diff --git "a/Germany/1.SAP_$240.94 B_Information Tech/2016/results.txt" "b/Germany/1.SAP_$240.94 B_Information Tech/2016/results.txt"
new file mode 100644--- /dev/null
+++ "b/Germany/1.SAP_$240.94 B_Information Tech/2016/results.txt"
@@ -0,0 +1,52858 @@
+-5,615
+New cloud bookings
+3
+26.1
+26.8
+8
+23.4
+25.3
+A in %
+2015
+2016
+Order Entry
+Effective tax rate (non-IFRS, in %)
+Effective tax rate (IFRS, in %)
+€ millions, unless otherwise stated
+5
+Key Facts
+6
+56
+60
+4
+71
+74
+-44
+-3,153
+21
+1,147
+3,001
+874
+Deferred cloud subscriptions and support revenue (IFRS)¹)
+1.25
+3
+3.77
+3.90
+19
+2.56
+3.04
+Dividend per share²)(in €)
+Earnings per share, basic (non-IFRS, in €)
+Earnings per share, basic (in €)
+Key SAP Stock Facts
+-5
+40
+38
+7
+27
+29
+Share of software orders greater than € 5 million (in % of total software order entry)
+Share of software orders less than € 1 million (in % of total software order entry)
+0
+57.439
+57,291
+Orders - Number of on-premise software deals (in transactions)
+33
+957
+1,271
+31
+3,627
+-1
+30.5
+70.2
+Total gross margin (in % of total revenue, IFRS)
+83.8
+83.7
+Cloud and software margin (in % of corresponding revenue, non-IFRS)
+○
+80.8
+81.0
+Cloud and software margin (in % of corresponding revenue, IFRS)
+1
+86.6
+87.4
+Software and support gross margin (non-IFRS, in %)
+1
+84.7
+85.9
+Software and support gross margin (IFRS, in %)
+-2
+65.6
+64.4
+1
+55.3
+56.1
+Cloud subscriptions and support margin (in % of corresponding revenue, IFRS)
+Cloud subscriptions and support margin (in % of corresponding revenue, non-IFRS)
+Profits and Margins
+70.0
+0
+Total gross margin (in % of total revenue, non-IFRS)
+72.9
+30.1
+14
+20.5
+23.3
+Equity ratio (total equity in % of total assets)
+Days' sales outstanding (DSO, in days)
+Net liquidity
+Free cash flow
+Operating margin (in % of total revenue, non-IFRS)
+Operating margin (in % of total revenue, IFRS)
+4
+6,348
+1.15
+6,633
+21
+4,252
+5,135
+Operating profit (IFRS)
+-1
+68
+67
+-1
+74
+74
+Applications, Technology & Services Segment gross margin (in % of corresponding revenue)
+SAP Business Network Segment gross margin (in % of corresponding revenue)
+73.3
+Operating profit (non-IFRS)
+9
+101.73
+90.18
+To Our Stakeholders | Letter from the CEO
+8
+Our business is healthy and our company is happy. As a truly
+integrated report, we also showcase non-financial indicators and
+their financial impact. For example, employee engagement is at
+an all-time high. Our employees are healthier than ever based on
+our Business Health Culture Index. Our colleagues are
+We continued our momentum in 2016. We again delivered a
+trifecta of strong software sales, fast cloud growth and
+operating income expansion. Non-IFRS cloud revenue powered
+to 31% growth. Cloud and software grew 8%, IFRS operating
+profit was up 20%, while non-IFRS operating profit expanded to
+a record 6.6 billion euros. New cloud bookings surged 31% in the
+full year, which means that we have a three billion euro business
+growing more than 30%. The road ahead looks equally strong,
+as cloud backlog soared 47% to 5.4 billion euros, greatly
+enhancing the predictability of our future cloud revenue.
+significantly, we have scaled a once-in-a-generation new data
+architecture with SAP HANA.
+Since 2010, we have worked hard to earn results that speak for
+themselves. Our revenue, operating income, and market value
+have all more than doubled. Our customer count has tripled. We
+have progressed from a nascent cloud business to having the
+most cloud users in the business software industry. And most
+SAP's Results
+On behalf of the 84,000 employees of SAP, it is my distinct
+privilege to present the SAP Integrated Report 2016. Backed by
+a strong financial, social and environmental performance, we
+have never been more committed to our customers, colleagues,
+vision and strategy. As the platform company for digital
+business, we are focused on Impact Through Innovation. As a
+purpose driven company, we are focused on strengthening the
+economy, society and the environment for all people. Driven by
+our ambition and guided by our values, we believe that SAP's
+best days are truly yet to come.
+Dear Stakeholders of SAP,
+Letter from the CEO
+To Our Stakeholders
+7
+43
+42
+25
+.19
+80262222
+.16
+.12
+10
+Compensation Report¹).
+Responsibility Statement
+Independent Auditor's Report...
+Report by the Supervisory Board.
+Corporate Governance Report.
+Investor Relations..
+SAP Executive Board..
+dedicating more time to serving their communities through our
+social sabbatical program and month of service. We beat our
+CO2 reduction target and continue to power data centers and
+facilities with 100% renewable energy. These factors have led
+us, for the 10th year in a row, to be the number one software
+company in the Dow Jones Sustainability Index. Our
+commitment to diversity and inclusion has also never been
+stronger, which led us to become the first global IT company to
+earn EDGE certification for our focus on gender equality.
+In the true spirit of our founders, especially our chairman Hasso
+Plattner, SAP is never content to rest on past success. We
+continue to pursue an aggressive innovation agenda and remain
+confident in our long-term ability to continue delivering
+profitable growth.
+A Statement About Our Challenges
+and Opportunities
+When we introduced a new operating principle in 2014 - Run
+Simple - many observers challenged us. SAP software, they
+said, is not particularly simple. This is true. SAP software is the
+most sophisticated software in the information technology
+industry. It runs the largest enterprises in business, healthcare,
+public services agencies and beyond. 76% of the world's
+financial transactions touch an SAP system and nearly one
+trillion U.S. dollars in commerce is transacted across our cloud
+business networks. This is truly innovation at scale on a global
+basis.
+To Our Stakeholders | SAP Executive Board
+President, Global Customer Operations
+Robert Enslin
+10
+10
+Bernd Leukert
+Products & Innovation
+Chief Financial Officer
+Chief Executive Officer
+Luka Mucic
+Bill McDermott
+SAP Executive Board
+9
+Letter from the CEO
+To Our Stakeholders | Letter from the CEO
+Very truly yours,
+If our business results continue on the positive trajectory of the
+past seven years, you will know that we have kept these
+promises. Equally critical, if our social results such as employee
+engagement, diversity and sustainability continue, you will know
+that we stayed true to our vision to help the world run better and
+improve people's lives. We remain ever grateful for your
+confidence, your trust, and your support.
+To the stakeholders of SAP, we respectfully request that you
+hold us accountable for our ability to remain a customer-driven
+growth company. Measure us on the success of our SAP Cloud
+Platform, our SAP S/4HANA digital ERP, our cloud business
+networks, and applications. Measure us on the high quality of
+our user experience and our commitment to design thinking and
+innovation. Measure us on modern services and support,
+hallmarks of our hard-earned reputation for customer loyalty.
+Measure us on our advocacy for human rights, environmental
+sustainability, and corporate social responsibility.
+To the customers of SAP, we enthusiastically redouble our
+commitment to your success. We believe that addressing your
+complexity requires heightened empathy, intellectual curiosity
+and above all humility. Please measure us on our ability to
+understand your business strategy and challenges. Measure us
+on the clarity with which we guide your digital transformation
+and your innovation road map. Measure us on our ability to
+make you early adopters of machine learning, the Internet of
+Things, blockchain and other breakthrough innovations.
+For citizens, who now more than ever want transparency and
+highly responsive public services.
+For employees, who want to understand the connection of
+their work to the results of their company, and;
+For consumers, who expect businesses to know them, to
+understand their preferences, and to personalize their
+experience;
+deliver technology that eliminates the wrath of complexity from
+the experiences of end users:
+Taken together, this is an intense maze of circumstances. The
+challenge to SAP is therefore unmistakable. We must design and
+Businesses in every industry are confronting digital
+transformation. 55% of the companies listed in Fortune
+magazine's 500 list actually lost money as they faced
+disruptive competition. On every topic, from customer
+engagement to finance and supply chain, businesses are
+immersed in a period of complex change.
+Technology is evolving faster than ever, challenging
+businesses to adopt early or risk inevitable decline.
+People are nervous about the implications of a new digital
+economy. As a result of this anxiety, the public debate has
+become more emotionally charged and intense than ever
+before.
+Consider the following about the state of the world:
+So why did we make a bold move for "simple"? We did it
+because reducing complexity is the defining priority of this
+young century, while handling complexity is SAP's 45-year core
+competency.
+Bill McDermott
+CEO
+SAP SE
+Research and development (IFRS)
+To Our Stakeholders
+-2
+78
+Business Health Culture Index (in %)
+4
+82
+85
+Employee Engagement Index (in %)
+4
+23.6
+24.5
+Women in management¹) (total, in % of total number of employees)
+5
+31
+32
+Women working at SAP (in %)
+-7
+126
+117
+Personnel expenses per employee - excluding share-based payments (in € thousands)
+9
+76,986
+84,183
+Number of employees¹), 3)
+Employees and personnel expenses
+Market capitalization¹) (in € billions)
+13
+4
+Leadership Trust Index (LTI, in %)
+Employee retention (in %)
+57
+249
+243
+-2
+965
+950
+-16
+455
+380
+-14
+22.4
+19.2
+3) Full-time equivalents.
+Key Facts
+6
+1) Numbers based on at year-end.
+Data center energy consumed (in GWh)
+Total energy consumption (in GWh)
+Net Greenhouse gas emissions (in kilotons)
+Environment
+Customer Net Promoter Score (in %)
+Customer
+2
+91.8
+93.7
+10
+52
+2) Numbers are based on the proposed dividend and on level of treasury stock at year-end.
+7
+75
+-3,044
+Public Policy.
+Waste and Water.
+Sustainable Procurement......
+Human Rights and Labor Standards
+Sustainability Management and Policies
+Business Conduct.
+Stakeholder Engagement.
+.224
+Materiality.
+215
+Connectivity of Financial and Non-Financial Indicators ¹).
+214
+Social Performance
+Additional Information on Economic, Environmental and
+213
+Management's Annual Report on Internal Control over Financial Reporting
+in the Consolidated Financial Statements........
+146
+Notes..
+140
+Consolidated Financial Statements IFRS.
+139
+Consolidated Financial Statements IFRS and Notes
+138
+131
+106
+Recognition...
+103
+227
+.232
+261
+260
+Publication Details
+Financial and Sustainability Publications.
+Financial Calendar and Addresses.
+Glossary.
+Five-Year Summary
+Additional Information
+.257
+.256
+Independent Assurance Report.
+Management's Acknowledgement of the SAP Integrated Report 2016.
+251
+.246
+.244
+.243
+GRI Index and UN Global Compact Communication on Progress.
+Non-Financial Notes: Environmental Performance.
+Non-Financial Notes: Social Performance.
+Memberships.
+.242
+241
+.239
+.237
+.235
+.229
+.84
+.81
+.74
+80262222
+16
+ས
+7
+45
+Responsibility Statement
+Compensation Report..
+Report by the Supervisory Board
+Corporate Governance Report...
+Investor Relations
+SAP Executive Board
+Letter from the CEO.
+To Our Stakeholders
+Key Facts
+About This Report.
+Contents
+Environment
+Economy
+III
+Society
+B
+SAP
+SAP Integrated Report 2016
+Impact
+Through
+Innovation
+-2,845
+10
+.12
+19
+25
+.67
+Events After the Reporting Period......
+Expected Developments and Opportunities.
+Risk Management and Risks
+Corporate Governance Fundamentals.
+Financial Performance: Review and Analysis.
+Energy and Emissions.....
+Employees and Social Investments.
+Performance Management System..
+65
+.63
+55
+.265
+.51
+49
+Customers.
+Security, Privacy, and Data Protection...
+Products, Research & Development, and Services.
+Strategy and Business Model..
+48
+Overview of the SAP Group.
+General Information About This Management Report.
+Combined Management Report
+Independent Auditor's Report..
+43
+.42
+50
+.276
+56
+.278
+Operating expenses
+3
+60
+61
+Share of predictable revenue (non-IFRS, in %)
+3
+60
+61
+Share of predictable revenue (IFRS, in %)
+19
+1,616
+1,925
+SAP Business Network Segment revenue
+5
+18,963
+19,920
+Applications, Technology & Services Segment revenue
+6
+20,805
+22,067
+Total revenue (non-IFRS)
+6
+22,062 20,793
+Total revenue (IFRS)
+7
+Cost of cloud subscriptions and support (IFRS)
+-1,313
+-1,022
+29
+8
+277
+-5,562
+-5,985
+5
+8
+-2,797
+-3,010
+-6,583 -6,245
+5
+-3,313
+-3,495
+-3
+17,226
+-2,008
+Total cost of revenue (non-IFRS)
+Total cost of revenue (IFRS)
+Cost of cloud and software (non-IFRS)
+Cost of cloud and software (IFRS)
+Cost of software licenses and support (non-IFRS)
+-5
+-2,291
+-2,182
+Cost of software licenses and support (IFRS)
+35
+-1,066
+Cost of cloud subscriptions and support (non-IFRS)
+-1,944
+18,428
+-789
+7
+2015
+2016
+€ millions, unless otherwise stated
+Key Facts
+About This Report
+4
+This report was designed by SAP and created with
+SAP S/4HANA software and the SAP BusinessObjects
+Disclosure Management application.
+Concept and Realization
+For more information about our materiality assessment and
+related stakeholder engagement, see the Materiality section and
+Stakeholder Engagement section.
+KPMG AG Wirtschaftsprüfungsgesellschaft has audited our
+Consolidated Financial Statements and our Combined
+Management Report (see the Independent Auditor's Report).
+Additionally, KPMG has provided assurance on selected non-
+financial data and information in accordance with the
+International Standard on Assurance Engagements (ISAE) 3000
+and 3410 ("Assurance Engagements on Greenhouse Gas
+Statements"), two pertinent standards for the assurance of
+sustainability reporting. Where our SAP Integrated Report
+makes reference to SAP's public Web site, that Web site
+information is unaudited. Both the Independent Auditor's Report
+and the Independent Assurance Report for non-financial
+information are available in the Independent Auditor's Report
+section and the Independent Assurance Report section.
+Independent Audit and Assurance
+The reporting period is fiscal year 2016. The report
+encompasses SAP SE and all subsidiaries of the SAP Group. To
+make this report as current as possible, we have included
+relevant information available up to the auditor's opinion and the
+responsibility statement dated February 22, 2017. The report is
+available in English and German.
+A in %
+Data
+are still developing methodologies to reliably quantify our
+impact through our solutions. In addition, the non-financial
+information is prepared by applying the principles of
+inclusiveness, materiality, and responsiveness.
+The social and environmental data and information included in
+the SAP Integrated Report is prepared in accordance with the
+core option of the G4 Sustainability Reporting Guidelines of the
+Global Reporting Initiative (GRI). We apply the GRI principles for
+defining report content (sustainability context, stakeholder
+inclusiveness, materiality, and completeness). We consider the
+principle of sustainability context in a number of ways, such as
+by looking at global issues or trends including climate change
+and demographic shifts. For example, we assess our
+greenhouse gas emissions in the context of the emissions of the
+entire information and communications technology landscape,
+with particular focus on the abatement potential of the industry.
+When it comes to completeness, we recognize that while we
+comply with this principle in reporting on our own operations, we
+Our Consolidated Financial Statements are prepared in
+accordance with IFRS. Internal control over financial reporting
+ensures the reliability of the information presented in the
+Consolidated Financial Statements. Our executive management
+has confirmed the effectiveness of our internal controls over
+financial reporting.
+Our Combined Management Report is prepared in accordance
+with sections 315 and 315a of the German Commercial Code and
+German Accounting Standards No. 17 and 20. The Combined
+Management Report is also a management commentary
+complying with the International Financial Reporting Standards
+(IFRS) Practice Statement Management Commentary.
+Basis of Presentation
+The SAP Integrated Report is aligned with the content elements
+suggested in the International Integrated Reporting Framework
+of the International Integrated Reporting Council (IIRC).
+The financial reporting presented in the SAP Integrated Report
+includes our Consolidated Financial Statements, our Combined
+Management Report, and certain financial measures derived
+from our management reporting. The non-financial information
+relates to topics derived from our materiality assessment
+including business conduct, climate and energy, human and
+digital rights, human capital, impact on society, and innovation.
+Since 2012, we have reported on our full-year financial, social,
+and environmental performance in one integrated report ("SAP
+Integrated Report") available at www.sapintegratedreport.com.
+The SAP Integrated Report 2016 contains a comprehensive and
+integrated presentation of our performance in 2016 based on
+both financial and non-financial measures and is available
+online.
+Content
+Cloud and software (non-IFRS)
+About This Report
+3
+Greenhouse gas data is prepared based on the Greenhouse Gas
+Protocol.
+Revenues
+All financial and non-financial data and information for the
+reporting period is reported utilizing SAP software solutions and
+sourced from the responsible business units.
+2,993
+Cloud and software (IFRS)
+Cloud subscriptions and support (IFRS)
+5
+10,094
+10,572
+Software support (non-IFRS)
+5
+10,093
+18,424
+Software support (IFRS)
+17,214
+1
+4,836
+10,571
+Cloud subscriptions and support (non-IFRS)
+4,862
+31
+2,995
+2,296
+30
+2,286
+4,860
+4,835
+1
+Software licenses (non-IFRS)
+Software licenses (IFRS)
+74
+19
+Assets
+Percent
+Long term
+Short term
+2016
+Investment in Goodwill, Intangible Assets or
+Property, Plant, and Equipment
+24
+2015
+956%
+76
+Total current assets increased by 19% in 2016 from €9,739
+million to €11,564 million. This was mainly due to an increase in
+trade and other receivables to €5,924 million (2015: €5,274
+million) on the one hand, which stemmed from our strong
+business in the last quarter of 2016. On the other hand it was
+due to investments in financial assets (2016: €1,124 million;
+2015: €351 million).
+(incl. Capitalizations Due to Acquisitions)
+€ | change since previous year
+26
+25
+2015
+222
+Assets (IFRS)
+Analysis of Consolidated Statements of
+Current liabilities increased by 23% to €9,674 million in 2016 as
+compared to the prior year (€7,867 million) which was mainly
+due to reclassifications from non-current to current financial
+liabilities to reflect the respective maturity profile.
+97
+Financial Position
+2016
+Total assets increased by 7% year-over-year to €44,277 million.
+Liabilities
+Percent
+Long term
+Short term
+18
+■Shareholder's equity
+60
+56
+22
+Total non-current liabilities decreased by €2,023 million in 2016
+to €8,205 million compared to the previous year figure of
+€10,228 million, which was (beside of the aforementioned
+reclassification on financial liabilities) mainly due to a repayment
+of our outstanding bank loan.
+2014
+Thus, the equity ratio (that is, the ratio of shareholders' equity to
+total assets) improved to 60% (prior year: 56%).
+-8pp
+1,145
+676
+2012
+2013
+2015
+-1pp
+2016
+2013
+2014
+2015
+Combined Management Report | Financial Performance: Review and Analysis
+Total non-current assets increased by 3% in 2016 to €32,713
+million compared to the previous year's figure of €31,651 million.
+This change was mainly due to foreign exchange related
+revaluations.
+2016
+2012
+4pp
+5pp
+5pp
+Equity Ratio
+Percent change since previous year
+6,939
+74%
+1,813
+8,636
+377%
+59
+56
+56
+54
+51
+60
+69%
+-92%
+For more information about financing activities in 2016, see the
+Finances (IFRS) section.
+The dividend payment of €1,378 million made in 2016 exceeded
+the amount of €1,316 million from the prior year resulting from
+the increased dividend paid per share from €1.10 to €1.15.
+-1,435
+Cash outflows from investment activities increased to
+€1,799 million in 2016 (2015: €334 million). The increase
+resulted from lower proceeds from sale of equity or debt
+instruments of other entities of €793 million in 2016 (2015:
+€1,880 million). Cash outflows from purchase of intangible
+assets and property, plant, and equipment increased by
+€365 million to €1,001 million in 2016. For more information
+about current and planned capital expenditures, see the Assets
+section and the Investment Goals section.
+3,238
+2,992
+246
+Non-current financial debt
+-6,390 -8,607
+2,217
+Net liquidity 1
+Net liquidity 2
+-5,615
+2,462
+3,559
+400
+4,628
+Group Liquidity Development
+-3,153
+€ millions
+-868
+Current financial debt
+Δ
+Principal Capital Expenditures and
+Divestitures Currently in Progress
+Cash and cash equivalents
+3,702
+3,411
+291
+-567
+Current investments
+148
+823
+Group liquidity
+4,673
+3,559
+1,114
+971
+-1,001
+-106
+-1,378
+3,638
+A in %
+27
+operating activities
+Net cash flows from investing
+-1,799
+-334
+4,628
+>100
+-2,705
+-3,356
+-19
+Net cash flows from
+financing activities
+In 2016 cash inflows from operating activities increased by
+€990 million to €4,628 million (2015: €3,638 million). This
+result is primarily due to our revenue increase and higher
+profitability as well as €161 million lower payments to employees
+related to restructuring (2015: €476 million).
+In 2016, days' sales outstanding (DSO) for receivables, defined
+as the average number of days from the raised invoice to cash
+receipt from the customer, increased three days to 74 days
+(2015: 71 days).
+activities
+Net cash flows from
+2015
+2016
+4,673
+-1,800
+-371
+Group Liquidity Operating
+12/31/2015
+Cash Flow
+Proceeds from Capital Acquisitions Dividends
+Borrowings Expenditure
+Paid
+Repayments of Other
+Borrowings
+Group Liquidity
+12/31/2016
+96
+Combined Management Report | Financial Performance: Review and Analysis
+Analysis of Consolidated Statements of
+Cash Flow
+Analysis of Consolidated Statements of Cash Flow
+€ millions
+Net cash outflows from financing activities were €2,705 million
+in 2016, compared to net cash outflows of €3,356 million in
+2015. The 2016 cash outflows resulted from repayments of
+€1,250 million bank loan that we had taken to finance the
+Concur acquisition. The repayment was partly refinanced
+through the issuance of a €400 million Eurobond. We also
+repaid a US$600 million U.S. private placements. Cash outflows
+in 2015 arose mainly from repayments of €1,270 million bank
+loan that we assumed in connection with our acquisition of
+Concur, €550 million Eurobonds and US$300 million U.S.
+private placements. We refinanced another portion of the bank
+loan through the issuance of a three-tranche Eurobond of
+€1,750 million in total.
+In 2016, we continued with various construction projects and
+started new construction activities in several locations. The
+expansion of our data centers is an important aspect of our
+investments planned for 2017. We aim to extend our office
+space to cover future growth. We plan to cover all of these
+projects in full from operating cash flow. Our most important
+projects are listed below:
+0
+Combined Management Report | Financial Performance: Review and Analysis
+-1,838
+-1,763
+0
+-1,763
+Depreciation and amortization
+-263
+Personnel expenses
+-263
+-263
+Other operating expenses
+-2,143
+-2,723
+1,232
+-3,955
+0
+Operating profit
+-4,031
+-5,263
+2015 adjusted
+Reconciliation
+2015
+12,578
+10,876
+10
+-1,232
+10,866
+1,218
+1,709
+-10
+1,719
+Cost of services and materials
+-7,337
+Other operating income
+2,215
+2,573
+0
+2,678
+O
+2,678
+-15
+2,595
+-14
+0
+2,610
+-14
+0
+2,664
+The total revenue of SAP SE in 2016 was €12,578 million
+(2015: €10,876 million), an increase of 16%. Product revenue
+increased 26% to €10,157 million (2015: €8,051 million). As in
+previous years, product revenue was primarily generated from
+license fees paid by subsidiaries of SAP SE.
+The disproportionate rise of SAP SE product revenue compared
+to SAP Group's increase of cloud and software revenues, is
+mainly due to license fees paid for distribution and utilization
+rights of IP held by affiliated companies. In December 2015, SAP
+SE concluded license agreements granting SAP SE as of January
+2016 world-wide distribution and utilization rights of those IP.
+This mainly concerns the IP rights of our acquisitions from the
+past years: Ariba, Concur, Fieldglass, SuccessFactors, and
+Sybase.
+2015
+2,664
+-824
+0
+-824
+2,573
+Finance income
+1,155
+929
+929
+Income before taxes
+3,370
+3,502
+0
+3,502
+Income taxes
+Income after taxes
+Other taxes
+Net income
+-760
+2016
+98
+Total revenue
+SAP SE Income Statement - German Commercial Code (Short Version)
+65
+9
+March 2018
+Bangalore
+New office building for approx.
+60
+New data center
+23
+2,500 employees
+Israel
+Ra'anana
+New office building for approx.
+63
+48
+July 2017
+April 2017
+Walldorf
+October 2018
+Construction Projects
+€ millions
+Country
+Location of Facility
+Short Description
+Estimated
+Total Cost
+Germany
+India
+Cost incurred by
+December 31, 2016
+Completion Date
+Germany
+Walldorf
+New office building for approx.
+700 employees
+71
+8
+Estimated
+800 employees
+United States
+New York City
+SAP ranked as the 22nd most valued brand in the world (2015:
+26th). We went from number 26 to 22 on the list in just one year.
+Against other German brands, the SAP brand ranks third behind
+Mercedes-Benz and BMW, and ninth globally against other IT
+brands. The SAP brand grew faster than major competitors.
+Interbrand determined our brand value to be US$ 21.3 billion, an
+increase of 13% compared to the previous year (2015: US$18.8
+billion).
+SAP SE
+SAP SE is headquartered in Walldorf, Germany, and is the
+parent company of the SAP Group, which comprises 246
+companies. SAP SE is the Group holding company and employs
+most of the Group's Germany-based development and service
+and support personnel.
+Combined Management Report | Financial Performance: Review and Analysis
+99
+99
+According to the Interbrand "Best Global Brands" annual survey, Report on the Economic Position of
+As the owner of the intellectual property in most SAP software,
+SAP SE derives its revenue mainly from software license fees
+paid by its subsidiaries for the right to market SAP solutions and
+bears the group-wide research and development expenses for
+the most part.
+The first time adoption of changed reporting standards
+according to BilRUG led to disclosure changes in our income
+statement. The definition of revenues has been expanded such
+that the recognition of income under revenues no longer
+requires that the income results from sales of the products and
+goods or from the provision of services that are typical of the
+company's line of business. So income formerly shown as other
+operating income is now shown as revenue.
+Intercompany royalty reimbursement claims from subsidiaries
+from the years 2012 to 2015 in the amount of €153 million
+reduced in the current year both, receivables from affiliated
+companies and revenue, but relate to other fiscal periods.
+Resulting taxes of €37 million reduced tax provisions and tax
+expenses.
+In order to improve the presentation of the income situation,
+expenses for licenses and commissions are no longer shown as
+other operating expenses. Due to the predominantly revenue-
+generating nature of these expenses a separate disclosure
+under cost of services and materials is applied.
+Income
+The income statement uses the nature of expense method and
+presents amounts in millions of euros.
+The following income statement shows the reconciliation of
+prior-year figures shown in the financial statements 2015 to the
+adjusted previous-year figures, taking into account the
+disclosure changes described above. The comments to income
+refers to the changes in relation to the adjusted previous-year
+figures.
+The SAP SE annual financial statements are prepared in
+accordance with the reporting standards in the German
+Commercial Code in the amended version of the Accounting
+Directive Implementation Act BilRUG and the German Stock
+Corporation Act. The full SAP SE annual financial report and
+unqualified audit report are submitted to the operator of the
+Elektronischer Bundesanzeiger (Online German Federal Gazette)
+for publication and inclusion in the Unternehmensregister
+(German Business Register). It is available from SAP SE on
+request.
+Employee-related activities increased the value of our employee
+base and our own software. For more information, see the
+Employees and Social Investment section, and the Products,
+Research & Development, and Services section.
+Our customer capital continued to grow in 2016. At the end of
+2016, we had more than 345,000 customers (2015: 300,000) in
+various market segments. The U.S. magazine Forbes revealed in
+its World's Most Valuable Brands report that 98% of the 100
+most valued brands, 87% of the Forbes Global 2000 companies,
+and 100% of the Dow Jones top-scoring sustainability
+companies are SAP customers. To help us improve insight into
+our customers' view of SAP, in 2012, we began measuring our
+Customer Net Promoter Score (NPS), a metric that gives a more
+complete picture of customer loyalty as it answers the question
+of how likely our customers would be to recommend SAP. For
+more information about our new customers and the Customer
+NPS, see the Customers section.
+The results of our current and past investment in research and
+development are also a significant element in our competitive
+intangibles.
+Execution of leasehold
+52
+33
+March 2017
+improvements and
+consolidation of offices for
+approx. 450 employees
+United States
+Colorado Springs, CO New data center
+122
+21
+January 2018
+For more information about planned capital expenditures, see the Investment Goals section. There were no material divestitures
+within the reporting period.
+Competitive Intangibles
+The resources that are the basis for our current as well as future
+success do not appear on the Consolidated Financial
+Statements. This is apparent from a comparison of the market
+capitalization of SAP SE (based on all outstanding shares),
+which was €101.7 billion at the end of 2016 (2015: €90.1 billion),
+with the book value of our equity on the Consolidated Financial
+Statements, which was €26.4 billion (2015: €23.3 billion). This
+means that the market capitalization of our equity is nearly four
+times higher than the book value. The difference is mainly due to
+certain internally generated intangible resources that the
+applicable accounting standards do not allow to be recorded (at
+all or at fair value) in the Consolidated Financial Statements.
+They include customer capital (our customer base and
+customer relations); employees and their knowledge and skills;
+our ecosystem of partners; software we developed ourselves;
+our ability to innovate; the brands we have built up, in particular,
+the SAP brand itself; and our organization.
+As of December 31, 2016, SAP was the most valuable company
+in Germany in terms of market capitalization based on all
+outstanding shares.
+€ millions
+2016
+Our sales and marketing expense rose 8% from €5,782 million
+in 2015 to €6,265 million in 2016. The increase was mainly the
+result of greater personnel costs as we expanded our global
+sales force, and of increased expenditure for bonus payments
+prompted by the strong revenue growth. The ratio of sales and
+marketing expense to total revenue, expressed as a percentage,
+For information about the impact of cash, cash equivalents,
+current investments, and our financial liabilities on our income
+statements, see the analysis of our financial income, net, in the
+Operating Results (IFRS) section.
+-Opp
+-Opp
+8,031
+40
+7,723
+4
+4
+74
+41
+-1pp
+In 2016, the revenue increase in the Applications, Technology &
+Services segment was driven mainly by strong growth in
+software support revenue, which increased 5% (6% at constant
+currencies) to €10,464 million. As a consequence of continuous
+strong demand for our human capital management, customer
+engagement and commerce, and SAP HANA Enterprise Cloud
+offerings, cloud subscriptions and support revenue in the
+Applications, Technology & Services segment grew 45% (47%
+at constant currencies) to €1,353 million.
+The increase of cloud subscriptions and support revenue and
+software support revenue resulted in an increase in the revenue
+share of more predictable revenue streams in this segment of
+2pp at constant currencies from 58% in 2015 to 59% in 2016.
+Software license revenue attributable to this segment increased
+1% at constant currencies to €4,814 million (2015: €4,770
+million).
+The segment's cost of revenue during the same time period
+increased 7% (8% at constant currencies) to €5,279 million
+(2015: €4,954 million). This increase in expenses was primarily
+the result of greater investment in expanding our cloud
+infrastructure and in providing and operating our cloud
+applications, as well as additional personnel expenses to
+support the growth of the cloud business.
+92
+-Opp
+22
+74
+5
+Segment margin (in %)
+2016
+2015
+A in %
+A in %
+(Constant
+Currency)
+1,353
+51
+6
+932
+47
+52
+-2pp
+-1pp
+19,920
+18,963
+45
+Combined Management Report | Financial Performance: Review and Analysis
+SAP Business Network Segment
+€ millions, unless otherwise stated
+1,616
+19
+19
+Gross margin (in %)
+67
+68
+1,925
+-1pp
+Segment profit
+Segment margin (in %)
+338
+317
+7
+0
+-1pp
+Segment revenue
+1pp
+1pp
+(Non-IFRS)
+2016
+2015
+A in %
+A in %
+(Constant
+Currency)
+Cloud subscriptions and support revenue
+1,595
+1,337
+19
+19
+Cloud subscriptions and support margin (in %)
+76
+75
+Segment profit
+18
+Gross margin (in %)
+Cloud subscriptions and support margin (in %)
+Operating Margin
+Percent change since previous year
+26.6
+24.9
+24.7
+23.3
+2016
+20.5
+1.7pp
+-2.0pp
+-4.2pp
+-9.4pp
+2012
+2013
+2.8pp
+2014
+2015
+2013
+payments to employees and share-based compensation higher.
+Our employee headcount (measured in full-time equivalents, or
+FTES) increased by 7,197 year-over-year.
+Operating Profit
+€ millions | change since previous year
+5,135
+4,479
+4,331
+2014
+4,252
+4,041
+11%
+-17%
+-3%
+-2%
+2012
+21%
+2015
+2016
+The increased operating expenses largely represent
+investments in the future and were offset by the increase in
+Sales and Marketing Expense
+Sales and marketing expense consists mainly of personnel
+costs, direct sales costs, and the cost of marketing our products
+and services.
+100
+increased to 28.4% year-over-year (2015: 27.8%), an increase
+of 0.6pp.
+General and Administration Expense
+Our general and administration expense consists mainly of
+personnel costs to support our finance and administration
+functions.
+Due to growing personnel costs driven by a 12% increase in our
+R&D headcount by the end of the year, our R&D expense
+increased by 7% to €3,044 million in 2016 from €2,845 million
+in 2015. R&D expense as a percentage of total revenue thus
+increased to 13.8% in 2016 (2015: 13.7%). For more information,
+see the Products, Research & Development, and Services
+section.
+General and administration expense decreased 4% from €1,048
+million in 2015 to €1,005 million in 2016. This decline in costs is
+primarily the result of careful cost management. Consequently,
+the ratio of general and administration expense to total revenue
+decreased in 2016 to 4.6% (2015: 5.0%).
+In 2016, SAP had two reportable segments: the Applications,
+Technology & Services segment; and the SAP Business Network
+segment.
+For more information about our segment reporting, see the
+Notes to the Consolidated Financial Statements, Note (28), and
+the Performance Management System section.
+Applications, Technology & Services Segment
+€ millions, unless otherwise stated
+(Non-IFRS)
+Cloud subscriptions and support revenue
+Segment Information
+R&D activities, and amortization of the computer hardware and
+software we use for our R&D activities.
+91
+Combined Management Report | Financial Performance: Review and Analysis
+revenue.
+As an overall result of these effects on operating profit, our
+operating margin widened 2.8pp to 23.3% in 2016 (2015:
+20.5%).
+Changes to the individual elements in our cost of revenue were
+as follows:
+Cost of Cloud and Software
+Cost of cloud and software consists primarily of customer
+support costs, cost of developing custom solutions that address
+customers' specific business requirements, costs for deploying
+and operating cloud solutions, amortization expenses relating to
+intangibles, and license fees and commissions paid to third
+parties for databases and the other complementary third-party
+products sublicensed by us to our customers.
+In 2016, the cost of cloud and software increased 5% to €3,495
+million (2015: €3,313 million).
+Main impact on costs was an additional €291 million year-over-
+year to extend our cloud business in response to the sustained
+strength of customer demand, with an associated increase in
+the expense of delivering and operating cloud applications.
+These investments contributed to revenue growth. Our margin
+on cloud subscriptions and support increased 0.8pp to 56.1%
+(2015: 55.3%). This improvement in margin was achieved
+primarily through strong growth in revenue. The investments in
+our cloud business were offset by the significant increase in
+cloud subscriptions and support revenue.
+While software licenses and support revenue increased, savings
+in customer support, in the cost of developing custom solutions,
+and in license fees, enabled us to reduce our software and
+support costs by a total of €109 million year over year.
+The gross margin on cloud and software, defined as cloud and
+software profit as a percentage of cloud and software revenue,
+widened to 81.0% in 2016 (2015: 80.8%). This change was
+mainly driven by the improved software license and support
+margin, which increased 1.2pp to 85.9% (2015; 84.7%).
+Cost of Services
+Cost of services consists primarily of the cost of consulting,
+premium services and training personnel and the cost of
+bought-in consulting and training resources.
+As of the second quarter of 2016, we changed the way sales and
+marketing expenses related to our service activities are
+classified in our income statement. For more information see
+the Notes to the Consolidated Financial Statements section,
+Note (3b).
+Although we were able to increase our service revenue by 2%
+year over year to €3,638 million in 2016 (2015: €3,579 million),
+our service business continues to be greatly affected as we
+trend away from classic software licensing and consulting
+revenue toward more subscription revenue from cloud
+solutions. In addition, we continue to invest in our ONE Service
+organization and in our customer co-innovation projects. As a
+result, cost of services rose 5% to €3,089 million (2015: €2,932
+million). Our gross margin on services, defined as services profit
+as a percentage of services revenue, narrowed to 15.1% (2015:
+18.1%).
+Research and Development Expense
+Our research and development (R&D) expense consists
+primarily of the personnel cost of our R&D employees, costs
+incurred for independent contractors we retain to assist in our
+Segment revenue
+20
+-2pp
+-3pp
+1,095
+1,000
+1,436
+1,292
+1,250
+750
+■ Variable
+925
+لنيلينيلا
+600
+1,095
+422
+925
+1,000
+1,310
+307
+■Fixed
+Financial Debts
+We believe that our liquid assets combined with our undrawn
+credit facilities are sufficient to meet our present operating
+needs and, together with expected cash flows from operations,
+will support debt repayments and our currently planned capital
+expenditure requirements over the near term and medium term.
+It may also be necessary to enter into financing transactions
+when additional funds are required that cannot be wholly
+sourced from free cash flow (for example, to finance large
+acquisitions).
+To expand our business, we have made acquisitions of
+businesses, products, and technologies. Depending on our
+future cash position and future market conditions, we might
+issue additional debt instruments to fund acquisitions, maintain
+financial flexibility, and limit repayment risk. Therefore, we
+continuously monitor funding options available in the capital
+markets and trends in the availability of funds, as well as the
+cost of such funding. In recent years, we were able to repay
+additional debt within a short period of time due to our
+persistently strong free cash flow. For more information about
+the financial debt, see the Cash Flows and Liquidity section.
+94
+Combined Management Report | Financial Performance: Review and Analysis
+Capital Structure Management
+The primary objective of our capital structure management is to
+maintain a strong financial profile for investor, creditor, and
+customer confidence, and to support the growth of our
+business. We seek to maintain a capital structure that will allow
+us to cover our funding requirements through the capital
+markets at reasonable conditions, and in so doing, ensure a high
+level of independence, confidence, and financial flexibility.
+Maturity Profile of Financial Debts
+€ millions
+For more information about the capital structure and its
+analysis, see the Analysis of Consolidated Statement of
+Financial Position section and Notes to the Consolidated
+Financial Statements section, Note (21).
+Our general intention is to remain in a position to return liquidity
+to our shareholders by distributing annual dividends totaling
+more than 35% of our profit after tax as well as repurchasing
+treasury shares in future. In absence of large acquisitions, our
+strong operating cash flow will generate excess cash in the next
+6-12 months. Based on the actual acquisition volume and
+liquidity development we would consider a potential share
+buyback in the second half of 2017.
+Credit Facilities
+Other sources of capital are available to us through various
+credit facilities, if required.
+We are party to a committed €2.0 billion revolving credit facility
+contract which matures in November 2020. The credit facility
+may be used for general corporate purposes. A possible future
+utilization is not subject to any financial covenants. So far, we
+have not used and do not currently foresee any need to use, this
+credit facility.
+As at December 31, 2016, SAP SE had additional available credit
+facilities totaling €474 million. Several of our foreign
+subsidiaries have credit facilities available that allow them to
+borrow funds at prevailing interest rates. As at December 31,
+2016, approximately €25 million was available through such
+arrangements. There were immaterial borrowings outstanding
+under these credit facilities from our foreign subsidiaries as at
+December 31, 2016.
+The long-term credit rating for SAP SE is "A2" by Moody's with
+stable outlook and "A" by Standard & Poor's with positive
+outlook. Standard & Poor's raised the outlook from stable to
+positive on August 12, 2016.
+750
+211
+600
+96
+Bonds
+Financial Debt
+€ millions
+Private Placement
+1,660
+95
+Bank Loan 16
+For more information about our financial debt, see the Notes to
+the Consolidated Financial Statements section, Note (17).
+Cash Flows and Liquidity
+Group Liquidity
+Group liquidity consists of cash and cash equivalents (for
+example, cash at banks, money market funds, and time deposits
+with original maturity of three months or less) and current
+investments (for example, investments with original maturities
+of greater than three months and remaining maturities of less
+than one year included in other financial assets) as reported in
+our Consolidated Financial Statements. Net liquidity is Group
+liquidity less total financial debt as defined above.
+Group liquidity on December 31, 2016, primarily comprised
+amounts in euros and U.S. dollars.
+The increase in Group liquidity compared to 2015 was mainly
+due to cash inflows from our operations. They were offset by
+cash outflows for dividend payments and repayments of
+borrowings.
+6,150
+Combined Management Report | Financial Performance: Review and Analysis
+In 2017, the Company intends to repay two Eurobond tranches
+of €1,000 million in total as well as two U.S. private placement
+tranches of US$442.5 million in total when they mature.
+In August 2016 we issued a €400 million Eurobond with a
+maturity of two years and variable interest rates (3-month
+EURIBOR plus 0.30%).
+95
+126
+43
+211
+212
+2017
+2018
+2019
+2020
+2022
+2023
+2024
+2025
+2027
+Financial debt on December 31, 2016 included amounts in euros
+(€6,150 million) and U.S. dollars (€1,660 million).
+Approximately 58% of financial debt was held at variable
+interest rates, partially swapped from fixed into variable using
+interest rate swaps.
+Our primary source of cash, cash equivalents, and current
+investments is funds generated from our business operations.
+Over the past several years, our principal use of cash has been
+to support operations and our capital expenditure requirements
+resulting from our growth, to quickly repay financial debt, to
+acquire businesses, to pay dividends on our shares, and to buy
+back SAP shares on the open market. On December 31, 2016,
+our cash, cash equivalents, and current investments were
+primarily held in euros and U.S. dollars. We generally invest only
+in the financial assets of issuers or funds with a minimum credit
+rating of BBB, and pursue a policy of cautious investment
+characterized by wide portfolio diversification with a variety of
+counterparties, predominantly short-term investments, and
+standard investment instruments. Investments in financial
+assets of issuers with a credit rating lower than BBB were not
+material in 2016.
+Liquidity Management
+We manage credit, liquidity, interest rate, equity price, and
+foreign exchange rate risks on a Group-wide basis. We use
+selected derivatives exclusively for this purpose and not for
+speculation, which is defined as entering into a derivative
+instrument for which we do not have corresponding underlying
+transactions. The rules for the use of derivatives and other rules
+and processes concerning the management of financial risks are
+documented in our treasury guideline, which applies globally to
+all companies in the Group. For more information about the
+management of each financial risk and about our risk exposure,
+see the Notes to the Consolidated Financial Statements section,
+Notes (24) to (26).
+required. For more information about these facilities, see the
+Credit Facilities section.
+-7%
+2012
+2013
+2014
+2015
+2016
+-1%
+Basic earnings per share increased to €3.04 (2015: €2.56). The
+number of shares outstanding increased to 1,198 million in 2016
+(2015: 1,197 million).
+€ | change since previous year
+Our effective tax rate increased to 25.3% in 2016 (2015: 23.4%).
+The increase in the effective tax rate mainly resulted from
+changes in taxes for prior years and the increase in the profit
+before taxes. For more information on income taxes, see the
+Notes to the Consolidated Financial Statements section, Note
+(10).
+3.04
+2.79
+2.75
+2.56
+Earnings per Share
+19%
+19%
+-18%
+The segment's cost of revenue increased 21% in 2016 (22% at
+constant currencies) to €631 million (2015: €520 million). The
+SAP Business Network segment achieved a segment gross
+profit of €1,295 million in 2016 (2015: €1,095 million), an
+increase of 18% (17% at constant currencies).
+Financial Income, Net
+Financial income, net, changed to -€38 million (2015: -€5
+million). Our finance income was €230 million (2015: €241
+million) and our finance costs were €268 million (2015: €246
+million).
+Finance income mainly consists of gains from disposal of equity
+securities totaling €164 million (2015: €176 million), interest
+income from loans and receivables, and other financial assets
+(cash, cash equivalents, and current investments) totaling €40
+million (2015: €41 million), and income from derivatives totaling
+€29 million (2015: €30 million).
+Finance costs mainly consist of interest expense on financial
+liabilities amounting to €108 million (2015: €135 million) and
+negative effects from derivatives amounting to €114 million
+(2015: €72 million). The decrease in finance costs is mainly due
+to lower average indebtedness. For more information about
+financing instruments, see the Notes to the Consolidated
+Financial Statements section, Note (17b).
+Income Tax
+Profit After Tax and Earnings per Share
+Profit after tax increased to €3,634 million in 2016 (2015:
+€3,056 million).
+Profit after Tax
+€ millions | change since previous year
+3,634
+3,325
+3,280
+3,056
+2,803
+2.35
+€ millions
+18%
+-7%
+0.85
+-23%
+18%
+10%
+9%
+5%
+1.00
+2012
+2014
+2015
+2016
+Finances (IFRS)
+Global Financial Management
+We use global centralized financial management to control liquid
+assets and monitor exposure to interest rates and currencies.
+The primary aim of our financial management is to maintain
+liquidity in the Group at a level that is adequate to meet our
+obligations. Most SAP companies have their liquidity managed
+centrally by the Group, so that liquid assets across the Group
+can be consolidated, monitored, and invested in accordance
+with Group policy. High levels of liquid assets help keep SAP
+flexible, sound, and independent. In addition, various credit
+facilities are currently available for additional liquidity, if
+2013
+1.10
+1.15
+1.25
+19%
+-19%
+2012
+2013
+2014
+2015
+2016
+Combined Management Report | Financial Performance: Review and Analysis
+93
+Dividend
+We believe our shareholders should benefit appropriately from
+the profit the Company made in 2016. In recent years, the
+payout has always been greater than 35% of profit after tax. We
+aim to continue our policy to pay a dividend totaling more than
+35% of profit after tax in the future.
+The Executive Board and the Supervisory Board will recommend
+to the Annual General Meeting of Shareholders that the total
+dividend will be increased by 9% to €1.25 per share (2015:
+€1.15). Based on this recommendation, the overall dividend
+payout ratio (which here means total distributed dividend as a
+percentage of profit) would be 41% (2015: 45%).
+If the shareholders approve this recommendation and if treasury
+shares remain at the 2016 closing level, the total amount
+distributed in dividends would be €1,498 million. The actual
+amount distributed may be different from this total because the
+number of shares held in treasury may change before the
+Annual General Meeting of Shareholders. In 2016, we distributed
+€1,378 million in dividends from our 2015 profit after tax. In 2016
+and 2015, we did not repurchase any SAP treasury shares.
+Dividend per Share
+€ | change since previous year
+-2%
+Combined Management Report | Financial Performance: Review and Analysis
+Overview
+unlikely
+allocations in the context of asset acquisitions and business
+combinations. We have also outsourced the preparation of the
+local statutory financial statements for most of our subsidiaries.
+The employees who work on SAP's financial reporting receive
+training in the respective policies and processes.
+Combined Management Report | Risk Management and Risks
+108
+We have outsourced some work, such as valuing projected
+benefit obligations and share-based payment obligations,
+quarterly tax calculations for most entities, and purchase price
+Our Corporate Financial Reporting (CFR) department codifies all
+accounting policies in our global group accounting and revenue
+recognition guidelines. These policies, the corporate closing
+schedule, and our process handbooks together define the
+closing process. Under this closing process, we prepare,
+predominately through centralized and outsourced services, the
+financial statements of all SAP legal entities for consolidation by
+our CFR department. The CFR department and other corporate
+departments assist in the efforts to comply with Group
+accounting policies and monitor the accounting work. The
+department also conducts reviews of our accounting processes
+and books.
+Our ICRMSFR also includes policies, procedures, and measures
+designed to ensure compliance of SAP's financial reports with
+applicable laws and standards. We analyze new statutes,
+standards, and other pronouncements concerning IFRS
+accounting and its impact on our financial statements and
+ICRMSFR. Failure to adhere to these new statutes, standards,
+and other pronouncements would present a substantial risk to
+the compliance of our financial reporting. Finally, the ICRMSFR
+has both preventive and detective controls, including, for
+example, automated and non-automated reconciliations,
+segregated duties with two-person responsibility, authorization
+concepts in our software systems, and corresponding
+monitoring measures.
+SAP's internal control and risk management system for financial
+reporting (ICRMSFR) is based on our Group-wide risk
+management methodology. The ICRMSFR includes
+organizational, control, and monitoring structures designed to
+ensure that data and information concerning our business are
+collected, compiled, and analyzed in accordance with applicable
+laws and properly reflected in the IFRS Consolidated Financial
+Statements.
+The purpose of our system of internal control over financial
+reporting is to provide reasonable assurance that our financial
+reporting is reliable and in compliance with applicable generally
+accepted accounting principles. Because of the inherent
+limitations of internal control over financial reporting, it might
+not prevent or bring to light all potential misstatements in our
+financial statements.
+Internal Control and Risk Management
+System for Financial Reporting
+The head of Global GRC, who reports to the Group CFO, is
+responsible for SAP's internal control and risk management
+program, and provides regular updates to the Audit Committee
+of the Supervisory Board. The overall risk profile of the Group is
+consolidated by the head of Global GRC,
+Risk managers are responsible for supporting and monitoring
+the implementation of risk management across the Group that
+is both effective and compliant with regulatory requirements
+and SAP's global risk management policy. Based on our risk
+management policy, all risks and risk-related matters must be
+reported to the Global GRC organization.
+During the merger and acquisition and post-merger integration
+phase, newly acquired companies are subject to risk
+management performed by our Corporate Development M&A
+function. Furthermore, as long as they are not integrated,
+existing risk management structures are maintained or
+enhanced within the acquired companies for purposes of
+compliance with legal requirements.
+Operational, financial, and strategic risk management is
+uniformly implemented at SAP. Independent GRC risk managers
+are assigned to each of SAP's important business units and
+business activities and to selected strategic initiatives. All GRC
+risk managers, together with assigned risk contacts in the
+business units, continuously identify and assess risks
+associated with material business operations using a uniform
+approach and monitor the implementation and effectiveness of
+the measures chosen to mitigate risks. Further financial risk
+management activities are performed by our global treasury
+function, and risk management of compliance risks is performed
+by our Legal Compliance & Integrity Office.
+Our global risk management organization (Global GRC) ensures
+the Group-wide systematic identification, assessment,
+management, and monitoring of operational, financial,
+compliance, and strategic risks as well as opportunities. In
+addition, the Global GRC function is responsible for the
+standardized internal risk reporting to risk committees on
+different levels within the Company in line with the internal GRC
+Risk Reporting Standard, including the Executive Board, the
+chairperson of the Supervisory Board and the Audit Committee
+of the Supervisory Board, along with the external risk reporting.
+Furthermore, Global GRC is responsible for the regular
+maintenance and implementation of our risk management
+policy.
+Within the scope of these license agreements, SAP SE was
+Based on an analysis of the design and operating effectiveness
+of our respective internal controls over financial reporting, a
+committee presents the results of the assessment on the
+ICRMSFR effectiveness with respect to our IFRS Consolidated
+Financial Statements as at December 31 each year to the Group
+CFO. The committee meets regularly to set the annual scope for
+the test of effectiveness, to evaluate any possible weaknesses in
+the controls, and to determine measures to address them
+adequately. During its own meetings, the Audit Committee of
+the Supervisory Board regularly scrutinizes the resulting
+assessments of the effectiveness of the internal controls over
+financial reporting with respect to the IFRS consolidated
+financial statements.
+The assessment of the effectiveness of the ICRMSFR related to
+our IFRS consolidated financial statements was that on
+December 31, 2016, the Group had an effective internal control
+system over financial reporting in place.
+Additionally, and in compliance with German commercial law
+requirements in Germany, SAP maintains an effective internal
+control system beyond financial reporting. This is supported
+through automated controls (continuous control monitoring) as
+part of our business processes.
+Risk Management and Internal Control
+Governance
+likely
+Global Economy
+Economic, Political, Social, and Regulatory Risk
+Risk Level Evolution¹)
+Probability Impact
+controlling, but are broken down by the same risk categories we
+use in our internal risk management system reporting structure.
+An overview of the risk factors presented below is outlined in the
+following table. It categorizes the risk factors according to our
+framework detailed in the Risk Management Methodology and
+Reporting section.
+Overview Risk Factors
+granted the right to further develop the existing technology, too.
+As a result, the volume of IP-related SAP SE services, which had
+previously been charged to the former IP distributers,
+decreased, leading to a decrease of other revenues by 15% to
+€1,927 million (2015: €2.280 million).
+The following sections outline risk factors that we have identified
+and track using our risk management software (SAP solutions
+for GRC) powered by SAP HANA. They are presented below at a
+more aggregated level as compared to their use in internal
+109
+Combined Management Report | Risk Management and Risks
+governance process. Risk managers record and address
+identified risks using our risk management software to help
+create transparency across all known risks that exist in the
+Group, as well as to facilitate risk management and the
+associated risk reporting. Our continuous controls monitoring
+activities are performed utilizing our GRC software as well. This
+information is available to managers through a mobile app as
+well as regularly issued reports, and is consolidated and
+aggregated for the quarterly risk report to the Executive Board.
+The solution also supports the risk-based approach of the
+ICRMSFR.
+We use our own risk management software, SAP solutions for
+GRC powered by SAP HANA, to effectively support the
+Software Solution Deployed
+implementation in the different Executive Board areas is
+monitored by each board member. We regularly provide a status
+on the risk management and the internal control system to the
+Audit Committee. Key risks are reported quarterly to the
+chairperson of the Supervisory Board and to the Audit
+Committee of the Supervisory Board. The Audit Committee of
+the Supervisory Board regularly monitors the effectiveness of
+SAP's risk management and internal control system. At the
+direction of our Audit Committee, the Corporate Audit
+department regularly audits various aspects of the risk
+management system and its effectiveness. Additional
+reassurance is obtained through the external audit of the
+effectiveness of our internal control system over financial
+reporting and the early warning system.
+Our Executive Board is responsible for ensuring the
+effectiveness of the risk management and internal control
+system. The effectiveness of both systems and their
+Risk Factors
+SAP SE operating profit decreased 14% to €2,215 million
+(2015: €2,573 million). Other operating income decreased
+€491 million to €1,218 million (2015: €1,709 million). The year-
+over-year decrease is primarily due to a decrease in gains from
+currency effects. SAP SE cost of services and materials
+increased 39% to €7,337 million (2015: €5,263 million). The
+granted IP rights led to an increase in expenses for licenses and
+commissions by €947 million to €2.179 million
+(2015: €1,232 million) and mainly IP-related research and
+development costs resulted in a rise of services received by
+€1,130 million to €5,137 million (2015: €4,007 million).
+SAP SE personnel expenses, mainly the labor cost of software
+developers, service and support employees, and administration
+staff employed by SAP SE, increased 4% to €1,838 million
+(2015: €1,763 million). Other operating expenses decreased
+21% to €2,143 million (2015: €2,723 million). This decrease is
+mainly attributable to €402 million lower losses from currency
+effects and a €247 million decrease in restructuring costs. The
+effect was partly offset by a €39 million increase in costs for
+maintenance and service.
+25,257
+26,596
+26,439
+Inventories
+2
+2
+Accounts receivable and other
+assets
+25,338
+4,637
+150
+0
+Liquid assets
+970
+360
+Short-term assets
+5,759
+3,872
+business critical
+Financial assets
+1,111
+Finance income was €1,155 million (2015: €929 million), an
+increase of €226 million compared with the previous year. The
+increase is primarily due to a €230 million higher income from
+profit transfer agreements and an increase of €5 million in net
+interest income. These were partly offset by an increase of
+€7 million in write-downs of financial assets.
+SAP SE income before taxes decreased €132 million to
+€3,370 million (2015: €3,502 million). Income taxes decreased
+8% to €760 million (2015: €824 million). After deducting taxes,
+the resultant net income is €2,595 million
+(2015: €2,664 million), a decrease of €69 million year-over-
+year.
+Assets and Financial Position
+In 2016, SAP SE total assets closed at €32,706 million
+(2015: €30,953 million).
+SAP SE Balance Sheet – German Commercial
+Code (Short Version)
+€ millions
+998
+Assets
+Fixed assets
+Marketable securities
+12/31/2016
+12/31/2015
+147
+184
+Property, plant, and equipment
+Intangible assets
+high
+International Business Activities
+unlikely
+unlikely
+Ethical Behavior
+low
+moderate
+unlikely
+Climate Change, Energy, and Emissions
+medium
+major
+business critical
+Data Protection and Privacy
+medium
+major
+unlikely
+Corporate Governance Laws and Regulations
+Organizational and Governance-Related Risks
+→>
+unlikely
+medium
+medium
+Communication and Information Risks
+low
+moderate
+We also have a process in place that analyzes those risks with
+respect to potential effects on liquidity, excessive indebtedness,
+and insolvency, which could be possible threats to the Group's
+ability to continue as a going concern.
+Management Use of Estimates
+low
+major
+remote
+7
+Liquidity
+moderate
+unlikely
+Quarterly Sales Fluctuations
+Financial Risks
+business critical medium
+remote
+Unauthorized Disclosure of Information
+low
+4,234
+major
+Attract, Develop, and Retain People
+medium
+business critical
+unlikely
+medium
+business critical
+unlikely
+Market Share and Profit
+unlikely
+Market Development for Cloud
+Market Risks
+medium
+business critical
+unlikely
+Environmental, Social, and Political Instability
+medium
+major
+Maintenance Business and Support
+unlikely
+major
+Business Strategy Risks
+low
+major
+remote
+Managing the Geographically Dispersed Workforce
+Human Capital Risks
+medium
+major
+medium
+unlikely
+business critical medium
+remote
+Cloud Business Model
+medium
+business critical
+remote
+Demand for New and Existing Solutions
+Relationships with Partners
+Prepaid expenses and deferred
+charges
+205
+173
+respectively associated business activities considering a
+relevant forecast horizon of up to one year, and up to 2020
+where applicable. The period for analyzing the risks that could
+be possible threats to the Group's ability to continue as a going
+concern is eight rolling quarters.
+Impact Level
+Insignificant
+Minor
+Moderate
+Major
+Business Critical
+Highly Likely
+Near Certainty
+Impact Definition
+Limited negative impact on
+business, financial position, profit,
+and cash flows
+Some potential negative impact
+on business, financial position,
+profit, and cash flows
+Considerable negative impact on
+business, financial position, profit,
+and cash flows
+Detrimental negative impact on
+business, financial position, profit,
+and cash flows
+In this framework, we define a remote risk as one that will occur
+only under exceptional circumstances and a near certain risk as
+one that can be expected to occur within the specified time
+horizon. The period for analyzing our risks correlates with the
+Based on the combination of the likelihood that a risk will occur
+and its impact on SAP's reputation, business, financial position,
+profit, and cash flow, we classify the risks as "high," "medium,"
+or "low."
+Probability
+Negligible negative impact on
+business, financial position, profit,
+and cash flows
+Insignificant
+80% to 99%
+Likely
+Risk Management Policy and Framework
+The risk management policy issued by our Executive Board
+governs how we handle risk in line with the Company's risk
+appetite and defines a methodology that is applied uniformly
+across all parts of the Group. The policy is regularly updated and
+stipulates who is responsible for conducting risk management
+activities and defines reporting and monitoring structures. Our
+global corporate audit function conducts regular audits to
+assess the effectiveness of our risk management system. Every
+year, SAP's external auditor assesses if the SAP SE early risk
+identification system is adequate to identify risks that might
+endanger our ability to continue as a going concern. SAP's
+enterprise risk management covers risks in the areas of
+strategy, operational business, financial reporting, and
+compliance. As of today, the risk management system analyzes
+risks and only assesses or analyzes opportunities where it is
+deemed appropriate.
+Risk Management Methodology and
+Reporting
+The following describes the key elements of the risk
+management process as part of SAP's risk management policy:
+risk planning, identification, analysis, response, monitoring, and
+reporting.
+Risk planning and risk identification for both internal and
+external risks are conducted in cooperation between risk
+managers and the business units or subsidiaries across the
+Group. We use various techniques to identify risks. For example,
+we have identified risk indicators and developed a
+comprehensive risk catalog that includes risk mitigation
+strategies for known product, solution, and project risks. Risk
+106
+Combined Management Report | Risk Management and Risks
+identification takes place at various levels of our organization to
+ensure that common risk trends are identified and end-to-end
+risk management across organizational borders is enabled. We
+apply both a qualitative and quantitative risk analysis as well as
+other risk analysis methods such as sensitivity analyses and
+simulation techniques.
+60% to 79%
+To determine which risks pose the highest threat to the viability
+of the SAP Group, we classify them as "high," "medium," or
+"low" based on the likelihood that a risk will occur within the
+assessment horizon as well as the impact the risk would have on
+SAP's business objectives if it were to occur. The scales for
+measuring these two indicators are given in the following tables.
+Description
+Occurrence
+1% to 19%
+Remote
+20% to 39%
+Unlikely
+40% to 59%
+Probability/Likelihood of
+continued to automate our internal control landscape leveraging
+continuous control monitoring and continuous auditing activities
+in selected business areas. Using the current Committee of
+Sponsoring Organizations of the Treadway Commission (COSO)
+framework of 2013, we define and implement internal controls
+along the value chain on a process and subprocess level to
+ensure that sound business objectives are set in line with the
+organization's strategic, operational, financial, and compliance
+goals. In addition, we have a governance model in place across
+risk management and the internal control system to ensure both
+systems are effective, as well as a central software solution to
+store, maintain, and report all risk-relevant information.
+Minor
+80-99%
+M
+L
+L
+L
+L
+M
+Impact
+M
+L = Low Risk
+H = High Risk
+Risk analysis is followed by risk response and risk monitoring.
+The risk exposure and the risk description, as well as the
+appropriateness of agreed responses, are validated by the
+accountable management. Our risk managers work in close
+cooperation with the business owners, ensuring that effective
+strategies are implemented to address risks. Business owners
+are responsible for continuously monitoring the risks and the
+effectiveness of mitigation strategies, with support from the
+respective risk managers. Risks might be reduced by taking
+active steps based on risk approval. To provide greater risk
+transparency and enable appropriate decision-making for
+business owners, we have established a risk delegation of
+authority (RDOA) for relevant parts of the organization as
+deemed appropriate. RDOA is a risk management decision-
+making hierarchy that helps business owners gain timely insight
+into projects and processes with the greatest risk, so they are
+better able to review the relevant information, understand the
+risk profile and associated mitigation strategies, and determine
+if their approval is warranted. Depending on the exposure,
+approval is required at different levels of the Company, up to
+and including the Executive Board.
+All identified and relevant risks are reported at the local,
+regional, and global levels in accordance with our risk
+management policy. At local, regional, and global levels, we have
+established executive risk councils that regularly discuss risks
+and countermeasures and that monitor the success of risk
+mitigation. In addition, the Executive Board is informed quarterly
+Combined Management Report | Risk Management and Risks
+107
+about individual risks based on clearly defined qualitative
+reporting criteria. Newly identified or existing significant risks
+that are above a defined threshold, a qualitative criteria or with a
+potential significant impact are also reported to the chairperson
+of the Supervisory Board and to the Audit Committee of the
+Supervisory Board. This includes any risks to the ability to
+continue as a going concern.
+M = Medium Risk
+Moderate
+L
+H
+M
+H
+Major
+H
+Business Critical
+H
+60-79%
+L
+20-39%
+1-19%
+M
+H
+H
+40-59%
+L
+L
+M
+M
+M
+110
+Our risk management system is based on three pillars, which
+include a dedicated risk management policy and a standardized
+risk management methodology as well as a global risk
+management organization. Our internal control system consists
+of the internal control and risk management system for financial
+reporting (ICRMSFR) that also covers the broader business
+environment. In 2016, we adjusted existing control designs to
+adequately address the changed risk environment and
+This system comprises numerous control mechanisms and is an
+important element of our corporate decision-making process; it
+is therefore implemented as an integral part of SAP's business
+processes across the entire Group. We have adopted an
+integrated risk management and internal control approach to
+ensure that our global risk management efforts are effective
+while also enabling us to aggregate risks and report on them
+transparently,
+Owing to investments in IT infrastructure property, plant and
+equipment rose by €113 million to €1,111 million
+(2015: €998 million). Financial assets increased €81 million
+compared with the previous year to €25,338 million
+(2015: €25,257 million), due mainly to capital contributions and
+loans to subsidiaries.
+The increase of €765 million in accounts receivable and other
+assets was principally the result of higher receivables from
+affiliated companies mainly due to higher product revenue and
+higher tax receivables. Liquid assets and marketable securities
+increased by €760 million to €1.120 million (2015: €360 million).
+SAP SE shareholders' equity rose 9% to €15,291 million
+(2015: €14,024 million). Against outflows of €1,378 million
+associated with the payment of the 2015 dividend, there was a
+€2,595 million increase in net income and an inflow of
+Combined Management Report | Financial Performance: Review and Analysis
+101
+Total shareholders' equity and
+liabilities
+€50 million from the issuance of shares to service the share-
+based payments of employees. The equity ratio (that is, the ratio
+of shareholders' equity to total assets) increased from 45% in
+2015 to 47% in 2016.
+(2015: €1,247 million). Other provisions increased €110 million
+to €953 million (2015: €843 million) primarily as a result of
+additions to the other employee-related liabilities and provision
+for losses from derivative forward contracts. Reserves for tax
+decreased €17 million to €381 million (2015: €398 million).
+Liabilities increased €390 million to €16,069 million
+(2015: €15,679 million). This increase is mainly attributable to
+contrasting effects: On the one hand, SAP SE issued new debt in
+the amount of €400 million and liabilities to affiliated companies
+increased €1.130 million, primarily due to increased cash
+contributions by subsidiaries through SAP SE centralized
+management of finance and liquidity; on the other hand, SAP SE
+repaid €1,250 million in liabilities to banks.
+Opportunities and Risks
+SAP SE is subject to materially the same opportunities and risks
+as the SAP Group. For more information, see the Risk
+Management and Risks section as well as the Expected
+Developments and Opportunities section.
+102
+Combined Management Report | Financial Performance: Review and Analysis
+Provisions increased €92 million to €1,339 million
+Corporate Governance
+Fundamentals
+Deferred income
+30,953
+Deferred taxes
+144
+106
+Surplus arising from offsetting
+Total assets
+2
+1
+32,706
+Liabilities
+30,953
+15,291
+1,339
+16,069
+14,024
+1,247
+15,679
+7
+3
+32,706
+Equity and liabilities
+Shareholders' equity
+Provisions
+Due to our public listings in both Germany and the United
+States, we are subject to both German and U.S. regulatory
+requirements that relate to risk management and internal
+controls over financial reporting, such as provisions in the
+German Stock Corporation Act, section 91 (2) and the U.S.
+Sarbanes-Oxley Act (SOX) of 2002, specifically sections 302
+and 404. Hence, our Executive Board has established an early
+warning system (risk management system) to ensure
+compliance with applicable regulations and an effective
+management of risks.
+Corporate Governance Statement
+For more information about the corporate governance of SAP,
+see the Corporate Governance Report section.
+The terms of SAP's syndicated €2 billion revolving credit facility
+include a change-of-control clause. For more information about
+this syndicated credit facility, see the Notes to the Consolidated
+Financial Statements, Note (25). This clause obliges SAP SE to
+notify the banks in case of a change of control. If, on receiving
+the notification, banks that represent at least two-thirds of the
+credit volume so require, the banks have the right to cancel the
+credit facility and demand complete repayment of the
+outstanding debt. If no continuation agreement is reached, the
+credit facility would end and the obligation to repay would
+become effective at an ascertainable time.
+In agreements between SAP SE and various banks for bilateral
+credit facilities that totaled €474 million as at December 31,
+2016, we have agreed to termination rights of the banks in
+certain cases including a change of control. We believe that in
+view of our current liquidity situation, termination of these credit
+facilities would not have a material adverse effect, at least in the
+near term.
+Of SAP's total amount of Eurobonds of €6.15 billion outstanding
+as of December 31, 2016, €5.25 billion were issued under a debt
+issuance program. For more information about SAP's
+Eurobonds, see the Notes to the Consolidated Financial
+Statements, Note (17b). Under the terms agreed with the
+buyers, we are required to notify the buyers of any change of
+control without delay. If there is a change of control and SAP is
+consequently assigned a lower credit rating within a defined
+period, buyers are entitled to demand repayment.
+Under the terms of our U.S. private placements totaling US$1.75
+billion, we are required to offer lenders repayment of
+outstanding debt if there is a change of control and SAP is
+consequently assigned a lower credit rating within a defined
+period. For more information about these private placements,
+see the Notes to the Consolidated Financial Statements section,
+Note (17b). Lenders would have at least 30 days to accept the
+offer.
+We have entered into relationships with other companies to
+jointly develop and market new software products. These
+relationships are governed by development and marketing
+agreements with the respective companies. Some of the
+agreements include provisions that, in the event of a change of
+104
+Combined Management Report | Corporate Governance Fundamentals
+Material agreements with change of control provisions:
+SAP SE has concluded the following material agreements with
+provisions that take effect in the event of a change of control,
+whether following a takeover bid or otherwise:
+control over one of the parties, give the other party a right to
+consent to the assignment of the agreement or to terminate it.
+Combined Management Report | Corporate Governance Fundamentals
+105
+Risk Management and
+Risks
+Our Risk Management
+Internal Control and Risk Management
+System
+As a global company, SAP is exposed to a broad range of risks
+across our business operations. As a consequence, our
+Executive Board has established comprehensive internal control
+and risk management structures that enable us to identify and
+analyze risks early and take appropriate action. Our risk
+management and internal control system is designed to identify
+potential events that could negatively impact the Company and
+to provide reasonable assurance regarding the operating
+effectiveness over our financial reporting while ensuring the
+achievement of the Company objectives, specifically our ability
+to achieve our financial, operational, or strategic goals as
+planned.
+Change of control provisions in Executive Board
+compensation agreements: Agreements have been concluded
+with the members of the Executive Board concerning
+compensation in the event of a change of control. These
+agreements, which are customary in Germany and elsewhere,
+are described in the compensation report, which is an integral
+part of this management report. We have no analogous
+compensation agreements with our other employees.
+The German Commercial Code, section 315 (5) in connection
+with section 289a, requires that as a listed company, SAP SE
+publish a corporate governance statement either as part of our
+management report or on our Web site. The Executive Board of
+SAP SE filed the corporate governance statement on February
+21, 2017, and published it on our public Web site at
+www.sap.com/corporate-en/investors/governance.
+SAP, are widely followed common practice among German
+companies such as SAP. They give the Executive Board the
+flexibility it needs, in particular, the option to use SAP shares as
+consideration in equity investments, raise funds on the financial
+markets at short notice on favorable terms, or return value to
+shareholders during the course of the year.
+appointments. In the event of a tie, the chairperson of the
+Supervisory Board has the deciding vote. The Supervisory
+Board can appoint a chairperson of the Executive Board and one
+or more deputy chairpersons from among the members of the
+Executive Board. The Supervisory Board can revoke
+appointments to the Executive Board in accordance with the SE
+Regulation, article 9, and the German Stock Corporation Act,
+section 84, if compelling reasons exist, such as gross negligence
+on the part of the Executive Board member. If the Executive
+Board is short of a required member, one may be appointed in
+urgent cases by a court in accordance with the SE Regulation,
+article 9, and the German Stock Corporation Act, section 85. In
+accordance with the SE Regulation, article 59, and the German
+Stock Corporation Act, section 179, an amendment of the
+Articles of Incorporation requires a resolution of the General
+Meeting of Shareholders with a majority of at least three-
+quarters of the valid votes cast. For any amendments of the
+Articles of Incorporation that require a simple majority for stock
+corporations established under German law, however, the
+simple majority of the valid votes cast is sufficient if at least half
+of the subscribed capital is represented or, in the absence of
+such quorum, the majority prescribed by law (that is, two-thirds
+of the votes cast, pursuant to article 59 of the SE Regulation) is
+sufficient. Section 11 (2) of the Articles of Incorporation
+authorizes the Supervisory Board to amend the Articles of
+Incorporation where such amendments only concern the
+wording.
+Changes in Management
+The Global Managing Board was dissolved on March 31, 2016.
+As of April 1, 2016, Stefan Ries and Steve Singh were appointed
+to the Executive Board. Stefan Ries continued in his role as Chief
+Human Resources Officer and also took on the position of SAP
+Labor Relations Director. Steve Singh continued to lead the
+Business Networks & Applications group. In addition, he took
+over responsibility for SAP's solutions for small-to-medium-
+sized businesses, the SAP Connected Health strategy and
+solutions, and the Data-as-a-Service (DaaS) business.
+Gerhard Oswald retired from his position as Executive Board
+member upon the end of his term on December 31, 2016.
+Information Concerning Takeovers
+Information required under the German Commercial Code,
+sections 289 (4) and 315 (4), with an explanatory report:
+Composition of share capital: For information about the
+composition of SAP SE share capital as at December 31, 2016,
+see the Notes to the Consolidated Financial Statements, Note
+(20). Each share entitles the bearer to one vote. American
+depositary receipts (ADRs) representing our shares are listed on
+the New York Stock Exchange in the United States. ADRs are
+certificates representing non-U.S. shares and are traded on U.S.
+stock exchanges instead of the underlying shares. One SAP ADR
+corresponds to one SAP share.
+Power to issue and repurchase shares: The Annual General
+Meeting of Shareholders on May 12, 2016, granted powers to the
+Executive Board, subject to the consent of the Supervisory
+Board, to issue convertible and/or warrant-linked bonds, profit-
+sharing rights and/or income bonds (or combinations of these
+instruments), and to grant conversion or option rights in respect
+of SAP SE shares representing a total attributable portion of the
+share capital of not more than €100 million secured by a
+corresponding amount of contingent capital. These powers will
+expire on May 11, 2021. The Executive Board is also authorized
+until May 19, 2020, to increase the share capital by not more
+than €250 million by issuing new shares against contributions in
+cash and to increase the share capital by not more than €250
+million by issuing new shares against contributions in cash or in
+kind. For more information about the different tranches of
+authorized capital and the aforementioned contingent capital,
+see the Articles of Incorporation, section 4. The Annual General
+Meeting of Shareholders on June 4, 2013, granted a power to
+the Executive Board in accordance with the German Stock
+Corporation Act, section 71 (1)(8), to buy back for treasury on or
+before June 3, 2018, SAP SE shares attributable in total to not
+more than €120 million of the share capital. The power is subject
+to the proviso that the shares repurchased, together with any
+shares that were previously acquired and are still held by SAP in
+treasury and any other shares controlled by SAP, must not in
+total exceed 10% of SAP's share capital. Executive Board
+powers, such as those described to issue and repurchase stock
+and to grant rights of conversion and subscription to shares of
+Restrictions applying to share voting rights or transfers: SAP
+shares are not subject to transfer restrictions except the lock-up
+period under the SAP Share Matching Plan (SMP), described
+below. SAP held 29,880,390 treasury shares as at December 31,
+Shareholdings that exceed 10% of the voting rights: We are
+not aware of any direct or indirect SAP SE shareholdings that
+exceed 10% of the voting rights.
+Shares with special rights conferring powers of control: No
+SAP shareholder has special rights conferring powers of control.
+Type of control over voting rights applying to employee
+shareholders who do not directly exercise their control rights:
+As with other shareholders, employee holders of SAP shares
+exercise their control rights in accordance with the law and the
+Articles of Incorporation. In votes on the formal approval of their
+acts at the Annual General Meeting of Shareholders, employee
+representatives on the Supervisory Board, as all other members
+of the Supervisory Board, are prohibited from exercising the
+voting rights associated with their shares.
+Requirements concerning appointments and dismissals of
+members of the Executive Board and amendments to the
+Articles of Incorporation:
+Conditions for the appointment and dismissal of members of the
+Executive Board and amendment to the Articles of Incorporation
+reflect the relevant provisions of applicable European and
+German law, including Council Regulation (EC) No. 2157/2001
+on the Statute for a European Company ("SE Regulation") and
+the German Stock Corporation Act. Under the Articles of
+Incorporation, the Executive Board consists of at least two
+members who are appointed for a period of not more than five
+years by the Supervisory Board in accordance with the SE
+Regulation, articles 39 and 46. The number of members of the
+Executive Board is decided by the Supervisory Board. Executive
+Board members may be reappointed for, or their term of office
+extended by, a maximum of five years. A simple majority of the
+Supervisory Board membership is required for Executive Board
+Combined Management Report | Corporate Governance Fundamentals
+103
+2016, see the Notes to the Consolidated Financial Statements,
+Note (20). Treasury shares do not carry voting rights or dividend
+rights or other rights. Shares issued under the employee SMP
+are partly subject to contractual transfer restrictions for a three-
+year lock-up period unless the plan member's employment with
+SAP is ended under certain circumstances during that period.
+Until that lock-up period has expired, participating employees
+are not ordinarily allowed to dispose of the shares they have
+acquired under the plan. We are not aware of any other
+restrictions applying to share voting rights or to share transfers.
+Combined Management Report | Risk Management and Risks
+Risk Management Organization
+Possible tax constraints impeding business operations in
+certain countries
+Expenses associated with the localization of our products and
+compliance with local regulatory requirements
+Discriminatory or conflicting fiscal policies
+Drive growth of references by creating customer use cases
+and demo systems
+Embed our solutions sufficiently enough to profitably drive
+product adoption, especially with innovations such as SAP
+S/4HANA and SAP Cloud Platform (formerly called SAP
+HANA Cloud Platform)
+Enable and train sufficient resources to promote, sell, and
+support to scale to targeted markets
+Comply with applicable quality requirements expected by our
+customers, resulting in delayed, disrupted, or terminated
+sales and services
+Transform their business model in accordance with the
+transformation of SAP's business model in a timely manner
+Renew their existing agreements with us or enter into new
+agreements on terms acceptable to us or at all
+Provide ability and capacity to meet customer expectations
+regarding service provisioning.
+If one or more of these risks materialize, this might have an
+adverse effect on the demand for our products and services as
+well as the partner's loyalty and ability to deliver. As a result, we
+might not be able to scale our business to compete successfully
+with other software vendors, which could have an adverse effect
+on our reputation, business, financial position, profit, and cash
+flows.
+SAP continues to invest in long-term, mutually beneficial
+relationships and agreements with partners. We continue to
+develop and enhance a wide range of partner programs to retain
+existing and attract new partners of all types. We offer training
+opportunities to a wide range of resources for our partners and
+additionally provide demo solutions to enable partners to lead
+business value discussions on cloud and on-premise solutions
+with customers. A thorough certification process for third-party
+solutions has been designed and established to ensure
+consistent high-quality and seamless integration.
+120
+Although we estimate the likelihood of occurrence of this risk to
+be remote, we cannot completely exclude the possibility that
+this risk could have a business-critical impact on our reputation,
+business, financial position, profit, and cash flows, or cause a
+negative deviation from our operating profit target. We classify
+this risk as a medium risk.
+With the digital transformation, the increased use of cloud
+solutions and social media by employees, a continual adoption
+of internal security measures is meaningful to achieve and
+maintain an effective and appropriate level of data protection
+and privacy and to reinforce the position of SAP as a trusted
+partner for its customers.
+Additionally, we combined organizationally all security groups
+into one global security unit. This combined organization
+strengthens the security capabilities and offers a wide range of
+policies, guidelines and support on executing the success of
+SAP's security measures.
+We take a wide range of actions to prevent unauthorized
+disclosure of information, including procedural and
+organizational measures. These measures include mandatory
+compliance base line trainings for all employees (including
+fundamentals within security awareness, data privacy and data
+protection, compliance and communication), social engineering
+tests, standards for safe internal and external communication,
+and technical security features in our IT hardware and
+communication channels, such as mandatory encryption of
+sensitive data.
+Provide high-quality products and services to meet customer
+expectations
+Confidential information and internal information related to
+topics such as our strategy, new technologies, mergers and
+acquisitions, unpublished financial results, customer data or
+personal data, could be prematurely or inadvertently disclosed
+and subsequently lead to market misperception and volatility.
+This could require us to notify multiple regulatory agencies and
+comply with applicable regulatory requirements and, where
+appropriate, the data owner, which could result in a loss of
+reputation for SAP. For example, leaked information during a
+merger or acquisition deal could cause the loss of our deal
+target, or our share price could react significantly in case of
+prematurely published financial results. This could have an
+adverse effect on our market position and lead to fines and
+penalties. In addition, this could have an adverse effect on our
+business, financial position, profit, and cash flows.
+Communication and Information Risks
+In that event, this risk could have a major impact on our
+reputation, business, financial position, profit, and cash flows
+and could cause a negative deviation from our operating profit
+target. We classify this risk as a medium risk.
+Although we estimate the probability of occurrence of
+intentional or negligent major unethical conduct to be unlikely,
+we cannot exclude the possibility that this risk could materialize.
+The SAP Code of Business Conduct is mandatory and applies to
+every SAP employee. It provides legal compliance guidance on
+how to avoid unethical behavior and solve dilemma situations.
+On an annual basis, the SAP Code of Business Conduct is re-
+confirmed by SAP's workforce (except where disallowed by local
+legal regulations). We also rolled out and enforced various
+additional compliance policies aimed at managing third parties
+and preventing misuse of third-party payments for illegal
+purposes; ensuring controls around travel, entertainment, gift,
+and expense policies; and promoting a commitment to business
+with integrity through our partner and vendor ecosystems.
+These efforts are flanked by continuous education including e-
+learning and classroom training to target audiences as identified
+by compliance risk assessment. The overall CMS approach by
+SAP is continuously monitored internally and externally, and
+adapted accordingly, if needed.
+To help prevent this, we instituted a comprehensive compliance
+management system (CMS), which is based on the three pillars
+of prevention, detection, and reaction. Our CMS program
+comprises several educational, counseling, control, and
+investigative instruments. The objective is to minimize and
+mitigate the risk of unethical behavior, whether intentional or
+negligent.
+However, we might encounter unethical behavior and non-
+compliance with our integrity standards due to intentional and
+fraudulent behavior of individual employees, possibly in
+collusion with external third parties. In addition to intentional
+behavior, problems could also arise due to negligence in the
+adherence to rules and regulations, especially in countries with a
+high Corruption Perceptions Index and continuously increasing
+business activities in profoundly regulated industries such as
+public sector, healthcare, banking or insurance. Unethical
+behavior and misconduct attributable to SAP could not only lead
+to criminal charges, fines, and claims by injured parties, but also
+to financial loss, and severe reputational damage. This could
+have an adverse effect on our business, financial position, profit,
+and cash flows.
+SAP's leadership position in the global market is founded on the
+long-term and sustainable trust of our stakeholders worldwide.
+Our heritage is one of corporate transparency, open
+communication with financial markets, and adherence to
+recognized standards of business integrity. The SAP Code of
+Business Conduct, adopted by the Executive Board on January
+29, 2003, and updated as necessary since then, memorialized
+and supplemented the already existing guidelines and
+expectations for the business behavior practiced at SAP.
+behavior could seriously harm our business, financial
+position, profit, and reputation.
+119
+Combined Management Report | Risk Management and Risks
+Unethical behavior and non-compliance with our integrity
+standards due to intentional and fraudulent employee
+We believe that the risk of failing to meet expectations regarding
+our energy and emission strategy is unlikely to occur and that if
+the risk were to occur, it would only have a moderate impact on
+our reputation, business, financial position, profit, and cash
+flows, as well as on the achievement of our revenue and
+operating profit target. We classify this risk as a low risk.
+In recent years, SAP has shown that it is possible to take a
+proactive position on social and environmental issues while
+delivering robust financial growth. As a result, we received great
+recognition for our sustainability efforts. As a proof point for
+SAP's sustainability performance, we continue to be listed in the
+most prominent and recognized sustainability indexes, such as
+the Dow Jones Sustainability Indices and the CDP Climate
+Performance and Disclosure Leadership Indices. In 2016, SAP's
+greenhouse gas emissions added up to 380 kilotons CO2, which
+means we did meet our greenhouse gas emissions target of 400
+kilotons by 20 kilotons. If we do not meet our greenhouse gas
+emissions target for 2020, we might fail to meet expectations
+regarding our energy and emission performance.
+Because our customers, employees, and investors expect a
+reliable energy and carbon strategy, we have reemphasized our
+environmental policy and our previously communicated targets,
+especially our 2020 target for greenhouse gas emissions. In
+case these targets cannot be achieved, our customers might no
+longer recognize SAP for our environmental leadership and
+might buy other vendors' products and services. Consequently,
+we could fail to achieve our revenue target. If we do not meet
+stakeholder expectations in the areas identified, our rating in
+sustainable investment indexes might decrease, which could
+have an adverse effect on our reputation, profit, and share price.
+Our controls and efforts to prevent the unauthorized
+disclosure of confidential information might not be effective.
+Our own operations - energy management and other
+environmental issues such as carbon management, water
+use, and waste
+Develop a sufficient number of new solutions and content on
+our platforms
+-
+116
+Market Risks
+Our established customers might not buy additional software
+solutions, subscribe to our cloud offerings, renew
+maintenance agreements, purchase additional professional
+services, or they might switch to other products or service
+offerings (including competitive products).
+In 2016, we continued to depend materially on the success of
+our support portfolio and on our ability to deliver high-quality
+services. Traditionally, our large installed customer base
+generates additional new software, maintenance, consulting,
+and training revenue. Despite the high quality and service level
+of our transformed and expanded service offering in the area of
+premium support services, we might be unable to meet
+customer expectations with regards to delivery and value
+proposition. This might lead to a potentially adverse impact on
+customer experience. Existing customers might cancel or not
+renew their maintenance contracts, decide not to buy additional
+products and services, not subscribe to our cloud offerings, or
+accept alternative offerings from other vendors. In addition, the
+Combined Management Report | Risk Management and Risks
+113
+increasing volume in our cloud business as well as the
+conversion of traditional on-premise licenses to cloud
+subscriptions licenses and an increased complexity in our
+maintenance and support cycle across our diverse solutions and
+offerings could have a potential negative impact on our software
+and maintenance revenue streams. This could have an adverse
+effect on our business, financial position, profit, and cash flows.
+Combined Management Report | Risk Management and Risks
+Our business consists of new software licenses, software license
+updates, Services and maintenance fees as well as of cloud
+subscriptions. Our customers are expecting to take advantage
+of technological breakthroughs from SAP without compromising
+their previous IT investments. However, the introduction of new
+SAP solutions, technologies, and business models as well as
+delivery and consumption models is subject to uncertainties as
+to whether customers will be able to perceive the additional
+value and realize the expected benefits we deliver along our road
+maps. There is a risk that such uncertainties might lead
+customers to wait for proof of concepts or holistic integration
+scenarios through reference customers or more mature
+versions first, which might result in a lower level of adoption of
+our new solutions, technologies, business models, and flexible
+consumption models, or no adoption at all, possibly impacting
+customer satisfaction and retention. This could have an adverse
+effect on our business, financial position, profit, and cash flows.
+To mitigate this risk, SAP is balancing the distribution of our
+strategic investments by evolving and protecting our core
+businesses and simultaneously developing new solutions,
+technologies, and business models for markets, such as those in
+analytics, applications, and database and technology.
+Furthermore, we continuously demonstrate the benefits of our
+solution and services portfolio through end-to-end integration
+scenarios, homogeneous and compelling user interfaces,
+customer references and success stories as well as the
+provision of support excellence to ensure customer satisfaction
+with and after the implementation of our solution.
+We estimate the probability of occurrence of this risk to be
+remote, but cannot completely exclude the possibility that this
+risk could have a business-critical impact on our business,
+financial position, profit, and cash flows, or cause a negative
+deviation from our revenue and operating profit target.
+Furthermore, unsuccessful launches of flagship
+products/offerings could negatively affect market perception.
+We classify this risk as a medium risk.
+Though downturns or upturns in cloud sales might not be
+immediately reflected in our operating results, any decline in
+our customer renewals would harm the future operating
+results of our cloud business.
+We recognize cloud subscriptions revenue as we provide the
+respective services, which typically range from one-to-three
+years with some up to five years. This revenue recognition and
+our increasing subscription revenues could have a temporary
+adverse effect on our financial position, profit, and cash flows.
+-
+To maintain or improve our operating results in the cloud
+business, it is important that our customers renew their
+agreements with us when the initial contract term expires and
+purchase additional modules or additional capacity. Our
+customers have no obligation to renew their subscriptions after
+the initial subscription period, and we cannot assure that
+customers will renew subscriptions at the same or at a higher
+level of service, or at all. Our customers' renewal rates might
+decline or fluctuate as a result of various factors, including their
+satisfaction or dissatisfaction with our cloud solution and
+services portfolio; our ability to efficiently provide cloud services
+according to customer expectations and meeting the service
+level agreements, service availability and provisioning, the
+integration capabilities of our cloud solutions into their existing
+IT environment (including hybrid solutions combining both cloud
+115
+and on-premise solutions); our customer support; concerns
+regarding stable, efficient, and secure cloud operations and
+compliance with legal and regulatory requirements; our pricing;
+the pricing of competing products or services; mergers and
+acquisitions affecting our customer base; global economic
+conditions; and reductions in our customers' spending levels.
+If our customers do not renew their subscriptions, if they renew
+on terms less favorable to us, or do not purchase additional
+modules or users, our revenue and billings might decline, and
+our operating results could be negatively impacted. This could
+have an adverse effect on our business, financial position, profit,
+and cash flows.
+We share our overall long-term cloud strategy and our
+integration road map with our customers and continuously
+implement improvements to enhance our cloud solutions,
+including instant provisioning, a consumer-grade user
+experience, and a fast time to value, among others. To
+continuously improve our services, we closely monitor all issues
+and work together with customers to perform a root-cause
+analysis and provide solutions to identified problems. We have a
+strong focus on providing our cloud services efficiently and
+according to customer expectations, including service
+provisioning, quality, and security as well as data protection and
+privacy.
+Furthermore, we are continuously improving and adapting cloud
+services delivery and license models to local and/or specific
+market requirements (such as local or regional data centers,
+customer expectations, and in accordance with legal and
+regulatory requirements).
+Although we estimate the probability of occurrence of this risk
+to be remote, we cannot completely exclude the possibility that
+this risk could have a business-critical impact on our business,
+financial position, profit, and cash flows, or cause a negative
+deviation from our revenue and operating profit target. We
+classify this risk as a medium risk.
+If we are unable to scale and enhance an effective partner
+ecosystem, revenue might not increase as expected.
+An open and vibrant partner ecosystem is a fundamental pillar
+of our success and growth strategy. We have entered into
+partnership agreements that drive co-innovation on our
+platforms, profitably expand all our routes to market to optimize
+market coverage, optimize cloud delivery, and provide high-
+quality services capacity in all market segments. Partners play a
+key role in driving market adoption of our entire solutions
+portfolio, by co-innovating on our platforms, embedding our
+technology, and reselling and/or implementing our software.
+If partners consider our products or services model less
+strategic and/or financially less attractive compared to our
+competition and/or less appropriate for their respective channel
+and target market, if partners fear direct competition by SAP or
+if SAP fails to establish and enable a network of qualified
+partners meeting our quality requirements and the
+requirements of our customers, then, among other things,
+partners might not:
+-
+-
+-
+Combined Management Report | Risk Management and Risks
+To protect our key IT infrastructure (especially our data
+centers), critical business systems, and processes from material
+adverse effects in crisis situations, disaster recovery and
+business continuity plans have been developed that include
+implementation of data redundancies and daily data backup
+strategies. To verify and improve our approach, our IT-related
+organizations have been certified to the internationally
+recognized ISO 22301:2013 (Business Continuity Management)
+standard with regards to the Applications, Technology &
+Services segment. In addition, our corporate headquarters,
+which houses certain critical business functions, is located in the
+German state of Baden-Württemberg. This area has historically
+been free of natural disasters.
+Working closely with SAP user groups, we continuously
+demonstrate the business value and the benefits of our solution,
+service and support portfolio in terms of innovation, quality, and
+high service level as well as through customer references and
+success stories. Additionally, we continuously monitor the
+performance and the perceived value of our services and the
+satisfaction of our customers. We implement mitigating steps
+where required and deliberately invest into alignments and
+improvements in order to benefit our customers.
+With regards to our volume in cloud business as well as the
+conversion of traditional on-premise licenses to cloud
+subscriptions licenses, we estimate the probability of this risk
+materializing to be unlikely. However, we cannot completely
+exclude the possibility that it could have a business-critical
+impact on our business, financial position, profit, and cash flows,
+or cause a negative deviation from our revenue. We classify this
+risk as a medium risk.
+To mitigate risks due to legal non-compliance, SAP actively
+monitors changes to applicable laws and regulations so that we
+can take adequate measures and certify our existing standards
+and policies on an ongoing basis. We have implemented a wide
+range of measures to protect data controlled by SAP and our
+customers from unauthorized access and processing, as well as
+from accidental loss or destruction. This includes, among
+others, a continuous enhancement of our data center operations
+worldwide, also taking into account local and/or sector-specific
+market and legal requirements. We have implemented a
+certified data protection management system in areas critical to
+data protection, such as digital business services, human
+resources (HR), marketing, products and innovation, and
+custom development, whereby implementation is audited
+internally as well as externally by the British Standard
+Institutions on an annual basis. Furthermore, customers are
+provided with security certifications (such as ISO/IEC 27001),
+security white papers, and reports from our independent
+auditors and certification bodies.
+Overall, these laws and regulations amend and supplement
+existing requirements regarding the processing of personal data
+that SAP and SAP customers must fulfill and which we must
+consequently address with our products and services, including
+cloud delivery. Failure to comply with applicable laws or to
+adequately address privacy concerns of customers, even if
+unfounded, could lead to investigations by supervisory
+authorities, civil liability, fines, (in the future, potentially
+calculated based on the Company's annual revenue), loss of
+customers, damage to our reputation, and could have an
+adverse effect on our business, financial position, profit, and
+cash flows.
+The data protection concepts of the GDPR do not adequately
+reflect the latest technological developments, such as big
+data and machine learning. If the GDPR cannot be interpreted
+in a way that allows for such technologies, or revised as
+necessary, SAP might not be able to use and offer products
+and services that implement such technologies in the
+EU/EEA.
+Combined Management Report | Risk Management and Risks
+118
+Where member states can supplement the GDPR with
+additional national rules, there is a risk that data protection
+law will not be fully harmonized across Europe. As a
+consequence, SAP would have to continue to adapt its
+products and services to the individual national
+requirements.
+Violations of the GDPR might be punished with financial
+penalties of up to the higher of €20 million or 4% of the
+responsible company's annual global turnover. Further
+administrative measures include mandatory instructions by
+the data protection supervisory authorities relating to
+specific processing activities, up to their prohibition. Non-
+compliance might further lead to legal claims from affected
+individuals and consumer protection organizations. Where
+SAP processes data on behalf of its customers, violations
+might lead to damage claims from customers. Non-
+compliance further bears the risk of reputational losses if
+violations become publically known.
+Risks for SAP include:
+As a global software and service provider, SAP is required to
+comply with local laws wherever SAP does business.
+Consequently, we must ensure that any legal requirements in
+connection with the provision of products and services are
+properly implemented. With regard to data protection
+requirements, in May 2016, the EU enacted a "General Data
+Protection Regulation" (GDPR), as a successor to the Data
+Protection Directive of 1995, with the aim of further harmonizing
+data protection laws across the EU. The GDPR will be directly
+applicable law in all EU and EEA member states as of May 25,
+2018 after a two-year transition period. Within limits, member
+states can supplement the GDPR with additional national rules.
+Overall, the GDPR does not introduce substantial new concepts.
+It rather focuses on stronger compliance requirements and
+enforces them vigorously on every business that processes
+personal data of individuals in the EU/EEA, regardless of where
+that business is established. Some of the new rules are subject
+to further definition by the authorities, though, and others leave
+room for interpretation.
+Non-compliance with applicable data protection and privacy
+laws or failure to adequately meet the requirements of SAP's
+customers with respect to our products and services could
+lead to civil liabilities and fines, as well as loss of customers
+and damage to SAP's reputation.
+With regards to the increase of regulation enforcement efforts
+we have already experienced and continue to expect as well as
+state-driven protectionism, we estimate the likelihood of this
+risk to be unlikely. We cannot completely exclude the possibility
+that this risk could have a major impact on our reputation,
+business, financial position, profit, and cash flows, or cause a
+negative deviation from our revenue and operating profit target.
+We classify this risk as a medium risk.
+However, we continuously monitor new and increased
+regulatory requirements, updated or new enforcement trends,
+and publicly available information on compliance issues in the
+computer software industry, the emerging markets where we
+invest our resources, and in the business environment in general
+to cope with an increase in regulation enforcement efforts of
+certain countries or state-driven protectionism. Based on this
+information and any other available sources, we continuously
+update and refresh our compliance programs to improve our
+effectiveness and to ensure that our employees understand and
+comply with the SAP Code of Business Conduct. This process is
+coordinated by our Legal Compliance and Integrity Office, a
+team of dedicated resources who are tasked with managing our
+policy-related compliance measures. Our chief compliance
+officer coordinates policy implementation, training, and
+enforcement efforts throughout SAP. Those efforts are
+monitored and tracked to allow trending and risk analysis and to
+ensure consistent policy application throughout the SAP Group.
+Despite our comprehensive compliance programs and
+established internal controls, intentional efforts of individuals to
+circumvent controls or engage in fraud for personal gains
+cannot always be prevented.
+It is difficult to assess the precise potential risk, because there is
+a wide variety of complex legal and regulatory requirements that
+apply, and therefore an equally wide variety of potential non-
+compliance scenarios exist.
+As a European company domiciled in Germany with securities
+listed in Germany and the United States, we are subject to
+European, German, U.S., and other governance-related
+regulatory requirements. Changes in laws and regulations and
+related interpretations, including changes in accounting
+standards and taxation requirements, and increased
+enforcement actions, sanctions, for example United States
+sanction requirements for Iran, and penalties might alter the
+business environment in which we operate. Regulatory
+requirements have become significantly more stringent in
+recent years, and some legislation, such as the anticorruption
+legislation in Germany, the U.S. Foreign Corrupt Practices Act,
+the UK Bribery Act, and other local laws prohibiting corrupt
+payments by employees, vendors, distributors, or agents, is
+being applied more rigorously. Emerging markets are a
+significant focus of our international growth strategy. The nature
+of these markets presents a number of inherent risks. A failure
+by SAP to comply with applicable laws and regulations, or any
+related allegations of wrongdoing against us, whether merited or
+not, could have an adverse effect on our business, financial
+position, profit, cash flows and reputation.
+With regard to the GDPR, the Data Protection & Privacy (DPP)
+team initiated a project that established a working group across
+all board areas. The aim of this project is to constructively assist
+all SAP business units to ensure compliance with the GDPR. DPP
+and Government Relations (GR) teams continue to work
+together and actively voice our opinion through industry-
+recognized associations. This is in addition to DPP's direct
+involvement with the European Commission and data protection
+authorities of member states. Such actions intend to achieve a
+use-oriented and forward-looking interpretation of the law while
+balancing protection of personal privacy as well as aiming to
+enhance European competitiveness.
+Laws and regulatory requirements in Germany, the United
+States, and elsewhere continue to be very stringent.
+Organizational and Governance-Related
+117
+Combined Management Report | Risk Management and Risks
+Although the risks related to failure to attract, develop, and
+retain talent could materialize, we believe that this is unlikely
+and that the impact on our reputation, business, financial
+position, profit, and cash flows, or potential negative deviation
+from our revenue and operating profit target would be major. We
+classify this risk as a medium risk.
+These risks notwithstanding, we continue to believe our leading
+market position, employer brand, and extended benefit
+programs will enable us to hire top talent internationally with the
+potential to contribute to SAP's growing business success in the
+future. We address the risk of an adverse effect on our business
+operations from a failure to recruit the employees we need or
+from the loss of leaders and employees by seeking to build
+employee and leadership strengths through a range of targeted
+professional development, mentoring, and coaching programs,
+a gender diversity program, in September 2016, globally
+awarded with the Economic Dividends for Gender Equality
+(EDGE) certificate in recognition for commitment to gender
+equality in the workplace, and a special focus on accelerated
+high-potential employee development that aims to develop
+talent as well as leadership talent, in particular. A strong focus
+on succession planning for leadership and key positions seeks to
+ensure sustainable leadership and to safeguard the business
+from disruption caused by staff turnover.
+such personnel as well as business experts is limited and, as a
+result, competition in our industry is intense and could expose
+us to claims by other companies seeking to prevent their
+employees from working for a competitor. If we are unable to
+identify, attract, develop, motivate, adequately compensate, and
+retain well-qualified and engaged personnel, or if existing highly
+skilled and specialized personnel leave SAP and ready
+successors or adequate replacements are not available or we
+cannot allocate our workforce as required due to local
+regulations and associated restrictions, we might not be able to
+manage our operations effectively, which could have an adverse
+effect on our reputation, business, financial position, profit, and
+cash flows. Furthermore, we might not be able to develop, sell,
+or implement successful new solutions and services as planned.
+This is particularly true as we continue to introduce new and
+innovative technology offerings and expand our business in
+emerging markets. The lack of appropriate or inadequately
+executed benefit and compensation programs could limit SAP's
+ability to attract or retain qualified employees and lead to
+financial losses. In addition, we might not be able to achieve our
+internal gender diversity objectives to increase the number of
+women in management from 18% in 2010 to 25% by end of
+2017.
+Our highly qualified workforce is the foundation for our
+continued success. In certain regions and specific technology
+and solution areas, we continue to set very high growth targets,
+specifically in countries and regions such as Africa, China, Latin
+America, and the Middle East. In the execution of SAP's
+strategic priorities, we depend on highly skilled and specialized
+personnel and leaders, both male and female. Successful
+maintenance and expansion of our highly skilled and specialized
+workforce in the area of cloud is a key success factor for our
+transition to be the leading cloud company. The availability of
+If we are unable to attract, develop, and retain leaders and
+employees with specialized knowledge and technology skills,
+or are unable to achieve internal diversity and inclusion
+objectives, we might not be able to manage our operations
+effectively and successfully, or develop successful new
+solutions and services.
+We estimate this risk to be a remote possibility, but we cannot
+completely exclude the possibility of this risk to have a major
+impact on our business, financial position, profit, and cash flows,
+or cause a negative deviation from our revenue and operating
+profit target. We classify this risk as a low risk.
+We focus on mitigating this risk through a range of activities
+including succession management; workforce planning (which
+aims to achieve diversity and the right mix of talent and to take
+account of demographic changes); outsourcing; external short-
+term staffing; employer branding; career management (such as
+offering opportunities for short-term assignments and
+opportunities to improve skills, competencies, and
+qualifications); and extended benefit programs - for example, a
+performance-oriented remuneration system, an employer-
+financed pension plan in certain countries, and long-term
+incentive plans.
+Our success is dependent on appropriate alignment of our
+internal and external workforce planning processes, adequate
+resource allocation and our location strategy with our general
+strategy. It is critical that we manage our internationally
+dispersed workforce effectively, taking short- and long-term
+workforce and skill requirements into consideration. This applies
+to the management of our internal as well as our external
+workforce. Changes in headcount and infrastructure needs as
+well as local legal or tax regulations could result in a mismatch
+between our expenses and revenue. Failure to manage our
+geographically dispersed workforce effectively could hinder our
+ability to run our business efficiently and successfully and could
+have an adverse effect on our business, financial position, profit,
+and cash flows.
+If we do not effectively manage our geographically dispersed
+workforce, we might not be able to run our business
+efficiently and successfully.
+Human Capital Risks
+Combined Management Report | Risk Management and Risks
+Risks
+The SAP Digital Business Services organization is combining
+responsibility for services and support in regards to the
+Applications, Technology & Services segment. This organization
+offers a wide range of support, including premium support
+services (SAP MaxAttention and SAP ActiveEmbedded), and
+professional services to increase business benefit for our
+customers. For the SAP Business Network segment, we
+continue the established service and support models.
+We estimate this risk to be unlikely, and cannot rule out the
+possibility of it having a business-critical impact on our
+Failure to meet customer, partner, or other stakeholder
+expectations or generally accepted standards on climate
+change, energy constraints, and our social investment
+strategy could negatively impact SAP's business, results of
+operations, and reputation.
+The success of our cloud computing strategy depends on
+positive market perception and increasing market adoption
+of our cloud solutions and managed cloud services.
+Insufficient adoption of our solutions and services could lead
+to a loss of SAP's position as a leading cloud company.
+The market for cloud computing is increasing and shows strong
+growth relative to the market for our on-premise solutions. To
+offer a broad cloud service portfolio and generate the associated
+business value for our customers, we continue to invest in
+innovation and acquisitions. Due to ongoing contracts and
+previous substantial investments to integrate traditional on-
+premise enterprise software into their businesses, as well as
+concerns about data protection, total cost of ownership,
+functional capacities, migration, security and integration
+capabilities, and reliability, customers and partners might be
+reluctant or unwilling to migrate to the cloud.
+Other factors that could affect the market acceptance, adoption
+and extension of cloud solutions and services include:
+-
+-
+-
+Concerns with entrusting a third-party to store and manage
+critical employee or company confidential data
+Customer concerns about security capabilities and reliability
+Customer concerns about the ability to scale operations for
+large enterprise customers
+Inadequate level of configurability or customizability of the
+software
+Missing integration scenarios between on-premise products
+and cloud-to-cloud solutions
+Failure to securely and successfully deliver cloud services by
+any cloud service provider could have a negative impact on
+customer trust in cloud solutions
+Strategic alliances among our competitors and/or their
+growth-related efficiency gains in the cloud area could lead to
+significantly increased competition in the market with
+regards to pricing and ability to integrate solutions
+Failure to get the full commitment of our partners might
+reduce speed and impact in market reach
+Failure to comply with increasing governance on data privacy
+and data residence
+Challenge in defining adequate solution packages and scope
+for all customer segments
+business, financial position, profit, and cash flows, and causing
+damage to our reputation, or causing a negative deviation from
+our revenue and operating profit target. We classify this risk as a
+medium risk.
+If organizations do not perceive the benefits of cloud computing,
+the market for cloud business might not develop further, or it
+might develop more slowly than we expect, either of which could
+have an adverse effect on our business, competitiveness,
+financial position, profit, reputation and cash flows.
+Although we estimate the probability of occurrence of this risk
+to be unlikely, we cannot completely exclude the possibility that
+this risk could have a business-critical impact on our reputation,
+business, financial position, profit, and cash flows, or cause a
+negative deviation from our revenue and operating profit target.
+We classify the risk as a medium risk.
+Our market share and profit could decline due to increased
+competition, market consolidation and technological
+innovation as well as new business models in the software
+industry.
+The software industry continues to evolve rapidly and is
+currently undergoing a significant shift due to innovations in the
+areas of enterprise mobility, machine learning, augmented and
+virtual reality, cybersecurity, Big Data, hyperconnectivity, the
+Internet of Things, digitization, supercomputing, cloud
+computing, and social media. While smaller innovative
+114
+Combined Management Report | Risk Management and Risks
+companies tend to create new markets organically, large
+traditional IT vendors tend to enter such markets mostly
+through acquisitions. SAP faces increased competition in its
+business environment from traditional, new and in particular
+cooperating competitors. This competition could cause price
+pressure, cost increases, and loss of market share, which could
+have an adverse effect on our business, financial position, profit,
+and cash flows.
