. It joined the DAX in 1995 and the New York Stock Exchange on 3 August 1998.
By price, Concur for US$8.3 billion in 2014, ahead of Qualtrics for US$8 billion, a stake SAP sold in 2023 for about US$7.7 billion. SAP has made more than 70 acquisitions since 1991.
Checked in November 2026. Where sources disagree, the page says so.
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