+Additionally, related to our Applications, Technology & Services
+segment, customers could change their buying behavior by
+accelerating their acceptance of cloud solutions to reduce their
+investments, which might have a temporary adverse effect on
+our operating results. Furthermore, the trend in the market to
+invest more in cloud solutions might lead to a risk of the
+potential loss of existing on-premise customers. It might also
+have a temporary adverse effect on our revenue due to the
+number of conversions from on-premise licenses to cloud
+subscriptions from existing SAP customers in our installed base,
+as we recognize cloud subscriptions revenue over the respective
+service provision, and that typically ranges from one-to-three
+years with some up to five years.
+We believe we will be able to protect our leadership in the
+market by continuing to execute successfully on our customer-
+centric innovation strategy, which is driven by a mix of organic
+growth, targeted acquisitions, and attractive cloud solution
+offerings. To compete successfully in the market, we
+continuously enhance our global processes and adjust our
+organizational structures. Furthermore, in the Application,
+Technology, and Services segment, we have policies in place to
+effectively manage conversions from on-premise software
+arrangements to cloud arrangements.
+Although we estimate the probability of this risk unlikely with
+major impact, we cannot completely exclude the possibility that
+this risk could have a major impact on our business, financial
+position, profit, and cash flows, or cause a negative deviation
+from our revenue and operating profit target. We classify this
+risk as a medium risk.
+Business Strategy Risks
+Demand for our new solutions might not develop as planned
+and our strategy on new business models and flexible
+consumption models might not be successful.
+Our solutions
+-
+Energy and emissions management are an integral component
+of our holistic management of social, environmental, and
+economic risks and opportunities. We have identified risks in
+these major areas:
+In addition to measures to communicate the business value of
+our cloud solutions to the market, we invest significantly in
+infrastructure and processes in an effort to ensure secure
+operations of our cloud solutions including the adaption of cloud
+service delivery to local and/or specific market requirements
+(such as local or regional data centers) and compliance with all
+local legal regulations regarding data protection and privacy as
+well as data security.
+Our mitigation measures have been designed and implemented
+to minimize such adverse effects. In an effort to ensure
+continuous operations of all business processes, we have been
+implementing and operating a worldwide business continuity
+management and crisis management system. To enable
+effective response and minimize possible losses in case of crisis
+situations, we have installed local crisis management teams at
+our main locations, supplemented by regional crisis
+management teams for the Americas (including Latin America
+and North America), APJ (including Greater China), and EMEA
+regions, and a global crisis management team.
+With regards to the relevance of current and anticipated political
+crisis situations and acts of violence impacting SAP's business,
+we believe that the likelihood of this risk materializing is unlikely;
+however, we cannot exclude the possibility of such a risk
+occurring and having a business-critical impact on our
+reputation, business, financial position, profit, and cash flows, or
+causing a negative deviation from our revenue and operating
+profit target. We classify this risk as a medium risk.
+Social and political instability caused by state-based
+conflicts, terrorist attacks, civil unrest, war, or international
+hostilities might disrupt SAP's business operations.
+All described risks are applicable to a different extent to our
+reportable segments (Applications, Technology & Services and
+SAP Business Network) unless otherwise noted.
+7
+increased
+unchanged
+decreased
+Icon:
+1) Evolution: Risk Level compared with previous year.
+low
+minor
+remote
+Venture Capital
+medium
+business critical
+remote
+Insurance
+medium
+major
+Mergers and Acquisitions
+unlikely
+business critical
+medium
+Enforcement of Intellectual Property
+likely
+SAP SE is the parent company of the SAP Group. Consequently,
+the risks described below also apply, directly or indirectly, to
+SAP SE.
+business critical
+Cybersecurity
+unlikely
+business critical
+medium
+Business Operations
+unlikely
+high
+high
+Economic, Political, Social, and Regulatory
+Risk
+Our business is influenced by multiple risk factors that are both
+difficult to predict and beyond our influence and control. These
+factors include global economic and business conditions, and
+fluctuations in national currencies. Other examples are political
+Conflict and overlap among tax regimes
+Data residency requirements (the requirement to store
+certain data only in and, in some cases, also to access such
+data only from within a certain jurisdiction)
+Data protection and privacy regulations regarding access by
+government authorities to customer, partner, or employee
+data
+-
+-
+-
+We are a global company and currently market our products and
+services in more than 180 countries and territories in the
+Americas (Latin America and North America); Asia Pacific Japan
+(APJ); and Europe, Middle East, and Africa (EMEA) regions. Our
+business in these countries is subject to numerous risks
+inherent in international business operations. Among others,
+these risks include:
+Our international business activities and processes expose us
+to numerous, sometimes even conflicting laws and
+regulations, policies, standards or other requirements, and to
+risks that could harm our business, financial position, profit,
+and cash flows.
+We estimate the probability of occurrence of this risk to be likely.
+Therefore, we cannot completely exclude the possibility that it
+will have a business-critical impact on our business, financial
+position, profit, and cash flows. This could exacerbate the other
+risks we describe in this report or cause a negative deviation
+from our revenue and operating profit target. We classify this
+risk as a high risk.
+is continuously reshaping its organizational structure and
+processes to increase efficiency.
+SAP has established measures and conducted scenario
+analyses to address and mitigate the described risks and
+adverse effects to the extent possible. We offer our customers
+standard software and product packages that are fast and easy
+to install, as well as financially attractive financing, software
+licensing, and subscription models. Our ongoing shift to a higher
+share of cloud subscriptions and software support revenue
+streams will lead to more predictable streams over time
+providing increased stability against financial volatility.
+Furthermore, we continue to apply cost discipline internally and
+have a conservative financial planning policy. Additionally, SAP
+Any one or more of these developments could reduce our ability
+to sell and deliver our software and services which could have an
+adverse effect on our business, financial position, profit, and
+cash flows.
+Increased price competition and demand for cheaper
+products and services
+acquisitions, or business practices
+Market disruption from aggressive competitive behavior,
+impairment charges in the future
+-
+Combined Management Report | Risk Management and Risks
+111
+developments and general regulations as well as budgetary
+constraints or shifts in spending priorities of national
+governments.
+Macroeconomic developments, such as financial market
+volatility episodes, global economic crises, chronic fiscal
+imbalances, slowing economic conditions, or disruptions in
+emerging markets, could limit our customers' ability and
+willingness to invest in our solutions or delay purchases. In
+addition, changes in the euro conversion rates for particular
+currencies might have an adverse effect on business activities
+with local customers and partners. Furthermore, political
+instability in regions such as Africa and the Middle East, political
+crises (including Brazil, Great Britain, Greece, Syria, Turkey,
+Ukraine, or Venezuela), sanctions (such as those placed on
+Russia), natural disasters, pandemic diseases (such as Ebola in
+West Africa) and terrorist attacks (including the attacks in
+Brussels, Belgium, in March 2016, or in Nice, France, in July
+2016) could contribute to economic and political uncertainty.
+These events could reduce the demand for SAP software and
+services, and lead to:
+-
+Uncertainty in the global economy, financial markets, or
+political conditions could have a negative impact on our
+business, financial position, profit, as well as cash flows, and
+put pressure on our operating profit.
+Delays in purchases, decreased deal size, or cancellations of
+proposed investments
+Higher credit barriers for customers, reducing their ability to
+finance software purchases
+-
+Increased number of bankruptcies among customers,
+business partners, and key suppliers
+-
+Increased default risk, which might lead to significant
+Potential lawsuits from customers due to denied provision of
+service as a result of sanctioned-party lists or export control
+issues
+Terrorist attacks (such as in Turkey, in March, June, August, and
+December 2016) as well as other acts of violence or war, civil,
+religious, and political unrest (such as in Turkey, Ukraine, and
+Venezuela; Israel, Libya, Syria, and in other parts of the Middle
+East; and parts of Africa); natural disasters (such as hurricanes,
+flooding, or similar events); or pandemic diseases (such as
+Ebola in West Africa) could have a significant adverse effect on
+the local economy and beyond. Such an event could lead, for
+example, to the loss of a significant number of our employees, or
+to the disruption or disablement of operations at our locations,
+and could affect our ability to provide business services and
+maintain effective business operations. Furthermore, this could
+have a significant adverse effect on our partners as well as our
+customers and their investment decisions, which could have an
+adverse effect on our reputation, business, financial position,
+profit, and cash flows.
+business critical
+Lawsuits
+likely
+unlikely
+Implementation Projects
+Project Risks
+low
+major
+remote
+Currency, Interest Rate and Share Price Fluctuations
+medium
+major
+unlikely
+Compliance with Accounting Pronouncements
+Evolution¹)
+Risk Level
+Probability Impact
+- Operational difficulties in countries with a high corruption
+perception index
+Protectionist trade policies, import and export regulations,
+and trade sanctions and embargoes
+Works councils, labor unions, and immigration laws in
+different countries
+Difficulties enforcing intellectual property and contractual
+rights in certain jurisdictions
+Country-specific software certification requirements
+Challenges with effectively managing a large distribution
+network of third-party companies
+Compliance with various industry standards (such as
+Payment Card Industry Data Security Standard)
+Market volatilities or workforce restrictions due to changing
+laws and regulations resulting from political decisions (e.g.
+Brexit, government elections)
+As we expand into new countries and markets, these risks could
+intensify. The application of the respective local laws and
+112
+Combined Management Report | Risk Management and Risks
+regulations to our business is sometimes unclear, subject to
+change over time, and often conflicting among jurisdictions.
+Additionally, these laws and government approaches to
+enforcement are continuing to change and evolve, just as our
+products and services continually evolve. Compliance with these
+varying laws and regulations could involve significant costs or
+require changes in products or business practices. Non-
+compliance could result in the imposition of penalties or
+cessation of orders due to alleged non-compliant activity. We do
+not believe we have engaged in any activities sanctionable under
+these laws and regulations, but governmental authorities could
+use considerable discretion in applying these statutes and any
+imposition of sanctions against us could be material. One or
+more of these factors could have an adverse effect on our
+operations globally or in one or more countries or regions, which
+could have an adverse effect on our business, financial position,
+profit, and cash flows.
+We address these risks with various measures depending on the
+circumstances on which SAP will not compromise, including, for
+example, a strong legal and compliance office presence in the
+main countries, compliance safeguards supported and
+monitored by SAP legal teams and the Legal Compliance &
+Integrity Office, maintaining an effective data protection and
+privacy office and associated policy, receiving guidance from
+external economics consultants, law firms, tax advisors, and
+authorities in the concerned countries, and taking legal actions
+when necessary.
+Although we estimate the probability of occurrence of this risk
+to be unlikely, we cannot completely exclude the possibility that
+this risk could have a major impact on our business, financial
+position, profit, and cash flows, or cause a negative deviation
+from our revenue and operating profit target. We classify this
+risk as a medium risk.
+medium
+Product and Technology Risks
+major
+unlikely
+high
+business critical
+likely
+Infringement of Intellectual Property
+Operational Risks
+→
+medium
+business critical
+unlikely
+Operation of SAP Cloud Data Centers
+medium
+Product Security
+unlikely
+Technology and Product Strategy
+business critical
+business critical
+business critical
+medium
+Undectected Defects in Products
+unlikely
+business critical
+medium
+medium
+We estimate the probability of occurrence of this risk to be
+unlikely, and we cannot exclude the possibility that this risk
+could have a major impact on our reputation, business, financial
+position, profit, and cash flows, or cause a negative deviation
+from our revenue and operating profit target if it were to
+materialize. We classify this risk as a medium risk.
+likely
+major
+medium
+Innovation
+remote
+Third-Party Licensing
+130
+In 2016, we recognized only minor changes in the percentages
+of all reported risks categorized as "high" or "medium" in our
+risk-level matrix. The number of risks categorized as "high"
+accounted for 11% (2015: 11%) of all reported risks, while the
+risks categorized as "medium" accounted for 67% (2015: 68%)
+of all risks reported in the Risk Factors section.
+SAP consolidates and aggregates all risks reported by the
+different business units and functions following our risk
+management policy, monitored by a Group-wide risk
+management governance function.
+Combined Management Report | Risk Management and Risks
+In our view, considering their likelihood of occurrence and
+impact level, the risks described in our aggregated Risk Report
+do not individually or cumulatively threaten our ability to
+continue as a going concern. Management remains confident
+that the Group's earnings strength forms a solid basis for our
+future business development and provides the necessary
+resource to pursue the opportunities available to the Group.
+Because of our strong position in the market, our technological
+leadership, our highly motivated employees, and our structured
+processes for early risk identification, we are confident that we
+can continue to successfully counter the challenges arising from
+the risks in our risk profile in 2017.
+Changes in customer budgets
+Although we estimate the probability of occurrence of the risk to
+be unlikely, we cannot completely exclude the possibility of a
+major impact. We classify this risk as a medium risk.
+The timing, size, and length of customers' services projects
+Deployment models that require the recognition of revenue
+over an extended period of time
+Decreased software sales that could have an adverse effect
+on related maintenance and services revenue
+Consolidated Risk Profile
+The timing of the introduction of new products and services
+or product and service enhancements by SAP or our
+competitors
+The introduction of licensing and deployment models such as
+cloud subscription models
+The large size, complexity, and extended timing of individual
+customer transactions
+The relatively long sales cycles for our products
+-
+-
+-
+-
+-
+-
+-
+Our revenue and operating results can vary and have varied in
+the past, sometimes substantially, from quarter to quarter. Our
+revenue in general, and our software revenue in particular, is
+difficult to forecast for a number of reasons, including:
+Our sales are subject to quarterly fluctuations and our sales
+forecasts might not be accurate.
+Financial Risks
+Adoption of, and conversion to, new business models leading
+to changed or delayed payment terms
+As a globally operating company, SAP is subject to various
+financial risks, which could negatively impact our business,
+financial position, profit, and cash flows.
+Seasonality of a customers' technology purchases
+Limited visibility during the ongoing integration of acquired
+companies into their ability to accurately predict their sales
+pipelines and the likelihood that the projected pipeline will
+convert favorably into sales
+Since many of our customers make their IT purchasing
+decisions near the end of calendar quarters, and with a
+significant percentage of those decisions being made during our
+fourth quarter, even a small delay in purchasing decisions for
+our on-premise software could have an adverse effect on our
+revenue results for a given year. Our dependence on large
+transactions has decreased in recent years with a trend towards
+an increased number of transactions while the average deal size
+is more or less constant.
+We regularly monitor our compliance with applicable financial
+reporting standards and review new pronouncements and drafts
+thereof that are relevant to us. As a result of new standards,
+changes to existing standards (including the new IFRS 15 on
+revenue from contracts with customers that we will need to
+adopt in 2018) and changes in their interpretation, we might be
+required to change our accounting policies, particularly
+concerning revenue recognition, to alter our operational policies
+so that they reflect new or amended financial reporting
+standards, or to restate our published financial statements.
+Such changes might have an adverse effect on our reputation,
+business, financial position, and profit, or cause an adverse
+deviation from our revenue and operating profit target.
+Current and future accounting pronouncements and other
+financial reporting standards, especially but not only
+concerning revenue recognition, might negatively impact our
+financial results.
+Although we estimate the probability of occurrence of the risk to
+be unlikely, we cannot completely exclude the possibility of a
+moderate impact on our business, financial position, profit, and
+cash flows, or a negative deviation from our revenue and
+operating profit target. We classify this risk as a low risk.
+We have a number of control procedures in place to make sure
+that our estimates and judgments are adequate. For example,
+we apply two-person verification to significant estimating.
+To comply with IFRS, management is required to make
+numerous judgments, estimates, and assumptions that affect
+the reported financial figures. The facts and circumstances, as
+well as assumptions on which management bases these
+estimates and judgments and management's judgment
+regarding the facts and circumstances, might change over time
+and this could result in significant changes in the estimates and
+judgments and, consequently, in the reported financials. There
+is a risk that such changes could have an adverse effect on our
+business, financial position, profit and cash flows.
+Management use of estimates could negatively affect our
+business, financial position, profit, and cash flows.
+Although we estimate the probability of occurrence of this risk
+to be remote, there can be no assurance that the prescribed
+measures will be successful or that uncertainty in global
+economic conditions could not have a major impact on our
+business, financial position, profit, cash flows, or operating profit
+target. We classify this decreased risk as a low risk.
+diversification with a variety of counterparties, predominantly
+short-term investments, and standard investment instruments.
+121
+Combined Management Report | Risk Management and Risks
+SAP's investment policy with regards to total Group liquidity is
+set out in our internal treasury guideline, which is a collection of
+uniform rules that apply globally to all companies in the SAP
+Group. Amongst others, it requires that we invest, with limited
+exceptions, only in assets and funds rated BBB flat or better.
+The weighted average rating of the investments of our total
+Group liquidity is in the area of A-. We continue to pursue a
+policy of cautious investment characterized by wide portfolio
+Macroeconomic factors such as an economic downturn could
+have an adverse effect on our future liquidity. We use a globally
+centralized financial management to control financial risk, such
+as liquidity, exchange rate, interest rate, counterparty, and
+equity price risks. The primary aim is to maintain liquidity in the
+SAP Group at a level that is adequate to meet our obligations at
+any time. Our total Group liquidity is supported by our strong
+operating cash flows, of which a large part is recurring, and by
+credit facilities from which we can draw if necessary. However,
+adverse macroeconomic factors could increase the default risk
+associated with the investment of our total Group liquidity
+including possible liquidity shortages limiting SAP's ability to
+repay financial debt. This could have an impact on the value of
+our financial assets, which could have an adverse effect on our
+business, financial position, profit, and cash flows.
+External factors could impact our liquidity and increase the
+default risk associated with, and the valuation of, our
+financial assets.
+Although we estimate the probability of occurrence of this risk
+to be unlikely, we cannot completely exclude the possibility that
+this risk could have a moderate impact on our business, financial
+position, profit, and cash flows, or cause a negative deviation
+from our revenue and operating profit target. We classify this
+risk as a low risk.
+based upon anticipated revenue levels and a high percentage of
+our expenses are relatively fixed in the near term, any shortfall in
+anticipated revenue or delay in revenue recognition could result
+in significant variations in our operating results from quarter to
+quarter or year to year. Continued deterioration in global
+economic conditions would make it increasingly difficult for us
+to accurately forecast demand for our products and services,
+and could cause our revenue, operating results, and cash flows
+to fall short of our expectations and public forecasts. This could
+have an adverse effect on our stock price. To the extent any
+future expenditure fails to generate the anticipated increase in
+revenue, our quarterly or annual operating results might be
+subject to an adverse effect and might vary significantly
+compared to preceding or subsequent periods. As we recognize
+cloud subscriptions and support revenue over the respective
+service period that typically ranges from one-to-three years with
+some up to five years, the relevance and impact of sales
+fluctuations decrease along with the growing importance of
+these revenues.
+We use a "pipeline" system for forecasting sales and trends in
+our business. Pipeline analysis informs and guides our business
+planning, budgeting, and forecasting, but pipeline estimates do
+not necessarily consistently correlate to revenue in a particular
+quarter, potentially due to one or more of the reasons outlined
+above. The reliability of our plans, budgets, and forecasts might
+therefore be compromised. Because our operating expenses are
+However, the loss or delay of one or a few large opportunities
+could have an adverse effect on our business, financial position,
+profit, and cash flows.
+Other general economic, social, environmental, and market
+conditions, such as a global economic crisis and difficulties
+for countries with large debt
+business, financial position, profit, cash flows, and operating
+profit target would be minor. We classify this risk as a low risk.
+An adverse effect on relationships with existing customers,
+partners, or third-party providers of technology or products
+Difficulties in integrating the acquired company's accounting,
+HR, and other administrative systems and coordination of the
+acquired company's research and development (R&D), sales,
+and marketing functions
+To address this risk, Sapphire Ventures diversifies its portfolio
+and manages our investments actively. In addition, our venture
+capital activities have a limited scope.
+quickly and successfully as expected. Therefore, market
+launches, entering new markets, or the introduction of new
+innovations could be delayed or not be successful.
+123
+Combined Management Report | Risk Management and Risks
+We believe that the likelihood of this risk materializing is remote
+and that if the risk were to occur, its potential impact on our
+Our development investment, including new product launches
+and enhancements, is subject to risks. For example, software
+products and services might not completely meet our high-
+quality standards, including security standards; might not fulfill
+market needs or customer expectations; or might not comply
+with local standards and requirements. Furthermore, this risk
+also exists with respect to acquired companies' technologies
+and products where we might not be able to manage these as
+Undetected defects in the introduction of new products,
+product enhancements and cloud offerings could increase
+our costs, and reduce customer demand.
+We cannot completely exclude the possibility of a negative
+impact on our customers' and partners' or our own operations
+globally or in one or more countries or regions. We estimate the
+probability of occurrence of the risk of severe damages to
+customers and SAP to be unlikely. If such an occurrence
+happens, it could have a business-critical impact on our
+reputation, business, financial position, profit, and cash flows as
+well as on the achievement of our revenue and operating profit
+target. We classify this risk as a medium risk.
+SAP has a software security response process in place to rapidly
+react to detected vulnerabilities and provide fixes. We have also
+improved the roll-out procedures for security-relevant notes,
+patches, and service packs to ensure easy and fast consumption
+on the customer side. However, with regards to the Applications,
+Technology & Services segment, there is a risk that customers
+do not upgrade or patch their business systems on a timely
+basis according to SAP's recommendations.
+Customer systems or systems operated by SAP itself to provide
+services could potentially be compromised by vulnerabilities if
+they are exploited by hackers. This could lead to theft,
+destruction, or abuse of data, or systems could be rendered
+unusable (for example, due to distributed denial of service
+attacks). The detection of security vulnerabilities in our
+software, our customers' systems, or SAP systems used in the
+provision of services, especially in case of exploitation, could
+prevent us from meeting our contractual obligations and
+subsequently might lead to customer claims and reputational
+damage, which might have an adverse effect on our business,
+financial position, profit, and cash flows.
+Undetected security vulnerabilities shipped and deployed
+within our products might cause damage to SAP and our
+customers, and partners.
+Product and Technology Risks
+We estimate the probability of this risk to be unlikely, but we
+cannot completely exclude the possibility that this risk could
+have a major negative impact on our reputation, business,
+financial position, profit, and cash flows, or cause a negative
+deviation from our revenue and operating profit target. We
+classify this risk as a medium risk.
+Our customers continue to follow project approaches to
+optimize their IT solutions in a non-disruptive manner. Our
+projects also include risk management processes that are
+integrated into SAP project management methods intended to
+safeguard implementations with coordinated risk and quality
+management programs. As part of our processes, we make
+adequate financial planning provisions for the remaining
+individual risks.
+As a result of these and other risks, SAP and/or some of our
+customers have incurred significant implementation costs in
+connection with the purchase and installation of SAP software
+products and solutions. Some customer implementations have
+taken longer than planned and failed to generate the profit
+originally expected. We cannot guarantee that we can reduce or
+eliminate protracted installation or significant third-party
+consulting costs, for example, that trained consultants will be
+readily available, that our costs will not exceed the fees agreed in
+fixed-price contracts, or that customers will be satisfied with the
+implementation of our software and solutions. Unsuccessful,
+lengthy, or costly customer implementation and integration
+projects could result in claims from customers, harm SAP's
+reputation, and could have an adverse effect on our business,
+financial position, profit, and cash flows. Additionally, potentially
+new contracting models based on subscription models for
+services, support, and application management might lead to
+challenges from a financial position perspective including profit
+and cash flow.
+Other aspects that could potentially affect our projects and
+deliveries, especially during the transition to the Cloud are
+security breaches or unauthorized access to confidential data,
+operational data center and infrastructure disruptions as well as
+local legislation with regards to data privacy.
+faces a number of different risks. For example, functional
+requirement changes, delays in timeline, or deviation from
+recommended best practices might occur during the course of a
+project. These scenarios have a direct impact on the project
+resource model and on securing adequate internal personnel or
+consultants in a timely manner and could therefore prove
+challenging.
+Combined Management Report | Risk Management and Risks
+Operational Risks
+Although we estimate the probability of occurrence of this risk
+to be unlikely, we cannot completely exclude the possibility that
+any disruption of our cloud operations could result in a business-
+critical impact on our reputation, business, financial position,
+profit, cash flows, and revenue and operating profit target. We
+classify this risk as a medium risk.
+Our mitigation measures have been designed and implemented
+to minimize such adverse effects. We continuously invest in
+protecting the integrity and security of our products and
+services as well as internal and external data that is managed
+within our data centers. We are consolidating and harmonizing
+our data centers and our data protection measures, including
+implementing security information and event management
+solutions as well as network access control enforcement and we
+monitor and invest to continuously improve our disaster
+recovery and business continuity capabilities, to run a
+homogeneous landscape that supports the complex
+infrastructure, application, and security requirements so that we
+can deliver the required service level for cloud services.
+In addition, our insurance coverage might not cover claims
+against us for loss or security breach of data or other indirect or
+consequential damages. Moreover, defending a suit, regardless
+of its merit, could be costly and time-consuming. In addition to
+potential liability, if we experience interruptions in the availability
+of our cloud applications, our reputation could be harmed and
+we could lose customers.
+if these security measures are breached as a result of third-
+party action, employee error or malfeasance, or otherwise, and
+if, as a result, someone obtains unauthorized access to our
+customers' data, which might include personally identifiable
+information regarding users, our reputation could be damaged,
+our business might suffer, local data protection and privacy laws
+or regulations might be breached, and we could incur significant
+liability.
+We have administrative, technical, and physical security
+measures in place as well as contracts that require third-party
+data centers to have appropriate security and data protection
+and privacy measures in place. In this context, customers might
+demand to use only specific and/or local data centers. However,
+In addition, new products and cloud offerings, including third-
+party technologies we have licensed and open source software
+components we use in those products, could contain
+undetected defects or they are detected, or not be mature
+enough from the customer's point of view for business-critical
+solutions after shipment in spite of all due diligence SAP puts
+into quality and security. The detection and correction of any
+defects especially after delivery could be expensive and time-
+consuming and in some cases we might not be able to meet the
+expectations of customers regarding time and quality in the
+defect resolution process. In some circumstances, we might not
+be in a position to rectify such defects or entirely meet the
+expectations of customers, specifically as we are expanding our
+product portfolio into additional markets. As a result, we might
+have to fix defects in our software after shipment (so called
+security response) or in some cases even face customer claims
+for cash refunds, damages, replacement software, or other
+concessions. The risk of defects and their adverse
+consequences could increase as we seek to introduce a variety
+of new software products and product enhancements at a
+higher innovation rate. This is especially relevant for cloud
+products as delivery cycles are even shorter (up to daily
+deliveries) and our complete cloud product customer base could
+receive undetected defects simultaneously. Furthermore, for
+products that use third-party (not SAP) cloud services, we might
+not always be able to detect defects in advance. Significant
+undetected defects or delays in introducing new products or
+product enhancements could affect market acceptance of SAP
+software products and could have an adverse effect on our
+reputation, business, financial position, profit, and cash flows.
+Because we are operating throughout the world, a significant
+portion of our business is conducted in foreign currencies. In
+2016, approximately 73% of our revenue was attributable to
+operations in foreign currencies and therefore gets translated
+into our reporting currency, the euro. Consequently, period-
+over-period fluctuations can significantly impact our financial
+results. In general, an appreciation of the euro has an adverse
+effect while a depreciation has a positive effect. In addition to
+exchange rate risks, we are exposed to interest rate and share
+price fluctuations due to variable interest bearing assets and
+liabilities and share-based compensation plans for our
+employees and executives.
+Nevertheless, financial risks could negatively impact our
+business, financial position, profit, and cash flows. We believe
+the likelihood of such a risk with a material adverse effect on our
+financial results is remote and if the risk were to occur, its
+impact on our business, financial position, profit, and cash flows
+could be major. We classify this risk as a low risk
+For more information about risks arising from financial
+instruments, including our currency and interest rate risks and
+our related hedging activity, see the Notes to the Consolidated
+Financial Statements section, Notes (24) to (25).
+Project Risks
+Implementation of SAP software and cloud-based service
+deliveries often involves a significant commitment of
+resources by our customers and is subject to a number of
+significant risks over which we often have no control.
+A core element of our business is the successful implementation
+of software and service solutions to enable our customers to
+master complexity and help our customers' business run at their
+best. The implementation of SAP software and cloud-based
+service deliveries is led by SAP, by partners, by customers, or by
+a combination thereof. Depending on various factors, such as
+the complexity of solutions, the customer's implementation,
+integration and migration needs, or the resources required, SAP
+122
+We continuously monitor our exposure to all of these financial
+risks and have implemented adequate procedures to mitigate
+them. For example, we pursue a group-wide foreign exchange
+risk management strategy to hedge balance sheet items and
+expected cash flows in foreign currencies by using derivative
+financial instruments as appropriate. We have a balanced
+maturity profile and mixture of fixed and floating interest rate
+arrangements in place to hedge against interest rate risk and
+use derivative instruments to reduce the impact of our share-
+based compensation plans on our income statement and cash
+flow.
+The use of existing SAP software products by customers in
+business-critical solutions and processes and the relative
+complexity and technical interdependency of our software
+products and services create a risk that customers or third
+parties might pursue warranty, performance, or other claims
+against us for actual or alleged defects in SAP software
+products, in our provision of services, or in our application
+hosting services. We have in the past been, and might in the
+future be, subject to warranty, performance, or other similar
+claims.
+Although our contracts generally contain provisions designed to
+limit our exposure due to actual or alleged defects in SAP
+software products or in our provision of services, these
+provisions might not cover every eventuality or be effective
+under the applicable law. Regardless of its merits, any claim
+could entail substantial expense and require the devotion of
+significant time and attention by key management personnel.
+Publicity surrounding such claims could affect our reputation
+and the demand for our software.
+We counter these risks using a broad range of techniques,
+including project management, project monitoring, product
+standards and governance, and rigid and regular quality
+assurance measures certified to ISO 9001:2008, applicable to
+the Applications, Technology & Services segment. Additionally,
+we are introducing a new and improved risk-based secure
+software development lifecycle with all the trainings, tools, and
+processes in place to develop secure software. This spans from
+specific security training curriculums for our developers, threat
+modelling at the beginning of every development project to
+identify potential risks early on to centrally provided security
+tools (for example, static and dynamic analysis tools), a holistic
+security testing strategy to validate the state of security for
+every product before market introduction. In addition, direct
+customer feedback is considered in the market release decision
+process. Delivering high-quality software products is a priority
+and part of our core business. Our strong investment and
+permanent efforts lead to a generally high level of quality of our
+products, which is made transparent in the defined quality
+perception and support index and confirmed by our constantly
+high customer satisfaction ratings as measured by customer
+quality perception reporting.
+comprehensive certification program designed to ensure that
+relevant third-party solutions are of consistently high quality.
+We believe that the likelihood of this risk materializing is unlikely.
+If this risk were to occur, its impact on our reputation, business,
+financial position, profit, cash flows, and revenue and operating
+profit target would be business-critical. We classify this risk as a
+medium risk.
+Our cloud offerings and related infrastructure might be
+subject to a security attack, become unavailable, or fail to
+perform properly.
+The software used in our cloud portfolio is inherently complex
+and any defects in product functionality, data center operations,
+or system stability that cause interruptions in the availability of
+our application portfolio could result in the following:
+-
+-
+125
+-
+-
+Lost or delayed market acceptance and sales
+Breach of warranty or other contract breach or
+misrepresentation claims
+Sales credits or refunds to our customers or partners
+Loss of customers and/or partners
+Diversion of development and customer service resources
+Breach of data protection and privacy laws and regulations
+Customers considering competitive cloud offerings
+Loss of customer satisfaction and brand reputation
+The costs incurred in correcting any defects or errors might be
+substantial and could have an adverse effect on our reputation,
+business, financial position, profit, and cash flows. The
+availability of our cloud applications could be interrupted by a
+number of factors, resulting in customers' inability to access
+their cloud applications or receive their service level, system
+outages or downtimes, failure of our network due to human or
+other errors, security breaches, or variability in user traffic for
+our cloud applications. Because of the large amount of data that
+we collect and manage, hardware failures, defects in our
+software, or errors in our systems could result in data loss or
+corruption, or cause the information that we collect to be
+incomplete or contain inaccuracies that our customers regard
+as significant. Additionally, any loss of the right to use hardware
+purchased or leased from third parties could result in delays in
+our ability to provide our cloud applications until equivalent
+technology is either developed by us or, if available, identified.
+Furthermore, our cooperation with partners in the area of cloud
+includes the co-location of data centers that might expose SAP
+to additional risks in the area of security and data protection, as
+well as the potential for breached service-level agreements by
+partners.
+-
+Third parties have claimed, and might claim in the future,
+that we infringe their intellectual property rights, which could
+lead to damages being awarded against us and limit our
+ability to use certain technologies in the future.
+Combined Management Report | Risk Management and Risks
+We might not be successful in integrating our platforms and
+solutions, enabling the complete product and cloud service
+portfolio, harmonizing our user interface design and technology,
+integrating acquired technologies, or bringing new solutions
+based on the SAP HANA platform as well as SAP HANA Cloud
+Platform to the market as fast as expected, in particular,
+innovative applications such as SAP S/4HANA or new
+technologies such as Internet of Things or machine learning. In
+addition, we might not be able to compete or partner effectively
+in the area of cloud services and our new applications and
+services might not meet customer expectations possibly
+impacting customer satisfaction and retention. As a result, our
+partner organizations and customers might not adopt our
+technology platforms, applications, or cloud services quickly
+enough or they might consider other competitive solutions in
+the market. This could have an adverse effect on our reputation,
+business, financial position, profit, and cash flows.
+With regards to the increased volume of open source software
+components used in our software products and services as well
+as in the products and services of our acquired companies, we
+see a probability of this risk to materialize but rate the
+probability as unlikely. We cannot completely exclude the
+possibility that this risk, if it were to occur, could have a
+business-critical impact on our reputation, business, financial
+position, profit, and cash flows, or cause a negative deviation
+from our revenue and operating profit target. We classify this
+risk as a medium risk.
+Changes in our rights to use software, cloud services, and
+technologies we license from third parties that are an integral
+part of SAP's products and services could slow down time to
+market and influence our license pricing and therefore the
+competitiveness with other software vendors. Furthermore, it
+could diminish our software's or cloud functional capabilities
+and therefore could jeopardize the stability of our solution
+portfolio offering.
+The numerous third-party solutions we have licensed and
+certain open source software components we use have become
+an integral part of our product and service portfolio. We depend
+on those solutions for the functionality of our software and cloud
+services. Changes to, or the loss of, third-party licenses as well
+as open source licenses being construed could significantly
+increase the cost of these licenses and significantly reduce
+software or cloud functionality and/or usability or availability of
+SAP's software or cloud offerings. As a result, we might incur
+additional development or license costs to ensure the continued
+functionality of our products, experience delays in our ability to
+offer or have to stop offering our products for sale, which could
+have an adverse effect on our business, financial position, profit,
+124
+Combined Management Report | Risk Management and Risks
+and cash flows. This risk increases with each of our acquisitions
+of a company or a company's intellectual property assets that
+had been subject to third-party solution licensing, open source
+software and product standards less rigorous than our own.
+We believe that we will be able to deliver additional business
+value with minimum disruption to our customers if we can
+successfully drive the integration and convergence of our
+technology platform offerings, SAP S/4HANA, as well as
+acquired technologies, enable our current product portfolio for
+SAP HANA, develop new solutions based on SAP HANA, and
+offer comprehensive cloud-based services, extendable with SAP
+HANA Cloud Platform. We enable and encourage partners to
+leverage SAP technology by providing guidance about business
+opportunities, architecture, and technology, as well as a
+We strive to execute appropriate due diligence and contract
+management processes and to continuously monitor
+development projects through our product implementation
+lifecycle process and monitoring as part of our cloud
+deployment.
+If we are unable to keep up with rapid technological, process
+and service innovations, and new business models as well as
+changing market expectations, we might not be able to
+compete effectively.
+Our future success depends upon our ability to keep pace with
+technological and process innovations and new business
+models, as well as our ability to develop new products and
+services, enhance and expand our existing products and
+services portfolio, and integrate products and services we obtain
+through acquisitions. To be successful, we are required to adapt
+our products and our go-to-market approach to a cloud-based
+delivery and consumption model to satisfy changing customer
+demand and to ensure an appropriate level of adoption,
+customer satisfaction and retention.
+We might not be successful in bringing new business models,
+solutions, solution enhancements, and/or services to market
+before our competitors or at equally favorable conditions. We
+might also face increasing competition from open source
+software initiatives, or comparable models in which competitors
+might provide software and intellectual property free and/or
+under terms and conditions unfavorable for SAP. In addition, we
+might not be able to generate enough revenue to offset the
+significant research and development costs we incur to deliver
+technological innovations or to offset the required infrastructure
+costs to deliver our solutions and services as part of our new
+business models. Moreover, we might not anticipate and
+develop technological improvements or succeed in adapting our
+products, services, processes, and business models to
+technological change, changing regulatory requirements,
+emerging industry standards, and changing requirements of our
+customers and partners. Finally, we might not succeed in
+producing high-quality products, enhancements, and releases in
+a timely and cost-effective manner to compete with our
+competitors, which could have an adverse effect on our
+reputation, business, financial position, profit, and cash flows.
+We will continue to align our organization, processes, products,
+delivery and consumption models, and services to changing
+markets and customer and partner demands. We develop new
+technology and new solutions such as the next-generation suite
+SAP S/4HANA or the next-generation business warehouse
+BW/4HANA. Furthermore, we explore future trends as well as
+the latest technologies e.g. through our network of innovation
+centers under the leadership of our chief innovation officer and
+adopt it if there is a clear business opportunity for SAP and if it
+provides value to our customers. To ensure that we remain
+competitive in the future, we conduct wide-ranging market and
+technology analyses and research projects, often in close
+cooperation with our customers and partners. We strive for
+strategic acquisitions with the potential to drive innovation and
+contribute to achieving our growth target.
+We believe that the likelihood of this risk materializing is remote;
+however, we cannot exclude the business-critical impact this
+risk would have on our reputation, business, financial position,
+profit, and cash flows, or the potential negative deviation from
+our revenue and operating profit target if it were to materialize.
+We classify this risk as a medium risk.
+Our technology and/or product strategy might not be
+successful or our customers and partners might not adopt
+our technology platforms and other innovations as expected.
+We believe that the probability of occurrence of this risk is likely
+and we cannot exclude the possibility of a major impact on our
+business, financial position, profit, and cash flows, or the
+possibility of a negative deviation from our revenue and
+operating profit target. We classify this risk as a medium risk.
+We believe that we will continuously be subject to intellectual
+property infringement claims as our solution portfolio grows; as
+we acquire companies with increased use of third-party code
+including open source code; as we expand into new industries
+with our offerings, resulting in greater overlap in the functional
+scope of offerings; and as non-practicing entities that do not
+design, manufacture, or distribute products increasingly assert
+intellectual property infringement claims.
+We have implemented a software security development lifecycle
+as a mandatory integral part of our software development
+process. For the Applications, Technology & Services segment
+we systematically align our software security development
+lifecycle to the recommendations of ISO/IEC 27034, applying
+methods to develop secure software in all development phases
+starting early in the design phase. This includes industry best
+practices such as security risk identification, threat modeling, a
+comprehensive security testing strategy, mandatory security
+training for all developers, and security validation of our
+products, patches, and services before shipment.
+126
+our reputation, business, financial position, profit, and cash
+flows.
+Combined Management Report | Risk Management and Risks
+128
+Protecting and defending our intellectual property is crucial to
+our success. We use a variety of means to identify and monitor
+potential risks and to protect our intellectual property. These
+include applying for patents, registering trademarks and other
+marks and copyrights, implementing measures to stop
+copyright and trademark infringement, entering into licensing,
+confidentiality, and non-disclosure agreements, and deploying
+protection technology. Despite our efforts, we might not be able
+to prevent third parties from obtaining, using, or selling without
+authorization what we regard as our proprietary technology and
+information. All of these measures afford only limited protection,
+and our proprietary rights could be challenged, invalidated, held
+unenforceable, or otherwise affected. Some intellectual property
+might be vulnerable to disclosure or misappropriation by
+employees, partners, or other third parties. Third parties might
+develop technologies that are substantially equivalent or
+superior to our technology. Finally, third parties might reverse-
+engineer or otherwise obtain and use technology and
+information that we regard as proprietary. Accordingly, we
+might not be able to protect our proprietary rights against
+unauthorized third-party copying or utilization, which could have
+an adverse effect on our competitive and financial positions, and
+result in reduced sales. Any legal action we bring to enforce our
+proprietary rights could also involve enforcement against a
+partner or other third party, which might have an adverse effect
+on our ability, and our customers' ability, to use that partner's or
+other third parties' products. In addition, the laws and courts of
+certain countries might not offer effective means to enforce our
+intellectual property rights. This could have an adverse effect on
+We might not be able to obtain adequate title to, or licenses
+in, or to enforce, intellectual property.
+Although we estimate this risk to be unlikely, we cannot
+completely exclude the possibility that this risk could have a
+business-critical impact on our business, financial position,
+profit, cash flows, and revenue and operating profit target. We
+classify this risk as a medium risk.
+We counter these acquisition-related risks with many different
+methodological and organizational measures. These include
+technical, operational, financial, and legal due diligence on the
+company or assets to be acquired and a holistic evaluation of
+material transaction and integration risks. The methods we use
+depend on the integration scenario. Our integration planning is
+detailed and standardized, and carried out by a dedicated
+integration team. We therefore believe we have minimized this
+risk.
+assurance that any such products or services will be
+successfully developed or that we will not incur significant
+unanticipated liabilities in connection with such arrangements.
+We might not be successful in overcoming these risks and we
+might therefore not benefit as anticipated from acquisitions or
+alliances.
+In addition, acquired businesses might not perform as
+anticipated, resulting in charges for the impairment of goodwill
+and other intangible assets on our statements of financial
+position. Such charges might have an adverse effect on our
+business, financial position, profit, and cash flows. We have
+entered into, and expect to continue to enter into, alliance
+arrangements for a variety of purposes, including the
+development of new products and services. There can be no
+Debt incurrence or significant cash expenditures
+Constraints in enforcing acquired companies' compliance
+with existing SAP security standards in a timely manner
+Difficulties in customer implementation projects combining
+technologies and solutions from both SAP and the acquired
+company
+Practices or policies of the acquired company that might be
+incompatible with our compliance requirements
+Difficulties in implementing, restoring, or maintaining internal
+controls, procedures, and policies
+Any claims, with or without merit, and negotiations or litigation
+relating to such claims, could preclude us from utilizing certain
+Material unknown liabilities and contingent liabilities of
+acquired companies, including legal, tax, accounting,
+intellectual property, or other significant liabilities that might
+not be detected through the acquisition due diligence
+process
+Loss of key personnel of the acquired business
+The diversion of management's time and attention from daily
+operations
+Failure to integrate the acquired company's operations
+across SAP's different cultures, languages, and local
+protocols, all within the constraints of applicable local laws
+Failure to meet the needs of the acquired company's
+customers and partners in the combined company
+We rely on a combination of the protections provided by
+applicable statutory and common law rights, including trade
+secret, copyright, patent, and trademark laws, license and non-
+disclosure agreements, and technical measures to establish and
+protect our proprietary rights in our products. We have
+established various internal programs, such as internal policies,
+processes, and monitoring, to assess and manage the risks
+associated with standards organizations, open source, and
+third-party intellectual property.
+Incorrect assumptions during due diligence process leading
+to negative contribution with regards to an acquired company
+Failure to successfully integrate acquired technologies or
+solutions into SAP's solution portfolio and strategy in a timely
+and profitable manner
+We might be dependent in the aggregate on technology that we
+license from third parties that is embedded in our products or
+that we resell to our customers. We have licensed and will
+continue to license numerous third-party software products that
+we incorporate into and/or distribute with our existing products.
+We endeavor to protect ourselves in the respective agreements
+by obtaining certain rights in case such agreements are
+terminated.
+We estimate the probability of this risk occurring as likely, and
+that it could have a business-critical impact on our reputation,
+business, financial position, profit, cash flows, and revenue and
+operating profit target. We classify this risk as a high risk.
+Through Sapphire Ventures (formerly SAP Ventures), our
+consolidated venture investment funds, we plan to continue
+investing in new and promising technology businesses. Many
+such investments initially generate net losses and require
+additional expenditures from their investors. Changes to
+planned business operations have, in the past affected, and
+might in the future affect, the performance of companies in
+which Sapphire Ventures holds investments, and that could
+have an adverse effect on the value of our investments in
+Sapphire Ventures, which could have an adverse effect on our
+business, financial position, profit, and cash flows. Furthermore,
+tax deductibility of capital losses and impairment in connection
+with equity securities are often restricted and could therefore
+have an adverse effect on our effective tax rate.
+We could incur significant losses in connection with venture
+capital investments.
+However, we cannot exclude the possibility of a business-critical
+impact on our business, financial position, profit, cash flows, and
+operating profit target if the risk were to occur. We classify this
+risk as a medium risk.
+In view of the scope of our insurance coverage and our selection
+of insurers, and because we keep our insurance programs under
+constant review, we believe that the likelihood of this risk
+materializing is remote.
+We maintain insurance coverage to protect us against a broad
+range of risks, at levels we believe are appropriate and
+consistent with current industry practice. Our objective is to
+exclude or minimize risk of financial loss at reasonable cost.
+However, we might incur losses that might be beyond the limits,
+or outside the scope, of coverage of our insurance and that
+might limit or prevent indemnification under our insurance
+policies. In addition, we might not be able to maintain adequate
+insurance coverage on commercially reasonable terms in the
+future. Further, certain categories of risks are currently not
+insurable at reasonable cost, which could have an adverse effect
+on our business, financial position, profit, and cash flows. Finally,
+there can be no assurance of the financial ability of the
+insurance companies to meet their claim payment obligations.
+Our insurance coverage might not be sufficient and we might
+be subject to uninsured losses.
+strategic transformation into cloud business operations, we
+classify this risk as a medium risk.
+129
+Combined Management Report | Risk Management and Risks
+Although we estimate the probability of occurrence of this risk
+to be unlikely, we cannot completely exclude the possibility that
+any misuse, theft, or breach of security could have a major
+impact on our business, financial position, profit, and cash flows
+as well as on our revenue and operating profit target. Due to our
+To minimize these risks, we have implemented several technical
+and organizational measures designed to safeguard our
+information, IT and facility infrastructure, and other assets.
+These measures include, for example, physical access control
+systems at facilities, multilevel access controls, closed-circuit
+television surveillance, security personnel in all critical areas,
+and recurring social engineering tests for SAP premises and
+data centers. Access to information and information systems is
+controlled using authorization concepts. Managers and
+employees are regularly sensitized to the issues and given
+mandatory security and compliance training. We keep these
+measures under continuous review to mitigate current threats.
+SAP is highly dependent on the exchange of a wide range of
+information across our global operations and on the availability
+of our infrastructure. With regards to our physical environment,
+we face several key security risks such as industrial and/or
+economic espionage, serious and organized crime, and other
+illegal activities, as well as violent extremism and terrorism. We
+might be endangered by threats including, but not limited to,
+social engineering, misuse, or theft of information or assets, or
+damage to assets by trespassers in our facilities or by people
+who have gained unauthorized physical access to our facilities,
+systems, or information. These could have an adverse effect on
+our business, financial profile, profit, and cash flows.
+We might not be able to protect our critical information and
+assets or to safeguard our business operations against
+disruption.
+Although we still consider the occurrence of this risk to be
+unlikely, we cannot completely exclude the possibility that this
+risk could have a business-critical impact on our business,
+financial position, profit, cash flows, and reputation as well as
+revenue and operating profit target. We classify this risk as a
+medium risk.
+To address the increasing cybersecurity threats, we are
+continuously adapting and modifying our security procedures.
+We have multiple security measures in place, such as technical
+IT security measures, identity and access management, and
+mandatory security and compliance training. In addition, our
+security governance model clearly defines security management
+accountabilities for all security areas regarding product security
+and corporate security, which enables us to respond quickly to
+identified cybersecurity risks. We have a global security function
+as well as an independent security audit department within the
+Corporate Audit organization in place appropriately addressing
+potential security threats.
+The key cybersecurity risks currently applicable to us include
+state-driven economic espionage as well as competitor-driven
+industrial espionage, and criminal activities including, but not
+limited to, cyberattacks and "mega breaches" against cloud
+services and hosted on-premise software. This might result in,
+for example, disclosure of confidential information and
+intellectual property, defective products, production downtimes,
+supply shortages, and compromised data (including personal
+data). A failure of our cybersecurity measures could impact our
+compliance with legal demands (for example, Sarbanes-Oxley
+Act, Payment Card Industry Data Security Standard, data
+privacy) and expose our business operations as well as service
+delivery to the described risks, for example, virtual attack,
+disruption, damage, and/or unauthorized access. Additionally,
+we could be subject to recovery costs, for example, as well as
+significant contractual and legal claims by customers, partners,
+authorities, and third-party service providers for damages
+against us, which could have an adverse effect on our
+reputation, business, financial position, profit, and cash flows.
+SAP's business strategy focuses on certain business models
+that are highly dependent on a working cyberspace. A
+cybersecurity breach could have an adverse effect on our
+customers, our reputation, and our business.
+We are party to certain patent cross-license agreements with
+third parties.
+Failure to properly evaluate the acquired business and its
+different business and licensing models
+Legal and regulatory constraints (such as contract
+obligations, privacy frameworks, and agreements)
+We consider the probability of occurrence of this risk to be likely,
+and cannot exclude its business-critical impact on our
+reputation, business, financial position, profit, cash flows, and
+revenue and operating profit target if it were to materialize. We
+classify this risk as a high risk.
+-
+-
+-
+-
+-
+-
+and integration of acquired businesses, products, or
+technologies demands time, focus, and resources of
+management and of the workforce. Acquisitions of companies,
+businesses, and technology expose us to unpredictable
+operational difficulties, expenditures, and risks. These risks
+include, among others:
+127
+Combined Management Report | Risk Management and Risks
+To expand our business, we acquire businesses, products, and
+technologies, and we expect to continue to make acquisitions in
+the future. Over time certain of these acquisitions have
+increased in size and in strategic importance for SAP,
+Management negotiation of potential acquisitions and alliances
+technologies in our products, be time-consuming, result in
+costly litigation, and require us to pay damages to third parties,
+stop selling or reconfigure our products and, under certain
+circumstances, pay fines and indemnify our customers, which
+could have an adverse effect on our business, financial profile,
+profit, cash flows, and reputation. They could also require us to
+enter into royalty and licensing arrangements on terms that are
+not favorable to us, cause product shipment delays, subject our
+products to injunctions, require a complete or partial redesign of
+products, result in delays to our customers' investment
+decisions, and damage our reputation.
+We might not acquire and integrate companies effectively or
+successfully and our strategic alliances might not be
+successful.
+The outcome of litigation and other claims or lawsuits is
+intrinsically uncertain. Management's view of the litigation might
+also change in the future. Actual outcomes of litigation and other
+claims or lawsuits could differ from the assessments made by
+management in prior periods, which are the basis for our
+accounting for these litigations and claims under IFRS.
+Claims and lawsuits are brought against us, including claims and
+lawsuits involving businesses we have acquired. Adverse
+outcomes to some or all of the claims and lawsuits pending
+against us might result in the award of significant damages or
+injunctive relief against us that could hinder our ability to
+conduct our business and could have an adverse effect on our
+reputation, business, financial position, profit, and cash flows.
+Claims and lawsuits against us could have an adverse effect
+on our business, financial position, profit, cash flows, and
+reputation.
+We are named as a defendant in various legal proceedings for
+alleged intellectual property infringements. For more
+information and a more detailed report relating to certain of
+these legal proceedings, see the Notes to the Consolidated
+Financial Statements, Note (23).
+We consider the probability of this risk materializing to be likely,
+and that any claims concerning intellectual property rights of
+third parties, open source requirements, or certain standards
+could have a business-critical impact on our business, financial
+position, profit, cash flows and reputation, as well as on the
+achievement of our revenue and operating profit target, and
+could also exacerbate the other risks we describe in this report.
+We classify this risk as a high risk.
+reporting of potential risks associated with third-party
+intellectual property.
+Our Legal Compliance & Integrity Office sets and manages
+internal policies related to our Code of Business Conduct
+including the handling of third-party intellectual property.
+Corporate Audit monitors compliance with these policies
+through various investigations. Our Global GRC organization
+works closely with both the Legal Compliance & Integrity Office
+and Corporate Audit and is responsible for the management and
+SAP continues to participate in standards organizations and
+increases the use of such standards in its products.
+Participation in standards organizations might require the
+licensing of SAP's intellectual property to contributors to the
+standard and to all standards implementers, including
+competitors, on a non-discriminatory basis in accordance with
+licensing terms defined by standards organizations. Within the
+software-related standards field, there is a trend toward
+expanding the scope of licensing obligations and narrowing an
+intellectual property owner's right to revoke a license if sued by
+a licensee. In certain situations, limitations on SAP's rights to
+revoke a license could reduce SAP's ability to assert a patent
+infringement claim against a third-party. Assertion of patents
+inadvertently licensed through standards could expose SAP to
+third-party claims.
+The software industry is making increasing use of open source
+software in its development work on solutions. We also integrate
+certain open source software components from third parties
+into our software. Open source licenses might require that the
+software code in those components or the software into which
+they are integrated be freely accessible under open source
+terms. Third-party claims might require us to make freely
+accessible under open source terms one of our products or
+third-party (not SAP) software upon which we depend.
+Software includes many components or modules that provide
+different features and perform different functions. Some of
+these features or functions might be subject to third-party
+intellectual property rights. The rights of another party could
+encompass technical aspects that are similar to one or more
+technologies in one or more of our products. Intellectual
+property rights of third parties could preclude us from using
+certain technologies in our products or require us to enter into
+royalty and licensing arrangements on unfavorable or expensive
+terms.
+For more information and a more detailed report relating to
+certain of these legal proceedings, see the Notes to the
+Consolidated Financial Statements, Note (23).
+-
+-
+Combined Management Report | Risk Management and Risks
+Selection of the wrong integration model for the acquired
+company and/or technology
+€8.5 billion to €9.0 billion operating profit (previously €8.0
+billion to €9.0 billion)
+€28 billion to €29 billion total revenue (previously €26 billion
+to €28 billion)
+-
+Combined Management Report | Expected Developments and Opportunities
+134
+€8.0 billion to €8.5 billion cloud subscriptions and support
+revenue (previously €7.5 billion to €8.0 billion)
+We raised our 2020 ambition to reflect the Company's
+consistent fast growth in the cloud, solid software momentum,
+and operating profit expansion as well as the exchange rate
+development. Assuming an exchange rate environment
+comparable to 2016, SAP strives to reach the following in 2020:
+We expect to grow our more predictable revenue business while
+steadily increasing operating profit. Our strategic objectives are
+focused primarily on the following financial and non-financial
+objectives: growth, profitability, customer loyalty, and employee
+engagement.
+In this section, all numbers are based exclusively on non-IFRS
+measures.
+Medium-Term Prospects
+Share-based payment expenses
+<20
+We believe SAP SE, the parent company of the SAP Group, will
+receive investment income in the form of profit transfers and
+dividends again in the future. The growth we expect from the
+SAP Group should have a positive effect on SAP SE investment
+income.
+Provided the SAP Group continues to hit its revenue and profit
+targets, we expect SAP SE to sustain revenue and operating
+income growth into the medium term.
+Assuming there are no special effects relating to acquisitions or
+internal corporate restructuring measures in 2017, we also
+expect the operating profit of SAP SE to increase slightly.
+We expect SAP SE product revenue to increase at constant
+currencies generally in line with the 6% to 8% constant-
+currency rise in non-IFRS cloud and software revenue
+anticipated for the SAP Group in 2017.
+Non-IFRS Measures
+€ millions
+Estimated
+Amounts for
+2017
+Actual
+Amounts
+for 2016
+5
+Revenue adjustments
+The outlook projections for the SAP Group in respect of liquidity,
+finance, investment, and dividend are equally applicable to SAP
+SE.
+Among the assumptions underlying this outlook are those
+presented above concerning the economy and our expectations
+for the performance of the SAP Group.
+In 2017, we expect a positive development of our operating cash
+flow, which we anticipate will reach up to €5.0 billion.
+We intend to repay €1 billion Eurobonds when they mature in
+April 2017 as well as US$443 million U.S. private placements in
+October and November 2017.
+On December 31, 2016, we had a negative net liquidity. We
+believe that our liquid assets combined with our undrawn credit
+facilities are sufficient to meet our present operating financing
+needs also in 2017 and, together with expected cash flows from
+operations, will support debt repayments and our currently
+planned capital expenditure requirements over the near term
+and medium term.
+Goals for Liquidity and Finance
+The Company expects a full-year 2017 effective tax rate (IFRS)
+of 26.0% to 27.0% (2016: 25.3%) and an effective tax rate (non-
+IFRS) of 27.0% to 28.0% (2016: 26.8%).
+133
+Combined Management Report | Expected Developments and Opportunities
+We do not expect any Company-wide restructuring programs in
+2017.
+28
+680
+620 to 650
+30 to 50
+Restructuring
+In the absence of large acquisitions, we expect our strong
+operating cash flow will generate excess cash in the next 6-12
+months. Based on the actual acquisition volume and liquidity
+development we would consider a potential share buyback in the
+second half of 2017.
+770 to 1,020
+Acquisition-related charges
+Investment Goals
+Our planned capital expenditures for 2017 and 2018, other than
+from business combinations, mainly comprise the construction
+activities described in the Assets (IFRS) section of this report.
+We expect investments from these activities of approximately
+€365 million in 2017 (an increase of 20% compared to the
+previous year), and approximately €250 million in 2018. These
+investments can be covered in full by operating cash flow.
+SAP is not currently planning any significant acquisitions in 2017
+and 2018 but will rather focus on organic growth, complemented
+by minor acquisitions. In 2017, we intend to spend up to €1.0
+billion for smaller acquisitions.
+Proposed Dividend
+We intend to continue our dividend policy in 2017 as well, which
+is to pay a dividend totaling more than 35% of the prior year's
+profit after tax.
+Premises on Which Our Outlook Is Based
+In preparing our outlook, we have taken into account all events
+known to us at the time we prepared this report that could
+influence SAP's business going forward.
+Among the premises on which this outlook is based are those
+presented concerning economic development and the
+assumption that there will be no effects from major acquisitions
+in 2017 and 2018.
+We continue to expect the share of more predictable revenue
+(defined as the total of cloud subscriptions & support revenue
+and software support revenue) to reach 70% to 75% in 2020.
+785
+By 2020, we expect our business network and public cloud
+offerings to generate approximately the same portion of cloud
+subscriptions and support revenue. Both of these offerings are
+expected to each generate, in 2020, cloud subscriptions and
+support revenues that are significantly higher than the cloud
+subscriptions and support revenue generated from our private
+cloud offerings.
+transformation which is key to our strategy. In addition to
+organic developments and tuck-in acquisitions, large strategic
+acquisitions in particular may boost our revenue and profits
+significantly. Furthermore, SAP seeks to establish new business
+models and leverage our expanding ecosystem of partners to
+achieve scale and maximize opportunities.
+We also strive for significantly improving, over the next few
+years, the profitability of our cloud business. In 2017, we will
+continue the investment phase of our cloud business. As of
+2018, we expect to see the benefits from those efficiency-based
+investments and increasing cloud gross margin. We expect
+these improvements to continue in the following years to reach
+our envisioned long-term cloud subscriptions and support
+margin targets in 2020. These will continue to increase at
+different rates per cloud operations model: We expect the gross
+margin from our public cloud to reach approximately 80%
+(2016: 62.0%) in 2020. Likewise, we expect our business
+network gross margin to reach approximately 80% (2016:
+75.9%) in 2020. The gross margin for our private cloud is
+expected to reach about 40% (2016: -5.4%) in 2020. The
+combined cloud gross margin is expected to be approximately
+73% in 2020.
+Our strong assets in applications and analytics, as well as
+database and technology, continue to offer solid multiyear
+growth opportunities as we bring innovative technologies with
+simplified consumption to our installed base and continue to
+add net-new customers. Unexpected portfolio growth may
+positively impact our revenue, profit, and cash flows, and result
+in their exceeding our stated outlook and medium-term
+prospects. Specifically, SAP HANA, cloud offerings, and
+SAP S/4HANA solutions, could create even more demand than
+is reflected in our stated outlook and medium-term prospects.
+Further upside potential is possible by higher than expected
+renewal rates of our cloud solutions.
+For more information about future opportunities for SAP, see
+the Strategy and Business Model section as well as the Expected
+Developments and Opportunities section.
+Opportunities from Our Partner Ecosystem
+SAP continues to grow and develop a global partner ecosystem.
+To increase market coverage, we want to enhance our portfolio
+and spur innovation with the specified objective of increasing the
+partner revenue contribution to SAP's overall revenue target. In
+addition to strengthening our core, we leverage our entire
+ecosystem to drive adoption of SAP HANA, cloud solutions,
+SAP S/4HANA, and SAP Cloud Platform (formerly called SAP
+HANA Cloud Platform). This includes strategic partnerships
+across all areas: third-party software vendors, systems
+integrators, service providers, and infrastructure providers. As a
+result, we are creating an ever-stronger setup, where SAP, along
+with our customers and partners, co-innovate and develop new
+innovative solutions on and with SAP HANA. Should the
+business of our partners develop better than currently expected,
+our indirect sales (partner revenue) could grow stronger than
+reflected in our outlook and medium-term prospects. This may
+positively impact our revenue, profit, and cash flows, and result
+in their exceeding our stated medium-term prospects.
+Opportunities from Our Employees
+Our employees drive our innovation, provide the value to our
+customers, and consistently promote our growth and
+profitability. In 2016, we significantly increased the number of
+full-time employees in key strategic areas to support our growth
+ambitions. We anticipate improvements in employee
+productivity as a result of our continued endeavors in design-
+thinking principles. As described in the Employees and Social
+Investment section, we continuously invest in our talents to
+increase engagement, collaboration, social innovation, and
+health.
+136
+Combined Management Report | Expected Developments and Opportunities
+To ensure continuous innovation and sustained business
+success, we need to continuously tap into the global talent pool
+and bring the best and brightest talent to SAP. To do so, we aim
+to further strengthen our brand perception in the market and
+optimize our recruiting experience to emphasize our mission to
+help the world run better and improve people's lives.
+Furthermore, we will maximize mobile channels and innovative
+talent strategies to tap into new talent pools.
+Our outlook and medium-term prospects are based on certain
+assumptions regarding employee turnover and our Business
+Health Culture Index (as defined in the Employees and Social
+Investment section). Should these develop better than expected
+there might be an upside to employee productivity and
+engagement. In turn, this might positively impact our revenue,
+profit, and cash flows, and result in their exceeding our stated
+medium-term prospects.
+For more information about future opportunities from our
+employees, see the Employees and Social Performance section.
+Opportunities from Our Customer
+Engagement
+SAP goes to market by region, customer segments, line of
+business, and industry. We evolve and invest in our go-to-
+market coverage model to effectively sell industry-specific
+solutions while increasing our engagement with customers. We
+focus on the dynamic and fast-changing landscape each
+industry faces as technology evolves.
+We offer unique services that support a significant return on
+investment, and continue to actively look at new opportunities to
+increase the value we deliver to our customers.
+In general, our outlook and medium-term prospects are based
+on certain assumptions regarding the success of our go-to-
+market approaches. If the actual go-to-market success exceeds
+these assumptions, this could positively impact our revenue,
+profit, and cash flows, and result in their exceeding our stated
+medium-term prospects.
+Combined Management Report | Expected Developments and Opportunities
+137
+Events After the
+Reporting Period
+For information about events after the reporting period see the
+Notes to the Consolidated Financial Statements section,
+Note (33).
+138
+Combined Management Report | Events After the Reporting Period
+Consolidated Financial Statements
+IFRS and Notes
+We see opportunities in growing product and market areas, such
+as in-memory computing, cloud, mobile, business networks,
+social media, Big Data, the Internet of Things, machine learning,
+artificial intelligence, predictive analytics and especially all
+business developments that are targeted at the digital business
+SAP strives to generate profitable growth across our portfolio of
+products, solutions, and services to keep or improve its market
+position. Our aim is to continue to expand our addressable
+market to €320 billion in 2020, based on new assets in our SAP
+Business Network Segment, our new technologies and
+innovations, and the extension of our cloud portfolio.
+4.0
+Opportunities from Our Strategy for
+Profitable Growth
+We also aim at further improving the profitability of our on-
+premise software business. The gross margin for our software
+licenses and support is expected to remain at least stable at
+approximately 88% (2016: 87.4%) in 2020.
+In addition, we expect our services gross margin to reach
+approximately 20% (2016: 18.2%) in 2020.
+As we look to increase our profitability through 2020, our cost
+ratios (cost as a % of total revenue) are expected to develop as
+follows through 2020: Research and development is expected to
+decline slightly, Sales and marketing is expected to follow the
+growth of the business and General and administration is
+expected to remain stable.
+Non-Financial Goals 2017 and
+Ambitions for 2020
+In addition to our financial goals, we also focus on two non-
+financial targets: customer loyalty and employee engagement.
+For 2017 through to 2020, we aim to reach an Employee
+Engagement Index between 84% and 86% (2016: 85%).
+We measure customer loyalty using the Customer Net Promoter
+Score (NPS). In 2017, we target achieving a combined Customer
+NPS of 21% to 23%, with our medium-term goal of reaching a
+combined Customer NPS of 35% to 40% by 2020 (2016:
+19.2%).
+Opportunities
+Our customers rely on SAP as the trusted partner in their digital
+business transformation, not only for providing in-memory
+technology, standardized on-premise and cloud solutions, and
+access to business networks, but also for helping them drive
+new business outcomes and enabling business model
+innovations. To meet these expectations, we must grow
+consistently and accelerate the pace of our own business
+transformation by exploiting new opportunities.
+We have established a framework for opportunity management
+by evaluating and analyzing four key areas: current markets,
+competitive landscapes, external scenarios, and technological
+trends. Additionally, we have delved into customer and product
+segmentation, growth drivers, and industry-specific success
+factors. Based on these combined insights, our Executive Board
+defines our market strategies. Our shareholder value relies
+heavily upon a fine balance of risk mitigation and value-driven
+opportunities. Therefore, our strong governance model ensures
+that decisions are based on return, investment required, and
+risk mitigation. We rely on the talent and resources within SAP
+and our entire ecosystem.
+Our revenue growth trajectory through 2020 is expected to be
+driven by continued strong growth in the cloud, low to mid-
+single-digit declines in software revenue and continued growth
+in our software support revenue. This is all expected to drive
+high single-digit growth in cloud and software revenue through
+2020.
+As far as opportunities are likely to occur, we have incorporated
+them into our business plans, our outlook for 2017, and our
+medium-term prospects outlined in this report. Therefore, the
+following section focuses on future trends or events that might
+result in an uplift of our outlook and medium-term prospects, if
+they develop better than we have anticipated in our forecasts.
+Opportunities from Economic Conditions
+Economic conditions have a clear influence on our business,
+financial position, profit, and cash flows. Should the global
+economy experience a more sustained growth than is reflected
+Combined Management Report | Expected Developments and Opportunities
+135
+in our plans today, our revenue and profit may exceed our
+current outlook and medium-term prospects.
+Our midterm planning is based on unchanged market conditions
+in emerging markets. Should their stability increase again, this
+would be an upside to our midterm planning.
+For more information about future trends in the global economy
+and the IT market outlook as well as their potential influence on
+SAP, see the Expected Developments and Opportunities section.
+Opportunities from Research and
+Development Traction
+Our continued growth through innovation is based on our ability
+to leverage research and development (R&D) resources
+effectively. We continue to improve our development processes
+through design thinking and lean methodologies. We are
+accelerating innovation cycles especially in the area of cloud
+solutions and engaging more closely with our customers to
+ensure accuracy and success. In addition, we have generated a
+new structure that enables innovations in a startup-like
+environment and ecosystem.
+While speed is a key strength, we also focus on ease of adoption
+and providing compelling returns. This allows our customers to
+easily consume technologies and software applications with
+immediate benefits for their businesses. If we make innovations
+available faster than currently anticipated, or if customers adopt
+the innovations faster than currently expected, for example,
+shifting faster to managed clouds for enterprise resource
+planning, or shifting faster to our new SAP S/4HANA solutions,
+this could positively impact our revenue, profit, and cash flows,
+and result in their exceeding our stated outlook and medium-
+term prospects.
+For more information about future opportunities in research and
+development for SAP, see the Products, Research and
+Development, and Services section as well as the Expected
+Developments and Opportunities section.
+SAP SE is the parent company of the SAP Group and earns most
+of its revenue from software license fees, subscriptions fees,
+and dividends paid by affiliates. Consequently, the opportunities
+described below also apply - directly or indirectly - to SAP SE.
+0.5
+The primary source of revenue for SAP SE is the license fees it
+charges subsidiaries for the right to market and maintain SAP
+software solutions. Consequently, the performance of SAP SE in
+operating terms is closely tied to the cloud and software revenue
+of the SAP Group.
+Notes........
+-0.7
+1.2
+Asia Pacific Japan (APJ)
+Japan
+1.2
+0.9
+0.8
+Asian developing economies
+China
+6.7
+6.3
+6.4
+6.9
+6.7
+0.1
+6.5
+3.4
+1.6
+2.8
+Source: International Monetary Fund (IMF), World Economic Outlook
+Update, A Shifting Global Economic Landscape, as of January 2017, p. 7.
+The IT Market: The Outlook for 2017
+"Worldwide IT spending is projected to total $3.5 trillion in 2017,
+a 2.7 percent increase from 2016," according to a January 2017
+Gartner Press Release by Gartner, a market research firm.
+"However, this growth rate is down from earlier projections of 3
+percent.2017 was poised to be a rebound year in IT spending.
+Some major trends have converged, including cloud, blockchain,
+digital business, and artificial intelligence. Normally, this would
+have pushed IT spending much higher than 2.7 percent growth.
+[...] However, some of the political uncertainty in global markets
+has fostered a wait-and-see approach causing many enterprises
+to forestall IT investments. The range of spending growth from
+the high to low is much larger in 2017 than in past years.
+Normally, the economic environment causes some level of
+Combined Management Report | Expected Developments and Opportunities
+131
+division, however, in 2017 this is compounded by the increased
+levels of uncertainty. [...] The result of that uncertainty is a
+division between individuals and corporations that will spend
+more due to opportunities arising - and those that will retract
+or pause IT spending."
+Gartner data indicate software will be the best-performing
+segment with software spending increasing by 7.2% (see table
+below). "Buyer investments in digital business, intelligent
+automation, and services optimization and innovation continue
+to drive growth in the market, but buyer caution, fueled by broad
+economic challenges, remains a counter-balance to faster
+growth," says Gartner.
+Within the Europe, Middle East, and Africa (EMEA) region, the
+table below shows that IT spending in Western European
+countries will grow 1.5% in 2017, whereas Western European
+software spending will increase considerably by 6.2%.
+According to the table below, IT spending in the Americas region
+will expand in 2017 by 2.6% in North America and 2.1% in Latin
+America.
+IT spending in the Asia Pacific Japan (APJ) region is expected to
+expand by 3.0% (Mature Asia/Pacific without Japan) and 5.9%
+(Emerging Asia/Pacific without China) in 2017 (see table below).
+IT spending in Greater China is expected to grow 5.1% in 2017
+(see table below).
+e estimate; p = projection
+Central and South America,
+Caribbean
+1.9
+1.3
+4.1
+4.1
+4.5
+Europe, Middle East, and
+Africa (EMEA)
+Euro area
+2.0
+1.7
+1.6
+Germany
+1.5
+1.7
+1.5
+Central and Eastern Europe
+3.7
+3.1
+Middle East and
+2.5
+3.8
+3.1
+North Africa
+Sub-Saharan Africa
+Americas
+United States
+Canada
+2.6
+1.6
+2.3
+0.9
+Sources:
+1) Gartner Market Databook, 4Q16 Update, 21 December 2016.
+2) Gartner Says Worldwide IT Spending Forecast to Grow 2.7 Percent in 2017,
+Press Release, January 12, 2017
+(http://www.gartner.com/newsroom/id/3568917).
+7.3
+Total IT
+(w/o China)
+Emerging Asia/Pacific
+2.6
+2.9
+4.4
+Services
+9.4
+9.3
+12.4
+Software
+3.0
+1.4
+4.9
+Total IT
+(w/o Japan)
+Mature Asia/Pacific
+6.9
+6.7
+6.9
+Services
+8.1
+7.4
+11.0
+Software
+2.1
+2.9
+Developing and emerging
+economies
+5.9
+11.4
+The Gartner Reports described herein, (the “Gartner Reports") represent
+research opinion or viewpoints published, as part of a syndicated subscription
+service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each
+Gartner Report speaks as of its original publication date (and not as of the
+date of this Annual Report) and the opinions expressed in the Gartner Reports
+are subject to change without notice.
+Trends in the IT Market - Increased IT Spending
+Year-Over-Year
+%
+World
+Total IT
+2015e
+2016p
+2017p
+7.4
+Software
+1.9
+0.3
+0.4
+Total IT
+Japan
+2017p
+2016p
+2015e
+%
+Combined Management Report | Expected Developments and Opportunities
+132
+9.7
+9.6
+7.5
+Services
+11.1
+10.8
+Software
+1.9
+1.6
+2.1
+0
+0
+-309
+Other operating income/expense, net
+-3
+1
+4
+Total operating expenses
+Operating profit
+Other non-operating income/expense, net
+Finance income
+-16,928
+5,135
+-16,541
+-13,230
+4,252
+4,331
+-234
+-256
+49
+230
+241
+127
+Finance costs
+Financial income, net
+Profit before tax
+-268
+-246
+(23)
+-152
+TomorrowNow and Versata litigation
+-621
+Consolidated Financial Statements IFRS..
+Sales and marketing
+General and administration
+-1,313
+-1,022
+-481
+-2,182
+-2,291
+-2,076
+-3,495
+-3,313
+-2,557
+-3,089 -2,932 -2,426
+-6,583 -6,245 -4,983
+15,479
+14,548
+-3,044
+-2,845
+12,578
+-2,331
+-6,265
+-5,782 -4,593
+-1,005
+-1,048
+-892
+Restructuring
+(6)
+-28
+-126
+-2.6
+(9)
+-5
+3.04
+2.56
+2.75
+Earnings per share, diluted (in €)
+(11)
+3.04
+2.56
+2.74
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+140
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+Expected Developments
+and Opportunities
+Future Trends in the Global Economy
+In its latest economic bulletin report, the European Central Bank
+(ECB) predicts that the global economy will continue to
+accelerate in 2017 although remain below its pre-crisis pace. It
+also expects the pace of expansion will remain relatively stable
+in 2017 in the advanced economies and improve slightly in the
+emerging economies. Adverse effects of low commodity prices
+on the commodity-exporting countries, the sustained
+realignment of the Chinese economy, and political and economic
+uncertainty in the United States could, however, dampen global
+prospects in 2017, the ECB warns.
+Looking at the Europe, Middle East, and Africa (EMEA) region,
+the ECB believes that the euro area economy will continue to
+recover further in 2017. It suggests that increased investment by
+enterprises benefiting from favorable borrowing conditions and
+improved earnings could be key factors in this growth. The
+experts even forecast a surge in investment activity in the
+Central and Eastern European countries in 2017 and dynamic
+consumer spending, both of which should help drive economic
+development there. Russia's economy should begin to expand
+again in 2017, for the first time since coming out of its recession,
+the ECB says.
+With regards to the North America and Latin America
+(Americas) region, the ECB writes that while uncertainty about
+the future political and economic course of the United States
+following the inauguration of the new president is currently very
+high, it nevertheless anticipates a moderate increase in US
+economic growth in 2017. As for Brazil, it should be able to leave
+its recession behind it in 2017, the ECB says, though large fiscal
+consolidation needs will continue to weigh on the country.
+In the Asia Pacific Japan (APJ) region, Japan's economy is
+projected to continue to expand at the same restrained pace as
+the preceding year. The ECB predicts that the underlying
+economic momentum in Japan will remain weak. Lastly,
+economic growth in China is likely to continue to decelerate in
+2017, primarily due a renewed slowdown in investment growth
+as Chinese enterprises cut back overcapacity, the ECB says.
+Economic Trends -Year-Over-Year GDP Growth
+%
+World
+2015e
+2016e
+2017p
+3.2
+3.1
+3.4
+Advanced economies
+(11)
+-38
+Earnings per share, basic (in €)
+-8
+-25
+4,863
+3,991
+4,355
+Income tax Tomorrow Now and Versata litigation
+0
+0
+86
+Other income tax expense
+-1,229
+-935
+-1,161
+Income tax expense
+(10)
+-1,229
+-935
+-1,075
+Profit after tax
+3,634
+3,056
+3,280
+Attributable to owners of parent
+3,646
+3,064
+3,280
+Attributable to non-controlling interests
+-13
+0
+4.7
+2.9
+Latin America
+179
+(24) Financial Risk Factors
+.178
+(23) Litigation and Claims
+.177
+(22) Other Financial Commitments.
+176
+(21) Additional Capital Disclosures.
+.175
+(20) Total Equity..
+..174
+(19) Deferred Income.
+171
+(18) Provisions.
+168
+(17) Trade and Other Payables, Financial Liabilities, and Other Non-Financial Liabilities
+168
+(16) Property, Plant, and Equipment.
+165
+(15) Goodwill and Intangible Assets..
+164
+(14) Other Non-Financial Assets
+163
+163
+162
+160
+5.2
+(25) Financial Risk Management..
+5.5
+.181
+185
+2015
+2016
+Notes
+€ millions, unless otherwise stated
+Consolidated Income Statements of SAP Group for the Years Ended December 31
+Consolidated Financial
+Statements IFRS
+139
+213
+Consolidated Financial Statements IFRS and Notes
+in the Consolidated Financial Statements......
+Management's Annual Report on Internal Control over Financial Reporting
+(34) Subsidiaries and Other Equity Investments...
+.207
+.206
+(33) Events After the Reporting Period.
+.205
+(32) German Code of Corporate Governance..
+.205
+(31) Principal Accountant Fees and Services.
+.204
+(30) Related Party Transactions...
+201
+(29) Board of Directors.
+196
+(28) Segment and Geographic Information.
+.191
+(27) Share-Based Payments.
+(26) Additional Fair Value Disclosures on Financial Instruments.
+2014
+Services
+2.2
+We continuously strive for profit expansion in all our reportable
+segments leading to a SAP Group profit expansion as outlined in
+the given 2017 outlook. For SAP's managed-cloud offerings, we
+expect a positive gross margin result in 2017 according to
+outlined long-term 2020 planning.
+The following table shows the estimates of the items that
+represent the differences between our non-IFRS financial
+measures and our IFRS financial measures.
+(13) Trade and Other Receivables..
+(12) Other Financial Assets...
+(11) Earnings per Share.
+(10) Income Tax......
+.160
+(9) Financial Income, Net...
+159
+(8) Other Non-Operating Income/Expense, Net.
+158
+(7) Employee Benefits Expense and Headcount
+Total IT
+(6) Restructuring.
+158
+(5) Revenue.
+158
+(4) Business Combinations
+146
+146
+146
+.146
+_
+Outlook for SAP SE
+140
+(3) Summary of Significant Accounting Policies.
+(1) General Information About Consolidated Financial Statements.
+(2) Scope of Consolidation.
+We expect that non-IFRS total revenue will continue to depend
+largely on the revenue from cloud and software. However, the
+revenue growth we expect from this is below the outlook
+provided for non-IFRS cloud subscriptions and support revenue.
+We expect the software license revenue in 2017 to decline by low
+to mid-single digit compared to 2016. However we will
+continuing to gain market share against our main on-premise
+license competitors.
+3.1
+While our full-year 2017 business outlook is at constant
+currencies, actual currency reported figures are expected to
+continue to be impacted by currency exchange rate fluctuations.
+The Company expects full year 2017 non-IFRS total revenue
+in a range of €23.2 billion to €23.6 billion at constant
+currencies (2016: €22.07 billion). This is above the previous
+2017 ambition which was raised at the beginning of 2016.
+The Company expects full-year 2017 non-IFRS operating
+profit to be in a range of €6.8 billion - €7.0 billion at constant
+currencies (2016: €6.63 billion). This is above the previous
+2017 ambition which was raised at the beginning of 2016.
+1.7
+Greater China (China/
+Taiwan/Hong Kong)
+Total IT
+4.8
+0.4
+5.1
+Software
+7.8
+8.4
+9.3
+5.7
+7.7
+8.1
+Services
+e estimate, p = projection
+Table created by SAP based on: Gartner Market Databook, 4Q16 Update, 21
+December 2016, Table 2-1 "Regional End-User Spending on IT Products and
+Services in Constant U.S. Dollars, 2014-2020 (Millions of Dollars)".
+Impact on SAP
+SAP expects to outperform the global economy and the IT
+industry again in 2017 in terms of revenue growth.
+As last year, our 2016 results validate our strategy of innovating
+across the core, the cloud, and business networks to help our
+customers become true digital enterprises. Our innovation cycle
+for SAP S/4HANA is well underway and the completeness of our
+vision in the cloud continues to distinguish SAP from both legacy
+players and providers of cloud-based point solutions. We
+achieved all key performance indicators raised in our business
+outlook in October.
+On this basis, we consider ourselves well-prepared for the future
+and expect profitable growth in 2017 as well. As such, we are
+raising our ambitious goals for 2020. Balanced in terms of
+regions as well as industries, we remain well-positioned with our
+product offering to offset individual fluctuations in the global
+economy and IT market.
+A comparison of our business outlook with forecasts for the
+global economy and IT industry shows that we can be successful
+even in a tough economic environment and increased
+geopolitical uncertainty, and will further strengthen our position
+as the market leader of enterprise application software.
+Operational Targets for 2017 (Non-
+IFRS)
+Revenue and Operating Profit Outlook
+The Company is providing the following 2017 outlook:
+Based on the continued strong momentum in SAP's cloud
+business the Company expects full year 2017 non-IFRS cloud
+subscriptions and support revenue to be in a range of €3.8
+billion - €4.0 billion at constant currencies (2016: €2.99
+-
+billion), in line with the previous 2017 ambition which was
+raised at the beginning of 2016. The upper end of this range
+represents a growth rate of 34% at constant currencies.
+The Company expects full year 2017 non-IFRS cloud &
+software revenue to increase by 6% - 8% at constant
+currencies (2016: €18.43 billion).
+We expect our headcount to increase at a slightly lower pace
+than in 2016.
+Cloud subscriptions and support
+158
+Software support
+9.9
+11.4
+Software
+3.0
+-0.2
+6.2
+Total IT
+Middle East and North
+Africa
+1.4
+0.9
+3.2
+Services
+7.9
+6.5
+14.1
+Software
+0.9
+-2.4
+2.0
+Total IT
+Eurasia
+3.9
+3.5
+3.4
+Services
+Research and development
+8.8
+10.1
+9.0
+Services
+4.0
+5.3
+Software licenses
+5.3
+6.0
+Services
+6.9
+7.2
+8.2
+2.6
+1.5
+3.0
+Total IT
+North America
+5.4
+5.3
+5.2
+Services
+11.4
+11.4
+13.2
+Software
+5.2
+1.6
+7.3
+Total IT
+Sub-Saharan Africa
+4.7
+5.8
+10.8
+Software
+0.8
+Cost of cloud subscriptions and support
+17,560
+20,793
+22,062
+(5)
+Total revenue
+3,245
+3,579
+3,638
+14,315
+17,214
+18,424
+13,228
+14,928
+15,431
+8,829
+10,093
+10,571
+4,399
+4,835
+4,860
+2,286
+2,993
+Services
+Software
+Software licenses and support
+Cloud and software
+Cost of software licenses and support
+Cost of cloud and software
+1,087
+Total cost of revenue
+15.8
+Cost of services
+Eastern Europe
+3.8
+1.8
+4.4
+Services
+6.2
+5.3
+9.6
+Software
+1.5
+-0.1
+4.1
+3.6
+Gross profit
+2.7
+Software
+9.1
+6.9
+7.2
+Total IT
+5.1
+4.5
+4.6
+Total IT
+Services
+Western Europe
+(12)
+5,274
+(14)
+581
+468
+233
+235
+11,564
+9,739
+Goodwill
+22,689
+23,311
+Intangible assets
+(15)
+3,786
+1,358
+Property, plant, and equipment
+(16)
+2,580
+2,192
+Other financial assets
+5,924
+(15)
+4,280
+2016
+Total current assets
+5,044
+4,539
+1,336
+-13
+-8
+0
+Attributable to non-controlling interests
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+141
+Consolidated Statements of Financial Position of SAP Group as at December 31
+(13)
+€ millions
+Other financial assets
+Notes
+2015
+3,702
+3,411
+(12)
+1,124
+351
+Trade and other receivables
+Other non-financial assets
+Tax assets
+Cash and cash equivalents
+Trade and other receivables
+2016
+126
+1,088
+316
+230
+Financial liabilities
+Other non-financial liabilities
+Provisions
+Deferred income
+Total current liabilities
+(17)
+1,813
+841
+(17)
+3,699
+3,407
+(18)
+183
+299
+(19)
+2,383
+2,001
+9,674
+4,423
+7,867
+1,281
+(17)
+2015
+Notes
+87
+Other non-financial assets
+(14)
+532
+332
+Tax assets
+450
+282
+Deferred tax assets
+(10)
+570
+(13)
+453
+Total assets
+32,713
+31,651
+44,277
+41,390
+142
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+Consolidated Statements of Financial Position of SAP Group as at December 31
+€ millions
+Trade and other payables
+Tax liabilities
+Total non-current assets
+4,539
+1,861
+4,410
+-23
+Gains (losses) on exchange differences on translation, before tax
+865
+1,845
+1.161
+Reclassification adjustments on exchange differences on translation, before tax
+-1
+0
+0
+Exchange differences, before tax
+864
+1,845
+1,161
+Income tax relating to exchange differences on translation
+(10)
+-25
+16
+21
+Exchange differences, net of tax
+(20)
+839
+1,182
+Gains (losses) on remeasuring available-for-sale financial assets, before tax
+-17
+-8
+-23
+-17
+Trade and other payables
+Consolidated Statements of Comprehensive Income of SAP Group for the Years Ended December 31
+€ millions
+Profit after tax
+Items that will not be reclassified to profit or loss
+Remeasurements on defined benefit pension plans, before tax
+Income tax relating to remeasurements on defined benefit pension plans
+Remeasurements on defined benefit pension plans, net of tax
+Other comprehensive income for items that will not be reclassified to profit or loss,
+net of tax
+Items that will be reclassified subsequently to profit or loss
+Notes
+2016
+-18
+2015
+3,634
+3,056
+3,280
+-10
+-19
+-30
+(10)
+2
+2
+7
+-8
+2014
+5,036
+181
+Reclassification adjustments on available-for-sale financial assets, before tax
+-15
+15
+-38
+Income tax relating to cash flow hedges
+(10)
+4
+-4
+10
+Cash flow hedges, net of tax
+(20)
+-11
+11
+-28
+Other comprehensive income for items that will be reclassified to profit or loss, net of
+tax
+785
+1,997
+1,282
+Other comprehensive income, net of tax
+Total comprehensive income
+Attributable to owners of parent
+777
+1,980
+1,259
+(25)
+Cash flow hedges, before tax
+3
+74
+-26
+-53
+-2
+Available-for-sale financial assets, before tax
+(26)
+-44
+128
+128
+Income tax relating to available-for-sale financial assets
+(10)
+1
+130
+-2
+Available-for-sale financial assets, net of tax
+(20)
+-43
+125
+128
+Gains (losses) on cash flow hedges, before tax
+-24
+-59
+-41
+Reclassification adjustments on cash flow hedges, before tax
+8
+0
+(17)
+(20)
+81
+The accompanying Consolidated Financial Statements for 2016
+of SAP SE and its subsidiaries (collectively, "we," "us," "our,"
+"SAP," "Group," and "Company") have been prepared in
+accordance with International Financial Reporting Standards
+(IFRS).
+(1) General Information About
+Consolidated Financial Statements
+Notes
+145
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+3,328
+3,411
+3,702
+(21)
+Cash and cash equivalents at the end of the period
+2,748
+3,328
+3,411
+We have applied all standards and interpretations that were
+effective on and endorsed by the European Union (EU) as at
+December 31, 2016. There were no standards or interpretations
+impacting our Consolidated Financial Statements for the years
+ended December 31, 2016, 2015, and 2014, that were effective
+but not yet endorsed. Therefore, our Consolidated Financial
+Statements comply with both IFRS as issued by the
+International Accounting Standards Board (IASB) and with IFRS
+as endorsed by the EU.
+(21)
+23
+4,298
+-3,356
+135
+83
+291
+167
+-2,705
+0
+0
+3
+7,503
+-2,062
+0
+0
+1,748
+-3,852
+-1,800
+43
+443
+580
+Our Executive Board approved the Consolidated Financial
+Statements on February 22, 2017, for submission to our
+Supervisory Board.
+All amounts included in the Consolidated Financial Statements
+are reported in millions of euros (€ millions) except where
+otherwise stated. Due to rounding, numbers presented
+throughout this document may not add up precisely to the totals
+we provide and percentages may not precisely reflect the
+absolute figures.
+(2) Scope of Consolidation
+Consolidated Financial Statements IFRS and Notes | Notes
+146
+We decide on a transaction-by-transaction basis whether to
+measure the non-controlling interest in the acquiree at fair value
+or at the proportionate share of the acquiree's identifiable net
+assets. Acquisition-related costs are accounted as expense in
+the periods in which the costs are incurred and the services are
+received, with the expense being classified as general and
+administration expense.
+Business Combinations and Goodwill
+The new policy has been applied retrospectively to the prior
+periods presented. The effect on the financial year 2015 was an
+increase in sales and marketing expenses and a respective
+decrease in cost of services totalling €381 million
+(2014: €290 million).
+Under the ONE Service approach, we combined premium
+support services and professional services under one
+comprehensive service offering. This combination triggered
+changes in our service go-to-market methodology and setup,
+resulting in an organizational separation of services sales and
+services delivery. As a result of these changes, we now classify
+all sales expenses relating to our services offering, which were
+previously recognized as cost of services, as sales and
+marketing expenses. We take the view that this policy provides
+more reliable and more relevant information because it
+classifies sales and marketing expenses consistently across our
+product and services portfolio.
+Reclassifications
+(3b) Relevant Accounting Policies
+Where applicable, information about the methods and
+assumptions used in determining the respective measurement
+bases is disclosed in the Notes specific to that asset or liability.
+Monetary assets and liabilities denominated in foreign
+currencies are translated at period-end exchange rates.
+Post-employment benefits are measured according to IAS 19
+(Employee Benefits) as described in Note (18a).
+Derivative financial instruments, available-for-sale financial
+assets, and liabilities for cash-settled share-based payments
+are measured at fair value.
+The Consolidated Financial Statements have been prepared on
+the historical cost basis except for the following:
+(3a) Bases of Measurement
+(3) Summary of Significant
+Accounting Policies
+The additions relate to legal entities added in connection with
+acquisitions and foundations. The disposals are mainly due to
+mergers and liquidations of legal entities.
+245
+-18
+Entities Consolidated in the Financial Statements
+December 31, 2014
+Additions
+Disposals
+December 31, 2015
+Additions
+51
+7,503
+Disposals
+Total
+287
+8
+-40
+255
+8
+December 31, 2016
+Foreign Currencies
+1,748
+64
+-6,472
+226
+-106
+-111
+266
+0
+Cash receipts from derivative financial instruments related to business combinations
+Total cash flows for business combinations, net of cash and cash equivalents acquired
+-6,360
+-39
+-106
+Business combinations, net of cash and cash equivalents acquired
+3,499
+3,638
+4,628
+Purchase of intangible assets and property, plant, and equipment
+Net cash flows from operating activities
+-1,420
+-1,477
+Income taxes paid, net of refunds
+59
+82
+79
+-130
+-172
+-190
+Interest received
+Interest paid
+-555
+0
+0
+-1,356
+-1,001
+-636
+-737
+27
+-1,194
+-1,316
+-1,378
+(21)
+Cash and cash equivalents at the beginning of the period
+Net decrease/increase in cash and cash equivalents
+Effect of foreign currency rates on cash and cash equivalents
+Net cash flows from financing activities
+Transactions with non-controlling interests
+Repayments of borrowings
+Total cash flows from proceeds from borrowings
+Cash receipts from swap contracts
+Proceeds from borrowings
+Proceeds from reissuance of treasury shares
+Dividends paid
+-7,240
+Proceeds from sales of intangible assets or property, plant, and equipment
+63
+68
+46
+Purchase of equity or debt instruments of other entities
+-1,549
+400
+-1,871
+Proceeds from sales of equity or debt instruments of other entities
+Net cash flows from investing activities
+793
+-1,799
+1,880
+833
+-334
+-910
+Income and expenses and operating cash flows of our foreign
+subsidiaries that use a functional currency other than the euro
+are translated at average rates of foreign exchange (FX)
+computed on a monthly basis. Exchange differences resulting
+Exchange Rates
+Equivalent to €1
+the customer. The majority of our customers renew their
+annual support service contracts at these rates.
+Company-specific objective evidence of fair value for our
+service offerings is derived from our consistently priced
+historic sales.
+-
+We derive the company-specific objective evidence of fair
+value for our renewable support services from the rates
+charged to renew the support services annually after an initial
+period. Such renewal rates generally represent a fixed
+percentage of the discounted software license fee charged to
+We allocate the total transaction fee of a customer contract to
+the distinct deliverables under the contract based on their fair
+values. The allocation is done relative to the distinct
+deliverables' individual fair values unless the residual method is
+applied as outlined below. Fair value is determined by company-
+specific objective evidence of fair value, which is the price
+charged consistently when that element is sold separately or, for
+elements not yet sold separately, the price established by our
+management if it is probable that the price will not change
+before the element is sold separately. Where company-specific
+objective evidence of fair value and third-party evidence of
+selling price cannot be established due to lacking stand-alone
+sales or lacking pricing consistency, we determine the fair value
+of a distinct deliverable by estimating its stand-alone selling
+price. Company-specific objective evidence of fair value and
+estimated stand-alone selling prices (ESP) for our major
+products and services are determined as follows:
+The portion of the transaction fee allocated to one distinct
+deliverable is recognized in revenue separately under the
+policies applicable to the respective deliverable. For combined
+deliverables consisting of cloud offerings or on-premise
+software and other services, the allocated portion of the
+transaction fee is recognized using the percentage-of-
+completion method, as outlined above, or over the cloud
+subscription term, if applicable, depending on which service
+term is longer.
+Goods and services that do not qualify as distinct deliverables
+are combined into one unit of account (combined deliverables).
+The services are not available from third-party vendors and
+are therefore deemed essential to the cloud subscription or
+on-premise software.
+The contract involves significant production, modification, or
+customization of the cloud subscription or on-premise
+software; and
+-
+We account for the different goods and services promised under
+our customer contracts as separate units of account (distinct
+deliverables) unless:
+We combine two or more customer contracts with the same
+customer and account for the contracts as a single arrangement
+if the contracts are negotiated as a package or otherwise linked.
+Multiple-Element Arrangements
+Our contributions to resellers that allow our resellers to execute
+qualified and approved marketing activities are recognized as an
+offset to revenue, unless we obtain a separate identifiable
+benefit for the contribution and the fair value of that benefit is
+reasonably estimable.
+Consolidated Financial Statements IFRS and Notes | Notes
+Company-specific objective evidence of fair value can
+generally not be established for our cloud subscriptions. ESP
+for these offerings is determined based on the rates agreed
+with the individual customers to apply if and when the
+subscription arrangement renews. We determine ESP by
+considering multiple factors which include, but are not limited
+to, the following:
+148
+Measurement of Revenue
+We recognize services revenue as the services are rendered.
+Usually, our professional services contracts and premium
+support services contracts do not involve significant production,
+modification, or customization of software, and the related
+revenue is recognized as the services are provided using the
+percentage-of-completion method of accounting. For
+messaging services, we measure the progress of service
+rendering based on the number of messages successfully
+processed and delivered except for fixed-price messaging
+arrangements, for which revenue is recognized ratably over the
+contractual term of the arrangement. Revenue from our training
+services is recognized when the customer consumes the
+respective classroom training. For on-demand training services,
+whereby our performance obligation is to stand ready and
+provide the customer with access to the training courses and
+learning content services, revenue is recognized ratably over the
+contractual term of the arrangement.
+Under our standardized support services, our performance
+obligation is to stand ready to provide technical product support
+and unspecified updates, upgrades, and enhancements on a
+when-and-if-available basis. Consequently, we recognize
+support revenue ratably over the term of the support
+arrangement.
+Software licenses revenue from customer-specific on-premise
+software development agreements that qualify for revenue
+recognition by reference to the stage of completion of the
+contract activity is recognized using the percentage-of-
+completion method based on contract costs incurred to date as
+a percentage of total estimated contract costs required to
+complete the development work.
+We usually recognize revenue from on-premise software
+arrangements involving resellers on evidence of sell-through by
+the reseller to the end customer, because the inflow of the
+economic benefits associated with the arrangements to us is not
+probable before sell-through has occurred.
+In general, our on-premise software license agreements include
+neither acceptance-testing provisions nor rights to return the
+software. If an arrangement allows for customer acceptance-
+testing of the software, we defer revenue until the earlier of
+customer acceptance or when the acceptance right lapses. If an
+arrangement allows for returning the software, we defer
+recognition of software revenue until the right to return expires.
+separately priced or not, is recognized ratably over the license
+term unless a substantive support service renewal rate exists; if
+this is the case, the amount allocated to the delivered software
+is recognized as software licenses revenue based on the residual
+method once the basic criteria described above have been met.
+Revenue from the sale of perpetual licenses of our standard on-
+premise software products is recognized upon delivery of the
+software, that is, when the customer has access to the software.
+Occasionally, we license on-premise software for a specified
+period of time. Revenue from short-term time-based licenses,
+which usually include support services during the license period,
+is recognized ratably over the license term. Revenue from multi-
+year time-based licenses that include support services, whether
+Cloud subscriptions and support revenue is recognized as the
+services are performed. Where a periodical fixed fee is agreed
+for the right to continuously access and use a cloud offering for
+a certain term, the fee is recognized ratably over the term
+covered by the fixed fee. Fees that are based on actual
+transaction volumes are recognized as the transactions occur.
+In general, our cloud subscriptions and support contracts
+include certain set-up activities. If these set-up activities have
+stand-alone value, they are accounted for as distinct
+deliverables with the respective revenue being classified as
+service revenue and recognized as the set-up activity is
+performed. If we conclude that such set-up activities are not
+distinct deliverables, we do not account for them separately.
+In general, we invoice fees for standard software upon contract
+closure and delivery. Periodical fixed fees for cloud subscription
+services and software support services are mostly invoiced
+yearly or quarterly in advance. Fees based on actual transaction
+volumes for cloud subscriptions and fees charged for non-
+periodical services are invoiced as the services are delivered.
+We do not start recognizing revenue from customer
+arrangements before evidence of an arrangement exists, the
+amount of revenue and associated costs can be measured
+reliably, collection of the related receivable is probable and the
+delivery has occurred, respectively the services have been
+rendered. If, for any of our product or service offerings, we
+determine at the outset of an arrangement that the amount of
+revenue cannot be measured reliably, we conclude that the
+inflow of economic benefits associated with the transaction is
+not probable, and we defer revenue recognition until the
+arrangement fee becomes due and payable by the customer. If,
+at the outset of an arrangement, we determine that collectability
+is not probable, we conclude that the inflow of economic
+benefits associated with the transaction is not probable, and we
+defer revenue recognition until the earlier of when collectability
+becomes probable or payment is received. If a customer is
+specifically identified as a bad debtor at a later point in time, we
+stop recognizing revenue from the customer except to the
+extent of the fees that have already been collected.
+Timing of Revenue Recognition
+We account for out-of-pocket expenses invoiced by SAP and
+reimbursed by customers as cloud subscriptions and support,
+software support, or services revenue, depending on the nature
+of the service for which the out-of-pocket expenses were
+incurred.
+147
+Revenue is recognized net of returns and allowances, trade
+discounts, and volume rebates.
+■
+Substantive renewal rates stipulated in the cloud
+arrangement; and
+Gross margin expectations and expected internal costs of
+the respective cloud business model.
+Consolidated Financial Statements IFRS and Notes | Notes
+150
+Derivatives Designated as Hedging Instruments
+We use derivatives to hedge foreign currency risk or interest
+rate risk and designate them as cash flow or fair value hedges if
+In addition, we occasionally have contracts that contain foreign
+currency embedded derivatives that are required to be
+accounted for separately.
+Derivatives Not Designated as Hedging Instruments
+Many transactions constitute economic hedges, and therefore
+contribute effectively to the securing of financial risks but do not
+qualify for hedge accounting under IAS 39. To hedge currency
+risks inherent in foreign-currency denominated and recognized
+monetary assets and liabilities, we do not designate our held-for-
+trading derivative financial instruments as accounting hedges,
+because the profits and losses from the underlying transactions
+are recognized in profit or loss in the same periods as the profits
+or losses from the derivatives.
+Derivatives
+Among the other impairment indicators in IAS 39 (Financial
+Instruments: Recognition and Measurement), for an investment
+in an equity security, objective evidence of impairment includes
+a significant (more than 20%) or prolonged (a period of more
+than nine months) decline in its fair value. Impairment losses on
+financial assets are recognized in financial income, net. For
+available-for-sale financial assets, which are non-derivative
+financial assets that are not assigned to loans and receivables or
+financial assets at fair value through profit or loss, impairment
+losses directly reduce an asset's carrying amount, while
+impairments on loans and receivables are recorded using
+allowance accounts. Such allowance accounts are always
+presented together with the accounts containing the asset's
+cost in other financial assets. Account balances are charged off
+against the respective allowance after all collection efforts have
+been exhausted and the likelihood of recovery is considered
+remote.
+Regular-way purchases and sales of financial assets are
+recorded as at the trade date.
+Our financial assets comprise cash and cash equivalents (highly
+liquid investments with original maturities of three months or
+less), loans and receivables, acquired equity and debt
+investments, and derivative financial instruments (derivatives)
+with positive fair values. Financial assets are only classified as
+financial assets at fair value through profit or loss if they are held
+for trading, as we do not designate financial assets at fair value
+through profit or loss. All other financial assets are classified as
+loans and receivables if we do not designate them as available-
+for-sale financial assets.
+Financial Assets
+For more information about our share-based payments, see
+Note (27).
+Where we hedge our exposure to cash-settled awards, changes
+in the fair value of the respective hedging instruments are also
+recognized as employee benefits expenses in profit or loss. The
+fair values of hedging instruments are based on market data
+reflecting current market expectations.
+Under certain programs, we grant our employees discounts on
+purchases of SAP shares. Since those discounts are not
+dependent on future services to be provided by our employees,
+the discount is recognized as an expense when the discounts
+are granted.
+Share-based payments cover cash-settled and equity-settled
+awards issued to our employees. The respective expenses are
+recognized as employee benefits expenses and classified in our
+Consolidated Income Statements according to the activities that
+the employees owning the awards perform.
+Share-Based Payments
+Accounting for Uncertainties in Income Taxes
+We measure current and deferred tax liabilities and assets for
+uncertainties in income taxes based on our best estimate of the
+most likely amount payable to or recoverable from the tax
+authorities, assuming that the tax authorities will examine the
+amounts reported to them and have full knowledge of all
+relevant information.
+General and administration includes costs related to finance and
+administrative functions, human resources, and general
+management as long as they are not directly attributable to one
+of the other operating expense line items.
+We also consider FASB ASC 985-605 in our accounting for
+options that entitle the customer to purchase, in the future,
+additional on-premise software or services. We allocate revenue
+to future incremental discounts whenever customers are
+granted a material right, that is, the right to license additional
+on-premise software at a higher discount than the one given
+within the initial software license arrangement, or to purchase or
+renew services at rates below the fair values established for
+these services. We also consider whether future purchase
+options included in arrangements for cloud subscription
+deliverables constitute a material right.
+Cost of Cloud and Software
+Cost of cloud and software includes the costs incurred in
+producing the goods and providing the services that generate
+cloud and software revenue. Consequently, this line item
+primarily includes employee expenses relating to these services,
+amortization of acquired intangibles, fees for third-party
+licenses, shipping, ramp-up cost, and depreciation of our
+property, plant, and equipment.
+Cost of Services
+Cost of services includes the costs incurred in providing the
+services that generate service revenue, such as consulting and
+Consolidated Financial Statements IFRS and Notes | Notes
+Consolidated Financial Statements IFRS and Notes | Notes
+149
+Research and Development
+Research and development includes the costs incurred by
+activities related to the development of software solutions (new
+products, updates, and enhancements) including resource and
+hardware costs for the development systems.
+We have determined that the conditions for recognizing
+internally generated intangible assets from our software
+development activities are not met until shortly before the
+products are available for sale. Development costs incurred
+after the recognition criteria are met have not been material.
+Consequently, research and development costs are expensed as
+incurred.
+Sales and Marketing
+Sales and marketing includes costs incurred for the selling and
+marketing activities related to our software and cloud solutions
+as well as our service portfolio.
+General and Administration
+training activities, messaging, as well as certain forms of hosting
+solutions for our customers and our partners.
+· Messaging services (primarily transmission of electronic text
+messages from one mobile phone provider to another)
+Payment services in connection with our travel and expense
+management offerings.
+Premium support services, that is, high-end support services
+tailored to customer requirements
+Training services
+Professional services, that is, consulting services that
+primarily relate to the installation and configuration of our
+cloud subscriptions and on-premise software products
+Swiss franc
+140.61
+134.12
+119.77
+131.07
+123.40
+JPY
+Japanese yen
+0.8037
+0.7255
+0.8206
+0.7340
+0.8562
+GBP
+Pound sterling
+1.3198
+1.1071
+from foreign currency transactions are recognized in other non-
+operating income/expense, net.
+The exchange rates of key currencies affecting the Company
+were as follows:
+Middle Rate as at December 31
+Annual Average Exchange Rate
+2016
+2015
+CHF
+2016
+2014
+U.S. dollar
+USD
+1.0541
+1.0887
+1.1045
+2015
+Cash outflows due to TomorrowNow and Versata litigation
+1.0739
+1.0886
+-
+Services revenue as presented in our Consolidated Income
+Statements represents fees earned from providing customers
+with the following:
+Software support revenue represents fees earned from
+providing customers with standardized support services
+which comprise unspecified future software updates,
+upgrades, enhancements, and technical product support
+services for on-premise software products. We do not sell
+separately technical product support or unspecified software
+upgrades, updates, and enhancements. Accordingly, we do
+not distinguish within software support revenue or within cost
+of software support the amounts attributable to technical
+support services and unspecified software upgrades,
+updates, and enhancements.
+Software licenses revenue represents fees earned from the
+sale or license of software to customers for use on the
+customer's premises, in other words, where the customer
+has the right to take possession of the software for
+installation on the customer's premises (on-premise
+software). Software licenses revenue includes revenue from
+both the sale of our standard software products and
+customer-specific on-premise software development
+agreements.
+Business Network Services, that is, connecting companies
+in a cloud-based-environment to perform business
+processes between the connected companies.
+■
+■ Infrastructure-as-a-Service (laaS), that is, hosting services
+for software hosted by SAP, where the customer has the
+right to terminate the hosting contract and take
+possession of the software at any time without significant
+penalty and related application management services, or
+Additional premium cloud subscription support beyond
+the regular support that is embedded in the basic cloud
+subscription fees, or
+Platform-as-a-Service (PaaS), that is, access to a cloud-
+based infrastructure to develop, run, and manage
+applications, or
+software functionality in a cloud-based-infrastructure
+(hosting) provided by SAP, where the customer does not
+have the right to terminate the hosting contract and take
+possession of the software to run it on the customer's own
+IT infrastructure or by a third-party hosting provider
+without significant penalty, or
+•
+Revenue from cloud subscriptions and support represents
+fees earned from providing customers with the following:
+Software-as-a-Service (SaaS), that is, a right to use
+Cloud and software revenue, as presented in our Consolidated
+Income Statements, is the sum of our cloud subscriptions and
+support revenue, our software licenses revenue, and our
+software support revenue.
+We derive our revenue from fees charged to our customers for
+(a) the use of our hosted cloud offerings, (b) licenses to our on-
+premise software products, and (c) standardized and premium
+support services, consulting, customer-specific on-premise
+software development agreements, training, and other services.
+Classes of Revenue
+Revenue Recognition
+1.4650
+1.4753
+1.0688
+1.2132
+Canadian dollar
+CAD
+1.4188
+1.5116
+1.0835
+1.4606
+1.4645
+Australian dollar
+AUD
+1.4596
+1.4897
+1.4850
+1.4227
+127
+16
+368
+1,259
+1,259
+1,282
+-23
+Share-based payments
+Comprehensive income
+income
+Other comprehensive
+3,280
+3,280
+3,280
+Profit after tax
+16,048
+8
+3,257
+16,040
+-718
+16,258
+551
+1,229
+January 1, 2014
+(20)
+(20)
+(20)
+Notes
+Equity
+Equity
+Total
+Non-
+Controlling
+Interests
+Total
+-1,280
+1,282
+4,539
+4,539
+Profit after tax
+19,534
+34
+19,499
+-1,224
+564
+18,317
+614
+1,229
+December 31, 2014
+-4
+-4
+-4
+Other changes
+combinations
+26
+26
+34
+34
+34
+Dividends
+-1,194
+-1,194
+Treasury
+Shares
+-1,194
+29
+56
+85
+85
+under share-based payments
+Additions from business
+Reissuance of treasury shares
+3,064
+Other
+Compo-
+nents of
+Premium
+18,095
+17,880
+10,228
+8,205
+106
+143
+(19)
+Issued capital
+Total liabilities
+Total non-current liabilities
+Deferred income
+448
+411
+(10)
+1,229
+Deferred tax liabilities
+217
+(18)
+Provisions
+331
+461
+(17)
+Other non-financial liabilities
+8,681
+6,481
+(17)
+Financial liabilities
+402
+365
+Tax liabilities
+180
+1,229
+Share premium
+599
+Share Retained
+Issued
+Capital
+Equity Attributable to Owners of Parent
+€ millions
+Consolidated Statements of Changes in Equity of SAP Group for the Years Ended December 31
+143
+41,390
+44,277
+23,295
+26,397
+(20)
+28
+21
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+Total equity and liabilities
+Total equity
+558
+Retained earnings
+Other components of equity
+Treasury shares
+Equity attributable to owners of parent
+22,302
+Earnings
+20,044
+2,561
+-1,099
+-1,124
+26,376
+23,267
+Non-controlling interests
+3,346
+3,064
+-8
+3,056
+Depreciation and amortization
+Adjustments to reconcile profit after taxes to net cash provided by operating activities:
+3,280
+3,056
+3,634
+2014
+2015
+2016
+Notes
+Consolidated Statements of Cash Flows of SAP Group for the Years Ended December 31
+Profit after tax
+€ millions
+Consolidated Financial Statements IFRS and Notes | Consolidated Financial Statements IFRS
+144
+(15)
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+21
+26,376
+-1,099
+3,346
+22,302
+599
+1,229
+4
+6
+-2
+-2
+50
+50
+25
+26,397
+1,268
+1,289
+1,010
+Decrease/increase in deferred income
+573
+757
+513
+Decrease/increase in trade payables, provisions, and other liabilities
+-329
+-313
+-248
+Decrease/increase in other assets
+-286
+-844
+-675
+Decrease/increase in trade and other receivables
+70
+-2
+39
+Other adjustments for non-cash items
+Income tax expense
+(10)
+1,229
+935
+1,075
+Financial income, net
+25
+(9)
+5
+25
+Decrease/increase in sales and bad debt allowances on trade receivables
+51
+45
+47
+38
+December 31, 2016
+Other changes
+under share-based payments
+2
+-4
+-4
+180
+180
+100
+80
+December 31, 2015
+Other changes
+under share-based payments
+Reissuance of treasury shares
+-1,316
+-1,316
+-1,316
+Dividends
+-136
+-136
+Other comprehensive
+income
+Comprehensive income
+Share-based payments
+-17
+1,997
+-2
+1,980
+3,047
+1,997
+5,044
+-8
+5,036
+-136
+1,980
+218
+1,229
+20,044
+Reissuance of treasury shares
+-1,378
+-1,378
+-1,378
+16
+16
+16
+4,410
+-13
+4,423
+785
+3,638
+777
+777
+785
+-8
+Dividends
+2,561
+-1,124
+23,267
+28
+23,295
+Profit after tax
+558
+3,646
+-13
+3,634
+Other comprehensive
+income
+Comprehensive income
+Share-based payments
+3,646
+For our on-premise software offerings, company-specific
+objective evidence of fair value can generally not be
+established and representative stand-alone selling prices are
+not discernible from past transactions. We therefore apply
+the residual method to multiple-element arrangements that
+include on-premise software. Under this method, the
+transaction fee is allocated to all undelivered elements in the
+amount of their respective fair values and the remaining
+amount of the arrangement fee is allocated to the delivered
+element. With this policy, we have considered the guidance
+provided by Financial Accounting Standards Board (FASB)
+Accounting Standards Codification (ASC) Subtopic 985-605
+(Software Revenue Recognition), where applicable, as
+authorized by IAS 8 (Accounting Policies, Changes in
+Accounting Estimates and Errors).
+2016
+a) Cash Flow Hedge
+80
+9
+7
+218
+24
+Research and development
+Sales and marketing
+7
+156
+3
+24
+147
+41
+General and administration
+Restructuring expenses
+1
+20
+28
+28
+621
+10
+Cost of cloud and software
+Cost of services
+2014
+2015
+Loans, trade, and other financial receivables and contract
+assets are held to collect contractual cash flows and are
+expected to give rise to cash flows solely representing
+payments of principal and interest. Thus, we expect that
+these will continue to be measured at amortized cost.
+Derivatives will continue to be measured at FVTPL.
+However, we will continue to analyze the contractual cash
+flow characteristics of all instruments approved to be used
+and the related business model in more detail before
+reaching a final conclusion on the classification for IFRS 9.
+(b) Financial liabilities
+We have never designated any financial liabilities at FVTPL
+and have no current intention to do so. Thus, we believe that
+we will not have a material impact with regards to financial
+liabilities, considering that the only significant change that
+IFRS 9 brings to the accounting for financial liabilities is that
+for liabilities designated as at FVTPL, changes in the fair value
+attributable to changes in the credit risk of the liability must
+be presented in other comprehensive income (OCI).
+(c) Impairment
+We currently plan to apply the simplified impairment
+approach of IFRS 9 and record lifetime expected losses on all
+trade receivables and contract assets. The financial impact of
+the new standard will depend on the financial instruments
+recorded at the time of adoption. Based on the current status
+of our analysis, we are expecting offsetting effects, that is,
+increases and decreases in impairment under IFRS 9 and
+thus no material impact. This assessment might change
+based on the result of the more detailed analysis performed
+that considers all reasonable and supportable information,
+including forward-looking elements.
+(d) Hedge accounting
+We believe that all existing hedge relationships that we have
+currently designated in effective hedging relationships will
+still qualify for hedge accounting in the future, and thus we do
+not expect a significant impact as a result of applying IFRS 9.
+In contrast to IAS 39, where fair value changes related to the
+interest element are recognized in profit or loss immediately,
+IFRS 9 allows recording these costs of hedging in OCI. We
+have not yet made a decision related to the accounting for
+the interest element. Only after having made that decision will
+we be able to reasonably estimate the impact of these new
+requirements on our financial statements.
+Consolidated Financial Statements IFRS and Notes | Notes
+157
+(4) Business Combinations
+In 2016 and 2015, we did not conclude any significant business
+combinations.
+(5) Revenue
+For detailed information about our revenue recognition policies,
+see Note (3).
+For revenue information by geographic region, see Note (28).
+Revenue from construction contracts (contract revenue) is
+mainly included in software revenue and services revenue
+depending on the type of contract. In 2016, contract revenue of
+€280 million was recognized for all our construction contracts
+(2015: €292 million, 2014: €285 million). The status of our
+construction contracts in progress at the end of the reporting
+period accounted for under IAS 11 (Construction Contracts) was
+as follows:
+Construction Contracts in Progress
+Restructuring provisions primarily include personnel costs that
+result from severance payments for employee terminations and
+onerous contract costs. Prior-year restructuring provisions
+relate to restructuring activities incurred in connection with
+organizational changes and the integration of employees of our
+acquisitions in previous years.
+If not presented separately in our income statement,
+restructuring expenses would break down by functional area as
+follows:
+Restructuring Expenses by Functional Area
+€ millions
+2016
+126
+€ millions
+2015
+2014
+7,969
+7,483
+6,319
+Social security expense
+1,135
+1,067
+916
+Recognized loss stated for 2016 predominantly resulted from
+strategic customer co-innovation projects.
+(6) Restructuring
+Restructuring Expenses
+Share-based payment
+785
+724
+290
+expense
+Pension expense
+270
+258
+Salaries
+Under our current policies, we classify most of our debt and
+equity investments as available-for-sale financial assets. We
+expect that the majority of our debt investments will be
+measured at amortized cost under IFRS 9, as we hold them to
+collect contractual cash flows which solely represent
+payments of principal and interest. Equity investments can
+be classified as either fair value through other comprehensive
+income (FVOCI) or fair value through profit or loss (FVTPL),
+and we have not yet made a decision in this regard.
+Consequently, we are unable to reasonably estimate the
+impact of the introduction of IFRS 9 on the accounting for our
+equity investments.
+customers
+2015
+Aggregate cost recognized
+527
+294
+201
+(7) Employee Benefits Expense and
+Headcount
+(multi-year)
+Recognized result
+-174
+20
+92
+(+ profit/ loss;
+Employee Benefits Expense
+multi-year)
+Gross amounts due to
+78
+41
+30
+€ millions
+2016
+2014
+(a) Classification of financial assets
+On July 24, 2014, the IASB issued the fourth and final version
+of IFRS 9 (Financial Instruments), which will be applicable in
+fiscal year 2018 with earlier application permitted. We plan to
+adopt the new standard on the required effective date.
+Our preliminary assessment may be subject to changes, as
+we have not yet finalized our analysis and thus have not
+completed the determination of the impact on our
+Consolidated Financial Statements.
+be material. We are also currently evaluating to what extent
+we want to make use of the practical expedients included in
+the standard. The financial impact of the new standard will
+depend on the lease agreements in effect at the time of
+adoption. It is expected that operating profit will increase, as
+costs that were treated as rental expenses in the past will
+now be recorded as interest expense. It is also expected that
+total assets / liabilities will increase, as right-of-use assets/
+lease liabilities will have to be recorded for those items that
+were previously "off balance sheet." Based on the limited
+assessment of the impact of IFRS 16 performed to date, we
+currently do not know and are not able to reasonably
+estimate the impact on our financial statements.
+The assessment whether a deferred tax asset is impaired
+requires management judgment, as we need to estimate future
+taxable profits to determine whether the utilization of the
+deferred tax asset is probable. In evaluating our ability to utilize
+our deferred tax assets, we consider all available positive and
+negative evidence, including the level of historical taxable
+income and projections for future taxable income over the
+periods in which the deferred tax assets are recoverable. Our
+judgment regarding future taxable income is based on
+assumptions about future market conditions and future profits
+of SAP. Changes to these assumptions and outcomes that differ
+from these assumptions could require material adjustments to
+the carrying amount of our deferred tax assets.
+For more information about our income tax, see Note (10).
+Accounting for Business Combinations
+In our accounting for business combinations, judgment is
+required in determining whether an intangible asset is
+identifiable, and should be recorded separately from goodwill.
+Additionally, estimating the acquisition date fair values of the
+identifiable assets acquired and liabilities assumed involves
+considerable management judgment. The necessary
+measurements are based on information available on the
+acquisition date and are based on expectations and
+assumptions that have been deemed reasonable by
+management. These judgments, estimates, and assumptions
+can materially affect our financial position and profit for several
+reasons, including the following:
+Fair values assigned to assets subject to depreciation and
+amortization affect the amounts of depreciation and
+amortization to be recorded in operating profit in the periods
+following the acquisition.
+Subsequent negative changes in the estimated fair values of
+assets may result in additional expense from impairment
+charges.
+Subsequent changes in the estimated fair values of liabilities
+and provisions may result in additional expense (if increasing
+the estimated fair value) or additional income (if decreasing
+the estimated fair value).
+Subsequent Accounting for Goodwill and
+Intangible Assets
+Judgment is required in determining the following:
+The useful life of an intangible asset, as this is based on our
+estimates regarding the period over which the intangible
+asset is expected to produce economic benefits to us
+The amortization method, as IFRS requires the straight-line
+method to be used unless we can reliably determine the
+pattern in which the asset's future economic benefits are
+expected to be consumed by us
+Both the amortization period and the amortization method have
+an impact on the amortization expense that is recorded in each
+period.
+In making impairment assessments for our goodwill and
+intangible assets, the outcome of these tests is highly
+dependent on management's assumptions regarding future
+cash flow projections and economic risks, which require
+significant judgment and assumptions about future
+154
+Consolidated Financial Statements IFRS and Notes | Notes
+developments. They can be affected by a variety of factors,
+including:
+-
+Changes in business strategy
+Internal forecasts
+We are subject to changing tax laws in multiple jurisdictions
+within the countries in which we operate. Our ordinary business
+activities also include transactions where the ultimate tax
+outcome is uncertain due to different interpretation of tax laws,
+such as those involving revenue sharing and cost
+reimbursement arrangements between SAP Group entities. In
+addition, the amount of income tax we pay is generally subject
+to ongoing audits by domestic and foreign tax authorities. As a
+result, judgment is necessary in determining our worldwide
+income tax provisions. We make our estimates about the
+ultimate resolution of our tax uncertainties based on current tax
+laws and our interpretation thereof. Changes to the assumptions
+underlying these estimates and outcomes that differ from these
+assumptions could require material adjustments to the carrying
+amount of our income tax provisions.
+Estimation of weighted-average cost of capital
+Accounting for Income Tax
+We use certain assumptions in estimating the fair values for our
+share-based payments, including expected share price volatility
+and expected option life (which represents our estimate of the
+average amount of time remaining until the options are
+exercised or expire unexercised). In addition, the final payout for
+plans may also depend on the achievement of performance
+indicators and on our share price on the respective exercise
+dates. Changes to these assumptions and outcomes that differ
+from these assumptions could require material adjustments to
+the carrying amount of the liabilities we have recognized for
+these share-based payments.
+As described in the Revenue Recognition section of Note (3b),
+we do not recognize revenue before the amount of revenue can
+be measured reliably, collection of the related receivable is
+probable, and the delivery has occurred or the services have
+been rendered. The determination of whether the amount of
+revenue can be measured reliably or whether the fees are
+collectible is inherently judgmental, as it requires estimates as
+to whether and to what extent subsequent concessions may be
+granted to customers and whether the customer is expected to
+pay the contractual fees. The timing and amount of revenue
+recognition can vary depending on what assessments have been
+made.
+The application of the percentage-of-completion method
+requires us to make estimates about total revenue, total cost to
+complete the project, and the stage of completion. The
+assumptions, estimates, and uncertainties inherent in
+determining the stage of completion affect the timing and
+amounts of revenue recognized.
+In the accounting for our multiple-element arrangements, we
+have to determine the following:
+Which contracts with the same customer are to be accounted
+for as one single arrangement
+Which deliverables under one contract are distinct and thus
+to be accounted for separately
+How to allocate the total arrangement fee to the distinct
+deliverables
+The determination of whether different contracts with the same
+customer are to be accounted for as one arrangement involves
+the use of judgment as it requires us to evaluate whether the
+contracts are negotiated together or linked in any other way.
+The timing and amount of revenue recognition can vary
+depending on whether two contracts are accounted for
+separately or as one single arrangement.
+Under a multiple-element arrangement including a cloud
+subscription, or on-premise software, and other deliverables, we
+do not account for the cloud subscription, or on-premise
+software, and the other deliverables separately if one of the
+other deliverables (such as consulting services) is deemed to be
+essential to the functionality of the cloud subscription or on-
+premise software. The determination whether an undelivered
+element is essential to the functionality of the delivered element
+requires the use of judgment. The timing and amount of revenue
+recognition can vary depending on how that judgment is
+exercised, because revenue may be recognized over a longer
+service term.
+In the area of allocating the transaction fee to the different
+deliverables under the respective customer contract, judgment
+is required in the determination of an appropriate fair value
+measurement which may impact the timing and amount of
+revenue recognized depending on the following:
+Whether an appropriate measurement of fair value can be
+demonstrated for undelivered elements
+The approaches used to establish fair value
+Additionally, our revenue for on-premise software contracts
+would be significantly different if we applied a revenue allocation
+policy other than the residual method.
+Valuation of Trade Receivables
+As described in the Trade and Other Receivables section in
+Note (3b), we account for impairments of trade receivables by
+recording sales allowances and allowances for doubtful
+accounts on an individual receivable basis and on a portfolio
+basis. The assessment of whether a receivable is collectible
+involves the use of judgment and requires the use of
+assumptions about customer defaults that could change
+significantly. Judgment is required when we evaluate available
+Consolidated Financial Statements IFRS and Notes | Notes
+153
+information about a particular customer's financial situation to
+determine whether it is probable that a credit loss will occur and
+the amount of such loss is reasonably estimable and thus an
+allowance for that specific account is necessary. Basing the
+general allowance for the remaining receivables on our historical
+loss experience likewise requires the use of judgment, as history
+may not be indicative of future development. Changes in our
+estimates about the allowance for doubtful accounts could
+materially impact reported assets and expenses, and our profit
+could be adversely affected if actual credit losses exceed our
+estimates.
+Accounting for Share-Based Payments
+For the purpose of determining the estimated fair value of our
+share options, we believe expected volatility is the most
+sensitive assumption. Regarding future payout under our cash-
+settled plans, the SAP share price is the most relevant factor.
+Changes in these factors could significantly affect the estimated
+fair values as calculated by the option-pricing model, and the
+future payout. For more information, see Note (27).
+211
+Changes to the assumptions underlying our goodwill and
+intangible assets impairment assessments could require
+material adjustments to the carrying amount of our recognized
+goodwill and intangible assets as well as the amounts of
+impairment charges recognized in profit or loss.
+For more information about goodwill and intangible assets, see
+Note (15).
+156
+(cumulative catch-up approach). We currently plan to adopt
+the new standard using the cumulative catch-up approach.
+We are in the process of developing our future IFRS 15
+revenue recognition policies and adjusting the relevant
+business processes to adopt these new policies. We have
+established a project across SAP's operating segments. This
+project covers the implementation of a new SAP-based
+revenue accounting and reporting solution as well as the
+development of new revenue recognition policies. Besides
+this, we have established a global roll-out and training
+approach for all of the relevant stakeholders within the
+organization. As part of this effort, we have identified several
+differences between our current accounting policies and the
+future IFRS 15-based policies (as far as these have already
+been developed). Based on our analyses performed so far,
+these differences include:
+"
+■
+Currently, if for any of our product or service offerings, we
+determine at the outset of an arrangement that the
+amount of revenue cannot be measured reliably, we
+conclude that the inflow of economic benefits associated
+with the transaction is not probable, and we defer revenue
+recognition until the arrangement fee becomes due and
+payable by the customer. Under our draft IFRS 15-based
+policies, we need to estimate, at the outset of an
+arrangement, the potential impact on the transaction price
+from both uncertainties in the measurement of revenue
+and from collection uncertainties and recognize the
+remaining revenue earlier.
+IFRS 15 requires changes to the way we allocate a
+transaction price to individual performance obligations,
+which can impact both the classification and the timing of
+revenues. Among these differences are changes in the
+application of the residual approach under IFRS 15 and the
+residual method which we currently apply. While the
+residual method we currently use aims at allocating the
+transaction price between deliverables, the residual
+approach under IFRS 15 is used for estimating the
+standalone selling price of a promised good or service and
+generally would not allow an allocation of little or no
+portion of the transaction price to a performance
+obligation. This difference may result in higher transaction
+price allocations to on-premise software performance
+obligations and thus in an earlier recognition of certain
+portions of the transaction price.
+We expect a revised recognition pattern for on-premise
+software subscription contracts, which combine the
+delivery of software and support service and the obligation
+to deliver, in the future, unspecified software products.
+Under our current policies, we recognize the entire fee
+ratably over the subscription term. In contrast, under IFRS
+15-, we would recognize a portion of the transaction price
+upon delivery of the initial software at the outset of the
+arrangement.
+Under our current policies, we do not account for options
+that allow the customer to purchase additional copies of
+an already-licensed on-premise software product as a
+separate element of an arrangement. In contrast, IFRS 15
+provides that such options are accounted for as a separate
+performance obligation if they represent a material right.
+In such circumstancesIFRS 15 will result in allocating a
+portion of the transaction price to such options giving rise
+to the material right. This portion will be recognized upon
+exercise or forfeiture of the options, which may be later
+than the current revenue recognition timing.
+■ We are currently already capitalizing the cost to obtain a
+contract. We expect the capitalization amount to increase
+under IFRS 15 due to a broader definition of what is
+capitalizable as cost to obtain a contract.
+In addition to the effects on our Consolidated Statements of
+Income, we expect changes to our Consolidated Statements
+of Financial Position (in particular due to no separate balance
+sheet items for deferred revenues being presented anymore,
+the recognition of contract assets/contract liabilities, the
+differentiation between contract assets and trade
+receivables, and an impact in retained earnings from the
+initial adoption of IFRS 15) and changes in quantitative and
+qualitative disclosure to be added. The quantitative impact of
+IFRS 15 on our 2018 financial statements is currently neither
+known to us nor reasonably estimable, as we have not yet
+done the following:
+■
+Completed the analysis of the volume of contracts that will
+be affected by the different policy changes stemming from
+IFRS 15 upon adoption
+Performed estimates of the potential changes in business
+practices that may result from the adoption of the new
+policies
+Completed the identification of those contracts that will
+not be completed by the end of 2017 and thus have to be
+restated under the cumulative catch-up approach that we
+intend to use for transition to the new policies
+Finalized our accounting policy regarding the cost
+components to be included into the cost to fulfill a
+contract under IFRS 15.
+We will continue to assess all of the impacts that the
+application of IFRS 15 will have on our financial statements in
+the period of initial application, which will also significantly
+depend on our business and go-to-market strategy in 2017.
+The impacts - if material – will be disclosed, including
+statements on if and how we apply any of the practical
+expedients available in the standard.
+On January 13, 2016, the IASB issued IFRS 16 (Leases). The
+standard becomes effective in fiscal year 2019, with earlier
+application permitted for those companies that also apply
+IFRS 15. The new standard is a major revision of lease
+accounting; whereas the accounting by lessors remains
+substantially unchanged, the lease accounting by lessees will
+change significantly as all leases need to be recognized on a
+company's balance sheet as assets and liabilities. For SAP,
+the vast majority of the impact is expected to come from our
+facility leases, and we are currently analyzing the effects of
+adopting the standard and whether or not those effects will
+Consolidated Financial Statements IFRS and Notes | Notes
+155
+The outcome of goodwill impairment tests may also depend on
+the allocation of goodwill to our operating segments. This
+allocation involves judgment as it is based on our estimates
+regarding which operating segments are expected to benefit
+from the synergies of business combinations.
+Consolidated Financial Statements IFRS and Notes | Notes
+-
+Accounting for Legal Contingencies
+As described in Note (23), we are currently involved in various
+claims and legal proceedings. We review the status of each
+significant matter at least quarterly and assess our potential
+financial and business exposures related to such matters.
+Significant judgment is required in the determination of whether
+a provision is to be recorded and what the appropriate amount
+for such provision should be. Notably, judgment is required in
+the following:
+-
+Determining whether an obligation exists
+Determining the probability of outflow of economic benefits
+Determining whether the amount of an obligation is reliably
+estimable
+Estimating the amount of the expenditure required to settle
+the present obligation
+Due to uncertainties relating to these matters, provisions are
+based on the best information available at the time.
+At the end of each reporting period, we reassess the potential
+obligations related to our pending claims and litigation and
+adjust our respective provisions to reflect the current best
+estimate. In addition, we monitor and evaluate new information
+that we receive after the end of the respective reporting period
+but before the Consolidated Financial Statements are
+authorized for issue to determine whether this provides
+additional information regarding conditions that existed at the
+end of the reporting period. Changes to the estimates and
+assumptions underlying our accounting for legal contingencies
+and outcomes that differ from these estimates and assumptions
+could require material adjustments to the carrying amounts of
+the respective provisions recorded as well as additional
+provisions. For more information about legal contingencies, see
+Notes (18b) and (23).
+Recognition of Internally Generated Intangible
+Assets from Development
+We believe that determining whether internally generated
+intangible assets from development are to be recognized as
+intangible assets requires significant judgment, particularly in
+the following areas:
+Determining whether activities should be considered
+research activities or development activities.
+· Determining whether the conditions for recognizing an
+intangible asset are met requires assumptions about future
+market conditions, customer demand, and other develop-
+ments.
+The term "technical feasibility" is not defined in IFRS, and
+therefore determining whether the completion of an asset is
+technically feasible requires judgment and a company-
+specific approach.
+Determining the future ability to use or sell the intangible
+asset arising from the development and the determination of
+the probability of future benefits from sale or use.
+Determining whether a cost is directly or indirectly
+attributable to an intangible asset and whether a cost is
+necessary for completing a development.
+These judgments impact the total amount of intangible assets
+that we present in our balance sheet as well as the timing of
+recognizing development expenses in profit or loss.
+(3d) New Accounting Standards Adopted in
+the Current Period
+No new accounting standards adopted in 2016 had a material
+impact on our Consolidated Financial Statements. We have early
+adopted the amendments to IAS 7 (Statement of Cash Flows),
+which are aimed at improving the information provided to users
+of financial statements about an entity's financing activities, as
+well as expanding the disclosures on net debt.
+(3e) New Accounting Standards Not Yet
+Adopted
+The standards and interpretations (relevant to the Group) that
+are issued, but not yet effective, up to the date of issuance of the
+Group's financial statements are disclosed below. The Group
+intends to adopt these standards, if applicable, when they
+become effective:
+On May 28, 2014, the IASB issued IFRS 15 (Revenue from
+Contracts with Customers). The new revenue recognition
+standard will be effective for us starting January 1, 2018. We
+do not plan to adopt IFRS 15 early. The standard permits two
+possible transition methods for the adoption of the new
+guidance: (1) retrospectively to each prior reporting period
+presented in accordance with IAS 8 (Accounting Policies,
+Changes in Accounting Estimates and Errors), or (2)
+retrospectively with the cumulative effect of initially applying
+the standard recognized on the date of the initial application
+Employee-related
+33
+610
+2016
+2015
+2014
+Thereof from financial
+-38
+-12
+83
+assets/liabilities at fair
+Cost of cloud and software
+89
+74
+28
+value through profit or
+Cost of services
+101
+113
+49
+loss
+Thereof from available-
+€ millions
+−1
+71
+-210
+172
+0
+73
+SAP Group (months' end 34,932
+average)
+209
+73
+23,532 22,145 80,609 33,561 21,832 19,788 75,180 31,821
+0
+0
+814
+2,890 1,831 5,535
+19,797 16,725 68,343
+Allocation of Share-Based Payment
+Expense
+The allocation of expense for share-based payments, net of the
+effects from hedging these instruments, to the various
+functional areas is as follows:
+(8) Other Non-Operating
+Income/Expense, Net
+Other Non-Operating Income/Expense, Net
+€ millions
+2016
+2015
+2014
+Share-Based Payments
+Foreign currency exchange
+gain/loss, net
+-230
+37
+-1
+Research and development
+724
+290
+liabilities at amortized
+Thereof cash-settled
+678
+637
+193
+cost
+share-based payments
+Thereof equity-settled
+107
+87
+96
+Thereof from non-financial
+assets/liabilities
+-17
+-3
+-13
+share-based payments
+they qualify for hedge accounting under IAS 39. For more
+information about our hedges, see Note (25).
+785
+0
+Share-based payments
+-2
+190
+166
+71
+for-sale financial assets
+Sales and marketing
+292
+260
+80
+Thereof from loans and
+26
+-213
+-219
+General and administration
+113
+111
+62
+receivables
+Thereof from financial
+-174
+226
+Revenue Recognition
+Thereof acquisitions
+879 373 2,794
+22,071 18,995 74,406
+restructuring expenses
+Restructuring expenses
+28
+621
+126
+In 2016, except for limited close-out activities under our global
+restructuring plan executed in 2015, no significant new
+restructuring activities occurred.
+Pension expense includes the amounts recorded for our defined
+benefit and defined contribution plans as described in
+Note (18a). Expenses for local state pension plans are included
+in social security expense.
+The number of employees in the following table is broken down
+by function and by the regions EMEA (Europe, Middle East, and
+Africa), Americas (North America and Latin America), and APJ
+(Asia Pacific Japan). The information for prior periods has been
+restated to conform to current year presentation.
+158
+Consolidated Financial Statements IFRS and Notes | Notes
+Number of Employees
+Full-time equivalents
+December 31, 2016
+December 31, 2015
+December 31, 2014
+EMEA
+Ame-
+ricas
+7
+APJ Total
+11
+Onerous contract-related
+119
+restructuring expense
+Termination benefits outside
+37
+28
+22
+of restructuring plans
+Employee benefits expense
+10,229
+10,170
+7,877
+€ millions
+2016
+2015
+2014
+Employee-related
+33
+119
+restructuring expenses
+-5
+31)
+EMEA
+6,406
+8,542
+8,999 4,435
+21,977
+7,683
+7,766
+3,974 19,422
+7,712
+7,758 3,776 19,246
+General and
+2,629
+1,746 1,018 5,393 2,434
+1,653 937 5,024
+2,436
+1.643 944 5,023
+administration
+Infrastructure
+SAP Group (December
+1,584
+788 454
+36,222 24,696 23,265
+2,827 1,535 783 425 2,743 1,542
+84,183 33,906 22,166 20,914 76,986 33,340
+Sales and marketing
+Cloud and software
+development
+6,649
+9,049
+4,184 5,412 16,002
+6,095
+Ame-
+ricas
+3,920 4,976 14,991
+APJ Total
+EMEA
+5,953
+Ame-
+ricas
+3,983 5,138 15,074
+APJ
+Total
+Services
+6,535
+Research and
+10,525
+4,119 3,967 14,621
+4,860 7,977 23,363 9,676
+6,482
+3,812
+3,574 13,868
+4,233
+7,029 20,938
+3,834 2,879 13,361
+3,974 5,885 18,908
+Our management periodically discusses these critical
+accounting policies with the Audit Committee of the Supervisory
+Board.
+610
+Total deferred tax income
+127
+241
+230
+Finance income
+1,168
+1,278
+1,412
+Tax expense for current year
+2014
+2015
+expense/income
+2016
+€ millions
+Current tax
+2014
+2015
+2016
+Taxes for prior years
+€ millions
+-22
+24
+-135
+-108
+Thereof interest expense from
+Deferred tax
+-152
+-246
+-268
+Finance costs
+1,192
+1,267
+1,390
+Total current tax expense
+financial assets (equity)
+30
+176
+164
+Thereof available-for-sale
+-11
+-93
+Major Components of Tax Expense
+(9) Financial Income, Net
+Valuation of trade receivables
+Revenue recognition
+The accounting policies that most frequently require us to make
+judgments, estimates, and assumptions, and therefore are
+critical to understanding our results of operations, include the
+following:
+We base our judgments, estimates, and assumptions on
+historical and forecast information, as well as on regional and
+industry economic conditions in which we or our customers
+operate, changes to which could adversely affect our estimates.
+Although we believe we have made reasonable estimates about
+the ultimate resolution of the underlying uncertainties, no
+assurance can be given that the final outcome of these matters
+will be consistent with what is reflected in our assets, liabilities,
+revenues, and expenses. Actual results could differ from original
+estimates.
+The preparation of the Consolidated Financial Statements in
+conformity with IFRS requires management to make judgments,
+estimates, and assumptions that affect the application of
+accounting policies and the reported amounts of assets,
+liabilities, revenues, and expenses, as well as disclosure of
+contingent assets and liabilities.
+(3c) Management Judgments and Sources
+of Estimation Uncertainty
+Consolidated Financial Statements IFRS and Notes | Notes
+152
+Deferred income is recognized as cloud subscriptions and
+support revenue, software licenses revenue, software support
+revenue, or services revenue, depending on the reason for the
+deferral, once the basic applicable revenue recognition criteria
+have been met. These criteria are met, for example, when the
+services are performed or when the discounts that relate to a
+material right granted in a purchase option are applied.
+Deferred Income
+Since our domestic defined benefit pension plans primarily
+consist of an employee-financed post-retirement plan that is
+fully financed with qualifying insurance policies, current service
+cost may become a credit as a result of adjusting the defined
+benefit liability's carrying amount to the fair value of the
+qualifying plan assets. Such adjustments are recorded in service
+cost.
+The discount rates used in measuring our post-employment
+benefit assets and liabilities are derived from rates available on
+high-quality corporate bonds and government bonds for which
+the timing and amounts of payments match the timing and the
+amounts of our projected pension payments. The assumptions
+used to calculate pension liabilities and costs are disclosed in
+Note (18a). Net interest expense and other expenses related to
+defined benefit plans are recognized as employee benefits
+expenses and classified in our Consolidated Income Statements
+according to the activities that the employees owning the
+awards perform.
+Post-Employment Benefits
+Provisions
+Expenses and gains/losses on financial liabilities mainly consist
+of interest expense, which is recognized based on the effective
+interest method.
+Customer funding liabilities are funds we draw from and make
+payments on behalf of our customers for customers' employee
+expense reimbursements, related credit card payments, and
+vendor payments. We present these funds in cash and cash
+equivalents and record our obligation to make these expense
+reimbursements and payments on behalf of our customers as
+customer funding liabilities.
+fair value through profit or loss. The latter include only those
+financial liabilities that are held for trading, as we do not
+designate financial liabilities at fair value through profit or loss.
+Accounting for share-based payments
+Financial Income, Net
+-
+Accounting for business combinations
+159
+Consolidated Financial Statements IFRS and Notes | Notes
+49
+-256
+-234
+Other non-operating
+income/expense, net
+For more information about our share-based payments, see
+Note (27).
+-25
+-27
+-27
+Miscellaneous expense
+3
+1
+3
+Miscellaneous income
+Recognition of internally generated intangible assets from
+development
+Subsequent accounting for goodwill and intangible assets
+Accounting for legal contingencies
+Accounting for income tax
+They are classified as financial liabilities at amortized cost and at
+expense/income
+Origination and reversal of
+Total deferred tax income
+-258
+-123
+Foreign
+-74
+-38
+Germany
+expense/income
+Deferred tax
+1,192
+1,267
+1,390
+Total current tax expense
+422
+408
+537
+Foreign
+-161
+Total
+-332
+1,229
+Consolidated Financial Statements IFRS and Notes | Notes
+160
+The following table reconciles the expected income tax expense,
+computed by applying our combined German tax rate of 26.4%
+(2015: 26.4%; 2014: 26.4%), to the actual income tax expense.
+Our 2016 combined German tax rate includes a corporate
+income tax rate of 15.0% (2015: 15.0%; 2014: 15.0%), plus a
+solidarity surcharge of 5.5% (2015: 5.5%; 2014: 5.5%) thereon,
+and trade taxes of 10.6% (2015: 10.6%; 2014: 10.6%).
+4,355
+3,991
+4,863
+1,017
+830
+1,754
+3,338
+3,161
+3,109
+2014
+2015
+2016
+84
+-201
+-117
+1,075
+935
+Total income tax expense
+financial liabilities at
+770
+853
+-38
+Financial income, net
+and development tax credits,
+and foreign tax credits
+derivatives
+9
+96
+242
+Unused tax losses, research
+-28
+-72
+-114
+Thereof interest expense from
+temporary differences
+amortized cost
+-126
+-428
+-403
+-5
+859
+-25
+-332
+Germany
+Foreign
+Current tax expense
+Germany
+2014
+2015
+2016
+€ millions
+€ millions
+Profit Before Tax
+Tax Expense According to Region
+(10) Income Tax
+1,075
+935
+1,229
+Total income tax expense
+-117
+-161
+Financial liabilities include trade and other payables, bank loans,
+issued bonds, private placements, and other financial liabilities
+that comprise derivative and non-derivative financial liabilities.
+The employee-related provisions include, amongst others, long-
+term employee benefits. They are secured by pledged
+reinsurance coverage and are offset against the settlement
+amount of the secured commitment.
+Liabilities
+Included in trade receivables are unbilled receivables related to
+fixed-fee and time-and-material consulting arrangements for
+contract work performed to date.
+In our Consolidated Income Statements, expenses from
+recording bad debt allowances for a portfolio of trade
+receivables are classified as other operating income/expense,
+net, whereas expenses from recording bad debt allowances for
+specific customer balances are classified as cost of cloud and
+software or cost of services, depending on the transaction from
+which the respective trade receivable results. Sales allowances
+are recorded as an offset to the respective revenue item.
+Account balances are written off, that is, charged off against the
+allowance after all collection efforts have been exhausted and
+the likelihood of recovery is considered remote.
+First, we consider the financial solvency of specific customers
+and record an allowance for specific customer balances when
+we believe it is probable that we will not collect the amount
+due according to the contractual terms of the arrangement.
+Second, we evaluate homogenous portfolios of trade
+receivables according to their default risk primarily based on
+the age of the receivable and historical loss experience, but
+also taking into consideration general market factors that
+might impact our trade receivable portfolio. We record a
+general bad debt allowance to record impairment losses for a
+portfolio of trade receivables when we believe that the age of
+the receivables indicates that it is probable that a loss has
+occurred and we will not collect some or all of the amounts
+due.
+Trade receivables are recorded at invoiced amounts less sales
+allowances and allowances for doubtful accounts. We record
+these allowances based on a specific review of all significant
+outstanding invoices. When analyzing the recoverability of our
+trade receivables, we consider the following factors:
+Trade and Other Receivables
+determined. The hedge is deemed highly effective if the
+determination coefficient between the hedged items and the
+hedging instruments exceeds 0.8 and the slope coefficient lies
+within a range of -0.8 to -1.25.
+Retrospectively, effectiveness is tested using statistical
+methods in the form of a regression analysis, by which the
+validity and extent of the relationship between the change in
+value of the hedged items as the independent variable and the
+fair value change of the derivatives as the dependent variable is
+b) Fair Value Hedge
+Retrospectively, effectiveness is tested on a cumulative basis
+applying the dollar offset method by using the hypothetical
+derivative method. Under this approach, the change in fair value
+of a constructed hypothetical derivative with terms reflecting
+the relevant terms of the hedged item is compared to the
+change in the fair value of the hedging instrument employing its
+relevant terms. The hedge is deemed highly effective if the
+results are within the range 80% to 125%.
+a) Cash Flow Hedge
+The method of testing effectiveness retrospectively depends on
+the type of the hedge as described further below:
+The effectiveness of the hedging relationship is tested
+prospectively and retrospectively. Prospectively, we apply the
+critical terms match for our foreign currency hedges, as
+currencies, maturities, and the amounts are identical for the
+forecasted transactions and the spot element of the forward
+exchange rate contract or intrinsic value of the currency options,
+respectively. For interest rate swaps, we also apply the critical
+terms match, as the notional amounts, currencies, maturities,
+basis of the variable legs or fixed legs, respectively, reset dates,
+and the dates of the interest and principal payments are
+identical for the debt instrument and the corresponding interest
+rate swaps. Therefore, over the life of the hedging instrument,
+the changes in the designated components of the hedging
+instrument will offset the impact of fluctuations of the
+underlying hedged items.
+Valuation and Testing of Effectiveness
+We apply fair value hedge accounting for certain of our fixed rate
+financial liabilities.
+b) Fair Value Hedge
+occur.
+With regard to foreign currency risk, hedge accounting relates to
+the spot price and the intrinsic values of the derivatives
+designated and qualifying as cash flow hedges, while gains and
+losses on the interest element and on those time values
+excluded from the hedging relationship as well as the ineffective
+portion of gains or losses are recognized in profit or loss as they
+Financial Liabilities
+Other Non-Financial Assets
+Other non-financial assets are recorded at amortized cost. The
+capitalized contract cost mainly results from the capitalization
+of direct and incremental cost incurred when obtaining a
+customer cloud subscription contract. We amortize these
+assets on a straight-line basis over the period of providing the
+cloud subscriptions to which the assets relate.
+In general, we apply cash flow hedge accounting to the foreign
+currency risk of highly probable forecasted transactions and
+interest rate risk on variable rate financial liabilities.
+We classify intangible assets according to their nature and use in
+our operation. Software and database licenses consist primarily
+of technology for internal use, whereas acquired technology
+consists primarily of purchased software to be incorporated into
+Impairment of Goodwill and Non-Current Assets
+Impairment losses, if any, are presented in other operating
+income/expense, net in profit or loss.
+4 to 20 years
+4 to 5 years
+Predominantly 25 to 50 years
+Based on the term of the lease
+contract
+3 to 5 years
+Automobiles
+Office furniture
+Information technology
+equipment
+Buildings
+Leasehold improvements
+Useful Lives of Property, Plant, and Equipment
+Property, plant, and equipment are depreciated over their
+expected useful lives, generally using the straight-line method.
+Property, plant, and equipment are carried at acquisition cost
+plus the fair value of related asset retirement costs if any and if
+reasonably estimable, less accumulated depreciation.
+Goodwill and Intangible Assets
+The annual goodwill impairment test is performed at the level of
+our operating segments since there are no lower levels in SAP at
+which goodwill is monitored for internal management purposes.
+The test is performed at the same time for all operating
+segments.
+Amortization expenses of intangible assets are classified as cost
+of cloud and software, cost of services, research and
+development, sales and marketing, and general and
+administration, depending on the use of the respective
+intangible assets.
+Amortization for acquired in-process research and development
+project assets starts when the projects are complete and the
+developed software is taken to the market. We typically
+amortize these intangibles over five to seven years.
+All our purchased intangible assets other than goodwill have
+finite useful lives. They are initially measured at acquisition cost
+and subsequently amortized either based on expected
+consumption of economic benefits or on a straight-line basis
+over their estimated useful lives ranging from two to 20 years.
+our product offerings and in-process research and development.
+Customer relationship and other intangibles consist primarily of
+customer contracts and acquired trademark licenses.
+Property, Plant, and Equipment
+151
+Consolidated Financial Statements IFRS and Notes | Notes
+493
+Sales allowances charged to revenue
+impaired
+3,918
+4,313
+Not past due and not individually
+2015
+6,114
+Gross carrying amount
+2016
+€ millions
+2015
+2016
+5,428
+-200
+-89
+Past due but not individually impaired
+Allowance for doubtful accounts charged
+-75
+to expense
+Past due 1 to 30 days
+541
+473
+€ millions
+Carrying amount trade receivables, net
+5,825
+5,199
+Past due 121 to 365 days
+428
+Past due 31 to 120 days
+-153
+Aging of Trade Receivables
+5,924
+163
+5,825
+2
+5,823
+Total
+Current Non-Current
+2015
+Current
+5,198
+2016
+Acquired
+Technology/
+IPRD
+Customer
+Relationship
+and Other
+Intangibles
+Total
+Historical cost
+Database
+Licenses
+Carrying Amounts of Trade Receivables
+Non-Current
+2
+Consolidated Financial Statements IFRS and Notes | Notes
+5,362
+87
+5,274
+6,050
+126
+Total
+305
+86
+77
+225
+124
+101
+5,199
+163
+257
+Goodwill
+Past due over 365 days
+123
+0
+123
+113
+0
+113
+139
+424
+563
+77
+250
+327
+62
+0
+62
+46
+0
+(15) Goodwill and Intangible Assets
+Goodwill and Intangible Assets
+€ millions
+January 1, 2015
+Consolidated Financial Statements IFRS and Notes | Notes
+164
+315
+Prepaid expenses primarily consist of prepayments for
+operating leases, support services, and software royalties.
+332
+468
+1,113
+532
+581
+46
+800
+Software and
+83
+364
+84
+38
+The changes in the allowance for doubtful accounts charged to
+expense were immaterial in all periods presented.
+Total past due but not individually
+impaired
+1,422
+1,196
+Individually impaired, net of allowances
+90
+85
+Carrying amount of trade receivables,
+net
+5,825
+5,199
+(14) Other Non-Financial Assets
+For more information about financial risk and how we manage it,
+see Notes (24) and (25).
+Other Non-Financial Assets
+€ millions
+Prepaid expenses
+107
+257
+Total
+Non-Current
+Current
+Total
+232
+Non-Current
+2015
+2016
+Total
+Miscellaneous other assets
+Capitalized contract cost
+Other tax assets
+Current
+21,099
+108
+2,587
+2015 were individually acquired from third parties and include
+cross-license agreements and patents.
+Consolidated Financial Statements IFRS and Notes | Notes
+165
+Significant Intangible Assets
+€ millions, unless otherwise stated
+Carrying Amount
+Remaining
+Useful Life
+2016
+2015
+Other additions to software and database licenses in 2016 and
+(in years)
+84
+104
+1 to 7
+Sybase
+- Customer relationships
+325
+400
+5 to 7
+SuccessFactors - Acquired technologies
+99
+Business Objects - Customer relationships
+148
+27,097
+721
+746
+Retirements/disposals
+0
+-16
+-1
+-92
+-109
+December 31, 2016
+104
+589
+2,863
+2,186
+5,135
+Carrying amount
+December 31, 2015
+December 31, 2016
+22,689
+201
+984
+3,095
+26,969
+202
+2,256
+351
+3
+353
+69
+74
+11
+296
+387
+5
+1,281
+1,299
+14 to 18
+3,328
+6
+3,792
+SAP had four operating segments in 2016, of which two are
+reportable segments. For more information about our segments,
+see Note (28).
+The carrying amount of goodwill has been allocated for
+impairment testing purposes to those operating segments
+expected to benefit from goodwill. Allocated goodwill to non-
+reportable segments is not material and disclosed under
+"Other" - the carrying amount did not exceed the recoverable
+amount.
+Goodwill by Reportable Operating Segment
+€ millions
+January 1, 2016
+Reallocation due to changes in segment composition
+Additions from business combinations
+Foreign currency exchange differences
+December 31, 2016
+The key assumptions on which management based its cash flow
+projections for the period covered by the underlying business
+plans are as follows:
+Goodwill Impairment Testing
+SuccessFactors - Customer relationships
+89
+1 to 11
+397
+9
+Ariba
+Acquired technologies
+97
+137
+4
+hybris
+Ariba Customer relationships
+Acquired technologies
+73
+hybris - Customer relationships
+Concur Acquired technologies
+Concur Customer relationships
+Total significant intangible assets
+483
+530
+2 to 11
+62
+100
+4
+106
+127
+Fieldglass - Acquired technologies
+Fieldglass Customer relationships
+321
+74
+0
+-10
+December 31, 2015
+22,792
+727
+2,796
+5,033
+31,348
+Foreign currency exchange differences
+566
+7
+-1
+71
+779
+Additions from business combinations
+57
+0
+41
+22
+120
+Other additions
+Retirements/disposals
+0
+135
+74
+-1
+0
+4,644
+28,997
+Foreign currency exchange differences
+1,666
+15
+204
+379
+2,264
+Total
+Additions from business combinations
+-8
+27
+6
+5
+38
+Other additions
+Retirements/disposals
+0
+53
+0
+6
+59
+0
+0
+21
+95
+372
+361
+809
+Retirements/disposals
+0
+-8
+−1
+−1
+-10
+December 31, 2015
+76
+103
+1,812
+1,938
+4,379
+Foreign currency exchange differences
+1
+5
+54
+59
+119
+Additions amortization
+526
+0
+Additions amortization
+187
+0
+-17
+-1
+-92
+-110
+December 31, 2016
+23,415
+791
+2,907
+5,119
+32,232
+Accumulated amortization
+January 1, 2015
+99
+448
+1,357
+1,489
+3,393
+Foreign currency exchange differences
+4
+10
+84
+89
+667
+Other receivables
+3,064
+€ millions
+32
+Expiring in the following year
+140
+279
+338
+Not expiring
+24.7
+23.4
+25.3
+Effective tax rate (in %)
+Unused tax losses
+1,075
+935
+1,229
+Total income tax expense
+2014
+2015
+95
+63
+Recognized Deferred Tax Assets and Liabilities
+Expiring after the following
+Intangible assets
+differences
+Deferred tax assets
+96
+122
+33
+Deductible temporary
+2015
+2016
+2016
+875
+1,078
+1,019
+Total unused tax losses
+year
+672
+704
+649
+€ millions
+€ millions
+-37
+-24
+Other
+-41
+-31
+-36
+Research and
+40
+39
+Deferred income
+26
+111
+112
+Withholding taxes
+112
+122
+Other provisions and obligations
+-86
+-103
+-106
+115
+81
+11
+tax credits
+2
+Items Not Resulting in a Deferred Tax Asset
+development tax credits,
+and foreign tax credits
+Other
+tax assets, research and
+41
+43
+43
+Reassessment of deferred
+development and foreign
+5
+Total deferred tax assets/liabilities, net
+-10
+-55
+-43
+Prior-year taxes
+1,950
+1,708
+Total deferred tax liabilities
+159
+Tax exempt income
+99
+development and foreign
+Research and development and foreign
+tax credits
+235
+187
+Other
+Total deferred tax assets
+102
+149
+1,867
+1,955
+€309 million (2015: €429 million; 2014: €441 million) of the
+unused tax losses relate to U.S. state tax loss carryforwards.
+In 2016, subsidiaries that suffered a tax loss in either the current
+or the preceding period recognized deferred tax assets in excess
+of deferred tax liabilities amounting to €189 million (2015:
+€129 million; 2014: €73 million), because it is probable that
+sufficient future taxable profit will be available to allow the
+benefit of the deferred tax assets to be utilized.
+We have not recognized a deferred tax liability on approximately
+€10.81 billion (2015: €9.95 billion) for undistributed profits of
+Consolidated Financial Statements IFRS and Notes | Notes
+161
+our subsidiaries, because we are in a position to control the
+timing of the reversal of the temporary difference and it is
+probable that such differences will not reverse in the foreseeable
+future.
+Total Income Tax
+€ millions
+621
+377
+Carryforwards of unused tax losses
+104
+98
+Expiring after the following
+30
+20
+22
+Share-based payments
+207
+163
+2016
+year
+64
+54
+54
+Other provisions and obligations
+517
+431
+Deferred income
+118
+Total unused tax credits
+2015
+2014
+Income tax recorded in profit
+0
+0
+1
+Expiring in the following year
+64
+72
+Trade and other receivables
+32
+2
+34
+Not expiring
+15
+18
+Other financial assets
+tax credits
+24
+32
+Property, plant, and equipment
+33
+Unused research and
+-1
+and loss
+1,229
+935
+1,075
+Income tax recorded in share
+premium
+-5
+-14
+Income tax recorded in other
+comprehensive income that
+will not be reclassified to
+profit and loss
+Available-for-sale financial
+-3
+Remeasurements on
+-2
+-2
+-7
+defined benefit pension
+plans
+Income tax recorded in other
+comprehensive income that
+will be reclassified to profit
+We are subject to ongoing tax audits by domestic and foreign tax
+authorities. Currently, we are in dispute mainly with the German
+and only a few foreign tax authorities. The German dispute is in
+respect of intercompany financing matters and certain secured
+capital investments, while the few foreign disputes are in respect
+of intercompany financing matters and the deductibility of
+license fees and intercompany services. In all cases, we expect
+that a favorable outcome can only be achieved through
+litigation. For all of these matters, we have not recorded a
+provision as we believe that the tax authorities' claims have no
+merit and that no adjustment is warranted. If, contrary to our
+view, the tax authorities were to prevail in their arguments
+before the court, we would expect to have an additional tax
+expense (including related interest expenses and penalties) of
+approximately €1,749 million (2015: €1,045 million) in total.
+4
+3
+Share-based payments
+Non-Current
+Total
+Loans and other financial receivables
+834
+266
+1,100
+195
+243
+437
+Debt investments
+195
+0
+195
+26
+0
+26
+Equity investments
+Current
+Total
+Non-Current
+Current
+1,198
+1,197
+Earnings per share, basic, attributable to equity holders of
+SAP SE (in €)
+3.04
+2.56
+2.75
+Earnings per share, diluted, attributable to equity holders
+of SAP SE (in €)
+3.04
+1
+2.56
+1) Number of shares in millions
+162
+Consolidated Financial Statements IFRS and Notes | Notes
+(12) Other Financial Assets
+Other Financial Assets
+€ millions
+2016
+2015
+2.74
+952
+953
+1
+58
+Total
+1,124
+1,358
+2,482
+351
+1,336
+1,687
+58
+Loans and Other Financial Receivables
+As at December 31, 2016, there were no loans and other
+financial receivables past due but not impaired. We have no
+indications of impairments of loans and other financial
+receivables that are not past due and not impaired as at the
+reporting date. For general information about financial risk and
+the nature of risk, see Note (24).
+(13) Trade and Other Receivables
+Available-for-Sale Financial Assets
+Our available-for-sale financial assets consist of debt
+investments in bonds of mainly financial and non-financial
+corporations and municipalities and equity investments in listed
+and unlisted securities, mainly held in U.S. dollars.
+For more information about fair value measurement with regard
+to our equity investments, see Note (26).
+Derivatives
+Detailed information about our derivative financial instruments
+is presented in Note (25).
+Trade and Other Receivables
+Loans and other financial receivables mainly consist of time
+deposits, investments in pension assets for which the
+corresponding liability is included in employee-related
+obligations (see Note (18b)), other receivables, and loans to
+employees and third parties. The majority of our loans and other
+financial receivables are concentrated in Germany.
+1,199
+0
+38
+881
+882
+Available-for-sale financial assets
+196
+952
+1,148
+27
+881
+38
+908
+94
+102
+196
+129
+154
+283
+Investments in associates
+0
+Derivatives
+Weighted average shares outstanding, diluted¹)
+3
+2
+Applications,
+Technology &
+Services
+Property, plant, and equipment
+rate of 26.4% (2015: 26.4%;
+1,151
+1,055
+1,284
+Tax expense at applicable tax
+1,234
+0
+1,162
+4,355
+3,991
+4,863
+Profit before tax
+Deferred tax liabilities
+2015
+2016
+€ millions
+Intangible assets
+2014
+66
+2014: 26.4%)
+63
+61
+78
+Non-deductible expenses
+5
+7
+Pension provisions
+-117
+62
+-126
+Foreign tax rates
+93
+125
+Trade and other receivables
+Tax effect of:
+389
+158
+Other financial assets
+-105
+Trade receivables, net
+2015
+€ millions, unless otherwise
+stated
+Profit attributable to equity holders of SAP SE
+3,646
+Pension provisions
+3,280
+Issued ordinary shares¹)
+1,229
+1,229
+1,229
+2014
+Effect of treasury shares¹)
+-32
+-34
+Weighted average shares outstanding, basic¹)
+1,198
+1,197
+1,195
+Dilutive effect of share-based payments¹)
+1
+-30
+2016
+2015
+€ millions, unless otherwise stated
+Before Tax
+Recognized Deferred Tax Assets and Liabilities
+Relationship Between Tax Expense and Profit
+assets
+Cash flow hedges
+-4
+4
+-10
+2016
+Exchange differences
+-16
+-21
+Total
+1,242
+909
+1,034
+(11) Earnings per Share
+Earnings per Share
+25
+SAP Business
+Network
+23,311
+Total
+400
+€400
+0.03%
+593
+594
+€600
+1.13%
+1.00% (fix)
+0.000% (var.)
+99.264%
+100.000%
+2018
+Eurobond 13 - 2016
+2025
+Eurobond 12 - 2015
+648
+648
+€650
+0.07%
+0.000% (var.)
+100.000%
+2020
+Eurobond 11 - 2015
+499
+500
+€500
+0.11%
+Eurobonds
+6,147
+5,733
+All of our Eurobonds are listed for trading on the Luxembourg
+Stock Exchange.
+Tranche 3- 2011
+180
+189
+US$200
+3.03%
+2.95% (fix)
+2017
+Tranche 2- 2010
+U.S. private placements
+millions)
+currency in
+(in € millions)
+0.000% (var.)
+(in respective (in € millions)
+2015
+Amount
+Volume
+Carrying
+Nominal
+2016
+Effective
+Interest Rate
+Coupon Rate
+Maturity
+Private Placement Transactions
+169
+Consolidated Financial Statements IFRS and Notes | Notes
+Carrying
+Amount
+100.000%
+2017
+Eurobond 10 - 2015
+496
+€500
+3.59%
+3.50% (fix)
+99.780%
+99.307%
+2019
+Eurobond 6 - 2012
+2017
+Eurobond 2 - 2010
+millions)
+(in €
+millions)
+currency in
+488
+(in respective (in € millions)
+Carrying
+Amount
+Nominal
+Volume
+Effective
+Interest Rate
+Coupon Rate
+Issue Price
+Maturity
+2015
+2016
+Bonds
+For an analysis of the contractual cash flows of our financial
+liabilities based on maturity, see Note (24). For information
+about the risk associated with our financial liabilities, see
+Note (25). For information about fair values, see Note (26).
+Financial liabilities are unsecured, except for the retention of
+title and similar rights customary in our industry. Effective
+interest rates on our financial debt (including the effects from
+interest rate swaps) were 1.25% in 2016, 1.30% in 2015, and
+1.77% in 2014.
+9,522
+Carrying
+Amount
+2016
+2.125% (fix)
+€750
+989
+990
+€1,000
+1.86%
+1.75% (fix)
+99.284%
+2027
+Eurobond 9 - 2014
+993
+994
+€1,000
+1.24%
+2.29%
+1.125% (fix)
+2023
+Eurobond 8 - 2014
+749
+749
+€750
+0.08%
+0.000% (var.)
+100.000%
+2018
+Eurobond 7 - 2014
+774
+776
+99.478%
+8,681
+2.82%
+0
+602
+Share-based payment liabilities
+Total
+Non-Current
+Current
+Total
+Non-Current
+Current
+2015
+2016
+€ millions
+Other Non-Financial Liabilities
+(17c) Other Non-Financial Liabilities
+1,261
+16
+Bank loans
+1,245
+16
+16
+INR 1,051
+Other loans
+0
+€0
+ΝΑ
+NA
+2017
+309
+911
+555
+205
+Other
+Consolidated Financial Statements IFRS and Notes | Notes
+170
+For more information about our share-based payments, see
+Note (27).
+3,739
+331
+3,407
+4,160
+461
+3,699
+Other non-financial liabilities
+597
+Concur term loan - Facility B
+0
+552
+0
+552
+Other taxes
+2,381
+126
+2,255
+2,697
+152
+2,545
+Other employee-related liabilities
+760
+597
+millions)
+currency in
+(in € millions)
+3.22%
+3.18% (fix)
+2022
+Tranche 7 - 2012
+271
+278
+US$290
+2.86%
+2.82% (fix)
+2020
+Tranche 6 - 2012
+221
+US$444.5
+229
+2.16%
+2.13% (fix)
+2017
+Tranche 5- 2012
+135
+141
+US$150
+3.50%
+3.43% (fix)
+2018
+Tranche 4 - 2011
+551
+US$242.5
+US$600
+439
+Tranche 8-2012
+2015
+Carrying
+Amount
+(in respective (in € millions)
+Carrying
+Amount
+2016
+Volume
+Nominal
+Effective
+Interest Rate
+Maturity Coupon Rate
+Bank Loans
+The U.S. private placement notes were issued by one of our
+subsidiaries that has the U.S. dollar as its functional currency.
+2,202
+1,717
+426
+Private placements
+107
+US$100
+3.57%
+3.53% (fix)
+2027
+Tranche 9-2012
+318
+334
+US$323
+3.37%
+3.33% (fix)
+2024
+100
+841
+2.77% (fix)
+6,481
+December 31, 2015
+Historical cost
+€ millions
+Property, Plant, and Equipment
+(16) Property, Plant, and Equipment
+167
+Consolidated Financial Statements IFRS and Notes | Notes
+1) The recoverable amount would equal the carrying amount if a margin of
+only 27% was achieved by 2022.
+1)
+-15
+Target operating margin at the end of
+the budgeted period
+1.4
+December 31, 2016
+4.4
+Budgeted revenue growth (average
+of the budgeted period)
+-2.1
+-6.9
+2015
+2016
+SAP Business Network
+Percentage points
+Sensitivity to Change in Assumptions
+The following table shows amounts by which the key
+assumptions would need to change individually for the
+recoverable amount to be equal to the carrying amount:
+The recoverable amount exceeds the carrying amount by
+€6,404 million (2015: €1,764 million).
+We are using a target operating margin of 34% (2015: 33%) for
+the segment at the end of the budgeted period as a key
+assumption, which is within the range of expectations of market
+participants (for example, industry analysts).
+The recoverable amount of the segment has been determined
+based on fair value less costs of disposal calculation. The fair
+value measurement was categorized as a level 3 fair value based
+on the inputs used in the valuation technique. The cash flow
+projections are based on actual operating results and specific
+estimates covering a nine-year (2015: nine-year) planning period
+Pre-tax discount rate
+SAP Business Network
+Land and
+Buildings
+Advance
+Total
+Non-Current
+Current
+2015
+2016
+Trade and other payables
+Miscellaneous other liabilities
+Advance payments received
+Trade payables
+€ millions
+Trade and Other Payables
+(17a) Trade and Other Payables
+Other
+Property,
+Plant, and
+Equipment
+(17) Trade and Other Payables,
+Financial Liabilities, and Other Non-
+Financial Liabilities
+Total additions (other than from business combinations)
+amounted to €933 million (2015: €580 million) and relate
+primarily to the replacement and purchase of computer
+2,580
+146
+1,297
+1,137
+2,192
+66
+1,073
+1,053
+Total
+in Progress
+Payments and
+Construction
+hardware and vehicles acquired in the normal course of
+business and investments in data centers.
+Current
+We believe that any reasonably possible change in any of the
+above key assumptions would not cause the carrying amount of
+our Applications, Technology & Services segment to exceed the
+recoverable amount.
+Applications, Technology & Services
+Budgeted operating margin
+Budgeted revenue growth
+Key Assumption
+Consolidated Financial Statements IFRS and Notes | Notes
+166
+23,311
+34
+7,439
+15,839
+566
+1
+216
+Pre-tax discount rates
+349
+0
+31
+25
+0
+33
+0
+-33
+22,689
+0
+7,191
+8,294
+15,497
+57
+The recoverable amount of the segment has been determined
+based on a value-in-use calculation. The calculation uses cash
+flow projections based on actual operating results and a group-
+wide four-year (2015: five-year) business plan approved by
+management.
+Terminal growth rate
+Revenue growth rate achieved in the current fiscal year, adjusted for an expected
+increase in SAP's addressable cloud, mobility, and database markets; expected
+growth in the established software applications and analytics markets. Values
+assigned reflect our past experience and our expectations regarding an increase in
+the addressable markets.
+3.0
+3.0
+3.0
+2.0
+Terminal growth rate
+13.0
+11.7
+11.7
+10.4
+Pre-tax discount rate
+16.2
+2015
+Basis for Determining Values Assigned to Key Assumption
+2016
+15.0
+6.7
+Budgeted revenue
+growth (average of
+the budgeted period)
+2015
+2016
+Services
+SAP Business
+Network
+Applications,
+Technology &
+Percent
+Key Assumptions
+Our estimated cash flow projections for periods beyond the business plan were
+extrapolated using segment-specific terminal growth rates. These growth rates do
+not exceed the long-term average growth rates for the markets in which our
+segments operate.
+Our estimated cash flow projections are discounted to present value using pre-tax
+discount rates. Pre-tax discount rates are based on the weighted average cost of
+capital (WACC) approach.
+Operating margin budgeted for a given budget period equals the operating margin
+achieved in the current fiscal year, increased by expected efficiency gains. Values
+assigned reflect past experience, except for efficiency gains.
+4.5
+Non-Current
+and the terminal growth rate thereafter. The projected results
+were determined based on management's estimates and are
+consistent with the assumptions a market participant would
+make. The segment operates in a relatively immature area with
+significant growth rates projected for the near future. We
+therefore have a longer and more detailed planning period than
+one would apply in a more mature segment.
+Total
+6,450
+6,390
+1,435
+Financial debt
+1,261
+1,245
+16
+1,250
+16
+16
+0
+16
+7,880
+0
+Bank loans
+transactions
+2,202
+1,651
+551
+1,607
+551
+1,717
+1,298
+418
+1,240
+420
+16
+Private placement
+567
+567
+1,813
+Financial liabilities
+199
+-5
+204
+NA
+ΝΑ
+219
+-12
+231
+ΝΑ
+ΝΑ
+8,607
+Other financial liabilities
+58
+70
+ΝΑ
+NA
+194
+43
+152
+ΝΑ
+ΝΑ
+Derivatives
+9,195
+8,628
+128
+5,733
+1,430
+0
+168
+Miscellaneous other liabilities mainly include deferral amounts
+for free rent periods and liabilities related to government grants.
+1,169
+81
+1,088
+1,408
+127
+1,281
+166
+85
+247
+127
+Consolidated Financial Statements IFRS and Notes | Notes
+120
+0
+110
+145
+0
+145
+893
+0
+893
+1,016
+5,733
+0
+1,015
+110
+(17b) Financial Liabilities
+81
+€ millions
+5,750
+Financial Liabilities
+6,147
+5,151
+996
+5,150
+1,000
+Bonds
+Current
+Current
+Total
+Non-
+Non- Current
+0
+Total
+Non-
+Current
+Current
+Non-
+Current
+Current
+Carrying Amount
+Nominal Volume
+Carrying Amount
+Nominal Volume
+2015
+2016
+Current
+Market Risk
+We are exposed to various financial risks, such as market risks
+(including foreign currency exchange rate risk, interest rate risk,
+and equity price risk), credit risk, and liquidity risk.
+(24) Financial Risk Factors
+For information about income tax-related litigation, see
+Note (10).
+Customer-Related Litigation and Claims
+Customer-related litigation and claims include cases in which we
+indemnify our customers against liabilities arising from a claim
+that our products infringe a third party's patent, copyright, trade
+secret, or other proprietary rights. Occasionally, consulting or
+software implementation projects result in disputes with
+customers. Where customers are dissatisfied with the products
+and services that we have delivered to them in routine
+consulting contracts or development arrangements, we may
+grant functions or performance guarantees.
+Tax-Related Litigation and Claims
+Contingent liabilities exist from customer-related litigation and
+claims for which no provision has been recognized. Generally, it
+is not practicable to estimate the financial impact of these
+contingent liabilities due to the uncertainties around these
+lawsuits and claims outlined above.
+The carrying amount of the provisions recorded for customer-
+related litigation and claims and the development of the carrying
+amount in the reporting period are disclosed in Note (18b). The
+expected timing or amounts of any resulting outflows of
+economic benefits from these lawsuits and claims is uncertain
+and not estimable as they generally depend on the duration of
+the legal proceedings and settlement negotiations required to
+resolve the litigation and claims and the unpredictability of the
+outcomes of legal disputes in several jurisdictions. For more
+information, see Note (3c).
+a) Foreign Currency Exchange Rate Risk
+In April 2010, SAP instituted legal proceedings (a declaratory
+judgment action) in the United States against Wellogix, Inc. and
+Wellogix Technology Licensing, LLC (Wellogix). The lawsuit
+sought a declaratory judgment that six patents owned by
+Wellogix were invalid or not infringed by SAP. The legal
+proceedings were stayed pending the outcome of six
+reexaminations filed by SAP with the United States Patent and
+Trademark Office (USPTO). In response to SAP's patent
+Declaratory Judgment action, Wellogix re-asserted trade secret
+misappropriation claims against SAP. The court granted SAP's
+motion to dismiss based on improper venue for litigating the
+trade secret claims in the U.S. and Wellogix appealed that
+decision. In February 2015, SAP filed a declaratory judgment
+action in Frankfurt/Main, Germany, asking the German court to
+rule that SAP did not misappropriate any Wellogix trade secrets.
+In early 2016, the appeals court rejected Wellogix's appeal. In
+mid-2016, SAP's patent declaratory judgment and
+reexaminations resulted in a final judgment invalidating all of
+Wellogix's six asserted patents and the litigation was dismissed.
+The German trade secrets litigation remains pending.
+We are subject to ongoing audits by domestic and foreign tax
+authorities. In respect of non-income taxes, we, like many other
+companies operating in Brazil, are involved in various
+proceedings with Brazilian tax authorities regarding
+assessments and litigation matters on intercompany royalty
+payments and intercompany services. The total potential
+amount in dispute related to these matters for all applicable
+years is approximately €106 million (2015: €75 million). We
+have not recorded a provision for these matters, as we believe
+that we will prevail.
+As we are active worldwide, our ordinary operations are subject
+to risks associated with fluctuations in foreign currencies. Since
+the Group's entities mainly conduct their operating business in
+their own functional currencies, our risk of exchange rate
+fluctuations from ongoing ordinary operations is not considered
+significant. However, we occasionally generate foreign currency-
+denominated receivables, payables, and other monetary items
+by transacting in a currency other than the functional currency.
+To mitigate the extent of the associated foreign currency
+exchange rate risk, the majority of these transactions are
+hedged as described in Note (25).
+Generally, we are not exposed to any significant foreign
+currency exchange rate risk with regard to our investing and
+In addition, the intellectual property (IP) holders in the SAP
+Group are exposed to risks associated with forecasted
+intercompany cash flows in foreign currencies. These cash flows
+arise out of royalty payments from subsidiaries to the respective
+IP holder. The royalties are linked to the subsidiaries' external
+revenue. This arrangement leads to a concentration of the
+foreign currency exchange rate risk with the IP holders, as the
+royalties are mostly denominated in the subsidiaries' local
+Consolidated Financial Statements IFRS and Notes | Notes
+179
+currencies, while the functional currency of the IP holders with
+the highest royalty volume is the euro. The highest foreign
+currency exchange rate exposure of this kind relates to the
+currencies of subsidiaries with significant operations, for
+example the U.S. dollar, the pound sterling, the Japanese yen,
+the Swiss franc, the Brazilian real, and the Australian dollar.
+financing activities, as such activities are normally conducted in
+the functional currency of the investing or borrowing entity. For
+more information, see Note (25).
+b) Interest Rate Risk
+We are exposed to interest rate risk as a result of our investing
+and financing activities mainly in euros and U.S. dollars:
+€ millions
+Financing activities
+Investing activities
+In February 2010, United States-based TecSec, Inc. (TecSec)
+instituted legal proceedings in the United States against SAP
+(including its subsidiary Sybase) and many other defendants.
+TecSec alleged that SAP's and Sybase's products infringe one
+or more of the claims in five patents held by TecSec. In its
+complaint, TecSec seeks unspecified monetary damages and
+permanent injunctive relief. The lawsuit is proceeding but only
+with respect to one defendant. The trial for SAP (including its
+subsidiary Sybase) has not yet been scheduled - the lawsuit for
+SAP (including its subsidiary Sybase) remains stayed.
+In rare circumstances, transacting in a currency other than the
+functional currency also leads to embedded foreign currency
+derivatives being separated and measured at fair value through
+profit or loss.
+Consolidated Financial Statements IFRS and Notes | Notes
+Due thereafter
+Individual cases of intellectual property-related litigation and
+claims include the following:
+Due 2018 to 2021
+2016
+Total
+Operating Leases
+Purchase Obligations
+December 31, 2016
+Capital Contribution
+Commitments
+316
+436
+167
+790
+266
+0
+178
+471
+1,578
+823
+0
+167
+Our rental and operating lease expenses were €458 million,
+€386 million, and €291 million for the years 2016, 2015, and
+2014, respectively.
+(23) Litigation and Claims
+We are subject to a variety of claims and lawsuits that arise from
+time to time in the ordinary course of our business, including
+proceedings and claims that relate to companies we have
+acquired, claims that relate to customers demanding
+indemnification for proceedings initiated against them based on
+their use of SAP software, and claims that relate to customers
+being dissatisfied with the products and services that we have
+delivered to them. We will continue to vigorously defend against
+all claims and lawsuits against us. We currently believe that
+resolving the claims and lawsuits pending as of December 31,
+2016, will neither individually nor in the aggregate have a
+material adverse effect on our business, financial position,
+profit, or cash flows. Consequently, the provisions recorded for
+these claims and lawsuits as of December 31, 2016, are neither
+individually nor in the aggregate material to SAP.
+However, the outcome of litigation and claims is intrinsically
+subject to considerable uncertainty. Management's view of the
+litigation may also change in the future. Actual outcomes of
+litigation and claims may differ from the assessments made by
+management in prior periods, which could result in a material
+impact on our business, financial position, profit, cash flows, or
+reputation. Most of the lawsuits and claims are of a very
+individual nature and claims are either not quantified by the
+claimants or claim amounts quantified are, based on historical
+evidence, not expected to be a good proxy for the expenditure
+that would be required to settle the case concerned. The
+specifics of the jurisdictions where most of the claims are
+located further impair the predictability of the outcome of the
+cases. Therefore, it is not practicable to reliably estimate the
+financial effect that these lawsuits and claims would have if SAP
+were to incur expenditure for these cases.
+Among the claims and lawsuits are the following classes:
+Intellectual Property-Related Litigation and
+Claims
+Intellectual property-related litigation and claims are cases in
+which third parties have threatened or initiated litigation
+claiming that SAP violates one or more intellectual property
+rights that they possess. Such intellectual property rights may
+include patents, copyrights, and other similar rights.
+The carrying amount of the provisions recognized for intellectual
+property-related litigation and claims and the change in the
+carrying amount in the reporting period are disclosed in
+Note (18b). The expected timing of any resulting outflows of
+economic benefits from these lawsuits and claims is uncertain
+and not estimable as it depends generally on the duration of the
+legal proceedings and settlement negotiations required to
+resolve them. Uncertainties about the amounts result primarily
+from the unpredictability of the outcomes of legal disputes in
+several jurisdictions. For more information, see Note (3c).
+Contingent liabilities exist from intellectual property-related
+litigation and claims for which no provision has been recognized.
+Generally, it is not practicable to estimate the financial impact of
+these contingent liabilities due to the uncertainties around the
+litigation and claims, as outlined above. The total amounts
+claimed by plaintiffs in those intellectual property-related
+lawsuits or claims in which a claim has been quantified were not
+material to us as of December 31, 2016 and 2015. Based on our
+past experience, most of the intellectual property-related
+litigation and claims tend to be either dismissed in court or
+settled out of court for amounts significantly below the originally
+claimed amounts and not material to our consolidated financial
+statements.
+121
+2015
+0
+3,308
+2,313
+-1,371
+-835
+-995
+Total of non-derivative financial liabilities
+-9,115
+-2,755
+-1,371
+-835
+-995
+0
+-62
+-62
+0
+-3,639
+-3,639
+-1,739
+€ millions
+Contractual Cash Flows
+Amount
+12/31/2015
+2016
+2017
+2018
+Trade payables
+-893
+-893
+0
+2019
+0
+Due 2017
+Carrying
+Cash Flow Risk Fair Value Risk Cash Flow Risk Fair Value Risk
+-8,099
+0
+1,364
+5,567
+3,078
+3,157
+480
+6,038
+c) Equity Price Risk
+We are exposed to equity price risk with regard to our
+investments in equity securities (2016: €952 million; 2015:
+€882 million) and our share-based payments (for the exposure
+from these plans, see Note (27)).
+Credit Risk
+To reduce the credit risk in investments, we arrange to receive
+rights to collateral for certain investing activities in the full
+amount of the investment volume, which we would be allowed to
+make use of only in the case of default of the counterparty to the
+investment. In the absence of other significant agreements to
+reduce our credit risk exposure, the total amounts recognized as
+cash and cash equivalents, current investments, loans and other
+financial receivables, trade receivables, and derivative financial
+assets represent our maximum exposure to credit risks, except
+for the agreements mentioned above.
+Liquidity Risk
+The table below is an analysis of the remaining contractual
+maturities of all our financial liabilities held as at December 31,
+2016. Financial liabilities for which repayment can be requested
+by the contract partner at any time are assigned to the earliest
+possible period. Variable interest payments were calculated
+using the latest relevant interest rate fixed as at December 31,
+2016. As we generally settle our derivative contracts gross, we
+show the pay and receive legs separately for all our currency and
+interest rate derivatives, whether or not the fair value of the
+derivative is negative. The cash outflows for the currency
+derivatives are translated using the applicable forward rate.
+For more information about the cash flows for unrecognized but
+contractually agreed financial commitments, see Note (22).
+Contractual Maturities of Non-Derivative Financial Liabilities
+€ millions
+Financial liabilities
+Carrying
+Amount
+12/31/2016
+2017
+2018
+2019
+2020
+2021 Thereafter
+Trade payables
+-1,016
+-1,016
+0
+0
+Contractual Cash Flows
+€ millions
+-64
+Our maximum exposure to loss is the amount invested plus
+unavoidable future capital contributions.
+-1
+-45
+Assets held to hedge financial debt
+100
+-43
+0
+-3
+-6
+0
+47
+Total liabilities from financing
+activities
+-9,141
+0
+1,357
+-40
+-33
+-12
+-7,878
+While we continuously monitor the ratios presented in and below
+the capital structure table above, we actively manage our
+liquidity and structure of our financial indebtedness based on
+the ratios group liquidity and net liquidity.
+Group Liquidity
+€ millions
+obligations through an agent who administers the equity-settled
+programs and therefor purchases shares on the open market.
+(22) Other Financial Commitments
+Other Financial Commitments
+2016
+2015
+-8
+Δ
+1
+0
+2020
+0
+Basis adjustment
+0
+0
+5
+-27
+0
+-86
+Transaction costs
+44
+○
+0
+0
+0
+-11
+32
+Financial debt (carrying amount)
+-9,195
+1,400
+-8
+-37
+-27
+−11
+-7,880
+Accrued interest
+-45
+0
+€ millions
+2016
+2015
+3,238
+2,992
+246
+Non-current financial debt
+-6,390
+Capital contribution commitments
+167
+111
+-8,607
+2,217
+Total
+2,568
+872
+2,330
+-3,153
+-5,615
+2,462
+Distribution Policy
+Our general intention is to remain in a position to return liquidity
+to our shareholders by distributing annual dividends totaling
+more than 35% of our profit after tax as well as by repurchasing
+treasury shares in future periods.
+In 2016, we distributed €1,378 million in dividends from our 2015
+profit (compared to €1,316 million in 2015 and €1,194 million in
+2014 related to 2014 and 2013 profit, respectively), representing
+€1.15
+per share.
+As a result of our equity-settled share-based payments
+transactions (as described in Note (27)), we have commitments
+to grant SAP shares to employees. We intend to meet these
+commitments by reissuing treasury shares or to fulfill these
+Our operating leases relate primarily to the lease of office space,
+hardware, and vehicles, with remaining non-cancelable lease
+terms between less than one year and 32 years. On a limited
+scale, the operating lease contracts include escalation clauses
+(based, for example, on the consumer price index) and renewal
+options. The contractual obligations for acquisition of property,
+plant, and equipment and intangible assets relate primarily to
+the construction of new and existing facilities and to the
+purchase of hardware, software, patents, office equipment, and
+vehicles. The remaining obligations relate mainly to marketing,
+consulting, maintenance, license agreements, and other third-
+party agreements. Historically, the majority of such purchase
+obligations have been realized.
+SAP invests and holds interests in other entities. On
+December 31, 2016, total commitments to make such equity
+investments amounted to €308 million (2015: €197 million), of
+Consolidated Financial Statements IFRS and Notes | Notes
+177
+which €141 million had been drawn (2015: €86 million). By
+investing in such equity investments, we are exposed to the risks
+inherent in the business areas in which these entities operate.
+Net liquidity 2
+823
+Purchase obligations
+Net liquidity 1
+Operating leases
+1,578
+1,347
+Cash and cash equivalents
+3,702
+3,411
+291
+Contractual obligations for acquisition of
+227
+162
+Current investments
+971
+148
+823
+property, plant, and equipment and
+Group liquidity
+4,673
+3,559
+intangible assets
+1,114
+Current financial debt
+-1,435
+-567
+-868
+Other purchase obligations
+596
+710
+Other Financial Commitments
+Thereafter
+398
+-9,395
+2.7
+2.2
+0.6
+0.7
+1.1
+4.0
+4.0
+4.2
+Future salary increases
+2.5
+2.5
+2.5
+2.1
+1.7
+1.7
+6.0
+6.3
+3.8
+Future pension increases
+2.0
+2.0
+2.0
+0
+0
+0.0
+0.0
+1.7
+0
+Discount rate
+2015
+-140
+-117
+−11
+-8
+-79
+-69
+-50
+-40
+-140
+-117
+€789 million (2015: €664 million) of the present value of the
+DBO of our domestic plans relate to plans that provide for lump-
+sum payments not based on final salary, and €316 million (2015:
+€287 million) of the present value of the DBO of our foreign
+plans relate to plans that provide for annuity payments not
+based on final salary.
+The following weighted average assumptions were used for the
+actuarial valuation of our domestic and foreign pension liabilities
+as well as other post-employment benefit obligations as at the
+respective measurement date:
+2014
+Consolidated Financial Statements IFRS and Notes | Notes
+Actuarial Assumptions
+Percent
+Domestic Plans
+Foreign Plans
+Other Post-Employment Plans
+2016
+2015
+2014
+2016
+2015
+2014
+2016
+171
+Employee turnover
+2.0
+2.0
+Plans
+2015 2014
+2016 2015
+2014
+Present value of all
+defined benefit
+obligations if:
+Discount rate was 50
+800
+678
+725
+344
+311
+2016
+259
+79
+44 1,237
+1,068 1,028
+basis points higher
+Discount rate was 50
+913
+775
+840
+-7,826
+359
+296
+101
+93
+2015 2014
+2016
+2014
+2.0
+10.3
+10.3
+10.1
+8.6
+8.7
+1.3
+Inflation
+2.0
+2.0
+0
+1.4
+1.4
+1.3
+1.1
+1.0
+1.3
+The sensitivity analysis table shows how the present value of all
+defined benefit obligations would have been influenced by
+reasonably possible changes to above actuarial assumptions.
+The sensitivity analysis table presented below considers change
+in one actuarial assumption at a time, holding all other actuarial
+assumptions constant. A reasonably possible change in
+actuarial assumptions of 50 basis points in either direction,
+except for the discount rate assumption, would not materially
+influence the present value of all defined benefit obligations.
+Sensitivity Analysis
+€ millions
+Domestic Plans
+Foreign Plans
+Other Post-Employment
+Total
+2016
+2015
+-40
+Financial liabilities
+-50
+-79
+140
+140
+0
+117
+117
+Other provisions (see Note (18b))
+183
+77
+260
+299
+63
+362
+0
+Total
+217
+400
+299
+180
+479
+(18a) Pension Plans and Similar Obligations
+Defined Benefit Plans
+The measurement dates for our domestic and foreign benefit
+plans are December 31.
+Present Value of the Defined Benefit Obligations (DBO) and the Fair Value of the Plan Assets
+€ millions
+Domestic Plans
+Foreign Plans
+183
+Other Post-
+Employment Plans
+Pension plans and similar obligations (see Note (18a))
+Total
+-863
+Total of non-derivative financial liabilities
+-10,288
+-1,756
+-2,778
+-2,778
+-980
+-836
+-980
+-836
+-986
+-986
+-3,683
+-3,683
+Current
+180
+Other employee-related liabilities mainly relate to vacation
+obligations, bonus and sales commission obligations, as well as
+employee-related social security obligations.
+(18) Provisions
+Provisions
+Other taxes mainly comprise payroll tax liabilities and value-
+added tax liabilities.
+€ millions
+2016
+2015
+Current
+Non-
+Current
+Total
+Current
+Non-
+Consolidated Financial Statements IFRS and Notes | Notes
+Total
+2016
+2015
+69
+61
+Fair value of the plan assets
+843
+716
+290
+265
+48
+42
+1,181
+1,023
+Net defined benefit liability (asset)
+21
+11
+79
+69
+50
+40
+140
+117
+Amounts recognized in the Consolidated
+Statement of Financial Position:
+Non-current provisions
+Total
+-11
+-8
+8
+24
+40
+45
+2016
+2015
+2016
+2015
+2016
+2015
+Present value of the DBO
+854
+724
+369
+333
+98
+82
+1,321
+1,139
+Thereof fully or partially funded plans
+854
+724
+324
+293
+74
+61
+1,252
+1,078
+Thereof unfunded plans
+0
+0
+-69
+0
+Intellectual property-related provisions
+-42
+€ millions
+Total future benefit payments from our defined benefit plans as
+at December 31, 2016, are expected to be €1,583 million (2015:
+€1,432 million). Eighty-two percent of this amount has
+maturities of over five years.
+Domestic Plans
+Less than a year
+Between 1 and 2 years
+Between 2 and 5
+Over 5 years
+Total
+years
+Foreign Plans
+Other Post-
+Employment Plans
+2016
+2015
+Maturity Analysis
+2016
+2016
+2015
+25
+19
+26
+26
+8
+2
+21
+18
+45
+43
+2015
+7
+Our expected contribution in 2017 to our domestic and foreign
+defined benefit pension plans is immaterial. The weighted
+duration of our defined benefit plans amounted to 14 years as at
+December 31, 2016, and 14 years as at December 31, 2015.
+287
+90
+0
+101
+0
+5
+0
+5
+0
+49
+0
+43
+0
+736
+○
+0
+736
+11
+0
+9
+0
+44
+0
+36
+0
+317
+864
+864
+93
+2
+65
+429
+360
+718
+647
+548
+173
+(18b) Other Provisions
+Other Provisions
+€ millions
+1/1/
+2016
+Addition
+Accretion Utilization
+484
+Release
+12/31/
+Impact
+2016
+Employee-related provisions
+58
+57
+0
+-39
+-2
+0
+74
+Customer-related provisions
+Currency
+70
+State plans
+218
+69
+63
+20
+8
+1,009
+935
+232
+223
+51
+28
+1,125
+1,037
+188
+372
+86
+40
+Total Expense of Defined Contribution Plans and
+State Plans
+Defined Contribution Plans/State Plans
+We also maintain domestic and foreign defined contribution
+plans. Amounts contributed by us under such plans are based
+on a percentage of the employees' salaries or the amount of
+contributions made by employees. Furthermore, in Germany
+and some other countries, we make contributions to public
+pension plans that are operated by national or local government
+or a similar institution.
+Total expense
+Consolidated Financial Statements IFRS and Notes | Notes
+€ millions
+2016
+2015
+2014
+Defined contribution plans
+234
+355
+0
+118
+an Active
+Market
+19
+17
+22
+3
+3
+5
+3
+3
+2
+25
+23
+29
+Interest expense
+Interest income
+-17
+-23
+-2
+-3
+-5
+-1
+-2
+-1
+-23
+-22
+-29
+Past service cost
+-20
+0
+25
+38
+87
+basis points lower
+Total Expense of Defined Benefit Pension Plans
+€ millions
+Domestic Plans
+Foreign Plans
+Other Post-Employment
+Total
+Plans
+2016
+2015 2014
+2016
+40
+2015 2014
+2015 2014 2016
+2015 2014
+Current service cost
+7
+10
+3
+21
+21
+16
+10
+9
+6
+2016
+0
+0
+0
+100
+-74
+144
+Our investment strategy on domestic benefit plans is to invest
+all contributions in stable insurance policies.
+Our investment strategies for foreign benefit plans vary
+according to the conditions in the country in which the
+respective benefit plans are situated. Generally, a long-term
+investment horizon has been adopted for all major foreign
+benefit plans. Although our policy is to invest in a risk-diversified
+portfolio consisting of a mix of assets, both the defined benefit
+obligation and plan assets can fluctuate over time, which
+exposes the Group to actuarial and market (investment) risks.
+Depending on the statutory requirements in each country, it
+172
+Consolidated Financial Statements IFRS and Notes | Notes
+might be necessary to reduce any underfunding by addition of
+liquid assets.
+Plan Asset Allocation
+€ millions
+Asset category
+Equity investments
+1
+Corporate bonds
+Real estate
+Insurance policies
+Cash and cash equivalents
+Others
+Total
+Quoted in an
+Active Market
+2016
+Not Quoted in
+an Active
+Market
+Quoted in an
+Active Market
+2015
+Not Quoted in
+Government bonds
+2
+2
+10
+0
+0
+0
+0
+0
+0
+0
+0
+Total expense
+6
+10
+3
+22
+21
+16
+12
+10
+7
+40
+41
+26
+Actual return on plan
+assets
+97
+-76
+133
+1
+0
+61
+0
+34
+-10
+Total Equity
+and Liabilities
+% of
+Total Equity
+and Liabilities
+26,397
+60
+23,295
+56
+13
+9,674
+1
+based payments
+December 31, 2016
+€ millions
+1,229
+Authorized Shares
+The Articles of Incorporation authorize the Executive Board to
+increase the issued capital as follows:
+By up to a total amount of €250 million by issuing new no-par
+value bearer shares against contributions in cash until
+May 19, 2020 (Authorized Capital I). The issuance is subject
+to the statutory subscription rights of existing shareholders.
+By up to a total amount of €250 million by issuing new no-par
+value bearer shares against contributions in cash or in kind
+until May 19, 2020 (Authorized Capital II). Subject to the
+consent of the Supervisory Board, the Executive Board is
+authorized to exclude the shareholders' statutory
+subscription rights in certain cases.
+Contingent Shares
+SAP SE's share capital is subject to a contingent capital increase
+which may be effected only to the extent that the holders or
+creditors of convertible bonds or stock options issued or
+guaranteed by SAP SE or any of its directly or indirectly
+controlled subsidiaries under certain share-based payments
+exercise their conversion or subscription rights, and no other
+methods for servicing these rights are used. As at December 31,
+2016, €100 million, representing 100 million shares, was still
+available for issuance (2015: €100 million).
+Other Components of Equity
+€ millions
+Exchange
+Differences
+Available-for-
+Sale Financial
+Assets
+Cash Flow
+Hedges
+Total
+-30
+January 1, 2014
+% of
+A in %
+785
+December 31, 2016
+3,062
+292
+-8
+3,345
+Treasury Shares
+By resolution of SAP SE's General Meeting of Shareholders held
+on June 4, 2013, the authorization granted by the General
+Meeting of Shareholders on June 8, 2010, regarding the
+acquisition of treasury shares was revoked to the extent it had
+not been exercised at that time, and replaced by a new
+authorization of the Executive Board of SAP SE to acquire, on or
+before June 3, 2018, shares of SAP SE representing a pro rata
+amount of capital stock of up to €120 million in aggregate,
+provided that the shares purchased under the authorization,
+together with any other shares in the Company previously
+acquired and held by, or attributable to, SAP SE do not account
+for more than 10% of SAP SE's issued share capital. Although
+treasury shares are legally considered outstanding, there are no
+dividend or voting rights associated with shares held in treasury.
+We may redeem or resell shares held in treasury, or we may use
+treasury shares for the purpose of servicing option or
+conversion rights under the Company's share-based payment
+plans. Also, we may use shares held in treasury as consideration
+in connection with mergers with, or acquisitions of, other
+companies.
+Consolidated Financial Statements IFRS and Notes | Notes
+175
+Dividends
+€ millions
+The total dividend available for distribution to SAP SE
+shareholders is based on the profits of SAP SE as reported in its
+statutory financial statements prepared under the accounting
+rules in the German Commercial Code (Handelsgesetzbuch). For
+the year ended December 31, 2016, the Executive Board intends
+to propose that a dividend of €1.25 per share (that is, an
+estimated total dividend of €1,498 million), be paid from the
+profits of SAP SE.
+(21) Additional Capital Disclosures
+Capital Structure Management
+The primary objective of our capital structure management is to
+maintain a strong financial profile for investor, creditor, and
+customer confidence, and to support the growth of our
+business. We seek to maintain a capital structure that will allow
+us to cover our funding requirements through the capital
+markets at reasonable conditions, and in so doing, ensure a high
+level of independence, confidence, and financial flexibility.
+SAP SE's long-term credit rating is "A2" by Moody's with stable
+outlook, and "A" by Standard & Poor's with positive outlook.
+Standard & Poor's raised the outlook to positive in 2016.
+Capital Structure
+Equity
+Current liabilities
+Non-current liabilities
+Liabilities
+Total equity and liabilities
+12/31/2016
+12/31/2015
+Dividends per share for 2015 and 2014 were €1.15 and €1.10
+respectively and were paid in the succeeding year.
+-11
+-820
+20
+Business
+Foreign
+Fair Value
+Other 12/31/2016
+Combi- Currency
+nations
+Changes
+Current financial debt
+-567
+547
+-6
+4
+0
+Cash Flows
+-1,413
+Non-current financial debt
+-8,607
+852
+-2
+-46
+0
+1,413
+-6,390
+Financial debt (nominal volume)
+-9,175
+1,400
+-8
+-1,435
+82
+12/31/2015
+Reconciliation of Liabilities Arising from Financing Activities
+-718
+Other comprehensive income for items that will be reclassified to profit
+or loss, net of tax
+1,182
+22
+7,867
+19
+23
+8,205
+19
+10,228
+25
+-20
+€ millions
+17,880
+18,095
+44
+-1
+44,277
+100
+41,390
+100
+7
+In 2016, we repaid €1,250 million in bank loans that we had
+taken to finance the Concur acquisition. The repayment was
+partly refinanced through the issuance of a €400 million
+Eurobond with a maturity of two years. We also repaid a
+US$600 million U.S. private placement tranche at maturity.
+Thus, the ratio of total financial debt to total equity and liabilities
+decreased by four percentage points to 18% at the end of 2016
+(22% as at December 31, 2015).
+Total financial debt consists of current and non-current bank
+loans, bonds, and private placements. The changes in our
+financial debts are reconciled to the cash flows from liabilities
+arising from financing activities below. For more information
+about our financial debt, see Note (17).
+176
+Consolidated Financial Statements IFRS and Notes | Notes
+40
+-43
+839
+Other comprehensive income for items that will be reclassified to profit
+or loss, net of tax
+0
+-2
+0
+39
+Total other provisions
+362
+147
+1
+-236
+-18
+4
+260
+0
+Thereof current
+299
+183
+63
+77
+Customer-related provisions include, among others, disputes
+with individual customers. Intellectual property-related
+provisions relate to litigation matters. Both classes of provisions
+are described in Note (23).
+For more information about our restructuring plans, see
+Note (6).
+The cash outflows associated with employee-related
+restructuring costs are substantially short-term in nature.
+Onerous contract provisions (other than from customer
+contracts) and other provisions comprise facility-related and
+supplier-related provisions. The timing of the associated cash
+outflows is dependent on the remaining term of the underlying
+lease and of the supplier contract.
+(19) Deferred Income
+Deferred income consists mainly of prepayments made by our
+customers for cloud subscriptions and support; software
+support and services; fees from multiple-element arrangements
+allocated to undelivered elements; and amounts recorded in
+purchase accounting at fair value for obligations to perform
+under acquired customer contracts in connection with
+acquisitions
+Deferred Income
+Thereof non-current
+€ millions
+8
+Other provisions
+-1
+3
+87
+11
+7
+0
+-10
+0
+1
+9
+Restructuring provisions
+184
+33
+41
+-163
+-13
+0
+49
+Onerous contract provisions (other than
+15
+0
+1
+-14
+0
+2
+from customer contracts)
+0
+2016
+1,412 1,221 1,185
+2015
+-33
+Reissuance of treasury shares under share-
+based payments
+2
+December 31, 2015
+1,229
+-31
+Reissuance of treasury shares under share-
+0
+128
+-28
+1,282
+December 31, 2014
+1,229
+362
+-8
+564
+Other comprehensive income for items that will be reclassified to profit
+or loss, net of tax
+1,861
+125
+11
+1,997
+December 31, 2015
+2,222
+336
+3
+2,561
+211
+December 31, 2014
+2
+0
+Current
+Deferred Income
+2,383
+Thereof deferred revenue from cloud subscriptions and
+support
+1,271
+Non-
+Current
+143
+0
+Total
+Current
+2,526
+1,271
+2,001
+Non-
+Current
+106
+Total
+2,107
+957
+○
+957
+174
+Consolidated Financial Statements IFRS and Notes | Notes
+(20) Total Equity
+Issued Capital
+SAP SE has issued no-par value bearer shares with a calculated
+nominal value of €1 per share. All of the shares issued are fully
+paid.
+Number of Shares
+millions
+January 1, 2014
+Issued Treasury
+Capital Shares
+1,229
+-35
+Reissuance of treasury shares under share-
+based payments
+0
+49
+Consolidated Financial Statements IFRS and Notes | Notes
+-10
+Liabilities
+Total
+Level 3
+Level 2
+Level 1
+Fair Value
+Measurement
+Categories
+At Fair
+Value
+Amortized
+Cost
+At
+Carrying
+Amount
+Category
+Trade and other payables
+December 31, 2016
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+185
+17
+17
+84
+35
+Consolidated Financial Statements IFRS and Notes | Notes
+17
+17
+HFT
+Call option on equity shares
+€ millions
+Trade payables¹)
+Other payables²)
+Financial liabilities
+-1,744
+-1,744
+-1,717
+-1,717
+AC
+Private placements
+-6,374
+-6,374
+-6,147
+-6,147
+AC
+Bonds
+-16
+-16
+-16
+-16
+AC
+Loans
+Non-derivative financial liabilities
+-8,294
+-392
+-1,016
+-1,016
+AC
+-1,408
+payments
+Other non-derivative financial liabilities
+84
+84
+144
+Financial instruments related to
+Loans and other financial receivables
+38
+Investments in associates²)
+953
+706
+94
+153
+953
+953
+employee benefit plans²)
+AFS
+195
+195
+195
+195
+AFS
+Debt investments
+Available-for-sale financial assets
+2,482
+Other financial assets
+225
+Other receivables²)
+Equity investments
+Other loans and other financial
+L&R
+956
+HFT
+35
+35
+35
+HFT
+Call options for share-based
+FX forward contracts
+47
+47
+47
+47
+12
+12
+12
+12
+22
+Not designated as hedging instrument
+Interest rate swaps
+FX forward contracts
+Designated as hedging instrument
+Derivative assets
+receivables
+956
+956
+956
+84
+5,825
+AC
+-219
+0
+442
+0
+475
+0
+employee benefit plans²)
+121
+Financial instruments related to
+Loans and other financial receivables
+58
+Investments in associates²)
+-489
+882
+21
+299
+882
+882
+AFS
+Equity investments
+26
+26
+26
+26
+AFS
+562
+0
+-475
+Total of derivative financial liabilities
+Carrying
+Amount
+Contractual Cash
+Flows
+Carrying
+12/31/2016
+2017 Thereafter
+Amount
+12/31/2015
+Contractual Cash
+Flows
+2016 Thereafter
+Derivative financial liabilities
+Currency derivatives not designated as hedging
+instruments
+-170
+-117
+Cash outflows
+-3,160
+-43
+Cash inflows
+0
+-2,896
+2,834
+-58
+Currency derivatives designated as hedging
+-24
+instruments
+Cash outflows
+Cash inflows
+Debt investments
+-219
+Available-for-sale financial assets
+Other financial assets
+723
+1,149 -6,026 -944
+1,369
+2,533
+-170
+-170
+-170
+-170
+HFT
+Total financial instruments, net
+FX forward contracts
+-6,248
+0
+-24
+-24
+-24
+-24
+Not designated as hedging instrument
+Interest rate swaps
+FX forward contracts
+Designated as hedging instrument
+Derivatives
+-219
+-219
+0
+186
+Consolidated Financial Statements IFRS and Notes | Notes
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+163
+Other receivables²)
+5,199
+5,199
+L&R
+Trade receivables¹)
+5,362
+Trade and other receivables
+3.411
+3,411
+L&R
+Cash and cash equivalents¹)
+Total
+Level 3
+Level 2
+Level 1
+Fair Value
+Measurement
+Categories
+At Fair
+Value
+Amortized
+Cost
+At
+Carrying
+Amount
+Category
+Assets
+December 31, 2015
+€ millions
+1,687
+€ millions
+5,825
+Trade receivables¹)
+2016
+€ billions
+Foreign Currency Exposure
+Our foreign currency exposure as at December 31 (and if year-
+|
+end exposure is not representative, also our average/high/low
+exposure) was as follows:
+We calculate our sensitivity on an upward/downward shift of
++/-25% of the foreign currency exchange rate between euro
+and Brazilian real and +/-10% of the foreign currency exchange
+rate between euro and all other major currencies (2015:
+upward/downward shift of +/-25% of the foreign currency
+exchange rate between euro and Brazilian real; +/-10% of the
+foreign currency exchange rate between euro and all other
+major currencies; 2014: upward shift for Swiss franc +20%, all
+other major currencies +10%, downward shift for all major
+currencies -10%). If on December 31, 2016, 2015, and 2014, the
+foreign currency exchange rates had been higher/lower as
+described above, this would not have had a material effect on
+other non-operating expense, net and other comprehensive
+income.
+Foreign currency embedded derivatives affecting other non-
+operating expense, net.
+Consequently, we are only exposed to significant foreign
+currency exchange rate fluctuations with regard to the following:
+Derivatives held within a designated cash flow hedge
+relationship (excluding the interest element, which is not part
+of the assigned cash flow hedge relationships) affecting other
+comprehensive income
+Our free-standing derivatives designed for hedging foreign
+currency exchange rate risks almost completely balance the
+changes in the fair values of the hedged item attributable to
+exchange rate movements in the Consolidated Income
+Statements in the same period. As a consequence, the
+hedged items and the hedging instruments are not exposed
+to foreign currency exchange rate risks, and thereby have no
+effect on profit.
+The SAP Group's entities generally operate in their functional
+currencies. In exceptional cases and limited economic
+environments, operating transactions are denominated in
+currencies other than the functional currency, leading to a
+foreign currency exchange rate risk for the related monetary
+instruments. Where material, this foreign currency exchange
+rate risk is hedged. Therefore, fluctuations in foreign
+currency exchange rates neither have a significant impact on
+profit nor on other comprehensive income with regard to our
+non-derivative monetary financial instruments and related
+income or expenses.
+-
+Our risk exposure is based on a sensitivity analysis considering
+the following:
+2015
+Foreign Currency Exchange Rate Exposure
+181
+Consolidated Financial Statements IFRS and Notes | Notes
+For all years presented, no previously highly-probable
+transaction designated as a hedged item in a foreign currency
+cash flow hedge relationship ceased to be probable. Therefore,
+we did not discontinue any of our cash flow hedge relationships.
+Also, we identified no ineffectiveness in all years reported.
+Generally, the cash flows of the hedged forecasted transactions
+are expected to occur and to be recognized in profit or loss
+We enter into derivative financial instruments, primarily foreign
+exchange forward contracts, to hedge significant forecasted
+cash flows (royalties) from foreign subsidiaries denominated in
+foreign currencies with a defined set of hedge ratios and a hedge
+horizon of up to 12 months, which is also the maximum maturity
+of the foreign exchange derivatives we use.
+Currency Hedges Designated as Hedging
+Instruments (Cash Flow Hedges)
+with the primary aim of reducing profit or loss volatility. Most of
+the hedging instruments are not designated as being in a hedge
+accounting relationship. For more information, see Note (3a).
+We continuously monitor our exposure to currency fluctuation
+risks based on monetary items and forecasted transactions and
+pursue a Group-wide strategy to manage foreign currency
+exchange rate risk, using derivative financial instruments,
+primarily foreign exchange forward contracts, as appropriate,
+Foreign Currency Exchange Rate Risk
+Management
+We manage market risks (including foreign currency exchange
+rate risk, interest rate risk, and equity price risk), credit risk, and
+liquidity risk on a Group-wide basis through our global treasury
+department. Our risk management and hedging strategy is set
+by our treasury guideline and other internal guidelines, and is
+subject to continuous internal risk analysis. Derivative financial
+instruments are only purchased to reduce risks and not for
+speculation, which is defined as entering into derivative
+instruments without a corresponding underlying transaction.
+(25) Financial Risk Management
+17
+monthly within a time frame of 12 months from the date of the
+statement of financial position.
+Year-end exposure toward all our major
+currencies
+0.9
+1.0
+Effects on Financial Income, Net
+€ millions
+If, on December 31, 2016, 2015, and 2014, interest rates had
+been higher/lower as described above, this would not have had
+a material effect on financial income, net for our variable interest
+rate investments and would have had the following effects on
+financial income, net.
+Due to the different interest rate expectations for the U.S. dollar
+and the euro area, we base our sensitivity analyses on a yield
+curve upward shift of +100/+50 basis points (bps) for the U.S.
+dollar/euro area (2015 and 2014: +100/+50 bps for the U.S.
+dollar/euro area) and a yield curve downward shift of -50 bps
+for both the U.S. dollar/euro area (2015: -50 bps; 2014: -50
+bps).
+Interest Rate Sensitivity
+are subject to interest rate risk if they are not hedged items in
+an effective hedge relationship. Thus, we take into
+consideration interest rate changes relating to our variable-
+rate financing and our investments in money market
+instruments in the profit-related sensitivity calculation.
+The designation of interest rate receiver swaps in a fair value
+hedge relationship leads to interest rate changes affecting
+financial income, net. The fair value movements related to the
+interest rate swaps are not reflected in the sensitivity
+calculation, as they offset the fixed interest rate payments for
+the bonds and private placements as hedged items. However,
+changes in market interest rates affect the amount of interest
+payments from the interest rate swap. As a consequence,
+those effects of market interest rates on interest payments
+are included in the profit-related sensitivity calculation.
+Consolidated Financial Statements IFRS and Notes | Notes
+182
+-
+A sensitivity analysis is provided to show the impact of our
+interest rate risk exposure on profit or loss and equity in
+accordance with IFRS 7, considering the following:
+Changes in interest rates only affect the accounting for non-
+derivative fixed-rate financial instruments if they are
+recognized at fair value. Therefore, such interest rate
+changes do not change the carrying amounts of our non-
+derivative fixed-rate financial liabilities as we account for
+them at amortized cost. Investments in fixed-rate financial
+assets classified as available-for-sale were not material at
+each year-end reported. Thus, we do not consider any fixed-
+rate instruments in the equity-related sensitivity calculation.
+Income or expenses recorded in connection with non-
+derivative financial instruments with variable interest rates
+Interest Rate Exposure
+None of the fair value adjustment from the receiver swaps, the
+basis adjustment on the underlying hedged items held in fair
+value hedge relationships, and the difference between the two
+recognized in financial income, net is material in any of the years
+presented.
+The majority of our investments are based on variable rates
+and/or short maturities (2016: 71%; 2015: 87%) while most of
+our financing transactions are based on fixed rates and long
+maturities (2016: 71%; 2015: 66%). To match the interest rate
+risk from our financing transactions to our investments, we use
+receiver interest rate swaps to convert certain fixed-rate
+financial liabilities to floating, and by this means secure the fair
+value of the swapped financing transactions. The desired fixed-
+floating mix of our net debt is set by the Treasury Committee.
+Including interest rate swaps, 42% (2015: 36%) of our total
+interest-bearing financial liabilities outstanding as at December
+31, 2016, had a fixed interest rate.
+Derivatives Designated as Hedging Instruments
+(Fair Value Hedges)
+The aim of our interest rate risk management is to reduce profit
+or loss volatility and optimize our interest result by creating a
+balanced structure of fixed and variable cash flows. We
+therefore manage interest rate risks by adding interest rate-
+related derivative instruments to a given portfolio of
+investments and debt financing.
+Interest Rate Risk Management
+Lowest exposure
+Highest exposure
+1.0
+0.8
+1.2
+1.0
+1.1
+0.9
+Average exposure
+30
+2016
+55
+-97
+-241
+Cash outflows
+instruments
+14
+12
+Currency derivatives designated as hedging
+-3,010
+3,073
+0
+1,938
+Cash inflows
+0
+0
+-1,902
+69
+35
+Currency derivatives not designated as hedging
+instruments
+Derivative financial assets
+-58
+-76
+-128
+-43
+-168
+-194
+Future cash outflows for fixed interest and principal are
+discounted over the term of the respective contracts using the
+market interest rates as of the reporting date.
+Cash outflows
+-266
+0
+Cash inflows
+-99
+Total of derivative financial liabilities and assets
+75
+106
+183
+29
+71
+95
+Total of derivative financial assets
+300
+77
+112
+62
+-225
+-43
+-83
+-38
+Cash inflows
+Cash outflows
+100
+47
+Interest-rate derivatives designated as hedging
+instruments
+275
+0
+252
+-14
+L&R
+2015
+Derivatives held within a designated fair value hedge relationship
+Interest rates +100 bps in U.S. dollar area/+50 bps in euro area
+Interest rates -50 bps in U.S. dollar/euro area
+Generally, our primary source of liquidity is funds generated
+from our business operations. Our global treasury department
+manages liquidity centrally for all subsidiaries. Where possible,
+we pool their cash surplus so that we can use liquidity centrally
+for our business operation, for subsidiaries' funding
+requirements, or to invest any net surplus in the market. With
+this strategy, we seek to optimize yields, while ensuring liquidity,
+by investing only with counterparties and issuers of high credit
+quality, as explained before. Hence, high levels of liquid assets
+and marketable securities provide a strategic reserve, helping
+keep SAP flexible, sound, and independent.
+Our liquidity is managed by our global treasury department with
+the primary aim of maintaining liquidity at a level that is
+adequate to meet our financial obligations.
+Liquidity Risk Management
+The default risk of our trade receivables is managed separately,
+mainly based on assessing the creditworthiness of customers
+through external ratings and our past experience with the
+customers concerned. Outstanding receivables are continuously
+monitored locally. For more information, see Note (3). The
+impact of default on our trade receivables from individual
+customers is mitigated by our large customer base and its
+distribution across many different industries, company sizes,
+and countries worldwide. For more information about our trade
+receivables, see Note (13). For information about the maximum
+exposure to credit risk, see Note (24).
+a debtor, we also closely observe the development of credit
+default swap spreads in the market to evaluate probable risk
+developments to timely react to changes if these should
+manifest.
+In addition, the concentration of credit risk that exists when
+counterparties are involved in similar activities by instrument,
+sector, or geographic area is further mitigated by diversification
+of counterparties throughout the world and adherence to an
+internal limit system for each counterparty. This internal limit
+system stipulates that the business volume with individual
+counterparties is restricted to a defined limit, which depends on
+the lowest official long-term credit rating available by at least
+one of the major rating agencies, the Tier 1 capital of the
+respective financial institution, or participation in the German
+Depositors' Guarantee Fund or similar protection schemes. We
+continuously monitor strict compliance with these counterparty
+limits. As the premium for credit default swaps mainly depends
+on market participants' assessments of the creditworthiness of
+To further reduce our credit risk, we require collateral for certain
+investments in the full amount of the investment volume which
+we would be allowed to make use of in the case of default of the
+counterparty to the investment. As such collateral, we only
+accept bonds with at least investment grade rating level.
+To mitigate the credit risk from our investing activities and
+derivative financial assets, we conduct all our activities only with
+approved major financial institutions and issuers that carry high
+external ratings, as required by our internal treasury guideline.
+Among its stipulations, the guideline requires that we invest only
+in assets from issuers with a minimum rating of at least "BBB
+flat". We only make investments in issuers with a lower rating in
+exceptional cases. Such investments were not material in 2016
+and 2015. The weighted average rating of our financial assets is
+in the range A- to BBB+. We pursue a policy of cautious
+investments characterized by predominantly current
+investments, standard investment instruments, as well as a wide
+portfolio diversification by doing business with a variety of
+counterparties.
+Credit Risk Management
+We are exposed to equity price risk with regard to our share-
+based payments. In order to reduce resulting profit or loss
+volatility, we hedge certain cash flow exposures associated with
+these plans through the purchase of derivative instruments, but
+do not establish a designated hedge relationship. In our
+sensitivity analysis, we include the underlying share-based
+payments and the hedging instruments. Thus, we base the
+calculation on our net exposure to equity prices, as we believe
+that taking only the derivative instrument into account would not
+properly reflect our equity price risk exposure. An assumed 20%
+increase (decrease) in equity prices as at December 31, 2016,
+would have increased (decreased) our share-based payment
+expenses by €281 million (€252 million) (2015: increased by
+€200 million (decreased by €198 million); 2014: increased by
+€158 million (decreased by €80 million)).
+million (€81 million) (2015: increased by €87 million (decreased
+by €84 million)).
+Apart from effective working capital and cash management, we
+have reduced the liquidity risk inherent in managing our day-to-
+day operations and meeting our financing responsibilities by
+arranging an adequate volume of available credit facilities with
+various financial institutions on which we can draw if necessary.
+183
+depends on the equity prices, while the fair value of the unlisted
+equity investments is influenced by various unobservable input
+factors. An assumed 10% increase (decrease) in equity prices
+and respective unobservable inputs as at December 31, 2016,
+would have increased (decreased) the value of our marketable
+equity investments and other comprehensive income by €84
+Our listed equity investments are monitored based on the
+current market value that is affected by the fluctuations in the
+volatile stock markets worldwide. Unlisted equity investments
+are monitored based on detailed financial information provided
+by the investees. The fair value of our listed equity investments
+Equity Price Risk Management
+2.64
+2.74
+2.67
+2.69
+2.22
+2.69
+2.59
+2.22
+Consolidated Financial Statements IFRS and Notes | Notes
+In order to retain high financial flexibility, on November 13, 2013,
+SAP SE entered into a €2.0 billion syndicated credit facility
+agreement with an initial term of five years plus two one-year
+extension options. In 2015, the original term of this facility was
+extended for an additional period of one year to November
+2020. The use of the facility is not restricted by any financial
+covenants. Borrowings under the facility bear interest of
+EURIBOR or LIBOR for the respective currency plus a margin of
+22.5 basis points. We are also required to pay a commitment fee
+of 7.88 basis points per annum on the unused available credit.
+We have never drawn on the facility.
+Additionally, as at December 31, 2016, and 2015, we had
+available lines of credit totaling €499 million and €520 million,
+184
+3,702
+3,702
+6,050
+Trade and other receivables
+L&R
+Cash and cash equivalents¹)
+Total
+Level 3
+Level 2
+Level 1
+Fair Value
+December 31, 2016
+Measurement
+Categories
+At Fair
+Value
+Amortized
+Cost
+At
+Carrying
+Amount
+Category
+Assets
+€ millions
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+measured at fair value or for which fair value must be disclosed,
+we have categorized the financial instruments into a three-level
+fair value hierarchy depending on the inputs used to determine
+fair value and their significance for the valuation techniques.
+We use various types of financial instruments in the ordinary
+course of business, which are classified as either: loans and
+receivables (L&R), available-for-sale (AFS), held-for-trading
+(HFT), or amortized cost (AC). For those financial instruments
+Fair Value of Financial Instruments
+(26) Additional Fair Value
+Disclosures on Financial
+Instruments.
+respectively. There were immaterial borrowings outstanding
+under these lines of credit in all years presented.
+Consolidated Financial Statements IFRS and Notes | Notes
+From interest rate swaps
+2014
+3.16
+3.73
+Low Year-End
+High
+Average
+Year-End
+2015
+2016
+€ billion
+Interest Rate Risk Exposure
+Our interest rate exposure as at December 31 (and if year-end
+exposure is not representative, also our average/high/low
+exposure) was as follows:
+65
+19
+Average
+0
+-39
+-21
+Interest rates -50 bps in euro area
+Interest rates +50 bps in euro area
+Variable rate financing
+70
+62
+29
+-116
+-105
+-46
+-65
+High
+Low
+Fair value interest rate risk
+3.16
+2.31
+3.31
+2.94
+2.31
+From financing
+2.62
+3.37
+3.09
+3.08
+3.03
+4.38
+3.59
+3.31
+From investments (including cash)
+Cash flow interest rate risk
+0.03
+0.07
+0.05
+0.03
+0.03
+0.20
+0.08
+0.20
+From investments
+4.63
+Contractual Maturities of Derivative Financial Liabilities and Financial Assets
+3,025
+14
+0
+0
+-10
+-10
+-10
+-10
+Interest rate swaps
+FX forward contracts
+Designated as hedging instrument
+Derivatives
+-199
+-199
+-199
+-199
+AC
+Other non-derivative financial liabilities
+-2,288
+-2,288
+-2,202
+-2,202
+AC
+Private placements
+-5,825
+-5,825
+-5,733
+-5,733
+AC
+Bonds
+-1,261
+0
+0
+Not designated as hedging instrument
+FX forward contracts
+1,148
+1,148
+AFS
+Available-for-sale
+136
+136
+HFT
+At fair value through profit or loss
+Financial assets
+At Fair Value
+At Amortized Cost
+Carrying Amount
+December 31, 2016
+Category
+-1,261
+€ millions
+2) Since the line items trade receivables, trade payables, and other financial assets contain both financial and non-financial assets or liabilities (such as other taxes
+or advance payments), the carrying amounts of non-financial assets or liabilities are shown to allow a reconciliation to the corresponding line items in the
+Consolidated Statements of Financial Position.
+"We do not separately disclose the fair value for cash and cash equivalents, trade receivables, and accounts payable as their carrying amounts are a reasonable
+approximation of their fair values.
+-8,192
+-117
+568
+-3,261
+-117
+1,064 -5,500
+-117
+-1,361
+-232
+Total financial instruments, net
+-117
+HFT
+Fair Values of Financial Instruments Classified According to IAS 39
+-1,261
+-1,261
+AC
+Call option on equity shares
+payments
+94
+[5
+94
+94
+HFT
+Call options for share-based
+69
+69
+69
+Other loans and other financial
+L&R
+316
+HFT
+316
+316
+receivables
+Derivative assets
+Designated as hedging instrument
+FX forward contracts
+Interest rate swaps
+14
+14
+14
+HFT
+100
+100
+100
+100
+316
+Loans and receivables
+6
+Consolidated Financial Statements IFRS and Notes | Notes
+Loans
+Non-derivative financial liabilities
+-9,522
+-276
+-893
+-893
+AC
+-1,169
+Financial liabilities
+Other payables²)
+Trade payables¹)
+Trade and other payables
+Liabilities
+Total
+6
+Level 3
+Level 1
+Measurement
+Categories
+At Fair
+Value
+Amortized
+Cost
+At
+December 31, 2015
+Fair Value
+Carrying
+Amount
+Category
+€ millions
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+187
+6
+6
+94
+69
+Level 2
+Not designated as hedging instrument
+L&R
+10,484
+Level 2
+Call options for
+share-based
+payment plans
+NA
+ΝΑ
+Net asset value/Fair market value
+as reported by the respective
+funds
+ΝΑ
+NA
+Liquidation preferences
+Interrelationship Between
+Significant Unobservable
+Inputs and Fair Value
+Measurement
+Unobservable Inputs
+Significant
+Value/Valuation Technique
+Determination of Fair
+Fair Value
+Hierarchy
+Туре
+189
+Consolidated Financial Statements IFRS and Notes | Notes
+NA
+NA
+Last financing round valuations
+ΝΑ
+NA
+recent or planned transactions,
+and market comparable
+companies.
+forecasted results, cash position,
+factors such as actual and
+quantitative and qualitative
+Market approach. Venture capital
+method evaluating a variety of
+were lower (higher).
+The liquidity discounts
+ΝΑ
+ΝΑ
+Call option on
+equity shares
+Level 3
+Discounted cash flows.
+190
+Level 2
+Fixed rate private placements/
+loans (financial liabilities)
+Level 1
+Fixed rate bonds (financial
+liabilities)
+Financial liabilities
+Туре
+Quoted prices in an active market
+Determination of Fair Value/Valuation Technique
+Fair Value Hierarchy
+ΝΑ
+NA
+ΝΑ
+The investees' revenues
+were higher (lower)
+NA
+The investees' EBITDA
+higher (lower)
+Financial Instruments Not Measured at Fair Value
+Discounted cash flow using Par-
+Method.
+Expected future cash flows based
+on forward exchange rates are
+discounted over the respective
+remaining term of the contracts
+using the respective deposit
+interest rates and spot rates.
+Discounted cash flow.
+Expected future cash flows are
+estimated based on forward
+interest rates from observable
+yield curves and contract interest
+rates, discounted at a rate that
+reflects the credit risk of the
+counterparty.
+Interest-rate swaps Level 2
+Level 2
+FX forward
+contracts
+Other financial assets/ Financial liabilities
+The EBITDA multiples were
+The estimated fair value
+would increase (decrease)
+if:
+EBITDA multiples used
+EBITDA of the investee
+Market approach. Company
+valuation using EBITDA multiples
+based on actual results derived
+from the investee.
+Calculated considering risk-free
+interest rates, the remaining term
+of the derivatives, the dividend
+yields, the stock price, and the
+volatility of our share.
+Monte-Carlo Model.
+were higher (lower)
+The revenue multiples were
+higher (lower)
+The estimated fair value
+would increase (decrease)
+if:
+Peer companies used
+(revenue multiples
+range from 3.9 to 8.3)
+Revenues of investees
+Discounts for lack of
+marketability (10% to
+30%)
+Financial liabilities
+8,926
+8,926
+L&R
+Loans and receivables
+908
+908
+AFS
+Available-for-sale
+169
+169
+HFT
+At fair value through profit or loss
+Financial assets
+At fair value through profit or loss
+At Fair Value
+At Amortized Cost
+Carrying Amount
+Category
+€ millions
+Consolidated Financial Statements IFRS and Notes | Notes
+188
+-9,115
+-170
+-170
+-9,115
+AC
+At amortized cost
+HFT
+At fair value through profit or loss
+Financial liabilities
+December 31, 2015
+10,484
+HFT
+-117
+Market approach. Comparable
+company valuation using revenue
+multiples derived from companies
+comparable to the investee.
+Level 3
+Unlisted equity
+investments
+ΝΑ
+ΝΑ
+ΝΑ
+ΝΑ
+NA
+ΝΑ
+Quoted prices in an active market
+Quoted prices in an active market
+Quoted prices in an active market
+deducting a discount for the
+disposal restriction derived from
+the premium for a respective put
+option.
+Level 2
+Level 1
+Listed equity
+investments
+Level 1
+-117
+Debt investments
+Interrelationship Between
+Significant Unobservable
+Inputs and Fair Value
+Measurement
+Unobservable Inputs
+Significant
+Determination of Fair
+Value/Valuation Technique
+Fair Value
+Hierarchy
+Туре
+Financial Instruments Measured at Fair Value on a Recurring Basis
+that caused the transfer. A description of the valuation
+techniques and the inputs used in the fair value measurement is
+given below:
+It is our policy that transfers between the different levels of the
+fair value hierarchy are deemed to have occurred at the
+beginning of the period of the event or change in circumstances
+Determination of Fair Values
+-10,288
+-10,288
+AC
+At amortized cost
+Other financial assets
+FX forward contracts
+We webcast all key investor events at which members of our
+Executive Board speak, and we post all relevant presentations
+on the Investor Relations Web site.
+To Our Stakeholders | Report by the Supervisory Board
+Gerhard Oswald
+Product, Quality & Enablement (retired December 31, 2016)
+11
+Investor Relations
+12.9%
+Increase in SAP stock
+in 2016
+€1.25
+Recommended dividend
+per share
+€101.7 bn
+Market capitalization
+at end of 2016
+An Up and Down Year for
+International Stock Markets
+International stock markets endured another rollercoaster year
+in 2016, prompted, among other things, by China's faltering
+economy, the UK vote to leave the EU, the presidential election
+in the United States, the referendum in Italy, the Federal
+Reserve's interest rate decisions, strong exchange rate
+fluctuations, and low oil prices. SAP stock nevertheless held up
+well, crossing the €80 mark for the first time in its history. With
+an increase of 12.9% during the year, the stock outperformed
+major indices for the second year in a row. In comparison, the
+DAX 30 increased 6.9% and the EURO STOXX 50 increased
+around 0.7%.
+SAP Stock Reaches New All-Time
+High
+The DAX fell below 10,000 points at the beginning of the year as
+a result of China's stock market crash and declining oil prices.
+SAP stock, meanwhile, reached its quarter peak of €74.25 on
+January 12 following publication of our preliminary full-year
+results for 2015. At the end of January, a strong euro and
+uncertainty about US interest rate policies strained the market
+further, pushing the DAX below 9,000 points. This in turn
+caused our share price to drop to €64.90, the lowest point of the
+year, on February 11.
+SAP stock recovered after the announcement of our preliminary
+first-quarter results on April 20, climbing to €71.09. At the
+beginning of May, however, weak company results, a solid euro,
+and increasing concerns about a Brexit put the stock markets
+under renewed pressure and drove the DAX below the 10,000-
+point mark again. By contrast, the price of SAP stock remained
+stable. On May 13, the day after the Annual General Meeting of
+Shareholders, it finished at €68.49, despite the €1.15 ex-
+dividend effect.
+The share price ultimately reached €72.96 on May 31, in the
+wake of a market recovery triggered by a falling euro and rising
+commodity prices. On June 23, however, the markets collapsed
+following Britain's shocking vote to leave the EU - and SAP
+stock tumbled, falling to €66.40 on June 28, its lowest level
+since February.
+Fear of the consequences of the Brexit continued to weigh on
+the markets until early July, when encouraging data on the US
+labor market and hopes of a further central bank stimulus
+package lifted market sentiment again. After publication of
+strong financial results for the second quarter on July 20, the
+price of SAP stock surged 5.7% to €75.72, its highest closing
+price ever at that point. Positive analyst estimates buoyed the
+SAP share price even higher, propelling it past the €80 mark for
+the first time ever in the Company's history to close at €80.40
+on September 2. At the end of September, the Federal Reserve's
+decision not to raise interest rates had a positive impact on the
+overall market situation, pushing SAP stock to €82.36 on
+September 22.
+Our stock continued to hover above the €80 mark during the
+first few days of October before a weak start to the reporting
+season and concerns about the Chinese economy depressed the
+markets anew. Publication of our strong third-quarter results on
+October 21 and an upward revision in our forecast, however, saw
+the SAP share price rise 3.7% to €81.98. In early November,
+uncertainty over the outcome of the presidential election in the
+USA determined the mood on global stock markets. SAP stock
+closed at €78.52 on November 1 in a somber market
+environment. Following the surprising election results on
+November 8, global stock markets reacted with initial panic but
+recovered quickly. At the beginning of December the decision
+against constitutional reform in Italy put further pressure on
+stocks. The promise of continued lose monetary policy from the
+ECB, however, subsequently pushed stocks higher. During this
+positive trend at the end of the year, the SAP stock closed the
+year on December 30 at a new all-time high of €82.81.
+12
+To Our Stakeholders | Investor Relations
+SAP Stock in Comparison to DAX 30, Dow Jones EURO STOXX 50, and S&P North American Technology Software Index
+December 31, 2015 (= 100%) to December 31, 2016
+Percent
+115
+110
+12/31/2015
+€73.38
+To Our Stakeholders | SAP Executive Board
+105
+Business Networks & Applications
+Digital Business Services
+Return on SAP ADRS.
+Source: Datastream
+Key Facts About SAP Stock/SAP ADRs
+9.4
+20.9
+12.5
+S&P North American Technology Software Index
+15.3
+19.5
+9.4
+2.3
+2.8
+4.3
+6.9
+14.2
+5.7
+14.7
+17.3
+9.2
+11,475
+1 year
+12/31/2015
+22,162
+5 years
+Stefan Ries
+Chief Human Resources Officer
+Michael Kleinemeier
+Steve Singh
+-
+100
+90
+HDAX
+6.81
+6.50
+8.65
+SAPG.F or .DE
+SAP GR
+716460/DE0007164600
+803054204 (CUSIP)
+Berlin, Frankfurt, Stuttgart
+New York Stock Exchange
+Prime All Share
+CDAX
+Weight (%) in indexes at 12/31/2016
+DAX 30
+Bloomberg
+United States (ADRs)
+IDs and symbols
+WKN/ISIN
+NYSE (ADRs)
+Reuters
+Germany
+Listings
+05
+06
+07
+08
+09
+10
+11
+12
+In SAP Share (Xetra) n DAX 30 Performance Index (Xetra) n S&P North American Technology Software Index m Dow Jones EURO STOXX 50
+Providing transparency to investors
+We are continuously engaged with the investment community
+through a number of channels. Over the course of the year,
+senior management at SAP and the Investor Relations (IR) team
+discussed our strategy and business development with
+institutional investors and analysts worldwide.
+A particular highlight of our global IR program in 2016 was the
+Capital Markets Day held in New York City. At this exciting event,
+attended by more than 75 financial analysts and investors, the
+SAP Executive Board discussed the details of the strong
+strategic position of SAP in the market. The Executive Board
+also discussed the future outlook of the company and shared
+insights about the innovations that the company planned to
+bring into the market in 2016. Two SAP customers, Swiss
+Property and HP Enterprises also presented how SAP is helping
+them in their digital transformation journey. In addition, we
+hosted events for buy-side analysts in Walldorf. We also held
+events for investors and financial analysts at the CeBIT fair in
+Hanover, Germany and at the SAPPHIRE NOW conference in
+Orlando, Florida. Furthermore, we maintained regular dialog
+with socially responsible investors (SRI), providing them with
+insights into our environmental, social, and corporate
+governance policies. SAP representatives spoke at various retail
+shareholder events. The Investor Relations team and the
+Treasury teams also maintained regular communication with the
+debt investor community.
+Investors can access a wide range of information about SAP and
+its shares online. Our channels of communication include our
+Twitter feed @sapinvestor, the quarterly SAP INVESTOR
+magazine, and a text message service. Shareholders can reach
+the IR team directly through a telephone hotline and through an
+e-mail at investor@sap.com. We also publish an overview of the
+latest analyst assessments in collaboration with Vara Research.
+6.89
+95
+Dow Jones STOXX 50
+Dow Jones EURO STOXX 50
+85
+80
+12/31/2016
+€82.81
+01
+02
+03
+04
+12/31/2011
+24,153
+12/31/2006
+10 years
+S&P 500 Composite - total return index
+REX General Bond - total return index
+DAX 30 Performance — total return index
+Performance comparators
+Average annual return
+Value at 12/31/2016¹) (in €)
+Period of investment
+Date of investment
+WKN 716460/ISIN DE007164600
+-
+Initial investment €10,000
+Percent, unless otherwise stated
+Return on SAP Common Stock
+13
+To Our Stakeholders | Investor Relations
+3.75
+2.38
+· 803054204 (CUSIP)
+"Assuming all dividends were reinvested
+Initial investment US$10,000
+In German stock corporation and commercial law, there are
+special requirements for internal risk management that apply to
+SAP. To meet them, our global risk management system
+supports risk planning, identification, analysis, handling, and
+minimization. We maintain standard documentation of all our
+internal control structures, especially those that affect financial
+reporting, and continually evaluate their effectiveness. As a
+company listed on the NYSE, we instruct our auditor, KPMG, to
+conduct an annual audit of our internal control over financial
+reporting in accordance with the requirements of the U.S.
+Sarbanes-Oxley Act of 2002, section 404. The audit as of
+December 31, 2016, confirmed that our internal control is
+effective. In compliance with the reporting requirements in the
+German Commercial Code, sections 289 (5) and 315 (2)(5), the
+combined SAP SE and SAP Group management report contains
+full information about the principal features of the internal
+controls and risk management structure applying to SAP's
+consolidated financial reporting.
+In addition to our annual financial statements, we also prepare
+quarterly statements for all four quarters in accordance with the
+rules and regulations of the Frankfurt Stock Exchange, as well a
+half-year financial report on June 30 pursuant to the legal
+requirements of the German Securities Trading Act. Our
+quarterly statements and half-year financial report are
+submitted to the Audit Committee of the Supervisory Board
+before they are published.
+the consolidated financial statements, and the combined
+management report. The SAP SE financial statements, the
+consolidated financial statements, and the combined
+management report are audited by KPMG AG
+Wirtschaftsprüfungsgesellschaft, the auditor elected for that
+purpose by the Annual General Meeting of Shareholders.
+Financial Accounting, Risk
+Management, and Internal Control
+We prepare the SAP SE financial statements in accordance with
+the German Commercial Code and our consolidated financial
+statements in accordance with International Financial Reporting
+Standards (IFRSS). We prepare a management report, as
+required by the German Commercial Code, and the Form 20-F
+annual report in accordance with SEC requirements. The
+Executive Board is responsible for financial accounting. The
+Supervisory Board approves the SAP SE financial statements,
+Our shareholders can obtain full and timely information about
+SAP on our Web site and can access current and historical
+Company data. Among other information, we post all of our
+financial reports, all relevant news about the Company's
+governing bodies and their corporate governance docu-
+mentation, information requiring ad hoc (current) disclosure,
+press releases, and news of notifiable directors' dealings.
+Transparency, Communication, and
+Service for Shareholders
+Our shareholders exercise their rights, such as the rights to put
+questions to the management and to vote, at the Annual General
+Meeting of Shareholders. Shareholders and the public are able
+to watch a live broadcast of the entire Annual General Meeting of
+Shareholders on the Internet. They can vote their shares at the
+Meeting or instruct a proxy of their choice or one of the proxies
+provided for that purpose by SAP. Alternatively, they can
+participate online or vote by mail. The invitation to the Annual
+General Meeting of Shareholders includes full details and
+instructions. Every shareholder can access all of the paperwork
+on the SAP Web site in good time for the meeting.
+Annual General Meeting of
+Shareholders
+SAP is a NYSE-listed company and we are therefore subject to
+certain U.S. financial legislation (including the Sarbanes-Oxley
+Act of 2002, among others) and to the applicable SEC and NYSE
+regulations. Besides implementing the requirements of the U.S.
+Sarbanes-Oxley Act, section 404, and other Sarbanes-Oxley Act
+requirements, including conducting an annual audit of our
+internal control over financial reporting, we comply with those of
+the corporate governance standards codified in the NYSE Listed
+Company Manual, section 303A, which bind foreign private
+issuers. The section 303A standards that apply to SAP include
+the requirement to have an audit committee composed of
+members who are independent in the meaning of the Sarbanes-
+Oxley Act, and related reporting requirements. Erhard
+Schipporeit, the chairperson of the Audit Committee, is an audit
+committee financial expert in the meaning of the Sarbanes-
+Oxley Act.
+Applying International Corporate
+Governance Standards
+17
+To Our Stakeholders | Corporate Governance Report
+SAP's corporate governance includes our Code of Business
+Conduct for employees and members of the Executive Board.
+The Code of Business Conduct expresses the high standards
+that we require from our employees and Executive Board
+members and sets out the main principles that guide our
+business conduct toward customers, business partners, and
+shareholders. We see our Code of Business Conduct as the
+standard for our dealings involving customers, business
+partners, vendors, shareholders, and competitors. By following
+our Code of Business Conduct, we demonstrate a commitment
+against all forms of unfair competitive practice, corruption, and
+misrepresentation. Our global compliance organization
+monitors worldwide compliance with the Code of Business
+Conduct and other policies applying within the Group. It
+regularly reviews these internal policies, revises them if
+necessary, and delivers related employee training.
+Code of Business Conduct
+The Executive Board continues to follow the recommendation in
+the Code that executive boards should generally have regard to
+diversity when appointing people to leadership positions, and in
+particular to employ appropriate numbers of women in such
+positions. In support of this, we maintain a diversity policy for
+company leadership appointments. SAP has set itself a target of
+increasing the overall percentage of positions in leadership held
+by women to 25% by 2017. It goes without saying that ability is
+still the primary selection criterion for any position at SAP.
+Globally, the percentage of leadership positions held by women
+at the end of 2016 was 24.5%.
+The first and second management levels below the Executive
+Board are the Global Executive Team (GET) and the Senior
+Executive Team (SET), respectively. In accordance with the
+requirements of the Act, the Executive Board resolved on
+September 30, 2015, that the percentage of positions held by
+women on the first two management levels below the Executive
+Board should remain unchanged at 23% and 17%, respectively,
+to June 30, 2017.
+The Executive Board currently has seven male members.
+Pursuant to the above Act, the Supervisory Board adopted by
+resolution at its meeting on March 19, 2015, a target of one for
+the number of Executive Board seats to be held by women by
+June 30, 2017.
+for Women Act). There are currently two women on the
+shareholder representatives' side of the Supervisory Board and
+two women on the employee representatives' side. The
+mandatory quota applies to future appointments to the
+Supervisory Board; the mandates of the current members of the
+Supervisory Board remain unaffected until the end of their term.
+Starting 2016, a mandatory gender quota of 30% applies for
+new appointments to the Supervisory Board of SAP SE pursuant
+to the law on the equal participation of men and women in
+leadership positions (German Equal Leadership Opportunities
+Diversity in the Company
+We believe a sufficient degree of independence of our
+Supervisory Board members is essential for effective and
+responsible corporate management and control. Our
+Supervisory Board has a defined objective for its composition
+regarding the minimum number of independent members on the
+shareholder representative side, as recommended in the Code,
+section 5.4.1, paragraph 2. The objective is five such members.
+At its meeting on October 28, 2016, the Supervisory Board
+determined that all of its shareholder representative members
+are independent in the meaning of the Code, section 5.4.2 and
+that the number of independent members is sufficient in the
+meaning of that section. The Audit Committee is chaired by
+Erhard Schipporeit, who for many years was the chief financial
+officer of a DAX company that is also listed on a U.S. stock
+exchange and therefore qualifies as an independent financial
+expert in the meaning of the German Stock Corporation Act,
+section 100 (5).
+Board
+Independence of the Supervisory
+We believe the current composition of the Supervisory Board
+fulfills all of these objectives. There is information about each
+member, the committees, and who serves on which committee,
+on the SAP Web site.
+Percent, unless otherwise stated
+At least five shareholder representatives on the Supervisory
+Board should be independent members in the meaning of
+section 5.4.2 of the Code.
+No employee, consultant, or director of a significant SAP
+competitor should be a Supervisory Board member.
+Executive Board and Supervisory
+Board Shareholdings
+There should never be fewer than three people from the
+international stage on the shareholder representatives' side
+of the Supervisory Board.
+Section 6.2, sentence 2, of the Code recommends that all
+directors' shareholdings be reported in a corporate governance
+report, broken down by executive board and supervisory board
+memberships if the entire holdings exceed 1% of the shares
+issued by the Company. In fulfillment of this recommendation,
+see the Compensation Report in our combined management
+report for 2016, which contains the recommended information.
+To Our Stakeholders | Corporate Governance Report
+20
+20
+At its ordinary meeting on March 24, the Supervisory Board
+turned its attention to SAP SE financial statements and the
+consolidated financial statements for 2015, the audits
+conducted by KPMG AG Wirtschaftsprüfungsgesellschaft
+(KPMG), and the Executive Board's proposed resolution on the
+appropriation of retained earnings for 2015. The Audit
+Committee comprehensively prepared all topics for which it is
+responsible in connection with the financial statements and the
+Meeting in March (Meeting to Discuss the
+Financial Statements)
+At our February 18 meeting, the Executive Board gave us an
+overview of business in 2015 and presented information on
+SAP's revenue growth in the individual business areas, regions,
+and product fields. It also explained SAP's current market
+position. We discussed in detail the annual budget for 2016 as
+presented to us by the Executive Board, and approved same. In
+addition, we reviewed the results of the employee survey.
+Meeting in February
+Other matters addressed at our meetings in 2016 included:
+In our opinion, the complex transition to the cloud initiated by
+the Executive Board can only be successfully implemented with
+the long-term commitment of the Executive Board members to
+the Company. This is why we also agreed in our March meeting
+to prematurely reappoint Bill McDermott, Robert Enslin, Bernd
+Leukert, and Luka Mucic as members of the Executive Board for
+a term of five years. In August and November, the General and
+Compensation Committee prepared an amendment to the
+Executive Board appointment contracts with regards to the
+leaver provisions (that is, the provisions for when an Executive
+Board member steps down) under the LTI plan, which we
+adopted in an extraordinary telephone conference in December.
+We referred in both meetings to the aforementioned
+appropriateness certificate from Ernst & Young.
+Compensation Committee proposed a number of measures for
+consideration by the full Supervisory Board. The Supervisory
+Board, in turn, resolved at its March meeting to increase certain
+Executive Board members' long-term incentive (LTI) plan based
+on their roles, and to generally pay fixed compensation and STI
+compensation elements in the currency of the Executive Board
+member's home country. It subsequently approved the
+individual Executive Board compensation packages. The
+Supervisory Board, as required, evaluated the appropriateness
+of the Executive Board members' compensation, and in each
+case found it to be appropriate in terms of amount, structure,
+objective criteria, and for each member's responsibilities and
+tasks. Ahead of the meeting, we had received a certificate from
+Ernst & Young on the compensation's appropriateness. For
+more information about the LTI Plan 2016 and other elements of
+the compensation package for Executive Board members, see
+the Compensation Report.
+We also discussed Executive Board compensation for 2015 at
+the February meeting. Exercising our discretionary powers
+under the terms of the short-term incentive (STI) plan 2015, we
+determined performance against the defined targets. As well, we
+determined target achievement within the so-called
+performance period for the 2015 tranche of the RSU Milestone
+Plan 2015. Introduced in 2012, the RSU Milestone Plan 2015 is a
+long-term variable compensation element for SAP SE Executive
+Board members in which the members were granted a number
+of virtual shares (called restricted share units, or RSUs) for a
+given year (or "tranche"); the quantity of RSUs ultimately
+allocable for a plan tranche depends on SAP's operating profit
+performance in the year it is allocated. When we met in
+February, we also deliberated on Executive Board compensation
+for 2016. We identified the key performance indicators (KPIs)
+and set the target numbers for each KPI in the STI 2016 plan and
+their relative weightings. In addition, we decided that, as of 2016,
+there should be greater differentiation in Executive Board
+members' compensation based on the function and role of the
+individual Executive Board member. We therefore requested
+Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, the
+Company's external compensation consultants, to carry out a
+benchmark analysis of the Executive Board appointment
+contracts based on a peer group of companies predefined by us.
+After comprehensive evaluation of this analysis, the General and
+At our ordinary meeting in February, we resolved the
+appointment of Stefan Ries and Steve Singh to the Executive
+Board effective April 1, 2016. The Executive Board explained its
+concept to dissolve the Global Managing Board and instead have
+various managers in global key roles more directly involved in
+crucial management tasks in the future. We acknowledged and
+endorsed this decision.
+The Supervisory Board dealt with human resources (HR)
+matters and Executive Board compensation notably in its first
+two meetings of 2016. All HR and compensation topics were
+extensively prepared by the General and Compensation
+Committee and subsequently adopted by the full Supervisory
+Board.
+HR Topics and Executive Board
+Compensation
+year. When we met in July, the Executive Board reported on
+some of the results achieved thus far in SAP's controlling,
+internal reporting, and other financial processes. As part of its
+simplification efforts, the Company also streamlined and
+optimized the process by which the SAP SE financial
+statements, the consolidated financial statements, and the
+integrated report are prepared, thus enabling SAP to publish our
+integrated report as early as February of the new year from now
+on. To accommodate this new timeline, the Supervisory Board
+adjusted its meeting schedule as of the new year and brought
+forward discussion of balance sheet-related topics from the
+March meeting to the February meeting.
+19
+To Our Stakeholders | Report by the Supervisory Board
+The 2020 strategy, which has the goal to make SAP the world's
+leading cloud company in terms of market share, market
+capitalization, and revenue, was discussed at length with the
+Executive Board at meetings of the Technology and Strategy
+Committee meetings and of the full Supervisory Board. At our
+meetings in February and July, the Executive Board apprised us
+of the various initiatives and projects for implementing this
+strategy. In July, we also heard an Executive Board report on the
+total cost of ownership (TCO) in the cloud area, and gave our
+constructive feedback on the plans presented. Likewise in our
+line of focus was the Run Simple initiative, SAP's project for
+simplifying our internal processes and reducing complexity. We
+continuously monitored progress of this initiative throughout the
+Simplification of Processes, and the
+Company's 2020 Strategy
+year:
+In 2016, the Supervisory Board of SAP SE held four ordinary
+meetings and one extraordinary meeting at which we
+deliberated and resolved on all matters of relevance to the
+Company. We also adopted two resolutions by correspondence
+vote. No Supervisory Board member attended only half or less
+of the meetings of the Supervisory Board and of the committees
+to which the member belonged in the fiscal year. The average
+attendance rate for the Supervisory Board and committee
+meetings was 95%. The Supervisory Board and its committees
+also convened wholly or partly without the Executive Board as
+necessary to deliberate on items that pertained to the Executive
+Board or required internal discussion among Supervisory Board
+members alone. On this basis, the Executive Board withdrew
+temporarily from three of the plenary sessions, in particular. The
+Supervisory Board addressed the following key topics during the
+Supervisory Board Meetings and
+Resolutions
+The CEO informed the Supervisory Board chairperson without
+delay of all important events that were significant for assessing
+SAP's position and progress or for the management and
+governance of the Company. Moreover, the chairperson of the
+Supervisory Board met regularly with the CEO to discuss SAP's
+strategy, planning, the Company's business performance, risks,
+risk management, compliance, and other key topics and
+decisions. In this way, the chairperson of the Supervisory Board
+was also kept fully informed between meetings of the
+Supervisory Board and its committees.
+The content and scope of the Executive Board's reports to us
+fully met our requirements for them. In addition, the Executive
+Board came to Supervisory Board meetings for discussion of the
+agenda items and to answer our questions. To ensure optimal
+performance of its duties, the Supervisory Board also deploys
+the latest SAP technologies. At our meetings, for example, we
+used the SAP Digital Boardroom, an innovative, analytical
+software solution that allows analysts to generate impressive
+graphics for all business area metrics in real time across
+multiple interactive computer screens. Thanks to this solution,
+we were always able to draw on current data and in-depth
+analyses during our discussions. We questioned and probed the
+Executive Board to satisfy ourselves that the information it gave
+to us was plausible. All transactions requiring approval by the
+Supervisory Board, whether by law, the Articles of Incorporation,
+or the Supervisory Board's list of transactions requiring consent
+within the meaning of the German SE Implementation Act (SE-
+Ausführungsgesetz), section 19, were carefully examined and
+discussed with the Executive Board, focusing on the benefits,
+potential risks, and other effects of each transaction. The
+Supervisory Board agreed to all transactions for which its
+consent was sought by the Executive Board.
+We regularly received full and timely reports from the Executive
+Board, both from members in person and in written documents.
+They kept us up to date on the Company's strategy, plans,
+business performance, risks, risk management, compliance (in
+other words, adherence to laws, to the Company's Articles of
+Incorporation, and to internal policies), and on transactions of
+special significance for SAP. The Executive Board advised us
+when business deviated from plan or target, and why.
+In 2016, we dealt extensively with the status and the
+development of the Company and discharged the duties
+imposed on us by the law and by the Company's Articles of
+Incorporation. We were consulted by the Executive Board
+throughout the year and kept the global management of the
+Company under continued observation and scrutiny for legal
+compliance, adherence to proper accounting principles,
+business focus, and efficiency. We agreed to the Company's
+strategy with the Executive Board and regularly discussed with
+the Executive Board the Company's progress toward executing
+it. We were directly involved when the Executive Board made
+any decision of fundamental importance to SAP.
+Dear Shareholders,
+Report by the
+Supervisory Board
+18
+-
+No member of the Supervisory Board should be older than 75
+years.
+The Supervisory Board members as a group possess the
+knowledge, ability, and expert experience required to properly
+perform its duties in our global IT company. At least one
+independent member has financial reporting and auditing
+expertise. The Supervisory Board has defined the following
+objectives for its own composition:
+Applying the definition accepted on the Frankfurt Stock
+Exchange, which excludes treasury stock from the free float, as
+of December 31, 2016, the free float stood at 78.8% (December
+31, 2015: 77.5%).
+-
+SAP's capital stock as of December 31, 2016, was
+€1,228,504,232 (2015: €1,228,504,232). It is issued as
+1,228,504,232 no-par shares, each with an attribute value of €1
+in relation to capital stock.
+Capital stock unchanged
+At the Annual General Meeting of Shareholders, the Executive
+Board and the Supervisory Board will recommend increasing the
+total dividend for fiscal year 2016 by 9% to €1.25
+per share
+(2015: €1.15)
+We believe our shareholders should benefit appropriately from
+the profit the company made in 2016. In recent years, the
+payout has always been greater than 35% of profit after tax. We
+aim to continue our policy to pay a dividend totaling more than
+35% of profit after tax in the future.
+Dividend payout of €1.25 per share
+Rewarding our investors -
+12.0
+14.7
+6.9
+11.0
+12.0
+14
+17,657
+18,642
+11,100
+12/31/2015
+1 year
+12/31/2011
+5 years
+12/31/2006
+10 years
+Source: Datastream
+1) Assuming all dividends were reinvested
+S&P 500 Composite - total return index
+Performance comparators
+Average annual return
+Value at 12/31/2016¹) (in US$)
+Period of investment
+Date of investment
+6.4
+To Our Stakeholders | Investor Relations
+Shareholder structure
+Shareholder Distribution
+Composition of the Supervisory
+Board
+and the Supervisory Board and about the work of the
+Supervisory Board and its committees in 2016, see the Report
+by the Supervisory Board.
+To Our Stakeholders | Corporate Governance Report
+16
+The Supervisory Board has 18 members who, in equal numbers,
+represent the shareholders and the employees. It appoints,
+monitors, and advises the Executive Board. The Executive Board
+involves the Supervisory Board in decisions on matters of
+fundamental importance for the Company. The Supervisory
+Board has reserved to itself the approval of certain transactions
+of fundamental importance, as set out in the Articles of
+Incorporation and detailed in the Supervisory Board's list of
+reserved categories of transactions. The Executive Board
+regularly provides the Supervisory Board with full and timely
+reports on all material matters of strategy, business planning,
+and performance, including any deviations of actual business
+performance from plan, risks, risk management, and corporate
+compliance. We provide our shareholders with in-depth
+information about how the Executive Board and the Supervisory
+Board work, how the committees are composed, and how these
+committees work, in our corporate governance statement. For
+more information about the joint work of the Executive Board
+The size and composition of the Supervisory Board are
+governed not by the German Codetermination Act (which does
+not apply, because we are a European company) but by the
+Articles of Incorporation and the SAP SE Employee Involvement
+Agreement. Both documents are available on the SAP Web site.
+Supervisory Board
+The Executive Board currently has seven members. It is solely
+responsible for managing the Company. It has a duty to exercise
+its management powers in the interest of the Company and in
+pursuit of the sustained growth of corporate value. It discusses
+and agrees its strategy for the Company with the Supervisory
+Board, ensures compliance with the requirements of the law
+throughout the Group, and maintains effective risk management
+structures and internal risk controls. There is information about
+each member's portfolio of responsibilities on the SAP Web site.
+Executive Board
+statement is on the SAP Web site. It comprises the current
+declaration pursuant to the German Stock Corporation Act,
+section 161, certain details of our corporate governance
+practices, and an account of how the Executive Board and the
+Supervisory Board work, who serves on which Supervisory
+Board committees, and how those committees work. It also sets
+out the targets for the percentage of women on the Executive
+Board and the two management levels below Executive Board
+level.
+Treasury
+3%
+Corporate Governance Statement
+Since SAP is also listed in the United States, we comply with the
+rules that apply to non-U.S. companies listed on the New York
+Stock Exchange (NYSE). These include the requirements, as
+they apply to foreign private issuers, of the NYSE Corporate
+Governance Standards, the U.S. Sarbanes-Oxley Act of 2002,
+and the U.S. Securities and Exchange Commission (SEC).
+Code.
+On February 21, 2017, the Executive Board published a
+corporate governance statement for 2016 pursuant to sections
+315 (5) and 289a of the German Commercial Code. The
+Corporate Governance Principles at
+SAP
+Retail/
+Unidentified
+22%
+SAP is an international firm with European roots, having the legal
+form of a European company (Societas Europaea, or SE). Being
+an SE headquartered in Germany, we are now subject to
+European and German law for SEs while remaining subject to
+German stock corporation law. Major characteristics of our
+governance structure remain in place since the conversion,
+notably our two-tier board comprising a Supervisory Board and
+an Executive Board, and parity for workforce representatives on
+the Supervisory Board. Because SAP SE is listed on a German
+stock exchange, our corporate governance is still based on the
+German Corporate Governance Code (the "Code" in this report).
+Every year, as required by the German Stock Corporation Act,
+section 161, the Executive Board and Supervisory Board issue a
+declaration stating whether SAP has implemented and is
+following the Code's recommendations, and identifying any
+recommendations that the Company has not followed - with a
+full explanation of why it has not done so. Our latest section 161
+declaration, published on October 29, 2016, is on the SAP Web
+site along with our declarations from previous years and links to
+the current and previous editions of the Code. As our 2016
+declaration shows, we currently follow all but five of the 102
+recommendations and all of the suggestions in the current
+19%
+Institutional
+Investors*
+56%
+*11% of these investors are classified as socially responsible investors (SRIs)
+Founders
+15
+Corporate Governance
+Report
+We are a global company with an international shareholder base,
+so we need sound governance. Good corporate governance
+means managing the Company accountably and transparently
+to secure long-term value. We believe our shareholders,
+business partners, employees, and the financial markets reward
+good corporate governance with the increased trust they place
+in our Company.
+To Our Stakeholders | Investor Relations
+Cost of software
+-1,957
+-1,942
+-1,956
+-1,971
+−1
+-1
+-1
+-1,943
+-1,972
+Consolidated Financial Statements IFRS and Notes | Notes
+Cost of cloud and
+-2,610
+-2,626
+-2,416
+-385
+-386
+-337
+-2,994
+support
+licenses and support
+subscriptions and
+Total segment revenue
+-1,055
+-444
+-414
+-258
+-336
+-293
+-128
+-781
+-707
+-386
+subscriptions and
+support
+Cost of software
+-1,971
+-1,809
+-1,801
+-1
+-1
+-3
+-1,972
+-1,810
+-1,804
+licenses and support
+Cost of cloud and
+-2,416
+-2,223 -2,059
+Cost of cloud
+17,381
+19,090
+20,579
+15,692
+14,663
+13,636
+1,367
+1,176
+544
+17,059
+15,839
+14,180
+Services
+3,271
+3,036
+-337
+3,098
+214
+103
+3,520
+3,250
+3,201
+Total segment revenue
+18,963
+17,699
+16,734
+1,616
+1,391
+647
+249
+-294
+-131
+-2,753
+-5,875
+-5,531
+-779
+-682
+-330
+Segment profit
+7,723
+7,200
+6,946
+317
+253
+105
+-6,286
+15,104
+-7,064
+8,040
+12,911
+-5,861
+7,050
+Information about assets and liabilities and additions to non-
+current assets by segment are not regularly provided to our
+Executive Board. Goodwill by reportable segment is disclosed in
+Note (15).
+Measurement and Presentation
+Our management reporting system reports our intersegment
+services as cost reductions and does not track them as internal
+revenue. Intersegment services mainly represent utilization of
+human resources of one segment by another segment on a
+project-by-project basis. Intersegment services are charged
+based on internal cost rates including certain indirect overhead
+costs, excluding a profit margin.
+Most of our depreciation and amortization expense affecting
+segment profits is allocated to the segments as part of broader
+infrastructure allocations and is thus not tracked separately on
+the operating segment level. Depreciation and amortization
+expense that is directly allocated to the operating segments is
+immaterial in all segments presented.
+Our management reporting system produces a variety of
+reports that differ by the currency exchange rates used in the
+accounting for foreign-currency transactions and operations.
+Reports based on actual currencies use the same currency rates
+as are used in our financial statements. Reports based on
+constant currencies report revenues and expenses using the
+average exchange rates from the previous year's corresponding
+period.
+We use an operating profit indicator to measure the
+performance of our operating segments. However, the
+accounting policies applied in the measurement of operating
+segment revenue and profit differ as follows from the IFRS
+accounting principles used to determine the operating profit
+measure in our income statement:
+The measurements of segment revenue and results include the
+recurring revenues that would have been recorded by acquired
+entities had they remained stand-alone entities but which are
+not recorded as revenue under IFRS due to fair value accounting
+for customer contracts in effect at the time of an acquisition.
+The expenses measures exclude:
+14,010
+-6,556
+7,453
+Cloud and software
+Other segment expenses
+935
+-2,517
+-2,190
+software
+Cost of services
+-2,539
+-2,401
+-2,198
+-183
+-162
+-82
+-2,722
+Total cost of revenue
+434
+-4,954
+-4,257
+-520
+-456
+-213
+-5,474
+-2,563
+-5,080 -4,470
+-2,280
+Segment gross profit
+14,009
+13,075
+12,477
+1,095
+-4,624
+support
+13,100
+13,866
+15,936
+16,028
+15,104
+Other segment expenses
+-6,610
+Segment profit
+8,031
+-6,704 -6,286
+8,039
+-957
+-968
+-779
+-7,567
+1,095
+-7,672
+7,723
+338
+317
+317
+8,369
+8,356
+8,040
+Consolidated Financial Statements IFRS and Notes | Notes
+197
+Revenue and Results of Segments
+€ millions
+Applications, Technology &
+-7,064
+SAP Business Network
+1,285
+14,009
+necessary were not material in all years presented, while
+transfers from Level 1 to Level 2 did not occur at all.
+Transfers of available-for-sale equity investments from Level 2
+to Level 1 which occurred because disposal restrictions lapsed
+and deducting a discount for such restriction was no longer
+Transfers Between Levels 1 and 2
+For other non-derivative financial assets/liabilities and variable
+rate financial debt, it is assumed that their carrying value
+reasonably approximates their fair values.
+software
+Cost of services
+-2,669
+-2,718 -2,539
+-246
+-249
+-183
+-2,915
+1,295
+-2,967 -2,722
+-5,279
+-5,344
+-4,954
+-631
+-635
+-520
+-5,909
+-5,979
+-5,474
+Segment gross profit
+14,641
+14,743
+Total cost of revenue
+Acquisition-related charges
+Total Reportable Segments
+2015
+4,324
+-1
+-1
+○
+4,770
+4,519
+4,324
+Software support
+9,990
+9,321
+8,748
+31
+4,520
+Software licenses and
+13,841
+13,072
+30
+22
+26
+29
+10,021
+9,347
+8,777
+25
+28
+14,790
+14,760
+Services
+4,770
+and support
+2014
+2015
+2014
+2015
+2014
+Actual Constant
+Currency
+Currency
+Actual
+Currency
+Actual
+Currency
+Constant
+Currency
+Software licenses
+Actual
+Currency
+Constant
+Currency
+Actual
+Currency
+Cloud subscriptions
+932
+822
+564
+1,337
+1,151
+515
+2,268
+1,974
+1,080
+Actual
+Currency
+Level 3 Disclosures
+■ Amortization expense and impairment charges for
+intangibles acquired in business combinations and certain
+Consolidated Financial Statements IFRS and Notes | Notes
+Rest of Americas
+1,763
+1,678
+1,591
+Americas
+8,931
+8,428
+6,489
+Japan
+825
+667
+600
+Rest of APJ
+2,552
+2,517
+2,088
+APJ
+3,377
+3,185
+2,688
+SAP Group
+22,062
+20,793
+17,560
+Non-Current Assets by Region
+4,898
+6,750
+7,167
+United States
+Geographic Information
+The amounts for revenue by region in the following tables are
+based on the location of customers. The regions in the following
+table are broken down into the regions EMEA (Europe, Middle
+East, and Africa), Americas (North America and Latin America),
+and APJ (Asia Pacific Japan).
+Revenue by Region
+€ millions
+EMEA
+Americas
+APJ
+SAP Group
+Total Revenue by Region
+€ millions
+2016
+€ millions
+2015
+Germany
+3,034
+2,771
+2,570
+Rest of EMEA
+6,721
+6,409
+5,813
+EMEA
+9,755
+9,181
+8,383
+2014
+2016
+2015
+Germany
+703
+507
+277
+8,193
+7,622
+6,819
+2,000
+1,579
+709
+7,366
+6,929
+5,276
+2014
+290
+101
+2,865
+2,663
+2,221
+2,993
+2,286
+1,087
+18,424
+17,214
+14,315
+The table above shows non-current assets excluding financial
+instruments, deferred tax assets, post-employment benefit
+assets, and rights arising under insurance contracts.
+For information about the breakdown of our workforce by
+region, see Note (7).
+200
+199
+2015
+2014
+2,655
+2.395
+Rest of EMEA
+5,281
+7,574
+EMEA
+7,936
+9,969
+United States
+21,911
+19,124
+Rest of Americas
+2016
+165
+Americas
+22,076
+APJ
+SAP Group
+685
+30,696
+19,264
+599
+29,832
+200
+Cloud Subscriptions
+and Support Revenue
+Cloud and Software Revenue
+2016
+2015
+139
+Consolidated Financial Statements IFRS and Notes | Notes
+4,355
+-25
+-164
+0
+1,505
+0
+Adjustment of revenue under fair value accounting
+-5
+-5
+−11
+-11
+-19
+Total revenue
+22,062
+○
+22,062
+20,793
+17,560
+Total segment profit for reportable segments
+Other revenue
+Other expenses
+Adjustment for currency impact
+8,369
+8,356
+222
+224
+8,040
+226
+-1,957
+20,793
+-1,975
+199
+226
+■
+■
+stand-alone acquisitions of intellectual property (including
+purchased in-process research and development)
+Settlements of pre-existing relationships in connection
+with a business combination
+Acquisition-related third-party costs
+Share-based payment expenses
+Restructuring expenses
+Expenses from the TomorrowNow litigation and the Versata
+litigation
+Revenues and expenses of our new operating but non-
+reportable segments are included in the reconciliation under the
+positions other revenue and other expenses, respectively.
+In addition, certain corporate-level activities are not allocated to
+our segments, including finance, accounting, legal, human
+resources, and marketing. They are disclosed in the
+reconciliation under other revenue and other expenses
+respectively.
+The segment information for prior periods has been restated to
+conform to the current year's presentation.
+Reconciliation of Revenue and Segment Results
+€ millions
+209
+2016
+2014
+Actual Constant
+Currency Currency
+Total segment revenue for reportable segments
+Other revenue
+Adjustment for currency impact
+21,845
+22,007
+Actual
+Currency
+20,579
+Constant
+Currency
+19,090
+Actual
+Currency
+17,381
+222
+224
+2015
+198
+-1,918
+0
+TomorrowNow and Versata litigation
+0
+0
+0
+0
+-309
+Operating profit
+5,135
+5,135
+4,252
+4,252
+4,331
+-126
+Other non-operating income/expense, net
+-234
+-256
+-256
+49
+Financial income, net
+-38
+-38
+Profit before tax
+4,863
+4,863
+-5
+3,991
+-5
+3,991
+-234
+28
+-621
+-28
+7,453
+209
+-1,759
+443
+7,050
+199
+-1,611
+0
+Adjustment for
+Revenue under fair value accounting
+-5
+-5
+-11
+-11
+-19
+-621
+Acquisition-related charges
+-680
+-738
+-738
+-562
+Share-based payment expenses
+-785
+-785
+-724
+-724
+-290
+Restructuring
+-28
+-680
+The following table shows the reconciliation from the opening to
+the closing balances for our unlisted equity investments and call
+options on equity shares classified as Level 3 fair values:
+Reconciliation of Level 3 Fair Values
+€ millions
+Granted
+12/31/2014
+thousands
+Equity-Settled Plans
+Changes in Numbers of Outstanding Awards for
+195
+Consolidated Financial Statements IFRS and Notes | Notes
+"For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the respective
+award from the prevailing share price as of the valuation date.
+1,550
+1,492
+Number of investment shares purchased (in thousands)
+0.9
+1.5
+Weighted average remaining life of awards outstanding at year end (in years)
+1.87%
+1.67%
+Expected dividend yield
+0.13%
+-0.08%
+Risk-free interest rate
+€55.61
+€66.31
+Other¹)
+Other¹)
+€52.49
+Exercised
+Forfeited
+12/31/2015
+Granted
+89
+80
+24
+SMP
+0
+0
+77
+Own
+2014
+2015
+2016
+€ millions
+6/4/2014
+Recognized Expense for Equity-Settled Plans
+-105
+-444
+0
+1,600
+-78
+-2,808
+551
+3,935
+SMP
+12/31/2016
+Forfeited
+Exercised
+1,051
+6/5/2015
+€62.98
+2014
+2015
+The share units for members of the Global Managing Board
+under the LTI 2015 Plan are subject to a three-year holding
+period before payout, which started in 2016.
+against either or both of those KPI targets does not reach the
+defined threshold of 60% (80% for 2013 tranches), no share
+units vest and share units granted for that year will be forfeited.
+The adjustment to the threshold of those performance
+indicators was made to reflect our updated expectations due to
+the accelerated shift to the cloud. For the year 2015, the RSUs
+granted at the beginning of the year vested with 112.96%
+achievement of the KPI targets for the LTI 2015 Plan.
+At the end of a given year, the number of share units that finally
+vest with plan participants depends on SAP's actual
+performance for the given year, and might be higher or lower
+than the number of share units originally granted. If
+performance against both KPI targets reaches at least the
+defined threshold of 60% (80% for 2013 tranches), the share
+units vest. Depending on performance, the vesting can reach a
+maximum of 150% of the budgeted amount. If performance
+The share unit allocation process took place at the beginning of
+each year based on SAP's share price after the publication of its
+preliminary annual results for the last financial year prior to the
+performance period.
+a.2) Long-Term Incentive Plan (LTI 2015 Plan)
+The LTI 2015 Plan is linked to the SAP share price performance
+and the achievement of two financial key performance
+indicators (KPIs): non-IFRS total revenue and non-IFRS
+operating profit, which are derived from SAP's 2015 financial
+KPIs. Under this plan, virtual shares, referred to as share units,
+were granted to participants. Participants are paid out in cash
+based on the number of share units that vest. All participants in
+the LTI 2015 Plan were members of our Global Managing Board.
+The number of PSUs that finally vest depends on the absolute
+and relative performance of the SAP share. If the increase of the
+SAP share price over the vesting period of the PSUs exceeds the
+increase of the Peer Group Index over the same period, the
+number of PSUs increases by a percentage equal to the
+outperformance expressed as percentage points. This
+percentage will be doubled if, in addition to the outperformance
+against the Peer Group Index, the SAP share price at the end of
+the vesting period of the PSUs is higher than the price at the
+start of this period. The number of vested PSUs is capped at
+150% of the initial PSU allocation for that year. Conversely, if the
+performance of the SAP share over the vesting period of the
+PSUs is below the performance of the Peer Group Index, the
+number of PSUs will be reduced by a percentage equal to the
+difference expressed as percentage points. All PSUs lapse if the
+difference exceeds 50%. If the service contract for the Executive
+Board member is terminated before the end of the third year
+following the year in which the Share Units were granted, the
+share units are forfeited in whole or in part, depending on the
+circumstances of the relevant resignation from office or
+termination of the service contract.
+The share units granted comprise 40% retention share units
+and 60% performance share units (PSUs). Both types of share
+units have a vesting period of (approximately) four years. Each
+share unit that finally vests entitles its holder to a (gross) payout
+corresponding to the price of one SAP share after the end of the
+holding period, but capped at three times the SAP share price
+applied for the conversion of the grant amount into share units.
+taking into account the achievement of the operating profit
+target set for the preceding financial year.
+193
+Consolidated Financial Statements IFRS and Notes | Notes
+determined by the Supervisory Board is converted into virtual
+shares, referred to as share units, by dividing the grant amount
+by the SAP share price (calculated on the basis of a defined
+average value). The grant amount is determined by the
+Supervisory Board in its discretion for each financial year at a
+level between 80% and 120% of the contractual target amount,
+a.1) Long-Term Incentive Plan (LTI 2016 Plan)
+SAP implemented a new Long-Term Incentive (LTI) 2016 Plan
+for members of the Executive Board in 2016. The plan is linked
+to the absolute performance of the SAP share and its relative
+performance as indicated by the SAP share price compared to a
+group of peer companies (Peer Group Index). A grant amount
+The LTI 2015 Plan includes a "look-back" provision, due to the
+fact that this plan is based on certain KPI targets in 2015. The
+number of share units vested under the 2015 tranche was
+adjusted to reflect the overall achievement for 2015, which
+differed from the value represented by the number of share
+units vested from the 2012 to 2014 tranches. However, share
+units that were already fully vested in prior years did not forfeit.
+458
+7
+7
+193
+187
+28
+0
+58
+29
+13
+0
+74.74
+65.83
+183
+Others
+The final financial effect of each tranche of the LTI 2015 Plan will
+depend on the number of vested share units and the SAP share
+price, which is set directly after the announcement of the
+preliminary fourth-quarter and full-year results for the last
+financial year of the respective three-year holding period under
+the LTI 2015 Plan, and thus may be significantly above or below
+the budgeted amounts.
+Under the SAP Stock Option Plan 2010, we granted members of
+the Senior Leadership Team/Global Executives and employees
+with an exceptional rating as well as high potentials between
+2010 and 2015, and only in 2010 and 2011 members of the
+Executive Board, cash-based virtual stock options, the value of
+which depends on the multi-year performance of the SAP share.
+Share price
+Option pricing model used
+Information how fair value was measured at grant date
+Fair value of granted awards
+Grant date
+Fair Value and Parameters at Grant Date for SMP
+The weighted average remaining life of free matching shares
+outstanding is 0.9 years at year end 2016. The following table
+shows the parameters and assumptions used at grant date to
+determine the fair value of free matching shares, as well as the
+quantity of shares purchased and free matching shares:
+The terms for the members of the Senior Leadership Team and
+Global Executives were slightly different than those for the other
+employees. They did not receive a discount when purchasing the
+shares. However, after a three-year holding period, they receive
+two free matching SAP shares for every three SAP shares
+acquired. This plan was not open to members of the SAP
+Executive Board.
+Under the Share Matching Plan (SMP), SAP offered its
+employees the opportunity to purchase SAP shares at a
+discount of 40% between 2010 and 2015. The number of SAP
+shares an eligible employee could purchase through the SMP
+was limited to a percentage of the employee's annual base
+salary. After a three-year holding period, the plan participants
+receive, from SAP, one free matching share for every three SAP
+shares acquired.
+b.2) Share Matching Plan (SMP)
+The number of shares purchased under this plan was 1.4 million
+in 2016.
+shares without any holding period. Each eligible employee's
+investment is limited to a percentage of the employee's monthly
+base salary. SAP matches the employee investment by 40% and
+adds a subsidy of €20 per month for non-executives. For the
+participation in 2016, employees receive a double matching
+contribution as well as a double subsidy. This plan is not open to
+members of the SAP Executive Board.
+a.3) SAP Stock Option Plan 2010 (SOP 2010
+(2010-2015 Tranches))
+Under the Own SAP Plan (Own) implemented in 2016, SAP
+offers its employees the opportunity to purchase, monthly, SAP
+The number of RSUs that will vest under the 2016 tranche with
+performance-based grants was mostly contingent upon
+achievement of the non-IFRS operating profit performance
+milestones in 2016. Depending on performance, the number of
+RSUS vesting ranges between 0% and 200% of the number
+initially granted. Performance against the KPI targets was
+85.13% (2015: 112.96%) in 2016. The RSUs are paid out in cash
+upon vesting.
+Over a one-to-three-year service period and upon meeting
+certain key performance indicators (KPIs).
+Over a one-to-three-year service period only, or
+-
+To retain and motivate executives and certain employees, we
+granted RSUs representing a contingent right to receive a cash
+payment determined by the market value of the same number of
+SAP SE shares (or SAP SE American Depositary Receipts on the
+New York Stock Exchange) and the number of RSUs that
+ultimately vest. Granted RSUs will vest in different tranches,
+either:
+a.4) Restricted Stock Unit Plan Including Move
+SAP Plan (RSU Plan (2013-2016 Tranches))
+Monetary benefits will be capped at 100% of the exercise price
+(150% for members of the SAP Executive Board).
+The exercise price is 110% of the grant base value (115% for
+members of the Executive Board), which is €39.03 (€40.80) for
+the 2010 tranche, €46.23 (€48.33) for the 2011 tranche, €49.28
+for the 2012 tranche, €59.85 for the 2013 tranche, €60.96 for
+the 2014 tranche, and €72.18 for the 2015 tranche.
+Consolidated Financial Statements IFRS and Notes | Notes
+194
+The virtual stock options granted under the SOP 2010 give the
+employees the right to receive a certain amount of money by
+exercising the options under the terms and conditions of this
+plan. After a three-year vesting period (four years for members
+of the Executive Board), the plan provides for 11 predetermined
+exercise dates every calendar year (one date per month except
+in April) until the rights lapse six years after the grant date
+(seven years for members of the Executive Board). Employees
+can exercise their virtual stock options only if they are employed
+by SAP; if they leave the Company, they forfeit. Executive Board
+members' options are non-forfeitable once granted - if the
+service agreement ends in the grant year, the number of options
+is reduced pro rata temporis. Any options not exercised at the
+end of their term expire.
+The grant-base value was based on the average fair market
+value of one ordinary share over the five business days prior to
+the Executive Board resolution date.
+b) Equity-Settled Share-Based Payments
+b.1) Own SAP Plan (Own)
+6
+7
+7
+1,367
+1,617
+1,622
+15,692
+16,729
+16,600
+Cloud and software
+support
+14,790
+15,385
+15,275
+30
+18,223
+27
+14,760
+15,358
+15,247
+Software licenses and
+10,021
+10,572
+10,492
+31
+28
+28
+9,990
+10,544
+27
+10,464
+18,346
+Services
+-1,051
+-336
+-385
+-384
+-444
+-669
+-667
+Cost of cloud
+20,579
+22,007
+21,845
+1,616
+17,059
+1,920
+18,963
+20,087
+19,920
+3,520
+3,661
+3.622
+249
+304
+303
+3,271
+3,358
+3,319
+1,925
+66.20
+78.74
+Software support
+4,813
+2016
+2015
+Actual
+Currency
+Currency
+Currency
+Actual Constant
+2016
+Services
+Total Reportable Segments
+SAP Business Network
+Applications, Technology &
+€ millions
+Revenue and Results of Segments
+2015
+Consolidated Financial Statements IFRS and Notes | Notes
+In addition, we established a further operating segment
+comprising SAP's healthcare strategy and solutions, which also
+does not qualify as a reportable segment due to its size. Since
+this segment represents a new business area to SAP, no
+significant adjustments to prior-year figures of other segments
+were made. Revenue and expenses of both non-reportable
+segments are included in the reconciliation of segment revenue
+and results.
+On April 1, 2016, we split the Applications, Technology &
+Services segment. The solutions SAP Anywhere, SAP Business
+One, and SAP Business By Design were combined into one
+organization, as together they provide complete front-office and
+back-office solutions for small and medium-sized customers.
+This reallocation resulted in a new operating but non-reportable
+segment since it does not exceed the quantitative thresholds in
+IFRS 8.13. We have retrospectively adjusted our revenue and
+results for the Applications, Technology & Services segment to
+reflect this change.
+collaborative business networks and from services relating to
+the SAP Business Network (including cloud applications,
+professional services, and education services). Within the SAP
+Business Network segment, we mainly market and sell the cloud
+offerings developed by SAP Ariba, SAP Fieldglass, and Concur.
+The SAP Business Network segment derives its revenues mainly
+from transaction fees charged for the use of SAP's cloud-based
+The Applications, Technology & Services segment derives its
+revenues primarily from the sale of software licenses,
+subscriptions to our cloud applications, and related services
+(mainly support services and various professional services and
+premium support services, as well as implementation services
+for our software products and education services on the use of
+our products).
+SAP has two reportable segments that are regularly reviewed by
+the Executive Board, which is responsible for assessing the
+performance of the Company and for making resource
+allocation decisions as the Chief Operating Decision Maker
+(CODM). One is the Applications, Technology & Services
+segment and the other is the SAP Business Network segment.
+The segments are largely organized and managed separately
+according to their product and service offerings.
+General Information
+(28) Segment and Geographic
+Information
+96
+87
+107
+Total
+196
+4,770
+2016
+Actual
+Currency
+4,783
+-1
+0
+0
+4,770
+4,814
+4,784
+Software licenses
+and support
+2,268
+2,960
+2,948
+2015
+1,337
+1,595
+932
+1,371
+1,353
+Cloud subscriptions
+Currency Currency
+Actual
+Constant
+Actual
+Currency
+Actual
+Currency
+Currency
+Constant
+1,589
+72.55
+NA
+ΝΑ
+1.2
+1.45%
+1.46%
+2.4
+1.4
+1.45%
+1.45%
+3.0
+12/31/2016 (in years)
+Weighted average remaining life of awards outstanding as at
+51.0%
+NA
+22.3% to
+NA
+"For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the respective
+award from the prevailing share price as of the valuation date.
+21.2%
+-0.83%
+-0.36% to
+-0.51% to
+-0.80% to
+-0.84%
+€82.77
+€82.81
+€82.81
+€82.81
+-0.76%
+Expected dividend yield
+Expected volatility
+Risk-free interest rate (depending on maturity)
+Share price
+-0.84%
+Other¹)
+Fair Value and Parameters Used at Year End 2015 for Cash-Settled Plans
+EPP 2015
+(2012-2015 (2015 Tranche)
+Tranches)
+Expected volatility
+-0.38%
+-0.39%
+-0.16% to
+-0.03% to
+ΝΑ
+-0.25% to
+Risk-free interest rate (depending on maturity)
+€73.24
+€73.38
+€73.38
+€73.38
+LTI Plan 2015
+Share price
+Monte Carlo
+Other¹)
+Other¹)
+Option pricing model used
+Information how fair value was measured at measurement date
+Weighted average fair value as at 12/31/2015
+€71.90
+€16.06
+€73.38
+€71.45
+RSU
+(2013-2015
+Tranches)
+SOP 2010
+(2010-2015
+Tranches)
+Other¹)
+NA
+Monte Carlo
+Binomial
+9
+96
+-22
+-168
+170
+156
+-80
+-18
+12
+18
+Unlisted Equity Investments and
+Call Options on Equity Shares
+400
+568
+48
+Unlisted Equity Investments and
+Call Options on Equity Shares
+2016
+Change in unrealized gains/losses in profit and loss for investments
+held at the end of the reporting period
+Included in exchange differences in other comprehensive income
+December 31
+Included in available-for-sale financial assets in other
+comprehensive income
+Included in financial income, net in profit and loss
+Gains/losses
+Sales
+Purchases
+Out of Level 3
+Into Level 3
+Transfers
+January 1
+2015
+Other¹)
+34
+45
+Option pricing model used
+Information how fair value was measured at measurement date
+€81.34
+€20.94
+€81.10
+€74.54
+(2013-2016
+Tranches)
+RSU
+SOP 2010
+(2010-2015
+Tranches)
+LTI Plan 2015
+(2012-2015
+Tranches)
+LTI Plan 2016
+(2016 Tranche)
+Weighted average fair value as at 12/31/2016
+22
+Fair Value and Parameters Used at Year End 2016 for Cash-Settled Plans
+Consolidated Financial Statements IFRS and Notes | Notes
+The valuation of our outstanding cash-settled plans was based
+on the following parameters and assumptions:
+SAP has made cash-settled share-based payments under the
+following plans: Long-Term Incentive Plan (LTI) for the Executive
+Board 2015 and 2016, Stock Option Plan 2010 (SOP 2010
+(2010-2015 tranches)), and Restricted Stock Unit Plan
+including Move SAP Plan (RSU (2013-2016 tranches)).
+a) Cash-Settled Share-Based Payments
+below, which are individually and in aggregate, immaterial to our
+Consolidated Financial Statements.
+SAP has granted awards under various cash-settled and equity-
+settled share-based payment plans to employees and
+executives. Most of these awards are described in detail below.
+SAP has further share-based payment plans not described
+(27) Share-Based Payments
+Changing the unobservable inputs to reflect reasonably possible
+alternative assumptions would not have a material impact on the
+fair values of our unlisted equity investments held as available-
+for-sale as of the reporting date.
+0
+0
+568
+722
+191
+-781
+ΝΑ
+-0.39%
+NA
+0
+12/31/2016
+12/31/2015
+Total carrying amount (in € millions) of liabilities as at
+12/31/2016
+12/31/2015
+Outstanding awards exercisable as at
+10,901
+23,375
+684
+377
+12/31/2016
+0
+-1,055
+0
+-12
+Forfeited
+-2,659
+-4,693
+-294
+0
+Exercised
+-66
+NA
+0
+0
+-1,059
+Adjustment based upon KPI target achievement
+4,120
+0
+NA
+2014
+2015
+2016
+Total expense (in € millions) recognized in
+2016
+2015
+Weighted average share price (in €) for share options exercised in
+154
+58
+2
+12/31/2016
+110
+76
+0
+0
+Total intrinsic value of vested awards (in € millions) as at
+436
+385
+58
+7
+166
+283
+74
+0
+O
+5,472
+0
+12/31/2015
+22.0% to
+9,104
+0
+Granted
+12/31/2014
+RSU
+(2013-2016
+Tranches)
+SOP 2010
+(2010-2015
+Tranches)
+Tranches)
+LTI 2015 Plan
+(2012-2015
+LTI 2016 Plan
+(2016 Tranche)
+thousands
+Changes in Numbers of Outstanding Awards Under Our Cash-Settled Plans
+Consolidated Financial Statements IFRS and Notes | Notes
+192
+Expected remaining life of the options reflects both the
+contractual term and the expected, or historical, exercise
+behavior. The risk-free interest rate is derived from German
+government bonds with a similar duration. The SAP dividend
+yield is based on expected future dividends.
+0
+of 39% are based on the historical data of SAP share price and
+the index price.
+"For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the respective
+award from the prevailing share price as of the valuation date.
+1.2
+3.4
+0.1
+1.7
+Weighted average remaining life of options outstanding as at
+12/31/2015 (in years)
+1.56%
+1.56%
+ΝΑ
+1.56%
+Expected dividend yield
+41.9%
+For SOP 2010, expected volatility of the SAP share price is
+based on a blend of implied volatility from traded options with
+corresponding lifetimes and exercise prices as well as historical
+volatility with the same expected life as the options granted. For
+LTI 2016 Plan valuation, the Peer Group Index price at year end
+was US$179.57; the expected dividend yield of the index of
+1.24% and the expected volatility of the index of 18%, and the
+expected correlation of the SAP share price and the index price
+0
+591
+2,228
+389
+Granted
+5,577
+29,127
+977
+0
+12/31/2015
+-548
+-1,436
+0
+0
+Forfeited
+26,282
+-1,337
+0
+0
+Exercised
+109
+ΝΑ
+109
+0
+Adjustment based upon KPI target achievement
+5,125
+10,866
+277
+0
+-6,585
+-3,012
+-2,753
+Concur Technologies (Australia) Pty. Limited,
+Sydney, Australia
+100.0
+542,135
+37,085
+53,967
+557
+11)
+SAP Service and Support Centre (Ireland) Limited, Dublin,
+Ireland
+100.0
+128,234
+6,800
+37,917
+1,322
+SAP Nederland B.V., 's-Hertogenbosch, the Netherlands
+SuccessFactors, Inc., South San Francisco, CA, United
+1,004,094
+137,358
+3,402,419
+1,069
+States
+Consolidated Financial Statements IFRS and Notes | Notes
+207
+Altiscale, Inc., Palo Alto, CA, United States
+Ambin Properties (Proprietary) Limited,
+Johannesburg, South Africa
+Ariba Czech s.r.o., Prague, Czech Republic
+100.0
+Ariba India Private Limited, Gurgaon, India
+100.0
+722
+-9,492
+6,490
+100.0
+510,042
+22,544
+359,818
+645
+S.p.A., Vimercate, Italy
+SAP Japan Co., Ltd., Tokyo, Japan
+100.0
+834,955
+58,228
+603,097
+1,048
+SAP Labs India Private Limited, Bangalore, India
+100.0
+353,016
+25,579
+54,091
+6,935
+SAP Labs, LLC, Palo Alto, CA, United States
+100.0
+600,069
+22,505
+346,403
+2,017
+SAP México S.A. de C.V., Mexico City, Mexico
+100.0
+367,521
+100.0
+SAP Italia Sistemi Applicazioni Prodotti in Data Processing
+Name and Location of Company
+Name and Location of Company
+Bangalore, India
+Ariba Investment Company, Inc., Wilmington, DE,
+100.0
+Concur Technologies (Singapore) Pte Ltd,
+Singapore, Singapore
+100.0
+United States
+Ariba Slovak Republic s.r.o., Košice, Slovakia
+100.0
+Concur Technologies (UK) Limited, London,
+United Kingdom
+100.0
+10)
+Ariba Software Technology Services (Shanghai)
+100.0
+100.0
+ConTgo Consulting Limited, London, United
+Kingdom
+100.0 10)
+Ariba Technologies India Private Limited,
+100.0
+Bangalore, India
+SAP Labs Israel Ltd., Ra'anana, Israel
+SAP Labs Korea, Inc., Seoul, South Korea
+100.0
+SAP Commercial Services Ltd., Valletta, Malta
+100.0
+SAP Colombia S.A.S., Bogotá, Colombia
+100.0
+SAP Labs France SAS, Mougins, France
+Co., Ltd., Shanghai, China
+Ariba International, Inc., Wilmington, DE, United
+States
+100.0
+Concur Technologies (India) Private Limited,
+Owner Foot-
+ship note
+ship note
+%
+%
+Other Subsidiaries ³)
+"SAP Kazakhstan“ LLP, Almaty, Kazakhstan
+110405, Inc., Newtown Square, PA, United States
+Concur (New Zealand) Limited, Wellington, New
+Zealand
+100.0
+100.0
+100.0
+100.0 4)
+100.0
+Concur (Philippines) Inc., Makati City, Philippines
+Concur (Switzerland) GmbH, Zurich, Switzerland
+Concur Czech (s.r.o.), Prague, Czech Republic
+Concur Holdings (France) SAS, Paris, France
+100.0
+100.0
+100.0
+Concur Holdings (Netherlands) B.V., Amsterdam,
+the Netherlands
+100.0 11)
+100.0
+Ariba International Holdings, Inc., Wilmington, DE,
+United States
+100.0
+Ariba International Singapore Pte Ltd, Singapore,
+100.0
+Concur Technologies (Hong Kong) Limited, Hong
+Kong, China
+100.0
+Singapore
+Owner Foot-
+391
+576,370
+18,853
+Concur Technologies, Inc., Bellevue, WA, United States
+100.0
+1,234,313
+1,153,819
+7,902,404
+3,183
+LLC SAP CIS, Moscow, Russia
+100.0
+355,700
+-5,498
+46,862
+793
+1,622
+SAP (Schweiz) AG, Biel, Switzerland
+786,847
+67,996
+69,965
+647
+SAP (UK) Limited, Feltham, United Kingdom
+100.0
+1,105,221
+-35,297
+-49,774
+1,618
+10)
+SAP America, Inc., Newtown Square, PA, United States
+100.0
+3,873,318
+54,307
+1,023,469
+In 2016 and 2015, our Executive Board and Supervisory Board
+issued the required declarations of implementation. The
+declaration for 2016 was issued on October 29, 2016. These
+statements are available on our Web site:
+www.sap.com/corporate-en/investors/governance.
+(33) Events After the Reporting
+Period
+No events that have occurred since December 31, 2016, have a
+material impact on the Company's Consolidated Financial
+Statements.
+206
+Consolidated Financial Statements IFRS and Notes | Notes
+(34) Subsidiaries and Other Equity
+Investments
+Subsidiaries
+Name and Location of Company
+Owner-
+Total
+Profit/Loss
+ship
+Revenue in
+2016¹)
+(-) After Tax
+for 2016¹)
+Total Equity
+as at
+12/31/2016¹)
+Number of Foot-
+Employees note
+as at
+12/31/2016²)
+%
+€ thousands
+€ thousands
+€ thousands
+Major Subsidiaries
+Ariba, Inc., Palo Alto, CA, United States
+100.0
+100.0
+4,956,907
+-328,262
+14,846,116
+SAP Deutschland SE & Co. KG, Walldorf, Germany
+100.0
+3,540,233
+591,502
+1,394,437
+4,414 7).9)
+SAP France, Levallois Perret, France
+100.0
+1,115,631
+167,281
+1,578,559
+1,413
+SAP Hungary Rendszerek, Alkalmazások és Termékek az
+Adatfeldolgozásban Informatikai Kft., Budapest, Hungary
+100.0
+74,569
+3,322
+15,431
+771
+SAP India Private Limited, Bangalore, India
+100.0
+517,116
+17,410
+235,904
+1,769
+SAP Industries, Inc., Newtown Square, PA, United States
+100.0
+651,352
+5,449
+100.0
+-50,993
+928,530
+7,188
+SAP Asia Pte Ltd, Singapore, Singapore
+100.0
+417,768
+-32,727
+1,100
+1,084
+SAP Australia Pty Ltd, Sydney, Australia
+100.0
+607,333
+-29,880
+160,155
+1,193
+SAP Brasil Ltda, São Paulo, Brazil
+SAP Canada, Inc., Toronto, Canada
+100.0
+525,837
+-18,051
+1,201
+1,646
+100.0
+729,874
+46,015
+491,067
+2,814
+SAP China Co., Ltd., Shanghai, China
+100.0
+19,735
+deviate from the suggestions without having to make any public
+statements.
+SAP China Holding Co., Ltd., Beijing, China
+100.0
+75.0
+Concur (Japan) Ltd., Bunkyo-ku, Japan
+100.0
+Inxight Federal Systems Group, Inc., Wilmington,
+DE, United States
+100.0
+Concur (Italy) S.r.l., Milan, Italy
+100.0 10)
+hybris UK Limited, London, United Kingdom
+Germany
+100.0
+Concur (Germany) GmbH, Frankfurt am Main,
+100.0 8).9)
+LLC "SAP Labs", Moscow, Russia
+hybris GmbH, Munich, Germany
+Concur (France) SAS, Paris, France
+100.0
+hybris AG, Zug, Switzerland
+100.0
+Concur (Canada), Inc., Toronto, Canada
+100.0
+hybris (US) Corp., Wilmington, DE, United States
+100.0
+Concur (Austria) GmbH, Vienna, Austria
+100.0 4)
+Hipmunk, Inc., San Francisco, CA, United States
+Pedro Garza Garcia, Mexico
+100.0
+100.0
+208
+Consolidated Financial Statements IFRS and Notes | Notes
+SAP Danmark A/S, Copenhagen, Denmark
+100.0
+Nihon Ariba K.K., Tokyo, Japan
+100.0
+SAP d.o.o., Zagreb, Croatia
+100.0
+Multiposting Sp.z o.o., Warsaw, Poland
+100.0
+SAP Cyprus Limited, Nicosia, Cyprus
+100.0
+Multiposting SAS, Paris, France
+100.0
+SAP ČR, spol. s r.o., Prague, Czech Republic
+100.0
+Merlin Systems Oy, Espoo, Finland
+100.0
+SAP Costa Rica, S.A., San José, Costa Rica
+100.0
+LLC "SAP Ukraine", Kiev, Ukraine
+%
+%
+ship note
+Foot-
+Owner
+Name and Location of Company
+Owner Foot-
+ship note
+Name and Location of Company
+100.0 10)
+100.0
+GlobalExpense (UK) Limited, London, United
+Kingdom
+CNQR Operations Mexico S. de. R.L. de. C.V., San
+United States
+100.0
+Business Objects Option LLC, Wilmington, DE,
+100.0
+Crystal Decisions UK Limited, London, United
+Kingdom
+'s-Hertogenbosch, the Netherlands
+100.0 11)
+Business Objects Holding B.V.,
+100.0
+Crystal Decisions Holdings Limited, Dublin,
+Ireland
+100.0
+b-process, Paris, France
+EssCubed Procurement Pty. Ltd., Johannesburg,
+South Africa
+100.0
+Technology Co., Ltd., Beijing, China
+0 5)
+Beijing Zhang Zhong Hu Dong Information
+100.0
+100.0 10)
+10)
+100.0
+ConTgo Limited, London, United Kingdom
+ConTgo MTA Limited, London, United Kingdom
+ConTgo Pty. Ltd., Sydney, Australia
+'s-Hertogenbosch, the Netherlands
+11)
+100.0
+Ariba Technologies Netherlands B.V.,
+Crystal Decisions (Ireland) Limited, Dublin,
+Ireland
+100.0
+Business Objects Software (Shanghai) Co., Ltd.,
+100.0
+100.0
+GlobalExpense (Consulting) Limited, London,
+United Kingdom
+54.2
+ClearTrip Private Limited, Mumbai, India
+Emirates
+54.2
+Cleartrip MEA FZ LLC, Dubai, United Arab
+100.0
+FreeMarkets Ltda., São Paulo, Brazil
+54.2
+ClearTrip Inc., George Town, Cayman Islands
+100.0
+Financial Fusion, Inc., Dublin, CA, United States
+54.2
+ClearTrip Inc. (Mauritius), Ebene, Mauritius
+100.0 10)
+100.0
+100.0 4)
+100.0
+Extended Systems, Inc., Dublin, CA, United States
+Fedem Technology AS, Trondheim, Norway
+Fieldglass Asia Pac Pty Ltd, Brisbane, Australia
+Fieldglass Europe Limited, London, United
+Kingdom
+Netherlands
+100.0
+Christie Partners Holding C.V., Utrecht, the
+Ireland
+100.0
+Business Objects Software Limited, Dublin,
+Shanghai, China
+100.0
+OutlookSoft Deutschland GmbH, Walldorf,
+Germany
+100.0
+SAP Dritte Beteiligungs- und
+100.0
+SAP Asia (Vietnam) Co., Ltd., Ho Chi Minh City,
+Vietnam
+Panama
+100.0
+SAP International Panama, S.A., Panama City,
+100.0
+SAP Argentina S.A., Buenos Aires, Argentina
+100.0
+SAP India (Holding) Pte Ltd, Singapore, Singapore
+Venezuela
+Germany
+100.0
+SAP International, Inc., Miami, FL, United States
+SAP Andina y del Caribe, C.A., Caracas,
+SAP Hosting Beteiligungs GmbH, St. Leon-Rot,
+100.0
+SAP (Beijing) Software System Co., Ltd., Beijing,
+China
+100.0
+SAP Hong Kong Co., Ltd., Hong Kong, China
+100.0
+San Borja Partricipadoes LTDA, São Paulo, Brazil
+10)
+100.0
+SAP Holdings (UK) Limited, Feltham, United
+Kingdom
+Beijing, China
+100.0
+100.0
+100.0
+SAP Azerbaijan LLC, Baku, Azerbaijan
+100.0
+SAP Labs Bulgaria EOOD, Sofia, Bulgaria
+SAP Labs Finland Oy, Espoo, Finland
+100.0
+SAP Chile Limitada, Santiago, Chile
+'s-Hertogenbosch, the Netherlands
+11)
+100.0
+SAP Business Services Center Nederland B.V.,
+100.0
+SAP Korea Ltd., Seoul, South Korea
+Siegen, Germany
+100.0
+SAP Israel Ltd., Ra'anana, Israel
+100.0
+SAP Business Compliance Services GmbH,
+Activity Company, Dublin, Ireland
+100.0
+SAP Bulgaria EOOD, Sofia, Bulgaria
+100.0
+SAP Ireland US - Financial Services Designed
+100.0
+SAP Beteiligungs GmbH, Walldorf, Germany
+100.0
+SAP Ireland Limited, Dublin, Ireland
+100.0
+SAP Belgium NV/SA, Brussels, Belgium
+100.0
+SAP Investments, Inc., Wilmington, DE, United
+States
+Ruan Lian Technologies (Beijing) Co., Ltd.,
+100.0
+SAP Hellas S.A., Athens, Greece
+100.0
+SAP España - Sistemas, Aplicaciones y
+100.0
+PT Sybase 365 Indonesia, Jakarta, Indonesia
+Germany
+99.0
+PT SAP Indonesia, Jakarta, Indonesia
+Vermögensverwaltungs GmbH, Walldorf,
+100.0 8).9)
+SAP Erste Beteiligungs- und
+100.0
+Plateau Systems LLC, South San Francisco, CA,
+United States
+100.0
+SAP EMEA Inside Sales S.L., Barcelona, Spain
+Australia
+100.0
+SAP Egypt LLC, Cairo, Egypt
+100.0
+Plateau Systems Australia Ltd, Brisbane,
+100.0
+SAP East Africa Limited, Nairobi, Kenya
+100.0 4)
+Plat. One Lab Srl, Bogliasco, Italy
+Germany
+100.0 4)
+Plat.One Inc., Palo Alto, CA, United States
+Vermögensverwaltungs GmbH, Walldorf,
+100.0
+100.0
+100.0
+Productos en la Informática, S.A., Madrid, Spain
+100.0
+Quadrem Peru S.A.C., Lima, Peru
+100.0
+SAP Global Marketing, Inc., New York, NY, United
+States
+100.0
+Quadrem Overseas Cooperatief U.A., Amsterdam,
+the Netherlands
+Germany
+Vermögensverwaltungs GmbH, Walldorf,
+100.0 8).9)
+SAP Fünfte Beteiligungs- und
+11)
+100.0
+Quadrem Netherlands B.V., Amsterdam, the
+Netherlands
+100.0
+SAP France Holding, Levallois Perret, France
+100.0
+100.0
+SAP Foreign Holdings GmbH, Walldorf, Germany
+100.0
+100.0
+SAP Finland Oy, Espoo, Finland
+100.0
+100.0
+SAP Financial, Inc., Toronto, Canada
+100.0
+Quadrem Brazil Ltda., Rio de Janeiro, Brazil
+Quadrem Chile Ltda., Santiago de Chile, Chile
+Quadrem Colombia SAS, Bogotá, Colombia
+Quadrem International Ltd., Hamilton, Bermuda
+100.0
+SAP Estonia OÜ, Tallinn, Estonia
+Quadrem Africa Pty. Ltd., Johannesburg, South
+Africa
+205
+100.0
+The German federal government published the German Code of
+Corporate Governance in February 2002 and introduced a
+commission that amends the Code from time to time. The Code
+contains statutory requirements and a number of
+recommendations and suggestions. Only the legal requirements
+are binding for German companies. With regard to the
+recommendations, the German Stock Corporation Act, section
+161, requires that every year listed companies publicly state the
+extent to which they have implemented them. Companies can
+SAP Puerto Rico GmbH, Walldorf, Germany
+100.0 8).9)
+China
+SAP Retail Solutions Beteiligungsgesellschaft
+100.0
+SuccessFactors Australia Holdings Pty Ltd,
+100.0
+mbH, Walldorf, Germany
+Brisbane, Australia
+SAP Romania SRL, Bucharest, Romania
+100.0
+SuccessFactors Australia Pty Limited, Brisbane,
+Australia
+100.0
+100.0
+100.0
+Kingdom of Saudi Arabia
+SuccessFactors Cayman, Ltd., Grand Cayman,
+100.0
+SAP Saudi Arabia Software Trading Ltd, Riyadh,
+Kingdom of Saudi Arabia
+Cayman Islands
+75.0
+SAP Sechste Beteiligungs- und
+100.0 8).9)
+SuccessFactors International Holdings, LLC, San
+Mateo, CA, United States
+100.0
+Vermögensverwaltungs GmbH, Walldorf,
+SAP Saudi Arabia Software Services Ltd, Riyadh,
+SuccessFactors Asia Pacific Limited, Hong Kong,
+100.0
+SuccessFactors (Philippines), Inc., Pasig City,
+Philippines
+Sapphire SAP HANA Fund of Funds, L.P.,
+Wilmington, DE, United States
+0 6)
+SAP Portals Holding Beteiligungs GmbH,
+100.0
+Sapphire Ventures Fund I, L.P., Wilmington, DE,
+United States
+Walldorf, Germany
+SAP Portals Israel Ltd., Ra'anana, Israel
+100.0
+Sapphire Ventures Fund II, L.P., Wilmington, DE,
+United States
+6)
+SAP Portugal - Sistemas, Aplicações e Produtos
+Informáticos, Sociedade Unipessoal, Lda., Porto
+Salvo, Portugal
+100.0
+SAPV (Mauritius), Ebene, Mauritius
+SAS Financière Multiposting, Paris, France
+100.0
+SAP Projektverwaltungs- und Beteiligungs GmbH,
+100.0
+8)
+SeeWhy (UK) Limited, Windsor, United Kingdom
+100.0
+Walldorf, Germany
+SAP Public Services Hungary Kft., Budapest,
+Hungary
+100.0
+Shanghai SuccessFactors Software Technology
+Co., Ltd., Shanghai, China
+100.0
+SAP Public Services, Inc., Washington, DC, United
+States
+100.0
+Sybase (UK) Limited, Maidenhead, United
+100.0
+100.0
+Kingdom
+Managing Partner Balderton Capital, London, United Kingdom
+Board of Directors, nlyte Software Ltd., London, United Kingdom
+Board of Directors, Talend SA, Suresnes, France
+Board of Directors, Wonga Group Ltd., London, United Kingdom
+Board of Directors, SCYTL Secure Electronic Voting SA,
+Barcelona, Spain
+Board of Directors, Vestiaire Collective SA, Levallois-Perret,
+France
+Board of Directors, Dashlane, Inc., New York, NY, United States
+Board of Directors, Recorded Future, Inc., Cambridge, MA,
+United States
+Board of Directors, eWise Group, Inc., Redwood City,
+CA, United States
+Board of Directors, Qubit Digital Ltd., London, United Kingdom
+Board of Directors, Stanford University, Stanford,
+CA, United States
+Board of Directors, Opbeat Inc., San Francisco,
+CA, United States
+Bernard Liautaud 2), 4), 6)
+Board of Directors, Aircall.io, New York City, NY, United States
+Attorney-at-Law, Certified Public Auditor, Certified Tax Advisor
+Linklaters LLP, Rechtsanwälte, Notare, Steuerberater, Frankfurt
+am Main, Germany
+Christine Regitz
+1), 4), 8)
+Vice President User Experience
+Chief Product Expert
+Andreas Hahn ¹), 2), 4)
+Product Expert, IoT Standards
+Prof. Dr. Gesche Joost 4), 8)
+Professor for Design Research and Head of the Design Research
+Lab, University of Arts Berlin
+Supervisory Board, ClearVAT Aktiengesellschaft, Berlin,
+Germany (from March 31, 2016)
+Dr. Erhard Schipporeit ³). 7)
+Independent Management Consultant
+Supervisory Board, Talanx AG, Hanover, Germany
+Prof. Dr. Wilhelm Haarmann 2), 5), 7), 8)
+Supervisory Board, Rhein-Neckar Loewen GmbH, Kronau,
+Germany (from August 30, 2016)
+Managing Director, Rhein-Neckar Loewen GmbH,
+Kronau, Germany (until June 30, 2016)
+Head of Sponsorships
+SAP Services s.r.o., Prague, Czech Republic
+100.0
+Sybase 365 Ltd., Tortola, British Virgin Islands
+100.0
+SAP Siebte Beteiligungs- und
+100.0
+4)
+Sybase 365, LLC, Dublin, CA, United States
+100.0
+Vermögensverwaltungs GmbH, Walldorf,
+Sybase Angola, LDA, Luanda, Angola
+100.0
+Germany
+Sybase Iberia S.L., Madrid, Spain
+100.0
+SAP sistemi, aplikacije in produkti za obdelavo
+podatkov d.o.o., Ljubljana, Slovenia
+100.0
+100.0
+SAP Slovensko s.r.o., Bratislava, Slovakia
+100.0
+Sybase International Holdings Corporation, LLC,
+Dublin, CA, United States
+100.0
+SAP Software and Services LLC, Doha, Qatar
+49.0
+5)
+Sybase Philippines, Inc., Makati City, Philippines
+100.0
+Germany
+SAP Portals Europe GmbH, Walldorf, Germany
+100.0
+SAP Polska Sp. z o.o., Warsaw, Poland
+Executive Board Members Who Left During 2016
+Gerhard Oswald (until December 31, 2016)
+Supervisory Board, innogy SE, Essen, Germany (from
+September 1, 2016)
+Global Consulting Delivery, Global and Regional Support and
+Premium Engagement Functions, Maintenance Go-to-Market,
+Global User Groups, Mobile Services
+Digital Business Services
+Michael Kleinemeier
+Chairman of the Board of Directors, Docker, Inc., San Francisco,
+CA, United States (from November 3, 2016)
+Board of Directors, ModuMetal, Inc., Seattle, WA, United States
+Board of Directors, Talend, Redwood City, CA, United States
+(from October 4, 2016)
+Chairman of the Board of Directors, Center ID, Bellevue, WA,
+United States
+Including Concur, SAP Ariba, SAP Fieldglass, SAP's Data
+Network Business, SAP Health, as well as Front-Office and Back-
+Office Solutions for Small and Midsize Businesses that currently
+include SAP Anywhere, SAP Business One and SAP Business
+ByDesign
+Business Networks and Applications
+Steve Singh (from April 1, 2016)
+Global Sales, Industry & LoB Solutions Sales, Services Sales,
+Sales Operations
+Supervisory Board
+Consolidated Financial Statements IFRS and Notes | Notes
+Robert Enslin
+Board of Directors, Dell Secure Works, Atlanta, GA, United
+States (from April 21, 2016)
+Board of Directors, ANSYS, Inc., Canonsburg, PA, United States
+Board of Directors, Under Armour, Inc., Baltimore, MD, United
+States
+Corporate Development, Global Corporate Affairs, Corporate
+Audit and Global Marketing
+Strategy, Governance, Business Development,
+Chief Executive Officer
+Bill McDermott
+Supervisory Board, Rhein-Neckar Loewen GmbH, Kronau,
+Germany
+Chief Human Resources Officer, Labor Relations Director
+HR Strategy, Business Transformation, Leadership
+Development, Talent Development
+Stefan Ries (from April 1, 2016)
+Memberships on supervisory boards and other comparable
+governing bodies of enterprises, other than subsidiaries of SAP
+on December 31, 2016
+Executive Board
+Global Customer Operations
+Memberships on supervisory boards and other comparable
+governing bodies of enterprises, other than subsidiaries of SAP
+on December 31, 2016
+Bernd Leukert
+Chief Technology Officer
+Lars Lamadé ¹), 2), 7), 8)
+Professor at the Electrical Engineering and Computer Science
+Faculty at the Technische Universität Berlin
+Prof. Anja Feldmann 4), 8)
+Product Manager
+Martin Duffek ¹), 3), 8)
+Support Expert
+Panagiotis Bissiritsas ¹), 3), 4), 5)
+Chairman of the Board of Directors, Sanoma Corporation,
+Helsinki, Finland
+Chairman of the Board of Directors, BMA Platform International
+Ltd., London, United Kingdom
+Board of Directors, CVON Future Limited, London, United
+Kingdom
+Board of Directors, CVON Limited, London, United Kingdom
+Chairman of the Board of Directors, CVON Innovation Services
+Oy, Turku, Finland
+Chairman of the Board of Directors, CVON Group Limited,
+London, United Kingdom
+Board of Directors, Pöyry Plc, Vantaa, Finland
+Chairman of the Board of Directors, Huhtamäki Oyj,
+Espoo, Finland
+Pekka Ala-Pietilä 4), 5), 6), 7)
+201
+Consolidated Financial Statements IFRS and Notes | Notes
+Vice President, Head of SAP Alumni Relations
+Chairperson of the Spokespersons' Committee of Senior
+Managers of SAP SE
+Deputy Chairperson
+Margret Klein-Magar ¹), 2), 4), 5)
+Prof. Dr. h.c. mult. Hasso Plattner 2), 4), 6), 7), 8)
+Chairman
+Global Finance and Administration including Investor Relations
+and Data Protection & Privacy, Corporate IT and Processes
+Chief Financial Officer
+Luka Mucic
+Supervisory Board, DFKI (Deutsches Forschungszentrum für
+Künstliche Intelligenz GmbH), Kaiserslautern, Germany
+Global Development Organization, Innovation & Cloud Delivery,
+Product Strategy, Development Services, SAP Global Security
+Products & Innovation
+(29) Board of Directors
+100.0
+100.0
+Consolidated Financial Statements IFRS and Notes | Notes
+'s-Hertogenbosch, the Netherlands
+SAP UAB, Vilnius, Lithuania
+100.0
+SAP New Zealand Limited, Auckland, New
+100.0
+Zealand
+SAP Ventures Investment GmbH, Walldorf,
+Germany
+100.0 8).9)
+SAP Norge AS, Lysaker, Norway
+100.0
+SAP Vierte Beteiligungs- und
+100.0
+SAP North West Africa Ltd, Casablanca, Morocco
+100.0
+Vermögensverwaltungs GmbH, Walldorf,
+SAP Österreich GmbH, Vienna, Austria
+100.0
+Germany
+SAP PERU S.A.C., Lima, Peru
+100.0
+SAP West Balkans d.o.o., Belgrade, Serbia
+100.0
+SAP Zweite Beteiligungs- und
+100.0 8).9)
+SAP Philippines, Inc., Makati, Philippines
+100.0
+Vermögensverwaltungs GmbH, Walldorf,
+100.0
+Supervisory Board, Deutsche Börse AG, Frankfurt am Main,
+Germany
+SAP Türkiye Yazilim Üretim ve Ticaret A.Ş.,
+Istanbul, Turkey
+100.0
+209
+Name and Location of Company
+Owner Foot-
+ship note
+Name and Location of Company
+Owner Foot-
+ship note
+%
+%
+SAP Latvia SIA, Riga, Latvia
+100.0
+SAP Svenska Aktiebolag, Stockholm, Sweden
+100.0
+SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia
+SAP Malta Investments Ltd., Valletta, Malta
+100.0
+100.0
+SAP Systems, Applications and Products in Data
+Processing (Thailand) Ltd., Bangkok, Thailand
+SAP Taiwan Co., Ltd., Taipei, Taiwan
+100.0
+100.0
+SAP MENA FZ L.L.C., Dubai, United Arab Emirates
+SAP Middle East and North Africa L.L.C., Dubai,
+United Arab Emirates
+100.0 4)
+49.0 5)
+SAP Technologies Inc., Palo Alto, CA, United
+States
+100.0
+SAP National Security Services, Inc., Newtown
+Square, PA, United States
+100.0
+SAP Training and Development Institute FZCO,
+Dubai, United Arab Emirates
+100.0
+SAP Nederland Holding B.V.,
+11)
+Supervisory Board, HDI V.a.G., Hanover, Germany
+Sybase India Ltd., Mumbai, India
+Supervisory Board, Fuchs Petrolub SE, Mannheim, Germany
+Supervisory Board, BDO AG, Hamburg, Germany
+Supervisory Board, RWE AG, Essen, Germany (from April 20,
+2016)
+Thereof variable
+compensation
+NA
+ΝΑ
+1,788
+The Supervisory Board members do not receive any share-
+based payment for their services. As far as members who are
+employee representatives on the Supervisory Board receive
+share-based payment, such compensation is for their services
+as employees only and is unrelated to their status as members
+of the Supervisory Board.
+Detailed information about the different elements of the
+compensation as well as the number of shares owned by
+members of the Executive Board and the Supervisory Board are
+disclosed in the Compensation Report, which is part of our
+Management Report and of our Annual Report on Form 20-F,
+both of which are available on SAP's Web site.
+(30) Related Party Transactions
+Certain Supervisory Board members of SAP SE currently hold,
+or held within the last year, positions of significant responsibility
+with other entities. We have relationships with certain of these
+entities in the ordinary course of business, whereby we buy and
+sell products, assets, and services at prices believed to be
+consistent with those negotiated at arm's length between
+unrelated parties.
+Supervisory Board, Hannover Rückversicherung SE, Hanover,
+Germany
+Wilhelm Haarmann practices as a partner in the law firm
+Linklaters LLP in Frankfurt am Main, Germany. SAP occasionally
+purchased and purchases legal and similar services from
+Linklaters.
+Occasionally, members of the Executive Board of SAP SE obtain
+services from SAP for which they pay a consideration consistent
+with those negotiated at arm's length between unrelated parties.
+All amounts related to the abovementioned transactions were
+immaterial to SAP in all periods presented.
+remuneration
+204
+In 2016, we entered into a consulting contract with Gerhard
+Oswald which applies from 2017 onwards. Compensation
+thereunder occurs if and when consulting services are rendered.
+No transactions occurred in all periods presented.
+In total, we sold products and services to companies controlled
+by members of the Supervisory Board in the amount of
+€1 million (2015: €1 million), we bought products and services
+from such companies in the amount of €3 million (2015:
+€7 million), and we provided sponsoring and other financial
+support to such companies in the amount of €4 million (2015:
+€5 million). Outstanding balances at year end from transactions
+with such companies were €0 million (2015: €0 million) for
+amounts owed to such companies and €0 million (2015:
+€0 million) for amounts owed by such companies. All of these
+balances are unsecured and interest-free and settlement is
+expected to occur in cash. Commitments (the longest of which
+is for two years) made by us to purchase further goods or
+services from these companies and to provide further
+sponsoring and other financial support amount to €6 million as
+at December 31, 2016 (2015: €11 million).
+In total, we sold services to members of the Executive Board and
+the Supervisory Board in the amount of €0 million (2015: €2
+million), and we received services from members of the
+Supervisory Board (including services from employee
+representatives on the Supervisory Board in their capacity as
+employees of SAP) in the amount of €1 million (2015:
+€1 million). Amounts owed to Supervisory Board members from
+these transactions were €0 million as at December 31, 2016
+(2015: €0 million). All of these balances are unsecured and
+interest-free and settlement is expected to occur in cash.
+For information about the compensation of our Executive Board
+and Supervisory Board members, see Note (29).
+(31) Principal Accountant Fees and
+Services
+At the Annual General Meeting of Shareholders held on May 12,
+2016, our shareholders elected KPMG AG Wirtschafts-
+prüfungsgesellschaft as SAP's independent auditor for 2016.
+KPMG AG Wirtschaftsprüfungsgesellschaft has been the
+company's principal auditor since the fiscal year 2002. Dr.
+Böttcher has signed as auditor responsible for the audit since
+the fiscal year 2013, and Ms. Herold has signed as auditor since
+the fiscal year 2016. KPMG AG Wirtschaftsprüfungsgesellschaft
+and other firms in the global KPMG network charged the
+following fees to SAP for audit and other professional services
+related to 2016 and the previous years:
+Fees for Audit and Other Professional Services
+€ millions
+2016
+2015
+Consolidated Financial Statements IFRS and Notes | Notes
+515
+479
+517
+107,467,372
+€ thousands
+2016
+2015
+DBO December 31
+10,739
+Annual pension entitlement
+470
+8,948
+427
+2014
+11,273
+475
+The total annual compensation of the Supervisory Board
+members for 2016 is as follows:
+Supervisory Board Compensation
+€ thousands
+2016
+2015
+2014
+Total compensation
+3,652
+3,728
+3,227
+Thereof fixed
+3,135
+3,250
+924
+compensation
+Thereof committee
+2014
+KPMG AG Foreign
+(Germany)
+Total
+KPMG
+Firms
+0
+0
+0
+0
+0
+0
+All other fees
+Total
+0
+0
+0
+0
+0
+0
+0
+0
+0
+3
+7
+10
+3
+6
+9
+2
+6
+8
+Audit fees are the aggregate fees charged by KPMG for auditing
+our consolidated financial statements and the statutory financial
+statements of SAP SE and its subsidiaries. Audit-related fees are
+fees charged by KPMG for assurance and related services that
+are reasonably related to the performance of the audit or review
+of our financial statements and are not reported under audit
+fees. Tax fees are fees for professional services rendered by
+KPMG for tax advice on transfer pricing, restructuring, and tax
+compliance on current, past, or contemplated transactions. The
+All other fees category includes other support services, such as
+training and advisory services on issues unrelated to accounting
+and taxes.
+(32) German Code of Corporate
+Governance
+0
+36,426
+0
+Tax fees
+KPMG AG
+(Germany)
+Foreign
+KPMG
+Total
+KPMG AG
+(Germany)
+Foreign
+KPMG
+Total
+Firms
+Firms
+Audit fees
+3
+6
+9
+3
+6
+9
+2
+6
+8
+Audit-related fees
+0
+1
+1
+0
+0
+0
+0
+0
+0
+45,309
+90,262,686
+Companies controlled by Hasso Plattner, chairman of our
+Supervisory Board and Chief Software Advisor of SAP, engaged
+in the following transactions with SAP: providing consulting
+services to SAP, receiving sport sponsoring from SAP, making
+purchases of SAP products and services.
+85,985
+€ thousands
+2016
+210
+2015
+2014
+Short-term employee
+benefits
+19,206
+15,137
+16,196
+Share-based payment¹)
+23,942
+Consolidated Financial Statements IFRS and Notes | Notes
+8) Member of the Company's People and Organization Committee
+10,365
+Subtotal¹)
+43,148
+25,502
+24,294
+Post-employment benefits
+2,398
+1,278
+3,249
+Thereof defined-benefit
+1,792
+288
+2,276
+8,098
+7) Member of the Company's Special Committee
+6) Member of the Company's Nomination Committee
+5) Member of the Company's Finance and Investment Committee
+Board of Directors, Fidelity Funds SICAV, Luxembourg (until
+February 26, 2016)
+202
+Consolidated Financial Statements IFRS and Notes | Notes
+Robert Schuschnig-Fowler 1), 8)
+Account Manager, Senior Support Engineer
+Deputy Chairman of SAP SE Works Council Europe
+Member of Works Council SAP SE
+Allocating the fair value of the share-based payments to the
+respective years they are economically linked to, the total
+compensation of the Executive Board members for the years
+2016, 2015, and 2014 was as follows:
+Executive Board Compensation
+Dr. Sebastian Sick ¹), 2), 5), 7)
+Head of Company Law Unit, Hans Böckler Foundation
+Supervisory Board, Georgsmarienhütte GmbH,
+Georgsmarienhütte, Germany
+Jim Hagemann Snabe 2), 5)
+Supervisory Board Member
+Board of Directors, Bang & Olufsen A/S, Struer, Denmark
+Board of Directors, Danske Bank A/S, Copenhagen, Denmark
+(until March 17, 2016)
+Board of Directors, A. P. Moller-Maersk A/S, Copenhagen,
+Denmark (from April 12, 2016)
+Supervisory Board, Allianz SE, Munich, Germany
+Supervisory Board, Siemens AG, Munich, Germany
+Pierre Thiollet ¹), 4)
+Webmaster (P&I)
+87,875,732
+Secretary of CHSCT (Hygiene, Security and Work Conditions
+Committee)
+Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer ³)
+Managing Director of Dr. Klaus Wucherer Innovations- und
+Technologieberatung GmbH, Erlangen, Germany
+Deputy Chairman of the Supervisory Board, HEITEC AG,
+Erlangen, Germany
+Deputy Chairman of the Supervisory Board, LEONI AG,
+Nuremberg, Germany
+Chairman of the Supervisory Board, Festo AG & Co. KG,
+Esslingen, Germany
+Information as at December 31, 2016
+"Elected by the employees
+2) Member of the Company's General and Compensation Committee
+3) Member of the Company's Audit Committee
+4) Member of the Company's Technology and Strategy Committee
+Thereof defined-
+606
+Member of the SAP France Works Council
+973
+Number of PSUs granted
+220,561
+NA
+ΝΑ
+DBO December 31
+33,935
+32,758
+33.764
+Number of stock options
+0
+0
+○
+granted
+Total expense in € thousands
+14,233
+22,310
+11,133
+The defined benefit obligation (DBO) for pensions to Executive
+Board members and the annual pension entitlement of the
+members of the Executive Board on reaching age 60 based on
+entitlements from performance-based and salary-linked plans
+were as follows:
+Retirement Pension Plan for Executive Board
+Members
+SAP did not grant any compensation advance or credit to, or
+enter into any commitment for the benefit of, any member of the
+Executive Board or Supervisory Board in 2016, 2015, or 2014.
+Shareholdings of Executive and Supervisory Board
+Members
+Number of SAP
+shares
+2016
+2015
+2014
+Executive Board
+Supervisory Board
+990
+3,462
+1,580
+In the table above, the share-based payment expense is the
+amount recorded in profit or loss under IFRS 2 in the respective
+period.
+Payments
+contribution
+1,667
+Total¹)
+45,546
+26,780
+27,543
+The share-based payment amounts disclosed above for 2016
+are based on the grant date fair value of the restricted share
+units (RSUs) and performance share units (PSUs), respectively,
+issued to Executive Board members during the year under the
+new LTI Plan 2016, effective January 1, 2016.
+The Executive Board members already received, in 2012, the LTI
+grants for the years 2012 to 2015 subject to continuous service
+as member of the Executive Board in the respective years.
+Although these grants are linked to and thus, economically,
+compensation for the Executive Board members in the
+respective years, section 314 of the German Commercial Code
+(HGB) requires them to be included in the total compensation
+number for the year of grant. Upon his appointment to the
+Executive Board in 2015, Michael Kleinemeier received a grant
+related to 2015. Vesting of the LTI grants is dependent on the
+respective Executive Board member's continuous service for the
+Company.
+The share-based payment for 2015 as defined in section 314 of
+the German Commercial Code (HGB) amounts to €263,200 and
+4,622 RSUs, respectively, based on the allocation for 2015 for
+Michael Kleinemeier, which was granted in 2015 in line with his
+appointment to the Executive Board.
+Considering the grant date fair value of the RSUs allocated in
+2015 instead of the economically allocated amount of share-
+based payments in the table above, the sum of short-term
+employee benefits and share-based payment amounts to
+€15,400,400 and the total Executive Board compensation
+amounts to ���16,678,400.
+Consolidated Financial Statements IFRS and Notes | Notes
+203
+Share-Based Payment for Executive Board
+Payments to/DBO for Former Executive Board
+"Portion of total executive compensation allocated to the respective year
+Members
+Members
+153,909
+147,041
+Number of RSUs granted
+192,345
+2015
+2014
+€ thousands
+2014
+2015
+2016
+2016
+47.10
+United States
+40.62
+Visage Mobile, Inc., San Francisco, CA, United States
+Yapta, Inc., Seattle, WA, United States
+TRX UK Limited, London, United Kingdom
+100.0
+TRX Technology Services, L.P., Atlanta, GA,
+Nagar, India
+17.00
+Stay NTouch Inc., Bethesda, MD, United States
+100.0
+TRX Technologies India Private Limited, Raman
+30.46
+Evature Technologies (2009) Ltd., Ramat Gan, Israel
+Procurement Negócios Eletrônicos S/A, Rio de Janeiro,
+Brazil
+100.0
+100.0
+TRX Luxembourg, S.a.r.I., Luxembourg City,
+Luxembourg
+100.0
+46.77
+10)
+Alchemist Accelerator Fund I LLC, San Francisco, CA, United
+States
+100.0
+Name and Location of Company
+TRX Fulfillment Services, LLC, Atlanta, GA, United
+States
+211
+Consolidated Financial Statements IFRS and Notes | Notes
+Cloudhealth Technologies, Inc., Boston, MA, United States
+Costanoa Venture Capital II L.P., Palo Alto, CA, United States
+Costanoa Venture Capital QZ, LLC, Palo Alto, CA, United States
+Cyphort, Inc., Santa Clara, CA, United States
+BY Capital 1 GmbH & Co. KG, Berlin, Germany
+Canvas II, L.P., Portola Valley, CA, United States
+Catchpoint Systems, Inc., New York, NY, United States
+Char Software, Inc., Boston, MA, United States
+Amplify Partners II L.P., Cambridge, MA, United States
+Amplify Partners L.P., Cambridge, MA, United States
+AP Opportunity Fund, LLC, Menlo Park, CA, United States
+All Tax Platform - Solucoes Tributarias S.A., São Paulo, Brazil
+Alteryx, Inc., Irvine, CA, United States
+TRX, Inc., Bellevue, WA, United States
+Volume Integration, Inc., VA, United States
+6) SAP SE does not hold any ownership interests in four structured entities,
+SAPV (Mauritius), Sapphire SAP HANA Fund of Funds, L.P., Sapphire
+Ventures Fund I, L.P. and Sapphire Ventures Fund II, L.P. However, based on
+the terms of limited partnership agreements under which these entities were
+established, SAP SE is exposed to the majority of the returns related to their
+operations and has the current ability to direct these entities' activities that
+affect these returns, in accordance with IFRS 10 (Consolidated Financial
+Statements). Accordingly, the results of operations are included in SAP's
+consolidated financial statements.
+4) Consolidated for the first time in 2016.
+3) Figures for profit/loss after tax and total equity pursuant to HGB, section
+285 and section 313 are not disclosed if they are of minor significance for a
+fair presentation of the profitability, liquidity, capital resources and financial
+position of SAP SE, pursuant to HGB, section 313 (2) sentence 3 no. 4 and
+section 286 (3) sentence 1 no. 1.
+2) As at December 31, 2016, including managing directors, in FTE.
+1) These figures are based on our local IFRS financial statements prior to
+eliminations resulting from consolidation and therefore do not reflect the
+contribution of these companies included in the Consolidated Financial
+Statements. The translation of the equity into Group currency is based on
+period-end closing exchange rates, and on average exchange rates for
+revenue and net income/loss.
+Equity Investments with Ownership of at Least 5%
+4)
+100.0
+Name and Location of Company
+5) Agreements with the other shareholders provide that SAP SE fully controls
+the entity.
+39.06
+100.0
+China DataCom Corporation Limited, Guangzhou, China
+Convercent, Inc., Denver, CO, United States
+Entity whose personally liable partner is SAP SE.
+70.0
+100.0
+100.0
+Systems Applications Products (Africa Region)
+Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products (Africa)
+Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products (South Africa)
+Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products Nigeria Limited,
+Victoria Island, Nigeria
+Sybase, Inc., Dublin, CA, United States
+100.0
+Sybase Software (India) Private Ltd., Mumbai,
+India
+Entity with (profit and) loss transfer agreement.
+100.0
+%
+8)
+ship note
+Foot-
+Owner
+Name and Location of Company
+7)
+Data Collective II L.P., San Francisco, CA, United States
+Data Collective III L.P., San Francisco, CA, United States
+Data Collective IV, L.P., San Francisco, CA, United States
+Dharma Platform, Inc., Florida Ave NW, WA, United States
+EIT ICT Labs GmbH, Berlin, Germany
+Sybase Software (China) Co., Ltd., Beijing, China
+28.30
+9) Pursuant to HGB, section 264 (3) or section 264b, the subsidiary is exempt
+from applying certain legal requirements to their statutory stand-alone
+financial statements including the requirement to prepare notes to the
+financial statements and a review of operations, the requirement of
+independent audit and the requirement of public disclosure.
+11) Pursuant to article 2:403 of the Dutch Civil Code, the entity is exempt from
+applying certain legal requirements to their statutory stand-alone financial
+statements including the requirement to prepare the financial statements,
+the requirement of independent audit and the requirement of public
+disclosure on the basis that SAP SE has provided a guarantee of the entity's
+liabilities in respect of its financial year ended December 31, 2016.
+100.0 10)
+TRX Europe Limited, London, United Kingdom
+100.0
+TRX Data Service, Inc., Glen Allen, VA, United
+States
+Joint Arrangements and Investments in Associates
+100.0
+Travel Technology, LLC, Atlanta, GA, United
+States
+%
+10) Pursuant to sections 479A to 479C of the UK Companies Act 2006, the
+entity is exempt from having its financial statements audited on the basis that
+SAP SE has provided a guarantee of the entity's liabilities in respect of its
+financial year ended December 31, 2016.
+Owner-
+ship
+TomorrowNow, Inc., Bryan, TX, United States
+Name and Location of Company
+100.0
+Technology Licensing Company, LLC, Atlanta, GA,
+United States
+Other Equity Investments
+100.0
+TechniData GmbH, Markdorf, Germany
+100.0
+100.0
+FeedZai S.A., Lisbon, Portugal
+Financial Impact
+GK Software AG, Schöneck, Germany
+Social Investment > BHCI
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. Now we can show
+what a change by one percentage point of the BHCI would mean
+for SAP's operating profit, as detailed in the Documenting
+Financial Impact section.
+BHCI > Profitability
+and career flexibility, can make it easier for employees to
+balance work and family life.6 This leads us to conclude that the
+higher our BHCI, the more attractive SAP becomes to women
+who are also seeking management positions.
+McKinsey (2013) found that different elements of the BHCI,
+such as flexible working hours, the ability to work from home,
+BHCI > Women in Management
+We believe that by supporting our employees in engaging in
+activities with a positive social impact, such as skills-based
+volunteering, we are enhancing the meaning they find in work.
+This sense of purpose can help create a richer and more
+rewarding work environment that reduces stress and promotes
+satisfaction and well-being.
+We believe that a balance of men and women in management
+roles helps create a more balanced working environment, one in
+which diversity is valued and people feel free to express their
+individual styles. It is our expectation that such an environment
+will positively affect our BHCI.
+The BHCI is a score for readiness of employees to accept
+change, in particular, their perception of affiliation and purpose,
+leadership, recognition, empowerment, reward, stress level, and
+life balance at SAP.
+Business Health Culture Index (BHCI)
+We believe that higher revenue has a positive impact on a
+company's work environment, thereby increasing employee
+pride and loyalty. This is also stated in a study of Harter et al.
+(2010), which states that improving financial performance
+appears to increase general satisfaction and some specific work
+perceptions.5
+Growth > Employee Engagement
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of employee engagement. We
+have been able to prove a significant positive correlation
+between employee engagement and revenue.
+Employee Engagement > Growth
+Women in Management > BHCI
+BHCI > Employee Engagement
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+employee engagement. (The BHCI positively influences the
+Leadership Trust Index, which positively influences the
+Employee Engagement Index; all correlations are significant).
+BHCI > Growth
+Capability Building > Employee Retention
+According to the Global Workforce Study (2012) the "chances to
+advance the career" is the second-most important driver of
+employee retention 7 By promoting and thus growing from
+within, SAP creates career opportunities for our employees. In
+turn, it is our expectation that this opportunity leads to an
+increase in employee retention.
+Employee retention is the ratio of the average headcount
+(expressed in full-time equivalents), minus employee-initiated
+terminations (turnover), divided by the average headcount,
+taking into account the past 12 months.
+Employee Retention
+Connectivity of Financial and Non-Financial Indicators
+Additional Information on Economic, Environmental and Social Performance
+218
+http://www.mckinsey.com/-/media/McKinsey/Global%20Themes/Women%20matter/WomenMatter%2
+02013%20Report%20(8).ashx [Accessed 16 Dec. 2016].
+• McKinsey & Company (2013): Women Matter. Gender diversity in top management: Moving corporate
+culture, moving boundaries. Available at:
+Harter, J., Schmidt, F., Asplund, J., Kilham, E., Agrawal, S. (2010): Causal Impact of Employee Work
+Perceptions on the Bottom Line of Organizations. In: Perspectives on Psychological Science, Vol. 5(4), pp.
+378-389.
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+customer loyalty.
+BHCI > Customer Loyalty
+Many of SAP's GHG emissions are caused by business travel
+and commuting, which we believe can have both negative and
+positive impacts on employee health. Some people may
+experience greater stress from more travel because they have
+less time to spend at home, suffer from jetlag, or lose valuable
+working time; others may enjoy travel, enabling them to
+experience other places and cultures as well as meet new
+people.
+GHG Footprint > BHCI
+revenue.
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+We believe that engaged employees are likely to want to help
+SAP achieve our own target in lowering GHG emissions. Yet
+another possible outcome is that a higher level of employee
+engagement may lead to more business activity requiring travel
+and therefore could lead to an increase in GHG emissions.
+Employee Engagement > GHG Footprint
+We believe that lowering SAP's GHG footprint can have a
+positive impact on employee engagement because loyalty
+should rise as employees see their company act responsibly
+towards the environment. However, because lowering emissions
+also brings certain restrictions, such as on business travel, it
+may also have a negative impact on employee engagement.
+Greenhouse Gas (GHG) Footprint > Employee
+Engagement
+We continue to share our methodology with our customers to
+help them win in the marketplace. We know that companies
+achieve higher operating profit - resulting from both greater
+cost efficiency as well as revenue growth - by addressing
+economic, social, and environmental considerations. More
+importantly, these companies are better equipped to lead in the
+future, as they navigate the world's most pressing challenges
+and help to bring about long-term sustainable change.
+Embedding Non-Financial
+Performance Indicators into Our
+Solutions
+Moving forward, we are promoting the use of sustainability
+measures as a way to improve financial performance, both
+inside and outside of SAP. By embedding this approach into our
+decision making and quarterly business reviews, our
+sustainability performance steers our business along with
+factors such as revenue and cost. Our goal is for all senior
+business leaders at SAP to recognize - and be held accountable
+for - the fact that improving such measures as employee
+engagement also boosts financial performance.
+Our findings help us to shift the conversation for business
+leaders, investors, employees, and other key stakeholders, and
+firmly establish non-financial indicators as playing a crucial role
+in our financial success. As a result, engaging employees or
+reducing our emissions is no longer seen as a nice-to-have, but
+rather as essential to carrying out a successful business
+strategy.
+Documenting the financial impact of non-financial indicators
+helps us move closer to achieving our sustainability goals.
+Rather than simply stating the business case for social or
+environmental change, we now have the numbers to back it up.
+Performance
+Promoting Sustainability Measures
+as a Way to Boost Financial
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+Follow Analytics, Inc., San Francisco, CA, United States
+single indicator includes interdependencies with other indicators, hence our results do not allow for a
+cumulative effect across all indicators included in this report. All calculations are based on non-IFRS figures
+(as shown in our Integrated Report 2016).
+⚫ These results reflect the quantification of a gross effect related to a change in a particular key performance
+indicator. They do not allow for any net impact measurement. The evaluation of required investment to
+change the non-financial indicator is excluded from the scope of analysis. The economic gross impact of a
+impact of the program on employees' work-life balance as well
+as its impact on the BHCI. In 2015, the program resulted in an
+ROI of 3.9 for the year of the investment. This means that
+operating profit increased €3.90 for every €1 invested during
+that year.
+Before and after the launch of the program, we mapped direct
+and indirect costs related to this activity. We also measured the
+As part of the "Join In - Stay Fit!" program at SAP Germany, we
+implemented a number of measures to improve the work-life
+balance of our staff. These include workshops that raise health
+awareness and provide tips for employees on how to change
+unhealthy behavior.
+Figure 2: Impact Pathway of the Business Health Culture Index
+Case Study: Calculating ROI for Our
+"Join In - Stay Fit!" Health Initiative
+Currently, our connectivity model focuses predominantly on
+internal issues within SAP. However, we are working to enhance
+our model to include the social, environmental, and economic
+impacts of SAP software and services when they are used by our
+customers.
+Employee Engagement > Employee Retention
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of employee engagement. We
+have been able to prove a significant positive correlation
+between employee engagement and employee retention.
+Using the connectivity model, we have been able to embed non-
+financial key performance indicators into our solutions. We see
+this in our SAP Digital Boardroom offering built on the SAP
+BusinessObjects Cloud solution, for example. By incorporating
+this connection into our software, the integrated approach to
+financial and non-financial performance not only helps SAP but
+also our customers. In this way, we can turn our vision into
+Details: How Our Non-Financial and
+Financial Performance Indicators Are
+Interconnected
+Employee Engagement > Employee Retention
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of employee engagement. We
+have been able to prove a significant positive correlation
+between employee engagement and employee retention.
+217
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+Mueller, K., Hattrup, K., Spiess, S., Lin-Hi, N. (2012): The effects of corporate social responsibility on
+employees' affective commitment: A cross-cultural investigation. In: Journal of Applied Psychology, Vol.
+97(6), pp. 1186-1200.
+* Bedarkar, M., Pandita, D. (2014): A Study on the drivers of employee engagement impacting employee
+performance. In: Procedia - Social and Behavioral Sciences, Vol. 133, pp. 106-115.
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+employee engagement. (The BHCI positively influences the
+Leadership Trust Index, which positively influences the
+Employee Engagement Index; all correlations are significant).
+Business Health Culture Index (BHCI) > Employee
+Engagement
+In our view, a high operating profit, as great business news, can
+raise employee morale, encourage identification with our vision,
+and thus drive employee engagement. On the other hand, we
+believe that a high profit can also have a negative impact on
+employee engagement. For example, if cost savings and budget
+cuts were implemented to reach an ambitious profit target,
+employees might feel constrained and dissatisfied.
+Profitability > Employee Engagement
+Since 2014, we have used real data from SAP to analyze and
+proof the financial impact of employee engagement. Now we
+can show what a change by one percentage point of employee
+engagement would mean for SAP's operating profit, as detailed
+in the Documenting Financial Impact section.
+Employee Engagement > Profitability
+Social Investment > Employee Engagement
+Mueller et al. (2012) have found that employees' perception of a
+company's commitment to corporate social responsibility is
+positively linked to their own commitment to the organization.4
+Capability Building > Employee Engagement
+Because it is closely linked to how much a company develops its
+employees and supports their careers, internal hiring to
+management and expert positions positively affects employees'
+commitment and loyalty. This hypothesis was confirmed by a
+study by Bedarkar & Pandita (2014), which identified "career
+opportunities" as the key driver of employee engagement.³
+Employee engagement is the level of employee commitment,
+pride, and loyalty, as well as the feeling of employees of being
+advocates for their company.
+Employee Engagement
+reality: enabling our customers to use our technology to make
+the world a better place.
+Economic indicators
+Employee Retention > Growth
+8
+BHCI > Growth
+Studies show that companies with a relatively high percentage
+of women in upper management ranks or as board members
+achieve stronger financial performance compared to those with
+a relatively low percentage (Catalyst, 2013). 19 We believe that
+having more women in management positions will increase our
+revenue as it helps us to better serve our diverse customer base.
+Women in Management > Growth
+A study by Muritala (2013) suggests that corporate social
+responsibility (or what we characterize as social investment) is
+likely to have a positive impact on an organization's financial
+performance. 18 In our experience, social investments do, in fact,
+have a positive impact on our ability to acquire new customers,
+especially in emerging markets.
+Social Investment > Growth
+Growth is one of our strategic objectives. We measure it through
+several KPIs, for example total revenue that SAP receives from
+the sale of our products and services.
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+Growth
+Capability Building > Women in Management
+Like many of our IT industry peers, SAP has less women than
+men in senior positions. Given our significant pool of talent, we
+Capability Building > Employee Engagement
+Because it is closely linked to how much a company develops its
+employees and supports their careers, internal hiring to
+management and expert positions positively affects employees'
+commitment and loyalty. This hypothesis was confirmed by a
+study by Bedarkar & Pandita (2014), which identified "career
+opportunities" as the key driver of employee engagement.17
+Capability Building > Employee Retention
+According to the Global Workforce Study (2012) the "chances to
+advance the career" is the second-most important driver of
+employee retention. 16 By promoting and thus growing from
+within, SAP creates career opportunities for our employees. In
+turn, it is our expectation that this opportunity leads to an
+increase in employee retention.
+Capability building is the internal hiring rate (promotions only)
+into management or expert positions as compared to the
+external hiring rate into such positions.
+Capability Building
+It is a common best practice for companies to invest a certain
+percentage of their annual profits in programs and activities that
+create a positive social impact. We believe that higher profit is
+therefore likely to lead SAP to make greater social investments.
+assume that internal promotions will increase the percentage of
+women in management positions.
+revenue.
+Employee Retention > Growth
+Meifert (2005) stated a clear relationship between employee
+retention and the company's revenue and margin.20
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+220
+Dec. 2016].
+PwC (2013): Busting the carbon budget - Low Carbon Economy Index 2013. Available at: https://www.pwc-
+wissen.de/pwc/de/shop/publikationen/Low+Carbon+Economy+Index+2013/?card=12994 [Accessed 16
+"Muritala, T. (2013): Does CSR Improve Organization Financial Performance? Evidence from Nigeria Using
+Triangulation Analysis. In: Economics and Applied Informatics, Issue 3, pp. 41-46.
+"Catalyst Information Center (2013): Why Diversity Matters. Available at:
+http://www.catalyst.org/system/files/why_diversity_matters_catalyst_0.pdf [Accessed 16 Dec. 2016].
+*Meifert, M. (2005): Mitarbeiterbindung: eine empirische Analyse betrieblicher Weiterbildner in deutschen
+Großunternehmen. München and Mering: Hampp Verlag.
+Bedarkar, M., Pandita, D. (2014): A Study on the drivers of employee engagement impacting employee
+performance. In: Procedia - Social and Behavioral Sciences, Vol. 133, pp. 106-115.
+[Accessed 16 Dec. 2016].
+Research-Results/2012/07/Towers-Watson-Global-Workforce-Study-2012-Deutschlandergebnisse
+* Towers Watson (2012): Global Workforce Study. Geld, Karriere, Sicherheit? Was Mitarbeiter motiviert und in
+ihrem Unternehmen hält. Available at: https://www.towerswatson.com/de-AT/Insights/IC-Types/Survey-
+* Muritala, T. (2013): Does CSR Improve Organization Financial Performance? Evidence from Nigeria Using
+Triangulation Analysis. In: Economics and Applied Informatics, Issue 3, pp. 41-46.
+Mueller, K., Hattrup, K., Spiess, S., Lin-Hi, N. (2012): The effects of corporate social responsibility on
+employees' affective commitment: A cross-cultural investigation. In: Journal of Applied Psychology, Vol.
+97(6), pp. 1186-1200.
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of employee engagement. We
+have been able to prove a significant positive correlation
+between employee engagement and revenue.
+Employee Engagement > Growth
+Lowering SAP's GHG footprint could have a positive impact on
+SAP's revenue because customers increasingly ask their
+suppliers to act sustainably. This reasoning is supported by a
+study by PwC (2013) confirming the existence of a positive
+correlation between a company's environmental performance
+and financial performance.21
+GHG Footprint > Growth
+Profitability > Social Investment
+A study by Muritala (2013) suggests that corporate social
+responsibility (or what we characterize as social investment) is
+likely to have a positive impact on an organization's financial
+performance. 15 In our experience, social investments do, in fact,
+have a positive impact on our ability to acquire new customers,
+especially in emerging markets.
+Social Investment > Growth
+Social Investment > Employee Engagement
+Mueller et al. (2012) have found that employees' perception of a
+company's commitment to corporate social responsibility is
+positively linked to their own commitment to the organization. 14
+Women in Management > Customer Loyalty
+Diversity programs - including those focused on the promotion
+of women to management positions - have a direct and positive
+impact on customer satisfaction (Catalyst, 2013).12
+Studies show that companies with a relatively high percentage
+of women in upper management or as board members achieve
+stronger financial performance compared to those with a
+relatively low percentage (Catalyst, 2013)." We believe that
+having more women in management positions will increase our
+revenue as it helps us better serve our diverse customer base.
+Women in Management > Growth
+McKinsey (2013) found that different elements of the BHCI,
+such as flexible working hours, the ability to work from home,
+and career flexibility, can make it easier for employees to
+balance work and family life. 10 This leads us to conclude that the
+higher our BHCI, the more attractive SAP becomes to women
+who are also seeking management positions.
+BHCI > Women in Management
+We believe that a balance of men and women in management
+helps create a more balanced working environment, one in
+which diversity is valued and people feel free to express their
+individual styles. It is our expectation that such an environment
+will positively affect our BHCI.
+Women in Management > BHCI
+assume that internal promotions will increase the percentage of
+women in management positions.
+Capability Building > Women in Management
+Like many of our IT industry peers, SAP has less women than
+men in senior positions. Given our significant pool of talent, we
+"Women in Management" means the share of women in
+management positions (managing teams, managing managers,
+board members) as compared to the total number of managers.
+Women in Management
+We have been using real data from SAP to analyze and prove the
+financial impact of employee retention. Now we can show what a
+change by one percentage point of employee retention would
+mean for SAP's operating profit, as detailed in the Documenting
+Financial Impact section.
+Employee Retention > Profitability
+Koys (2001) has found evidence that employee turnover has a
+negative impact on customer satisfaction. 9 We believe this
+effect stems from the fact that experienced employees work
+more efficiently, have better product knowledge, and can build
+trusting relationships with colleagues and customers, so
+therefore have the ability to better serve customers' needs.
+Employee Retention > Customer Loyalty
+Women in Management > Profitability
+Meifert (2005) stated a clear relationship between employee
+retention and a company's revenue and margin.
+Studies show that companies with a high level of gender
+diversity outperform companies with an average level in terms
+of return on equity (11.4% versus an average 10.3%); operating
+results (EBIT 11.1% versus 5.8%); and stock price increases
+(64% versus 47% over the period 2005-2007) (McKinsey,
+2007).13 It is therefore likely that a higher share of women in
+management positions will result in a higher profit for SAP.
+Social investment reflects SAP's activities in volunteering and
+technology as well as cash donations.
+This sense of purpose helps create a richer and more rewarding
+work environment that reduces stress and promotes
+satisfaction and well-being.
+219
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+men%20matter/Women_matter_oct2007_english.ashx [Accessed 16 Dec. 2016].
+http://www.mckinsey.com/-/media/McKinsey/Business%20Functions/Organization/Our%20Insights/Wo
+at:
+"Catalyst Information Center (2013): Why Diversity Matters. Available at:
+http://www.catalyst.org/system/files/why_diversity_matters_catalyst_0.pdf [Accessed 16 Dec. 2016].
+"Catalyst Information Center (2013): Why Diversity Matters. Available at:
+http://www.catalyst.org/system/files/why_diversity_matters_catalyst_0.pdf [Accessed 16 Dec. 2016].
+McKinsey & Company (2007): Women Matter. Gender diversity, a corporate performance driver. Available
+http://www.mckinsey.com/-/media/McKinsey/Global%20Themes/Women%20matter/WomenMatter%2
+02013%20Report%20(8).ashx [Accessed 16 Dec. 2016].
+• Koys, D. (2001): The effects of employee satisfaction, organizational citizenship behavior, and turnover on
+organizational effectiveness: A unit-level, longitudinal study. In: Personnel Psychology, Vol. 54(1), pp. 101-114.
+McKinsey & Company (2013): Women Matter. Gender diversity in top management: Moving corporate
+culture, moving boundaries. Available at:
+* Meifert, M. (2005): Mitarbeiterbindung: eine empirische Analyse betrieblicher Weiterbildner in deutschen
+Großunternehmen. München and Mering: Hampp Verlag.
+[Accessed 16 Dec. 2016].
+Research-Results/2012/07/Towers-Watson-Global-Workforce-Study-2012-Deutschlandergebnisse
+> Towers Watson (2012): Global Workforce Study. Geld, Karriere, Sicherheit? Was Mitarbeiter motiviert und in
+ihrem Unternehmen hält. Available at: https://www.towerswatson.com/de-AT/Insights/IC-Types/Survey-
+We believe that by supporting our employees in engaging in
+activities with a positive social impact, such as skills-based
+volunteering, we are enhancing the meaning they find in work.
+Social Investment > BHCI
+Social Investment
+Productivity and innovation indicators
+216
+Revenue
+215
+Connectivity of Financial and Non-Financial Indicators..
+Additional Information on
+Economic, Environmental and
+Social Performance
+213
+Management's Annual Report on Internal Control over Financial Reporting in the Consolidated Financial Statements
+Consolidated Financial Statements IFRS and Notes
+Materiality.
+KPMG AG Wirtschaftsprüfungsgesellschaft, our independent
+registered public accounting firm, has issued its attestation
+report on the effectiveness of SAP's internal control over
+financial reporting. It is included in the independent auditor's
+report on the Consolidated Financial Statements as at
+December 31, 2016.
+management has concluded that, as at December 31, 2016, the
+Based on the assessment under these criteria, SAP
+SAP's management assessed the effectiveness of the
+Company's internal control over financial reporting as at
+December 31, 2016. In making this assessment, it used the
+criteria set forth by the Committee of Sponsoring Organizations
+of the Treadway Commission (COSO) in Internal Control -
+Integrated Framework (2013).
+The management of SAP is responsible for establishing and
+maintaining adequate internal control over financial reporting as
+such term is defined in Rules 13a-15(f) and 15d-15(f) under the
+U.S. Securities Exchange Act of 1934. SAP's internal control
+over financial reporting is a process designed under the
+supervision of SAP's CEO and CFO to provide reasonable
+assurance regarding the reliability of financial reporting and the
+preparation of financial statements for external reporting
+purposes in accordance with International Financial Reporting
+Standards (IFRS) as issued by the International Accounting
+Standards Board (IASB).
+U.S. law requires that management submit a report on the
+effectiveness of internal control over financial reporting in the
+consolidated financial statements. For 2016, that report is as
+follows:
+Management's
+Annual Report on
+Internal Control over
+Financial Reporting in the
+Consolidated
+Financial Statements
+Company's internal control over financial reporting was
+effective.
+.224
+Stakeholder Engagement
+227
+Memberships.
+.242
+.241
+.239
+.237
+235
+Social indicators
+.229
+Recognition.
+Public Policy.
+Waste and Water
+Sustainable Procurement.
+Human Rights and Labor Standards
+Sustainability Management and Policies.
+Business Conduct..
+Consolidated Financial Statements IFRS and Notes | Notes
+212
+Steve Singh
+Stefan Ries
+Name and Location of Company
+Narrative Science, Inc., Chicago, IL, United States
+MVP Strategic Partnership Fund GmbH & Co. KG, Grünwald,
+Germany
+Local Globe VII, L.P., St. Peter Port, Guernsey, Channel Islands
+Local Globe VIII, L.P., St. Peter Port, Guernsey, Channel Islands
+Looker Data Sciences, Inc., Santa Cruz, CA, United States
+MuleSoft, Inc., San Francisco, CA, United States
+LeanData, Inc., Sunnyvale, CA, United States
+Kaltura, Inc., New York, NY, United States
+Jibe, Inc., New York, NY, United States
+Jfrog, Ltd., Netanya, Israel
+Iron.io, Inc., San Francisco, CA, United States
+Integral Ad Science, Inc., New York, NY, United States
+innoWerft Technologie- und Gründerzentrum Walldorf Stiftung
+GmbH, Walldorf, Germany
+InnovationLab GmbH, Heidelberg, Germany
+Inkling Systems, Inc., San Francisco, CA, United States
+IDG Ventures USA III, L.P., San Francisco, CA, United States
+IEX Group, Inc., New York, NY, United States
+Greater Pacific Capital (Cayman) L.P., Grand Cayman, Cayman
+Islands
+Nor1, Inc., Santa Clara, CA, United States
+Notation Capital, L.P., Brooklyn, NY, United States
+On Deck Capital, Inc., New York, NY, United States
+OpenX Software Limited, Pasadena, CA, United States
+Patent Quality, Inc., Bellevue, WA, United States
+Non-Financial Notes: Social Performance
+Point Nine Annex GmbH & Co. KG, Berlin, Germany
+Point Nine Capital Fund III GmbH & Co. KG, Berlin, Germany
+Portworx Inc., Los Altos, CA, United States
+Luka Mucic
+Bernd Leukert
+Michael Kleinemeier
+Robert Enslin
+Bill McDermott
+The Executive Board
+Walldorf, Baden
+SAP SE
+Walldorf, February 22, 2017
+Spring Mobile Solutions, Inc., Reston, VA, United States
+Storm Ventures V, L.P., Menlo Park, CA, United States
+SV Angel IV, L.P., San Francisco, CA, United States
+T3C Inc., Mountain View, CA, United States
+TableNow, Inc., San Francisco, CA, United States
+The Currency Cloud Group Limited, London, United Kingdom
+The SAVO Group Ltd., Chicago, IL, United States
+TidalScale, Inc., Santa Clara, CA, United States
+USV 2016, L.P., New York, NY, United States
+Socrata, Inc., Seattle, WA, United States
+Shasta Ventures V, L.P., Menlo Park, CA, United States
+Smart City Planning, Inc., Tokyo, Japan
+Return Path, Inc., New York, NY, United States
+Rome2rio Pty. Ltd., Albert Park, Australia
+SaaStr Fund I, L.P., Palo Alto, CA, United States
+Scytl, S.A., Barcelona, Spain
+PubNub, Inc., San Francisco, CA, United States
+Realize Corporation, Tokyo, Japan
+Post for Systems, Cairo, Egypt
+Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
+Non-Financial Notes: Environmental Performance.
+232
+.244
+Non-Financial Performance
+Cause-and-Effect Chain for the Business Health Culture Index (BHCI)
+Our Business Health Culture Index assesses the health of both
+our organizational culture and our employees. Figure 2 shows
+how activities that support health at SAP strengthen our
+organizational culture and help our employees perform at their
+best. For example, we see that flexibility improves stress
+resilience and enhances the work-life balance. This leads to
+greater productivity, resulting in a higher operating profit.
+Financial Impact of a Healthy Work
+Culture
+Case Study: Documenting the
+5 (for a reduction by 1%)
+Employees
+Carbon emissions
+.243
+80 to 90 (for a change by 1 pp)
+Increase in Operating Profit (€
+million, non-IFRS)
+Retention
+| Employee engagement
+Business Health Culture
+Index
+50 to 60 (for a change by 1 pp)
+Activities that support
+health at SAP...
+Drive leadership
+Run health campaigns
+Increased customer loyalty
+Increased employee retention
+Increased employee engagement
+AKPIs of the Business Health Culture Index (BHCI):
+Increased innovation
+Profit
+Increased productivity
+...and influence the
+financial KPIs.
+have an impact on the
+company....
+Improved individual health,
+stress resilience and
+Strengthened leadership and
+reward culture
+Increased leadership skills
+... change behavior and
+perception, ...
+Customers
+Foster work flexibility
+Non-Financial Indicator
+for our operating profit. The results for 2016² are below:
+45 to 55 (for a change by 1 pp)
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+Growth
+Employee
+Retention
+Employee
+Engagement
+BHCI
+€
+Integrated reporting is based on the idea that social,
+environmental, and economic performance are interrelated,
+with each creating tangible impacts on the others. To achieve a
+truly integrated strategy, we must understand these
+connections and work to support them throughout SAP. Figure 1
+below shows how different elements connect.
+Gaining a Holistic View of Our
+Performance
+215
+Connectivity of Financial
+and Non-Financial
+Additional Information on Economic, Environmental and Social Performance
+214
+257
+.256
+251
+GRI Index and UN Global Compact Communication on Progress
+Management's Acknowledgement of the SAP Integrated Report 2016.
+Independent Assurance Report..
+.246
+Profitability
+Customer
+Loyalty
+Indicators¹)
+Capability
+Building
+Women in
+Management
+1) The information in the section Connectivity of Financial and Non-Financial
+Indicators is not in scope of the Independent Assurance Report from KPMG.
+Since 2014, SAP has used techniques such as linear regression
+analysis to document the financial impact of four non-financial
+indicators. We assess each indicator to see what a change of
+one percentage point (or 1% for carbon emissions) would mean
+Documenting Financial Impact
+profit.
+To create and validate these chains of cause and effect, we
+turned to both internal and external stakeholders. We started
+with those inside SAP, meeting in small groups that rigorously
+examined the impacts of activities related to each of our non-
+financial indicators.
+Using Cause-and-Effect Analysis
+Next, we conferred with external stakeholders, including
+academics, financial investors, and industry peers, to vet our
+findings. Finally, we used real data from SAP to translate our
+cause-and-effect chains into a quantified impact on operating
+To achieve this quantification, we created cause-and-effect
+chains that show how specific actions we take at SAP lead to
+shifts in behavior. This behavior impacts on our business and
+has a financial consequence.
+At SAP, we put a monetary value on how our operating profit is
+affected by selected non-financial indicators that measure, for
+example, how well we engage with our employees and inspire
+them to commit to our vision and strategy, support a healthy
+business culture, and succeed in reducing our carbon emissions.
+Putting a Value on Non-Financial
+Performance Indicators
+Figure 1: Connectivity between Social, Environmental, and
+Economic Performance
+Total Energy
+Consumed
+GHG Footprint
+Social
+Investment
+Such analysis establishes more than just a correlation between
+non-financial indicators and financial impact. It also reveals why
+and how something such as employee engagement ultimately
+leads to gains or losses in business performance. We believe
+that such insights are a prerequisite for fully modeling the
+financial impact of non-financial performance.
+Profit (or loss) is the total of income less expenses; if revenue as
+the main part of total income grows at a higher rate than costs, it
+will lead to greater profit.
+Employee Retention > Profitability
+We have been using real data from SAP to analyze and prove the
+financial impact of employee retention. Now we can show what a
+change by one percentage point of employee retention would
+mean for SAP's operating profit, as detailed in the Documenting
+Financial Impact section.
+Total Energy Consumed > Profitability
+We have found that reduced energy consumption is strongly
+correlated with a reduction in costs. Therefore, any cost
+avoidance achieved has a positive impact on our profit.
+Growth > Profitability
+Customer Loyalty > Profitability
+http://www.mckinsey.com/-/media/McKinsey/Business%20Functions/Organization/Our%20Insights/Wo
+GHG Footprint > Profitability
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of our GHG footprint. Now we can
+show what a reduction of SAP's carbon emissions by one
+percentage point would mean for SAP's operating profit, as
+detailed in the Documenting Financial Impact section.
+Customer Loyalty
+Customer loyalty is measured with the Net Promoter Score:
+Percentage of customers that are likely to recommend SAP to
+friends or colleagues minus the percentage of customers that
+are unlikely to do so.
+"Harter, J., Schmidt, F., Asplund, J., Kilham, E., Agrawal, S. (2010): Causal Impact of Employee Work
+Perceptions on the Bottom Line of Organizations. In: Perspectives on Psychological Science, Vol. 5(4), pp.
+378-389.
+> McKinsey & Company (2007): Women Matter. Gender diversity, a corporate performance driver. Available
+at:
+It is a common best practice for companies to invest a certain
+percentage of their annual profits in programs and activities that
+create a positive social impact. We believe that a higher profit is
+therefore likely to lead SAP to make greater social investments.
+We believe that positive experiences among our customers can
+significantly increase business with existing customers, as well
+as help attract new customers. Both results can lower the cost
+of sales, thereby increasing our profit.
+Profitability > Social Investment
+Key points of our results include:
+Women in Management > Profitability
+Reichheld, F. (2003): The One Number You Need to Grow. In: Harvard Business Review, Vol. 81(12), pp. 46-
+Growth > Employee Engagement
+We believe that a higher revenue will have a positive impact on a
+company's work environment, thereby increasing employee
+pride and loyalty. This is also stated in a study of Harter et al.
+(2010), stating that improving financial performance appears to
+increase general satisfaction and some specific work
+perceptions.22
+Customer Loyalty > Growth
+Reichheld (2003) found a strong correlation between
+companies' Net Promoter Score results and their revenue
+growth rates. 23 We support this view as we believe that loyal SAP
+customers are likely to recommend SAP products to other
+companies, which is likely to result in increased sales and
+stronger revenue.
+Growth > Profitability
+Profit (or loss) is the total of income less expenses; if revenue as
+the main part of total income grows at a higher rate than costs, it
+will lead to greater profit.
+Profitability
+Profitability is one of our strategic objectives. We measure it
+through operating profit. Profit (or loss) is the total of income
+less expenses.
+BHCI > Profitability
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. Now we can show
+what a change by one percentage point of the BHCI would mean
+for SAP's operating profit, as detailed in the Documenting
+Financial Impact section.
+Employee Engagement > Profitability
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of employee engagement. Now
+we can show what a change by one percentage point of
+employee engagement would mean for SAP's operating profit,
+as detailed in the Documenting Financial Impact section.
+Profitability > Employee Engagement
+In our view, high profits, as great business news, can raise
+employee morale, encourage identification with our vision, and
+help increase employee engagement. On the other hand, we
+believe that a high profit expectation can also have a negative
+impact on employee engagement. If cost savings and budget
+cuts are implemented to reach an ambitious profit target,
+employees might feel constrained and dissatisfied.
+Studies show that companies with a high level of gender
+diversity outperform companies with an average level in terms
+of return on equity (11.4% versus an average 10.3%); operating
+results (EBIT 11.1% versus 5.8%); and stock price increases
+(64% versus 47% over the period 2005-2007) (McKinsey,
+2007). 24 It is therefore likely that a higher share of women in
+management positions will result in a higher profit for SAP.
+men%20matter/Women_matter_oct2007_english.ashx [Accessed 16 Dec. 2016].
+-
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+positioning material integrates
+economic, social, and
+environmental impact creation.
+We work extensively with
+academia through the SAP
+University Alliances program,
+providing students at more than
+3,100 universities with hands-on
+experience in working with SAP
+software and solutions.
+As with customers, we also
+gather partner feedback
+regularly through our "SAP
+Listens" customer and partner
+feedback program.
+Our sustainability advisory panel
+met in 2016 with SAP senior
+executives from the areas of
+strategy, solutions, finance, and
+administration, including Luka
+Mucic, our chief financial officer
+(CFO) and board sponsor for
+sustainability, and Michael
+Kleinemeier, member of the
+Executive Board. The group
+discussed the further integration
+of sustainability into SAP
+solutions, ways to support
+business transformations, and
+the key areas in which our
+digitalization strategy can play an
+especially important role in
+creating a sustainable future.
+Members of the sustainability
+advisory panel provided input
+into our materiality assessment
+and reviewed the results.
+228
+Additional Information on Economic, Environmental and Social Performance
+Stakeholder Engagement
+Business Conduct
+Championing Excellence in Business
+Conduct
+All too often we see the impact of poor business conduct in the
+wider business community. Corrupt and unethical practices
+irreparably damage brand reputations and lead to punitive
+financial penalties for the organizations involved. Such behavior
+undermines the rule of international law and is also linked to
+poverty and irreversible environmental damage across the
+globe.
+New fraud and corruption schemes are discovered all the time
+in an ever-changing business environment. Therefore, SAP
+must constantly adapt our approach to compliance to
+incorporate new best practices and meet new challenges.
+Establishing Clear and
+Comprehensive Standards
+We have developed a compliance management system for
+enforcing ethical business conduct. This includes detailed
+policies and procedures to ensure that SAP does business the
+right way.
+Audited regularly, the system encompasses all aspects of
+compliance management. From the analysis of compliance risks
+and defining objectives to running compliance programs as well
+as ongoing monitoring, this comprehensive framework enables
+us to maintain a responsible compliance organization.
+Fostering a Culture of Compliance
+To help foster a corporate culture where compliance is taken
+seriously, we needed to establish a common understanding of
+what we mean by compliance. We did this by creating a code of
+business conduct that summarizes our standards. The code
+contains guidelines for all SAP employees worldwide as they
+perform their daily work.
+-
+-
+Prohibition of bribery and corruption in all its forms, including
+facilitation or "grease payments"
+Gifts and business entertainment limits
+Full, fair, and accurate accounting
+We updated IT analysts on topics
+such as SAP HANA, enterprise
+applications, industry solutions,
+cloud solutions, ecosystem, and
+services. The latest industry
+Conflicts of interest
+Additional Information
+Our partners are also key to our growth, as they co-innovate
+solutions with us, and sell and implement solutions at customer
+sites. The spirit of cooperation and engagement is exemplified by
+the online SAP Community.
+advisory panel. We selected these groups as they are critical to
+our value creation.
+For the materiality assessment conducted in 2016, we
+specifically spoke to stakeholder representatives of academia,
+auditors, customers, employees, and investors. For the results
+of this dialog, see the Materiality section.
+Stakeholder Group
+Customers
+Employees
+Financial analysts
+and investors
+Governments
+How We Engage
+Our customer-facing organizations, such as sales, consulting,
+education, and support, have multiple touch points with customers
+on a daily basis. In addition to the sales engagement cycle, we
+engage customers through industry value networks, co-innovation
+projects, customer councils, and customer-organized user groups
+throughout the world. Our Customer Engagement Initiative provides
+early insight into SAP product planning, allowing our customers to
+influence and collaborate around our product development cycle.
+We also gather customer feedback regularly through our "SAP
+Listens" customer and partner feedback program.
+We survey employees annually, conducting pulse checks throughout
+the year.
+The Supervisory Board comprises 50% employee representation,
+and management regularly engages with employee works councils.
+In addition, the Executive Board answers employees' questions in
+all-hands meetings that take place every quarter. In quarterly coffee
+corner sessions, senior executives explain our strategy to
+employees and answer their questions directly. Through topic-
+related discussion blogs, executives engage regularly with
+employees, foster open discussion, and receive focused feedback
+globally.
+Our Investor Relations team and the Executive Board conduct one-
+to-one briefings with financial analysts and institutional investors, as
+well as hold investor road shows, quarterly earnings calls, a Capital
+Market Day, and the Annual General Meeting of Shareholders. Our
+Investor Relations team also engages with the sustainable
+investment community in close cooperation with the Sustainability
+team, and the Global Treasury team interacts regularly with debt
+investors.
+We advise certain governments and administrations worldwide on
+critical IT topics, such as digitalization, cloud computing, and Big
+Data, which play a key role in creating efficiencies and spurring
+economic growth.
+Additional Information
+For more information about our
+customer surveys, see the
+Customers section.
+For the results of our latest
+employee survey and action
+items resulting from it, see the
+Listening to Our Employees
+section.
+For more information about our
+dialog with investors, see the
+Investor Relations section.
+Additional Information on Economic, Environmental and Social Performance
+Stakeholder Engagement
+227
+Stakeholder Group
+Industry analysts
+Non-governmental
+organizations
+(NGOs) and
+academia
+Partners
+Sustainability
+advisory panel
+How We Engage
+Our Analyst Relations team, the Executive Board, and executives
+interact with IT analysts on a frequent basis.
+Our dialog with NGOs, not-for-profit organizations, and academic
+institutions helps us understand how we can help address today's
+most pressing issues with our solutions and what is expected from
+us as a corporation.
+Our sustainability advisory panel consists of expert representatives
+from our customers, investors, partners, NGOs, and academia.
+To be able to innovate, we regularly engage with the stakeholder
+groups described in the table below, including our sustainability
+Confidentiality
+Data protection and privacy rights
+229
+Our training program covers a wide range of topics around
+business conduct. These include guidelines on anti-corruption,
+competition law, governance for customer commitments,
+intellectual property, and information security.
+E-learning modules are available in nine different languages. In
+addition, our legal compliance and integrity office also holds
+classroom training sessions. Employees from across the SAP
+organization take part, from customer-facing staff to individuals
+in supporting roles such as corporate affairs and marketing. In
+addition, general compliance information on relevant policies is
+included in the onboarding sessions for new hired run by our HR
+organization.
+Communicating Our Standards
+Quarterly newsletters provide employees with information on a
+range of compliance-related topics. These communications
+include details of cases that have recently been highlighted in
+the media as well as presenting hypothetical scenarios that
+provide people with opportunities for self-reflection. In addition,
+the newsletters provide links to other relevant sources of
+information such as our whistleblower reporting system, legal
+compliance and integrity office, corporate audit department,
+and SAP global policies.
+We ask business ethics and compliance-related questions in our
+annual People Survey. Through the SAP Corporate Portal, we
+run company-wide polls on a variety of compliance-related
+questions throughout the year. In addition, employees can use
+the portal at any time for quick and easy access to all global
+policies along with guidelines and additional information.
+Colleagues within the legal compliance and integrity office carry
+out ongoing programs of calls and meetings to raise awareness
+of business conduct issues throughout the organization.
+Meanwhile, regular e-mail communications with subsidiaries
+and the availability of information in local languages help to
+promote leading standards of business conduct across every
+part of the SAP ecosystem.
+Analyzing Compliance Risk
+At SAP, we want to address issues before they become
+problems. For this reason, we believe that analysis of
+compliance risk is key to maintaining the highest standards of
+business conduct.
+On an ongoing basis, we review SAP business units for potential
+bribery or corruption. For example, in 2016, we collected
+quantitative data about 154 SAP entities supporting 142
+countries. This data includes revenue information, number of
+employees, percentage of public sector business, number of
+fraud allegations or incidents, changes or updates to relevant
+laws, and other quantitative information. Based on this
+information and management input, we determine a risk ranking
+for each country.
+Our assessment also helps us create a general risk profile for
+subsidiary locations. Through analysis of our quantitative data,
+we determine which countries require our highest attention.
+Our legal compliance and integrity office works closely with our
+global governance, risk, and compliance organization to identify
+areas where a risk assessment is needed. We then drive
+compliance mitigation programs if necessary. Generally, we find
+that our primary compliance risks are related to corruption,
+antitrust issues, export controls, and intellectual property. For
+more information, see our Risk Report section.
+Enforcing Policies
+SAP is committed to ensuring that our compliance policies are
+strictly enforced, and that any infringements are quickly flagged
+and acted upon. To achieve this, we have built an effective
+global network of compliance professionals who act as our
+ambassadors at country level for business conduct.
+The legal compliance and integrity office oversees the
+development of our code of business conduct, as well as all
+other related policies and our anti-corruption program. Global
+compliance officers are based at SAP headquarters and in our
+most important markets, especially where there are local
+language needs. In addition, compliance officers at local
+subsidiaries assess issues and escalate them to the global level
+if necessary.
+In addition to making regular reports to the CFO and the
+Executive Board, the chief global compliance officer provides at
+the least annual reports to the audit committee of the
+Supervisory Board. Matters of significance are brought to the
+attention of the Executive Board and the audit committee of the
+Supervisory Board when required.
+Employees at all levels of the organization are required to
+disclose conflicts of interest to the legal compliance and
+integrity office. Disclosures are then followed up with guidance
+or mitigation if necessary.
+Facilitating Reporting and
+Remediation
+If employees are concerned that our code of business conduct
+has been breached, or if they need advice on a compliance
+issue, they can access support in a number of ways. They can:
+-
+-
+Call our governance hotline at +49 6227 7-40022
+E-mail the legal compliance and integrity office at global-
+compliance-office@sap.com
+Contact with local compliance officers via e-mail or telephone
+Use the anonymous online whistleblower tool
+Employees can find information on how to report compliance
+issues in SAP Corporate Portal, and new hires are informed of
+reporting channels during the new hire process. External
+230
+Additional Information on Economic, Environmental and Social Performance
+Business Conduct
+Additional Information on Economic, Environmental and Social Performance
+Business Conduct
+Anti-competitive practices
+Approved by the Executive Board at SAP, the code sets the
+standard for our dealings with customers, partners,
+competitors, and vendors. It is adapted locally and translated
+into local languages.
+96
+Setting High Expectations Across All
+Business Activities
+SAP has established a number of policies to maintain the
+highest standards of business conduct including in the following
+areas:
+Regulation of the appointment and remuneration of sales
+agents
+Charitable and political donations
+Global intellectual property
+Group accounting and revenue recognition
+Segregation of duty
+- Export control and sanctions laws
+Data protection and privacy
+Additional policies or commitments related to sustainability are
+under the responsibility of the respective lines of business and
+can be found at sap.com.
+Providing Comprehensive Training
+A code of business conduct is only effective if everyone knows
+about it. That is why we strive to make sure all of our employees
+receive full training on the standards that we expect.
+In 2016, we introduced mandatory online training for all
+employees worldwide. In total, more than 79,200 employees
+(93% of SAP staff) received this training. Here is a full
+breakdown of our training activities is presented in the table
+below.
+Region
+Training sessions
+completed by
+employees, in %
+Training sessions
+completed by
+employees, in
+headcount
+Americas
+93
+22,882
+APJ
+89
+20,778
+Key areas covered by the code of business conduct include:
+EMEA
+35,578
+For SAP, stakeholder engagement and collaboration are deeply
+embedded into our process of innovation and the development
+of our products and services. Before we can design a new
+solution, we must first understand the issue we are addressing.
+For this reason, design thinking and co-innovation are essential.
+In our business, trust is everything. We know that to engage with
+SAP fully, our customers must first trust that our business
+practices adhere to the highest standards of compliance and
+integrity.
+Materiality
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+Total Energy Consumed > Profitability
+We have found that reduced energy consumption is strongly
+correlated with a reduction in costs. The thus achieved cost
+avoidance has a positive impact on our profit.
+Total Energy Consumed > GHG Footprint
+The emissions caused by SAP's energy consumption add
+directly to the corporate carbon footprint if they are not reduced
+through offsets or - for electricity consumption - renewable
+energy certificates (RECs).
+Additional Information on Economic, Environmental and Social Performance
+Connectivity of Financial and Non-Financial Indicators
+223
+Materiality
+Defining Key Priorities for Our
+Reporting
+By understanding which environmental, social, and governance
+issues are key priorities for our stakeholders, we are better able
+to allocate time, budget, and resources accordingly within our
+integrated reporting and efforts towards realizing our corporate
+vision. Based on our existing material aspects, in 2016, we
+completed a new materiality assessment to help identify and
+validate those topics which are the most relevant to our
+stakeholders such as employees, investors, and customers. The
+assessment also highlights those topics which contribute most
+to value creation both in our own operations and in those of our
+customers.
+Our new process combines the GRI G4 standards for
+sustainability reporting and the International Integrated
+Reporting Framework. Key stages are detailed below.
+Identification
+During this stage, we drew up a long list of potential topics based
+on guidance from GRI G4 and the Sustainability Accounting
+Standards Board (SASB), as well as our existing material
+aspects. We also considered a materiality assessment for the
+ICT industry by the Global E-Sustainability Initiative (GeSI) as
+well as the United Nations' Sustainable Development Goals
+(SDGs).
+When identifying our key topics and their boundaries, we looked
+first at areas related to our operations and supply chain. Second,
+we looked at topics related to how our software can help our
+customers contribute to the achievement of the SDGs.
+Prioritization
+During the prioritization stage we looked at the extent to which
+each individual topic affects our ability to create value at SAP.
+We assessed whether this value was financial, operational,
+strategic, reputational, or regulatory. All topics that were
+identified as delivering value in three or more areas were then
+included on our short list of seven categories, as follows:
+Business conduct
+Climate and energy
+Financial performance
+Human and digital rights
+Human capital
+Innovation
+Impact on society
+Next, we conducted semi-structured interviews with selected
+stakeholders to validate the shortlisted topics. We asked
+stakeholders to rate topics on a scale from 0 to 5 (where 0 is not
+important at all and 5 is very important) based on the following
+questions for the first six categories:
+To what degree does this topic influence SAP's ability to
+create value?
+How important is that topic for you to engage into a business
+relationship with SAP?
+To assess the category "impact on society," we asked
+stakeholders the following questions:
+How high is the potential of SAP to enable our customers to
+achieve the SDGs?
+How important is our ability to help achieve the SDGs for you
+to engage in a business relationship with SAP?
+We have included in our materiality matrix all topics with
+stakeholder ratings in the upper 50% for both questions.
+222
+Validation
+» Reichheld, F. (2003): The One Number You Need to Grow. In: Harvard Business Review, Vol. 81(12), pp. 46-
+PwC (2013): Busting the carbon budget - Low Carbon Economy Index 2013. Available at: https://www.pwc-
+wissen.de/pwc/de/shop/publikationen/Low+Carbon+Economy+Index+2013/?card=12994 [Accessed 16
+Dec. 2016].
+* Catalyst Information Center (2013): Why Diversity Matters. Available at:
+http://www.catalyst.org/system/files/why_diversity_matters_catalyst_0.pdf [Accessed 16 Dec. 2016].
+*Koys, D. (2001): The effects of employee satisfaction, organizational citizenship behavior, and turnover on
+organizational effectiveness: A unit-level, longitudinal study. In: Personnel Psychology, Vol. 54(1), pp. 101-114.
+221
+Women in Management > Customer Loyalty
+Diversity programs - including those focused on the promotion
+of women to management positions - have a direct and positive
+impact on customer satisfaction (Catalyst, 2013).25
+Employee Retention > Customer Loyalty
+Koys (2001) has found evidence that employee turnover has a
+negative impact on customer satisfaction. 26 We believe this
+effect stems from the fact that experienced employees work
+more efficiently, have better product knowledge, and can build
+trusting relationships with colleagues and customers, so
+therefore have the ability to better serve customers' needs.
+GHG Footprint > Customer Loyalty
+We believe that lowering SAP's carbon emissions has a positive
+reputational effect, thereby enhancing SAP's standing with its
+customers.
+Customer Loyalty > Growth
+Reichheld (2003) found a strong correlation between
+companies' Net Promoter Score results and their revenue
+growth rates.27 We support this view as we believe that loyal SAP
+customers are likely to recommend SAP products to other
+companies, which is likely to result in increased sales and
+stronger revenue.
+Customer Loyalty > Profitability
+We believe that positive experiences among our customers can
+significantly increase business with existing customers, as well
+as help attract new customers. Both results can lower the cost
+of sales, thereby increasing our profit.
+BHCI > Customer Loyalty
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the BHCI. We have been able to
+prove a significant positive correlation between the BHCI and
+customer loyalty.
+GHG Footprint
+Our GHG footprint is the sum of all greenhouse gas emissions
+measured and reported, including renewable energy and third-
+party reductions, for example, offsets.
+Stakeholder Engagement
+Many of SAP's GHG emissions are caused by business travel
+and commuting, which we believe can have both negative and
+positive impacts on employee health. Some people may
+experience greater stress from more travel because they have
+less time to spend at home, suffer from jetlag, or lose valuable
+working time; others may enjoy travel, enabling them to
+experience other places and cultures as well as meet new
+people.
+GHG Footprint > Employee Engagement
+We believe that lowering SAP's GHG footprint can have a
+positive impact on employee engagement because loyalty
+should rise as employees see their company act responsibly
+towards the environment. However, because lowering emissions
+also brings certain restrictions, such as on business travel, it
+may also have a negative impact on employee engagement.
+Employee Engagement > GHG Footprint
+We believe that engaged employees are likely to want to help
+SAP achieve our target in lowering GHG emissions. Yet another
+possible outcome is that a higher level of employee engagement
+may lead to more business activity requiring travel and therefore
+could lead to an increase in GHG emissions.
+GHG Footprint > Growth
+Lowering SAP's GHG footprint could have a positive impact on
+SAP's revenue because customers increasingly ask their
+suppliers to act sustainably. This reasoning is supported by a
+study by PwC (2013) confirming the existence of a positive
+correlation between a company's environmental performance
+and financial performance.28
+GHG Footprint > Customer Loyalty
+We believe that lowering SAP's carbon emissions has a positive
+effect on our reputation, thereby enhancing SAP's standing with
+our customers.
+Total Energy Consumed > GHG Footprint
+The emissions caused by SAP's energy consumption add
+directly to the corporate carbon footprint if they are not reduced
+through offsets or - for electricity consumption - renewable
+energy certificates (RECs).
+GHG Footprint > Profitability
+Since 2014, we have been using real data from SAP to analyze
+and prove the financial impact of the GHG footprint. Now we can
+show what a reduction of SAP's carbon emissions by one
+percentage would mean for SAP's operating profit, as detailed in
+the Documenting Financial Impact section.
+Total Energy Consumed
+Total energy consumed is the sum of all energy consumed
+through SAP's own operations, including energy from renewable
+sources.
+54.
+The results of the materiality analysis were reviewed and
+confirmed by our steering committee for integrated reporting
+and our sustainability advisory panel. It was also reviewed by our
+chief financial officer, who is the board sponsor for sustainability
+and integrated reporting.
+GHG Footprint > BHCI
+Feedback on and analysis of the SAP Integrated Report 2016 will
+serve as an input for future materiality assessments.
+■
+SDG 4 Quality education
+The climate and energy category had the lowest response
+rates. In response to this, we have reduced the volume of our
+reporting on this category. We have only included a short
+description of our environmental targets and our progress in
+achieving them.
+Understanding the Relevance of Our
+Business Conduct
+For more information, see the Business Conduct section.
+Climate and Energy
+For more information, see the Energy and Emissions section.
+Financial Performance
+Not only do we create financial value for SAP and our
+shareholders, we also create wealth for a broad range of
+stakeholders. We do this through employee wages and benefits,
+payments to our value chain and ecosystem, and tax payments
+to local governments and economies, for example.
+Human and Digital Rights
+For more information, see the Security and Privacy section and
+the Human Rights and Labor Standards section.
+Human Capital
+SDG 12 Responsible consumption and production
+Nothing has a greater impact on our long-term success than the
+creativity, talent, and commitment of our people. Their ability to
+innovate and understand the needs of our customers delivers
+sustainable value to our company and our society. Successful
+strategies to attract, retain, develop, lead, and engage our
+employees are therefore critical to driving a diverse culture of
+innovation, sustained growth, and profitability.
+We believe that digital technologies will enable companies and
+organizations to tackle some of the world's most complex,
+intractable problems. These include issues that are highlighted
+within the United Nations' 17 SDGs, such as abolishing poverty
+and reducing global carbon emissions. Through our solutions,
+we provide customers, partners, and consumers with the tools
+that help them make a difference. This may be through
+empowering those disadvantaged in society through financial
+services, providing personalized medicine, building
+infrastructure, or combating climate change.
+As well as creating positive impacts through our solutions, we
+are equipping young people all over the world with the skills they
+need to tackle society's problems and thrive in the digital
+economy. By engaging talent, leveraging technology, and
+building strong partnerships, we can build the workforce of the
+future.
+Innovation and Customer Loyalty
+To realize our vision of helping the world run better and
+Material and Other Reported Aspects improving people's lives, we help our customers operate more
+efficiently, protect the safety of their products, manage their
+employees, and become more effective overall. Our customers
+inspire everything we do, from the first spark of innovation to the
+Additional Information on Economic, Environmental and Social Performance
+Materiality
+225
+design and completion of new products, as well as to how we
+serve their needs over time. Innovation throughout the company
+helps us realize our vision and serve our customers' needs.
+Our future business success, specifically in the cloud business,
+depends on customer loyalty. We view customer loyalty as being
+so critical to our own success that we have made it one of our
+four company-wide strategic goals, in addition to employee
+engagement, growth, and profitability.
+Additional Information on Economic, Environmental and Social Performance
+226
+Review
+Impact on Society
+■
+Each of our material aspects has significant impact on the
+business success of SAP as described below.
+■
+224
+SDG 17 Global partnerships
+Additional Information on Economic, Environmental and Social Performance
+Materiality
+Results
+Very High
+High
+Human and
+digital rights
+Impact on
+society
+Business
+conduct
+Innovation
+Human capital
+Very High
+Importance to the business relationship with SAP
+SDG 3 Good health and well-being
+Influence on SAP's ability to create value
+(as an organization or through SAP solutions)
+SDG 8 Decent work and economic growth
+•
+SDG 13 Climate action
+"
+SDG 9 Industry, innovation, and infrastructure
+"
+Financial performance was seen as a mandatory part of
+reporting and was often not expressly discussed as a result.
+However, this category received high individual scores.
+The innovation, business conduct, and human capital
+categories received the highest scores and response rates.
+In evaluating our impact on society through the SAP portfolio,
+our stakeholders identified the following seven SDGs as
+material:
+-
+54.
+Materiality Matrix (in Addition to Financial Performance)
+•
+Upholding High Standards Across
+This innovative solution provides buyers with a command center
+that helps them monitor all relevant risk information. It also
+offers daily alerts and notifications to buyers based on their
+preferences. Sustainability risks covered by the solution include
+unethical practice, workplace discrimination, workplace safety
+neglect, the use of child labor, human trafficking, and
+environmental disasters such as oil spills and radioactive
+contamination.
+Minority Supplier Development U.K. (MSDUK)
+WeConnect International
+Our Supply Chain
+Today's digital networks help us connect with an increasing
+number of global suppliers, quickly and easily. However, with
+Additional Information on Economic, Environmental and Social Performance
+Sustainable Procurement
+237
+supply networks becoming more complex, companies face even
+greater challenges in ensuring their suppliers uphold high ethical
+standards.
+To help address this, we are developing an innovative SAP Ariba
+solution for supplier risk management that enables companies
+to identify and manage their response to a range of supplier-
+related risks. Our GPO is collaborating with the SAP Ariba
+product development teams to finalize and implement this cloud
+solution. With the SAP Ariba Supplier Risk Insights solution,
+organizations can establish due diligence, ongoing monitoring,
+and remediation processes to proactively address risks across
+the source-to-pay process and the full supplier base.
+e-waste recycled
+238
+We are also strengthening the enforceability of the code of
+conduct for suppliers and it is now an integral part of our
+standard contracts. It is also included in our global terms and
+conditions.
+Driving Innovative Sustainability
+Projects
+SAP works closely with suppliers to find new ways to make our
+supply chain more sustainable. We have a number of ongoing
+projects that minimize our impact on the environment in areas
+such as enterprise mobility, catering, office supplies, and SAP
+events.
+Our chief procurement officer and chief sustainability officer
+meet each quarter to discuss progress and challenges related to
+embedding sustainability in our procurement practices.
+Additional Information on Economic, Environmental and Social Performance
+Sustainable Procurement
+Waste and Water
+Demonstrating our commitment to supplier diversity, SAP
+became a corporate member of the following minority supplier
+organizations in 2016:
+160 tons
+3 kt
+In addition, our GPO worked on a pilot project with the SAP Ariba
+team and the Made in a Free World organization to identify the
+areas of greatest risk of forced and child labor in our supply
+chain. As part of this project, we requested information about
+our suppliers' supply chains and analysis of this data is helping
+us to pinpoint potential risk areas for further investigation.
+To address this, we developed a supplier diversity program this
+year. Driven by our Global Procurement Organization (GPO), the
+program is an integral part of our supplier management
+program. It strives to ensure that diverse businesses have a fair
+chance at competing for contracts and are treated equally with
+other SAP suppliers. Targeted to reach a 5% spend ratio for
+diversity suppliers in selected countries by 2020, the GPO will
+proactively involve diversity suppliers in selected categories in
+defined countries into our sourcing process.
+16%
+Promoting Supplier Diversity
+What We Buy and Where We Buy It
+From
+This year, we have looked at the way we recruit our supplier
+base in order to increase opportunities for a wide range of
+businesses to compete for supply of products and services to
+SAP. We have also engaged with our suppliers to define higher
+standards of conduct, and to encourage new thinking when it
+comes to sustainability.
+ca. 1.05 m m³
+At SAP, we consider our suppliers to be key partners in our
+business success. In 2016, we spent €4.8 billion in transactions
+with more nearly 19,000 suppliers worldwide.
+Suppliers by Category
+Percent of total spend
+Services and HR
+IT and Telecommunications
+18%
+Enterprise Mobility
+Marketing
+Facility and Office
+15%
+22%
+29%
+Supplier Locations by Region
+Percent of total spend
+APJ
+13%
+O
+Americas
+37%
+EMEA
+50%
+Including more diverse businesses - that is, minority enterprises
+defined by gender, ethnicity, disability, sexual orientation, age,
+religion, and other characteristics - into our supplier base has
+become a key priority for SAP. We believe that our commitment
+to an inclusive, bias-free culture in our workplace should be
+mirrored in our approach to our supplier base. In addition,
+through their flexibility and a high innovation potential, we
+believe that diverse businesses bring significant added value to
+SAP.
+municipal waste
+(non-recycled)
+SAP employees can access a printing dashboard that shows the
+company's progress in reducing paper consumption at global,
+regional, and country levels.
+Taking a Global Approach
+Changing Working Behavior
+We have also successfully changed working behavior to
+significantly reduce the amount of pages that our employees
+print. A secure pull-printing system requires that employees
+bring their ID badges to a printing device to activate a job. This
+makes people think about whether the printout is really needed.
+With more than 76,000 employees currently using this system,
+our printing volume has reduced by 15.4 million pages in total
+since 2014.
+Using Water Efficiently
+While our operations are not water-intensive, we continue to use
+water as efficiently as possible. As part of our efficiency efforts,
+we use rain and run-off water for irrigation and toilets in
+Walldorf, Germany, and other office locations.
+Global Water Usage
+Thousand cubic meters
+924.5
+1,269.0
+1,060.0
+1,049.0
+970.0
+2012
+2013
+2014
+2015
+2016
+A few of our offices are located in areas with significant water
+scarcity. In locations such as Ra'anana, Israel, or in Bangalore,
+we have been addressing this issue with dedicated water
+management efforts. These range from the reuse of treated
+sewage water to employee awareness campaigns.
+240
+Additional Information on Economic, Environmental and Social Performance
+A significant part of our social and environmental impact is
+delivered through our supply chain. That is why we work hard to
+find new ways to ensure that our procurement activities meet
+high sustainability standards.
+Waste and Water
+We reduced our paper usage by almost 30% since 2009
+through our global printing optimization initiative. Among other
+improvements, this sets printers to produce double-sided,
+black-and-white printouts as a default. This year we have also
+made significant advances in paperless contracting. By using
+the SAP Signature Management application from DocuSign to
+enable electronic signatures, we have been able to handle
+31,472 pages of contract, cutting down on paper contracts
+significantly.
+in water consumption
+239
+In 2016, we continued to roll out zero waste diversion programs
+at offices across the globe as part of our ISO 14001 program
+with specific targets to achieve and maintain landfill diversion at
+or above 90%. This approach focuses on eliminating the need to
+send waste to landfill, by changing processes or promoting the
+reuse of materials.
+Our waste and water strategy ensures that we minimize the
+impact SAP has on our environment. By promoting company-
+wide initiatives, we keep waste out of landfills and reduce the
+amount of water we use in locations worldwide. A global
+approach combined with local targets and initiatives ensures
+that we optimize our environmental performance.
+Taking steps to recycle our waste and save water also
+contributes to our business performance. Through ongoing
+initiatives at SAP sites, we reduce our operational costs while
+engaging our employees in our efforts.
+Managing Our E-Waste
+Our single largest source of waste comes from the data center
+servers, IT equipment, PCs, peripherals, and range of mobile
+devices that we use to develop our software. Our servers and IT
+equipment are either resold or recycled in an environmentally
+friendly manner depending on their condition. In 2016, we
+continued our engagement with one of the world's most
+sustainable companies as our e-waste disposal partner. This
+partner adheres to ISO 14001 standards and ensures that we
+have one uniform disposal process for e-waste. This way we
+were able to recycle 160 tons of e-waste this year. We plan to
+expand this recycling process for our servers to our Americas
+region in 2017.
+In addition, we support the reuse of “gently used" IT equipment
+internally through used-equipment shops in some country
+locations. A sustainable procurement program complements
+our waste reduction efforts by offering sustainably produced IT
+equipment. Besides e-waste, we estimate that we generated
+approximately 3 kilotons (kt) of waste in our offices, cafeterias,
+and product packaging worldwide in 2016. The vast decrease
+compared to 2015 stems primarily from adjusting our
+extrapolation factor which is used to calculate waste quantities
+from sites where actual data is not available.
+Municipal Waste (non-recycled)
+kilotons
+12
+12
+10
+18
+3
+2012
+2013
+2014
+2015
+2016
+Composting Food Waste
+SAP also runs comprehensive recycling programs for cafeterias
+at its sites worldwide. For example, we process leftover food
+from our headquarters in Walldorf, Germany, in an external
+composting plant.
+Our SAP Labs location in Bangalore, India, has installed an
+"organic waste converter." This recycles organic waste from
+cafeteria operations into odor-free, homogenized compost. Our
+cafeterias in Palo Alto, CA, and Newtown Square, PA, in the
+United States have comprehensive composting programs in
+place with the byproducts used to fertilize the on-site gardens.
+Cutting Down on Landfill Waste
+Additional Information on Economic, Environmental and Social Performance
+Waste and Water
+Making Our Supply Chain More
+Sustainable
+We measure the success of our initiatives through our annual
+People Survey. In 2016, 92% of our employees agreed with the
+statement "It is important for SAP to pursue sustainability"
+compared to 90% in 2015 and 77% in 2009. Furthermore, 82%
+of our employees stated, "I actively contribute to sustainability
+goals at SAP." This is up from 80% in 2015 and 46% in 2009.
+Additional Information on Economic, Environmental and Social Performance
+Human Rights and Labor Standards
+Managing Our Response to Our
+Led by our chief sustainability officer, a dedicated team
+responsible for our sustainability performance works to embed
+sustainability into our corporate strategy and promotes new
+sustainability initiatives across the organization. Our chief
+financial officer (CFO) is the sponsor for sustainability on the
+Executive Board and we also have a dedicated sustainability
+contact for each area of the business. These contacts are
+responsible for embedding sustainability in their business
+practices, for example, by setting relevant targets and
+implementing related programs. They are held accountable for
+their achievements in review meetings with the CFO and the
+chief sustainability officer that take place twice a year.
+To address this, we have integrated sustainability management
+efforts across our entire business.
+At SAP, we strive to promote sustainability in everything we do.
+We believe that it is not enough to simply have a sustainability
+strategy but that, instead, our overall corporate strategy must
+itself be sustainable. Only by achieving this can we fulfill our
+vision to help the world run better and improve people's lives.
+Putting Sustainability at the Heart of
+Our Strategy
+Management and Policies
+Sustainability
+231
+Business Conduct
+Additional Information on Economic, Environmental and Social Performance
+In addition, we are active in the Alliance for Integrity (Afln). Afln
+is a business-driven, multistakeholder initiative promoting
+economic integrity and compliance in business. It was initiated
+by a number of multinational companies, business associations,
+the German Federal Ministry for Economic Cooperation and
+Development (BMZ), the Society for International Cooperation
+(GIZ), the German Global Compact Network and sequa, a non-
+profit development organization. The focus of the initiative is on
+implementing collective action on the ground.
+SAP is proactively working in collaboration with the wider
+business community to fight against corruption and the
+negative impacts it creates. SAP is a member of the German
+chapter of Transparency International, a non-profit, non-
+partisan organization that combats corruption in government
+and international business and development.
+Taking a Proactive Stance Against
+Corruption
+All concerns are investigated, and remedial action is taken if
+necessary. This may include termination of employment.
+stakeholders without access to SAP Corporate Portal can find
+the hotline number and e-mail address on SAP.com. In addition,
+reporting channels are described in our codes of conduct for
+partners and suppliers. Most of these reporting mechanisms are
+available 24x7, and concerns are treated as confidentially as
+possible in light of subsequent investigation.
+Innovation and Customer Loyalty
+Our Customer Experience Council regularly reviews and
+prioritizes our activities related to driving improvements in
+customer experience. For more information about our customer
+loyalty goals, see the Customers section.
+As innovation happens everywhere at SAP, each Executive
+Board member is responsible for innovation in their area. For
+example, our Executive Board member responsible for products
+and innovation oversees our software innovation efforts. We
+have a team of development and solution management
+professionals who create SAP solutions specifically for
+sustainability. In addition, another team of experts designs and
+integrates sustainability into new or existing industry or line-of-
+business (LoB) solutions. For more information about our latest
+innovations, see the Products, Research & Development, and
+Services section.
+Changing Our Behavior and Culture
+In our efforts to become a more sustainable organization, SAP is
+focusing on two key areas: our processes and our people. To
+achieve our goals, we need to challenge behavior and find new
+ways of thinking.
+Our chief sustainability officer and their dedicated sustainability
+organization coordinate our response to climate change.
+Facilities management staff design and operate our facilities
+based on robust environmental standards. In addition, our IT
+operations personnel are continuously looking at issues around
+the working environment and the amount of energy consumed
+in our data centers. We assess our environmental performance
+in quarterly management reviews.
+The engagement of our employees is essential, as their ideas
+and commitment help drive change throughout SAP. SAP runs a
+number of programs to help employees understand how
+sustainability is connected to our vision to help the world run
+better and improve people's lives.
+This year, we continued to roll out our global environmental
+management system based on the ISO 14001 standard. We plan
+that the system will cover operations affecting about 70% of
+employees globally by 2018. At the end of 2016, 46 sites in 26
+countries (49% of employees) have implemented ISO 14001.
+Financial Performance
+Sustainable Procurement
+There is a global governance committee that guides the
+strategic direction of our overall CSR strategy. In addition, every
+SAP region has a CSR governance committee that approves all
+major CSR partnerships, as well as advising the regional CSR
+leadership. On a group level, we ensure that donations are made
+in an appropriate manner through financial and compliance
+control processes. Led by our head of global CSR, our global
+CSR team is part of the Office of the CEO and corporate affairs
+organization. To ensure meaningful and relevant execution of
+our companywide CSR strategy, we appoint a regional CSR lead
+for each of our six major SAP market units.
+Our global CSR policy offers all SAP employees the opportunity
+to volunteer for up to eight working hours at a CSR event. In
+2016, our goal was to impact 1.5 million lives through our global
+CSR programs. We set a target of 250,000 volunteering hours,
+with 40% based on skills and professional expertise. We
+overachieved these targets with almost 339,000 volunteering
+hours (thereof 57% skills-based) and about 3.2 million lives
+impacted.
+Our contribution to the SDGs is coordinated by our corporate
+strategy, sustainability, and marketing professionals and teams.
+We have started to map our existing engagement with
+customers to the SDGs in the How Our Vision Comes to Life
+brochure.
+This aspect covers two key areas. The first is the contribution we
+make towards the fulfilment of the United Nations Sustainable
+Development Goals (SDGs) through our software solutions and
+our social investments. The second is our efforts to make the
+world a better place through our corporate social responsibility
+(CSR) programs.
+Impact on Society
+For more information about our management approach, see the
+Employees and Social Investment section.
+goals and our "how we run" philosophy by helping employees
+flourish in an inclusive and authentic working environment.
+Additional Information on Economic, Environmental and Social Performance
+Sustainability Management and Policies
+The diversity and inclusion policy provides a framework for
+diversity and inclusion at SAP. As such, it supports our business
+Our key policies include a global health and safety management
+policy and a diversity and inclusion policy. The global health and
+safety management policy is an integral part of our long-term
+commitment to sustainability. It provides a framework that
+supports business processes, leadership behavior, and culture
+by addressing, integrating, and leveraging health, occupational
+safety, well-being, and stress management topics. The objective
+is to nurture our employees' long-term employability,
+engagement, and creativity in developing sustainable value for
+our organization, for our customers, and for themselves.
+Overall global responsibility for our human resources strategy
+lies with our chief human resources officer who is a member of
+the Executive Board.
+Our global environmental policy promotes a more productive
+use of resources by providing transparency in environmental
+issues, driving efficiency, and leveraging transformational
+strategies. It also outlines our environmental goals that are
+described in the Energy and Emissions section.
+Climate and Energy
+For information about our management approach, see the
+Business Conduct section.
+Business Conduct
+SAP has dedicated personnel addressing the material aspects
+identified in our materiality analysis with staff remuneration
+linked to each aspect. For each topic, we look at ways that we
+can manage our response, and how we can evaluate whether
+our approach is effective.
+Material and Other Reported Aspects Human Capital
+For information about our management approach, see the
+Security and Privacy section and the Human Rights section.
+Human and Digital Rights
+The Executive Board retains ultimate responsibility for revenue
+growth, profitability, and the financial stability of SAP. For more
+information, see the Corporate Governance Report section and
+the Report by the Supervisory Board section.
+All of our major CSR programs are monitored for social impact.
+For example, in our global SAP Social Sabbatical program, we
+survey the non-profit organization or social business involved to
+determine whether our team has met the agreed deliverables.
+To capture long-term impact, the evaluation is also repeated six
+months after our team's departure. As with every volunteering
+initiative, we adjust our CSR offerings according to the feedback
+we receive. For more information, see the Engaging in Social
+Investments section.
+In 2016, we encouraged open dialog through coffee corner
+sessions, virtual all-hands meetings, and social media. During
+these sessions, employees also heard about specific customer
+impact stories and role models within the SAP organization. In
+addition, SAP now includes sustainability in its onboarding
+training for new hires as well as management training.
+232
+Focusing on Transparency and Building
+Awareness
+our standards and to check internal compliance with this policy.
+In 2016, we conducted a labor audit at our SAP India and SAP
+Labs India locations in Bangalore. There were no material
+findings within the audit. However, areas for improvement were
+identified and include improvement of security escorts,
+comprehensive distribution of access cards, as well as
+improvement in air-conditioning.
+Respecting the Rights of Our
+Employees
+We have a long-standing policy of nondiscrimination in our
+dealings with employees and provide training on human rights
+issues that are most relevant to our business. These include
+security, privacy, and antidiscrimination.
+We encourage any employees who feel they are subjected to
+conduct that violates our antidiscrimination policies to report it.
+They can reach out confidentially to their managers, HR officers,
+a compliance office, or colleagues who are trained to be part of
+our internal mediation pool.
+In addition, our global ombudsperson investigates employee
+complaints and mediates fair settlements. The ombudsperson
+also helps the Executive Board analyze HR-related complaints
+and consider ways to address potential issues before they
+occur.
+Further Measures to Ensuring Fair
+Labor Practices
+At SAP, we strive for constructive labor relations across the
+world, working within each country's requirements. We currently
+have works councils in place in Belgium, Germany, Ireland, Italy,
+the Netherlands, Slovenia, Spain, and the United Kingdom. In
+addition, we have a European works council that represents
+employees from all SAP subsidiaries in Europe.
+These councils consist of both elected union members and non-
+union members, and are consulted by SAP management on
+topics that define the work environment and work processes.
+These include HR initiatives, talent development, payment and
+benefits, equal opportunities, changes in work or IT processes,
+privacy protection, and health and safety protection.
+Collective bargaining agreements with unions are only made in
+countries where legally required. Overall, about 50% of
+Additional Information on Economic, Environmental and Social Performance
+Human Rights and Labor Standards
+235
+employees are represented by works councils, an independent
+trade union, or are covered by collective bargaining agreements.
+Maintaining High Standards Across
+Our Supply Chain
+We expect all of our business partners to respect human rights
+and to avoid complicity in human rights abuses. Our codes of
+conduct for suppliers and partners require them to uphold labor
+rights and to provide a safe and healthy work environment for all
+employees.
+We work collaboratively with our suppliers and partners on the
+implementation of these codes. In addition, we may carry out
+on-site audits to assess performance.
+Throughout Our Product Lifecycle
+As a business software company, we are committed to
+respecting and protecting human rights throughout the lifecycle
+of our products - from design through development to use. We
+develop innovative solutions that help customers embed human
+rights standards into their business and supply chain strategies.
+We also develop solutions that help to advance human rights in
+areas such as healthcare, education, and public services. For
+example, our healthcare solution SAP Medical Research Insights
+delivers software that addresses the areas of patient care,
+cancer research and cancer prevention.
+When designing any solution, our development teams ensure
+that the product complies with human rights standards. For
+example, accessibility is a key area of focus and we follow Web
+content accessibility guidelines such as Section 508 to ensure
+inclusive design in all our software.
+The protection of personal information is another key area of
+focus for our development teams. To help ensure that our
+products enable our customers to respect digital rights, we
+adhere to robust privacy and security standards. These are
+defined in our global product development, quality, product
+standards, and data protection and privacy policies.
+We also keep our employees updated on global trends such as
+the ratification of the SDGs in 2016. Employees can explore how
+SAP contributes to the SDGs through our customers and our
+own operations through the new interactive Web book SAP and
+the UN Global Goals and a related iPad app, as well as the online
+course "Sustainability Through Digital Transformation."
+236
+To assess our human rights measures, we consider external
+benchmarks, performance ratings, audit results, and
+stakeholder feedback. In addition, since 2012, we conduct
+regular internal audits to verify that our subsidiaries adhere to
+Our sustainability organization is responsible for making sure
+that we fulfil our human rights commitments across the
+business. The team works with colleagues from human
+resources (HR), procurement, and product development to
+manage an integrated approach.
+Respecting Human Rights
+Our commitment statement applies to all our operations and
+subsidiaries globally and is reviewed on a regular basis. It also
+contains references to our other guidelines such as health and
+safety management, and data protection and privacy.
+Enforcing Our Standards
+Change starts with transparency and awareness. Since 2016,
+our Executive and Supervisory Boards have access to our own
+SAP Digital Boardroom solution. It provides access to key
+financial and non-financial data, including human capital
+indicators, that gives a holistic and detailed overview of our
+performance.
+Additional Information on Economic, Environmental and Social Performance
+Sustainability Management and Policies
+233
+In addition, every employee can access a dashboard detailing
+our environmental and social performance. For example, data
+on employee retention and women in management helps create
+transparency on the social performance of our company. The
+My SAP Footprint app also provides employees with statistics
+Nurturing a Network of Sustainability
+Champions
+While sustainability requires strong leadership, it cannot be
+mandated from the top. To help drive progress with
+sustainability initiatives, we need the support of employees in
+every part of SAP.
+To address this, we have a global internal network of more than
+100 sustainability champions who represent different regions
+and lines of business at SAP. They dedicate 10% of their work
+time to promoting sustainability. Not only do they act as role
+models, but they also tailor sustainability to local and LoB needs
+and interests as well as share best practices.
+234
+about their personal impact through activities such as driving a
+company car or using electronic equipment.
+Sustainability Management and Policies
+Additional Information on Economic, Environmental and Social Performance
+Making a Commitment
+By integrating human rights considerations into our standard
+business practices, we also support the values of the Universal
+Declaration of Human Rights, the OECD Guidelines for
+Multinational Enterprises, and the International Labor
+Organization Declaration on Fundamental Principles and Rights
+at Work. To ensure that our commitment to human rights
+translates into practice, we take guidance from the United
+Nations "Protect, Respect and Remedy" framework.
+At SAP, we believe that we have a responsibility to respect
+human rights throughout all our business operations. Upholding
+high labor standards supports diversity and helps us to attract
+and keep top talent. Providing fair, ethical conditions for our
+employees also results in greater innovation and productivity.
+SAP is a signatory of the United Nations Global Compact. This is
+a voluntary undertaking to align our strategies and operations
+with universal principles on human rights, labor, the
+environment, and anticorruption.
+Upholding High Standards
+Standards
+Human Rights and Labor
+The SAP Global Human Rights Commitment Statement details
+our response to the international standards mentioned above.
+Based on the SAP Code of Business Conduct and approved by
+our Executive Board, the statement focuses on three main
+areas: our employees, our ecosystem of partners and suppliers,
+and our solutions.
+Indirect emissions from
+supply chain or services
+Waste
+disposal
+Emissions from purchased
+energy/utilities
+External
+reductions
+General Information About
+Environmental Non-Financial
+Indicators
+Scope 3
+Scope 2
+Production
+RECS
+PCFs
+of purchased
+materials
+Product
+use
+Outsourced
+activities
+Contractor-
+owned vehicles
+Employee
+business travel
+Scope 3
+lindirect
+Offsets
+Boundaries
+Reporting Principles
+Environmental Indicators
+To support the growing demand for SAP's cloud offerings, we
+subcontract computation power in local third-party data
+centers. Carbon emissions are approximated and included
+based on the consumed computation power.
+for own use
+In most instances, however, SAP has 100% ownership of our
+subsidiaries. Accordingly, the difference between applying the
+control versus the equity approach is about 0.6% based on SAP
+revenue. If additional investments in associates were included,
+the difference would be even smaller, about 0.5%.
+247
+Additional Information on Economic, Environmental and Social Performance
+Non-Financial Notes: Environmental Performance
+A portion of SAP's leased facilities operates under full-service or
+multitenant leases, where the building owner or manager pays
+for the utilities directly and SAP does not have access to actual
+energy consumption information. SAP includes these facilities in
+our definition of operational control and accounts for them by
+estimating related energy consumption.
+Operational control is established when SAP has the full
+authority to introduce and implement its operating policies. The
+emissions of all operations over which the company has
+operational control and all owned, leased facilities, co-location
+data centers, and vehicles that the company occupies or
+operates are accounted for in the GHG footprint, being based on
+either measurements or, where no measured data is available,
+on estimations and extrapolations.
+SAP defines our organizational boundaries by applying the
+operational control approach as set out in the GHG Protocol.
+Organizational Boundaries
+In 2016 we updated our emissions and extrapolation factors for
+the categories stationary combustion facilities, corporate cars,
+corporate jets, business flights, rental cars, train travel, business
+trips with private cars, employee commuting as well as paper
+consumption, leading to a 10% downward impact on SAP's 2016
+gross CO2 emissions.
+SAP reports our net greenhouse gas emissions according to the
+GHG Protocol Scope 2 and the location-based method. The
+recently introduced market-based method is an amendment to
+the GHG Protocol Scope 2 and will be considered starting 2017.
+For 2016 we continue to apply the location-based emissions
+instead of a dual reporting (location and market based).
+We define the GHG footprint or carbon footprint as the sum of all
+greenhouse gas emissions measured and reported for SAP,
+including the compensation with renewable energy or offsets.
+SAP's preparation of the GHG footprint is based on the
+Corporate Accounting and Reporting Standard (Scope 1 and 2)
+and the Corporate Value Chain (Scope 3) Standard of the World
+Resources Institute/World Business Council for Sustainable
+Development. This approach conforms with the requirements of
+GRI G4 indicators EN3, EN4, EN15, EN16, and EN17.
+Greenhouse Gas Footprint
+The indicators greenhouse gas emissions per employee and
+total energy consumed per employee are calculated on the basis
+of an average number of employees. This average is calculated
+by adding the FTEs at the end of each quarter and then dividing
+the result by four.
+All numbers are based on the metric system. Whenever we state
+"tons," we mean metric tons.
+Reporting on total energy consumed, data center energy, and
+renewable energy is based on the data collected for the
+calculation of our greenhouse gas (GHG) footprint. Therefore,
+the same reporting principles apply as for the GHG footprint.
+Data for our environmental indicators is collected and reported
+on a quarterly basis and is subject to external assurance for
+annual reporting.
+Our boundaries take two different perspectives: SAP as a
+company, which includes all our legal entities and operations
+and supply chain, and SAP as a solution provider enabling our
+customers. These boundaries are listed in detail in the GRI G4
+Content Index.
+Purchased electricity
+Upstream Emissions (Scope 3)
+Scope 2
+Our purchased electricity powers everything from our data
+centers to our buildings throughout the world. Whenever we
+Indirect Emissions (Scope 2)
+Consumption of fuel for our company cars remains the single
+greatest contributor to our Scope 1 emissions. In 2016, we
+continued to enhance our car policy by linking emissions caps to
+efficiency improvements of the automotive industry. In addition,
+we focused on greater shifts in commuting habits. We continued
+the global rollout of TwoGo by SAP, our car-sharing solution,
+which is now available in 110 SAP locations worldwide. To
+increase the scale and attractiveness of TwoGo, we make the
+solution available to the public free of charge. As part of our
+initiative to increase the proportion of electric vehicles in our car
+fleet to 20% by 2020, we continue to offer incentives to our
+employees to purchase electrical cars. As an example of
+additional transportation alternatives for our employees, we
+established a company bike program in Germany, where
+employees have the opportunity to select between using a
+bicycle or a company car to commute to work. A further
+commuting alternative to a company car in Germany is
+participation in a national reduced train fare program called
+"BahnCard 100."
+Direct Emissions (Scope 1)
+Our gross carbon footprint for 2016 was 682 kilotons CO2e (704
+kilotons CO2e in 2015). Our gross carbon footprint includes all
+GHG emission categories in Scope 1, 2, as well as selected
+categories of 3 as outlined in figure 1. Our net carbon footprint is
+calculated by reducing purchased renewable energy certificates
+and carbon offsets from our gross carbon footprint in the
+respective reporting period.
+A Detailed View of Our Emissions
+We look at our energy usage and emissions throughout our
+entire value chain, gaining insights to help us manage our
+environmental performance and, in turn, help our customers do
+the same. The activities and trends behind our results for 2016
+are detailed below. This includes information about the areas in
+which we consume the most purchased electricity, as well as the
+impact caused by the use of our products.
+Performance
+refer to our green cloud, we mean our cloud is carbon neutral
+due to purchasing 100% renewable electricity certificates and
+compensation by offsets, at SAP. We continued a wide range of
+efficiency projects to reduce our energy usage, including facility
+upgrades and new LEED certifications. We also expanded the
+management of our environmental performance through ISO
+14001.
+Environmental
+245
+Non-Financial Notes: Social Performance
+Additional Information on Economic, Environmental and Social Performance
+Our Customer NPS accounting policy helps ensure that SAP
+achieves a trustworthy consolidated NPS for our on-premise
+and cloud-based services.
+In 2015, customers who purchased SAP Hybris and Concur
+solutions were included for the first time; in 2016, we also added
+customers of Fieldglass and Ariba to our global process. As we
+further harmonize processes in acquired entities, the customer
+segments used for customer surveys has not yet been
+completely harmonized across the SAP Group. Specifically, due
+to the nature of the business, the Concur customer sample
+includes a higher proportion of general business customers in
+comparison to other Group entities. As a result, Concur
+responses make up a large proportion of the total customer
+sample.
+Methodology
+We aim to include at least 70% of all eligible direct customers
+from all regions and industries in the annual survey. From each
+company, multiple roles (decision makers, influencers, end
+users) are invited to provide feedback. In 2016, approximately
+29% of invited customers (accounts) participated in the survey.
+Non-Financial Notes:
+We are one of the global corporations that have signed on to the
+RE100 initiative. Led by The Climate Group in partnership with
+CDP (formerly Carbon Disclosure Project), the goal of the RE100
+campaign is to have 100 of the world's most influential
+businesses committed to 100% renewable electricity.
+Only selected upstream emissions such as business flights,
+paper consumption, and co-locations of data centers are
+directly measured and hence included in our corporate target.
+The additional upstream emissions products and services or
+grey energy of our buildings are based on an estimate. Together,
+our upstream emissions including these estimates are
+responsible for about 15% of SAP's total carbon footprint.
+As it is expected that the emissions from external data centers
+(co-locations) will continue to grow in the future, SAP
+committed to a green cloud strategy, to compensate the
+emissions with renewable electricity certificates.
+HFCs
+N₂O
+CHA
+SF6
+on-site sources
+Scope 1
+Emissions from direct
+Fuel combustion
+Company-owned
+vehicles
+Scope 1
+direct
+CO₂
+We continued offsetting carbon emissions for business flights in
+2016. In addition to avoiding overall business flights, we began
+to offset selected business flights in the second half of 2015.
+This offset effort resulted in a compensation of 90 kilotons of
+CO₂e in 2016.
+Our investment in Livelihoods Funds has provided us with 21
+kilotons of high-quality carbon credits, which we used to
+compensate Scope 3 emissions in 2016.
+Offsets
+Additional Information on Economic, Environmental and Social Performance
+Non-Financial Notes: Environmental Performance
+246
+The vast majority of our overall emissions stem from the use of
+our software. When SAP software runs on our customers'
+hardware and on their premises, the resulting carbon footprint is
+about 20 times the size of our own net carbon footprint. Given
+that we cannot control our customers' IT landscapes because
+they usually contain many elements not related to SAP software,
+we share this responsibility with others.
+Downstream Emissions (Scope 3)
+indirect
+We are reporting all our GHG emissions in CO2 equivalents
+(CO2e), including the impact from CH4, N2O, and HFCs in our
+Scope 1 and 2 emissions. As SF6 and PFCs mainly occur in
+chemical processes, they are not relevant for us.
+CO2 Emission Factors
+Scope 1
+We define renewable energy as electricity coming from
+renewable energy sources such as wind, solar, hydro, and
+geothermal. The shares of renewable energy used by SAP are
+calculated by adding the amount of renewable energy
+specifically sourced, produced onsite by our own solar cells, and
+covered by Renewable Energy Certificates (RECs). We have
+developed a quality standard that defines key criteria for the
+procurement of RECs to drive change in the electricity market
+and to avoid the risk caused by low-quality products. The key
+characteristics of our renewable energy purchasing guidelines
+are as follows:
+Renewable Energy
+If a significant error is found in the base year inventory, it will be
+corrected. If a significant error is found which does not affect the
+base year but has an impact on this year's or last year's
+emissions, it will be corrected. An error is significant if it affects
+SAP's gross carbon footprint by more than 1%. No restatement
+due to error correction of historical data was necessary in 2016.
+Error Correction
+249
+Non-Financial Notes: Environmental Performance
+Additional Information on Economic, Environmental and Social Performance
+-
+Additionally, we annually measure the cumulative cost
+avoidance of our carbon emissions, compared to a business-as-
+usual scenario. In 2015, we introduced a cumulative cost
+avoidance calculation based on a triennial rolling method. This
+leads to additional comparability and we will continue to
+calculate our cumulative cost avoidance with the triennial rolling
+approach.
+Comparability
+Where relevant, our CO2 emission factors consider all CO2
+equivalents (CO2e) for all greenhouse gases. Global Warming
+Potential factors are based on the Fifth Assessment Report of
+the Intergovernmental Panel on Climate Change (IPCC).
+The calculation of the above emissions is based on factors for
+conversion and extrapolation provided, among others, by IEA,
+WRI, US EPA, UK DEFRA, DEHSt, Environment Canada, GHG
+Protocol, and SAP's own measurements.
+A requirement for offsets is that the minimum standard
+(Voluntary Carbon Standard, or VCS) is applied. In 2016, our
+strategic investment in the Livelihoods Funds has provided us
+with 21 kilotons of offsets which are included in our overall net
+carbon footprint.
+■ Verifiable: The GHG reductions will result from projects
+whose performance can be readily and accurately
+quantified, monitored, and verified.
+Real: The quantified GHG reductions will represent actual
+emission reductions that have already occurred.
+Additional: The GHG reductions will be surplus to
+regulation and beyond what would have happened in the
+absence of the project or in a business-as-usual scenario
+based on a performance standard methodology.
+Permanent: The GHG reductions will be permanent or
+have guarantees to ensure that any losses are replaced in
+the future.
+•
+SAP uses a significance threshold of 5% for structural or
+organizational changes and 1% for methodology changes of
+total current year emissions. A structural or organizational
+change that increases or decreases the total inventory by 5% or
+more will trigger an adjustment of historic years. A structural or
+organizational change that increases or decreases the total
+inventory by less than 5% will be considered insignificant and
+thus no adjustment will be made.
+-
+Type of renewable electricity: SAP considers solar, wind,
+biogas, geothermal, and hydro power as renewable
+electricity.
+Installation: The power plant producing the renewable
+energy shall not be older than 10 years. In case of a
+renovation of an old power plant, the 10-year rule applies only
+to the additional electricity output due to efficiency increase.
+Furthermore, SAP does not consider RECs from government
+supported power plants.
+included in the calculation. The NPS can range from -100% to
+100%.
+Additional Information on Economic, Environmental and Social Performance
+250
+By waste, we mean non-recyclable waste produced in our offices
+and data centers. Data on municipal waste was provided
+(estimated) for about 50% of the total space.
+Waste
+By water, we mean total freshwater withdrawn for our facilities.
+Data is based on estimations from sites and is largely
+extrapolated. Data was provided (estimated) for 60% of the
+total space; remaining data is extrapolated based on square
+meter footage.
+Water
+We define total energy consumed as the sum of all energy
+consumed through SAP-own operations, including energy from
+renewable sources. It is calculated based on the consumption
+data obtained through our measurements for the GHG footprint
+and is the sum of energy consumption from stationary
+combustion facilities, mobile combustion corporate cars, mobile
+combustion corporate jets, electricity offices, electricity data
+centers, and purchased chilled water, purchased hot water, and
+purchased steam.
+Total Energy Consumed
+We will continuously improve data quality of energy
+consumption of external data centers.
+Data center energy consumption per euro is calculated by
+dividing the electricity consumption of all internal and external
+data centers measured for the calculation of our GHG footprint.
+(location with any number of server units) that is part of our
+global IT infrastructure strategy. In 2016, we continued
+analyzing and reporting internal and external data center energy
+consumption intensity against our non-IFRS revenue.
+We define data center energy as the sum of electricity
+consumed to provide internal and external computation power
+in SAP data centers and contracted third party data centers. A
+data center is any global, regional, or local computing center
+Data Center Energy
+All energy outside the aforementioned categories falls within
+conventional energy. We define conventional energy as
+electricity coming from the standard electricity grid. The
+electricity grid provides a country-specific energy mix including
+all available sources, either fossil, nuclear, or renewable. Energy
+from renewable sources as part of the local grid is calculated as
+conventional energy and not displayed as part of renewable
+energy.
+Accounting: To calculate the carbon reduction achieved by
+the RECS, SAP will use the grid-specific emissions factor. As
+RECs are considered independently to the electricity
+delivered physically to our facilities, the carbon reduction
+achieved through their procurement can be allocated to any
+location globally.
+Vintage: The renewable electricity must be produced in the
+same year or the year before with regard to the reporting
+period it will be applied.
+"
+Offsets: Purchased offsets are reported separately based on
+the carbon reduction amount purchased. SAP ensures that
+the GHG emission reductions from offsets are credible and
+that they meet four key accounting principles:
+electricity; data is only valid with an official certificate or
+written confirmation of the electricity supplier (100% data
+coverage).
+-
+Business Flights: Average emission factors for business
+flights are calculated based on short, medium, and long-haul
+flights; extrapolation of CO2 is based on the actual distance
+travelled and the net (excluding tax) costs (55% data
+coverage), emission factors for business flights do not
+consider the radiative forcing factors.
+-
+The following scope 3 GHG emissions are included in our
+corporate GHG target:
+Scope 3
+Purchased Chilled and Hot Water, Steam: Inclusion of CH4
+and N2O based on global emission grid factors (45% data
+coverage).
+Electricity Data Centers: Updated CO2 conversion factors
+and inclusion of CH4 and N2O based on country specific grid
+factors; electricity consumption for internal data centers is
+extrapolated based on the number of server units (80% data
+coverage). The stable values are based on SAP's 2015 carbon
+footprint data.
+Electricity Office: Updated CO2 conversion factors and
+inclusion of CH4 and N2O based on country specific grid
+factors; stable values (kWh/m²) instead of actual average
+consumption are used for the extrapolation of buildings
+where no measured data is available (70% data coverage).
+The stable values are based on SAP's 2015 carbon footprint
+data.
+-
+Scope 2
+Mobile Combustion Corporate Jets: Inclusion of CH4 and
+N20 (100% data coverage)
+Refrigerants Corporate Cars: Refrigerant emissions are
+based on a rough estimate of HFC emissions per car and are
+extrapolated based on the number of corporate cars reported
+(0% measured data).
+Mobile Combustion Corporate Cars: Inclusion of CH4 and
+N20; in 2016, 31 countries reported actual fuel data (90%
+data coverage); for other countries stable values (liters/car)
+are used for extrapolation based on the number of corporate
+cars reported. The stable values for extrapolation are based
+on SAP's 2015 carbon footprint data.
+Refrigerants Facilities: Refrigerant data is reported for
+completeness of our carbon footprint, but HFC emissions are
+fully estimated (0% measured data) based on the number of
+server units and office space with an A/C system; all
+refrigerants are assumed to be HFC134a.
+Stationary Combustion Facilities: Inclusion of CH4 and
+N20; stable values (kWh/m²) instead of actual average
+consumption are used for extrapolation of buildings where no
+measured data is available (60% measured data). In cases
+where no specific information is available, natural gas
+reported by local sites is assumed to be reported in Lower
+Heating Value.
+-
+-
+-
+Rental Cars: Average emission factors from rental cars are
+calculated based on actual distance traveled and these
+factors are used for extrapolation based on the costs (90%
+data coverage).
+Below you will find the different parameters contributing to our
+carbon footprint:
+Train Travel: Average emission factors from train travel are
+calculated based on an actual distance traveled and these
+factors are used for extrapolation based on the costs (30%
+data coverage).
+Business Trips with Private Cars: Carbon calculation is
+based on distance traveled with a private car, extrapolation is
+based on FTE. Train and company car trips are excluded from
+this activity type (60% data coverage).
+Renewable Electricity: Purchased renewable electricity is
+already deducted from our Scope 2 emissions in the net
+carbon footprint; CO2, CH4, and N2O conversions are based
+on grid specific factors from the origin of renewable
+External Reduction
+Not included: Upstream Transportation and Distribution (due to
+data complexity and de minimis); Upstream Leased Assets (not
+applicable); Processing of Sold Products (not applicable); End-
+of-Life Treatment of Sold Products (not applicable);
+Downstream Leased Assets (not applicable); Franchises (not
+applicable); and Investments (not applicable).
+Use of Sold Products: Resource need per year is determined
+using a landscape simulation. It is extrapolated globally based
+on the number of productive installations and power usage
+effectiveness (PUE). We use a PUE factor of 1.9, representing
+a commonly used global average. Emissions are calculated
+using a global electricity emission factor. Due to the special
+characteristics of software products, an assessment of
+resource need per year was chosen. This deviates from the
+minimum boundaries as defined by the GHG Protocol's
+Corporate Value Chain (Scope 3) Accounting and Reporting
+Standard, which requires assessment and disclosure of
+"direct use-phase emissions of sold products over their
+expected lifetime." The calculation covers all of our major
+solutions, including on-premise software. Cloud solutions are
+not included, as they are part of our Scope 2 emissions.
+Mobile solutions (e.g. SAP apps running on customer IT
+equipment) are also not included. Calculation parameters will
+be adapted when significant technology changes occur.
+-
+Downstream
+Due to the link of our upstream emissions to operating
+expenses, for 2016, we extrapolated our upstream figures by
+multiplying our four key contributors to our upstream emissions
+from 2015 with the year-over-year increase of operating
+expenses between 2015 and 2016.
+Upstream
+Additionally, we annually measure and publish the following
+Scope 3 GHG emissions based on the GHG Protocol's Corporate
+Value Chain (Scope 3) Accounting and Reporting Standard.
+These GHG emissions are not included in our corporate target
+and are meant to be for indicative purpose only.
+An external data center is a local computing center with server
+units running SAP software that is operated by an external
+partner. Those emissions are classified as Scope 3. SAP-owned
+and SAP-managed data centers, coming from acquisitions are
+classified as Scope 2 GHG emissions.
+the consumption of printing paper is based on printer tracker
+data (100% data coverage).
+Paper Consumption: Calculation for emissions caused by
+Additional Information on Economic, Environmental and Social Performance
+Non-Financial Notes: Environmental Performance
+248
+Data Download: Carbon calculation is based on the data
+volume downloaded by our customers globally (100% data
+coverage).
+Electricity External Data Centers: Updated CO2 conversion
+factors and inclusion of CH4 and N2O based on country
+specific grid factors; electricity consumption for external data
+centers is extrapolated based on the data center capacity, a
+utilization and power usage effectiveness (PUE) factor. As
+the utilization and PUE factor is not available for all external
+data centers, the average of all provided factors is used as
+estimate for external data centers with missing information.
+Logistics: Calculation is based on the actual number of
+parcels and mail sent from our logistics center in Germany
+and is extrapolated globally.
+Employee Commuting: A system-integrated commuting
+survey about the distance to work and the mode of transport
+is conducted annually for SAP globally. The survey responses
+are the basis for carbon calculation of employee commuting
+in the following year. More than 30,000 employees
+responded to the survey in 2016. Commuting for non-
+responding employees and quarterly updates are
+extrapolated based on the number of FTEs excluding those
+employees who own a company car.
+Non-Financial Notes: Environmental Performance
+Additional Information on Economic, Environmental and Social Performance
+Non-Financial Notes: Social Performance
+■
+The Customer NPS is calculated using the following formula:
+NPS=% of Promoters - % of Detractors. Passives are not
+•
+-
+Every two years, IAVE recognizes a global company that has
+created a high impact volunteer initiative. In November, SAP
+received this award for our SAP Social Sabbatical program.
+SAP America was recognized for its strong commitment to
+employee volunteerism and community, earned in part for
+our Early College High Schools initiative. This gives high-need
+students the opportunity to earn both a high school and post-
+secondary degree in a business-related or technology-related
+field. Students receive academic and real-world job training,
+as well as access to mentoring, which provides them with a
+simpler path to jobs in the technology sector.
+International Association for Volunteer Effort (IAVE)
+Inspiring Practice Award
+Civic 50 listing
+SAP was recognized as the "Public Favorite" for the
+development of a free massive open online course (MOOC)
+on the openSAP platform to help volunteers teach German
+language classes to refugees. Developed in partnership with
+Germany's largest welfare organization Der Paritätische
+Wohlfahrtsverband, the "You Can Do It Too! German for
+Asylum Seekers" course helped guide nearly 10,000
+volunteers in their efforts to set up or teach German classes
+in their community.
+"Germany - Land of Ideas" initiative
+Best Diversity and Inclusion Recruitment Strategy
+Our social investment programs were recognized with the
+following awards:
+Asia Recruitment Awards (14 wins)
+First for Best Companies to Start Your Career; Você S/A
+magazine
+Top Companies Leadership Index for Women in Tech; Anita
+Borg Institute
+Forbes list of America's Best Large Employers of 2016
+BrandZ top 100 most valuable brand and top 20 most
+valuable B2B brand
+Top Employer regional certificate for Middle East, Europe,
+and China (12 Top Employer wins)
+Fortune magazine ranked SAP #41 on their 2016 list of 50
+Best Workplaces for Diversity
+Glassdoor Best Places to Work (4x) as well as Highest Rated
+CEO (2x)
+The Firm Awards winner:
+Best Emerging Talent Recruitment Programme
+The Recruiter Awards: SAP was honored as a winner and as
+"highly commended" for three categories:
+"
+242
+Among best companies for graduates (in multiple countries)
+by trendence
+10 Great Place to Work Awards
+#1 in Online Social Media and Talent Communication in
+Europe by Potentialpark
+Bronze: Innovation in Employer Branding, Employment
+Brand Menu
+■
+Bronze: Best Ongoing Commitment to Employer Brand
+"
+Silver: Best Communication of the Employer Brand to an
+External Audience
+Silver: Best Digital Campaign
+"
+Gold: Innovation in Employer Branding, Autism at Work
+Program
+"
+"
+The Employer Brand Management Awards 2016 winners:
+Gold: Best Diversity Branding
+Highly Commended: Innovation in Recruitment, Autism At
+Work
+Winner: Most Effective Employer Brand Development
+Highly Commended: Best Candidate Experience, Autism
+At Work
+HRC Foundation's 2016 Corporate Equality Index
+Additional Information on Economic, Environmental and Social Performance
+Global EDGE certificate
+-
+Dow Jones Sustainability Indices
+-
+-
+In 2016, we received the following awards and recognition for
+our performance and efforts related to sustainability:
+Recognition
+241
+Public Policy
+SAP ranked as software sector lead for the 10th consecutive
+year.
+Additional Information on Economic, Environmental and Social Performance
+Political Contributions
+SAP believes in transparency in the political process.
+Accordingly, we are registered in the European Transparency
+Register for interest representatives. In the United States, our
+company is registered and reports in compliance with the
+Lobbying Disclosure Act.
+SAP supports global best practices to ensure cybersecurity and
+the protection of personal data to build trust in digital
+technologies. SAP favors global policy frameworks and
+international standards that enable the free flow of data across
+borders and the free trade of digital products and services.
+SAP engages with governments around the globe on a number
+of public policy issues, including the creation of reasonable
+framework conditions for new technologies or business models
+such as cloud computing, the Internet of Things, and Big Data.
+SAP has developed trusting relationships with governments
+worldwide by exploring the potential for information and
+communications technology (ICT) to spur economic growth,
+create jobs, and address societal challenges.
+Public Policy
+244
+SAP does not support any political parties. Under the laws of the
+United States, a number of SAP employees continue to exercise
+their right to create a political action committee (PAC). The SAP
+America PAC is an independent, registered, and strictly
+regulated organization that allows eligible employees in the
+United States to support political candidates at the state and
+federal level. Consistent with U.S. law, SAP SE exercises no
+control over or influence on the SAP America PAC. SAP America
+PAC expenditures are transparent and available on the U.S.
+Federal Election Commission Web site.
+FTSE4GOOD
+NASDAQ OMX CRD Global Sustainability 50 Index
+Newsweek Global 500 Green Ranking
+Ethibel Sustainability Index (ESI) Excellence Europe and
+In addition, SAP received numerous awards for being a globally
+recognized employer of choice:
+SAP received this award from the World Communications
+Forum in Davos for our work on Africa Code Week.
+C4F award ("Education of the Future" category)
+SAP received this top corporate honor for our Africa Code
+Week initiative.
+MIT Inclusive Innovation Competition
+AAA ranking by MSCI
+-
+services in the DACH (Germany, Austria, and Switzerland)
+region.
+SAP is the sector leader for IT and telecommunication
+CDP A-rating
+-
+oekom Prime Rating
+-
+Building Public Trust Award for Innovation in Integrated
+Reporting
+Good Company Ranking
+-
+Ethibel Sustainability Index (ESI) Excellence Global
+-
+Recognition
+SAP ranks third among DAX30 companies.
+To better understand and enable sustainable performance on a
+global level, both for our company and customers, SAP
+subscribes to and routinely engages in a range of third-party
+organizations, including:
+Data for our social indicators is collected and reported on a
+quarterly or annual basis and is subject to external assurance for
+annual reporting.
+Social Indicators
+Our boundaries take two different perspectives: SAP as a
+company, which includes all our legal entities and operations
+and supply chain, and SAP as a solution provider enabling our
+customers. These boundaries are listed in detail in the GRI G4
+Content Index.
+Boundaries
+General Information About Social
+Indicators
+Non-Financial Notes:
+Social Performance
+243
+Employee Retention
+Memberships
+World Economic Forum
+U.S. Chamber of Commerce
+-
+United Nations Global Compact (since 2000)
+-
+Transparency International Germany
+Transatlantic Business Council
+Additional Information on Economic, Environmental and Social Performance
+We define employee retention as a ratio that puts emphasis on
+employee-initiated turnover - in other words, we seek to
+measure how many employees choose to stay with SAP. We
+derive our retention rate by starting with our average number of
+employees expressed in full-time equivalents (FTEs) in a given
+year and subtracting employee-initiated turnover. We then
+divide this figure by our average number of employees in that
+year to obtain our retention rate. As opposed to keeping a low
+turnover rate - which companies generally seek to do – we aim
+to keep our retention rate high. A higher retention rate signifies
+that fewer employees are choosing to leave SAP.
+We do not differentiate between gender when we analyze
+retention and turnover rates.
+Women in Management
+We measure customer loyalty using the Customer Net Promoter
+Score (NPS). The NPS is derived from the following survey
+question "How likely would you be to recommend SAP to friends
+or colleagues?" Customers choose from a range of 0 to 10.
+Customers that choose a 9 or 10 are considered Promoters.
+Passives answer the question with a rating of 7 or 8, and
+Detractors with a rating of 6 or less.
+Memberships
+Customer Loyalty
+In 2015, we simplified our Employee Engagement Index and
+recalculated our score for 2015 from 81% to 82%. This
+calculation method has been applied moving forward.
+It is calculated based on the results of an employee survey that
+is conducted annually (see BHCI).
+We define employee engagement as a score for the level of
+employee commitment, pride, and loyalty, as well as our
+employees' feeling of advocacy for SAP.
+Employee Engagement
+The BHCI score for 2014 was recalculated from 70% to 72%
+based on two updated questions in the people survey
+concerning work-life balance. The changes were carried out to
+simplify the questionnaire and to better compare with against
+external benchmarks.
+The BHCI is calculated based on the results of an employee
+survey ("People Survey") conducted annually. All employees
+were invited to take part in the 2016 People Survey and 64,889
+employees participated (response rate: 76%).
+The Business Health Culture Index (BHCI) measures the general
+cultural conditions in an organization that enable employees to
+stay healthy and balanced. The index covers questions
+concerning how employees rate their personal well-being and
+the working conditions at SAP, including our leadership culture.
+The BHCI is an indicator as to what extent SAP successfully
+offers employees a working environment that promotes health
+supporting their long-term employability and their active
+engagement in reaching our ambitious corporate goals.
+Business Health Culture Index
+Board members
+Managers managing managers: Refers to managing
+managers that manage teams
+Managers managing teams: Refers to managing teams of at
+least one employee or vacant positions
+-
+At SAP, we differentiate between the following categories of
+managers:
+We define "women in management" as the share of women in
+management positions as compared to the total number of
+managers.
+The Wall Street Journal CEO Council
+-
+-
+The Sustainability Consortium
+econsense
+Dublin Chamber of Commerce
+DIGITALEUROPE
+Deutschland sicher im Netz e. V.
+Cellular Telephone Industries Association
+CEB Inc.
+Business for Social Responsibility
+Bitkom e. V.
+Association of Climate Change Officers
+-
+-
+-
+-
+-
+-
+-
+-
+European Centre for Women and Technology
+European Roundtable of Industrialists
+Alliance for Integrity
+Financial Women's Association
+The Business Council
+The Conference Board, Inc.
+Federation of German Industries
+-
+Schmalenbach-Gesellschaft für Betriebswirtschaft e. V.
+Russian-German Chamber of Commerce
+Organization for International Investment
+National Defense Industrial Association
+Mechanical Engineering Industry Association
+Plattform Industrie 4.0
+-
+-
+Information Technology Industry Council
+-
+-
+-
+International Integrated Reporting Council
+Inquiries of personnel on corporate level responsible for
+providing the data and information, carrying out internal
+control procedures and consolidating the data and
+information,
+Evaluation of the overall presentation of the selected
+qualitative and quantitative sustainability disclosures in the
+Report.
+Reviewing the consistency of GRI G4 in-accordance option
+'Core' as declared by SAP with the qualitative and
+quantitative sustainability disclosures presented in the
+Report.
+Reviewing the suitability of the internally developed
+definitions.
+An analytical review of the data and trend explanations
+submitted by all sites for consolidation at corporate level.
+determine whether the qualitative and quantitative
+sustainability disclosures are supported by sufficient
+evidence.
+Evaluation of internal and external documentation, to
+Evaluation of the design and implementation of the systems
+and processes for the collection, processing and control of
+the qualitative and quantitative sustainability disclosures
+included in the scope of this engagement, including the
+consolidation of the data.
+In addition, we conducted the following procedures to obtain
+reasonable assurance:
+-
+An evaluation of the design and implementation, and tests of
+the operating effectiveness of the systems and methods used
+to collect and process the data, including the aggregation of
+these data into the performance indicators as presented in
+the Report.
+258
+Conclusions
+Based on the procedures performed and evidence received to
+obtain reasonable assurance, the performance indicators
+Business Health Culture Index, Employee Engagement,
+Employee Retention, Women in Management, Customer Net
+Promoter Score, Greenhouse Gas Emissions (Scope 1 and 2 as
+well as selected Scope 3 emissions including business flights
+and employee commuting), Renewable Energy and Total Energy
+Consumed, published in the SAP Integrated Report 2016,
+including the explanatory notes thereto, are, in all material
+respects, presented in accordance with the Reporting Criteria.
+Based on the procedures performed and evidence received to
+obtain limited assurance, nothing has come to our attention that
+causes us to believe that the disclosures on materiality and
+stakeholder engagement, the disclosures on management
+approaches for the material aspects Business Conduct, Climate
+and Energy, Human and Digital Rights, Customer Loyalty and
+Innovation, as well as the other qualitative and quantitative
+sustainability disclosures in relation to these material aspects,
+published in the SAP Integrated Report 2016, are, in all material
+respects, not prepared in accordance with the Reporting
+Criteria.
+Purpose of the assurance report
+This assurance report is issued based on an assurance
+engagement agreed upon with SAP. The assurance engagement
+to obtain reasonable respectively limited assurance is
+conducted on behalf of SAP and the assurance report is solely
+Additional Information on Economic, Environmental and Social Performance
+Independent Assurance Report
+for information purposes of SAP on the results of the assurance
+engagement.
+Limited liability
+This assurance report must not be used as basis for (financial)
+A risk analysis, including a media search, to identify relevant
+information on SAP's sustainability performance in the
+reporting period.
+decision-making by third parties of any kind. We have
+responsibility only towards SAP. We do not assume any
+Auditing internal and external documentation in order to
+determine in detail whether the performance indicators for
+the business year 2016 correspond with the underlying
+sources, and whether all the relevant information contained
+in such underlying sources has been included in the Report.
+Location visits to Walldorf and St. Leon Rot (both Germany)
+and a remote visit to Palo Alto (USA) to assess the quality of
+information management systems and the reliability of the
+data as reported to corporate level.
+An evaluation of the approach to determining material
+sustainability topics and respective boundaries, including
+results of stakeholder engagement.
+index-and-united-nations-global-compact.html with the
+following symbol: √
+-
+256
+responsibility towards third parties.
+Additional Information on Economic, Environmental and Social Performance
+Management's Acknowledgement of the SAP Integrated Report 2016
+Independent Assurance
+Report
+To the executive board of SAP SE,
+Walldorf
+We have performed an independent assurance engagement on
+selected qualitative and quantitative sustainability disclosures of
+the Integrated Report 2016 (further: "the Report") of SAP SE,
+Walldorf (further "SAP"), published under
+http://www.sap.com/integrated-reports/2016/en.html.
+For the performance indicators Business Health Culture Index,
+Employee Engagement, Employee Retention, Women in
+Management, Customer Net Promoter Score, Greenhouse Gas
+Emissions (Scope 1 and 2 as well as selected Scope 3 emissions
+including business flights and employee commuting),
+Renewable Energy and Total Energy Consumed, including the
+explanatory notes thereto, a reasonable assurance engagement
+was performed.
+For the disclosures on materiality and stakeholder engagement,
+the disclosures on management approaches for the material
+aspects Business Conduct, Climate and Energy, Human and
+Digital Rights, Human Capital, Innovation and Customer Loyalty,
+as well as for the other qualitative and quantitative sustainability
+disclosures in relation to these material aspects, a limited
+assurance engagement was performed.
+The qualitative and quantitative sustainability disclosures
+included in the scope of our assurance engagement are marked
+in the GRI G4 Content Index, published online under
+http://www.sap.com/integrated-reports/2016/en/about/gri-
+It was not part of our engagement to review product or service
+related information, references to external information sources,
+expert opinions and future-related statements in the Report.
+-
+Resources Institute / World Business Council for Sustainable
+Development, as well as internally developed definitions, as
+described in the 'Non-Financial Notes: Social Performance' and
+the 'Non-Financial Notes: Environmental Performance' as
+Reporting Criteria.
+Independence and quality assurance
+on the part of the auditing firm
+We have complied with the independence and other ethical
+requirements of the Code of Ethics for Professional Accountants
+issued by the International Ethics Standards Board for
+Accountants (IESBA-Code), which is founded on fundamental
+principles of integrity, objectivity, professional competence and
+due care, confidentiality and professional behavior.
+The quality assurance system of the KPMG AG
+Wirtschaftsprüfungsgesellschaft is based on the International
+Standard on Quality Control 1 "Quality Control for Audit,
+Assurance and Related Service Practices" (ISQC 1) and, in
+addition on national statutory requirements and professional
+standards, especially the Professional Code for Certified
+Accountants as well as the joint statement of WPK (Chamber of
+Public Accountants) and IDW (Institute of Public Auditors in
+Germany): Requirements for quality assurance in the auditing
+practice (VO 1/2006).
+Management's Responsibility for the Practitioner's Responsibility
+Report
+The legal representatives of SAP are responsible for the
+preparation of the Report in accordance with the Reporting
+Criteria. SAP applies the principles and standard disclosures of
+the G4 Sustainability Reporting Guidelines of the Global
+Reporting Initiative in combination with the Corporate
+Accounting and Reporting Standard (Scope 1 and 2) and the
+Corporate Value Chain (Scope 3) Standard of the World
+Our responsibility is to express a conclusion based on our work
+performed and the evidence obtained on the qualitative and
+quantitative sustainability disclosures marked in the GRI G4
+Content Index with the following symbol: √
+Additional Information on Economic, Environmental and Social Performance
+Independent Assurance Report
+257
+Nature and extent of the assurance
+engagement
+We conducted our work in accordance with the International
+Standard on Assurance Engagements (ISAE) 3000 (Revised):
+"Assurance Engagements other than Audits or Reviews of
+Historical Financial Information" and the International Standard
+on Assurance Engagements (ISAE) 3410: "Assurance
+Engagements on Greenhouse Gas Statements" of the
+International Auditing and Assurance Standards Board (IAASB).
+These standards require that we comply with our professional
+duties and plan and perform the assurance engagement to
+obtain a reasonable level of assurance to conclude that the
+above mentioned performance indicators are prepared, in all
+material respects, in accordance with the aforementioned
+Reporting Criteria respectively to obtain a limited level of
+assurance to preclude that the above mentioned qualitative and
+quantitative sustainability disclosures are not prepared, in all
+material respects, in accordance with the aforementioned
+Reporting Criteria. In a limited assurance engagement the
+evidence gathering procedures are more limited than in a
+reasonable assurance engagement and therefore less
+assurance is obtained than in a reasonable assurance
+engagement. The choice of audit procedures is subject to the
+auditor's own judgement. This includes the assessment of the
+risk of material misstatement in the Report under consideration
+of the Reporting Criteria.
+Within the scope of our engagement, we performed amongst
+others the following procedures when conducting the limited
+assurance:
+-
+This responsibility includes the selection and application of
+appropriate methods to prepare the Report and the use of
+assumptions and estimates for individual qualitative and
+quantitative sustainability disclosures which are reasonable
+under the circumstances. Furthermore, this responsibility
+includes designing, implementing and maintaining systems and
+processes relevant for the preparation of the Report in a way
+that is free of - intended or unintended - material
+misstatements.
+Frankfurt am Main, February 22, 2017
+8
+Simone Fischer
+SAP
+V
+Financial Performance: Review and Analysis
+Growth and
+Profitability
+V
+waste-intensive. Therefore,
+we do not report on the
+different types of waste and
+disposal methods.
+SAP
+V
+Our operations are not
+parties
+external
+8,9
+SAP and
+V
+parties
+external
+8
+SAP and
+our solutions have on our customers'
+success and document this in case studies.
+SAP does not conduct community
+assessment programs.
+We are working on understanding the impact
+Sustainability Management and Policies;
+Expected Developments and Opportunities;
+Report by the Supervisory Board
+DMA
+Material Aspect: Financial Performance
+Waste and Water
+Our Executive Board believes that the integrated report is
+presented in accordance with the <IR> Framework as far as
+possible given the aforementioned restrictions. Should the
+aforementioned restrictions ever cease to apply, we will
+continue to strive for further alignment with the <IR>
+Framework in future reports.
+EC8
+Strategy and Business Model;
+www.sap.com/purpose
+V
+Wirtschaftsprüferin
+(German Public Auditor)
+ppa. Thea Renner
+Additional Information on Economic, Environmental and Social Performance
+Independent Assurance Report
+259
+Additional Information
+Five-Year Summary..
+Glossary
+Financial Calendar and Addresses.
+261
+.265
+.276
+KPMG AG Wirtschaftsprüfungsgesellschaft
+Financial and Sustainability Publications.
+Publication Details..
+.278
+260
+Additional Information
+DMA and
+Indicators
+253
+GRI Index and UN Global Compact Communication on Progress
+Additional Information on Economic, Environmental and Social Performance
+Material Aspect: Human Capital Management
+parties
+9
+External
+277
+Our Executive Board has reviewed the SAP Integrated Report
+2016, including the consolidated financial statements, the
+combined management report, as well as the other additional
+content related to the GRI G4 Content Index.
+SAP does not tolerate discrimination on any
+basis, which includes our commitment to
+equal pay for men and women for work of
+equal value.
+The SAP Integrated Report 2016 is only available online. The
+Executive Board is aware of its responsibility to ensure the
+integrity of our integrated report. The members of the Executive
+Board have applied their collective mind to the preparation and
+presentation of our integrated report.
+SAP
+LA12
+Employees and Social Investments;
+Chart Generator
+V
+SAP
+6
+LA13
+V
+SAP
+6
+Material Aspect: Innovation
+DMA
+LA9
+Sustainability Management and Policies;
+Non-Financial Notes: Social Performance
+Our learning strategy is also based on the
+principle that much of employee learning
+and development happens outside formal
+training through peer-based interaction such
+as coaching, mentoring, rotational programs
+and on-the-job-guided development
+experiences. As a result, we have decided to
+no longer report on the number of formal
+training hours per employee because it does
+not provide meaningful insights.
+V
+✓
+SAP
+254
+Additional Information on Economic, Environmental and Social Performance
+GRI Index and UN Global Compact Communication on Progress
+DMA and
+Indicators
+LA10
+LA11
+PR5
+Links and Content
+Employees and Social Investments;
+For continued employability and managing
+career endings, SAP has dedicated staff to
+support generational intelligence. These
+experts work on continuously improving
+processes and designing programs for
+sustaining employability as long as possible;
+providing training for cross-generation
+collaboration; managing career endings in a
+flexible way (for example, part-time options);
+and keeping employees connected with the
+company after retirement. SAP also
+participates in external research studies and
+networks on workforce demographics to
+share and learn about best practices in this
+field.
+Employees and Social Investments
+Customers
+Injuries, diseases, lost days,
+or absenteeism are not a
+material issue for SAP as
+we track our Business
+Health Culture Index on a
+global basis.
+In Germany, we measure the accident rate
+with a "1000-Mann-Quote" (TMQ). This is
+calculated as the number of reportable
+accidents x 1000 employees/number of full-
+time equivalents. Reportable accidents are
+work-related and include commuting
+accidents that result in more than three days
+of absence from work. In 2016, the TMQ was
+3.6 (3.4 in 2015). We also measure the
+accident rate per one million working hours.
+In 2016, this value slightly increased to 2.3
+reportable accidents per one million working
+hours (2.2 in 2015).
+group and gender as well as
+total numbers is proprietary
+information for SAP.
+employee hires by age
+EN23
+Employee
+Sustainability Management and Policies;
+Human Rights and Labor Standards
+Employees and Social Investments
+Engagement
+Business
+Employees and Social Investments
+Health Culture
+Index
+Leadership
+LA1
+Employees and Social Investments
+Employees and Social Investments;
+Chart Generator
+LA6
+Omissions
+R&D and Local Products, R&D, and Services
+Innovation
+External Boundaries
+Assurance
+Compact
+Principles
+V
+SAP
+V
+SAP
+1,2,6
+V
+SAP
+A breakdown of new
+✓
+SAP
+6
+UN Global
+Omissions
+External Boundaries
+Assurance
+UN Global
+V
+SAP and
+external
+parties
+5
+V
+SAP and
+external
+parties
+4
+Sustainability Management and Policies
+Strategy and Business Model
+V
+V
+External
+Sustainable
+parties
+parties
+Development
+Social
+Employees and Social Investments
+Investments
+V
+SAP and
+external
+parties
+Additional Information on Economic, Environmental and Social Performance
+GRI Index and UN Global Compact Communication on Progress
+255
+Management's
+Acknowledgement of the
+SAP Integrated Report
+2016
+The International Integrated Reporting (<IR>) Framework
+launched by the International Integrated Reporting Council in
+December 2013 has a provision that an integrated report should
+include a statement in which management acknowledges its
+responsibility for the report. Our respective statement for 2016
+is as follows:
+Goals
+Similar to previous reports, our SAP Integrated Report 2016 is
+structured along the content elements suggested in the <IR>
+Framework. We have applied the Guiding Principles of the <IR>
+Framework, but we also must ensure our compliance with legal
+requirements, such as the provisions regarding financial
+reporting in the German Commercial Code as set out in detail in
+the German Accounting Standard 20 Group Management
+Report, while balancing other reporting standards such as the
+G4 guidelines of the Global Reporting Initiative (GRI), with the
+<IR> Framework.
+external
+SAP and
+Compact
+Principles
+✓
+SAP
+V
+SAP
+V
+SAP
+V
+SAP
+Material Aspect: Human and Digital Rights
+DMA
+Security and Privacy;
+3
+V
+Human Rights and Labor Standards
+Security and Privacy
+HR4
+HR5
+HR6
+Human Rights and Labor Standards;
+We are not aware of any operations or
+suppliers in which the right to exercise
+freedom of association and collective
+bargaining may be at significant risk.
+Human Rights and Labor Standards;
+We are not aware of any operations or
+suppliers as having significant risk for
+incidents of child labor.
+Human Rights and Labor Standards;
+We are not aware of any operations or
+suppliers as having significant risk for
+incidents of forced or compulsory labor.
+Material Aspect: Impact on Society
+DMA
+UN
+V
+SAP and
+1
+external
+parties
+PR8
+Non-Financial Notes: Environmental
+Performance
+Links and Content
+Energy and Emissions;
+G4-26
+Stakeholder Engagement
+G4-25
+Stakeholder Engagement
+G4-24
+Stakeholder Engagement
+G4-23
+Non-Financial Notes: Environmental Performance;
+Non-Financial Notes: Social Performance
+Non-Financial Notes: Environmental Performance;
+Non-Financial Notes: Social Performance
+Non-Financial Notes: Environmental Performance;
+Non-Financial Notes: Social Performance
+G4-22
+GRI Content Index;
+G4-21
+Non-Financial Notes: Environmental Performance;
+Non-Financial Notes: Social Performance
+GRI Content Index;
+G4-20
+Links and Content
+General Standard
+Disclosures
+251
+V
+V
+Additional Information on Economic, Environmental and Social Performance
+GRI Index and UN Global Compact Communication on Progress
+About This Report
+Materiality
+All entities are covered by the report.
+Materiality;
+Subsidiaries and Other Equity Investments;
+G4-19
+Stakeholder Engagement
+G4-27
+Stakeholder Engagement
+Report Profile
+V
+V
+V
+External
+Assurance
+Business Conduct
+G4-56
+Ethics and Integrity
+Sustainability Management and Policies
+Report by the Supervisory Board;
+G4-34
+Management's Acknowledgement of the SAP Integrated Report 2016
+Independent Assurance Report;
+G4-18
+Governance
+Independent Assurance Report
+GRI Content Index;
+About This Report;
+G4-32
+Investor Services
+Annual Reporting Cycle
+March 20, 2016
+About This Report
+G4-31
+G4-30
+G4-29
+G4-28
+G4-33
+V
+G4-17
+Memberships
+Overview of the SAP Group
+G4-7
+V
+V
+V
+V
+Overview of the SAP Group
+G4-6
+Overview of the SAP Group
+G4-5
+Products, R&D, and Services
+G4-4
+Overview of the SAP Group
+G4-3
+Letter from the CEO
+G4-1
+Organizational Profile
+UN Global Compact
+Principles
+External
+Assurance
+Strategy and Analysis
+Links and Content
+General Standard
+Disclosures
+The social and environmental data and information included in the SAP Integrated Report 2016 is prepared in accordance with the
+core option of the international guidelines G4 of the Global Reporting Initiative (GRI).
+on Progress
+GRI Index and UN Global
+Compact Communication
+DMA
+G4-8
+Overview of the SAP Group;
+V
+Customers
+Memberships
+G4-16
+G4-15
+7
+V
+We support a precautionary approach towards environmental
+management. While we see little apparent risk for our own
+operations, we do see an opportunity to help our customers
+anticipate and manage this risk in a more agile and responsive
+fashion through effective product lifecycle management and
+sustainable design.
+G4-14
+V
+There were no changes with significant impacts regarding our own
+organization or our supply chain.
+G4-13
+V
+Sustainable Procurement
+Identified Material Aspects and Boundaries
+G4-12
+V
+Human Rights and Labor Standards
+G4-11
+Headcount and Personnel Expense
+6
+Chart Generator;
+G4-10
+Financial Performance: Review and Analysis
+Consolidated Financial Statements IFRS;
+Subsidiaries and Other Equity Investments;
+Headcount and Personnel Expense;
+G4-9
+3
+V
+V
+V
+V
+8
+SAP
+V
+7,8
+SAP
+V
+parties
+7
+SAP and
+external
+UN Global
+Compact
+Principles
+External Boundaries
+Assurance
+Omissions
+Non-Financial Notes: Environmental
+Chart Generator;
+Energy and Emissions;
+EN15
+Waste and Water
+EN8
+Energy and Emissions
+EN6
+Performance
+Non-Financial Notes: Environmental
+Chart Generator;
+Energy and Emissions;
+SAP
+8
+Our operations are not
+water-intensive. Therefore,
+we do not report on the
+sources of water
+withdrawal.
+V
+EN19
+Chart Generator
+EN18
+Performance
+Non-Financial Notes: Environmental
+parties
+Chart Generator;
+7,8
+External
+V
+Energy and Emissions;
+EN17
+EN5
+Performance
+Chart Generator;
+7,8
+SAP
+V
+Energy and Emissions;
+Performance
+EN16
+7,8
+SAP
+V
+7,8
+SAP
+Non-Financial Notes: Environmental
+Performance
+Non-Financial Notes: Environmental
+Chart Generator;
+SO5
+10
+SAP
+V
+Business Conduct
+SO4
+10
+SAP
+V
+Business Conduct
+S03
+Business Conduct
+There were no confirmed incidents of
+10
+Sustainability Management and Policies;
+DMA
+Material Aspect: Business Conduct
+UN Global
+Compact
+Principles
+Boundaries
+External
+Assurance
+Omissions
+Links and Content
+DMA and
+Indicators
+10
+V
+UN Global Compact
+Principles
+V
+Chart Generator;
+V
+10
+Energy and Emissions;
+EN3
+through the CDP (www.cdp.net)
+opportunities related to climate change
+SAP provides details on risks and
+EC2
+Links and Content
+DMA and
+Indicators
+Additional Information on Economic, Environmental and Social Performance
+GRI Index and UN Global Compact Communication on Progress
+8
+V
+Sustainability Management and Policies;
+Energy and Emissions
+SAP
+DMA
+Material Aspect: Climate and Energy
+SAP
+V
+Litigation and Claims
+S07
+Business Conduct
+10
+SAP
+V
+Public Policy;
+S06
+corruption in 2016.
+252
+Employee Engagement Index (in %)
+Services margin (in % of corresponding revenue, non-IFRS)
+€ millions, unless otherwise stated
+74.85
+62.55
+64.80
+61.43
+SAP share price - low (in €)
+64.90
+54.53
+50.90
+52.20
+41.45
+Market capitalization") (in € billions)
+101.73
+90.18
+71.60
+76.50
+74.70
+Return on SAP shares 4) 1-year investment period (in %)
+14.70
+25.87
+-4.80
+4.20
+52.10
+Return on SAP shares 4) 5-year investment period (in %)
+Return on SAP shares 4) 10-year investment period (in %)
+17.30
+13.99
+13.90
+21.80
+82.81
+SAP share price – peak (in €)
+60.69
+62.31
+Earnings per share, diluted (in €)
+3.04
+2.56
+2.74
+2.78
+2.35
+Dividend per share³)(in €)
+1.25
+1.15
+1.10
+1.00
+0.85
+Total dividend distributed³)
+13.10
+1,498
+1,315
+1,194
+1,013
+Total dividend distributed in % of profit after tax³)
+41
+45
+40
+36
+36
+SAP share price) (in €)
+82.81
+73.38
+58.26
+1,378
+3.01
+9.20
+7.40
+7,489
+7,286
+Personnel expenses - excluding share-based payments
+9,444
+9,446
+7,587
+7,162
+6,764
+Personnel expenses per employee - excluding share-based payments (in
+€ thousands)
+117
+126
+111
+109
+111
+Operating profit per employee (in € thousands)
+64
+57
+63
+68
+66
+Women working at SAP (in %)
+32
+31
+31
+31
+30
+Women in management) (total, in % of total number of employees)
+7,877
+10,170
+10,229
+Personnel expenses
+7.90
+13.80
+Additional Information | Five-Year Summary
+263
+€ millions, unless otherwise stated
+2016
+2015
+2014
+2013
+2012
+Employees and personnel expenses
+Number of employees 5). 7)
+84,183
+6.72
+76,986
+66,572
+64,422
+Number of employees, annual average 5)
+80,609
+75,180
+68,343
+65,409
+61,134
+Number of employees in research and development5), 7)
+23,363 20,938
+18,908
+17,804
+18,012
+74,406
+24.5
+3.35
+3.77
+-7,670
+-1,467
+-2,502
+Days' sales outstanding (DSO, in days)
+74
+71
+65
+62
+59
+Assets, equity and liabilities
+Trade and other receivables
+Total current assets
+6,050
+5,362
+4,443
+3,962
+4,006
+11,564
+9,739
+8,999
+7,351
+6.928
+Goodwill
+23,311 22,689
+21,000
+13,690
+13,192
+-5,615
+-3,153
+Net liquidity
+4,994
+119
+107
+115
+136
+Cash and cash equivalents
+3,702
+3,411
+3,328
+2,748
+2,477
+Short-term investments
+971
+148
+Total non-current assets
+95
+15
+Group liquidity (cash and cash equivalents/short-term
+4,673
+3,559
+3,423
+2,841
+2,492
+investments/restricted cash)
+Financial debts (due to banks, private placements, bonds)
+7,826
+9,174
+11,093
+4,308
+93
+3.50
+32,713
+29,566
+Debt ratio (total liabilities²) in % of total assets)
+40
+44
+49
+41
+46
+Investments in goodwill, intangible assets or property, plant, and
+equipment (including capitalizations due to acquisitions)
+1,145
+676
+8,636
+1,813
+6,939
+Key SAP Stock Facts
+Issued shares) (in millions)
+1,229
+1,229
+1,229
+1,229
+1,229
+Earnings per share, basic (in €)
+3.04
+2.56
+2.75
+2.79
+2.35
+Earnings per share, basic (non-IFRS, in €)
+3.90
+54
+59
+51
+56
+19,739
+19,378
+Total current liabilities (including deferred income)
+9,674
+7,867
+8,574
+6,347
+6,546
+Total non-current liabilities (including deferred income)
+8,205
+10,228
+10,457
+4,695
+31,651
+5,627
+26,397
+23,295
+19,534
+16,048
+14,133
+Total assets
+44,277
+41,390
+38,565
+27,091
+26,306
+Equity ratio (total equity in % of total assets)
+60
+Total equity (including non-controlling interests)
+127
+23.6
+21.2
+employee retention - The ratio of the average headcount
+(expressed in full-time equivalents/FTEs) minus employee-
+initiated terminations (turnover) divided by the average
+headcount, taking into account the past 12 months.
+end-to-end process - Set of activities supporting defined
+management, core, or support processes. Customers can use
+these activities as a reference to map their own processes.
+end-to-end solution - Software solution that drives strategic
+business outcomes and directly contribute to a business priority
+in an industry, line of business, or technology area. These
+solutions are structured into solution capabilities that comprise
+a number of individual software products, instances, and/or
+license materials. End-to-end solutions provide a business
+scope with a comprehensive value proposition.
+enterprise mobility - Term used in business and industry to
+refer to the concept and approach to making a business mobile
+where employees can perform business-related tasks through
+mobile devices. At SAP, we use "enterprise mobility" as our
+umbrella term for an overall mobile strategy.
+enterprise resource planning - See "SAP ERP."
+environmental impact - A positive or negative change to the
+natural environment.
+F
+Fieldglass - Company acquired by SAP in May 2014 and fully
+integrated in SAP. Our solutions for contingent workforce
+management are marketed under the SAP Fieldglass brand. See
+"SAP Fieldglass."
+G
+greenhouse gas footprint - The sum of all greenhouse gas
+emissions measured and reported, including renewable energy
+and third-party reductions, for example, offsets.
+H
+Hadoop - Part of the Apache project sponsored by the Apache
+Software Foundation, this open source, Java-based
+programming framework supports the processing of large data
+sets in a distributed computing environment. As open source
+technology, Hadoop is an efficient distributed file system that
+enables the analysis and processing of very large volumes of
+data from a great number of varied, structured, and
+unstructured sources. SAP Distribution for Hadoop software
+provides redistribution of Apache Hadoop developed by
+Hortonworks.
+Hasso Plattner Founders' Award - Introduced in 2014, an
+employee award that signifies the highest employee recognition
+at SAP, awarded annually by the CEO to an individual or a team.
+-
+How We Run SAP's set of corporate values that sets
+behaviors that describe what makes SAP unique.
+-
+hybrid cloud – Deployment model that uses resources
+comprised of a mix of two or more distinct cloud deployment
+models that are integrated by standardized or proprietary
+technology enabling data and application portability. Also called
+"hybrid cloud deployment model."
+hybrid landscape - A mix of on-premise and any cloud
+deployment model(s). Alternatively referred to as an "on
+premise to cloud" or "hybrid environment."
+hybris See "SAP Hybris. "
+industry - An economic sector characterized by a typical value
+chain, business processes, and set of products and services that
+the companies operating in it have in common. At SAP,
+"industries" is also used as a term to differentiate between lines-
+of-business functions such as marketing, procurement, and
+finance, and those functions specific to an industry.
+industry portfolios - Software portfolios that address the
+business needs of 25 different industries.
+infrastructure as a service (laaS) - Processing, storage,
+network, other computing resources and typically a defined level
+of support for consumers to deploy software (such as operating
+systems and applications). IaaS consumers do not manage
+underlying cloud infrastructure but may control networking
+components (such as host firewalls).
+in-memory computing – A major advance in information
+technology that creates a dramatic change in computing,
+analytics, and data storage. Combining advances in multicore
+processing with more affordable servers, in-memory computing
+allows information to be stored in the main memory rather than
+in relational databases to greatly accelerate processing times. It
+disrupts the traditional IT stack comprised of hardware,
+middleware, and software, where disk-based relational
+databases can become bottlenecks.
+Additional Information | Glossary
+267
+in-memory database - Database that keeps all active records in
+main memory rather than on disk. Accessing in-memory records
+is considerably faster than retrieving them from the disk,
+significantly increasing performance. SAP HANA is SAP's
+groundbreaking database that allows businesses to take
+advantage of in-memory computing. See "SAP HANA.".
+Employee Engagement Index - A score for the level of
+employee commitment, pride, and loyalty, as well as the feeling
+of employees of being advocates for their company. The index is
+calculated based on the results of regular employee surveys.
+electronic waste (e-waste) - Electronic products that are
+discarded by consumers or companies, such as computers,
+computer monitors, or mobile devices.
+Additional Information | Glossary
+266
+business process - Set of logically related activities performed
+within an organization to complete a defined business task. SAP
+provides software and technology that enable and support
+business processes. Order processing and payroll are typical
+examples.
+business user - Employees who spend significant time finding
+and sharing information, collaborating with others, coordinating
+projects, devising strategy or operational tactics, and coming up
+with new ideas based on information gathered from multiple
+sources. Also called knowledge or information workers or
+business consumers.
+C
+carbon credit - A tradable certificate that allows the holder to
+emit one ton of CO2 or the respective equivalent of any other
+greenhouse gas.
+carbon neutral - A goal or state of emitting net zero
+greenhouse gases for certain activities. This includes reducing
+emissions, but also using renewable electricity certificates or
+carbon credits.
+carbon offset or greenhouse gas (GHG) offset - A unit of
+carbon dioxide-equivalent (CO2 equivalent) that is reduced,
+avoided, or sequestered to compensate for emissions occurring
+elsewhere.
+Additional Information | Glossary
+265
+cloud computing - Generic term for flexible, IT-related services
+available through, or hosted on, the Internet for consumers and
+business, including storage, computing power, software
+development environments, and applications, combined with
+service delivery. Accessed as needed "in the cloud," these
+services eliminate the need for in-house IT resources. See
+"cloud service model."
+-
+cloud deployment models The different infrastructure,
+software lifecycle management, and licensing models used for
+deploying software, that is, where the software is running and
+how much control and flexibility a customer has.
+cloud service model - "As-a-service" offerings where cloud
+services are offered as infrastructure as a service (laaS),
+platform as a service (PaaS), or software as a service (SaaS).
+cloud solutions from SAP - Category used to communicate all
+of cloud software related to the cloud, including platform,
+managed services, solutions, technology, and infrastructure,
+public cloud applications, managed cloud applications delivered
+via SAP HANA Enterprise Cloud, and SAP Cloud Platform. It
+includes offerings branded with SAP, SAP SuccessFactors, and
+SAP Ariba solutions, among others. It can be used in conjunction
+with the messaging statement "SAP Cloud powered by SAP
+HANA."
+K
+component - Modular piece of software offering functions
+accessible via interfaces.
+connectivity - A framework which describes the
+interrelatedness of SAP's social, environmental, and economic
+performance. Based on statistical analysis, it allows us to
+quantify the impact of non-financial measures on the operating
+profit offering a holistic understanding of SAP's value creation.
+corporate social responsibility - SAP's corporate social
+responsibility (CSR) program is about how the company creates
+social impact for people, both inside and outside SAP, to help
+make society more sustainable and the world run better.
+customer engagement lifecycle - Model that provides an
+integrated framework of practices to help create and deliver
+customer value. The phases of the customer engagement
+lifecycle represent the common route followed by the SAP and
+the customer teams in the process of identifying, delivering,
+operating, and managing solutions that best fit the customer's
+needs.
+Customer Net Promoter Score (NPS) - Describes the
+willingness of customers to recommend or promote an
+organization or company to others. It is defined as the
+percentage of customers that are likely to recommend an
+organization or company to friends or colleagues (promoters)
+minus the percentage of customers that are unlikely to do so.
+D
+data center - A physical facility used to house computer
+systems and associated components.
+data center energy - The amount of energy consumed in SAP's
+own and external data centers. An external data center is a local
+computing center with server units running SAP software that is
+operated by an external partner.
+data warehouse - An electronic collection of information
+organized for easy access by computer programs.
+design thinking - A methodology for routine innovation that
+brings together the right side of the brain (creative) with the left
+side of the brain (analytical).
+digital core - An integrated system that enables customers to
+predict, simulate, plan, and even anticipate future business
+outcomes in a digital economy. This digital core is realized by
+SAP through SAP S/4HANA, providing the framework that
+allows customers to run an entire enterprise in the cloud - such
+as finance, procurement, sales, inventory management, project
+system, and product lifecycle management. In this way,
+companies can achieve the real-time visibility they need into all
+mission-critical business processes and processes around their
+customers, suppliers, workforce, Big Data, and the Internet of
+Things.
+digital transformation - Concept that refers to the changes
+associated with the application of digital technology in all
+aspects of society. Digital technologies empower customers and
+consumers in a way they never could before, transforming their
+relationship with brands and products. Businesses need to meet
+these new challenges or will miss the potential business success
+to be realized in the digital economy.
+E
+ecosystem - Construct encompassing SAP and its customers
+and partners that extends the value SAP provides to its
+customers. By bringing together community-based insight,
+innovative partner solutions, and industry-leading collaboration
+and co-innovation, it enables customers to extract the greatest
+possible value from their SAP investments.
+Concur Technologies - Acquired by SAP in 2014, this travel and
+expense management company helps customers manage
+business resources, processes, and spend through the world's
+largest business network in the cloud for comprehensive travel
+and expense management. The Concur platform offers an
+integrated system for expense, invoice, travel, and spend
+intelligence in the cloud.
+business network - An online service that connects businesses
+and their systems to those of their trading partners and enables
+new processes and information and insight sharing only possible
+in a digital environment. See "Ariba Network."
+-
+L
+SAP Anywhere - An HTML5 solution that runs in the cloud
+designed for smaller companies with up to 50 employees that
+need a seamless and affordable way to manage their customer
+interactions in a single front-office system. Accessible through a
+Web browser on a desktop, laptop, or mobile device, it delivers a
+consistent customer experience with the seamless integration
+of marketing, sales, and commerce activities. See also "SAP
+SME Solutions."
+SAP Ariba - Category of offerings resulting from the acquisition
+of Ariba in October 2012. All cloud-related supplier assets of
+SAP and Ariba are now consolidated under the SAP Ariba brand.
+SAP Ariba solutions include those for procurement, financials,
+and sourcing, as well as the Ariba Network.
+SAP Best Practices - Packages that provide proven methods
+and tools for organizations to implement best business
+practices in key areas and a range of industries using SAP
+software. The packages deliver methodology, documentation,
+and preconfiguration that enable rapid, reliable deployment with
+quick return on investment.
+-
+SAP Business ByDesign - Adaptable, cloud-based business
+management solution delivered in the cloud, ideally suited for
+growing midsize companies as well as for subsidiaries of larger
+corporations. It is a complete, integrated suite that can run an
+entire enterprise – financials, human resources, sales,
+procurement, customer service, and supply chain. The latest
+versions enable partners and customers to extend the system
+capabilities or build cloud-based applications using SAP
+Business ByDesign Studio.
+SAP BusinessObjects Analytics - Connotes all of SAP's on-
+premise software solutions that help customers achieve the
+power of collective insight in Big Data by empowering them with
+the right information at the right time to make insightful
+business decisions, anticipate change, and uncover new
+opportunities. SAP BusinessObjects Analytics solutions cover
+the areas of business intelligence, enterprise performance
+Additional Information | Glossary
+269
+management, and governance, risk, and compliance. Formerly
+called analytics solutions from SAP.
+SAP BusinessObjects Cloud - A single solution encompassing
+analytics capabilities offered by SAP in the cloud including what
+was previously available in SAP Cloud for Planning. These
+capabilities, together with additional planning and analysis
+capabilities, have been integrated into this offering. SAP
+BusinessObjects Cloud is software as a service (SaaS) built
+natively on SAP Cloud Platform that provides all analytics
+capabilities for all users in one product. Customers are able to
+subscribe to SAP BusinessObjects Cloud as a single solution
+with specific capabilities that can be licensed separately or
+together. Formerly called SAP Cloud for Analytics.
+SAP Business One - Application designed especially for small
+businesses with up to 100 employees, providing a single,
+integrated solution for managing the entire business across
+financials, sales, customer relationships, purchasing, inventory,
+analytics, and operations.
+SAP BW/4HANA - SAP's next-generation data warehouse
+solution built entirely on SAP HANA. It provides a simple set of
+objects that is well suited for modelling an agile and flexible
+layered architecture of a modern data warehouse. SAP
+BW/4HANA manages data from SAP applications or other
+systems, structured or unstructured, and allows accessing all
+models through an open SQL interface. SAP BW/4HANA comes
+with state-of-the-art user interfaces for administrators,
+developers, and end users as well as processes optimized for
+SAP HANA that leverages huge amounts of data in real time for
+competitive advantage. It is not a legal successor of any SAP BW
+solution.
+SAP Clea - The new name and solution/technology brand for
+the SAP portfolio of offerings that include machine learning
+technology. Current applications include SAP Clea for Resume
+Matching; SAP Clea for Cash Application; SAP Clea for Service
+Ticket Intelligence; SAP Clea for Brand Intelligence; and SAP
+Clea for Customer Management Insights.
+SAP Cloud for Planning - See "SAP BusinessObjects Cloud."
+-
+SAP Cloud Platform – An open cloud platform that is the
+foundation for running applications and analytics today and
+allows developers to build custom applications in the cloud as
+either stand-alone or connected to on-premise solutions. It
+includes infrastructure, application, and database services in a
+subscription model. Separately licensed, it is part of SAP Cloud
+powered by SAP HANA. Formerly called SAP HANA Cloud
+Platform.
+SAP Cloud Platform Big Data Service - Standalone Big Data
+solution that combines SAP Cloud Platform technology with
+Apache Hadoop, Apache Spark, Apache Hive, and Apache Pig.
+The offering provides servers, networking, and software
+configured for performance, reliability, and security to ease the
+process of procuring and provisioning hardware, installing and
+configuring Hadoop, integrating in other tools, and managing
+clusters in production. Formerly called Altiscale Data Cloud
+before SAP acquired the company Altiscale.
+SAP Cloud Platform Integration - Technology that integrates
+cloud applications with on-premise solutions from SAP and
+other vendors. Based on a multitenant cloud infrastructure, it
+allows customers to unite business processes and data in a
+secure, reliable environment. Formerly SAP HANA Cloud
+Integration.
+SAP Cloud powered by SAP HANA - Messaging statement that
+refers to all of SAP offerings related to the cloud, including
+platforms, services, applications, technology, and infrastructure.
+It is not the name of a single offering or a category of solutions.
+SAP Cloud always refers to more than just the software and
+technology, but our approach to become "the innovative cloud
+company powered by SAP HANA." See "cloud solutions from
+SAP."
+SAP Community Network - Online portal with nearly two
+million members in more than 200 countries, providing
+individuals with the opportunity to trade experience and
+insights, pursue business opportunities, and learn from each
+other. SAP offers distinct communities in the network that offer
+information, trusted resources, and co-innovation.
+SAP Enterprise Support - Services that provide proactive
+support in addition to all features of SAP Standard Support
+services. These proactive support services encompass tools,
+processes, and services that enable continuous improvement,
+holistic application lifecycle management for continuous
+innovation, business and operational process improvements,
+and levers to address the total cost of operation (TCO).
+SAP ERP - Application designed to optimize business and IT
+processes by reducing IT complexity, increasing adaptability,
+and delivering more IT value at a lower cost than traditional ERP
+solutions. It can support mission-critical, end-to-end business
+processes for finance, human capital management, asset
+management, sales, procurement, and other essential corporate
+functions. SAP ERP can also support industry-specific
+processes by providing industry-specific business functions that
+can be activated selectively via the switch framework, keeping
+the application core stable and helping ensure maximum
+performance.
+SAP Fiori user experience (UX) - As of May 2014, SAP Fiori UX
+is the user experience for SAP software. Based on modern
+design principles, it represents a consumer-like, consistent
+experience across devices, including tablets and smartphones.
+SAP for Aerospace & Defense (SAP for A&D) - Solution
+portfolio specifically designed to meet the needs of the
+270
+Additional Information | Glossary
+SAP ActiveEmbedded - Enhanced engagement services for
+optimizing solutions and accelerating adoption of technologies
+without disrupting customer businesses
+SAP Activate - Innovation adoption framework introduced for
+SAP S/4HANA that combines SAP Best Practices,
+methodology, and guided configuration delivered with a
+reference landscape. The SAP Activate methodology is the SAP
+guidance for implementation, enhancements, upgrades, or co-
+innovation of SAP solutions starting with SAP S/4HANA. It
+enables cost-effective, agile, and fast delivery of the SAP
+solution to the customer and supports deployments in the
+cloud, on premise, or in hybrid deployment.
+S
+Run Simple - SAP's operating principle that refers to how SAP
+solutions and services help SAP customers run at their best by
+addressing complexity and innovating for future growth as well
+as how SAP can radically simplify the way business is
+conducted.
+-
+Leadership Trust Score – Based on the Net Promoter Score
+(NPS) methodology that results from a question in our annual
+global employee survey that gauges employees' trust in our
+leaders. It measures our collective effort to foster a work
+environment based on trust. We use this score to further
+enhance accountability for our leaders and executive
+management.
+lean - Set of manufacturing principles that first defines
+customer value, then reorganizes every step required to design,
+order, build, deliver, and maintain this value across all the
+organizations and units. As a result, firms can do more with less,
+respond more quickly to customer needs, create jobs that are
+more rewarding for employees, and reduce their impact on the
+environment.
+line of business (LoB) - Internal organizational area or
+business unit in a company (division) that combines all
+responsibilities for a particular product, group, or set of
+processes. Examples include sales, purchasing, human
+resources, finance, marketing, and so on. A line of business is a
+typical high-level business capability in a company.
+line-of-business portfolios - SAP offers software portfolios that
+address the needs of organizations in 12 lines of business, or
+functional areas. The following solution portfolios are currently
+available: SAP for Asset Management, SAP for Commerce, SAP
+for Finance, SAP for Human Resources, SAP for Manufacturing,
+SAP for Marketing, SAP for R&D/Engineering, SAP for Sales,
+SAP for Service, SAP for Sourcing and Procurement, SAP for
+Supply Chain Management, and SAP for Sustainability.
+Live Business - SAP's campaign platform that refers to our
+vision of a seamless digital business that enables our customers
+to Run Simple by sensing, responding to, learning from,
+adapting to, and predicting business data in real time.
+M
+machine learning - Technology that enables computers to
+learn from large amounts of data without being explicitly
+programmed. SAP Clea is the new name given to the SAP
+portfolio of offerings including machine learning technology. See
+"SAP Clea."
+maintenance - Software support comprising support for legal
+changes and corrections delivered through the SAP Notes tool,
+support packages, problem support, and access to information
+and online service channels - depending on the maintenance
+phase.
+managed cloud - Deployment model that implies resources are
+dedicated to one customer and accessed through a VPN. The
+infrastructure is owned, managed, and operated by the cloud
+provider in the cloud provider's data center. SAP HANA
+Enterprise Cloud is SAP's managed cloud service.
+mobile apps - Applications for mobile devices available for
+download, demo, and purchase on SAP Store, App Store, and
+other online stores. Mobile apps are categorized as either
+business/product in focus or as consumer-focused. At SAP, our
+mobile apps are task-oriented or allow access to existing on-
+premise software.
+on premise - A deployment model where a software license is
+purchased and deployed on the servers at the premises of the
+customer. The customer manages and controls the software.
+open source - Software based on the concept of software
+developers coming together to build a virtual community and
+solving a common problem by developing working software that
+everyone has a right to change. Successful development
+projects under the open source model include Linux - a free
+operating system supported by SAP.
+key performance indicator (KPI) – Performance figure for
+which threshold values are defined and against which validation
+is executed.
+P
+platform as a service (PaaS) - Cloud infrastructure, operating
+system, programming languages, libraries, services, tools and
+typically a defined level of support for consumers to deploy
+consumer-created or acquired applications. PaaS consumers do
+not manage underlying cloud infrastructure but have control
+over deployed applications.
+powered by SAP HANA - An SAP offering powered by SAP
+HANA runs on the SAP HANA platform. More than 100 SAP
+applications are currently "powered by SAP HANA." Partner
+268
+Additional Information | Glossary
+solutions or applications that are powered by SAP HANA are
+certified by SAP to run on the SAP HANA platform. These
+applications take advantage of distinctive capabilities of SAP
+HANA to deliver key benefits, such as simpler administration,
+reduced overhead, and better business intelligence over
+conventional traditional technology platforms.
+private cloud - Deployment model that implies resources are
+dedicated to one customer and accessed through the Internet.
+The infrastructure is owned, managed and operated by the
+customer, a third-party, or both, and is on the premises of the
+customer, cloud provider, or a third party. SAP indicates private
+cloud deployments using the term "private option."
+product - A high-level non-versioned software offering that
+contains functionality and business logic to address a business
+need. An individual software product comprises software
+product versions.
+product footprint - The environmental impact of products,
+processes, or services by production, usage, and disposal.
+public cloud - Provides consumers access to a provider's
+software applications running on a cloud infrastructure. The
+resources are located on the premises of the cloud provider, not
+of the customer, and are shared by multiple customers
+accessing them through the Internet.
+R
+release - SAP software product that has a version number, is
+shipped at a particular time, and has defined maintenance
+phases.
+renewable energy - The shares and types of electricity obtained
+from renewable sources such as hydro, wind, solar, geothermal,
+and biomass. It is calculated by adding the amount of renewable
+energy specifically sourced, produced on-site by our own solar
+cells and covered by Renewable Energy Certificates (RECs).
+road map - Product timeline that has a variety of objectives,
+including communication to customers, users, or other parties
+interested in the timing of future product releases; the features
+planned for those releases; general prioritization of features;
+and in some cases, the requirements of features in enough detail
+that current and prospective customers can give feedback on
+the feature itself and the product's direction.
+People Survey - SAP's annual employee survey that allows
+employees to provide feedback about issues that impact them.
+21.3
+business intelligence (BI) - Software that enables users to
+analyze an organization's raw data and make fact-based
+decisions. Bl-related processes include data mining, analytical
+processing, querying, and reporting. Business intelligence
+offerings from SAP include SAP BusinessObjects BI solutions,
+SAP Crystal Reports, SAP BusinessObjects Dashboards, and
+SAP BusinessObjects Lumira, as well as the SAP
+BusinessObjects BI platform.
+availability of massive amounts of data requires companies to
+rethink technology architecture and database structures.
+93.7
+91.8
+93.5
+93.5
+94.0
+8
+11
+9
+8
+7
+Customer
+Customer Net Promoter Score⁹) (in %)
+19.2
+22.4
+19.1
+12.1
+8.9
+Environment
+Net Greenhouse gas emissions (in kilotons)
+380
+455
+500
+545
+485
+Greenhouse gas emissions per employee 5) (in tons)
+4.7
+6.0
+Total turnover rate (in %)
+Employee retention (in %)
+ΝΑ
+29
+20.8
+Women managing managers 6), 7) (in %)
+20.8
+19.2
+15.9
+14.3
+14.5
+Women managing teams6). 7) (in %)
+25.9
+25.3
+23.3
+21.7
+21.1
+7.3
+85
+79
+77
+79
+Business Health Culture Index 10) (BHCI, in %)
+78
+75
+72
+67
+66
+Leadership Trust Index (LTI, in %)
+57
+52
+47
+82
+Business Health Culture Index - A score for the general
+cultural conditions in an organization that enable employees to
+stay healthy and balanced. The index is calculated based on the
+results of regular employee surveys.
+8.3
+Greenhouse gas emissions per € revenue (in grams)
+100
+43
+51
+¹) SAP Group. Amounts for 2012 to 2016 according to IFRS, unless otherwise stated.
+2) As sum of current and non-current liability.
+3) Numbers are based on the proposed dividend and on level of treasury stock at year-end.
+4) Average Annual Return. Assuming all dividends are reinvested.
+5) Full-time equivalents.
+6) Relates to different levels of management position.
+"Numbers based on at year-end.
+8) Data center energy consumption normalized against € revenue combines a relative measure of required energy to develop and operate solution in internal and
+external data center.
+9) Due to changes in sampling, the 2015 Customer NPS is not fully comparable to the prior year's score.
+10) The BHCI score for 2014 was recalculated from 70% to 72% based on two updated questions in the people survey concerning work-life balance.
+264
+Additional Information | Five-Year Summary
+Glossary
+A
+Africa Code Week - SAP-led corporate social responsibility
+initiative initiated in 2015 in cooperation with partners. Planned
+as an annual event, children in African countries where SAP has
+a market are introduced to computer programming to increase
+awareness of, and interest in, the software development career
+field. The initiative has been extended to other participant
+groups, including an innovative Refugee Code Week in 2016.
+analytics - Discovery and communication of meaningful
+patterns in data. It is applied to business data to describe,
+predict, and improve business performance; recommend action;
+and guide decision making across all organizations and
+functions in a company. Analytics helps companies gain new
+insight and understanding of their business performance based
+on data and statistical methods. See "analytics solutions from
+SAP."
+analytics solutions from SAP - See "SAP BusinessObjects
+Analytics."
+application - Software that enables organizations to address
+specific business needs and to perform certain business
+processes or activities. An application may comprise one
+software product or multiple software products, components, or
+instances.
+Ariba See "SAP Ariba."
+Five-Year Summary¹)
+Ariba Network Business commerce network where
+companies of all sizes can connect to their trading partners
+anywhere, at any time from any application or device to buy, sell,
+and manage their cash more efficiently and effectively than ever
+before. Companies around the world use the Ariba Network to
+simplify interenterprise commerce and enhance the results they
+deliver. See “business network."
+B
+best practice - A management concept that involves devising a
+method of process that most effectively produces a desired
+outcome. SAP applications use business best practices to help
+customers automate common business processes through
+software and technology. See "SAP Best Practices."
+Big Data - The large volume of data created by billions of
+connected devices and people generating a tremendous amount
+of information about their behavior, location, and activity. This
+100
+100
+Renewable energy sourced (in %)
+NA
+17.3
+21.9
+28.4
+32.4
+30.0
+Total energy consumption (in GWh)
+950
+965
+920
+910
+860
+Energy consumed per employee5) (in kWh)
+11,800
+7.9
+12,500
+13,900
+14,000
+Data center energy consumed (in GWh)
+243
+249
+179
+173
+160
+Data center energy per € revenue) (in kWh)
+11
+12
+10
+NA
+13,400
+Cash conversion rate (net cash flows from operating activities in % of
+profit after tax)
+-
+19
+-2,370
+360
+-2,011
+-2,660
+128
+-2,339
+411
+-1,929
+-2,734
+-2,533
+132
+-2,602
+-6,583
+598
+Total cost of revenue (non-IFRS)
+Research and development (IFRS)
+Research and development (in % of total revenue, IFRS)
+-5,985
+-6,245
+683
+-5,562
+-4,983
+467
+-4,515
+-5,031
+-5,073
+487
+-4,543
+542
+-4,531
+-3,044
+-2,845
+-2,331
+-2,282
+-2,261
+13.8
+13.7
+13.3
+-2,557
+346
+-2,211
+-2,426
+122
+-2,304
+-2,932
+167
+-2,765
+113
+-2,976
+-3,089
+-1,066
+-789
+-2,182
+Non-IFRS adjustments
+238
+Cost of software licenses and support (non-IFRS)
+-1,944
+-2,291
+283
+-2,008
+-393
+-2,076
+258
+-1,818
+-218
+ΝΑ
+-2,056
+ΝΑ
+13.6
+263
+-1,793
+ΝΑ
+Cost of cloud and software (IFRS)
+-3,495
+Non-IFRS adjustments
+Cost of cloud and software (non-IFRS)
+485
+-3,010
+-3,313
+516
+-2,797
+Cost of services (IFRS)
+Non-IFRS adjustments
+Cost of services (non-IFRS)
+Total cost of revenue (IFRS)
+Non-IFRS adjustments
+ΝΑ
+Cost of cloud subscriptions and support (non-IFRS)
+Cost of software licenses and support (IFRS)
+13.9
+18.0
+Cloud subscriptions and support margin (in % of corresponding revenue,
+non-IFRS)
+64.4
+65.6
+64.3
+71.2
+NA
+Cloud and software margin (in % of corresponding revenue, IFRS)
+81.0
+80.8
+82.1
+82.4
+81.7
+Cloud and software margin (in % of corresponding revenue, non-IFRS)
+Services margin (in % of corresponding revenue, IFRS)
+83.7
+83.8
+84.6
+85.2
+85.0
+15.1
+18.1
+25.2
+19.6
+20.1
+Software and support gross margin (IFRS, in %)
+Software and support gross margin (non-IFRS, in %)
+Total gross margin (in % of total revenue, IFRS)
+18.2
+NA
+54.8
+55.8
+55.3
+17.2
+17.6
+18.5
+18.6
+Sales and marketing (IFRS)
+General and administration (IFRS)
+Depreciation and amortization (IFRS)
+-6,265
+-5,782
+-1,005 -1,048
+-1,268 -1,289
+-4,593
+-3,912
+-892
+-866
+Research and development (in % of total operating expenses, IFRS)
+-949
+-951
+-863
+Additional Information | Five-Year Summary
+261
+€ millions, unless otherwise stated
+2016
+2015
+2014
+2013
+2012
+Profits and Margins
+Cloud subscriptions and support margin (in % of corresponding revenue,
+IFRS)
+56.1
+-1,010
+22.7
+NA
+88
+2
+1
+0
+NA
+NA
+Software licenses (non-IFRS)
+4,862
+4,836
+4,399
+ΝΑ
+NA
+Software support (IFRS)
+Non-IFRS adjustments
+Software support (non-IFRS)
+Cloud and software (IFRS)
+Non-IFRS adjustments
+Cloud and software (non-IFRS)
+Services (IFRS = non-IFRS)
+Total revenue (IFRS)
+Non-IFRS adjustments
+Total revenue (non-IFRS)
+10,571
+10,093
+8,829
+NA
+ΝΑ
+1
+Non-IFRS adjustments
+ΝΑ
+ΝΑ
+4,399
+20
+Revenues
+2016
+2015
+2014
+2013
+2012
+Cloud subscriptions and support (IFRS)
+2,993
+2,286
+1,087
+696
+270
+0
+Non-IFRS adjustments
+10
+14
+61
+73
+Cloud subscriptions and support (non-IFRS)
+2,995
+2,296
+1,101
+757
+343
+Software licenses (IFRS)
+4,860
+4,835
+2
+97
+5
+ΝΑ
+81
+22,067
+20,805
+17,580
+16,897
+16,304
+Share of predictable revenue (IFRS, in %)
+61
+60
+56
+NA
+NA
+61
+60
+57
+NA
+ΝΑ
+Share of predictable revenue (non-IFRS, in %)
+Operating expenses
+Cost of cloud subscriptions and support (IFRS)
+Non-IFRS adjustments
+-1,313
+-1,022
+-481
+-314
+NA
+247
+232
+82
+19
+11
+16,223
+10,572
+10,094
+8,834
+NA
+ΝΑ
+18,424
+17,214
+14,315
+13,505
+12,801
+5
+11
+19
+NA
+82
+18,428
+17,226
+14,334
+13,587
+12,883
+3,638
+22,062
+5
+3,579
+3,245
+3,310
+3,421
+20,793
+17,560
+16,815
+81
+29.0
+-4,131
+23.9
+0
+0
+309
+-31
+0
+Segment results
+Applications, Technology & Services Segment
+Segment revenue
+19,920
+18,963
+16,734
+ΝΑ
+NA
+Gross margin (in % of corresponding revenue)
+74
+Segment profit
+8,031
+23.5
+75
+ΝΑ
+ΝΑ
+6,946
+ΝΑ
+ΝΑ
+Segment margin (Segment profit in % of Segment revenue)
+SAP Business Network Segment
+40
+41
+Adjustment for TomorrowNow and Versata litigation
+8
+70
+126
+38
+40
+40
+44
+44
+43
+Non-IFRS Adjustments
+Revenue adjustments
+5
+11
+19
+82
+81
+42
+Adjustment for acquisition-related charges
+738
+562
+555
+537
+Adjustment for share-based payment expenses
+785
+724
+290
+327
+522
+Adjustment for restructuring
+28
+621
+680
+NA
+ΝΑ
+Segment revenue
+Net cash flows from operating activities
+4,628
+3,638
+3,499
+3,832
+3,822
+Net cash flows from investing activities
+-1,799
+-334
+-7,240
+-1,781
+-5,964
+Net cash flows from financing activities
+Liquidity and cash flow
+-2,705
+4,298
+-1,589
+-194
+Free cash flow
+3,627
+3,001
+2,762
+3,266
+3,281
+Free cash flow in % of total revenue
+16
+14
+16
+-3,356
+Share of software orders less than € 1 million (in % of total software order
+entry)
+NA
+16
+1,925
+1,616
+647
+ΝΑ
+ΝΑ
+Gross margin (in % of corresponding revenue)
+67
+68
+67
+ΝΑ
+ΝΑ
+262
+Additional Information | Five-Year Summary
+NA
+€ millions, unless otherwise stated
+2015
+2014
+2013
+2012
+Segment profit
+338
+317
+105
+NA
+NA
+Segment margin (Segment profit in % of Segment revenue)
+18
+20
+2016
+28
+74
+7,723
+22
+1,003
+1,150
+Operating profit (non-IFRS)
+6,633
+6,348
+5,638
+5,482
+5,192
+Operating margin (in % of total revenue, IFRS)
+23.3
+20.5
+24.7
+26.6
+24.9
+Operating margin (in % of total revenue, non-IFRS)
+30.1
+30.5
+32.1
+32.4
+31.8
+Financial income, net
+-38
+-5
+-25
+-66
+-72
+Profit before tax (PBT)
+1,307
+4,863
+2,095
+Non-IFRS adjustments
+85.9
+84.7
+84.3
+NA
+ΝΑ
+87.4
+86.6
+86.3
+NA
+24
+70.2
+70.0
+71.6
+70.1
+68.7
+Total gross margin (in % of total revenue, non-IFRS)
+72.9
+73.3
+74.3
+73.1
+72.2
+Operating profit (IFRS)
+5,135
+4,252
+4,331
+4,479
+4,041
+1,498
+3,991
+ΝΑ
+4,396
+Return on equity (profit after tax in percentage of average equity)
+15
+14
+18
+22
+21
+Order Entry
+New cloud bookings
+1,147
+874
+436
+ΝΑ
+ΝΑ
+27.5
+Deferred cloud subscriptions and support revenue (IFRS)")
+957
+689
+443
+317
+Orders - Number of on-premise software deals (in transactions)
+57,291
+57,439
+55,909
+59,289
+Share of software orders greater than € 5 million (in % of total software
+order entry)
+29
+27
+4,355
+1,271
+25.9
+54,120
+26.1
+3,796
+PBT margin (in % of revenues)
+26.1
+22
+19
+26
+23
+Income tax expense
+-1,229
+-935
+-1,075
+-1,071
+-993
+25
+3,634
+Effective tax rate (non-IFRS, in %)
+Profit after tax
+24.4
+24.7
+23.4
+25.3
+26.2
+2,803
+3,325
+26.8
+3,280
+3,056
+Effective tax rate (IFRS, in %)
+E-mail press@sap.com
+Web site www-sap.com/press
+-
+Additional Information | Financial Calendar and Addresses
+Financial and
+Sustainability
+Publications
+We present our financial, social, and environmental performance
+in the 2016 SAP Integrated Report, which is available at
+www.sapintegratedreport.com. This Excerpt from the Integrated
+Report 2016 comprises all of the information required by
+accounting and disclosure standards applicable to us.
+The following publications are available in English at
+www.sap.com/investor, or in German at www.sap.de/investor:
+-
+276
+Annual Report on Form 20-F (IFRS, in English)
+-
+-
+-
+SAP Group Annual Report (IFRS, in English and German)
+SAP Integrated Report in PDF format
+SAP SE Statutory Financial Statements and Review of
+Operations (HGB, in German)
+Interim Reports (in English and German)
+Quarterly Statements (in English and German)
+Tel. +49 6227 74 63 15
+XBRL versions of the annual and interim reports
+SAP INVESTOR, SAP's quarterly shareholder magazine
+(German only)
+Complete information on the governance of SAP is available at
+www.sap.com/corpgovernance. Materials include:
+-
+Press
+The addresses of all our international subsidiaries and sales
+partners are available on our public Web site at
+www.sap.com/directory/main.html.
+E-mail investor@sap.com
+Results for the second quarter of 2017
+-
+October 19
+Results for the third quarter of 2017
+Addresses
+Group Headquarters
+SAP SE
+Dietmar-Hopp-Allee 16
+69190 Walldorf
+Germany
+Tel. +49 6227 74 74 74
+Fax +49 6227 75 75 75
+E-mail info@sap.com
+Web site www.sap.com
+For more information about the matters discussed in the report,
+contact:
+January 30
+Preliminary results for fiscal year 2017
+May 17
+Annual General Meeting of Shareholders, Mannheim, Germany
+May 22
+Dividend Payment
+Investor Relations
+Tel. +49 6227 76 73 36
+Fax +49 6227 74 08 05
+Web site www.sap.com/investor
+-
+SAP Integrated Report project team with the support of
+SAP software
+Information about the management of the company,
+Photography Executive Board
+Andreas Pohlmann, Munich, Germany
+Printing
+ABC Druck, Heidelberg, Germany
+Copyright
+SAP SE
+Dietmar-Hopp-Allee 16
+69190 Walldorf
+Germany
+© 2017 SAP SE or an SAP affiliate company. All rights reserved.
+No part of this publication may be reproduced or transmitted in
+any form or for any purpose without the express permission of
+SAP SE or an SAP affiliate company.
+SAP and other SAP products and services mentioned herein as
+well as their respective logos are trademarks or registered
+trademarks of SAP SE or an SAP affiliate company in Germany
+and other countries.
+Please see www.sap.com/about/legal/copyright.html for
+additional trademark information and notices.
+278
+Additional Information | Publication Details
+Group Headquarters
+SAP SE
+Dietmar-Hopp-Allee 16
+69190 Walldorf
+Germany
+www.sap.com
+www.sap.com/investor
+July 20
+Concept and Realization
+-
+Investor Relations
+Publisher
+including the directors on the governing bodies
+Details of the directors' dealings in SAP shares
+Shareholder meeting documents and ballot results
+Articles of Incorporation
+Agreement on the Involvement of Employees in SAP SE
+German Code of Corporate Governance
+Declaration of Implementation pursuant to the German Stock
+Corporation Act, Section 161
+Code of Business Conduct for Employees
+Corporate Governance Statement pursuant to the German
+Commercial Code, Section 289a
+Corporate Governance Report
+Additional SAP policies are made public at
+www.sap.com/corporate-sustainability:
+-
+-
+-
+SAP Human Rights Commitment
+SAP Global Health and Safety Management Policy
+SAP Environmental Policy
+SAP Supplier Code of Conduct
+SAP Partner Code of Conduct
+Additional Information | Financial Calendar and Addresses
+277
+Publication Details
+SAP SE
+Dividend Payment
+2018
+Annual General Meeting of Shareholder, Mannheim, Germany
+SAP for Utilities - Solution portfolio for all supply and energy
+industries, with capabilities ranging from call centers and
+Internet communications to consumption billing.
+SAP for Wholesale Distribution - Solution portfolio that
+addresses the needs of midsize and large wholesale distribution
+businesses in a wide range of segments. Industry-specific
+capabilities support new business models and strategies that
+meet the needs of an important supply sector.
+SAP HANA-Flexible, data-agnostic, in-memory platform that
+helps organizations analyze their business operations, using
+huge volumes of detailed transactional and analytic information
+from virtually any data source. The platform provides the
+foundation for innovative applications that take advantage of an
+in-memory database and calculation engine, allowing customers
+to conduct complex planning, forecasting, and simulation based
+on real-time data. Software products built for SAP HANA have
+been specifically designed or at least adapted to take advantage
+of the enhanced capabilities of the SAP HANA platform.
+SAP HANA Enterprise Cloud - This service enables customers
+to access solutions in the cloud. It contains managed cloud
+applications, in-memory infrastructure, managed services, and
+SAP Cloud Platform through an additional license, to build
+custom applications in the cloud. On-premise applications from
+SAP can be delivered to customers via SAP HANA Enterprise
+Cloud.
+SAP HANA Vora – An in-memory, massively distributed data
+processing engine for Hadoop that provides simple business-
+oriented scale-out processing of data. This engine allows
+distributed Hadoop data to be analyzed together with enterprise
+data using the SAP HANA platform.
+SAP Hybris - Unified brand resulting from the acquisition of
+hybris in August 2013. All e-commerce solutions from SAP and
+hybris are now consolidated under the SAP Hybris brand. SAP
+Hybris solutions help businesses sell more goods, services, and
+digital content through every touch point, channel, and device.
+SAP Hybris Cloud for Customer - A cloud-based offering of
+CRM applications and tools developed for sales, service, and
+marketing teams that provides an overview of your end-to-end
+business, as well as deep customer insight and personalized
+engagement, so that they can deliver a relevant experience at
+every step of your customer's journey. It also offers designed-in
+social collaboration to help transform social media
+conversations into business insight. The offering currently
+includes SAP Hybris Cloud for Sales, SAP Hybris Cloud for
+Service, SAP Hybris Marketing Cloud, and SAP Hybris Cloud for
+Social Engagement solutions. An Edge edition is available for
+small and midsize enterprises.
+SAP Hybris Commerce - A solution that offers customers a
+platform enabled for the cloud that supports product content
+management and unified commerce processes. It gives a
+business a single view of its customers, products, and orders,
+and its customers a single view of the business. It combines
+functionality. Formerly available in two separate solutions, SAP
+hybris B2B Commerce and SAP hybris B2C Commerce, which
+were combined in April 2015.
+SAP.io SAP's startup incubation engine and related program
+that helps innovators inside and outside of SAP build products,
+find customers, and ultimately change industries. The SAP.io
+team works with the best entrepreneurs, developers, designers,
+and data scientists to upend how business works.
+SAP for Transportation & Logistics - Solution portfolio that
+covers the unique business needs of postal services, railways,
+airlines, and toll collection companies, as well as logistics service
+providers, to optimize supply chain and planning.
+SAP Leonardo - The new SAP brand for our new innovative
+portfolio for Internet of Things (IoT) solutions. SAP Leonardo loT
+solutions enable companies to not only realize a digital
+transformation of existing end-to-end business processes, but
+also allows them to adopt new business models to run digitally.
+It extends digital core with adaptive applications, Big Data
+applications, and connectivity to enable new business
+processes, new business models, and new work environments.
+SAP NetWeaver - A comprehensive technology platform
+designed to efficiently develop, run, and extend business
+applications. SAP NetWeaver provides foundation and
+enterprise software, including the SAP Business Warehouse
+application, and the SAP NetWeaver Application Server, SAP
+Enterprise Portal, and SAP Process Orchestration components.
+It facilitates the easy integration of SAP software with
+heterogeneous system environments, third-party solutions, and
+external business partners. See "technology platform."
+272
+Additional Information | Glossary
+SAP PartnerEdge - Global, partner-to-partner business
+collaboration network where SAP partners can share expertise,
+development capabilities, solutions, and knowledge to extend
+their market reach. In late 2012, SAP's extranet for partners,
+SAP Channel Partner Portal, merged with SAP PartnerEdge. The
+combined site, available at www.sappartneredge.com now gives
+partners access to information, product and business news,
+tools, training, and business resources to order products.
+Partners can also manage their relationship with SAP and
+collaborate with other SAP partners through SAP PartnerEdge.
+SAP Payment service - Service that helps companies invest in
+SAP solutions implemented by a strategic partner of SAP:
+Siemens Financial Services GmbH (SFS). SFS targets the
+financing service chiefly at midsize companies. Depending on
+local conditions, the SFS plan leases solutions to customers and
+provides loan finance. Formerly called SAP Financing service.
+SAPPHIRE NOW - SAP's signature business technology event
+and the largest SAP customer-driven conference is held
+annually in several locations around the globe. The global event
+in the United States is co-located with the Americas' SAP Users'
+Group (ASUG) annual conference. Attendees discover new
+initiatives, solutions, products, and services, as well as unique
+access to the latest business strategies and industry best
+practices from SAP customers, partners, executives, and
+industry experts to help them drive business results across all
+levels.
+Sapphire Ventures - Name of independent venture firm spun
+off from SAP, providing the agility of a start-up while allowing
+companies to tap into SAP's global enterprise ecosystem of
+customers and partners. The firm partners with outstanding
+entrepreneurs and venture firms worldwide to build industry-
+leading businesses. Formerly called SAP Ventures.
+SAP Rapid Deployment solutions - Packages of preconfigured
+software and predefined services with content including best
+practices, templates, tools, and business user enablement with
+predetermined scope, time, and costs. Because the solutions
+are installed quickly, customers can benefit from crucial
+software functionality within as little as 12 weeks, helping lower
+the total cost of implementation and giving customers
+immediate and tangible value.
+SAP road maps - Available for industries, lines of business, and
+technology, SAP road maps highlight the SAP solutions available
+today, planned innovation, and the SAP vision for the future.
+SAP Month of Service - Held annually in October, SAP's
+signature corporate volunteerism effort offers SAP employees
+around the world opportunities to come together to support
+social change in their communities.
+SAP for Telecommunications - Solution portfolio that provides
+telecommunications enterprises of all types and sizes a range of
+industry-specific capabilities, including support for convergent
+invoicing and contract accounting.
+SAP for Sports & Entertainment - Solution portfolio that
+comprises solutions for sports teams, leagues, and venues,
+designed to help them deepen fan engagement, drive on-field
+performance, and optimize business efficiency.
+SAP for Retail - Solution portfolio that offers multichannel
+applications designed specifically to provide the best retail
+services to a large customer base.
+May 15
+aerospace and defense industry. It offers capabilities for
+maintenance, repair and overhaul, airline operations, defense,
+manufacturing, contract and program management, and
+business acquisitions.
+SAP for Automotive - Solution portfolio designed to meet the
+specific needs of the automotive industry. Its capabilities help
+link complex business processes into a logical flow, maximizing
+efficiency and profitability and satisfying customers'
+expectations.
+SAP for Banking - Solution portfolio that enables banks to
+obtain all customer information at a glance and offers a full
+complement of high-performance capabilities for strategic
+planning, financial accounting, costing, and enterprise-wide
+control. It also features key industry-specific applications for
+profitability management, risk management, customer
+relationship management, and integrated customer account
+systems.
+SAP for Chemicals - Solution portfolio that delivers support for
+specific processes and tools that chemical companies require.
+Industry-specific capabilities include recipe management, batch
+management, and version control.
+SAP for Consumer Products - Solution portfolio that supports
+the integration of every step of the consumer product value
+chain - from suppliers to consumers. Key capabilities include
+mobile and Internet sales, trade promotion management,
+inventory management, brand and channel management, and
+demand signal management.
+SAP for Defense & Security - Solution portfolio that offers a
+variety of capabilities that meet the critical needs of the defense
+and security sector. Key industry-specific capabilities include
+acquisition and materials management; force planning;
+maintenance, repair, and overhaul (MRO); personnel and
+organization; infrastructure management; planning and support
+for deployed operations; in-service support; and line
+maintenance.
+SAP for Engineering, Construction & Operations (SAP for
+EC&O) Solution portfolio designed to meet the specific
+requirements of project-oriented enterprises that offers
+capabilities for industrial plant construction, construction of
+commercial and private buildings, and shipbuilding.
+SAP for Healthcare - Solution portfolio for hospitals and clinics
+to manage a variety of required administrative and clinical
+processes.
+SAP for Higher Education and Research (SAP for HE&R) -
+Solution portfolio that supports organizational processes and
+unique needs of public and private universities, multicampus
+institutions, research agencies, and medical colleges, including
+campus management, grants management, student lifecycle
+management, financials, operations, human capital
+management, procurement, analytics, research, and asset
+management.
+SAP for High Tech - Solution portfolio that meets the demands
+of high-tech industries, including RosettaNet support.
+-
+SAP for Industrial Machinery & Components (SAP for IM&C)
+· Solution portfolio that coordinates the entire scope of
+business activities (estimating, order entry, project
+management, and production planning) for the industrial sector
+and supports areas ranging from maintenance and services to
+billing and profitability analysis.
+SAP for Insurance - Solution portfolio that integrates steps in
+the insurance business process, including capabilities for
+customer contact, policy and product management, collections
+and disbursement, and claims management.
+SAP for Life Sciences - Solution portfolio that meets the
+requirements of pharmaceutical, biotechnology, and diagnostics
+companies, as well as manufacturers of medical devices and
+products.
+SAP for Media - Solution portfolio that supports processes
+specific to the media industry with capabilities that include sales
+and distribution, advertising management, product
+development, and intellectual property management.
+SAP for Mill Products - Solution portfolio for manufacturers of
+building materials, the paper and timber industry, metal and
+primary metal producers, and textile and furniture
+manufacturers.
+SAP for Mining - Solution portfolio that supports processes
+specific to the mining industry, including mining operations and
+asset performance; sales and supply chain management;
+operational risk and compliance; as well as human resources;
+finance; procurement; and IT management.
+SAP for Oil & Gas (SAP for O&G) - Solution portfolio that
+meets the demands of oil and gas companies of all sizes.
+SAP for Professional Services - Solution portfolio that delivers
+integrated tools, best practices, and support for automated
+processes designed specifically for the demands of the
+professional services industry, including management
+consultancies as well as accounting and legal firms.
+Additional Information | Glossary
+271
+SAP S/4HANA - Launched in February 2015, SAP's next-
+generation business suite offered exclusively on the SAP HANA
+platform, with on-premise and cloud deployment editions,
+designed with the role-based user experience of SAP Fiori. Cloud
+editions are available for marketing, project services, and the
+enterprise.
+SAP S/4HANA Enterprise Management - A core solution that
+covers all mission-critical business processes of an enterprise. It
+is natively built on the SAP HANA platform, designed with SAP
+Fiori user experience (UX), and delivered in the cloud and on
+premise. It is a core element of the new SAP S/4HANA Line-of-
+Business (LoB) Solutions.
+SAP for Public Sector - Solution portfolio for public
+administration, providing an electronic framework that enables
+online communication through various applications for the
+public, government authorities, and related entities.
+SAP S/4HANA Line-of-Business Solutions - Solutions that
+combine the core capabilities included in the SAP S/4HANA
+Enterprise Management solution with the solutions in the SAP
+portfolio (on premise and cloud) for a specific line of business.
+total energy consumed - The sum of all energy consumed
+through SAP's own operations, including energy from renewable
+sources and energy consumed by external data centers
+delivering our cloud offerings.
+U
+United Nations Global Compact (UN Global Compact) - A
+policy initiative for businesses that are committed to aligning
+their operations and strategies with ten universally accepted
+principles in the areas of human rights, labor standards,
+environment, and anti-corruption.
+UN Sustainable Development Goals - A set of 17 global
+development goals by the United Nations which are aimed to
+ensure an environmentally, socially and economically
+274
+Additional Information | Glossary
+sustainable future by tackling adverse challenges to humanity
+like poverty, hunger and inequality.
+user experience (UX) - In general terms, UX represents the
+quality of a user's interaction with and perceptions of a system.
+At SAP, our UX is a characteristic of solutions or products that
+use SAP Fiori UX technology and follow SAP Fiori UX guidelines
+to offer a next-generation experience to our users.
+V
+version - Variant of a software product that is specific to
+audience, operating system, device, or database. Depending on
+context, may also refer to a specific product release.
+W
+works council – As dictated by the German Works Council
+Constitution Act, a works council is a legal body for representing
+employees' interests to the employer and codetermining the
+works in private companies. On June 21, 2006, the SAP AG
+employees working in Germany elected its first works council. A
+European works council was created in the spring of 2012. The
+SAP AG works council evolved to become the SAP SE works
+council in 2014 to reflect the legal entity of SAP SE.
+Additional Information | Glossary
+275
+Financial Calendar
+and Addresses
+Financial Calendar
+2017
+February 28
+Publication of SAP Integrated Report
+April 25
+Results for the first quarter of 2017
+SAP S/4HANA Finance - A global financial solution powered by
+SAP HANA offering a complete choice of deployment (cloud, on
+premise, hybrid). It is part of the modular SAP S/4HANA Line-
+of-Business (LoB) Solutions.
+May 10
+technology platform - The technical foundation for a business-
+driven software architecture that increases the adaptability,
+flexibility, openness, and cost-efficiency of IT operations and
+enables organizations to become more agile in responding to
+change. See "SAP NetWeaver."
+T
+women in management - Phrase used to refer to the
+percentage of women in management positions (managing
+teams, managing managers, executive boards) as compared to
+the total number of managers, expressed by the number of
+individuals and not full-time equivalents (FTES).
+SuccessFactors - See "SAP SuccessFactors."
+-
+SAP SME Solutions A subset of the portfolio of SAP solutions
+for small businesses and midsize companies. It is essentially a
+family name for four specific offerings: SAP Anywhere, SAP
+Business One, SAP Business ByDesign, and SAP Business All-in-
+One. By consolidating these four offerings under one umbrella
+name, we focus on a portfolio of SME offerings that helps our
+customers choose the best solution for their business size and
+needs.
+sustainability - A method of creating social, environmental, and
+economic value for long-term business success and responsible
+global development.
+SAP Solution Manager - Application management solution that
+enables customers to manage their SAP and non-SAP
+applications better. With SAP Solution Manager, customers can
+centralize, enhance, automate, and improve the management of
+their entire system landscape, thus reducing total cost of
+ownership. The solution includes features such as diagnostics,
+testing, root cause analysis, and solution monitoring.
+SAP solutions for customer engagement and commerce -
+Category of solutions that help businesses create experiences
+that engage customers like never before and can lead to more
+effective marketing promotions, increased revenue share of new
+customers, reduced customer churn, increased revenue growth,
+and improved cart-to-order conversion rate.
+SAP solutions for small businesses and midsize companies
+Category of solutions that combine business management and
+business intelligence software for small and midsize enterprises
+(SMEs). It currently includes SAP SME Solutions, SAP
+BusinessObjects Edge solutions, Edge editions or existing SAP
+software products, and other SME services. As with large
+enterprises, these firms seek to streamline business processes,
+cut costs, drive growth, and increase profitability by receiving
+the right information at the right time - across all operations.
+SAP solutions for sustainability - Category of solutions that
+helps companies measure sustainability key performance
+indicators; energy and carbon management; and environment,
+health, and safety. SAP solutions for sustainability help
+organizations tackle energy consumption and greenhouse gas
+Additional Information | Glossary
+emissions, as well as support efforts in product safety,
+healthcare, and sustainability performance management.
+SAP Store - Public online store (www.sapstore.com) where you
+can discover, download, and buy SAP solutions, services, mobile
+apps, demos, and free trials from SAP and partners.
+SAP SuccessFactors - Unified brand resulting from the
+acquisition of SuccessFactors in August 2013. All cloud HR
+assets of SAP and SuccessFactors are now consolidated under
+the SAP SuccessFactors brand. SAP SuccessFactors solutions
+help businesses sell more goods, services, and digital content
+through every touch point, channel, and device.
+SAP SuccessFactors Employee Central - The foundation of
+the SAP SuccessFactors HCM Suite of solutions, The offering is
+core HR software delivered securely as a service from the cloud.
+It offers one global system of record, complete workforce
+overview combining HR and talent data, powerful analytics, and
+social collaboration fine-tuned to meet local needs.
+273
+SAP SuccessFactors Employee Central Payroll - A cloud
+solution that extends the SAP SuccessFactors HCM suite to
+include payroll accounting and management.
+SAP SuccessFactors HCM Suite - Suite of HR solutions for
+talent management, core HR, collaboration, and workforce
+analytics. The cloud-based suite provides solutions to bridge the
+gap between strategy and execution with tools to hire, reward,
+and develop the right people with the right skills to grow a
+business sustainably.
+SAP University Alliances - Program that introduces students
+to the exciting technologies shaping business today, and
+designed to connect students around the world interested in
+SAP solutions, careers, and research opportunities. Students
+participate in classroom sessions, app development, networking
+opportunities, events, and more. The SAP University Alliances
+community provides connections between university leaders
+and students, SAP customers and partners, and SAP internal
+experts.
+SAP Ventures - see "Sapphire Ventures."
+Scope 1 (emissions) - Direct greenhouse gas emissions from
+sources that are owned or controlled by the reporting company,
+for example, fuel burned in corporate cars.
+Scope 2 (emissions) - Indirect greenhouse gas emissions from
+consumption of purchased electricity, heat, or steam.
+Scope 3 (emissions) - Indirect emissions that are a
+consequence of the activities of the reporting company, but
+occur from sources owned or controlled by another company,
+such as business flights.
+service - A service provided to a customer by SAP (or SAP
+partners). Examples: education consulting; data management
+services
+social enterprise - An organization with an aim to achieve wider
+social, environmental, or community objectives through its
+business activities
+solution - A solution enables a customer to meet a challenge or
+take advantage of an opportunity and are built or assembled by
+flexibly combining software products and technology. SAP
+solutions may include support for best business practices and
+be aided by consulting and ongoing support. They may also be
+enhanced or extended by applications and services from
+partners.
+software as a service (SaaS) - Software that is provided
+literally "as a service." Software applications are delivered and
+managed remotely over a secure Internet connection and a
+standard Web browser. Access is charged on a subscription
+basis usually on a dedicated time basis and with expandable
+feature access options. Typically a defined level of support is
+included. See "cloud computing."
+0
+0
+0
+0
+0
+4,627.8
+Total according to
+GCGC
+805.4
+712.1 13,008.5 1,837.9 4,017.4
+712.4 14,304.7 1,837.5 4,314.5
+0
+O
+0
+1,837.5
+0
+0
+0
+Service cost
+11,485.2 1,848.2
+805.4
+4,017.4
+712.1 13,008.5 1,837.9
+4,314.5
+14,304.7
+712.4
+11,485.2 1,848.2
+4,627.8
+0
+Reconciliation reporting of total compensation pursuant to Section 314(1)(6a) HGB in connection with GAS 17
+0
+-1,125.8
+Total
+2,382.9
+2,372.6 4,066.9
+2,372.2 4,364.0
+4,677.3
+Total compensation
+0
+0
+0
+○
+0
+Less service cost
+value
+measuring grant
+Less difference in
+compensation
+annual variable
+1.660.5
+1,660.5 1,175.3
+1,175.3
+1,660.5
+1,175.3
+Plus allocated actual
+compensation
+variable target
+-1,125.8
+-1,125.8 -1,125.8
+-1,125.8
+-1,125.8
+Less granted annual
+Plan 2015
+700.0
+8,639.3
+Total
+22.4
+105.4
+105.4
+105.4
+12.1
+12.1
+12.1
+12.1
+11.7
+12.4
+12.4
+12.4
+712.4
+Fringe benefits³)
+700.0
+To Our Stakeholders | Compensation Report
+700.0
+700.0 700.0
+700.0
+700.0
+700.0
+700.0
+700.0
+700.0
+Fixed compensation
+2015
+2016 2016
+(Min) (Max)
+700.0
+712.4
+712.4
+711.7
+0
+2,086.2
+10,255.9
+0
+2,476.6
+11,551.8
+0
+2,789.6
+LTI 2016 Plan
+compensation
+Multiyear variable
+compensation
+1,125.8
+2,040.5
+0
+1,125.8
+○ 2,040.5 1,125.8
+1,125.8
+2,040.5 1,125.8
+0
+1,125.8
+One-year variable
+722.4
+805.4
+805.4
+805.4
+712.1 712.1
+712.1
+712.1
+RSU Milestone
+29
+5,474.2
+30
+10,827.6
+646.1
+3,669.1
+538.5 8,563.0
+2,916.5
+Total according to GCGC
+990.4
+606.0
+0
+0
+0
+0
+0
+43,302.8
+0
+42,696.8 12,340.5
+10,827.6
+646.1
+3,669.1
+538.5 8,563.0
+2,916.5
+Total
+315.0
+RSU Milestone Plan 2015
+23,942.4
+8,218.0
+0
+1,939.7
+Service cost
+13,330.9
+Reconciliation reporting of total compensation pursuant to Section 314(1)(6a) HGB in connection with GAS 17
+Less granted annual variable
+To Our Stakeholders | Compensation Report
+(€263,200) upon his appointment to the Executive Board, the
+total Executive Board compensation for 2015 calculated as
+required under section 314 of the German Commercial Code
+amounted to €15,400,400.
+The total Executive Board compensation for 2016 calculated as
+required under section 314 of the German Commercial Code
+amounted to €43,147,900. Including RSU Milestone Plan 2015
+awards for 2015 granted in 2015 to Michael Kleinemeier
+4) Total grant value at time of grant according to GCGC (€315.000) deducted by the grant value calculated as required under section 314 of the German
+Commercial Code (€263.200).
+3) Insurance contributions, benefits in kind, expenses for maintenance of two households, use of aircraft as well as tax and discrete payments arising through
+application of the fixed exchange-rate clause in 2016 for 2015.
+2) The value of the fixed and one-year variable elements is subject to a contractual exchange-rate clause applied at the end of the year, so the amounts actually
+paid may be greater.
+1) The value of the fixed and one-year variable elements is granted in U.S. dollars. For conversion purposes from U.S. dollars into euro, for fixed compensation the
+2016 average exchange rate applies and for the one-year variable element the 2016 year-end exchange rate applies.
+43,147.9 15,400.4
+-990.4
+-606.0
+-51.8
+0
+9,663.0
+10,707.4
+-10,256.3 -6,551.3
+3,716.8
+0
+1.131.0
+-1,083.3
+2,953.7
+○
+Total compensation
+Less service cost
+Less difference in measuring
+grant value4)
+variable compensation
+883.1
+Plus allocated actual annual
+target compensation
+-845.9
+6,491.3
+0
+1,532.1
+LTI 2016 Plan
+640.0
+525.0
+525.0
+525.0
+Fixed compensation
+(Max)
+(Min)
+(Max)
+(Min)
+2015
+2016
+2015
+2016¹)
+2015
+2016
+2016
+2016
+2016
+2016
+Compensation
+Board
+Total Executive
+Steve Singh
+Member of the Executive Board
+(from April 1, 2016)
+(from April 1, 2016)
+Member of the Executive Board
+Stefan Ries
+€ thousands
+Benefits Granted
+German Corporate Governance Code (Benefits Granted in 2015 and 2016)
+640.0
+30
+640.0
+Fringe benefits³)
+compensation
+Multiyear variable
+compensation
+6,551.3
+10,256.3
+1,963.5
+0
+1,083.3
+1,533.2
+0
+845.9
+One-year variable
+2016
+8,498.1
+646.1
+646.1
+646.1
+538.5
+538.5
+538.5
+Total
+1,407.5
+2,276.1
+6.1
+6.1
+6.1
+13.5
+13.5
+13.5
+6,222.0 4,066.7
+2015
+variable target
+(Min)
+The variable LTI element was determined under the
+LTI 2016 plan effective January 1, 2016, however, the grant
+date of the tranche 2016 is March 24, 2016. The purpose of
+the LTI 2016 plan is to reflect the operating profit target
+achievement, to ensure long-term retention of our Executive
+Board members, and to reward a share price outperformance
+by SAP as compared to a group of its peers (Peer Group).
+On February 22, 2017, the Supervisory Board assessed SAP's
+performance against the agreed targets and determined the
+amount of compensation payable under the STI 2016 plan.
+The STI 2016 plan will be paid out after the Annual General
+Meeting of Shareholders in May 2017.
+-
+25
+To Our Stakeholders | Compensation Report
+The fixed annual salary element is paid as a monthly salary.
+The variable STI element was determined under the STI 2016
+plan. Under this plan, the STI compensation depends on the
+performance of the SAP Group against the predefined target
+values for three KPIs: non-IFRS constant currency cloud and
+software revenue growth; non-IFRS constant currency
+operating margin increase; and constant currency new cloud
+bookings. In addition, the STI 2016 plan provides for a
+discretionary element that allows the Supervisory Board,
+after the end of the fiscal year 2016, to address not only an
+Executive Board member's individual performance, but also
+SAP's performance in terms of market position, innovative
+power, customer satisfaction, employee satisfaction (taking
+innovative HR strategy, HR excellence, leadership
+development and social partnership into consideration), and
+attractiveness as an employer. A threshold of 75% for the
+total target achievement level applies for the financial KPIs: if
+the sum of the weighted individual target achievements for
+the financial KPIs is below 75% (threshold), there is no
+payout for the pro rata target bonus. A cap of 175% applies
+for each financial KPI, and a cap of 200% applies for the
+discretionary KPI. Moreover, if there has been any
+extraordinary and unforeseeable event, the Supervisory
+Board can, at its reasonable discretion, retroactively adjust
+payouts up or down in the interest of SAP.
+The following criteria apply to the elements of Executive Board
+compensation for 2016:
+The amount of variable compensation depends on SAP's
+performance against performance targets that the Supervisory
+Board sets for each plan year. The performance targets are key
+performance indicator (KPI) values aligned to the SAP budget
+for the plan year.
+Executive Board
+(other than CEO)
+CEO
+12%
+16-18%
+20%
+Yearly grant of Share Units
+25-29%
+The Supervisory Board sets a compensation target for the sum
+of the fixed and the two variable elements. It reviews, and if
+appropriate, revises this compensation target every year. The
+review takes into account SAP's business performance and the
+compensation paid to board members at comparable
+companies on the international stage. The following charts
+visualize the relation of the fixed and the variable compensation
+targets for the Executive Board members for 2016:
+The fixed annual salary and STI elements are paid in the
+currency of the Executive Board member's home country,
+whereas compensation for the LTI element is paid in euros.
+A variable long-term incentive (LTI) element tied to the price
+of SAP shares to reward performance over multiple years
+A variable short-term incentive (STI) element to reward
+performance in the plan year
+A fixed annual salary element
+-
+The compensation package for each Executive Board member is
+determined based on their individual role and performance. The
+package has three elements:
+The 2016 compensation for Executive Board members is
+intended to reflect SAP's company size and global presence as
+well as our economic and financial standing. The compensation
+level is internationally competitive to reward committed,
+successful work in a dynamic business environment.
+Compensation System for 2016
+Compensation for Executive Board
+Members
+52-59%
+■Base Salary ■STI ■LTI
+68%
+1) This compensation report is part of the audited management report
+This compensation report outlines the criteria that we applied
+for the year 2016 to determine compensation for Executive
+Board and Supervisory Board members, discloses the amount
+of compensation paid, and describes the compensation
+systems. It also contains information about share-based
+payment plans for Executive Board members and shares held by
+Executive Board and Supervisory Board members.
+■
+based on the achievement of operating income
+Grant ranging between a minimum floor of 80%
+and a maximum of 120%
+In contrast to the disclosure rules stipulated in the German HGB
+and GAS 17, the GCGC includes the service cost according to
+IAS 19 in the Executive Board compensation and requires the
+additional disclosure of the target value for the one-year variable
+compensation and the maximum and minimum compensation
+amounts achievable for the variable compensation elements.
+Pursuant to the recommendations of the GCGC, the value of
+benefits granted for the year under review as well as the
+allocation, that is, the amounts disbursed for the year under
+review, are disclosed below based on the reference tables
+recommended in the GCGC.
+We present the Executive Board compensation disclosures in
+accordance with the recommendations of the German
+Corporate Governance Code ("GCGC"). Furthermore, the table
+below provides a reconciliation statement following the
+requirements of sections 314 and 315 of the German
+Commercial Code (Handelsgesetzbuch, or "HGB") as specified
+in the German Accounting Standards ("GAS 17").
+Amount of Compensation for 2016
+which would otherwise be forfeited in the event of
+termination of the service contract for the Executive Board
+member will not be forfeited to the extent of this
+calculated amount. If the PSUs which would be forfeited in
+the termination year is lower than the equalization
+amount, PSUs from the preceding financial year and, if
+required, from earlier years which would otherwise be
+forfeited, will become non-forfeitable.
+To compensate for disadvantages resulting from leaver
+rules under the LTI 2016 plan in comparison to the
+previous RSU Milestone Plan, all current Executive Board
+members will receive an individual equalization amount as
+an amendment to the leaver rules of the LTI 2016 plan.
+The equalization amount is the sum of partial amounts
+applicable for the years 2016 and 2017 and, in one case,
+also for the year 2018. The respective annual partial
+amount is subject to a target achievement of at least 60%
+of the operating profit target and an ongoing employment
+relationship of the respective year. In the event of
+termination, PSUs equal to this amount based on the then-
+applicable reference share price will be granted. PSUs
+2016
+(Max)
+In the event of a change of control as defined in the service
+contract of the Executive Board member, the following
+generally applies:
+of remaining PSUs is adjusted subject to the performance
+of SAP's share price in relation to the Peer Group Index.
+The same applies if the Executive Board member dies,
+however the Share Units are paid out pro rata temporis
+within 90 days after death on the basis of the then current
+SAP share price.
+"
+■
+To Our Stakeholders | Compensation Report
+26
+■
+A portion of the RSUs and PSUs are forfeited, if the
+Executive Board member has resigned from office without
+cause, but does not start working for a competitor of SAP
+prior to the end of the initial vesting period of the Share
+Units, or the Service Contract of the Executive Board
+member expires by mutual consent, is terminated by
+mutual consent, is terminated by the Executive Board
+member for cause or the Executive Board member retires.
+Expiration by mutual consent or termination by mutual
+consent occurs if the Executive Board member is not re-
+appointed or does not accept the reappointment or an
+extraordinary expiration is provided by the Service
+Contract of the Executive Board member, that is, in the
+case of a permanent inability to work. The portion of the
+RSUS and PSUs which forfeit equal the proportion of plan
+participation to the vesting period (for example, if the
+Executive Board member leaves with effect from
+December 31, 2016, three quarters of the Share Units
+granted in 2016 would be forfeited). The remaining Share
+Units will continue to be in effect. In addition, the number
+types of Share Units have a vesting period of (approximately)
+four years. Each Share Unit that finally vests entitles its
+holder to a (gross) payout corresponding to the price of one
+SAP share after the end of the holding period, but capped at
+three times the SAP share price applied for the conversion of
+the grant amount into Share Units. The number of PSUs that
+finally vests depends on the performance of the SAP share. If
+the increase of price of the SAP share over the vesting period
+of the PSUs exceeds the increase of a defined Peer Group
+Index over the same period, the number of PSUs is increased
+by a percentage equal to the outperformance expressed as
+percentage points. This percentage will be doubled if, in
+addition to the outperformance over the Peer Group Index,
+the price of the SAP share at the end of the vesting period of
+the PSUs is higher than the price at the start of this period.
+The number of vested PSUs a member can attain in respect
+to a plan year is capped at 150% of their initial PSU allocation
+for that year. Conversely, if the increase of price of the SAP
+share over the vesting period of the PSUs is below the
+increase in the Peer Group Index, the number of PSUs is
+reduced by a percentage equal to the difference expressed as
+percentage points. All PSUs lapse if the difference exceeds
+50%. If the service contract for the Executive Board member
+is terminated before the end of the third year following the
+year in which the Share Units were granted, both the RSUs
+and PSUs are forfeited in whole or in part, depending on the
+circumstances of the relevant resignation from office or
+termination of the service contract, as follows:
+The Share Units granted comprise 60% Performance Share
+Units (PSUs) and 40% Retention Share Units (RSUs). Both
+The LTI 2016 plan is an annual revolving remuneration
+element that is linked to the price of the SAP share. A grant
+amount determined by the Supervisory Board is converted
+into virtual shares, referred to as Share Units, by dividing the
+grant amount by the price of the SAP share (calculated on
+the basis of a defined average value). The grant amount is
+determined by the Supervisory Board in its discretion for
+each financial year at a level of between 80% and 120% of
+the contractual target amount; taking into account the
+achievement of the operating profit targets set for the
+preceding financial year.
+Payout
+=
+SAP share price
+X
+Number of vested share units after 4 years
+4-year term
+Retention Share Units
+subject to the
+employment duration
+during the vesting period
+40%
+Performance Share
+Units subject to the
+performance of SAP's
+share price in relation to
+the Peer Group Index
+and the employment
+duration during the
+vesting period
+60%
+■ If the Executive Board member has resigned from office
+without cause and starts working for a competitor of SAP,
+whether on a free-lance basis or as an employee or
+otherwise prior to the end of the initial vesting period of
+the Share Units or the Supervisory Board terminates the
+Executive Board member's service contract for cause, all
+Share Units are forfeited.
+Compensation Scheme
+Compensation for Executive and
+Supervisory Board Members
+Compensation Report¹)
+The Finance and Investment Committee held five physical
+meetings in 2016, of which one was a joint meeting with the
+Technology and Strategy Committee and one a joint meeting
+with the Audit Committee. At its February 17 meeting,
+representatives from Sapphire Ventures presented detailed
+information about the investment activities of the three SAP
+venture capital funds. The Committee recommended that the
+Supervisory Board approve the financing of two further
+venture capital funds totaling US$1 billion. It also discussed
+the annual report on SAP's acquisitions. When it met on July
+13, the Committee focused solely on a comprehensive
+evaluation of SAP by external analysts. It also held a joint
+meeting with the Technology and Strategy Committee on the
+same day. Matters discussed included a multiyear overview
+of the development of SAP's major acquisitions, SAP's
+strategic alignment and competitive environment, and the
+results of an analysis of SAP's product portfolio. The
+Committee also approved by correspondence the Executive
+Board's planned financing transactions. At its October
+meeting, the Committee examined the organizational
+structure, business environment, and equity investments of
+an SAP subsidiary that provides professional services to
+national security authorities, and were given an update on
+other equity investments and acquisition-related activities
+carried out by SAP in 2016. The focus of the joint meeting
+with the Audit Committee on October 25 was the
+presentation of and discussion on the preliminary Group
+annual plan for 2017, in preparation for the Supervisory
+Board meeting in February 2017, at which the full Supervisory
+Board resolved to approve the 2017 Group annual plan.
+The Technology and Strategy Committee held four
+meetings in 2016, one of which was a joint meeting with the
+Finance and Investment Committee. It discussed the key
+technology trends in the software industry in the years to
+come and SAP's corporate and product strategies. At the
+Committee's February 17 meeting, the Executive Board
+presented an overview of market development in 2015 and
+explained what it would mean for SAP's business in 2016. Key
+topics included the strategic road map, development
+priorities, and market launch of our human capital
+management (HCM) software. The Committee also learned
+The auditor attended all physical meetings and telephone
+conference meetings of the Audit Committee and reported in
+depth on its audit work and on its quarterly reviews of
+selected software agreements.
+the auditor, dealt with the internal audit service's work in the
+first half of the year and audit planning for the second half-
+year, and reviewed the Company's internal controls. At its
+October meeting, the Committee discussed the report from
+the chief compliance officer and other compliance system
+matters and came to the conclusion that the compliance
+system was effective. As reported in more detail below, the
+Committee also held a joint meeting with the Finance and
+Investment Committee on the same day, to prepare the
+Supervisory Board's February 2017 resolution concerning the
+Group annual plan.
+The Audit Committee held five physical meetings and four
+meetings by telephone conference. The telephone
+conference meetings were all ahead of the publication of
+quarterly financial reports for each quarter. At these
+meetings, the Committee primarily deliberated on the course
+of business over the quarter concerned, the process by which
+the quarterly financial reports were prepared, the quarterly
+reports to be published, and insights gained from the
+auditor's quarterly review of selected revenue-generating
+software agreements. The physical meetings in February and
+March concentrated on the SAP SE and consolidated
+financial reports for 2015 and the reporting process, the
+internal control structure for financial reporting, the most
+important accounting methods, and the audit. At the
+February meeting, the Committee also discussed the German
+Financial Reporting Enforcement Panel's criteria and the
+internal audit service's report for the previous year,
+organization and processes, and audit plan for 2016. At its
+meeting in March, the Committee did preparatory work on
+the Supervisory Board's recommendations to the Annual
+General Meeting of Shareholders concerning the election of
+an auditor and the appropriation of retained earnings and
+discussed the Company's compliance system. When it met in
+July, the Committee discussed the audit focus and fees with
+The General and Compensation Committee held six
+meetings at which members attended in person ("physical
+meetings") and one meeting by telephone conference. During
+its meetings, it prepared and recommended the Supervisory
+Board's resolutions, notably those on Executive Board
+compensation and HR decisions described above. It also
+focused on the following matters: At the beginning of the
+year, it deliberated on the annual report it receives from the
+Company's capital market compliance officer, including an
+overview of the changes to the rules on insider trading and
+directors' dealings notifications under the new EU Market
+Abuse Regulation, which came into force on July 3, 2016. At
+the meeting in March, the Committee received a report from
+the corporate governance officer and adopted an update to
+its rules of procedure. In June, the Committee approved the
+conclusion of a consulting contract between the Company
+and the retiring Executive Board member Gerhard Oswald. In
+October, it prepared the Supervisory Board's resolutions with
+respect to the submission of the declaration of
+implementation of the Code and ascertaining the
+independence of Supervisory Board members. It also
+discussed succession planning for the Executive Board. In the
+fiscal year ended, the Committee also approved the
+acceptance of outside supervisory board seats by three
+Executive Board members.
+-
+In 2016, the committees focused on the following topics:
+For more information about the Supervisory Board committees
+and their duties, see SAP's corporate governance statement
+pursuant to the German Commercial Code, section 289a,
+published on the SAP public Web site at www.sap.de/investor.
+21
+To Our Stakeholders | Report by the Supervisory Board
+Each of the committees was active in 2016 except the Special
+Committee.
+Special Committee: Hasso Plattner (chairperson), Pekka
+Ala-Pietilä, Wilhelm Haarmann, Lars Lamade, Erhard
+Schipporeit, Sebastian Sick
+Pekka Ala-Pietilä, Bernard Liautaud
+22
+Nomination Committee: Hasso Plattner (chairperson),
+Audit Committee: Erhard Schipporeit (chairperson),
+Panagiotis Bissiritsas, Martin Duffek, Klaus Wucherer
+Finance and Investment Committee: Wilhelm Haarmann
+(chairperson), Pekka Ala-Pietilä, Panagiotis Bissiritsas,
+Margret Klein-Magar, Sebastian Sick, Jim Hagemann Snabe
+Technology and Strategy Committee: Hasso Plattner
+(chairperson), Christine Regitz (deputy chairperson), Pekka
+Ala-Pietilä, Panagiotis Bissiritsas, Anja Feldmann, Andreas
+Hahn, Gesche Joost, Margret Klein-Magar, Bernard Liautaud,
+Pierre Thiollet
+General and Compensation Committee: Hasso Plattner
+(chairperson), Wilhelm Haarmann, Andreas Hahn, Margret
+Klein-Magar, Lars Lamade, Bernard Liautaud, Sebastian Sick,
+Jim Hagemann Snabe
+-
+The committees made a key contribution to the work of the
+Supervisory Board and reported on their work to us, including
+their preparatory work on the relevant agenda items of the full
+Supervisory Board. The following committees were in place in
+2016:
+The Work of the Supervisory Board
+Committees
+Board members the opportunity to tour the facility, learn about
+the latest development projects, and gain insight into how SAP
+collaborates with its customers, other research institutes, and
+universities. At the meeting, the Executive Board reported on
+business and updated us on SAP's current HR strategy. In
+agreement with the Executive Board, the Supervisory Board also
+adopted, for regular publication in October 2016, the annual
+declaration of implementation of the German Corporate
+Governance Code (the "Code") pursuant to the German Stock
+Corporation Act, section 161. The Supervisory Board determined
+that it has a sufficient number of independent members. We
+were then given a comprehensive overview of SAP's product
+strategy in the small business and midmarket segments. Finally,
+the Executive Board informed us about the organizational setup
+and work performed by SAP's internal data protection
+department, explained how SAP is preparing for the new EU
+General Data Projection Regulation, and reported on other legal
+developments relevant for SAP in the area of data protection.
+Our October 28 meeting was held at the SAP Innovation Center
+in Potsdam, SAP's development center for new software
+technologies that opened in 2014. This gave the Supervisory
+Meeting in October
+The Executive Board then gave us an account of business in the
+second quarter of 2016 and performance in the first half-year,
+reporting at our request particularly on revenue development in
+the various regions, on SAP's competitive position in its core
+business and in the cloud, and on the progress in healthcare
+solutions. We also received updates on the business activities in
+the SAP Business Network operating segment and in the
+Internet of Things space.
+At our ordinary meeting on July 14, we discussed the
+aforementioned strategy topics as well as the directors' and
+officers' (D&O) group liability insurance policies that we take out
+from year to year. We also agreed that deliberations on the
+budget process be made the subject of joint meetings between
+the Financial and Investment Committee and the Audit
+Committee from now on.
+Meeting in July
+We regularly reviewed and updated the list of transactions for
+which the Executive Board must obtain the Supervisory Board's
+consent in accordance with the German SE Implementation Act,
+section 19. The Executive Board presented detailed information
+about the investment activities of SAP's venture capital funds.
+The Supervisory Board approved the financing of two further
+venture capital funds with a total volume of US$1 billion, for
+investment in the respective funds by 2022 and 2023
+respectively.
+consolidated financial statements for 2015, and reported
+particularly on the form and scope of its examination of the
+documents relating to the financial statements, which it
+recommended we approve. The auditor attended the meeting
+and reported in detail on the audit and its findings for each of the
+focus areas that had been agreed between the auditor and the
+Audit Committee. The auditor also related the discussions on
+those matters at the preceding meetings of the Audit
+Committee. The auditor then discussed the results of the audit
+with the Supervisory Board and answered our questions. The
+Supervisory Board approved the audit. There were no findings
+from our own examination, so we gave our consent to the SAP
+SE and consolidated financial statements for 2015. We checked
+and endorsed the Executive Board's proposal to appropriate
+retained earnings in accordance with the Audit Committee's
+recommendation. There were also a number of corporate
+governance matters on the meeting agenda. We decided on the
+resolutions we would propose for the agenda of the Annual
+General Meeting of Shareholders in May 2016. Our
+recommendation to the Annual General Meeting of
+Shareholders concerning the auditor to elect for 2016 followed
+the recommendation of the Audit Committee to us.
+People and Organization Committee: Hasso Plattner
+(chairperson), Martin Duffek, Anja Feldmann, Wilhelm
+Haarmann, Gesche Joost, Lars Lamade, Christine Regitz,
+Robert Schuschnig-Fowler
+22
+To Our Stakeholders | Report by the Supervisory Board
+-
+To Our Stakeholders | Report by the Supervisory Board
+24
+24
+Professor Hasso Plattner
+(Chairperson)
+For the Supervisory Board
+The Supervisory Board thanks the Executive Board, the
+managing directors of the Group companies, and all of our
+employees for their hard work and dedication in 2016. We would
+also like to thank our customers and partners. Without them,
+our Company's success would not be possible.
+Gesche Joost, who was initially appointed by the court as interim
+member of the Supervisory Board at the end of May 2015, was
+elected to the Supervisory Board as shareholder representative
+on May 12, 2016, by the Annual General Meeting of
+Shareholders.
+After 36 years at SAP - 21 of which as member of the Executive
+Board - Gerhard Oswald retired from the Company and the
+Executive Board on December 31, 2016. He remains associated
+with SAP as a consultant so that SAP is still able to benefit from
+his experience and expertise. We thank Gerhard Oswald for his
+many years of valuable and constructive service to SAP.
+Stefan Ries and Steve Singh were appointed members of the
+Executive Board with effect from April 1, 2016.
+Changes on the Supervisory and
+Executive Boards
+The Audit Committee and the Supervisory Board satisfied
+themselves that KPMG had conducted the audit properly. In
+particular, they concluded that both the audit reports and the
+audit itself fulfilled the legal requirements. On the basis of the
+report and the Audit Committee's recommendation, the
+Supervisory Board approved the audit and, since there were no
+findings from our own examination, we gave our consent to the
+SAP SE financial statements, the consolidated financial
+statements, and the combined management report (including
+the Executive Board's corporate governance statement
+pursuant to the German Commercial Code, section 289a). The
+financial statements and combined management report were
+thus formally adopted. The Supervisory Board's opinion of the
+Company and the Group coincided with that of the Executive
+Board as set out in the combined management report. The
+Supervisory Board considered the proposal presented by the
+Executive Board concerning the appropriation of retained
+earnings. We had regard to the requirements of dividends policy,
+the effects on the liquidity of the Group, and the interests of the
+shareholders. We also discussed these matters with the auditor.
+We then endorsed the Executive Board's proposal concerning
+the appropriation of retained earnings, in accordance with the
+Audit Committee's recommendation. Finally, we approved this
+present report.
+The Committee also reported that KPMG had told it that no
+circumstances had arisen that might give cause for concern
+about KPMG's impartiality, and informed us about the services
+KPMG had provided that were not part of the audit. The
+Committee reported that it had examined the auditor's
+independence, taking the non-audit services it had rendered into
+consideration, and stated that in the Committee's opinion the
+auditor possessed the required degree of independence.
+After the Executive Board had explained them, the Audit
+Committee and the Supervisory Board reviewed the financial
+statement documents in the light of KPMG's audit reports. The
+representatives of the auditor who attended presented full
+reports on the audit and the results of the audit to the Audit
+Committee and Supervisory Board meetings and explained the
+audit report. The auditor also reported that it had not identified
+any material weaknesses in our internal control and risk-
+management systems for financial reporting. Both the Audit
+Committee and the Supervisory Board asked detailed questions
+about the form, scope, and results of the audit. The Audit
+Committee reported to the Supervisory Board on its own review
+of the financial statements of SAP SE and the SAP Group, its
+discussions with the Executive Board and with the auditor, and
+its supervision of the financial reporting process. It confirmed
+that as part of its supervisory work, it had addressed the
+effectiveness of the SAP Group internal control, risk
+management, and internal auditing systems, and found the
+systems to be effective.
+At the meeting of the Audit Committee on February 21, 2017,
+and at the meeting of the Supervisory Board on February 22,
+2017, the Executive Board explained the financial statements of
+SAP SE and the SAP Group and its proposal concerning the
+appropriation of retained earnings. Members of the Executive
+Board answered questions from the Audit Committee and the
+Supervisory Board. At the Audit Committee meeting, they also
+explained the Annual Report on Form 20-F.
+On February 20, 2017, the Executive Board prepared the
+financial accounts of SAP SE and the Group for 2016,
+comprising the SAP SE financial statements, the consolidated
+financial statements, and the combined management report,
+and submitted them without delay to the Supervisory Board.
+of foreseeable opportunities and risks. KPMG had completed its
+audit of SAP's internal control over financial reporting and
+certified without qualification that it complies with the applicable
+U.S. standards. The auditor stated in its opinion that it considers
+SAP's internal controls over financial reporting to be effective in
+all material respects. All Audit Committee and Supervisory
+Board members received the documents concerning the
+financial statements mentioned above, the audit reports
+prepared by KPMG, and the Executive Board's proposal
+concerning the appropriation of retained earnings in good time.
+23
+23
+To Our Stakeholders | Report by the Supervisory Board
+KPMG audited the SAP SE and consolidated financial reports for
+2016. The Annual General Meeting of Shareholders elected
+KPMG as the SAP SE and SAP Group auditor on Thursday, May
+12, 2016. The Supervisory Board proposed the appointment of
+KPMG on the recommendation of the Audit Committee. Before
+proposing KPMG to the Annual General Meeting of Shareholders
+as auditor for the year, the chairperson of the Supervisory Board
+and the Audit Committee obtained confirmation from KPMG
+that circumstances did not exist that might prejudice or raise
+any doubt concerning its independence as the Company's
+auditor. In that connection, KPMG informed us of the volume of
+the services that were not part of the audit which it had either
+provided to the Group in the past year or was engaged to
+provide in the year to come. The Supervisory Board has agreed
+with KPMG that the auditor should report to the Supervisory
+Board and record in the auditor's report any fact found during
+the audit that is inconsistent with the declaration given by the
+Executive Board and the Supervisory Board concerning
+implementation of the German Corporate Governance Code.
+KPMG examined the SAP SE financial statements prepared in
+accordance with the German Commercial Code, the
+consolidated financial statements prepared in accordance with
+International Financial Reporting Standards (IFRSS) as required
+by the German Commercial Code, section 315a, and the
+combined SAP Group and SAP SE management report, and
+certified them without qualification. The auditor thus confirmed
+that, in its opinion and based on its audit in accordance with the
+applicable accounting principles, the SAP SE and consolidated
+financial statements give a true and fair view of the net assets,
+financial position, and results of operations of SAP SE and the
+SAP Group. The auditor also confirmed that the combined SAP
+SE and SAP Group management report is consistent with the
+corresponding financial statements and as a whole gives a
+suitable view of the position of SAP SE and the SAP Group and
+SAP SE and Consolidated Financial
+Reports for 2016
+The Supervisory Board closely examined the Executive Board's
+corporate governance statement pursuant to the German
+Commercial Code, section 289a. We approved the statement
+with the combined SAP Group and SAP SE management report.
+those dealings, they did not affect the independence of the
+Supervisory Board members concerned and do not give rise to
+any substantial and not merely temporary conflict of interest in
+the meaning of the Code. There were a number of transactions
+involving members of the Executive Board in 2015 which were all
+consistent with industry standards and immaterial. These
+transactions were approved by the General and Compensation
+Committee during the year under review. The General and
+Compensation Committee also approved a consulting contract
+for Gerhard Oswald for after his retirement from the Company.
+The Company made no other contracts with members of the
+Executive Board or Supervisory Board that would have required
+a resolution of the Supervisory Board.
+Members of the Executive Board and of the Supervisory Board
+had no conflicts of interest that sections 4.3.4 and 5.5.2 of the
+Code require to be disclosed to the Supervisory Board. Some
+Supervisory Board members currently have business dealings
+with SAP or hold senior positions or material equity in
+companies that currently have business dealings with SAP, or
+had done so in the course of the year. SAP's business dealings
+with these persons or companies are or were at arm's length. In
+our view, especially given the limited scope and materiality of
+SAP's corporate governance officer monitored our compliance
+with those recommendations in the Code with which we claim to
+comply in SAP SE's declaration, and reported in full to the
+General and Compensation Committee. For more information
+about compliance with the Code, see the Corporate Governance
+Report from the Executive Board and Supervisory Board.
+Corporate Governance
+Regular reports from the committees ensured that we were kept
+fully informed of all matters covered by the committees and
+were able to discuss them thoroughly.
+The People and Organization Committee held two meetings
+in 2016. In September, it engaged in detailed discussions
+about the measures to recruit top talents, and asked
+management for an update on the current status of training
+and personal and professional development at SAP, so that it
+could see whether the Committee's suggestions from the
+year before had been implemented. To this end, the
+Committee reviewed the technical learning offerings available
+through SAP Development University, SAP's internal
+academy for the professional training of our software
+developers. The second meeting was held on December 6.
+The Committee was presented with the results of the SAP
+Strategy Survey, an employee survey conducted in the
+summer of 2016 regarding the implementation and
+employees' understanding of the strategy. The Committee
+was also given an update on SAP's collaboration with
+academia to promote young talents in a digitalized working
+world. Further topics at this meeting included the new
+employee stock plan and the expert career path at SAP.
+The Nomination Committee is composed exclusively of
+shareholder representatives. It met once, in March 2016, to
+prepare the Supervisory Board's recommendation to the
+Annual General Meeting of Shareholders that Gesche Joost
+be elected shareholder representative on the Supervisory
+Board. It also reviewed its process for seeking suitable
+candidates for the Supervisory Board.
+more about the SAP Startup Focus program, SAP's initiative
+to support startups. The focus topics of the March 23
+meeting were TCO of SAP S/4HANA, SAP's strategy for
+analytics, and a status report on the Sybase acquisition.
+When the Committee met on October 27, it deliberated on the
+measures to position SAP Ariba products and learned more
+about the road map and platform architecture for machine
+learning.
+27
+To Our Stakeholders | Compensation Report
+The Share Units are paid out without undue delay within
+90 days on a pro rata temporis basis, plus 50% of the
+Share Units (which otherwise, under mere pro rata
+aspects, would be forfeited), on the basis of the then
+current SAP share price. In addition, the number -
+reduced on a pro rata temporis basis - of PSUs paid out
+may change with the relevant outperformance of the SAP
+share compared to the Peer Group Index as determined on
+the day the change of control event is effective. The
+remaining Share Units are forfeited.
+German Corporate Governance Code (Benefits Granted in 2015 and 2016)
+annual variable
+277.5
+1,175.3
+1,660.5
+2,743.5 1,505.2
+2,486.9
+Plus allocated actual
+compensation
+-188.1
+-1,125.8
+-1,125.8
+-1,441.8
+-1,860.0
+compensation
+-2,382.1
+Reconciliation reporting of total compensation pursuant to Section 314(1)(6a) HGB in connection with GAS 17
+14,913.5 2,237.1 4,329.3 726.9 13,023.3 619.8
+13,982.4 3,600.0 41,047.3 4,950.4 5,445.8 1,362.7
+Total according to
+GCGC
+0
+Executive Board Members' Compensation
+0
+0
+4,329.3 726.9 13,023.3 619.8
+14,878.8 1,929.1
+308.0
+34.7
+34.7
+13,411.1 3,028.7 40,476.0 4,268.0 5,411.1 1,328.0
+571.3 571.3
+682.4
+34.7
+Less granted annual
+Less difference in
+-51.8
+measuring grant
+(Max)
+(Min)
+2016
+2015
+2016
+2016
+2016
+2016
+Gerhard Oswald
+Member of the Executive Board
+(until December 31, 2016)
+Luka Mucic
+Member of the Executive Board
+Member of the Executive Board
+Bernd Leukert
+€ thousands
+Benefits Granted
+German Corporate Governance Code (Benefits Granted in 2015 and 2016)
+To Our Stakeholders | Compensation Report
+28
+657.4
+4,378.8
+2,463.8
+5,151.5 5,474.5
+Total compensation 13,515.9
+0
+-308.0
+-34.7
+-682.4
+-571.3
+Less service cost
+value4)
+571.3
+Service cost
+0
+---......--- 315.0
+1,328.0
+3,028.7 2,408.0
+474.0
+474.0
+1,625.7 1,258.0
+854.0
+Total
+854.0
+1,403.0 1,150.0
+1,403.0 1,403.0
+1,625.7 1,625.7
+3,028.7
+3,028.7
+Total
+Fixed compensation
+Fringe benefits³)
+1,328.0
+2016
+Michael Kleinemeier
+Member of the Executive Board
+Robert Enslin
+Member of the Executive Board
+2016
+(Max)
+(Min)
+2016¹)
+2015²)
+2016
+2016
+(Max)
+(Min)
+2016¹)
+2016
+CEO
+Bill McDermott
+Benefits Granted
+€ thousands
+2015²)
+700.0
+474.0 103.3
+1,328.0 803.3
+854.0
+2016
+(Max)
+700.0 116.7
+RSU Milestone
+Plan 2015
+10,255.9
+0
+2,476.6
+10,937.5
+2016
+(Min
+700.0 700.0
+2,641.3
+0 33,129.7
+8,000.3
+LTI 2016 Plan
+compensation
+compensation
+Multiyear variable
+2,040.5 188.1
+0
+0
+1,125.8
+1,125.8
+2015
+26.9 26.9
+0
+726.9 726.9
+726.9
+26.9
+One-year variable
+2,382.1
+0
+4,317.6 1,860.0 1,441.8
+0
+2,613.3
+116.7
+In addition, we reimburse members of the Supervisory Board for Long-Term Incentives for the
+3,135.0
+517.0
+3,652.0
+3,249.6
+478.5
+3,728.1
+their expenses and the value-added tax payable on their
+compensation.
+To Our Stakeholders | Compensation Report
+Supervisory Board
+We do not offer members of the Supervisory Board share-based
+payment for their Supervisory Board work. Any share-based
+payment awards received by employee-elected members relate
+to their position as SAP employees and not to their work on the
+Supervisory Board.
+Shareholdings of Supervisory Board
+Members
+Supervisory Board chairperson Hasso Plattner and the
+companies he controlled held 87,860,661 SAP shares on
+December 31, 2016 (December 31, 2015: 90,248,789 SAP
+shares), representing 7.152% (2015: 7.346%) of SAP's share
+capital. No other member of the Supervisory Board held more
+than 1% of the SAP SE share capital at the end of 2016 or of the
+previous year. Members of the Supervisory Board held a total of
+40
+40
+Gerhard Oswald
+Total
+In total, we received services from members of the Supervisory
+Board (including services from employee representatives on the
+Supervisory Board in their capacity as employees of SAP) in the
+amount of €1,040,400 (2015: €1,282,800). This amount
+includes fees paid to Linklaters LLP in Frankfurt am Main,
+Germany (of which Supervisory Board member Wilhelm
+Haarmann is a partner), of €0 (2015: €224,500).
+563.8
+Luka Mucic
+504.2
+27,396
+70,151
+Gerhard Oswald
+70,151
+27,396
+27,396
+70,151
+Dr. Werner Brandt (until June 30, 2014)
+255,050
+-16,886
+76,374
+195,562
+Bill McDermott (CEO)
+31, 2014
+Holding on
+December
+Forfeited
+Units
+Exercised
+Units
+13,474
+51,887
+51,887
+13,117
+90,009
+132,263 -45,709 86,554
+667,947 -173,134 494,813
+-6,057
+The RSUs held as of December 31, 2015, which were issued and
+not forfeited in 2015, reflect the number of RSUs multiplied by
+the total target achievement. The total target achievement
+consists of the addition of the target achievement of the
+financial KPIs of 112.96% and the adjustment factor based on
+individual plan participation.
+Quantity of RSUs
+Holding on
+January 1,
+2014
+2014
+Grants in Performance-
+Related
+Adjustment
+RSU Milestone Plan 2015 - Rollforward 2014/2015
+91,490
+Dr. Vishal Sikka (until May 4, 2014)¹)
+70,151
+406,014
+208,701
+-34,029
+70,151
+54,792
+455,743
+Total
+1) According to the termination agreement with Vishal Sikka, the 2012 grants were paid out after the close of the Annual General Meeting of Shareholders in 2016,
+based on a fixed share price of €52.96. The 2013 grants will be paid out after the close of the Annual General Meeting of Shareholders in 2017 based on a fixed
+share price of €58.69.
+To Our Stakeholders | Compensation Report
+37
+RSU Milestone Plan 2015 - Rollforward 2013/2014
+Quantity of RSUs
+Holding on
+January 1,
+2013
+The RSUs held as of December 31, 2014, which were issued and
+not forfeited in 2014, reflect the number of RSUs multiplied by
+the 77.89% target achievement.
+27,656
+10,757
+13,811
+27,396
+70,151
+27,396
+Robert Enslin (from May 4, 2014)
+0
+18,164
+-3,054
+-4,016
+Bernd Leukert (from May 4, 2014)
+18,164
+-4,016
+14,148
+Luka Mucic (from July 1, 2014)
+0
+14,148
+2013
+55,726
+13,922
+2) To balance disadvantages from leaver rules under the LTI 2016 Plan
+1) Forfeiture according to leaver rules
+360,713
+17,038
+-23,927
+220,561
+147,041
+367,602
+Total
+(from April 1, 2016)
+30,368
+18,221
+12,147
+30,368
+Steve Singh
+(from April 1, 2016)
+23,987
+22,739
+37,898
+Gerhard Oswald (until
+31,924
+12,770
+19,154
+RSU Milestone Plan 2015
+-23,927
+25,035
+December 31, 2016)
+Stefan Ries
+23,987
+9,595
+14,392
+17,038
+The table below shows Executive Board members' holdings, on
+December 31, 2016 and 2015, of RSUs issued to them under the
+RSU Milestone Plan 2015. The plan is a cash-settled long-term
+incentive scheme with a payout subsequent to a performance
+period of one year and an additional holding period of three
+years. The RSU Milestone Plan 2015 consists of four plan
+tranches to be issued with respect to the calendar years 2012
+through 2015. The RSUs allocated in 2013 have a remaining
+term of 0.08 years; the RSUs allocated in 2014 have a remaining
+term of 1.08 years; and the RSUs allocated in 2015 have a
+remaining term of 2.08 years.
+To Our Stakeholders | Compensation Report
+54,133
+54,133
+Michael Kleinemeier (from
+0
+4,622
+599
+12,329
+5,221
+November 1, 2015)
+Bernd Leukert
+Luka Mucic
+Gerhard Oswald
+Total
+14,148 27,656
+10,757
+91,490 27,656
+385,593 192,345
+5,221
+55,726
+27,656
+Robert Enslin
+RSU Milestone Plan 2015 - Rollforward 2015/2016
+Quantity of RSUs
+2015
+Holding on Grants in Performance- Exercised Forfeited
+January 1,
+2015
+Related
+Units Units
+Adjustment
+December
+31, 2015
+Holding on Exercised Holding on
+December
+14,148
+Bill McDermott (CEO)
+77,099
+36,568
+368,717
+Units
+Tranche
+2012
+-127,425
+31, 2016
+241.292
+255,050
+Grants in Performance-
+Related
+Adjustment
+Exercised
+Units
+Forfeited
+Bill McDermott
+(CEO)
+Years
+Quantity Quantity Remaining
+of Options of Options
+Term in
+of Options
+Years
+Term in
+of Options
+€
+Quantity
+€
+Quantity Remaining
+Rights
+Date
+in 2016
+Option
+Holding on December
+31, 2016
+For-
+feited
+The RSUs held as of December 31, 2012, reflect the number of
+RSUs issued in 2012 multiplied by the 133.55% target
+achievement.
+SAP SOP 2010
+The table below shows Executive Board members' holdings, on
+December 31, 2016, of virtual share options issued to them
+under the SAP SOP 2010 since its inception. The strike price for
+an option is 115% of the base price. The issued options have a
+term of seven years and can only be exercised on specified
+dates after the vesting period. The options issued in 2010 were
+exercisable beginning in September 2014 and the options issued
+in 2011 were exercisable beginning in June 2015.
+38
+To Our Stakeholders | Compensation Report
+2010
+SAP SOP 2010 Virtual Share Options
+Holding on
+January 1, 2016
+Strike
+Price per
+Rights
+Price on
+Exercised
+Exercise
+Year
+Granted
+135,714
+1.69
+2011
+0
+3,081.8
+5,782.1
+1,333.5
+2,372.6
+1,529.0
+0
+2,372.9
+3,316.2
+Total
+Service cost
+Total
+Other
+SAP SOP 2011
+1,126.7
+391,977
+Bernd Leukert
+Robert Enslin
+112,426
+2.44
+40.80
+48.33
+Total
+248,140
+135,714
+Michael Kleinemeier
+0.69
+1.44
+248,140
+Total Expense for Share-Based Payment
+Total expense for the share-based payment plans of Executive
+Board members was recognized as follows.
+Total Expense for Share-Based Payment
+€ thousands
+Bill McDermott (CEO)
+112,426
+98,471
+293,506
+45,709
+Gerhard Oswald
+45,709
+26,290
+-1,848
+Dr. Vishal Sikka
+45,709
+-1,848
+26,290
+Total
+391,977
+225,448
+-15,849
+195,562
+0
+-1,848
+70,151
+26,290
+Dr. Werner Brandt
+Holding on
+Units
+December
+31, 2013
+Bill McDermott (co-CEO)
+127,425
+45,709
+73,289
+195,562
+Jim Hagemann Snabe (co-CEO) ¹)
+127,425
+73,289
+-5,152
+195,562
+-5,152
+15,159
+70,151
+406,014
+95,414
+32,011
+127,425
+95,414
+32,011
+127,425
+31, 2012
+34,226
+45,709
+34,226
+11,483
+45,709
+34,226
+11,483
+11,483
+70,151
+Holding on
+December
+Exercised
+Units
+According to the termination agreement with Jim Hagemann Snabe, the 2012 and 2013 grants were paid out after the close of the Annual General Meeting of
+Shareholders on May 21, 2014, based on a fixed share price of €52.96 for the 2012 grants and €58.69 for the 2013 grants.
+The RSUs held as of December 31, 2013, which were issued and
+not forfeited in 2013, reflect the number of RSUs multiplied by
+the 92.97% target achievement.
+RSU Milestone Plan 2015 - Rollforward 2012/2013
+Quantity of RSUs
+Bill McDermott (co-CEO)
+Jim Hagemann Snabe (co-CEO)
+Forfeited
+Units
+Dr. Werner Brandt
+Dr. Vishal Sikka
+Total
+Holding on
+January 1,
+Grants in
+2012
+2012
+Performance-
+Related
+Adjustment
+Gerhard Oswald
+RSU Milestone Plan 2015
+37,898
+42,687
+1,382.5
+665.9
+356.9
+138.0
+145.6
+25.4
+-
+287.6
+-171.2
+129.9
+129.2
+29.7
+3,505.1
+2,229.0
+35.0
+28.6
+170.0
+7,221.4
+8,659.9
+Less plan assets market
+94.6
+67.8
+4,992.4
+29.7
+5,154.8
+Accrued January 1, 2015
+DBO change in 2015
+Plan assets change in 2015
+DBO December 31, 2015
+Less plan assets market
+value December 31, 2015
+1,212.5
+value January 1, 2015
+252.4
+232.7
+7,050.2
+920.7
+257.9
+1,791.6
+156.0
+149.5
+141.8
+211.9
+378.6
+942.6
+1,459.2
+154.9
+451.6
+444.6
+7,970.9
+116.7
+102.8
+199.2
+76.7
+8,947.5
+25.4
+240.2
+205.8
+5,349.3
+5,820.7
+125.2
+Accrued December 31, 2015
+4.3
+12.2
+26.9
+1,700.9
+3,126.8
+DBO change in 2016
+Plan assets change in 2016
+DBO December 31, 2016
+1,382.5
+257.9
+123.2
+DBO January 1, 2015
+2,372.6
+1,333.5
+5,782.1
+3,081.8
+Stefan Ries
+Member of the
+Executive Board
+(from April 1, 2016)
+Steve Singh
+Member of the
+Executive Board
+(from April 1, 2016)
+Total Executive
+Board Compensation
+2016
+2015
+525.0
+2016¹)
+640.0
+2015
+2016
+2015
+6,222.0 4,066.7
+13.5
+6.1
+538.5
+0
+30,722.0 12,126.3
+0
+646.1
+0
+538.5
+1,529.0
+1,126.7
+9,663.0 5,525.4
+1,407.5
+2,276.1
+8,498.1 5,474.2
+0
+646.1
+0
+12,560.9
+2,372.9
+0
+0
+SAP made contributions to a third-party pension plan for Bill
+McDermott (2016: €571,300; 2015: €682,400) and Robert
+Enslin (2016: €34,700; 2015: €308,000). SAP's
+contributions are based on payments by Bill McDermott and
+Robert Enslin into this pension plan.
+Steve Singh has no entitlements under the pension plan for
+Executive Board members. SAP made no retirement pension
+plan contributions to a third-party pension plan with respect
+to Steve Singh in 2016.
+To Our Stakeholders | Compensation Report
+33
+Total Defined Benefit Obligations (DBO) and the Total Accruals for Pension Obligations to Executive
+Board Members
+€ thousands
+Bill McDermott has rights to future benefits under the portion
+of the pension plan for SAP America classified as "Non-
+Qualified Retirement Plan" according to the U.S. Employee
+Retirement Income Security Act (ERISA). The "Non-
+Qualified" pension plan of SAP America is a cash balance plan
+that provides either monthly pension payments or a lump
+sum on retirement. The pension becomes available from the
+beneficiary's 65th birthday. Subject to certain conditions, the
+plan also provides earlier payment or invalidity benefits. The
+"Non-Qualified" pension plan closed with effect from
+January 1, 2009. Interest continues to be paid on the earned
+rights to benefits within this plan.
+Bill
+McDermott Kleinemeier¹)
+Bernd Luka Mucic¹)
+Leukert¹)
+Gerhard
+(CEO)
+Stefan Ries¹)
+Oswald (from April 1,
+2016)
+Total
+Michael
+1,212.5
+base salary. The applicable income threshold is the statutory
+annual income threshold for the state pension plan in
+Germany (West), as amended from time to time.
+Originally, Gerhard Oswald was under a performance-based
+retirement plan. This plan was discontinued when SAP
+introduced a contributory retirement pension plan in 2000.
+His pension benefits are derived from any accrued
+entitlements on December 31, 1999, under performance-
+based pension agreements and a salary-linked contribution
+for the period commencing January 1, 2000. Gerhard
+Oswald's rights to retirement pension benefits increased by
+further annual contributions because he remained a member
+of the Executive Board after his 60th birthday until his
+retirement on December 31, 2016.
+The following retirement pension agreements apply to the
+individual members of the Executive Board:
+0
+606.0
+990.4
+538.5
+0
+646.1
+Michael Kleinemeier, Bernd Leukert, Luka Mucic, Gerhard
+Oswald, and Stefan Ries receive a retirement pension when
+they reach the retirement age of 60 (62 for Board members
+appointed after January 1, 2012) and retire from their
+Executive Board seat; or a disability pension depending on
+health examination if, before reaching the regular retirement
+age, they become subject to occupational disability or
+permanent incapacity. A surviving dependent's pension is
+paid on the death of a former member of the Executive
+Board. The disability pension is 100% of the vested
+retirement pension entitlement and is payable until the
+beneficiary's 60th birthday, after which it is replaced by a
+retirement pension. The surviving dependent's pension is
+60% of the retirement pension or vested disability pension
+entitlement at death. Entitlements are enforceable against
+SAP SE. Current pension payments are reviewed annually for
+adjustments and, if applicable, increased according to the
+surplus in the pension liability insurance. If service is ended
+before the retirement age of 60 (62 for Board members
+appointed after January 1, 2012), pension entitlement is
+reduced in proportion as the actual length of service stands in
+relation to the maximum possible length of service. The
+applied retirement pension plan is contributory. The
+contribution is 4% of applicable compensation up to the
+applicable income threshold plus 14% of applicable
+compensation above the applicable income threshold. For
+this purpose, applicable compensation is 180% of annual
+0 31,328.0 13,116.7
+2) Insurance contributions, benefits in kind, expenses for maintenance of two households, use of aircraft as well as tax and discrete payments arising through
+application of the fixed exchange-rate clause in 2016 for 2015.
+32
+To Our Stakeholders | Compensation Report
+End-of-Service Benefits
+Regular End-of-Service Undertakings
+Retirement Pension Plan
+1) The value of the fixed and one-year variable elements is granted in U.S. dollars. For conversion purposes from U.S. dollars into euro, for fixed compensation the
+2016 average exchange rate applies and for the one-year variable element the 2016 year-end exchange rate applies.
+10,739.1
+Less plan assets market
+181.4
+Holding on
+January 1,
+Quantity of Share
+Units
+LTI 2016 Plan (2016 Tranche)
+The table below shows Executive Board members' holdings, on
+December 31, 2016, of Share Units issued to them under the LTI
+2016 plan. The plan is an annual revolving cash-settled long-
+term incentive scheme with a payout after the vesting period.
+LTI 2016 Plan
+36
+36
+35
+To Our Stakeholders | Compensation Report
+Members of the Executive Board hold or held share-based
+payment rights throughout the year under the RSU Milestone
+Plan 2015 and the SAP SOP 2010 (which were granted in
+previous years). For information about the terms and details of
+these programs, see the Notes to the Consolidated Financial
+Statements section, Note (27).
+Executive Board Members' Holdings of
+Long-Term Incentives
+In 2016, we paid pension benefits of €1,667,000 to Executive
+Board members who had retired before January 1, 2016 (2015:
+€1,580,000). At the end of the year, the DBO for former
+Executive Board members was €33.935.000 (2015:
+€32,758,000). Plan assets of €26.053.000 are available to
+meet these obligations (2015: €26,716,000).
+Payments to Former Executive Board
+Members
+We have entered into a consulting contract with Gerhard
+Oswald. Based on this contract, he will be available to the
+Executive Board and to the Chairman of the Supervisory
+Board as a strategic advisor especially for customer-specific
+topics and events for SAP customers until the end of
+December 2018.
+For a period of 12 months following his retirement, he
+receives monthly abstention compensation for the
+postcontractual non-compete period totaling € 1,922,193.
+Upon termination of his employment contract, Gerhard
+Oswald received compensation for unused leave totaling
+€151,061.12.
+-
+Gerhard Oswald retired from his position as Executive Board
+member upon the end of his current term on December 31,
+2016. He received the following payments in connection with his
+retirement:
+(from April 1, 2016)
+Total
+19,411.9
+1) For the purpose of this calculation, the following discount rates have been
+applied: Bill McDermott 0.22% (2015: 0.18%); Robert Enslin 0.22% (2015:
+0.18%); Michael Kleinemeier -0.026% (2015: 0.50%); Bernd Leukert 0.22%
+(2015: 0.18%); Luka Mucic 0.22% (2015: 0.18%); Stefan Ries -0.01%; Steve
+Singh -0.01%.
+Early End-of-Service Undertakings
+Severance Payments
+Grants in
+The standard contract for all Executive Board members
+provides that on termination before full term (for example,
+where the member's appointment is revoked, where the
+member becomes occupationally disabled, or in connection with
+a change of control), SAP SE will pay to the member the
+outstanding part of the compensation target for the entire
+remainder of the term, appropriately discounted for early
+payment. A member has no claim to that payment if they have
+not served SAP as a member of the Executive Board for at least
+one year or if they leave SAP SE for reasons for which they are
+responsible. Upon the appointment of Stefan Ries and Steve
+Singh to the Executive Board, the Supervisory Board abstained
+from the waiting period of one year.
+member of SAP SE is revoked in connection with a change of
+control.
+Postcontractual Non-Compete Provisions
+Abstention compensation for the postcontractual non-compete
+period as described above is also payable on early contract
+termination.
+Permanent Disability
+In case of permanent disability, the contract will end at the end
+of the quarter in which the permanent inability to work was
+determined. The Executive Board member receives the monthly
+basic salary for a further 12 months starting from the date the
+permanent disability is determined.
+Payments to Executive Board Members Retiring
+in 2016
+If an Executive Board member's appointment to the Executive
+Board expires or ceases to exist because of, or as a
+consequence of, change or restructuring, or due to a change of
+control, SAP SE and each Executive Board member has the right
+to terminate the employment contract within eight weeks of the
+occurrence by giving six months' notice. A change of control is
+deemed to occur when a third party is required to make a
+mandatory takeover offer to the shareholders of SAP SE under
+the German Securities Acquisition and Takeover Act, when SAP
+SE merges with another company and becomes the subsumed
+entity, or when a control or profit transfer agreement is
+concluded with SAP SE as the dependent company. An
+Executive Board member's contract can also be terminated
+before full term if their appointment as an Executive Board
+Retention
+Performance
+Exercised
+Robert Enslin
+40,417
+16,167
+24,250
+40,417
+Michael Kleinemeier
+122,423
+37,898
+22,739
+37,898
+Bernd Leukert
+42,687
+17,075
+25,612
+15,159
+1,858.8
+73,454
+122,423
+Forfeited
+Balanced
+2016
+Share Units
+Share Units
+Units
+48,969
+Units ¹) Performance
+2016
+(40%)
+(60%)
+Share Units²)
+31, 2016
+Bill McDermott (CEO)
+Holding on
+December
+March 31, 2019
+Steve Singh
+(from April 1, 2016)
+Vested on
+Vested on
+December 31, December 31,
+2016
+2015
+Bill McDermott (CEO) ¹)
+106.5
+106.9
+Michael Kleinemeier
+€ thousands
+5.2
+Bernd Leukert
+14.0
+8.8
+Luka Mucic
+12.9
+7.8
+0.7
+Gerhard Oswald²)
+Annual Pension Entitlement
+1) The values shown here only reflect the pension entitlements that Michael Kleinemeier, Bernd Leukert, Luka Mucic, and Stefan Ries will receive from the
+retirement pension plan for Executive Board members.
+389.7
+347.6
+5,727.9
+116.7
+6,763.3
+value December 31, 2016
+The table below shows the annual pension entitlement earned
+during Executive Board membership of each member of the
+Executive Board on reaching the scheduled retirement age (60
+for Executive Board members initially appointed before 2012
+and 62 for Executive Board members initially appointed after
+January 1, 2012) based on entitlements from SAP under
+performance-based and salary-linked plans vested on
+December 31, 2016.
+Accrued December 31, 2016
+-26.5
+61.9
+97.0
+2,243.0
+141.2
+3,975.8
+1,459.2
+Luka Mucic
+327.4
+Stefan Ries
+Bill McDermott (CEO)
+March 31, 2021
+6,695.1
+Robert Enslin
+March 31, 2021
+Michael Kleinemeier
+Payment¹)
+October 31, 2018
+March 31, 2021
+March 31, 2021
+2,711.8
+2,190.4
+2,316.9
+2,161.7
+Stefan Ries
+March 31, 2019
+1,477.2
+Bernd Leukert
+302.5
+Abstention
+Postcontractual
+3.6
+(from April 1, 2016)
+1) The rights shown here for Bill McDermott refer solely to rights under the
+pension plan for SAP America.
+2) Due to the extension of Gerhard Oswald's contract beyond June 30, 2014,
+these values represent the retirement pension entitlement that he receives
+after his current Executive Board contract expired on December 31, 2016,
+based on the entitlements vested on December 31, 2016 (December 31,
+2015).
+These are vested entitlements. To the extent that members
+continue to serve on the Executive Board and that therefore
+more contributions are made for them in the future, pensions
+actually payable at the scheduled retirement age will be higher
+than the amounts shown in the table.
+Postcontractual Non-Compete Provisions
+During the agreed 12-month postcontractual non-compete
+period, each Executive Board member receives abstention
+payments corresponding to 50% of the final average
+contractual compensation as agreed in the respective contract
+on an individual basis. Any other occupational income generated
+by the Executive Board member is deducted from their
+compensation in accordance with section 74c of the German
+Commercial Code.
+Non-Compete
+The following table presents the net present values of the
+postcontractual non-compete abstention payments. The net
+present values in the table reflect the discounted present value
+of the amounts that would be paid in the fictitious scenario in
+which the Executive Board members leave SAP at the end of
+their respective current contract terms and their final average
+contractual compensation prior to their departure equals the
+compensation in 2016. Actual postcontractual non-compete
+payments will likely differ from these amounts depending on the
+time of departure and the compensation levels and target
+achievements at the time of departure.
+To Our Stakeholders | Compensation Report
+Net Present Values of the Postcontractual Non-
+Compete Abstention Payments
+€ thousands
+Luka Mucic
+Contract Term
+Expires
+Net Present
+Value of
+34
+Multiyear variable compensation
+One-year variable compensation
+165.0
+29.3
+215.4
+253.0
+33.0
+220.0
+Margret Klein-Magar (deputy chairperson)
+341.0
+66.0
+275.0
+363.0
+88.0
+275.0
+Prof. Dr. h.c. mult. Hasso Plattner (chairperson)
+tee Work
+tee Work
+Commit-
+sation
+Commit-
+sation
+244.8
+sation for
+Pekka Ala-Pietilä
+33.0
+Prof. Anja Feldmann
+128.3
+18.3
+110.0
+192.5
+27.5
+165.0
+Martin Duffek (from May 20, 2015)
+197.1
+32.1
+165.0
+203.5
+38.5
+165.0
+Panagiotis Bissiritsas
+192.5
+27.5
+165.0
+198.0
+165.0
+Compen-
+sation for
+Compen-
+14,233.4 22,309.7
+465.3
+Steve Singh (from April 1, 2016)
+Total
+367.5
+Stefan Ries (from April 1, 2016)
+2,693.6 3,445.6
+1,123.5 2,148.5
+1,237.2 2,208.6
+2015
+12,291.1
+1,851.2
+364.7
+2016
+6,525.3
+1,185.8
+635.2
+(until December 31, 2016)
+The share-based payment amounts included in the 2016 compensation result from the following RSUs and PSUs under the LTI 2016
+Plan.
+Share-Based Payment Under LTI 2016 Plan (Grants for 2016)
+Quantity
+(RSU)
+Retention
+Share Units
+(40%)
+(PSU)
+Performance
+Share Units
+Grant
+Value per
+Grants for 2016
+Grant
+Total
+The expense is recognized in accordance with IFRS 2 (Share-
+Based Payments) and consists exclusively of obligations arising
+from Executive Board activities.
+Shareholdings of Executive Board
+Members
+No member of the Executive Board holds more than 1% of the
+ordinary shares of SAP SE. Members of the Executive Board
+held a total of 85,985 SAP shares on December 31, 2016 (2015:
+45,309 shares).
+Executive Board: Other Information
+We did not grant any compensation advance or credit to, or
+enter into any commitment for the benefit of, any member of
+our Executive Board in 2016 or the previous year.
+Total
+Compen-
+Fixed
+Total
+Compen-
+Fixed
+2015
+2016
+€ thousands
+165.0
+Supervisory Board Members' Compensation in 2016
+To Our Stakeholders | Compensation Report
+Any members of the Supervisory Board having served for less
+than the entire year receive one-twelfth of the annual
+remuneration for each month of service commenced. This also
+applies to the increased compensation of the chairperson and
+the deputy chairperson(s) and to the remuneration for the
+chairperson and the members of a committee.
+For membership of the Audit Committee, Supervisory Board
+members receive an additional fixed annual compensation of
+€16,500, and for membership of any other Supervisory Board
+committee €11,000, provided that the committee concerned
+has met in the year. The chairperson of the Audit Committee
+receives €27,500, and the chairpersons of the other
+committees receive €22,000. The fixed remuneration is payable
+after the end of the year.
+Each member of the Supervisory Board receives, in addition to
+the reimbursement of their expenses, an annual basic
+compensation of €165,000. The chairperson receives €275,000
+and the deputy chairperson €220,000.
+Supervisory Board members' compensation is governed by our
+Articles of Incorporation, section 16.
+Compensation System
+Compensation for Supervisory Board
+Members
+third parties. To this end, we maintain directors' and officers'
+(D&O) group liability insurance. The policy is annual and is
+renewed from year to year. The insurance covers the personal
+liability of the insured group for financial loss caused by its
+managerial acts and omissions. The current D&O policy includes
+an individual deductible for Executive Board members of SAP SE
+as required by section 93 (2) of the German Stock Corporation
+Act.
+As far as the law permits, SAP SE and its affiliated companies in
+Germany and elsewhere indemnify and hold harmless their
+respective directors and officers against and from the claims of
+39
+22.0
+187.0
+165.0
+Jim Hagemann Snabe
+124.7
+14.7
+110.0
+187.0
+22.0
+165.0
+Dr. Sebastian Sick (from May 20, 2015)
+117.3
+7.3
+110.0
+176.0
+11.0
+165.0
+Robert Schuschnig-Fowler (from May 20, 2015)
+192.5
+27.5
+165.0
+192.5
+165.0
+22.0
+187.0
+165.0
+ΝΑ
+NA
+ΝΑ
+Former Supervisory Board members
+181.5
+16.5
+165.0
+181.5
+16.5
+27.5
+165.0
+117.3
+7.3
+110.0
+176.0
+11.0
+165.0
+59.6
+187.0
+22.0
+Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
+Value per
+165.0
+124.7
+22.0
+165.0
+Prof. Dr. Gesche Joost (from May 28, 2015)
+124.7
+14.7
+110.0
+187.0
+22.0
+165.0
+Andreas Hahn (from May 20, 2015)
+209.0
+44.0
+165.0
+209.0
+44.0
+Total
+Prof. Dr. Wilhelm Haarmann
+187.0
+22.0
+187.0
+110.0
+11.0
+121.0
+14.7
+110.0
+187.0
+22.0
+165.0
+Christine Regitz (from May 20, 2015)
+187.0
+22.0
+165.0
+Dr. Erhard Schipporeit
+198.0
+165.0
+Bernard Liautaud
+187.0
+22.0
+165.0
+187.0
+22.0
+165.0
+Lars Lamadé
+33.0
+Grant
+Pierre Thiollet (from May 20, 2015)
+PSU at
+15,016.9
+571.3
+15,588.2
+4,444.7
+682.4
+5,127.1
+34.7
+2,988.5 1,620.6 1,004.4
+308.0
+3,023.2 1,928.6
+116.7
+0
+1,004.4
+116.7
+To Our Stakeholders | Compensation Report
+31
+German Corporate Governance Code (Allocation)
+Allocation
+€ thousands
+Bernd Leukert
+Member of the
+Executive Board
+Luka Mucic
+Member of the
+Executive Board
+Gerhard Oswald
+2016)
+Total
+Service cost
+Total
+Other
+474.0
+103.3
+26.9
+0
+Total
+3,028.7 2,408.0
+1,328.0
+803.3
+726.9
+2016
+116.7
+2,743.5
+2,036.7
+1,660.5
+817.3
+277.5
+Multiyear variable compensation
+RSU Milestone Plan 2015
+9,244.7
+SAP SOP 2011
+One-year variable compensation
+1,625.7 1,258.0
+2015
+2015
+1,660.5
+Fringe benefits²)
+Fixed compensation
+€ thousands
+Allocation
+German Corporate Governance Code (Allocation)
+Total
+Service cost
+Total
+Other
+SAP SOP 2011
+RSU Milestone Plan 2015
+Multiyear variable compensation
+1,232.7
+1,660.5
+621.4
+1,660.5
+817.3
+RSU at
+One-year variable compensation
+722.4
+805.4
+712.1
+2016
+2015
+Fixed compensation
+700.0
+700.0
+700.0
+700.0
+700.0
+700.0
+2016
+Fringe benefits²)
+11.7
+12.1
+12.1
+105.4
+22.4
+Total
+712.4
+711.7
+712.1
+12.4
+Fringe benefits²)
+Member of the
+Executive Board
+(until December 31,
+700.0
+66.52
+64.57
+2,641
+37,898
+15,159
+22,739
+66.52
+64.57
+2,477
+Bernd Leukert
+42,687
+17,075
+25,612
+66.52
+64.57
+2,790
+Luka Mucic
+37,898
+15,159
+24,250
+16,167
+40,417
+8,000
+Value at
+116.7
+Time of
+Time of
+Time of
+Grant
+Grant
+Grant
+€
+22,739
+€
+thousand
+Bill McDermott (CEO)
+Robert Enslin
+Michael Kleinemeier
+122,423
+48,969
+73,454
+66.52
+64.57
+€
+66.52
+(60%)
+2,477
+147,041
+220,561
+23,942
+German Corporate Governance Code (Allocation)
+Allocation
+€ thousands
+Bill McDermott
+CEO
+Robert Enslin
+Member of the
+Executive Board
+367,602
+Michael Kleinemeier
+Member of the
+Executive Board
+2016¹)
+1,403.0
+2015
+2016¹)
+2015
+2016
+2015
+1,150.0
+700.0
+64.57
+Fixed compensation
+Total
+854.0
+62.61
+Gerhard Oswald (until December 31, 2016)
+31,924
+12,770
+19,154
+66.52
+1,940
+2,086
+Stefan Ries (from April 1, 2016)
+23,987
+64.57
+14,392
+65.77
+62.61
+1,532
+Steve Singh (from April 1, 2016)
+30,368
+12,147
+18,221
+9,595
+65.77
+General Information About This Management Report..
+Combined Management Report
+47
+German Public Auditor
+Wirtschaftsprüferin
+German Public Auditor
+Herold
+To Our Stakeholders | Independent Auditor's Report
+Overview of the SAP Group
+63
+Products, Research & Development, and Services.
+Security, Privacy, and Data Protection......
+Customers...
+Performance Management System....
+49
+50
+.51
+55
+65
+Strategy and Business Model...
+Dr. Böttcher
+Wirtschaftsprüfer
+in reasonable detail accurately and fairly reflects the
+transactions and dispositions of the company's assets, (2)
+provide reasonable assurance that transactions are recorded as
+necessary to permit preparation of financial statements in
+accordance with generally accepted accounting principles, and
+(3) provide reasonable assurance regarding prevention or
+timely detection of unauthorized acquisition, use or disposition
+of the company's assets that could have a material effect on the
+financial statements.
+Mannheim, February 22, 2017
+KPMG AG
+67
+To Our Stakeholders | Independent Auditor's Report
+The Supervisory Board is responsible for overseeing the
+Group's financial reporting process for the preparation of the
+Group Management Report.
+Auditor's Responsibilities for the Audit of
+the Group Management Report
+Our objectives are to obtain reasonable assurance whether the
+Group Management Report as a whole provides a suitable view
+of the Group's position, as well as, in all material respects, is
+consistent with the consolidated financial statements and our
+knowledge obtained in the audit, complies with the German
+statutory requirements, and suitably presents the opportunities
+and risks of future development and to issue an auditor's report
+that includes our opinion on the Group Management Report.
+Report on the System of Internal
+Control over Consolidated Financial
+Reporting pursuant to PCAOB
+Opinion on the System of Internal Control
+over Consolidated Financial Reporting
+We have audited the system of internal control over
+consolidated financial reporting of SAP SE, Walldorf, and its
+subsidiaries in place as at December 31, 2016. This control
+system is based on criteria set out in the Internal Control -
+Integrated Framework of the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO) (version of
+2013).
+46
+In our opinion, SAP maintained effective internal control over
+consolidated financial reporting as at December 31, 2016 based
+on the criteria set out in the Internal Control - Integrated
+Framework issued by COSO (in the version of 2013).
+Executive Board's and Supervisory Board's
+Responsibility for the System of Internal
+Control over Consolidated Financial
+Reporting
+SAP SE's Executive Board is responsible for maintaining an
+effective system of internal control over consolidated financial
+reporting and assessing its effectiveness, which is included in
+the Executive Board's report on the system of internal control
+over consolidated financial reporting.
+A company's system of internal control over consolidated
+financial reporting is a process designed to provide reasonable
+assurance regarding the reliability of financial reporting in the
+consolidated financial statements and the preparation of
+financial statements for external purposes in accordance with
+generally accepted accounting principles. A company's system
+of internal control over consolidated financial reporting includes
+policies and procedures to (1) ensure an accounting system that
+Because of its inherent limitations, internal control over financial
+reporting may not prevent or detect material misstatements.
+Also, projections of any evaluation of effectiveness to future
+periods are subject to the risk that controls may become
+inadequate because of changes in conditions, or that the degree
+of compliance with the policies or procedures may deteriorate.
+The Supervisory Board is responsible for overseeing the
+Group's system of internal control over consolidated financial
+reporting.
+Auditor's Responsibility for the System of
+Internal Control over Consolidated
+Financial Reporting
+Our responsibility is to express an opinion on the system of
+internal control over consolidated financial reporting based on
+our audit. We conducted our audit in accordance with the
+standards of the Public Company Accounting Oversight Board
+(United States). Those standards require that we plan and
+perform the audits to obtain reasonable assurance about
+whether effective internal control over consolidated financial
+reporting was maintained in all material respects. Our audit of
+internal control over consolidated financial reporting included
+obtaining an understanding of internal control over financial
+reporting, assessing the risk of material deficiencies in internal
+control, testing and evaluating the design and operating
+effectiveness of internal control based on this assessment, and
+performing such other procedures as we considered necessary
+in the circumstances.
+We believe that the audit evidence we have obtained is sufficient
+and appropriate to provide a basis for our opinion.
+Responsible Auditor
+The engagement partner on the audit resulting in this
+independent auditor's report is Dr. Bert Böttcher.
+Wirtschaftsprüfungsgesellschaft
+Employees and Social Investments.
+This management report contains forward-looking statements
+and information based on the beliefs of, and assumptions made
+by, our management using information currently available to
+them. Any statements contained in this report that are not
+historical facts are forward-looking statements as defined in the
+U.S. Private Securities Litigation Reform Act of 1995. We have
+based these forward-looking statements on our current
+expectations, assumptions, and projections about future
+conditions and events. As a result, our forward-looking
+statements and information are subject to uncertainties and
+risks, many of which are beyond our control. If one or more of
+these uncertainties or risks materializes, or if management's
+underlying assumptions prove incorrect, our actual results could
+differ materially from those described in or inferred from our
+forward-looking statements and information. We describe these
+risks and uncertainties in the Risk Management and Risks
+section.
+Energy and Emissions.
+Combined Management Report | General Information About This Management Report
+49
+49
+Overview of the SAP
+Group
+>76%
+of worldwide transactions
+touch an SAP system
+>345,000
+customers worldwide
+>180
+countries where SAP
+customers are located
+Our vision is to help the world run better and improve people's
+lives. Together with our broad ecosystem of partners, this
+comes to life as we help our customers master complexity and
+innovate and transform to become sustainable digital
+businesses. SAP is involved in driving innovation in all fields of
+the digital economy, such as the Internet of Things, machine
+learning, and artificial intelligence. For more information on our
+vision and strategy, see the Strategy and Business Model
+section.
+Founded in 1972, SAP is a global company headquartered in
+Walldorf, Germany. Our legal corporate name is SAP SE. SAP is
+the market leader in enterprise application software¹. The
+company is also the fastest-growing major database company.
+Globally, more than 76% of all business transactions worldwide
+touch an SAP software system. With more than 345,000
+customers in more than 180 countries, the SAP Group includes
+subsidiaries in all major countries and employs more than
+84,100 people.
+Our ordinary shares are listed on the Frankfurt Stock Exchange.
+American Depositary Receipts (ADRs) representing SAP SE
+ordinary shares are listed on the New York Stock Exchange
+(NYSE). SAP is a member of Germany's DAX, the Dow Jones
+EURO STOXX 50, and the Dow Jones Sustainability Indexes. As
+at December 31, 2016, SAP was the most valuable company in
+the DAX based on market capitalization. For additional
+information regarding our stock, see the Investor Relations
+section.
+As at December 31, 2016, SAP SE directly or indirectly
+controlled a worldwide group of 245 subsidiaries to develop,
+distribute, and provide our products, solutions, and services. For
+a list of our subsidiaries, associates, and other equity
+investments, see the Notes to the Consolidated Financial
+Statements, Note (34).
+Enterprise application software is computer software specifically developed to support and automate
+business processes
+50
+46
+This report includes statistical data about the IT industry and
+global economic trends that comes from information published
+by sources including Gartner, the European Central Bank (ECB);
+and the International Monetary Fund (IMF). This type of data
+represents only the estimates of Gartner, ECB, IMF, and other
+sources of industry data. SAP does not adopt or endorse any of
+the statistical information provided by sources such as Gartner,
+ECB, IMF, or other similar sources that is contained in this
+report. The data from these sources is subject to risks and
+uncertainties, and subject to change based on various factors,
+including those described above, in the Risk Management and
+Risks section, and elsewhere in this report. These and other
+factors could cause our results to differ materially from those
+expressed in the estimates made by third parties and SAP. We
+caution readers not to place undue reliance on this data.
+74
+example, those made in the Operating Results section, our
+quantitative and qualitative disclosures about market risk
+pursuant to the International Financial Reporting Standards
+(IFRS), namely IFRS 7 and related statements in our Notes to
+the Consolidated Financial Statements; Expected Developments
+and Opportunities section; Risk Management and Risks section;
+and other forward-looking information appearing in other parts
+of this report. To fully consider the factors that could affect our
+future financial results, both this report and our Annual Report
+on Form 20-F should be considered, as well as all of our other
+filings with the Securities and Exchange Commission (SEC).
+Readers are cautioned not to place undue reliance on these
+forward-looking statements, which speak only as of the date
+specified or the date of this report. We undertake no obligation
+to publicly update or revise any forward-looking statements as a
+result of new information that we receive about conditions that
+existed upon issuance of this report, future events, or otherwise
+unless we are required to do so by law.
+Forward-Looking Statements
+.81
+Financial Performance: Review and Analysis..
+84
+Corporate Governance Fundamentals
+.103
+Risk Management and Risks....
+106
+Expected Developments and Opportunities.
+131
+Events After the Reporting Period.
+138
+48
+Combined Management Report
+General
+Information
+About This Management
+Report
+Basis of Presentation
+This combined group management report by the SAP Group
+(collectively, “we,” “us,” “our," "SAP," "Group," or "Company")
+and the management report of SAP SE have been prepared in
+accordance with sections 289, 315, and 315a of the German
+Commercial Code and German Accounting Standards (GAS)
+No. 17 and 20. The management report is also a management
+commentary complying with the International Financial
+Reporting Standards (IFRS) Practice Statement Management
+Commentary. All of the information in this report relates to the
+situation as at December 31, 2016, or the fiscal year ended on
+that date, unless otherwise stated. The report contains
+references to additional information in other parts of the SAP
+Integrated Report that is available online. This additional
+information is not part of the management report.
+The words "aim," "anticipate," "assume,” “believe,” “continue,"
+"could," "counting on,” “is confident," "development,"
+"estimate," "expect," "forecast," "future trends," "guidance,"
+"intend," "may," "might," "outlook,” “plan,” “project,” “predict,"
+"seek," "should," "strategy," "want,” “will,” “would," and similar
+expressions as they relate to us are intended to identify such
+forward-looking statements. Such statements include, for
+The Executive Board of SAP SE is responsible for the
+preparation of the Group Management Report, which as a whole
+provides a suitable view of the Group's position, is consistent
+with the consolidated financial statements, complies with the
+German statutory requirements and suitably presents the
+opportunities and risks of future development. Furthermore, the
+Executive Board is responsible for such arrangements and
+measures (systems) as the Executive Board determines are
+necessary to enable the preparation of the Group Management
+Report in compliance with the requirements of German
+commercial law applicable pursuant to Section 315a (1) HGB,
+German Accounting Standards number 17 and 20 (GAS 17, GAS
+20) and the International Financial Reporting Standard (IFRS)
+Practice Statement Management Commentary and for
+providing sufficient and appropriate evidence for the
+statements in the Group Management Report.
+To Our Stakeholders | Responsibility Statement
+We conducted our audit in accordance with Section 317 (2) HGB
+and German generally accepted standards for the audit of
+management reports promulgated by the German Institute of
+Public Auditors [IDW]. We believe that the audit evidence we
+have obtained is sufficient and appropriate to provide a basis for
+our opinion
+Opinion on the Consolidated Financial
+Statements
+We have audited the consolidated financial statements of SAP
+SE, Walldorf, and its subsidiaries (the Group), which comprise
+the consolidated statements of financial position as at
+December 31, 2016, consolidated income statements,
+consolidated statements of comprehensive income,
+consolidated statements of changes in equity and consolidated
+statements of cash flows for the fiscal year from January 1,
+2016, to December 31, 2016, and notes to the consolidated
+financial statements, including a summary of significant
+accounting policies.
+Pursuant to Section 322 (3) sentence 1 half sentence 2 HGB
+("Handelsgesetzbuch": German Commercial Code), we state
+that, in our opinion, based on our knowledge obtained in the
+audit, the accompanying consolidated financial statements
+comply in all material respects with IFRS as adopted by the EU
+and the supplementary requirements of German commercial
+law pursuant to Section 315a (1) of the German Commercial
+Code [HGB], as well as IFRS as adopted by the International
+Accounting Standards Board and give a true and fair view of the
+net assets and financial position of the Group as at December
+31, 2016 as well as the results of operations for the fiscal year
+from January 1, 2016, to December 31, 2016, in accordance with
+these requirements.
+Pursuant to Section 322 (3) sentence 1 HGB, we state that our
+audit of the consolidated financial statements has not led to any
+reservations with respect to the propriety of the consolidated
+financial statements.
+Basis for Opinion on the Consolidated
+Financial Statements
+We conducted our audit in accordance with Section 317 HGB
+and German generally accepted standards for the audit of
+financial statements promulgated by the German Institute of
+Public Auditors [IDW] as well as in supplementary compliance
+with International Standards on Auditing (ISA) and guidelines of
+the Public Company Accounting Oversight Board (United
+States). Our responsibilities under those standards and
+additional guidelines are further described in the "Auditor's
+Responsibilities for the Audit of the Consolidated Financial
+Statements" section of our report. We are independent of the
+Group in accordance with the requirements of German
+commercial law and the rules of professional conduct, and we
+have fulfilled our other ethical responsibilities applicable in
+Germany in accordance with these requirements. We believe
+that the audit evidence we have obtained is sufficient and
+appropriate to provide a basis for our opinion.
+Key Audit Matters
+Key audit matters are those matters that, in our professional
+judgment, were of most significance in our audit of the
+consolidated financial statements for the fiscal year from
+January 1, 2016 to December 31, 2016. These matters were
+addressed in the context of our audit of the consolidated
+financial statements as a whole, and in forming our opinion
+thereon, but we do not provide a separate opinion on these
+matters.
+Recognition of software licenses revenue
+Refer to Note (3b) - Relevant Accounting Policies, Note (3c) -
+Management Judgments and Sources of Estimation
+Uncertainty, and Note (5) - Revenue.
+The Financial Statement Risk
+IFRS do not provide specific guidance on recognizing revenue
+for sales of software and software-related products and
+services. SAP defined detailed policies, procedures and
+processes to manage the accounting for its software
+arrangements. SAP's revenue generating transactions and,
+consequently, SAP's revenue recognition policies are complex.
+Applying them often requires significant judgment.
+Significant judgments include the allocation of revenue from
+customer contracts to multiple deliverables and the application
+of the revenue recognition criteria under IAS 18, e.g., assessing
+whether the significant risks and rewards have been transferred
+to the buyer and whether the amount of revenue can be
+measured reliably.
+Our Response
+We evaluated the compliance of SAP's accounting policies on
+software revenue recognition with the IFRS Framework and the
+To Our Stakeholders | Independent Auditor's Report
+43
+individual applicable IFRSs. We considered the design and
+tested the operating effectiveness of the key controls
+implemented by SAP on the identification of multiple-element
+arrangements, the identification of deliverables and separate
+units of accounting, the identification of fair value for all relevant
+deliverables other than on-premise software (due to the residual
+method being applied). For all software arrangements we
+considered to be individually substantial and for a sample of the
+remaining software arrangements, we also:
+obtained an understanding of the transaction through
+inspection of the underlying contractual agreements and
+other related documents as well as discussions with SAP's
+accounting and/or sales representatives;
+obtained external confirmations of the key terms and
+conditions from the respective customers to corroborate the
+information relevant for the accounting that we received
+from SAP;
+assessed whether SAP appropriately identified all separate
+units of accounting and allocated the transaction price to
+such units based on either the relative fair value method or
+the residual method, as applicable, using the established fair
+values (see next paragraph); and
+evaluated whether the revenue recognition policies
+applicable to each separate unit of accounting were applied
+appropriately to ensure that revenue is recognized in the
+appropriate period.
+We evaluated the fair value assumptions for each deliverable
+that typically qualifies as a separate unit of accounting in SAP's
+multiple-element arrangements by assessing the
+appropriateness of the methodology applied, testing
+mathematical accuracy of the underlying calculations and
+testing selections to corroborate the data underlying SAP's
+calculations. We also assessed the appropriateness of the
+related disclosures in the consolidated financial statements.
+Report on the Audit of Consolidated
+Financial Statements
+Our Observations
+TO SAP SE, Walldorf
+Independent Auditor's
+87,875,732 SAP shares on December 31, 2016 (December 31,
+2015: 90,262,686 SAP shares).
+Supervisory Board: Other
+Information
+We did not grant any compensation advance or credit to, or
+enter into any commitment for the benefit of, any member of
+our Supervisory Board in 2016 or the previous year.
+Hasso Plattner, the chairperson of the Supervisory Board,
+entered into a consulting contract with SAP after joining the
+Supervisory Board in May 2003. The contract does not provide
+for any compensation. The only cost we incurred under the
+contract was the reimbursement of expenses.
+As far as the law permits, we indemnify Supervisory Board
+members against, and hold them harmless from, claims brought
+by third parties. To this end, we maintain directors' and officers'
+(D&O) group liability insurance. The current D&O policy does
+not include an individual deductible for Supervisory Board
+members as envisaged in the German Corporate Governance
+Code.
+41
+To Our Stakeholders | Compensation Report
+Responsibility Statement
+To the best of our knowledge, and in accordance with the
+applicable reporting principles, the Consolidated Financial
+Statements give a true and fair view of the assets, finances, and
+operating results of the SAP Group, and the management report
+of the Group and SAP SE includes a fair review of the
+development and performance of the business and the position
+of the Group and SAP SE, together with a description of the
+principal opportunities and risks associated with the expected
+development of the Group and SAP SE.
+Walldorf, February 22, 2017
+SAP SE
+Walldorf, Germany
+Executive Board of SAP SE
+Bill McDermott
+Robert Enslin
+Michael Kleinemeier
+Bernd Leukert
+Luka Mucic
+Stefan Ries
+Steve Singh
+42
+22
+Report
+SAP has developed an adequate framework for determining the
+accounting treatment for its software licenses revenue. Our
+testing did not identify any significant exceptions in the
+operation of controls. The disclosures appropriately describe
+this framework. For the vast majority of the software
+arrangements entered into during 2016, it was clear which of
+SAP's revenue policies should apply. Where there was room for
+interpretation, SAP's judgment was balanced and appropriate.
+We did not identify any material errors in calculations.
+Income tax exposures
+Refer to note (3b) - Relevant Accounting Policies, note (3c) -
+Management Judgments and Sources of Estimation Uncertainty,
+and note (10) - Income Tax.
+Our objectives are to obtain reasonable assurance about
+whether the consolidated financial statements as a whole are
+free from material misstatement, whether due to fraud or error,
+and to issue an auditor's report that includes our opinion on the
+consolidated financial statements. Reasonable assurance is a
+high level of assurance, but is not a guarantee that an audit
+conducted in accordance with Section 317 HGB and German
+generally accepted standards for the audit of financial
+statements promulgated by the German Institute of Public
+Auditors [IDW] as well as in supplementary compliance with ISA
+and guidelines of the Public Company Accounting Oversight
+Board (United States) will always detect a material
+misstatement when it exists. Misstatements can arise from
+fraud or error and are considered material if, individually or in
+the aggregate, they could reasonably be expected to influence
+the economic decisions of users taken on the basis of these
+consolidated financial statements.
+As part of an audit in accordance with Section 317 HGB and
+German generally accepted standards for the audit of financial
+statements promulgated by the German Institute of Public
+Auditors [IDW] as well as in supplementary compliance with ISA
+and guidelines of the Public Company Accounting Oversight
+Board (United States), we exercise professional judgment and
+maintain professional skepticism throughout the audit. We also:
+-
+Identify and assess the risks of material misstatement of the
+consolidated financial statements, whether due to fraud or
+error, design and perform audit procedures responsive to
+those risks, and obtain audit evidence that is sufficient and
+appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is
+higher than for one resulting from error, as fraud may involve
+collusion, forgery, intentional omissions, misrepresentations,
+or the override of internal control.
+To Our Stakeholders | Independent Auditor's Report
+45
+445
+-
+Obtain an understanding of internal control relevant to the
+audit in order to design audit procedures that are appropriate
+in the circumstances.
+Evaluate the appropriateness of accounting policies used and
+the reasonableness of accounting estimates and related
+disclosures made by the Executive Board.
+Conclude on the appropriateness of the Executive Board's
+use of the going concern basis of accounting and, based on
+the audit evidence obtained, whether a material uncertainty
+exists related to events or conditions that may cast
+significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we
+are required to draw attention in our auditor's report to the
+related disclosures in the consolidated financial statements
+or, if such disclosures are inadequate, to modify our opinion.
+Our conclusions are based on the audit evidence obtained up
+to the date of our auditor's report. However, future events or
+conditions may cause the Group to cease to continue as a
+going concern.
+Evaluate the overall presentation, structure and content of
+the consolidated financial statements, including the
+disclosures, and whether the consolidated financial
+statements represent the underlying transactions and events
+in a manner that the consolidated financial statements give a
+true and fair view of the net assets and financial position as
+well as the results of operations of the Group in accordance
+with IFRS as adopted by the EU and the supplementary
+requirements of German commercial law pursuant to Section
+315a (1) HGB as well as IFRS as adopted by the International
+Accounting Standards Board.
+Obtain sufficient and appropriate audit evidence regarding
+the financial information of the entities or business activities
+within the Group to express an opinion on the consolidated
+financial statements. We are responsible for the direction,
+supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+We communicate with those charged with governance
+regarding, among other matters, the planned scope and timing
+of the audit and significant audit findings, including any
+significant deficiencies in internal control that we identify during
+our audit.
+We also provide the Supervisory Board with a statement that we
+have complied with relevant ethical requirements regarding
+independence, and to communicate with them all relationships
+and other matters that may reasonably be thought to bear on
+our independence, and where applicable, related safeguards.
+From the matters communicated with the Supervisory Board,
+we determine those matters that were of most significance in
+the audit of the consolidated financial statements of the current
+period and are therefore the key audit matters. We describe
+these matters in our report on the audit of the consolidated
+financial statements unless law or regulation precludes public
+disclosure about the matter.
+Other Legal and Regulatory
+Requirements
+Report on the Audit of the Group
+Management Report
+Opinion on the Group Management Report
+We have audited the combined group management report by
+the SAP Group and the management report of SAP SE, Walldorf
+("Group Management Report"), for the fiscal year from January
+1, 2016 to December 31, 2016.
+In our opinion, based on our knowledge obtained in the audit,
+the accompanying Group Management Report as a whole
+provides a suitable view of the Group's position. In all material
+respects, the Group Management Report is consistent with the
+consolidated financial statements, complies with the German
+statutory requirements and suitably presents the opportunities
+and risks of future development.
+Pursuant to Section 322 (3) sentence 1 HGB, we state that our
+audit has not led to any reservations with respect to the
+propriety of the Group Management Report.
+Basis for Opinion on the Group
+Management Report
+Auditor's Responsibilities for the Audit of
+the Consolidated Financial Statements
+The Supervisory Board is responsible for overseeing the
+Group's financial reporting process for the preparation of the
+consolidated financial statements.
+In preparing the consolidated financial statements, the
+Executive Board is responsible for assessing the Group's ability
+to continue as a going concern, disclosing, as applicable,
+matters related to going concern and using the going concern
+basis of accounting unless the Executive Board either intends to
+liquidate the Group or to cease operations, or has no realistic
+alternative but to do so.
+Executive Board determines is necessary to enable the
+preparation of consolidated financial statements that are free
+from material misstatement, whether due to fraud or error.
+The Financial Statement Risk
+SAP operates in multiple tax jurisdictions with complexities of
+transfer pricing, changing tax laws, and intercompany financing
+transactions. The determination of provisions for tax
+contingencies requires SAP to make judgments on tax issues
+and develop estimates regarding SAP's exposure to tax risks.
+Our Response
+SAP regularly engages external experts to provide tax opinions
+to support their own risk assessment. We involved our tax
+specialists to evaluate these tax opinions. Our specialists also
+assessed the correspondence with the relevant tax authorities
+and analyzed and evaluated the assumptions used to determine
+tax provisions based on our knowledge and experiences of the
+current application of the relevant legislation by authorities and
+courts. Through our international network we involved tax
+specialists with the appropriate knowledge on the respective
+local tax rules and regulations who reported the results of their
+assessment to us. We also assessed the adequacy of SAP's
+disclosures about income taxes and uncertain tax positions.
+Our Observations
+SAP's judgments as to the amounts recognized as tax expense
+and provisions for tax contingencies as at December 31, 2016
+are appropriate. The disclosures provide a balanced description
+of the current status of tax claims and risks.
+Goodwill impairment test for SAP Business
+Network
+Refer to Note (3c) - Management Judgments and Sources of
+Estimation Uncertainty, Note (15) - Goodwill and Intangible
+Assets
+The Financial Statement Risk
+SAP performed the annual goodwill impairment test at the level
+of its operating segments as there are no lower levels within
+SAP at which goodwill is monitored for internal management
+purposes. SAP's acquisitions led to a material goodwill in the
+SAP Business Network Segment in which SAP mainly markets
+and sells the cloud offering developed by SAP Ariba, SAP
+Fieldglass and Concur. Goodwill allocated to the SAP Business
+Network is material as of December 31, 2016 (16,8% of
+consolidated balance sheet total) and the impairment test
+involves significant judgment. The key assumptions relate to the
+determination of the peer group, budgeted revenue growth,
+budgeted operating margins, pre-tax discount rates and
+terminal growth rates.
+Responsibilities of the Executive Board and
+the Supervisory Board for the Group
+Management Report
+Our Response
+44
+To Our Stakeholders | Independent Auditor's Report
+own expectations and performed independent sensitivity
+analysis for each key assumption.
+Our Observations
+Our testing did not identify any significant exceptions in the
+operation of controls. Based on our performed sensitivity
+analysis we concluded that SAP applied a balanced set of
+assumptions in determining the recoverable amount (fair value
+less cost of disposal). The valuation results for the goodwill of
+SAP Business Network are consistent with our internal
+projections. We did not identify any material errors in valuation
+methodologies applied or in the calculations made.
+Information Other than the Consolidated
+Financial Statements and Auditor's Report
+thereon
+The Executive Board of SAP SE is responsible for the
+information other than the consolidated financial statements
+and auditor's report thereon (the other information). The other
+information comprises the Integrated Report published on the
+website of SAP SE, including the Annual Report on Form 20-F,
+except for the annual and consolidated financial statements, the
+combined group management report by the SAP Group and the
+management report of SAP SE and our auditor's report thereon.
+Our audit opinion on the consolidated financial statements does
+not cover the other information and we do not express, any form
+of assurance conclusion thereon, except for selected qualitative
+and quantitative sustainability disclosures for which we
+performed an independent assurance engagement and issued
+an Independent Assurance Report.
+In connection with our audit of the consolidated financial
+statements, our responsibility is to read the other information,
+and doing so, consider whether the other information is
+materially inconsistent with the consolidated financial
+statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated. If, based on the work we
+have performed, we conclude that there is a material
+misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+Responsibilities of the Executive Board and
+the Supervisory Board for the Consolidated
+Financial Statements
+The Executive Board of SAP SE is responsible for the
+preparation of the consolidated financial statements which
+comply with IFRS as adopted by the EU and the supplementary
+requirements of German commercial law pursuant to Section
+315a (1) HGB as well as IFRS as adopted by the International
+Accounting Standards Board and give a true and fair view of the
+net assets, financial position and results of operations of the
+Group in accordance with these requirements. Furthermore, the
+Executive Board is responsible for such internal control as the
+SAP has implanted controls designed to ensure that the
+calculation of the recoverable amount (in the specific case fair
+value less cost of disposal) for SAP Business Network is
+appropriate. We tested the design and operating effectiveness
+of these controls. We involved our valuation specialists to
+assess the valuation methodologies applied and key
+assumptions used in measuring the fair value less cost to
+disposal and to test the mathematical accuracy of the
+discounted cash flow and other valuation models. We evaluated
+SAP's assumptions by comparing the fair value estimates to our
+50
+Combined Management Report | Overview of the SAP Group
+We execute on our vision by empowering our customers to
+become digital businesses through SAP technology, so they can
+address the challenges facing our world today and have an
+impact in three vital areas:
+For 20 years, through venture capital funds managed by
+Sapphire Ventures, SAP has supported entrepreneurs that
+aspire to build industry-leading businesses. Sapphire Ventures
+currently has over US$2 billion under management and has
+invested in more than 130 companies on five continents - in
+growth-stage technology companies as well as early-stage
+venture capital funds. Sapphire Ventures pursues opportunities
+Investing in the next generation of
+technology leaders
+Hipmunk, a leader in innovative travel search, will bring a
+consumer-like experience for business travelers.
+PLAT.ONE, a leading enterprise-grade loT provider, will help
+SAP enhance complex loT capabilities in SAP Cloud Platform
+(formerly called SAP HANA Cloud Platform).
+Fedem Technology, a forward-thinking loT company, will
+help SAP build next-generation, end-to-end loT solutions that
+not only support predictive maintenance but also Industry
+4.0 scenarios.
+Altiscale, a company providing high-performance, scalable
+Big Data-as-a-service (BDaaS) solutions, will help SAP
+accelerate and operationalize the deployment of Big Data in
+the enterprise.
+-
+-
+-
+in which it can help fuel growth by adding expertise,
+technologies to add to our broad solution offerings and improve
+coverage in key strategic markets. In 2016, SAP made the
+following smaller tuck-in acquisitions:
+We take a balanced approach on how to grow. We will continue
+to focus on organic investments in technology and innovations
+to drive our short-term and midterm growth ambitions. We will
+continue to look at unleashing the full potential of our
+employees' talent as well as strategic partnerships with our
+ecosystem to foster innovation.
+Keeping a balanced focus on growth
+Combined Management Report | Strategy and Business Model
+62
+52
+For more information, see the Employees and Social
+Investments section.
+We cannot bring innovations to our customers without capable,
+driven employees. As we strive to be the best place to work in
+the enterprise software industry, we look to a diverse and
+engaged workforce to drive innovation and value for our
+customers. Recruiting the right talent and unleashing their
+innovative power is as crucial for SAP as continuing to develop
+the talent of existing employees to allow them to realize their full
+potential.
+Recruit and retain the right talent
+Additionally, we may also acquire targeted "tuck-in"
+For more information about these investments, see the
+Products, Research & Development, and Services section.
+relationships, geographic reach, and capital. It places a
+particular focus on companies in Europe, Israel, and the United
+States.
+For more information about our consolidated investment funds,
+see the Notes to the Consolidated Financial Statements, Note
+(34).
+2016
+2016
+Outlook*
+ΚΡΙ
+Strategic Objective
+Outlook and Results for 2016
+The table below provides an overview of the specific key
+performance indicators (KPIs) used to measure performance,
+as well as our goals and actual performance.
+Employee engagement
+Customer loyalty
+Additionally, we launched a new SAP.io Fund to focus on
+strategic, early stage investments aligned with our SAP.io
+innovation initiatives. This US$35 million fund will focus on
+"catalyzing" a startup ecosystem that can leverage or enrich
+SAP data sets, platform technologies, or business workflows. It
+is operated in partnership with Sapphire Ventures.
+Profitability
+-
+We believe the most important indicators to measure our
+success comprise both financial and non-financial indicators:
+Measuring Our Success
+Activity in our business networks
+Licensing of on-premise software products and solutions
+Use of our cloud solutions
+Support, professional services, development, training, and
+other services
+We derive our revenue from fees charged to our customers for:
+Financial Business Model
+Growth
+To enable sustainable success, we must prepare for the future.
+We will continue to incubate disruptive technologies across a
+number of initiatives. We have begun incubating new businesses
+using an "open innovation" approach under the umbrella of the
+SAP.io program with focus on both internal and external
+startups. We are aggressively investing in making our business
+applications "intelligent" with machine learning. We are
+investing in delivering personalized medicine through a
+connected health platform - aligned with our vision of improving
+society and healthcare. At the same time, we continue to create
+reliable security solutions across all of our products.
+Invest in disruptive technologies
+We will continue to deliver transformational innovations in the
+platform, database, and analytics space. We want developers in
+our entire ecosystem and our customers to turn to SAP as their
+reference cloud platform and API hub. Finally, we want to ensure
+that security remains a trusted feature of all SAP platforms and
+applications.
+Achieving the Vision
+Society
+T
+Economy
+鱼
+The United Nations has defined 17 Sustainable Development
+Goals (SDGs) to transform the world's economy, society, and
+environment. These goals are a universal call to action to end
+poverty, protect the planet, and ensure that all people enjoy
+peace and prosperity. We consider the most relevant of these
+goals in the context of our own vision and higher purpose and
+they inspire us to achieve this vision.
+Environment: Climate change touches everyone and will
+impact the lives of future generations. SAP software and
+technology is helping our customers make the world more
+energy efficient, and drive more sustainable supply chains
+around the world.
+Society: Health, education, and public safety are critical for a
+vibrant society. SAP software and technology is addressing
+complex challenges around disease prevention and
+detection, as well as providing solutions for smarter
+government and smarter cities.
+Environment
+Economy: Economic empowerment comes from purpose-
+driven work. SAP software and technology enables
+customers to innovate and build strong industries and
+infrastructure and to protect the privacy of individuals and
+organizations.
+SAP's vision is to help the world run better and improve people's
+lives. We strive to make our world a better, more sustainable
+place and help solve some of its most complex problems. Our
+innovations give us the power to help tackle these issues by
+giving our customers, partners, and consumers the tools they
+need to have an impact.
+Impact Through Innovation
+Strategy and Business
+Model
+SAP S/4HANA - Reimagining the Business Suite
+for the Digital Age
+SAP S/4HANA, our next-generation business suite, allows our
+customers to embrace the digital economy. The digital core is
+the foundation for running a Live Business:
+Intelligent - Going beyond automation to provide predictive
+suggestions
+Integrated Connecting not only customer functions but
+also people, things, and businesses
+Based on SAP HANA, SAP S/4HANA software can store and
+process huge amounts of data while significantly reducing an
+organization's data footprint. This means our customers can
+save time and cost.
+-
+Supporting our customers' digital
+transformation
+To execute our vision, we are helping customers meet the
+challenges of today's changing world, and at the same time,
+enabling them to have a positive impact across the economy,
+society, and the environment.
+Technology is transforming both our society and the way we do
+business. People and things are connected like never before.
+Entire industries are being disrupted by innovations that seemed
+unimaginable only a few years ago. Technology trends such as
+cloud computing, Big Data, the Internet of Things (IoT), and
+artificial intelligence go hand in hand with social trends that are
+changing how we live and work.
+We built an open cloud platform with cloud application
+programming interfaces (APIs), which means the platform can
+communicate with multiple sources to support a strong
+ecosystem - allowing developers from companies of all sizes to
+extend our applications or create new solutions for the digital
+economy. Moreover, as the rapidly growing data management
+and database market moves to the cloud, our cloud platform
+offers companies planning, predictive, visualization, and mobile
+capabilities.
+Scale our platform as the innovation platform for
+our ecosystem partners
+develop best-in class, line-of-business (LoB) cloud applications
+combined with real-time analytics, loT capabilities, and industry
+add-ons. Finally, we will leverage our expertise to deliver
+solutions to help small businesses and midsize companies be
+successful.
+We will continue to deliver market-leading applications for ERP,
+whether in the cloud or on premise. Further, we will continue to
+Continue to develop market-leading applications
+Our core ERP software is the historic foundation of our strength.
+To maintain our market leadership position as this market
+rapidly shifts to the cloud, we will continue to innovate and offer
+the agility and flexibility our customers require.
+Invest in disruptive technologies
+Recruit and retain the right talent
+Scale our platform as the innovation platform for our
+ecosystem partners
+Continue to develop market-leading applications
+-
+-
+In 2016, we have increased our focus on innovation as it is the
+key to long-term success. Our strategy to be the most
+innovative cloud company powered by SAP HANA, will help us
+deliver the digital innovation that our customers need. To
+execute on this strategy, we are focusing our efforts on the
+following key areas:
+In the past years, we have built our success in the business
+applications market by expanding our product portfolio to help
+companies meet the needs of the digital economy. We have
+organically innovated with groundbreaking technology such as
+SAP HANA and software such as SAP S/4HANA. We have also
+expanded our portfolio through acquisitions by integrating
+valuable assets in the cloud and business network spaces.
+Executing on our strategy
+We want to build on the trust of our existing customers and earn
+the trust of new customers. For more information, see the
+Customers section.
+Our platform leverages existing SAP assets that are
+complemented by new cloud capabilities and the real-time
+applications available in our next-generation business suite
+SAP S/4HANA. Our solutions and services - combined with the
+talent and expertise of more than 84,100 colleagues and a broad
+global ecosystem of partners - puts us in a unique position to
+enable our more than 345,000 customers to fulfill their goals.
+By providing a technology platform for innovation and
+digitalization, we help our customers with the challenges of
+digital transformation. Our solutions enable businesses,
+governments, and non-profit organizations in more than 180
+countries to become data-driven "live" businesses.
+Organizations need to digitally transform their business
+processes and business models to be able to succeed in today's
+marketplace. They need to become agile organizations that are
+laser focused on driving customer value. They also must
+become data-driven and run their business on real-time
+information to react to market and customer demands.
+51
+Combined Management Report | Strategy and Business Model
+(non-IFRS, at constant currencies)
+Achievement
+(non-IFRS, at constant currencies)
+Cloud subscriptions and
+support revenue
+54
+* Support and cloud subscriptions - share of total revenue
+84% to 86%
+84% to 86%
+85%
+Employee Engagement Index
+Employee Engagement
+35% to 40%
+54
+21% to 23%
+Customer Net Promoter Score
+€8.5bn to €9.0bn
+€6.8bn to €7.0bn
+€6.63bn
+Operating profit
+Customer Loyalty
+Profitability
+revenue*
+19.2%
+Combined Management Report | Strategy and Business Model
+Products, Research &
+Development, and
+Services
+Running Business with Modern Business
+Applications and Business Networks
+Our cloud-first strategy requires a very strong offering to handle
+Big Data in the cloud. With SAP Cloud Platform Big Data Service,
+which is powered by SAP HANA, we run multitenant-aware
+Hadoop systems and provide end-to-end capabilities to
+efficiently manage and scale Big Data initiatives.
+applications that leverage advanced analytic processing and
+empowers all users with deeper insight into any data from
+anywhere.
+With our second version of SAP HANA, we launched a truly next-
+generation platform. It enables the reduction of time-consuming
+database and data management tasks and delivers intelligent
+SAP HANA is our in-memory computing platform that lets
+companies accelerate business processes, deliver more
+business intelligence, and simplify their IT environment.
+SAP HANA removes the burden of maintaining separate legacy
+systems and siloed data, so companies can run live and
+business people can make better business decisions in the new
+digital economy. Emphasizing our cloud-first strategy,
+SAP HANA can be deployed on several public cloud
+infrastructures.
+SAP HANA - Enabling Business with a
+Digital Data Foundation
+Making companies' digital transformations possible with SAP
+Digital Business Services
+Reinventing business with machine learning and the
+Internet of Things
+Differentiating business with a digital enterprise platform
+Steering business with real-time analytics
+Running business with modern business applications and
+business networks
+Enabling business with a digital data foundation
+In 2016, we continued to give top priority to supporting our
+customers on their individual paths into the digital economy,
+defining our strategy around the following cornerstones:
+Empowering Our Customers to
+Become Digital Businesses
+R&D expense in 2016 (IFRS)
+connected companies using
+Ariba Network
+€3,044 m
+>2.5 m
+SAP S/4HANA customers
+>5,400
+70% to 75%
+Available in the cloud, on premise, or as a hybrid deployment, in
+2016, SAP S/4HANA evolved from a finance-focused offering
+€28bn to €29bn
+€22.07bn
+* The outlook was communicated in January 2016 and raised in October 2016.
+85%
+82%
+Employee Engagement Employee Engagement Index
+19.2%
+25%
+Customer Net Promoter Score
+Customer Loyalty
+Combined Management Report | Strategy and Business Model
+€6.60bn
+€6.5bn to €6.7bn
+Profitability
++8%
++6.5% to +8.5%
+Cloud and software revenue
+Growth
+€3.01bn
+€3.00bn to €3.05bn
+Operating profit
+53
+53
+Outlook for 2017 and Ambitions for 2020
+61%
+Share of more predictable
+Total revenue
+Growth
++6% to +8%
+€18.43bn
+Cloud and software revenue
+€8.0bn to €8.5bn
+€3.8bn to €4.Obn
+€2.99bn
+Cloud subscriptions and
+support revenue
+Ambition
+(non-IFRS)
+2020
+constant currencies)
+2017 Outlook
+(non-IFRS, at
+(non-IFRS)
+2016
+ΚΡΙ
+Strategic Objective
+€23.2 to €23.6bn
+Combined Management Report | Products, Research & Development, and Services
+Immediate - Empowering business users with insights to act
+in the moment
+into a full digital-age ERP system. It enables insight and
+understanding so businesses can predict outcomes and use that
+data to make decisions live, which helps companies stay
+competitive in the digital economy. SAP S/4HANA can replace a
+traditional ERP solution across all lines of business (LoBs), such
+as finance, human resources, sales, service, procurement,
+manufacturing, asset management, supply chain, and research
+and development (R&D).
+Business leaders need to be able to discover and communicate
+meaningful and actionable insights in data so they can make
+decisions in real time. Our analytics offerings help companies to
+apply analytics to business data to describe, predict, and
+improve business performance, recommend action, and guide
+decision making.
+With SAP BW/4HANA, we launched next-generation data
+warehouse software, delivering a simpler and more powerful
+way to achieve real-time analytics by connecting historical data
+with live data stored in SAP and third-party software
+environments. This integrated data warehouse solution is
+optimized to fully leverage the SAP HANA platform and
+simplifies development, administration, and the user interface,
+resulting in enhanced business agility.
+We consolidated analytical functionalities across our product
+portfolio in one cloud analytics solution - SAP BusinessObjects
+Cloud. Built on SAP Cloud Platform, it helps companies
+overcome the challenge of point solutions and data silos spread
+throughout the organization with enterprise-wide access to
+analytics delivered through a public cloud experience.
+For the SAP Digital Boardroom solution, which offers executive
+decision makers ease and elegance in accessing company data
+in real time, we released new industry-specific and LoB-specific
+content for consumer products, chemicals, engineering,
+construction, operations, and public sector, as well as HR,
+finance, and marketing LoBs.
+Reinventing Business with the Internet of
+Things and Machine Learning
+There is no topic that typifies the digital transformation more
+than the Internet of Things (IoT). The loT is a network of physical
+objects with embedded sensors to detect their environment and
+interact with business processes and systems. This builds a
+foundation for entirely new business models and completely
+digitized, connected businesses. Intelligent sensors, ubiquitous
+connectivity, and unlimited data storage are driving innovation
+and leading to a deeper integration of people, processes, data,
+and things in one connected world.
+-
+Our loT solutions, now marketed under the new SAP Leonardo
+brand, help companies digitally transform their manufacturing,
+logistics, and asset management processes and respond to the
+needs of a digital business in a highly individualized, consumer-
+driven economy. We strive to become a trusted partner for loT
+that helps our customers link sensor data with business
+processes and thereby add value. With our end-to-end SAP
+Leonardo solutions for connected logistics, connected
+manufacturing, and connected assets, for example, we offer a
+comprehensive portfolio of standard loT software, both cross-
+industry and industry specific. Furthermore, in November 2016,
+we announced the SAP IoT Application Enablement toolkit,
+providing services that allow our customers to build their own
+IoT applications.
+Close partnerships with customers and other leading technology
+companies are key to providing best-in-class solutions. In 2016,
+we announced a strategic partnership with Apple Inc. to build a
+SAP Cloud Platform software development kit for iOS that
+enables businesses, designers, and developers to quickly and
+efficiently build their own native iOS apps for iPhones and iPads.
+Steering Business with Real-Time Analytics
+Research and Innovation - Innovating for Future
+Growth
+Through the SAP Innovation Center concept, we explore
+unconventional ideas and develop inspiring proofs of concept in
+a startup-like environment. We strive to open up new markets
+for SAP software and accelerate the integration of emerging
+technologies into our core products. Some of these innovations
+include:
+Machine learning - Making all existing SAP solutions
+intelligent, bringing machine-learning services and APIs to
+our platform, and building intelligent business solutions in
+new and adjacent markets. To emphasize the importance of
+this topic, we have introduced the new brand SAP Clea that
+represents our entire machine learning portfolio.
+Blockchain - Exploring the potential of digital finance to
+radically change how business transactions are conducted in
+the future and its impact on existing products and innovation
+potential of blockchain across industries.
+Combined Management Report | Products, Research & Development, and Services
+59
+Future enterprise applications - Enabling companies to
+successfully lead the next economic revolution by developing
+game-changing business applications to process intangible
+assets, provide contextual user assistance, and manage new
+business models.
+We draw on the ideas of customers, partners, startups,
+academia, and, most importantly, our own employees. We want
+to foster organic innovation and support the transformation of
+great ideas into profitable business.
+Investing in Research and
+Development
+With businesses shifting, leading our customers through change
+is more important than ever before. We do this every day by
+empowering our employees and collaborating with our
+customers to develop world-class software and next-generation
+solutions. We further strengthened our global research and
+development (R&D) efforts in 2016 by investing in our SAP Labs
+network and expanding our SAP Innovation Center locations in
+India, Israel, and the United States.
+SAP Cloud Platform the center of gravity for a modular suite of
+business applications.
+Furthermore, we are positioning the SAP Cloud Platform
+Integration service as the default integration infrastructure for
+SAP solutions, whether in the cloud or on premise. We deliver
+content to support end-to-end integration scenarios. Being able
+to connect and integrate all best-of-breed applications to our
+digital core and to any custom-built solution makes
+Robust business services that customers and independent
+software vendors can consume to build solutions
+Our focus for SMEs, as with larger enterprises, is on cloud
+technology and simplified business processes for end users and
+partners. End-to-end accountability and increased investments
+in these core cloud ERP, on-premise ERP, and front-office
+solutions helps foster innovation and growth for the digital
+economy. Customers using SME solutions include small
+businesses and midsize companies in more than 100 countries.
+55
+User experience (UX) is about meeting the user's needs in the
+most effective and enjoyable way. Our understanding of how to
+create true innovation manifests itself in the award-winning SAP
+Fiori UX. The concept and design principles are key components
+in our design-led development process, which helps ensure the
+delivery of SAP Fiori innovations through all SAP applications.
+With SAP Fiori 2.0, users can get their work done faster and
+more effectively, with:
+Direct access to relevant information and apps
+- Transparency on items needing attention and timely
+notifications
+Support in deciding what needs to be done next
+Ability to perform quick and informed actions
+At the same time, our UX strategy focuses on empowering our
+customers and partners to design their own UX journey and
+execute on it - through a rich portfolio of services, educational
+offerings, and tools and technologies to design, develop, and
+deliver a simplified UX.
+SAP Cloud Platform - Differentiating
+Business with a Digital Enterprise Platform
+In the digital economy, in addition to standard applications,
+companies need a highly flexible platform that allows them to do
+the following:
+Extend cloud and on-premise SAP applications
+Build new applications for differentiating LoB processes
+- Integrate cloud and on-premise SAP applications
+With SAP Cloud Platform, our in-memory platform-as-a-service,
+companies can rapidly build, run, and extend modern business
+applications. It offers comprehensive capabilities to help
+business users and developers create better, more agile
+applications in less time. Customers can apply, among other
+things, mobile services, advanced analytic tools, state-of-the-art
+authentication mechanisms, and social functionality. For
+maximum flexibility, portability, and agility, we use open
+technologies.
+SAP Cloud Platform is a digital enterprise platform offering the
+following:
+58
+Combined Management Report | Products, Research & Development, and Services
+Analytical capabilities
+-
+Access to SAP applications, processes, and data
+-
+SAP's strong commitment to R&D is reflected in our
+expenditures (see figure below).
+Research and Development (IFRS)
+€ millions | change since previous year
+3,044
+2,845
+SAP offers a comprehensive portfolio of services and support
+designed to help our customers deploy their software faster and
+more efficiently - so they can focus more on innovations and
+realize faster, greater ROI. We provide tailored support to our
+customers to help them run live in the digital economy.
+Through our SAP Digital Business Services unit, SAP aims to
+standardize services, not recreate them each time - helping
+companies and organizations reimagine their businesses in the
+new economy using a digital business framework.
+We are accelerating the realization of the digital enterprise with
+game-changing engagements for predictive maintenance and
+warranty, analytics to manage Big Data, and connected
+intelligent manufacturing, among others.
+Innovations from SAP Digital Business
+Services
+SAP Digital Business Services offers an entire portfolio of
+services. Some of our top innovations in 2016 to help customers
+transform to a digital business include:
+-
+-
+SAP Value Assurance service packages for SAP S/4HANA
+Latest generation of SAP Solution Manager and SAP Model
+Company
+Next-generation support
+SAP Digital: Expanding the reach of SAP Store and
+messaging services
+SAP Value Assurance Service Packages
+Our SAP Value Assurance service packages for SAP S/4HANA
+cover all project phases and scenarios to help customers
+migrate from SAP ERP to SAP S/4HANA. This includes:
+System conversion
+Landscape transformation
+New implementations
+- On-premise, cloud, and hybrid deployment options
+60
+60
+Combined Management Report | Products, Research & Development, and Services
+Making Digital Transformation
+Possible with SAP Digital Business
+Services
+SAP Business One: Our integrated ERP application is
+available on premise or through a partner-hosted cloud.
+Today, more than 2,000 SAP Business One customers run
+the application on SAP HANA.
+While our intellectual property is important to our success, we
+believe our business as a whole is not dependent on one
+particular or a combination of patents.
+Patents
+2,261
+2,282
+2,331
+17%
+7%
+5%
+2%
+1%
+2012
+2013
+2014
+2015
+2016
+In 2016, our non-IFRS R&D expense as a portion of total
+operating expenses increased from 18.3% to 18.4% year over
+year. Our IFRS R&D expense ratio increased from 17.2% to
+18.0%. At the end of 2016, our total full-time equivalent (FTE)
+headcount in development work was 23,363 (2015: 20,938).
+Measured in FTEs, our R&D headcount was 28% of total
+headcount (2015: 27%).
+Total R&D expense not only includes our own personnel costs
+but also the external cost of work and services from the
+providers and cooperation partners we work with to deliver and
+enhance our products. We also incur external costs for the
+following:
+Translating, localizing, and testing products
+Obtaining certification for products in different markets
+Patent attorney services and fees
+Strategy consulting
+Professional development of our R&D workforce
+SAP actively seeks intellectual property protection for
+innovations and proprietary information. Our software
+innovations continue to strengthen our market position in
+business solutions and services. Our investment in R&D has
+resulted in numerous patents. As at December 31, 2016, SAP
+held a total of more than 8,000 validated patents worldwide. Of
+these, 841 were granted and validated in 2016.
+SAP Business ByDesign: Our ERP cloud solution is targeted
+to the midmarket and subsidiaries of large enterprises. At the
+end of 2016, 99% of SAP Business By Design customers ran
+the solution on SAP HANA.
+Keeping User Experience in Focus
+-
+Public services
+SAP for Defense & Security
+SAP S/4HANA Cloud is comprised of various solutions targeted
+to meet the specific business needs of our customers and
+enable their journey to the cloud. For example, the
+SAP S/4HANA Enterprise Management Cloud solution provides
+a next-generation ERP suite in the cloud with integrated, end-to-
+end processes.
+SAP S/4HANA Cloud was developed to co-exist in a
+heterogeneous system landscape with native integration to
+other SAP solutions and open interfaces for further integration
+and extensions using SAP Cloud Platform (formerly called SAP
+HANA Cloud Platform). The solution also supports specific
+industry and LoB requirements with preconfigured content from
+SAP Best Practices packages and uses the award-winning SAP
+Fiori user experience (UX) to provide simplified, role-based
+usability.
+Extending Our Reach Through a Broad Ecosystem
+SAP's ecosystem and partners extend our reach in the
+marketplace. We work closely with more than 15,000 partners
+worldwide to provide SAP solutions for our customers. Partners
+continue to drive SAP S/4HANA and our solutions for small
+businesses and midsize enterprises (SMEs) - SAP Business
+ByDesign and SAP Business One - to prospects on behalf of
+SAP, accounting for more than 88% of all new SAP customers.
+Innovating for LoBs and Industries
+As a modular integrated suite, SAP S/4HANA is the backbone of
+a company. And, at the same time, we are building functional
+innovations for LoBs and industries to address our customers'
+specific and evolving needs.
+SAP for Insurance
+Services
+SAP for Healthcare
+SAP for Higher Education &
+Research
+SAP for Public Sector
+SAP for Engineering, Construction
+SAP Anywhere: Our front-office solution for small businesses
+has been on the market for just over a year in China, the
+United Kingdom, and the United States. Currently, more than
+185 customers are running SAP Anywhere.
+SAP for Media
+SAP for Professional Services
+SAP for Sports & Entertainment
+SAP for Telecommunications
+SAP for Travel & Transportation
+Asset Management
+Commerce
+Lines of Business
+Finance
+SAP for Banking
+SAP for Utilities
+Customers recognize the benefits and power of SAP S/4HANA
+and, at the end of 2016, more than 5,400 customers had chosen
+the suite to support their digital transformation.
+SAP S/4HANA Cloud - Delivering the Power of
+the Digital Core
+In addition to our on-premise suite SAP S/4HANA, we further
+strengthened our SAP S/4HANA Cloud offering, delivering the
+power of a digital core with the key benefits expected from a
+software-as-a-service solution. It provides the scalability, ease
+of management, and security required in today's digital
+economy. A quarterly release cycle helps ensure that customers
+can benefit from regularly delivered innovations with minimum
+disruption to their business.
+SAP covers 25 industries grouped in six industry sectors and 12
+lines of business:
+Industry Sector
+Consumer
+Discrete manufacturing
+Industry Portfolio
+SAP for Consumer Products
+Financial services
+SAP for Life Sciences
+SAP for Wholesale Distribution
+SAP for Aerospace & Defense
+SAP for Automotive
+SAP for High Tech
+SAP for Industrial Machinery &
+Components
+Energy and natural resources SAP for Chemicals
+SAP for Mill Products
+SAP for Mining
+SAP for Oil & Gas
+SAP for Retail
+Human Resources
+& Operations
+Marketing
+-
+User interface improvements and the addition of many
+region-specific partners to our ecosystem
+Integration with the SAP ERP Financials and Intuit
+Manufacturing
+Expansion of global tax capabilities
+Additional features in the Concur Invoice solution to help
+ensure a three-way match between purchase, receipt, and
+invoicing
+SAP Fieldglass solutions help simplify procuring and managing
+external workforce services, connecting businesses in real time.
+In 2016, more than 3.1 million workers in approximately 135
+countries were connected using the solution.
+Market changes, including globalization and access to talent,
+have led many organizations to increasingly rely on contingent
+workers and service providers to achieve business goals. SAP
+Fieldglass cloud-based solutions also help companies engage
+and optimize all forms of talent. The software dynamically
+New innovations for travel, expense, and accounts payable
+automation in Concur solutions include:
+Combined Management Report | Products, Research & Development, and Services
+matches business needs with the right combination of resources
+while helping to ensure visibility, compliance, and cost control.
+In 2016, we continued to redefine how work gets done in the
+enterprise, with innovations in SAP Fieldglass solutions
+including streamlined services procurement templates and
+extended flexible talent-sourcing capabilities.
+Data Network
+Our business data network offers a comprehensive, people-first
+data-as-a-service solution that provides real-time, industry-
+specific, and data-driven benchmarks built on the world's
+largest repository of networked business data and enriched by
+key industrial and economic indicators. In 2016, we produced a
+beta version of the first data-driven service based on contingent
+workforce data. The highly personalized user experience helps
+customers discover their standing in the market so that they can
+take advantage of live recommendations and collaboration
+workflows that turn insights into action. Using data strategically
+in this way, customers can operate more efficiently and create
+new data-driven business models.
+SAP Connected Health
+Building on many years of work in the healthcare and life
+sciences industries, SAP has deepened its investment in these
+areas. In 2016, we launched a SAP Connected Health platform
+with trusted partners. The platform supports new developments
+such as using very large data sets to conduct in-depth analysis
+of the human genome, proteome, and other biological data. It
+also enables a broad ecosystem of partners - including
+developers, researchers, and healthcare organizations - to
+accelerate the development and delivery of innovative, patient-
+centered solutions for improving health outcomes, reducing
+costs, and delivering connected healthcare services.
+Building Better Solutions for Small and
+Midsize Enterprises
+We offer a portfolio that extends the power of SAP HANA to
+support SMEs with their digital transformation that includes the
+followings solutions:
+57
+With more than 45 million users worldwide, our acquired
+company Concur is the world leader in travel and expense
+management solutions. In 2016, Concur continued to deliver on
+our vision of an open cloud platform for travel and expense
+management that enables an effortless experience for end users
+as well as finance departments. It provides total transparency
+into employee travel and spending, wherever and whenever it
+happens.
+Quickbooks solutions
+Guided buying - A new buying experience automatically
+leads employees to goods and services they need to do their
+jobs and execute purchases in compliance with company
+policies.
+R&D/Engineering
+Sales
+Service
+Sourcing and Procurement
+Supply Chain
+Light enablement - This interactive e-mail service eliminates
+the complexity that buyers face in onboarding and
+connecting suppliers, letting them send purchase orders and
+receive order confirmations and invoices in just a few clicks.
+Open platform - Ariba Network offers an open application-
+programming interface (API) capability that allows partners
+to add functionality and extend solutions for all industries and
+business needs.
+56
+Combined Management Report | Products, Research & Development, and Services
+In addition, we are building other functional innovations that
+serve specific lines of business, for example:
+Sustainability
+Included in the business networks portfolio are SAP's market-
+leading Concur, SAP Ariba, and SAP Fieldglass solutions, which
+are at the center of our business network strategy.
+Our human capital management (HCM) offerings, including SAP
+SuccessFactors solutions, help organizations increase the value
+of their total workforce by developing, managing, engaging, and
+empowering their people. SAP SuccessFactors HCM Suite
+addresses a full range of HR needs and encompasses the
+following:
+Core human resources - SAP SuccessFactors Employee
+Central and SAP SuccessFactors Employee Central Payroll
+solutions cover the administrative tasks required to manage
+an organization's workforce. More specifically, this includes
+HR administration, payroll, position management, global
+benefits, time and attendance, shared services, and
+employee and manager self-service capabilities. The
+solutions act as the key source of employee and worker data
+and typically integrate with hundreds of external and internal
+systems, including SAP S/4HANA. At the end of 2016,
+customers for SAP SuccessFactors Employee Central
+numbered more than 1,580.
+Talent management - Our suite comprises solutions for all
+pillars of talent management, recruiting (marketing and
+management), onboarding, performance management,
+development, succession planning, compensation planning
+and administration, learning, and workforce analytics.
+We focus on delivering a simple and intuitive UX for our HCM
+suite through mobile device or desktop.
+Customer Engagement and Commerce (CEC)
+Today's customers are digitally connected, socially networked,
+and individually empowered, changing the rules of engagement.
+Our integrated front-office suite encompasses a holistic offering
+across customer experience, commerce, marketing, sales,
+billing, and services.
+By providing leading omnichannel customer engagement and
+commerce solutions across any touch point and channel, we
+enable organizations (both business-to-consumer and business-
+to-business) to deliver contextual, consistent, and relevant
+experiences - regardless of channel or device - throughout the
+customer journey.
+Connecting Companies with Business Networks
+Our business networks are best-in-class cloud applications that
+connect a global ecosystem of customers, suppliers, and
+partners. The products and services go beyond the four walls of
+a business to integrate and connect systems, services, partners,
+and data - creating more efficient, more powerful, and far
+simpler ways to manage key business functions. They provide
+the outcomes and experiences business users need through
+open and connected platforms.
+Human Capital Management
+Ariba Network is the world's largest business network, with
+more than 2.5 million connected companies trading over
+US$885 billion of commerce on the network, which has grown
+its commerce volume close to 20% year-over-year. In 2016, we
+unveiled innovations that help businesses achieve efficient,
+intelligent connections and frictionless transactions across the
+entire source-to-pay process:
+30.5
+20.5
+29.7
+30.1
+23.3
+-8
+Key ratios
+interests
+Effective tax rate (in %)
+0
+Operating margin (in %)
+25.3
+1,024
+23.4
+26.1
+Earnings per share, basic (in €)
+3.04
+3.90
+2.56
+3.77
+70
+Combined Management Report | Performance Management System
+-8
+4,658
+26.8
+-13
+2
+-13
+0
+1
+Total operating expenses
+-16,928
+1,494
+-15,434
+-192
+-15,626
+-16,541
+1
+2,084
+Profit numbers
+Operating profit
+5,135
+1,498
+6,633
+-28
+6,605
+Other non-operating income/expense,
+-234
+-14,457
+O
+3,056
+0
+549
+-5,716
+-5,782
+462
+-5,320
+General and administration
+-1,005
+119
+-886
+-3
+-1,048
+-932
+Restructuring
+-28
+28
+0
+-621
+621
+Other operating income/expense, net
+-3
+116
+-6,265
+-234
+2,095
+-5
+Profit before tax
+4,863
+1,498
+6,361
+3,991
+2,095
+6,087
+Income tax expense
+0
+-1,229
+-1,703
+-935
+-651
+-1,586
+Profit after tax
+3,634
+10,571
+1
+Software support
+-474
+4,252
+-256
+-5
+0
+6,348
+0
+-256
+net
+Finance income
+230
+○
+230
+241
+-38
+0
+Finance costs
+-268
+0
+-268
+-246
+0
+-246
+Financial income, net
+-38
+241
+4,836
+Sales and marketing
+202
+Services
+3,638
+O
+3,638
+39
+3,678
+3,579
+0
+3,579
+17,226
+Total revenue
+5
+22,067
+164
+22,231
+20,793
+11
+20,805
+Operating expense measures
+Cost of cloud subscriptions and
+22,062
+-1,313
+11
+18,553
+10,572
+82
+10,654
+10,093
+0
+10,094
+Software licenses and support
+15,431
+3
+17,214
+15,434
+15,546
+14,928
+2
+14,930
+Cloud and software
+18,424
+5
+18,428
+125
+113
+-2,643
+247
+-1,022
+-2,765
+Total cost of revenue
+-6,583
+598
+-5,985
+-6,245
+683
+-5,562
+Gross profit
+167
+15,479
+16,081
+14,548
+694
+15,242
+Research and development
+-3,044
+201
+-2,843
+-2,845
+603
+-1,066
+-2,932
+113
+232
+-789
+support
+Cost of software licenses and
+-2,182
+238
+-1,944
+-2,291
+283
+-2,976
+-2,008
+Cost of cloud and software
+-3,495
+485
+-3,010
+-3,313
+516
+-2,797
+Cost of services
+-3,089
+support
+1
+0
+4,893
+Performance
+Management System
+We use various performance measures to help manage our
+performance with regard to our primary financial objectives,
+which are growth and profitability, and our primary non-financial
+objectives, which are customer loyalty and employee
+engagement. We view growth and profitability as indicators for
+our current performance, while customer loyalty and employee
+engagement are indicators for our future performance.
+Measures We Use to Manage Our
+Financial Performance
+after the software sale. Support contracts cover standardized
+support services that comprise unspecified future software
+updates and enhancements. Software licenses revenue as well
+as cloud subscriptions and support revenue also tend to
+stimulate services revenue earned from providing customers
+with professional services, premium engagement services,
+training services, messaging services, and payment services.
+Total revenue (non-IFRS): We use nominal total revenue (non-
+IFRS) and constant currency total revenue (non-IFRS) to
+measure our growth. The total of cloud subscriptions and
+support revenue and software support revenue divided by total
+Measures We Use to Manage Our Operating revenue is the share of more predictable revenue. This measure
+Financial Performance
+In 2016, we used the following key measures to manage our
+operating financial performance:
+Cloud subscriptions and support revenue (non-IFRS): This
+revenue driver comprises the main revenues of our fast-growing
+cloud business. We generate cloud subscriptions and support
+revenue when we provide software functionality in a cloud-
+based infrastructure (software as a service, or SaaS) to our
+customers; when we provide our customers with access to a
+cloud-based infrastructure to develop, run, and manage
+applications (platform as a service, or PaaS); and also when we
+provide hosting services for software hosted by SAP
+(infrastructure as a service, or laaS). Cloud subscriptions and
+support revenue are also generated when providing additional
+premium cloud subscription support beyond the regular
+support, which is embedded in the basic cloud subscription fees
+as well as business network services to our customers. We use
+the cloud subscriptions and support revenue (non-IFRS)
+measure both at actual currency and at constant currency.
+Combined Management Report | Customers
+Cloud and software revenue (non-IFRS): We use cloud and
+software revenue (non-IFRS) and constant currency cloud and
+software revenue (non-IFRS) to measure our revenue growth.
+Our cloud and software revenue includes cloud subscriptions
+and support revenue plus software licenses and support
+revenue. Cloud subscriptions and support revenue and software
+revenue are our key revenue drivers because they tend to affect
+our other revenue streams. Generally, customers that buy
+software licenses also enter into related support contracts, and
+these generate recurring revenue in the form of support revenue
+New cloud bookings: For our cloud activities, we also look at
+new cloud bookings. This measure reflects the committed order
+entry from new customers and from incremental purchases by
+existing customers for offerings that generate cloud
+subscriptions and support revenue. In this way, it is an indicator
+for cloud-related sales success in a given period and for secured
+future cloud subscriptions and support revenue. We focus
+primarily on the average contract value variant of the new cloud
+bookings measure that takes into account annualized amounts
+for multiyear contracts. Additionally, we internally monitor the
+total contract value variant of the new cloud bookings measure
+that takes into account the total committed order entry
+amounts regardless of contract durations. There are no
+comparable IFRS measures for these bookings metrics. In
+addition to new cloud bookings, we use the measure "cloud
+backlog" to evaluate our sales success in the cloud business. We
+define cloud backlog as a measure that represents the volume of
+business that, as of period end, is contracted but not yet billed.
+Operating profit (non-IFRS): We use operating profit (non-
+IFRS) and constant currency operating profit (non-IFRS) to
+measure our overall operational process efficiency and overall
+business performance. See below for more information on the
+IFRS and non-IFRS measures we use.
+Cloud subscriptions and support gross margin (non-IFRS):
+We use our cloud subscriptions and support gross margin (non-
+IFRS) to measure our process efficiency in our cloud business.
+Cloud subscriptions and support gross margin (non-IFRS) is the
+Combined Management Report | Performance Management System
+67
+ratio of our cloud subscriptions and support gross profit (non-
+IFRS) to cloud subscriptions and support revenue (non-IFRS),
+expressed as a percentage.
+Measures We Use to Manage Our Non-
+Operating Financial Performance
+We use the following measures to manage our non-operating
+financial performance.
+Financial income, net: This measure provides insight into the
+return on liquid assets and capital investments and the cost of
+borrowed funds. To manage our financial income, net, we focus
+on cash flow, the composition of our liquid assets and capital
+investment portfolio, and the average rate of interest at which
+assets are invested. We also monitor average outstanding
+borrowings and associated finance costs.
+provides additional insight into our sustained business success.
+Days Sales Outstanding (DSO): We manage working capital by
+controlling the days sales outstanding (DSO) for operating
+receivables (defined as the average number of days from the
+raised invoice to cash receipt from the customer).
+To help companies invest in SAP solutions and associated
+services and hardware, SAP Payment services offers customers
+payment plans. SAP Payment services can help preserve
+liquidity, provide an alternative to credit from customers'
+existing banking relationships, and balance their budgetary
+priorities, while giving them the flexibility to choose their
+preferred solution.
+·Targin, a large Russian multiproduct integrated oilfield
+service holding, will implement SAP S/4HANA as an
+introduction to the next generation of SAP software. SAP
+S/4HANA will support Targin in transforming its business
+enterprises and increasing the efficiency of its business
+processes to reduce downtime and increase inventory
+turnover and the company's market share.
+2
+Combined Management Report | Customers
+65
+99
+66
+technological innovation and fully achieve its functional and
+automatization needs.
+Asia Pacific Japan (APJ) Region
+-
+-
+Helping Customers Invest
+Cathay Pacific, based in Hong Kong, chose SAP S/4HANA
+and the SAP HANA platform to simplify its business process,
+enable operational-level reporting directly from the airline
+company's operational system, and provide the foundation
+for further system migrations.
+NTUC Fairprice, one of Singapore's largest retailers, chose
+the SAP HANA platform, SAP Payroll Processing, and SAP
+SuccessFactors Recruiting Posting solutions to improve
+employee productivity and engagement. As a customer-
+oriented retailer, the company also strives to boost
+productivity and raise overall customer-satisfaction levels by
+simplifying processes, automating manual practices, and
+obtaining detailed insights from integrated analytics.
+Rockland Distilleries in Sri Lanka has chosen the SAP Hybris
+Cloud for Customer solution over competitors to lead the
+company through its digital transformation journey. The
+solution will help increase the productivity of its salespeople
+and gather business insights that will enable it to make
+strategic and transformational decisions.
+Roy Hill Mining Operation is an independent iron ore
+operation with a project to become the largest single ore
+mine in Australia. The project is turning to SAP software,
+including SAP S/4HANA, the SAP Multiresource Scheduling
+application, and the SAP Integrated Business Planning
+solution, to view its inventory in real time, make informed
+decisions on maintenance activities, and manage its supply
+chain costs more effectively.
+Europe, Middle East, and Africa
+(EMEA) Region
+-
+Barry Callebaut, based in Switzerland, is one of the world's
+leading suppliers of high-quality chocolate and cocoa
+products. It has implemented SAP solutions to integrate
+65,000 small-scale cocoa farmers in Côte d'Ivoire, enable
+sustainable cocoa farming, and improve the livelihood of
+farmers, their families, and their communities. The company
+recently went live with the SAP Rural Sourcing Management
+solution, an integrated, cloud-based solution running on SAP
+Cloud Platform. It provides farming organizations with mobile
+and desktop access to important data immediately to help
+simplify and digitalize business processes.
+Bilfinger, a German industrial services provider, selected
+SAP SuccessFactors HCM Suite, including the SAP
+SuccessFactors Employee Central solution, to standardize
+HR processes and increase workforce transparency. A
+further aim is to establish a global talent management model
+and increase workforce performance. The solutions will help
+Bilfinger drive its strategic objectives for productivity,
+consolidation, and compliance.
+Inter Cars, the largest importer and distributor of automotive
+spare parts in Poland, chose the SAP Hybris Commerce
+Cloud solution to establish a full omnichannel platform that
+will address the business strategy and help the company
+achieve its goal to double its revenue within the next few
+years.
+L'OCCITANE, a French natural and organic ingredient-based
+cosmetics and well-being retailer, chose the SAP
+SuccessFactors Employee Central and SAP SuccessFactors
+Recruiting solutions to streamline human resources
+processes and gain global visibility into its workforce. It also
+expects to attract and hire top talents and develop a
+workforce that helps to support the company's digital
+transformation and growth strategy.
+China National Chemical Corporation (ChemChina),
+China's biggest chemical group and a Fortune Global 500
+company, has invested heavily in overseas acquisitions. It
+chose SAP S/4HANA, the SAP HANA platform, the SAP
+NetWeaver Master Data Management component, and the
+SAP BusinessObjects Planning and Consolidation application
+to keep pace with rapid organizational expansion. Through
+this partnership, ChemChina is leveraging SAP's leading
+technology to redefine its IT strategy, optimize IT
+infrastructure, improve efficiency and business insights, and
+prepare for a transition to Industry 4.0.
+4,835
+Measures We Use to Manage Overall
+Financial Performance
+Earnings per share (EPS) (IFRS and non-IFRS): EPS measures
+our overall performance because it captures all operating and
+non-operating elements of profit as well as income tax expense.
+It represents the portion of profit after tax allocable to each SAP
+share outstanding. EPS is influenced not only by our operating
+and non-operating business as well as income taxes but also by
+the number of shares outstanding.
+€ millions, unless otherwise stated
+2016
+2015
+IFRS
+Adj. Non-IFRS Currency Non-IFRS
+Impact Constant
+IFRS
+Adj. Non-IFRS
+Currency
+Revenue measures
+Reconciliation of IFRS to Non-IFRS Financial Measures for the Years Ended December 31
+Cloud subscriptions and support
+1,445
+2,995
+12
+3,007
+2,286
+10
+2,296
+Software licenses
+4,860
+2,993
+We use the following measures to manage our overall financial
+performance:
+69
+Combined Management Report | Performance Management System
+Effective tax rate (IFRS and non-IFRS): We define our effective
+tax rate as the ratio of income tax expense to profit before tax,
+expressed as a percentage.
+Operating, investing, and financing cash flows and free cash
+flow: Our consolidated statement of cash flows provides insight
+as to how we generated and used cash and cash equivalents.
+When applied in conjunction with the other primary financial
+statements, it provides information that helps us evaluate the
+changes of our net assets, our financial structure (including our
+liquidity and solvency), and our ability to affect the amounts and
+timing of cash flows to adapt to changing circumstances and
+opportunities. We use our free cash flow measure to determine
+the cash flow remaining after all expenditures required to
+maintain or expand our organic business have been paid off.
+This measure provides management with supplemental
+information to assess our liquidity needs. We calculate free cash
+flow as net cash from operating activities minus purchases
+(other than purchases made in connection with business
+combinations) of intangible assets and property, plant, and
+equipment.
+Measures We Use to Manage Our
+Non-Financial Performance
+In 2016, we used the following key measures to manage our non-
+financial performance in the areas of employee engagement,
+customer loyalty, and leadership trust:
+Employee Engagement Index: We use this index to measure the
+motivation and loyalty of our employees, how proud they are of
+our company, and how strongly they identify with SAP. The
+index is derived from surveys conducted among our employees.
+Applying this measure is recognition that our growth strategy
+depends on engaged employees.
+Customer Net Promoter Score (NPS): This score measures the
+willingness of our customers to recommend or promote SAP to
+others. It is derived from our annual customer survey that
+identifies, on a scale of 0-10, whether a customer is loyal and
+likely to recommend SAP to friends or colleagues, is neutral, or
+is unhappy. We introduced this measure in 2012, as we are
+convinced that we can achieve our financial goals only when our
+customers are loyal to, and satisfied with, SAP and our
+solutions. To derive the Customer NPS, we start with the
+percentage of "promoters" of SAP - those who give us a score
+of 9 or 10 on a scale of 0-10. We then subtract the percentage of
+"detractors" those who give us a score of 0 to 6. The method
+ignores "passives," who give us a score of 7 or 8.
+Leadership Trust Score: We use this score to further enhance
+accountability and to measure our collective effort to foster a
+work environment based on trust. It is derived from a question in
+our annual global employee survey that gauges employees' trust
+in our leaders. We measure leadership trust by using the same
+methodology as we do determining the Net Promoter Score
+(NPS).
+Value-Based Management
+69
+Our holistic view of the performance measures described above,
+together with our associated analyses, comprises the
+information we use for value-based management. We use
+planning and control processes to manage the compilation of
+these key measures and their availability to our decision makers
+across various management levels.
+68
+Combined Management Report | Performance Management System
+planned total revenues and total expenses are allocated to the
+individual board areas. Budget administration and control,
+including budget adjustments applied during the year to reflect
+changes in priorities, to achieve efficiency targets and to reflect
+endogenous and exogenous factors, are handled at board area
+level. It is then the individual board member's responsibility to
+break down, in their board area, the allocated budgets and
+budget adjustments. The Executive Board's efforts to assess the
+performance of the company and components thereof is also
+done on the level of the board areas. Based on an integrated
+portfolio process running in parallel to the budgeting process we
+ensure aligned investment behavior across board areas with
+regards to specific solutions or solution areas. In a final step,
+customer-facing revenue targets and cost of sales and
+marketing targets are broken down into sales regions.
+Based on our detailed annual plans, we determine the budget for
+the respective year. We also have processes in place to forecast
+revenue and profit on a quarterly basis, to quantify whether we
+expect to realize our financial goals, and to identify any
+deviations from plan. We continuously monitor the concerned
+units in the Group to analyze these developments and define any
+appropriate actions. Our entire network of planning, control, and
+reporting processes is implemented in integrated planning and
+information systems, based on SAP software, across all
+organizational units so that we can conduct the evaluations and
+analyses needed to make informed decisions.
+Non-IFRS Financial Measures Cited
+in This Report
+As in previous years, we provided our 2016 financial outlook on
+the basis of certain non-IFRS measures. Therefore, this report
+contains a non-IFRS based comparison of our actual
+performance in 2016 against our outlook in the Financial
+Performance: Review and Analysis section.
+Reconciliations of IFRS to Non-IFRS
+Financial Measures for 2016 and 2015
+Due to rounding, the sum of the numbers presented in the
+following table might not precisely equal the totals we provide.
+SAP's long-term strategic plans, including a multiyear financial
+plan through 2020, are the point of reference for our short-term
+and midterm planning and controlling processes. We initially
+identify future growth and profitability drivers at a highly
+aggregated level. In a first step, the resulting financial plan is
+broken down to (i) our deployment models “On Premise,"
+"Software as a Service/Platform as a Service," "Infrastructure
+as a Service," and "Business Networks", and (ii) functions such
+as development, sales, or administration. In a second step, the
+Itaú Unibanco Holding, based in Brazil and one of the top 20
+banks in the world by market value, is currently using the SAP
+HANA platform. It recently added Ariba Network, through
+which Itaú joins the SAP marketplace for business-to-
+business transactions.
+Live Nation, the global leader for live entertainment based in
+the United States, has purchased Concur Travel & Expense to
+meet the needs for an end-to-end travel solution from travel
+request, to online and agent assisted travel planning through
+to trip reimbursement. Important in the selection process
+was a full-featured mobile app, exceptional end-user
+experience, robust analytics and reporting, the ability to
+integrate with existing Live Nation systems, and the flexibility
+to configure to their travel policy and business practices.
+Mexico Proyectos Y Desarollos chose SAP Ariba Buying,
+advanced edition, SAP Ariba Strategic Sourcing, and the
+SAP HANA platform to standardize operative, strategic
+sourcing, and management processes while achieving better
+corporate negotiations and reducing maverick purchases.
+The construction infrastructure company expects to
+transform procurement processes by leveraging
+-
+It is a ready-to-use solution that supports critical decision
+phases such as discovery and prototype. We provide the full
+system landscape with detailed business content and
+documentation and help lower time to value with versions
+specific to industries and lines of business.
+Next-Generation Support
+Traditional businesses are becoming digital enterprises. With
+more business processes “running live," product support must
+be less reactive and much more proactive, predictive, and
+available at any moment; in other words, live support.
+Our product support has implemented a next-generation
+support approach that includes real-time support. Named
+Expert Chat, this live support channel offers direct access to our
+experts, available for the majority of our solutions. Moreover, a
+universal, toll-free phone number harmonizes interaction with
+support across almost all of our products. We also offer
+customers a way to search for answers to product-related
+questions, by making knowledge located within SAP searchable
+using Google. Automating tasks with intelligent, context-
+sensitive tools provides customers with solutions proactively.
+Customers also demand a seamless, omnichannel support
+experience. We plan to address this by implementing functions
+such as built-in, mobile, and social media-enabled support.
+In addition, we launched an SAP Preferred Care offering as a
+premium support option for on-premise customers transitioning
+to digital business models. It complements the already existing
+SAP Preferred Care Cloud offering. The offering is an
+enhancement to our foundation support offerings, namely
+SAP Enterprise Support, and includes:
+Advanced service-level agreements
+Additional services
+Dedicated contacts
+SAP Digital
+End users can buy both SAP and partner offerings using one-
+click contracts and digital payments by credit card or PayPal.
+Customers can discover, try, buy, use, and renew solutions in a
+simple online interaction. In 2016, customers from 95 different
+countries placed more than 55,000 orders digitally.
+We also offer a new modeling environment. SAP Model
+Company is an accelerator service that helps simplify innovation
+adoption. It combines standard SAP software, SAP Best
+Practices packages, SAP Rapid Deployment solutions, and
+content from SAP Activate. Customers can develop repeatable
+implementation scenarios and access the latest innovations for
+their future projects. It helps to decrease effort and ensure
+project success on time and within budget. The service enables
+customers to accelerate implementations, reduce total cost of
+ownership, and get up and running quickly.
+At the same time, SAP also provides a wide variety of intelligent,
+interconnected messaging and communication services that
+reach 97% of the world's mobile subscribers and connect
+billions of things. Top social media companies rely on SAP
+solutions to reach their customers worldwide. In 2016, more
+than 350 billion messages passed through our networks.
+A Partner on the Journey to Digital
+Transformation
+SAP will continue to support our customers' digital
+transformation through innovative software, ongoing R&D, and
+proactive services. By reimagining our business suite and
+Combined Management Report | Products, Research & Development, and Services
+61
+providing world-class software, we empower businesses to
+continue to succeed in the new digital economy. Together, we
+are a force that helps further economic development, social
+progress, and minimizes environmental impact - and makes the
+world run better.
+662
+Combined Management Report | Products, Research & Development, and Services
+Security, Privacy, and
+Data Protection
+Meeting Today's Data Protection
+Challenges
+We are incubating several new initiatives to more rapidly grow
+our digital business and expand into new areas - for example,
+integrating messaging services into our own applications.
+The Dow Chemical Company, based in the United States,
+has decided to deepen their relationship in SAP through the
+investment in SAP HANA, including a future state vision
+around SAP S/4HANA in support of their business objectives
+Hershey, headquartered in the United States, is upgrading to
+the SAP S/4HANA suite to achieve enterprise connectivity
+through access to actionable information at the right time for
+everyone, anywhere. The large chocolate manufacturer will
+gain real-time insights from both operational and other data
+and can simplify global business processes to drive
+efficiencies and scale.
+The solution gives customers real-time transparency,
+automation, and control to adopt and manage innovations.
+Process experts and solution architects can explore new
+industry models earlier, accessing all SAP Best Practices
+packages.
+Partners also play a key role in innovation adoption. Our open
+engagement approach has motivated many of our larger
+services partners to focus more on establishing SAP S/4HANA
+as the digital core.
+31
+4,862
+Attributable to non-controlling
+4,509
+1,445
+3,064
+4,671
+1,024
+3,646
+SAP Solution Manager and SAP Model Company
+SAP Solution Manager manages SAP software implementations
+from cloud to on premise and hybrid, and is currently rolled out
+as the delivery platform for SAP Digital Business Services. It
+addresses both IT and business needs.
+Attributable to owners of parent
+The approach consolidates services and embedded support in
+four distinct phases:
+-
+-
+Plan and safeguard - Defining the implementation strategy,
+including dependencies and prerequisites for the target
+architecture
+-
+Technical implementation – Focusing on the technical
+aspects of implementation, including data and system
+migration, high availability, and disaster recovery
+Migrate and implement - Implementing functions with
+preconfigured setup and ready-to-use business process
+templates, and analyzing operational impact
+Innovate and optimize - Expanding the context of innovation
+beyond the digital core to reimagine business models across
+the enterprise
+The packages utilize the SAP Activate methodology, an
+innovation adoption framework that combines SAP Best
+Practices packages, implementation methodology, and guided
+configuration to help streamline deployment.
+4,501
+For this reason, data protection and security is of paramount
+importance to us. We have implemented safeguards to help
+enable the privacy rights of everyone whose data is processed
+by SAP, whether they are our customers, prospects, employees,
+or partners. In addition, we work towards compliance with all
+relevant legal requirements for data protection. Our global
+security officer and data protection and privacy officer report to
+our Executive Board and regularly monitor the compliance of all
+activities in these areas.
+Every day, organizations all around the world trust SAP with
+their data - either in their own premises, in the cloud, or on the
+move using mobile devices. Our customers need to know that
+we will keep that data safe, process it in a manner that complies
+with local legislation, and protect it from malicious use.
+Safeguarding data is an increasingly challenging task today.
+Companies are collecting and storing more data than ever
+before from more and more sources. No longer is data locked
+away in an on-premise mainframe requiring physical security.
+Complying with Data Protection and
+Privacy Legislation
+When processing data about employees, applicants, customers,
+suppliers, and partners, SAP respects and protects their right to
+data protection and privacy while implementing appropriate
+security measures. We develop and support our data protection
+and privacy strategy in accordance with our business strategy.
+To comply with applicable data protection laws, SAP has
+adopted a global data protection and privacy policy. It outlines a
+Group-wide minimum standard for handling personal data in
+compliance with data protection and privacy laws. The policy
+defines requirements for all operational processes that affect
+the processing of or access to personal data, as well as
+providing clear responsibilities and organizational structures.
+We actively monitor changes to applicable laws and regulations
+so that we can update our standards on an ongoing basis.
+We have also implemented a wide range of measures to protect
+data controlled by SAP and SAP customers from unauthorized
+access and processing, as well as from accidental loss or
+destruction. These include, among others, the implementation
+of our data protection management system in areas critical to
+data protection. This system is certified on a yearly basis by the
+British Standards Institute.
+In 2016, SAP did not experience any significant incidents
+regarding breaches of customer privacy or losses of customer
+data. There were no incidents reported subject to the provisions
+of the German Federal Data Protection Act.
+Combined Management Report | Security, Privacy, and Data Protection
+Customers
+>345,000
+Facing Increasing Risks in IT Security
+customers around the world
+Customer Net Promoter Score 2016
+Continuing to Build Strong Customer
+Relationships
+Customer loyalty is one of our four corporate objectives, along
+with growth, profitability, and employee engagement. In 2016,
+our combined on-premise and cloud Customer Net Promoter
+Score (Customer NPS) was 19.2% (2015: 22.4%). As we further
+harmonize processes in acquired entities, the customer
+segments used for customer surveys has not yet been
+completely harmonized across the SAP Group. Specifically, due
+to the nature of the business, the Concur customer sample
+includes a higher proportion of general business customers in
+comparison to other Group entities. As a result, Concur
+responses make up a large proportion of the total customer
+sample.
+While we continue to have a positive Customer NPS, we did not
+reach our target of 25% in 2016. As a response to the feedback
+received from our customers throughout 2016, we have focused
+on improving the quality of our follow-up process to ensure a
+timely resolution of customer issues. We have provided more
+insight into how customers can migrate to our innovations
+without disrupting their business processes. With a sustained
+emphasis on follow-up, we are targeting a combined Customer
+NPS of 21% to 23% in 2017, with our medium-term goal of
+reaching a combined Customer NPS of 35% to 40% by 2020.
+For more information about the Customer NPS, see the
+Performance Management System section.
+Continuing Strong Customer
+Demand
+We help companies transform into digital businesses. In 2016,
+we saw customers do so by licensing or subscribing to the full
+range of SAP software, from comprehensive solutions for large
+enterprises to the latest mobile apps.
+Some examples by region include the following customers:
+North America and Latin America
+(Americas) Region
+19.2%
+Secure environments: Comprehensive physical security
+measures are in place to ensure the security of our data
+centers and development sites so that we can protect
+buildings and facilities effectively.
+Business continuity: A corporate continuity framework
+aimed at having robust governance in place at all times is
+reviewed on an annual basis to adapt to new or changed
+business needs.
+-
+Data now proliferates outside the four walls of businesses with
+multiple endpoints exposed and vulnerable to attack. Moreover,
+the sheer number of and the sophistication of attacks facing
+businesses are at an all-time high. We are seeing the
+"commercialization of hacking" while new advanced persistent
+threats can bypass many traditional security protection
+techniques.
+Establishing a Comprehensive
+Security Vision
+At SAP, we want our customers and employees to be able to use
+our software and services anywhere, from any device, at any
+time, with confidence and trust. However, the growing risk and
+occurrence of cyberattacks reinforces the need to keep critical
+information systems secure.
+Consequently, for SAP and for our customers, security means
+more than just meeting compliance demands. To secure the
+SAP software landscape, we offer a comprehensive portfolio of
+security products, services, and secure support as well as
+security consulting. They help our customers build security and
+privacy protection capabilities into their businesses.
+Several of our security measures extend across all sectors of
+our company and thus to all of our products and services. These
+measures include, among other things, the regular training of
+employees on the subject of IT security and data protection,
+including the handling of confidential information and ensuring
+controlled and restrictive access to customer information. In
+addition, we have developed a three-pronged strategy focusing
+on the security of our products, operations, and organization:
+Secure Products Strategy: Champion Product Security
+Businesses use SAP applications to process mission-critical
+transactional data which can be highly attractive to cyber
+attackers. Our secure products strategy focuses on
+incorporating security features into our applications to minimize
+the risk of a security breach.
+Our secure software development lifecycle is at the heart of this
+strategy. This provides a comprehensive methodological
+approach for incorporating security features into our
+applications. Before a release decision is made, our software is
+validated by independent IT security experts. This team then
+addresses any recommendations made before we release the
+application.
+Security culture: Awareness and compliance with our
+security policy and standards are fostered through regular
+mandatory training, assessments, and reporting.
+Secure Operations Strategy: Running Secure Operations
+Our secure operations strategy focuses on the security
+principles of "confidentiality, integrity, and availability" to ensure
+overall protection of our business, as well as our customers'
+businesses. Our mission is to provide a comprehensive end-to-
+end cloud and IT operations security framework - from system
+and data access and system hardening to security patch
+management, security monitoring, and end-to-end incident
+handling. This involves the implementation of key security
+measures across all layers including physical assets as well as
+process-integrated controls.
+This approach conforms to the ISO/IEC 27034 standard for
+application security and is closely embedded into our ISO 9001-
+certified process framework for developing standard software.
+Combined Management Report | Security, Privacy, and Data Protection
+63
+83
+149
+64
+through a combination of automated and manual reviews.
+Performed by third parties as well as by SAP colleagues, these
+reviews verify compliance with international standards and SAP
+global security standards.
+Industry best-practice certifications are key success factors for
+our secure operations strategy. Many of our cloud solutions
+undergo Service Organization Control (SOC) audits ISAE3402,
+SSAE16 SOCI Type II, and SSAE16 SOC II Type II. The SOC
+standards are harmonized with a number of ISO certifications
+including ISO 9001, 27001, and 22301.
+Secure Company Strategy: Taking a Holistic Approach to
+the Security of Our Business
+At SAP, we take a holistic approach to the security of our
+company, encompassing processes, technology, and
+employees. At the heart of our secure company strategy is an
+efficient information security management system and a
+security governance model that brings together all of the
+different aspects of security. These include the following three
+main areas:
+-
+Furthermore, our secure operations approach concentrates on
+the early identification of any deviations from the standards
+defined in our security framework. Deviations are identified
+An HR Strategy Designed Specifically for
+Our People
+We believe that by providing an environment where our people
+can engage, develop their skills, and draw on the support they
+need to create and innovate, SAP can help to make the world run
+better. For this reason, we are fully committed to nurturing our
+people at every stage of their career at SAP.
+Our employees play a pivotal role in helping our customers
+succeed in the new digital economy. Our employees empower
+our customers to Run Simple and work more innovatively. At the
+same time, they enable SAP to become "the most innovative
+cloud company powered by SAP HANA."
+Supporting Customers by Nurturing
+Our Employees
+Employee Engagement
+Index
+Business Health
+Culture Index
+78%
+-932
+0
+111
+4
+-1,048
+-886
+0
+113
+6
+Restructuring
+-1,005
+-5,320
+260
+202
+-5,782
+-5,716
+0
+292
+257
+-6,265
+General and administration
+Sales and marketing
+-28
+0
+Adjustments of
+income/expense, net
+1
+0
+0
+0
+1
+-3
+0
+0
+0
+-3
+Other operating
+0
+621
+0
+0
+-621
+0
+28
+0
+-16,928
+-2,643
+36
+0
+89
+395
+-3,495
+Cost of cloud and software
+IFRS
+turing
+Non-
+IFRS Acqui- SBP¹) Restruc-
+sition-rel.
+-3,010
+IFRS
+Non-
+SBP¹) Restruc-
+Acqui-
+sition-rel.
+IFRS
+2015
+2016
+€ millions
+Non-IFRS Adjustments by Functional Areas
+Explanation of Non-IFRS Measures
+turing
+166
+-3,313
+74
+-2,845
+-2,843
+0
+190
+10
+-3,044
+Research and
+-2,765
+0
+441
+113
+-2,932
+-2,976
+0
+101
+12
+-3,089
+Cost of services
+-2,797
+0
+54
+680
+785
+-15,434 -16,541
+-
+Combined Management Report | Performance Management System
+12
+72
+We believe that our non-IFRS financial measures described
+above have limitations, including but not limited to, the
+following:
+Limitations of Non-IFRS Measures
+Non-IFRS and non-GAAP measures are widely used in the
+software industry. In many cases, inclusion of our non-IFRS
+measures may facilitate comparison with our competitors'
+corresponding non-IFRS and non-GAAP measures.
+The non-IFRS measures provide investors with additional
+information that enables a comparison of year-over-year
+operating performance by eliminating certain direct effects of
+acquisitions, share-based compensation plans, and
+restructuring plans.
+Our revenue (non-IFRS), expense (non-IFRS), and profit
+(non-IFRS) measures as well as the measures “new cloud
+bookings" and "cloud backlog" (see above) provide investors
+with insight into management's decision making because
+management uses these measures to run our business and
+make financial, strategic, and operating decisions. We include
+the revenue adjustments outlined above and exclude the
+expense adjustments outlined above when making decisions
+to allocate resources. In addition, we use these non-IFRS
+measures to facilitate comparisons of SAP's operating
+performance from period to period.
+The eliminated amounts could be material to us.
+-
+Usefulness of Non-IFRS Measures
+21
+3,001
+3,627
+Free cash flow
+acquisitions)
+equipment (without
+57
+-636
+We believe that our non-IFRS measures are useful to investors
+for the following reasons:
+-1,001
+Without being analyzed in conjunction with the
+corresponding IFRS measures, the non-IFRS measures are
+not indicative of our present and future performance,
+foremost for the following reasons:
+■
+employees at SAP
+(in FTEs)
+84,183
+Investments
+Employees and Social
+73
+Combined Management Report | Performance Management System
+Despite these limitations, we believe that the presentation of our
+non-IFRS measures and the corresponding IFRS measures,
+together with the relevant reconciliations, provide useful
+information to management and investors regarding present
+and future business trends relating to our financial condition and
+results of operations.
+We believe that constant currency measures have limitations,
+particularly as the currency effects that are eliminated
+constitute a significant element of our revenue and expenses
+and could materially impact our performance. Therefore, we
+limit our use of constant currency measures to the analysis of
+changes in volume as one element of the full change in a
+financial measure. We do not evaluate our results and
+performance without considering both constant currency and
+nominal measures in revenue (non-IFRS) and operating profit
+(non-IFRS) measures on the one hand, and changes in revenue,
+operating expenses, operating profit, or other measures of
+financial performance prepared in accordance with IFRS on the
+other. We caution the readers of our financial reports to follow a
+similar approach by considering nominal and constant currency
+non-IFRS measures only in addition to, and not as a substitute
+for or superior to, changes in revenue, operating expenses,
+operating profit, or other measures of financial performance
+prepared in accordance with IFRS.
+In the past, we have issued share-based payment awards
+to our employees every year and we intend to continue
+doing so in the future. Thus, our share-based payment
+expenses are recurring although the amounts usually
+change from period to period.
+■
+The valuation of our cash-settled share-based payments
+could vary significantly from period to period due to the
+fluctuation of our share price and other parameters used
+in the valuation of these plans.
+The revenue adjustment for the fair value accounting of
+the acquired entities' contracts and the expense
+adjustment for acquisition-related charges do not arise
+from a common conceptual basis. This is because the
+revenue adjustment aims to improve the comparability of
+the initial post-acquisition period with future post-
+acquisition periods, while the expense adjustment aims to
+improve the comparability between post-acquisition
+periods and pre-acquisition periods. This should
+particularly be considered when evaluating our operating
+profit (non-IFRS) and operating margin (non-IFRS)
+numbers as these combine our revenue (non-IFRS) and
+expenses (non-IFRS) despite the absence of a common
+conceptual basis.
+The remaining acquisition-related charges that we
+eliminate in deriving our profit (non-IFRS) numbers are
+likely to recur should SAP enter into material business
+combinations in the future. Similarly, the restructuring
+expenses that we eliminate in deriving our profit (non-
+IFRS) numbers are likely to recur should SAP perform
+restructurings in the future.
+The acquisition-related amortization expense that we
+eliminate in deriving our profit (non-IFRS) numbers is a
+recurring expense that will impact our financial
+performance in future years.
+While we adjust for the fair value accounting of the
+acquired entities' recurring revenue contracts, we do not
+adjust for the fair value accounting of deferred
+compensation items that result from commissions paid to
+the acquired company's sales force and third parties for
+closing the respective customer contracts.
+While our profit (non-IFRS) numbers reflect the
+elimination of certain acquisition-related expenses, no
+eliminations are made for the additional revenue or other
+income that results from the acquisitions.
+"
+"
+■
+■
+Our restructuring charges resulted in significant cash
+outflows in the past and could do so in the future. The
+same applies to our share-based payment expense
+because most of our share-based payments are settled in
+cash rather than shares.
+Purchase of intangible assets
+and property, plant, and
+operating activities
+27
+Operating Expense (Non-IFRS)
+71
+Combined Management Report | Performance Management System
+Under IFRS, we record at fair value the contracts in effect at the
+time entities were acquired. Consequently, our IFRS software
+support revenue, IFRS cloud subscriptions and support revenue,
+IFRS cloud and software revenue, and IFRS total revenue for
+periods subsequent to acquisitions do not reflect the full amount
+of revenue that would have been recorded by entities acquired
+by SAP had they remained stand-alone entities. Adjusting
+revenue numbers for this revenue impact provides additional
+insight into the comparability of our ongoing performance
+across periods.
+Revenue items identified as revenue (non-IFRS) have been
+adjusted from the respective IFRS financial measures by
+including the full amount of software support revenue, cloud
+subscriptions and support revenue, and other similarly recurring
+revenue that we are not permitted to record as revenue under
+IFRS due to fair value accounting for the contracts in effect at
+the time of the respective acquisitions.
+Revenue (Non-IFRS)
+Our non-IFRS financial measures reflect adjustments based on
+the items below, as well as adjustments for the related income
+tax effects.
+All forecast and performance reviews with all senior
+managers globally are based on these non-IFRS measures,
+rather than the respective IFRS financial measures.
+Both our internal performance targets and the guidance we
+provided to the capital markets are based on revenue (non-
+IFRS) and profit (non-IFRS) measures rather than the
+respective IFRS financial measures.
+The annual budgeting process for all management units is
+based on revenue (non-IFRS) and operating profit (non-IFRS)
+numbers rather than the respective IFRS financial measures.
+Operating expense numbers that are identified as operating
+expenses (non-IFRS) have been adjusted by excluding the
+following expenses:
+The variable components of our Executive Board members'
+and employees' remuneration are based on revenue (non-
+IFRS), operating profit (non-IFRS), as well as new cloud
+bookings measures rather than the respective IFRS
+measures.
+-
+We believe that the disclosed supplemental historical and
+prospective non-IFRS financial information provides useful
+information to investors because management uses this
+information, in addition to financial data prepared in accordance
+with IFRS, to attain a more transparent understanding of our
+past performance and our anticipated future results. We use the
+revenue (non-IFRS) and profit (non-IFRS) measures
+consistently in our internal planning and forecasting, reporting,
+and compensation, as well as in our external communications,
+as follows:
+We disclose certain financial measures, such as revenue (non-
+IFRS), operating expenses (non-IFRS), operating profit (non-
+IFRS), operating margin (non-IFRS), and earnings per share
+(non-IFRS), as well as constant currency revenue, expense, and
+profit that are not prepared in accordance with IFRS and are
+therefore considered non-IFRS financial measures. Our non-
+IFRS financial measures may not correspond to non-IFRS
+financial measures that other companies report. The non-IFRS
+financial measures that we report should only be considered in
+addition to, and not as substitutes for, or superior to, our IFRS
+financial measures.
+1) Share-based payments (SBP)
+total operating expenses
+-14,457
+621
+724
+738
+Our management primarily uses these non-IFRS measures
+rather than IFRS measures as the basis for making financial,
+strategic, and operating decisions.
+-
+Acquisition-related charges
+■
+3,638
+4,628
+Net cash flows from
+A in %
+2015
+2016
+€ millions
+Free Cash Flow
+Among others we use the measure free cash flow to manage our
+overall financial performance.
+Free Cash Flow
+We calculate constant currency revenue and operating profit
+measures by translating foreign currencies using the average
+exchange rates from the comparative period instead of the
+current period.
+present information about our revenue and various values and
+components relating to operating profit that are adjusted for
+foreign currency effects.
+We believe it is important for investors to have information that
+provides insight into our sales. Revenue measures determined
+under IFRS provide information that is useful in this regard.
+However, both sales volume and currency effects impact period-
+over-period changes in sales revenue. We do not sell
+standardized units of products and services, so we cannot
+provide relevant information on sales volume by providing data
+on the changes in product and service units sold. To provide
+additional information that may be useful to investors in
+breaking down and evaluating changes in sales volume, we
+Constant Currency Information
+Operating profit, operating margin, effective tax rate, and
+earnings per share identified as operating profit (non-IFRS),
+operating margin (non-IFRS), effective tax rate (non-IFRS), and
+earnings per share (non-IFRS) have been adjusted from the
+respective IFRS measures by adjusting for the aforementioned
+revenue (non-IFRS) and operating expenses (non-IFRS) and the
+income tax effects thereon.
+Operating Profit (Non-IFRS), Operating Margin
+(Non-IFRS), Effective Tax Rate (Non-IFRS), and
+Earnings per Share (Non-IFRS)
+We exclude certain acquisition-related expenses for the purpose
+of calculating operating profit (non-IFRS), operating margin
+(non-IFRS), and earnings per share (non-IFRS) when evaluating
+SAP's continuing operational performance because these
+expenses generally cannot be changed or influenced by
+management after the relevant acquisition other than by
+disposing of the acquired assets. Since management at levels
+below the Executive Board does not influence these expenses,
+we generally do not consider these expenses for the purpose of
+evaluating the performance of management units. For similar
+reasons we eliminate share-based payment expenses as these
+costs are impacted by share price developments and other
+factors outside our control. We also eliminate restructuring
+expenses because they are volatile and mostly cannot be
+influenced by management at levels below the Executive Board.
+Restructuring expenses, that is, expenses resulting from
+measures which comply with the definition of restructuring
+according to IFRS
+Share-based payment expenses
+■ Acquisition-related third-party expenses
+Amortization expense/impairment charges of intangibles
+acquired in business combinations and certain stand-
+alone acquisitions of intellectual property (including
+purchased in-process research and development)
+Settlements of preexisting business relationships in
+connection with a business combination
+85%
+28
+Employee Engagement Index
+KONT! PLACES TO WORK
+2016 for LGBT Equality
+Drive Simplicity
+-
+Our Leadership Principles:
+Our investment in developing our leaders is delivering results
+according to our People Survey. Living up to our SAP leadership
+principles and building trust with employees has become a key
+ingredient of successful leadership performance. By the end of
+2016, 57.6% of leaders at SAP completed our flagship
+leadership development program. Leaders who completed this
+had higher employee engagement and leadership trust scores.
+In 2016, leadership trust reached 57% (2015: 52%) and we are
+committed to keep this high score moving forward.
+Engaging Our People Through
+Impactful and Inspirational
+Leadership
+Our overall retention rate in 2016 was 93.7% compared with
+91.8% in 2015. We define retention as the ratio of the average
+number of employees minus voluntary attrition to the average
+number of employees (in full-time equivalents, or FTEs). High
+retention is something we are aiming for as reflected in all our
+activities to drive high employee engagement.
+In addition, we launched SAP Talk to 8,100 early-adopter
+employees in 2016. This approach provides a new, state-of-the-
+art way of managing performance at SAP, helping foster a
+continuous dialog on professional development between
+managers and employees. We plan to roll out SAP Talk to all
+SAP employees in 2017.
+At SAP, we believe that everyone is a talent and we invest in the
+professional development of all our employees. We continue to
+build development offerings for specific groups such as early
+talents, experts, and fast-track employees. To provide career
+development support, we also introduced career counselling
+sessions that are delivered either in person or virtually.
+Investing in Talent Development
+and Turkey to coding basics, Web development, and software
+skills in the SAP Business One application. The most promising
+students are referred to SAP partner ReBootKAMP (RBK.org)
+for an intensive 16-week training program and assistance in
+securing job placements.
+75
+Combined Management Report | Employees and Social Investments
+In addition, 2016 saw the launch of Refugee Code Week,
+empowering young people and inspiring refugee communities
+with job-relevant coding skills. In collaboration with the United
+Nations Refugee Agency (UNHCR), the event introduced more
+than 10,000 refugees and nationals in Egypt, Jordan, Lebanon,
+As a company with employees of approximately 80 different
+nationalities working in Germany alone, we are open to talented
+people from all communities. As part of our “Engaging with
+Refugees" program, we are working on a number of initiatives
+that promote cultural integration through training and
+recruitment. For example, SAP joined Germany's "Wir
+zusammen" ("We together") initiative, which provides an
+Internet platform to support the efforts of participating
+companies to integrate refugees into the German labor market.
+In 2016, SAP offered 100 internships and 14 vocational training
+positions to refugees in Germany. In 2017, SAP will again offer
+up to 100 additional internships and 10 vocational training
+positions to candidates who are refugees.
+Connecting with Refugee Communities
+SAP also runs a vocational training program that allows students
+to work towards their university degree while gaining valuable
+business experience at the same time. As of the end of 2016,
+more than 1,000 vocational training students were enrolled in
+the program. Overall, we measured a conversion rate (number
+of these types of students who stayed with SAP after completing
+their dual studies) for vocational training students of 82% in
+2016.
+Our collaboration with educational institutions is key to
+recruiting early talent. SAP works closely with over 3,100
+universities on international events such as student meet-ups
+and info days. In addition, we run a number of coding events
+such as SAP InnoJam, as well as a broad variety of activities and
+events through our SAP University Alliances program.
+Selection of employer branding awards SAP received in 2016
+Collaborating with Educational Institutions
+100% CORPORATE EQUALITY INDEX
+BEST
+HUMAN
+-
+THE GU
+Develop Amazing Talent
+Making Learning a Compelling
+Experience for Everyone
+How We Run
+SAP
+Keep the
+promise
+Embrace
+differences
+Stay curious
+Tell it like it is
+Our "How We Run" Behaviors
+"How We Run": Launched in 2015 to showcase the
+behavioral values that provide the foundation to SAP's
+corporate culture, our "How We Run" behaviors initiative has
+received widespread support and adoption among SAP
+employees worldwide.
+People Weeks: In 2016, SAP again sponsored a two-week
+event designed for employees to exchange ideas and
+cultivate a greater connection across cultures, genders, and
+generations. Under the motto “You in the Digital Workplace,"
+the event reached over 27,000 employees in 124 locations
+and 58 countries.
+deals related to our own human capital management
+solutions. Also in 2016, we announced the Klaus Tschira
+Human Resources Innovation Award, an annual program for
+SAP partners and customers that have contributed a unique
+and innovative solution in the field of human resources.
+-
+Combined Management Report | Employees and Social Investments
+76
+SAP SuccessFactors solutions: To make our employees'
+lives easier when dealing with HR matters, we continue to
+transform and simplify our entire HR IT landscape by
+implementing SAP SuccessFactors solutions. In this context,
+approximately 160 HR experts supported sales teams in
+SAP Shares program: Introduced in 2016, this equity
+program consists of two different plans, ensuring closer
+market alignment. The "Own SAP" plan enables employees to
+purchase shares with preferred conditions and build value by
+becoming an SAP shareholder. The "Move SAP" plan is a
+restricted stock unit plan that rewards selected employees
+and executives for their contribution to the success of the
+company. For more information, see the Notes to the
+Consolidated Financial Statements section, Note (27).
+Hasso Plattner Founders' Award: In its third year, this
+prestigious award provides the highest internal employee
+recognition at SAP for delivering on our vision and strategy. In
+2016, the award went to the "Skills for Africa" initiative, which
+helps fill the skills gap in the IT sector in Africa.
+Intrapreneurship program: Open to all global employees,
+this program attracted more than 830 entries from over
+1,500 employees in 2016. It enables employees to act as
+entrepreneurs and transform innovative ideas into profitable
+businesses in new markets.
+-
+SAP aims to create a working environment that helps drive
+innovation, high performance, and employee satisfaction. We do
+so by providing, among others, the following benefits and
+activities:
+Creating an Environment That Drives
+Innovation, Performance, and
+Engagement
+Self-paced online programs that include language learning as
+well as technical and soft-skills training courses are open to all
+employees. In addition, the online programs enable employees
+to build impactful development plans that meet their career
+goals. Our innovative peer-to-peer learning portfolio includes
+coaching, mentoring, job shadowing, and facilitation
+opportunities. In 2016, we hosted many live and virtual “learning
+culture" workshops throughout the world, as an opportunity to
+foster the exchange of ideas between peers and managers.
+To achieve this, we make high-quality learning opportunities
+easily accessible to all employees through our cloud-based
+learning management system (SAP SuccessFactors solution). In
+2016, we provisioned 1.3 million courses to 90.7% of our
+employees. We also initiated a new tuition assistance program
+to help employees as they pursue additional educational and
+professional certification opportunities.
+Our human resources (HR) strategy uses cloud technology to
+help us Run Simple. It helps us change the way we hire new
+talent, and to transform the way we develop and retain our
+employees. At the same time, it allows us to create a culture at
+SAP that is able to deal with the complexity, speed, and scope of
+a digital workplace. This culture inspires innovation, leads
+change, and ultimately creates employee satisfaction. Our HR
+team stays focused on delivering a seamless, simple employee
+experience by following three guiding principles: customer
+satisfaction, simplification, and standardization.
+We support employees at all levels and roles as they strive to
+achieve their long-term career aspirations. Our learning strategy
+is based on the principle that much of employee learning and
+development happens outside formal training such as coaching,
+Ensure Customer Success
+CERTIFIED
+EDG
+ASSESS
+The People Survey 2015 results revealed two focus areas for
+2016: simplification and innovation. In 2016, we started a
+company-wide "Run Simple at SAP" initiative to help the
+business improve processes and services, as well as numerous
+efforts to boost and promote innovation initiatives. Conducted
+from October to November, our People Survey 2016 revealed
+moderate improvements in both simplification and innovation.
+We will continue with simplification and innovation as our
+company-wide focus areas in 2017.
+Combined Management Report | Employees and Social Investments
+74
+A change by one percentage point of the EEI would have an
+impact of €45 million to €55 million on SAP's operating profit.
+For more information on how we calculate this impact, see the
+Connectivity of Financial and Non-Financial Indicators section of
+the SAP Integrated Report online.
+Ensuring that our employees are highly engaged remains one of
+our company-wide strategic goals. For 2017 through to 2020,
+we aim to reach an Employee Engagement Index between 84%
+and 86%.
+*The EEI score for 2015 was recalculated from 81% to 82%
+based on updated questions. This calculation method has been
+applied moving forward.
+2016
+2015*
+2014
+2013
+2012
+85
+82
+80
+77
+79
+79
+Percent
+(EEI). In 2016, we see a significant increase of the EEI by three
+percentage points to 85%.
+The People Survey 2016 results are extraordinarily positive.
+Employee satisfaction went up in nearly all aspects and
+questionnaire topics. This especially holds true for one of our
+most important dimensions, the Employee Engagement Index
+Listening to Our Employees
+In the second half of 2016, we also conducted a strategy dialog
+survey to assess the degree to which employees understand
+and believe in our strategy, our culture, and our leadership, as
+well as the capability to drive innovation. This survey revealed
+that while we already have the right innovation mindset, many of
+the internal innovation tools available are not yet widely known
+within the company.
+In addition, we also measure our Business Health Culture Index
+(BHCI) based on our People Survey. The BHCI assesses the
+degree to which our workplace culture supports people's well-
+being, work-life balance, and organizational health.
+In 2016, the positive trend of the BHCI continued with a score of
+78% compared to 75% in 2015. This encouraging result shows
+that a health-focused culture has impacted employees in a
+positive way.
+99
+UALITY
+Oglassdoor
+ΤΟ
+WORK
+GREAT
+PLACE
+At the same time, continued recognition of SAP as an employer
+of choice contributed to our success in meeting our hiring
+targets in 2016. SAP won many awards across the globe in the
+areas of diversity, inclusion, employer attractiveness, and
+people satisfaction. For a comprehensive list of awards given to
+SAP in 2016, see the Recognition section of the SAP Integrated
+Report online.
+priority for us. In 2016, approximately one third of all external
+hires fell into this category.
+While we increased our overall hiring volume successfully in
+2016, increasing the number of "early talent” hires (people with
+professional experience of up to two years) has also been a key
+Getting the Right Talent in the Right
+Place at the Right Time
+*The BHCI score for 2014 was recalculated based on two
+updated questions. This calculation method has been applied
+moving forward.
+2016
+Build bridges,
+not silos
+2015
+2013
+2012
+75
+78
+72
+Percent
+67
+20
+Business Health Culture Index
+66
+2014*
+Promoting Inclusion, Well-Being, and
+Social Innovation
+mentoring, rotational programs, and on-the-job-guided
+development experiences. This is why we are transitioning to a
+continuous learning model with a strong focus on more informal
+learning activities.
+Closing the Gender Gap
+33,340
+An inclusive, bias-free culture inspires greater innovation and
+helps us to better connect with and serve our customers. It also
+fosters employee engagement, and makes SAP a more
+attractive workplace.
+29,757
+19,123
+19,568
+22,166
+22,071
+24,696
+Americas
+■APJ
+15,542
+16,011
+18,995
+20,914
+64,422
+66,572
+23,265
+74,406
+76,986
+84,183
+Number of Employees
+Full-Time Equivalents
+33,906
+36,222
+■ EMEA
+2012
+Combined Management Report | Employees and Social Investments
+80
+5,393
+14,621
+16,002
+21,977
+23,363
+2,827
+Infrastructure
+Full-Time Equivalents
+Our personnel expense per employee decreased to
+approximately €127,000 in 2016 (2015: approximately
+€135,000). This decrease in expense is primarily attributable to
+a significant decrease of employee-related restructuring
+expenses in 2016 compared to the previous year. The personnel
+expense per employee is defined as the overall personnel
+expense divided by the average number of employees. For more
+information about employee compensation and a detailed
+overview of the number of people we employ, see the Notes to
+the Consolidated Financial Statements section, Note (7).
+Employees by Functional Area
+Services
+Cloud and Software
+Sales and Marketing
+Research and Development
+79
+Combined Management Report | Employees and Social Investments
+2016
+2015
+2014
+2013
+General and Administration
+We define headcount in FTE as the number of people on
+permanent employment contract considering their staffing
+percentage. Students, individuals employed by SAP who are
+currently not working due to various reasons (such as maternity
+leave), and temporary employees with limited contracts of less
+than six months are excluded from our figures. The number of
+temporary employees is not material.
+30,993
+Headcount and Personnel Expense
+Take Charge of Your Health and Well-Being program: This
+program empowers employees to take better care of their
+health and well-being.
+Health checkup: A one-day, one-on-one health checkup
+program for executives.
+Corporate Oncology Program (COPE): Available in Canada,
+Germany, United Kingdom, and the United States, the
+program provides SAP employees facing cancer with access
+to an individual molecular genetic tumor analysis and
+interpretation.
+Employee Assistance Program (EAP): This program helps
+employees to deal better with life's challenges by providing
+free, confidential, and impartial expert advice and support, 24
+hours a day, seven days a week.
+-
+-
+-
+-
+77
+Combined Management Report | Employees and Social Investments
+A caring culture enables our employees to live to their full
+potential and accelerates our ability to achieve our goals.
+Consequently, we invest in extensive employee benefits,
+programs, and services that truly make people's lives better.
+These include:
+We believe that the way we care for our people is closely linked
+to our business success. When people feel healthy, respected,
+and cared for, it results in higher productivity, engagement,
+innovation, and customer satisfaction.
+Caring for the Health and Well-Being
+of Our Employees
+Global Pride@SAP employee network: This network has
+grown to more than 8,000 members, sponsoring numerous
+activities and initiatives that support lesbian, gay, bisexual,
+and transgender (LGBT) people and their allies.
+White House Tech Inclusion Pledge: SAP is one of the
+largest global technology companies to participate in this
+pledge, announced during former President Obama's Global
+Entrepreneurship Innovation Summit 2016 in Silicon Valley.
+Autism at Work program: 107 employees with Autism
+Spectrum Disorder currently work at SAP. Launched in
+Argentina this year, we have implemented the Autism at
+Work program in nine countries.
+Focus on Insight - Diversity and Inclusion curriculum: A
+global learning curriculum launched for all employees in
+September 2016 to ensure that everyone at SAP understands
+the importance and benefits of a diverse workplace.
+Business Beyond Bias: Launched in August 2016, this
+initiative includes significant investment in programs and
+technology that support greater diversity. This helps
+eliminate bias not only at SAP but also in customer and
+partner organizations.
+In addition, we participate in a wide range of activities to create a
+more inclusive environment throughout the organization,
+including:
+Working closely with ethnicity-based employee network groups
+such as the Black Employee Network (BEN), and Latinos@SAP,
+SAP launched several important initiatives in 2016 in the United
+States. An example is Project Propel, a program designed to
+enable U.S. educational institutions that have historically served
+minorities to build the next generation of technology talent. The
+program focuses on providing students with critical digital
+enterprise skills that are in demand in the SAP ecosystem.
+On December 31, 2016, we had 84,183 full-time equivalent (FTE)
+employees worldwide (December 31, 2015: 76,986). This
+represents an increase in headcount of 7,197 FTEs in
+comparison to 2015. The average number of employees in 2016
+was 80,609 (2015: 75,180).
+Throughout 2016, SAP sponsored and hosted numerous events
+focused on attracting, developing, and supporting women.
+These included major events in China, Colombia, Germany,
+Saudi Arabia, the United States and other countries. Additional
+ongoing initiatives supporting women at SAP include the
+Women's Professional Growth Webinar series, the Business
+As the first multinational technology company, SAP was
+awarded the Economic Dividends for Gender Equality (EDGE)
+certificate in 2016. It recognizes our global commitment to
+gender diversity and equality in the workplace and reinforces
+SAP's publicly stated goal to fill 25% of its management
+positions with women by the end of 2017. We have made great
+strides toward our goal, increasing the proportion of female
+managers from 23.6% in 2015 to 24.5% in 2016.
+Health Ambassador Network: This global network
+strengthens our focus on health in SAP office locations and
+helps identify best practices.
+Local health and well-being offerings: Services such as skin
+screening, on-site fitness centers and activity classes,
+mindfulness practice, eyesight testing, and health awareness
+sessions are also available to employees in various office
+locations.
+Women's Network, and the Women@SAP online community. In
+addition, we offer executive sponsorships for women at SAP and
+the Leadership Excellence Acceleration Program (LEAP), a
+highly respected and award-winning development program that
+helps prepare high-potential women for leadership roles at SAP.
+Creating an Inclusive Environment
+As our vision to help the world run better and improve people's
+lives shows, we are passionate about making a positive impact
+on people's lives, both in our communities and in the wider
+world. As SAP guides our customers through digital
+transformation, our social investments focus on ensuring that
+today's young people - regardless of background - get the skills
+they need to thrive and lead in this digital economy.
+Engaging in Social Investments
+Gaining International Recognition for
+Award-Winning Programs
+SAP received significant recognition in 2016 for the innovative
+nature of its social investment programs. For more information,
+see the Recognition section of the SAP Integrated Report online.
+The event was organized in collaboration with
+streetfootballworld, a non-governmental organization (NGO)
+whose mission is to use soccer as a tool to drive social change.
+The best ideas from each team were then combined to create a
+final app that was presented during the 16th streetfootballworld
+Festival at the European soccer championships (UEFA EURO
+2016).
+worldwide including Brazil, Germany, Hungary, India, Israel, and
+the United States. The teams coded together, played soccer and
+had fun, while competing to attend the finals in Lyon, France,
+and Heidelberg, Germany, to present their app prototypes.
+Regional competitions took place at SAP Labs locations
+The first annual KickApp Cup brought together 200 young
+community leaders from disadvantaged backgrounds to work
+closely with 180 SAP developers and coaches. Their aim: to
+develop a prototype app that would help non-profit
+organizations tackle issues such as monitoring attendance or
+tracking social impact.
+78
+To ignite passion for IT, we need to be creative about how to
+reach young people. We developed a creative approach,
+harnessing the power of soccer to bring people together while
+spreading a passion for IT.
+Changing the Game for Underprivileged
+Youths with the KickApp Cup
+Combined Management Report | Employees and Social Investments
+In 2016, we also extended our social sabbatical portfolio to joint
+projects with SAP customers. In July, a joint team of volunteers
+from SAP and GlaxoSmithKline plc designed and implemented
+an integrated database for Partners in Health, a non-profit
+organization based in Kigali, Rwanda. Additional social
+sabbatical collaboration with customers is planned for 2017.
+Recent projects include building strategic plans for social
+entrepreneurship incubators and strengthening the internal
+capabilities of non-profit organizations focused on STEM
+education and digital literacy. As such, we worked with the
+Dreamoval Foundation in Accra, Ghana, to support the
+development of a growth strategy to strengthen the IT skills of
+170,000 teachers to help improve educational outcomes across
+the country.
+By volunteering their time and talent for assignments that last
+between two and six weeks, our employees strengthen their
+leadership competencies, cross-industry know-how, and
+intercultural sensitivity. They achieve all this while ensuring their
+"client" is better able to deliver on their social mission.
+Our strategy is based on two main focus areas. We aim to
+increase the capacity of innovative social enterprises that put
+young people on the path to successful careers. In addition, we
+aim to build a skilled workforce for the IT sector through training
+and workforce development programs. In 2016, we donated
+€22.3 million to charitable organizations.
+Now in its second year, Africa Code Week saw thousands of
+coding activities organized across 30 African countries and
+through openSAP coursework. Africa Code Week demonstrates
+the power of public-private partnerships: Hundreds of schools,
+teachers, ministers, community centers, businesses, and non-
+profit organizations work together towards the common goal of
+ensuring Africa's children are not left out of the digital economy.
+In 2016, the program reached 426,000 children in Africa.
+Supporting Our Social Sabbatical Portfolio
+With four unique programs across the award-winning social
+sabbatical portfolio, we offer employees at all levels the
+opportunity to extend their skills, expertise, and know-how.
+Participation in the program challenges employees to solve
+concrete business challenges for non-profit organizations and
+social enterprises in either their home or emerging markets.
+In 2016, SAP extended our successful Code Week initiatives to
+bring digital literacy to thousands of young people who may not
+otherwise have the opportunities to learn software coding skills.
+Extending Code Week Initiatives
+An annual highlight is our “Month of Service" program. This
+year, more than 22,000 employees in 42 countries volunteered
+almost 142,000 hours to this program alone. While passing on
+valuable skills and helping the world to run better, employees
+taking part in these programs benefit from what can be an
+incredibly rewarding experience. In addition to making a positive
+social impact, they develop leadership skills, learn about new
+markets, and grow their professional network.
+As part of our social investment commitment, SAP encourages
+its employees to contribute their time and talent to support
+social causes. Whether by offering individual hands-on support,
+or business coaching and mentoring, we run a number of
+initiatives that help make a real difference to people's lives in the
+communities in which they live and work.
+Through our social sabbatical portfolio, 213 SAP employees
+provided 58,808 hours of pro bono service to 71 organizations in
+15 countries in 2016.
+Improving Lives, Sharing Experience
+457
+709
+5,275
+4,922
+1,579
+5,350
+4,646
+161
+5,366
+2013
+4,465
+4,566
+changes in volumes and prices and a 1% increase from currency
+effects. Software licenses and software support revenue
+increased 5% to €2,575 million in 2016 (2015: €2,463 million).
+This growth reflects a 3% increase from changes in volumes and
+prices and a 1% increase from currency effects.
+Revenue by Industry
+We allocate our customers to one of our industries at the outset
+of an initial arrangement. All subsequent revenue from a
+particular customer is recorded under that industry sector.
+Revenue by Industry
+€ millions
+2012
+2,000
+4,485
+6,929
+2016
+■Cloud
+5,967
+82
+6,819
+277
+507
+176
+7,115
+7,489
+5,885
+6,252
+6,542
+7,366
+2012
+2014
+2015
+Cloud subscriptions revenue rose 39% to €703 million in 2016
+(2015: €507 million). This growth reflects a 41% increase from
+changes in volumes and prices and a 3% decrease from
+currency effects. Software licenses and software support
+revenue rose 5% to €7,489 million in 2016 (2015: €7,115
+million). This increase reflects a 7% increase from changes in
+volumes and prices and a 2% decrease from currency effects.
+Americas Region
+Combined Management Report | Financial Performance: Review and Analysis
+89
+Americas: Cloud and Software Revenue
+€ millions
+■On Premise
+2013
+2014
+14%
+2016
+Consumer
+Energy and Natural Resources
+Discrete Manufacturing
+3,880
+Services
+3,632
+Public Services
+2,137
+Financial Services
+Cloud subscriptions revenue grew 45% to €290 million in 2016
+(2015: €200 million). This growth reflects a 43% increase from
+1,928
+4,966
+In 2016, we achieved above-average growth in the following
+industry sectors, measured by changes in total revenue:
+Consumer (€5,520 million, growing 12%); Services (€3,632
+million, growing 10%); and Discrete Manufacturing (€3,880
+million, growing 6%). Revenue from the other industry sectors
+was Financial Services (€1,928 million, growing 3%); Energy and
+Natural Resources (€4,966 million, growing 3%); and Public
+Services (€2,137 million, decreasing 2%).
+Operating Profit and Operating Margin
+SAP continued to invest in innovation and its cloud business and
+achieved a record revenue in 2016. Thanks to strong revenue
+growth and lower restructuring costs, our operating profit
+improved 21% to €5,135 million (2015: €4,252 million).
+In 2016, our operating expenses increased €387 million or 2% to
+€16,928 million (2015: €16,541 million). The main contributors
+to that increase were our continued investment in sales
+activities and our greater revenue-related and investment-
+related cloud subscriptions and support costs.
+The record revenue generated and significantly lower
+restructuring costs had a positive impact on our operating
+profit. Continuing investment in cloud infrastructure, in sales
+activities around the world, and in research and development
+also affected the results in 2016. The increased operating profit
+and the higher share price in 2016 pushed the cost of bonus
+90
+Combined Management Report | Financial Performance: Review and Analysis
+6,428
+5.520
+2016
+2015
+2014
+Cloud subscriptions revenue rose by 27% to €2,000 million in
+2016 (2015: €1,579 million); currency effects were 0%. Software
+licenses and software support revenue in 2016 of €5,366 million
+was virtually unchanged compared to the prior year (2015:
+€5,350 million).
+APJ Region
+In 2016, 15% (2015: 15%) of our total revenue was generated in
+the APJ region. Total revenue in the APJ region increased 6% to
+€3,377 million. In Japan, revenue increased 24% to €825
+million. Revenue from Japan was 24% (2015: 21%) of all revenue
+generated in the APJ region. The revenue growth in Japan was
+attributable to a 10% increase from changes in volumes and
+prices and a 13% increase from currency effects. In the
+remaining countries of the APJ region, revenue increased 1%.
+Revenue in the remaining countries of the APJ region was
+generated primarily in Australia, India and China. Cloud and
+software revenue in the APJ region totaled €2,865 million in
+2016 (2015: €2,663 million). That was 85% of all revenue from
+the region (2015: 84%).
+APJ: Cloud and Software Revenue
+€ millions
+On Premise
+Cloud
+2,865
+2,663
+200
+290
+2,189
+27
+2,155
+64
+2,221
+101
+2,463
+2,575
+2,162
+2,091
+2,120
+2012
+2013
+2015
+703
+7,622
+8,192
++8%
++6.5% to +8.5%
++6.0% to +8.0%
+€ 3.01 billion
+€ 3.00 billion
+to € 3.05 billion
+€ 2.95 billion
+to € 3.05 billion
+€6.40 billion
+to €6.70 billion
+22.5% to 23.5%
+24.5% to 25.5%
+Results
+for 2016
+Revised Outlook
+Outlook for 2016
+(as reported in Integrated
+Report 2015)
+Effective tax rate (non-IFRS)
+Effective tax rate (IFRS)
+(non-IFRS, at constant currencies)
+Operating profit
+for 2016
+(non-IFRS, at constant currencies)
+€6.50 billion
+to €6.70 billion
+27.0% to 28.0%
+28.0% to 29.0%
+approximately 62% for 2016 compared to our long-term
+ambition of approximately 80%. Affected by the incremental
+investments in our cloud infrastructure, cloud profitability fell by
+8pp on a constant currency basis, mainly due to significant
+investments in the expansion of our data center and IT
+infrastructure as well as in the harmonization of our various
+public cloud offerings into one platform.
+Combined Management Report | Financial Performance: Review and Analysis
+86
+The cloud subscriptions gross margin (non-IFRS) of our
+infrastructure-as-a-service cloud offering (IaaS) performed much
+better in 2016 than in 2015. In 2016 our cloud subscription gross
+margin is -5% which reflects an improvement of more than
+104pp on a constant currency basis. In the last two quarters
+break-even was already reached, we are therefore in line with
+our expectations. Profitability in our software-as-a-
+service/platform-as-a-service cloud offering (Saas/PaaS) was
+Our cloud subscriptions gross margin (non-IFRS) in our
+business network business increased by 1% and resulted in
+approximately 76% for 2016, already close to our long-term
+ambition of approximately 80%. This excellent result is
+attributable to the continued positive gross margin development
+within the Concur and SAP Ariba portfolios.
+Our expense base in 2016 continued to be impacted by the
+transformation to a fast-growing cloud business. In our outlook
+we expected the cloud subscriptions and support gross margin
+to be at least stable or to slightly increase compared to 2015.
+The cloud subscriptions gross margin for 2016 was 64.4%, a
+decrease of 1.2pp on a constant currency basis and with that
+below our expectations. The decrease is primarily due to the
+change in the cloud subscription revenue mix; the share of our
+infrastructure-as-a-service cloud offering (IaaS) that has a lower
+margin than the other cloud offerings, grew at above-average
+rates and thus impacted the overall gross margin. The cloud
+subscriptions gross margins of our cloud offerings developed
+heterogeneously in 2016:
+€6.61 billion
+Operating expenses (non-IFRS) in 2016 were €15.43 billion
+(2015: €14.46 billion), an increase of 7%. On a constant
+currency basis, the increase was 8%.
+Besides the cloud business, our traditional on-premise business
+also showed a remarkable growth in 2016. Cloud and software
+revenue (non-IFRS) was €18.43 billion (2015: €17.23 billion). On
+a constant currency basis, the increase was 8% and therefore
+well above the midpoint of the increased outlook.
+Our new cloud bookings, which is the main measure for our
+cloud-related sales success and for future cloud subscriptions
+revenue, increased 31% in 2016 to €1.15 billion (2015: €874
+million). In addition to this strong growth, our cloud backlog
+(unbilled future revenue based on existing customer contracts)
+climbed by 47% to €5.4 billion (2015: €3.7 billion). This reflects
+the unbilled committed future cloud subscriptions and support
+revenue that will drive strong cloud growth in 2017 and beyond.
+On a constant currency basis, non-IFRS cloud subscriptions and
+support revenue grew from €2.30 billion in 2015 to €3.01 billion
+in 2016. That represents an increase of 31% on a constant
+currency basis. We thus achieved our refined outlook range of
+€3.00 billion to €3.05 billion that we predicted in October.
+Despite ongoing economic uncertainty throughout 2016,
+especially in Latin America, coupled with fears about the
+possible effects of the Brexit vote and the presidential election in
+the United States, our new and existing customers continued to
+show a strong willingness to invest in our solutions.
+26.8%
+25.3%
+Our total revenue (non-IFRS) rose 6% in 2016 to €22.07 billion
+(2015: €20.81 billion). On a constant currency basis, the
+increase was 7%.
+Cloud and software revenue
+Cloud subscriptions and support revenue (non-IFRS, at
+constant currencies)
+Comparison of Outlook and Results for 2016
+In 2016, we again demonstrated that we are consistently
+pursuing our strategy for innovation and growth - and that
+globally, we are able to generate growth that few other IT
+companies can match – in three respects: in revenue from core
+business and cloud business, and in operating profit.
+In 2016, we once again succeeded in significantly expanding our
+business and outperformed the overall global economy and IT
+industry in 2016 with regards to revenue growth. Our good 2016
+results are further evidence that our strategy of innovating
+across the core, the cloud, and business networks to help our
+customers become true digital enterprises is the right way
+forward.
+Impact on SAP
+The Gartner Report described herein, (the "Gartner Report") represents
+research opinion or viewpoints published, as part of a syndicated subscription
+service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each
+Gartner Report speaks as of its original publication date (and not as of the
+date of this Annual Report) and the opinions expressed in the Gartner Report
+are subject to change without notice.
+Source: Gartner Market Databook, 4Q16 Update, 21 December 2016.
+Combined Management Report | Financial Performance: Review and Analysis
+Overall Financial Position
+84
+The Americas region likewise recorded lower growth rates in IT
+spending than the previous year as can be seen in the table
+mentioned above. According to the same table, software
+spending nevertheless significantly outperformed IT spending
+as a whole.
+In the Europe, Middle East, and Africa (EMEA) region, growth
+declined year-over-year in the Western European IT market from
+3.6% to -0.1% and the Eastern European IT market declined
+from 15.8% to 1.8% (see table in paragraph "Expected
+Developments and Opportunities”: "Trends in the IT Market - IT
+spending Year-on-Year", created by SAP on the basis of Gartner
+Market Databook, 4Q16 Update, 21 December 2016). According
+to the same table, software spending grew significantly faster
+than all other submarkets throughout the region.
+According to Gartner Market Databook December 2016 by
+Gartner, a market research firm, "worldwide IT spending is
+forecast to grow 0.5% in 2016 on a constant-currency basis.
+However, currency rate changes will limit market growth to
+negative 0.6%. Software is the best-performing segment, with
+6.9% growth in 2016 constant currency, while Emerging
+Asia/Pacific is the fastest-growing region/country, at 2.9%."
+The IT Market
+at only a very modest pace, the ECB notes. In China, meanwhile,
+economic growth continued to slow in 2016 but, according to
+the ECB, eventually stabilized in the second half-year, supported
+by strong consumption and infrastructure spending.
+In the Asia Pacific Japan (APJ) region, soft foreign demand and
+weak private consumption caused Japan's economy to advance
+In the Asia Pacific Japan (APJ) region, software spending grew
+faster than all other submarkets in the IT industry as well,
+documented in the table mentioned above.
+Executive Board's Assessment
+In 2016, we delivered strong software sales, fast cloud growth,
+and operating profit expansion. We saw exceptional growth in
+our cloud and software business and reached above the
+midpoint of the full year outlook which we raised in October.
+SAP's rapidly expanding cloud business combined with solid
+growth in support revenue continued to drive the share of more
+predictable revenue.
+The strong cloud growth was driven throughout our broad cloud
+portfolio. Mainly due to our strong top line result, we generated
+an operating profit which was at the midpoint of our raised
+guidance range.
+We achieved or exceeded the raised outlook for revenue and
+operating profit we published in October.
+2016 Actual Performance Compared to
+Outlook (Non-IFRS)
+IFRS cloud and software revenue to 6.5% to 8.5% at constant
+currencies. In view of the greater revenues expected, we also
+adjusted our outlook for full-year operating profit (non-IFRS) for
+2016 upward to range between €6.5 billion and €6.7 billion at
+constant currencies.
+85
+Combined Management Report | Financial Performance: Review and Analysis
+In October, based on the strong momentum in our cloud
+business, we raised our outlook for 2016 non-IFRS cloud
+subscriptions and support revenue to a range of €3.00 billion to
+€3.05 billion at constant currencies. The upper end of this range
+represents a growth rate of 33% at constant currencies. Thanks
+to continued growth in our software license business, we were
+also able to increase our growth outlook for full-year 2016 non-
+In July 2016, we adjusted our outlook for the effective tax rate
+(IFRS) to between 27.0% and 28.0% and for the effective tax
+rate (non-IFRS) to between 28.0% and 29.0%. The increase in
+comparison to the previous outlook mainly resulted from tax
+effects relating to changes in foreign currency exchange rates in
+Venezuela and the fact that the execution of the originally
+planned consolidation of intellectual property rights held by SAP
+Group company hybris AG at the level of SAP SE in Germany
+could no longer be achieved at this point of time.
+At the beginning of 2016, we projected that our 2016 non-IFRS
+cloud subscriptions and support revenue would be between
+€2.95 billion and €3.05 billion at constant currencies (2015:
+€2.30 billion). We expected full-year 2016 non-IFRS cloud and
+software revenue to increase by 6% to 8% at constant
+currencies (2015: €17.23 billion). We also expected our full-year
+operating profit (non-IFRS) for 2016 to end between €6.4 billion
+and €6.7 billion (2015: €6.35 billion) at constant currencies. We
+anticipated an effective tax rate (IFRS) of between 22.5% and
+23.5% (2015: 23.4%) and an effective tax rate (non-IFRS) of
+between 24.5% and 25.5% (2015: 26.1%).
+Outlook for 2016 (Non-IFRS)
+Our 2016 operating profit-related internal management goals
+and published outlook were based on our non-IFRS financial
+measures. For this reason, in the following section we discuss
+performance against our outlook only in terms of non-IFRS
+numbers derived from IFRS measures. The subsequent section
+about IFRS operating results discusses numbers only in terms of
+the International Financial Reporting Standards (IFRSS), so the
+numbers in that section are not expressly identified as IFRS
+numbers.
+Performance Against Our Outlook for
+2016 (Non-IFRS)
+There are no off-balance sheet financial instruments, such as
+sale-and-lease-back transactions, asset-backed securities, and
+liabilities related to structured entities, which are not disclosed
+in our Consolidated Financial Statements.
+For more information about our accounting policies, see the
+Notes to the Consolidated Financial Statements section, Note
+(3).
+Influence of Accounting Policies on Our
+Financial Position
+We made substantial progress in transforming our Company by
+shifting investments from non-core activities to strategic growth
+areas, enabling us to capture the tremendous growth
+opportunities in the market. We expanded our addressable
+market, acquired best in class assets, and innovated a new
+generation of ERP with SAP S/4HANA. Our strong cloud backlog
+and the high software support renewal rates combined with our
+robust pipeline positions us for yet another year of growth in
+2017 and allowed us to confidently raise our high-level 2020
+ambition.
+Efficiency improvements in both our cloud and traditional on-
+premise business drove continued operating profit expansion.
+Non-IFRS operating profit in 2016 was €6.61 billion on a
+constant currency basis, reflecting an increase of 4%. As a
+result, we were able to surpass our excellent results from 2015,
+despite our continued investment in our business
+transformation during the reporting year. The positive
+development of our operating profit was influenced by the
+effects of our global transformation program carried out in 2015
+as well as by the cost-conscious hiring of highly educated young
+talents in our fast growth areas and locations that enabled us to
+increase our overall headcount by 7,197 full-time equivalents in
+2016. With these additional resources, we continued to invest in
+our innovation and growth markets. Thus, constant currency
+non-IFRS operating profit amounting to €6.61 billion was at the
+midpoint of our raised outlook range (€6.5 billion to €6.7
+billion).
+In the North America and Latin America (Americas) region,
+continued low interest rate policies and improving labor markets
+stimulated the U.S. economy in 2016, the ECB reports, with
+economic activity in the United States improving markedly in the
+second half of 2016, following modest growth in the first half. In
+Brazil, the recession is believed to have slowly bottomed out in
+the second half of the year.
+We achieved an effective tax rate (IFRS) of 25.3% and an
+effective tax rate (non-IFRS) of 26.8%, which is below the
+adjusted outlook of 27.0% to 28.0% (IFRS) and 28.0% to 29.0%
+(non-IFRS). This mainly results from taxes for prior years and
+from the regional allocation of income.
+This section on operating results (IFRS) discusses results only in
+terms of IFRS measures, so the IFRS numbers are not expressly
+identified as such.
+10,571
+For more information about the breakdown of total revenue by
+region and industry, see Revenue by Region and Revenue by
+Industry below.
+Cloud and Software Revenue
+Software licenses revenue results from the fees earned from
+selling or licensing software to customers. Revenue from cloud
+subscriptions and support refers to the income earned from
+contracts that permit the customer to access specific software
+solutions hosted by SAP during the term of its contract with
+Combined Management Report | Financial Performance: Review and Analysis
+87
+3,638
+SAP. Support revenue represents fees earned from providing
+technical support services and unspecified software upgrades,
+updates, and enhancements to customers.
+€ millions
+18,424
+17,214
+14,315
+13,505
+12,801
+Cloud and Software
+2012
+Services
+4,860
+16,223
+4%
+18%
+6%
+2012
+2013
+Software Support
+2014
+2016
+This increase reflects a 7% increase from changes in volumes
+and prices and a 1% decrease from currency effects. The growth
+in revenue resulted primarily from a €707 million increase in
+cloud subscriptions and support revenue. Furthermore,
+software support revenue rose €478 million. This growth is a
+result of continuously high software license revenue, which
+increased €25 million in 2016. Cloud and software revenue
+climbed to €18,424 million in 2016, an increase of 7%. Cloud and
+software revenue represented 84% of total revenue in 2016
+(2015: 83%). Service revenue increased 2% from €3,579 million
+in 2015 to €3,638 million, which was 16% of total revenue, in
+2016.
+Revenue by Line Item
+€ millions
+Cloud Subscriptions & Support
+2,993
+Software Licenses
+2015
+2013
+2014
+2015
+2,993
+9,916
+2,286
+8,989
+8,143
+17,560
+12,379
+20,793
+€ millions | change since previous year
+Total Revenue
+Total revenue increased from €20,793 million in 2015 to
+€22,062 million in 2016, representing an increase of €1,269
+million, or 6%.
+Total Revenue
+Revenue
+We break our operations down into three regions: the Europe,
+Middle East, and Africa (EMEA) region, the Americas region, and
+the Asia Pacific Japan (APJ) region. We allocate revenue
+amounts to each region based on where the customer is located.
+For more information about revenue by geographic region, see
+the Notes to the Consolidated Financial Statements section,
+Note (28).
+22,062
+13,564
+270
+696
+2016
+Cloud subscriptions and support revenue increased from
+€2,286 million in 2015 to €2,993 million in 2016.
+Cloud Subscriptions and Support
+€ millions
+than €5 million (2015: 27%), while 38% resulted from deals
+worth less than €1 million (2015: 40%).
+Our stable customer base, continued investment in new
+software licenses by customers throughout 2016 and the
+previous year, and the continued interest in our support
+offerings resulted in an increase in software support revenue
+from €10,093 million in 2015 to €10,571 million in 2016. The SAP
+Enterprise Support offering was the largest contributor to our
+software support revenue. The €478 million, or 5%, growth in
+software support revenue reflects a 6% increase from new
+support business and a 1% decrease from currency effects. This
+growth is primarily attributable to SAP Product Support for
+Large Enterprises and SAP Enterprise Support. The acceptance
+rate for SAP Enterprise Support among new customers reached
+100% in 2016 (2015: 99%).
+Software licenses and software support revenue rose €503
+million, or 3%, from €14,928 million in 2015 to €15,431 million in
+2016. This increase reflects a 4% increase from changes in
+volumes and prices and a 1% decrease from currency effects.
+We define predictable revenue as the sum of our software
+support revenue and our cloud subscriptions and support
+revenue. Compared to the previous year, our predictable
+revenue increased 10%, from €12,379 million to €13,564 million
+in 2016. Predictable revenue accounted for 61% of our total
+revenue in 2016 (2015: 60%).
+2,286
+2,993
+Predictable Revenue
+€ millions
+■Software Support
+■Cloud
+1,087
+Operating Results (IFRS)
+16,815
+For the Europe, Middle East, and Africa (EMEA) region, the ECB
+reports that economic recovery in the euro area continued
+throughout 2016, supported by the ECB's own monetary policy
+measures which it finds helped revitalize domestic demand in
+the euro area and reduce debt. According to its calculations, the
+real gross domestic product of the euro area countries grew
+1.7% in 2016. The economies of many of the Central and Eastern
+Europe countries also performed well in 2016, the ECB writes.
+There were even signs of an economic rebound in Russia, but
+expansion there stayed slightly negative for the year as a whole.
+Global Economic Trends
+renewable electricity
+100%
+energy consumption
+950 GWh
+carbon emissions
+380 kt
+Being a Front-Runner of a Greener
+Way of Working
+Energy and Emissions
+696
+2012
+2013
+2014
+270
+2015
+1,087
+2016
+As a role model for sustainable business operations, SAP takes
+its environmental responsibilities seriously. We believe that by
+running cleaner, greener operations, we can make a difference
+to our planet. In addition, we aim to enable our customers to
+reduce their overall carbon footprint through our software.
+A number of initiatives harness innovative technologies to help
+us run our operations in a way that minimizes our impact on the
+environment. In addition, our investment in renewable electricity
+certificates and carbon credits enables us to support
+sustainability projects across the globe.
+380
+950
+965
+455
+485
+500
+One of our goals is to reduce net greenhouse gas (GHG)
+emissions from our operations to levels of the year 2000 by
+2020. This target includes all direct emissions from running our
+business as well as a selected subset of indirect emissions from
+supply chains and services.
+545
+Total Energy Consumption
+Our commitment to 100% renewable electricity is crucial to
+making our operations more sustainable. While SAP produces a
+small amount of renewable electricity through solar panels in
+some locations, we rely primarily on the purchase of renewable
+energy certificates (RECs) to achieve our target of 100%
+renewable electricity. We follow robust procurement guidelines
+for RECS to ensure that we only invest in environmentally
+friendly schemes.
+Committing to 100% Renewable
+Electricity
+In addition to our long-term commitment for 2020, we have
+derived annual targets for our internal operational steering. In
+2016, we outperformed our annual target to reduce our
+emissions to less than 400 kilotons (kt) of CO2. This result
+stems primarily from updating our emission factors as well as
+compensation with carbon emission offsets. Our focus on
+carbon emissions has contributed to a cumulative cost
+avoidance of €155 million in the past three years, compared to a
+business-as-usual scenario based on 2007. We avoided €73.6
+million of this cost in 2016.
+kilotons CO2
+Total Net Emissions
+GWh
+Despite a combination of a challenging macroeconomic and
+political environment and the accelerating industry shift to the
+cloud, we achieved a €25 million increase in software license
+revenue. This increase, from €4,835 million in 2015 to €4,860
+million in 2016, reflects a 1% increase from changes in volumes
+and prices and a 1% decrease from currency effects.
+Our customer base continued to expand in 2016. Based on the
+number of contracts concluded, 16% of the orders we received
+for software in 2016 were from new customers (2015: 13%). The
+total value of software orders received was stable year-over-
+year. The total number of software license contracts remained
+at the same level with 57,291 (2015: 57,439), while the average
+order value remained unchanged year-over-year. 29% of our
+software order entry in 2016 resulted from deals worth more
+10,093
+Revenue by Region
+Revenue by Region
+(based on customer location)
+EMEA Region
+€ millions
+APJ
+3,377
+Revenue by Region and Industry
+Americas
+8,931
+22,062
+In 2016, the EMEA region generated €9,755 million in revenue
+(2015: €9,181 million), which was 44% of total revenue (2015:
+44%). This represents a year-over-year increase of 6%.
+Revenue in Germany increased 9% to €3,034 million in 2016
+(2015: €2,771 million). Germany contributed 31% (2015: 30%)
+of all EMEA region revenue. The remaining revenue in the EMEA
+region was primarily generated in the United Kingdom, France,
+Switzerland, the Netherlands and Italy. Cloud and software
+revenue generated in the EMEA region in 2016 totaled €8,193
+million (2015: €7,622 million). Cloud and software revenue
+represented 84% of all revenue in the region in 2016 (2015:
+83%).
+EMEA: Cloud and Software Revenue
+€ millions
+■On Premise
+■Cloud
+EMEA
+9,755
+Revenue from other services increased €33 million, or 5%, to
+€756 million in 2016 (2015: €723 million). This reflects a 6%
+increase from changes in volumes and prices and a 1% decrease
+from currency changes.
+A solid market demand led to a 1% increase of €26 million in
+consulting revenue and premium support revenue from €2,856
+million in 2015 to €2,883 million in 2016. This increase reflects a
+2% increase from changes in volumes and prices and a 1%
+decrease from currency effects. Consulting and premium
+support revenue contributed 79% of the total service revenue
+(2015: 80%). Consulting and premium support revenue
+contributed 13% of total revenue in 2016 (2015: 14%).
+Services revenue increased €59 million, or 2%, from €3,579
+million in 2015 to €3,638 million in 2016. This increase reflects a
+3% increase from changes in volumes and prices and a 1%
+decrease from currency effects.
+10,571
+7,873
+8,293
+8,829
+2012
+2013
+2014
+2015
+2016
+Cloud and software revenue grew from €17,214 million in 2015
+to €18,424 million in 2016, an increase of 7%. This reflects an
+8% increase from changes in volumes and prices and a 1%
+decrease from currency effects.
+Services Revenue
+Services revenue combines revenue from professional services,
+premium support services, training services, messaging
+services and payment services. Professional services primarily
+relate to the installation and configuration of our cloud
+88
+Combined Management Report | Financial Performance: Review and Analysis
+subscriptions and on-premise software products. Our premium
+support offering consists of high-end support services tailored
+to customer requirements. Messaging services are primarily
+transmission of electronic text messages from one mobile
+phone provider to another. Payment services are primarily
+delivered in connection with our travel and expense
+management offerings.
+910
+In its latest economic bulletin, the European Central Bank (ECB)
+concludes that the global economy grew steadily in 2016 at a
+similar pace as the year before, with relatively stable expansion
+in advanced economies and a slight improvement in emerging
+market economies. According to the ECB, acute uncertainty
+about the political and economic impact of the presidential
+election in the United States shaped global sentiment at the end
+of the year.
+920
+2012
+As first introduced in 2015, we continue with our program to
+reduce the impact of air travel by SAP employees. In addition
+to avoiding business flights, we invest in carbon emission
+offsets for air travel in nine countries by charging an internal
+carbon price. This offset effort resulted in a compensation of
+90 kt in 2016.
+Internal carbon pricing for business flights
+As a result of our business expansion, the number of SAP
+employees eligible for a company car has increased annually.
+We want to ensure that the resulting growth in our car fleet
+does not undo our successes in cutting emissions. To help
+address this, SAP aims to increase the number of electric
+vehicles in our company car fleet to 20% by 2020.
+All electric company cars charged at SAP are powered with
+100% renewable electricity. In addition, in Germany, we
+provide employees with an incentive to switch to electric
+alternatives by offering a battery subsidy that offsets the
+costs of purchasing an electric vehicle.
+Electric vehicles
+In a new online training module, software developers and
+architects learn how to make a positive contribution to SAP's
+sustainability goals in their daily programming work.
+Performance and sustainability go hand in hand as
+performance-optimized programming usually equates to
+energy-efficient programming. It also helps improve end-to-
+end response time and creates a great user experience for
+our customers.
+Sustainable programming sessions
+Investment in carbon credits
+-
+We continuously pursue strategies to help us achieve our goal of
+reducing emissions at a time of ongoing growth in our business.
+Key initiatives for 2016 included the following:
+Driving Environmental Initiatives
+Throughout SAP
+SAP also works with customers to optimize their on-premise
+landscapes so that they consume less energy. We achieve this
+by helping them to decommission legacy systems, archive
+unused data, and consolidate business applications, as well as
+virtualizing their system landscape.
+The SAP HANA platform also plays a vital role in helping our
+customers to cut their carbon emissions. By combining the
+worlds of analytic and transactional data into one real-time, in-
+memory platform, it can help create much leaner operations,
+further simplifying the system landscape and reducing energy
+consumption.
+The vast majority of our overall emissions result from the use of
+our software. When our customers run SAP software on their
+hardware and on their premises, the resulting carbon footprint is
+about 20 times the size of our own net carbon footprint. To
+address this, we have developed a downstream emissions
+strategy to help our customers, hardware providers, and others
+run greener operations. One of the most important ways we help
+our customers reduce their energy usage and emissions is by
+managing their SAP systems through cloud services provided by
+our carbon-neutral green cloud offerings. In addition, the
+solutions in our portfolio help enable our customers manage
+their resources, such as electricity, in an efficient manner.
+Helping Our Customers Run Greener
+Operations
+-
+* We started reporting our external data center energy
+consumption in 2014.
+In 2016, we continued to realize the benefits of our
+investment in the Livelihoods Fund, a unique investment fund
+whose returns consist of high-quality carbon credits. Several
+years ago, we made a commitment to invest €3 million
+covering a 20-year participation in the fund that supports the
+sustainability of agricultural and rural communities
+worldwide. Livelihoods Funds have been designated the "Best
+Combined Management Report | Energy and Emissions
+Economy and the Market
+new cloud bookings
+Up 31%
+operating profit (IFRS)
+cloud and software revenue
+(IFRS)
+Up 7%
+82
+Up 20%
+Performance:
+Financial
+83
+Combined Management Report | Energy and Emissions
+markets by the Environmental Finance magazine. In 2016, we
+received carbon credits from the fund, which helped us to
+offset our carbon footprint by 21 kt.
+Corporate Offsetting Program 2016" in voluntary carbon
+Review and Analysis
+2016
+2015
+2014
+As more business moves to the cloud, data centers are a key
+part of how SAP provides solutions to our customers. By using
+our green cloud services, customers can significantly reduce
+their carbon footprint. However, data centers represent a
+significant part of our total GHG with energy consumption
+increasing as a growing number of customers sign up to our
+cloud services. For this reason, our data centers have become a
+primary focus of our carbon reduction efforts. We have
+introduced initiatives to drive efficiency and innovation around
+buildings, data center operations, and infrastructure. For
+example, in 2016, one of our main data centers in Rot, Germany,
+had a very efficient power usage effectiveness (PUE) of 1.35. In
+addition, we have tied our business strategy to our
+environmental strategy by creating a completely "green cloud"
+powered by 100% renewable electricity at SAP. Carbon
+neutrality is achieved by purchasing renewable electricity
+certificates and carbon emission offsets.
+Strengthening Our "Green Cloud"
+81
+2016
+2015
+2014
+Total Data Center Electricity
+2013
+Combined Management Report | Energy and Emissions
+*For more information on the calculation method of the 2016
+CO2 emissions, see our Notes to Environmental Performance
+Reporting section on the GHG footprint in the SAP Integrated
+Report online.
+2016*
+2015
+2014
+2013
+2012
+GWh
+■Internal External
+249
+2013*
+2012*
+161
+161
+178
+189
+160
+173
+18
+160
+179
+173
+65
+60
+243
+860
+4%
+In 2016, 40% of our total revenue was generated in the
+Americas region (2015: 41%). Total revenue in the Americas
+region increased 6% to €8,931 million; revenue generated in the
+United States increased 6% to €7,167 million. This growth
+reflects a 6% increase from changes in volumes and prices and
+currency effect of 0%. The United States contributed 80%
+(2015: 80%) of all revenue generated in the Americas region. In
+the remaining countries of the Americas region, revenue
+increased 5% to €1,763 million. This increase reflects a 7%
+increase from changes in volumes and prices and a 2%
+decrease from currency effects. Revenue in the remaining
+countries of the Americas region was generated primarily in
+Mexico, Brazil and Canada. Cloud and software revenue
+generated in the Americas region in 2016 totaled €7,366 million
+(2015: €6,929 million). Cloud and software revenue represented
+82% of all revenue in the Americas region in 2016 (2015: 82%).
+Connectivity of Financial and Non-Financial Indicators
+129
+126
+Section A Customers....
+Notes
+Consolidated Financial Statements IFRS
+Expected Developments and Opportunities.
+Risk Management and Risks
+Human Rights and Labor Standards.
+Business Conduct
+123
+116
+108
+.107
+131
+103
+Energy and Emissions
+Employees and Social Investments..
+Customers.
+Security, Data Protection, and Privacy
+99
+74
+Non-Financial Statement Including Information on Sustainable Activities
+Financial Performance: Review and Analysis
+68
+59
+52
+50
+49
+Corporate Governance Fundamentals.
+Products, Research & Development, and Services..
+155
+170
+Stakeholder Engagement.
+282
+Materiality.
+.278
+277
+About This Further Information on Economic, Environmental, and Social Performance
+276
+and Social Performance
+Further Information about Economic, Environmental,
+.275
+Management's Annual Report on Internal Control over Financial Reporting in the
+Consolidated Financial Statements..
+252
+Section GOther Disclosures.......
+163
+234
+SAP Integrated Report 2021
+SAP
+6/338
+5/338
+226
+Section E Capital Structure, Financing, and Liquidity
+209
+Section D Invested Capital.
+198
+Section C - Financial Results..
+184
+Section B Employees.
+175
+Section F - Management of Financial Risk Factors
+Performance Management System.
+Strategy
+General Information About This Management Report
+-19
+135
+110
+>100
+4
+10
+4 In CO2 equivalents.
+3 Full-time equivalents.
+2 Numbers are based on the proposed dividend and on level of treasury stock at year-end.
+1 Numbers based on year end.
+Total data center electricity consumption (in GWh)
+Total energy consumption 5 (in GWh)
+Net carbon emissions (in kilotons)
+941
+Environment
+Customer
+Employee retention (in %)
+Leadership Trust Index (LTI, as NPS)
+-3
+95.3
+92.8
+8
+62
+67
+1
+80
+81
+Business Health Culture Index (in %)
+Customer Net Promoter Score
+879
+7
+429
+Combined Group Management Report
+46
+Assurance Report of the Independent Auditor regarding Sustainability Information...
+.43
+33
+32
+18
+13
+11
+00
+8
+2
+combined non-financial statement
+Limited Assurance Report of the Independent Auditor regarding the
+Independent Auditor's Report.
+Responsibility Statement...
+Report by the Supervisory Board
+Investor Relations...
+SAP Executive Board
+Letter from the CEO.
+To Our Stakeholders
+About This Report.
+Contents
+SAP Integrated Report 2021
+SAP
+4/338
+5 Before 2021, our total energy consumption covered direct energy consumption (Scope 1) and selected indirect energy consumption (Scope 2). In 2021, we added indirect
+energy consumption of our value chain (Scope 3) to all years shown.
+19
+361
+286
+-3
+Sustainability Management...
+Our Contribution to the UN Sustainable Development Goals.
+- Operating cash flow of €6.22 billion, while free cash flow was €5.05 billion.
+Operating profit increased by 1%,1,2
+Total revenue grew 3%.¹
+Current cloud backlog increased by 26%.1
+―
+Our exceptional 2021 results at a glance:
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Our share price gained over the course of 2021, growing 16.5%, ahead of the DAX which grew 15.8%.
+With a market capitalization of €153.4 billion, SAP ended the year as the second most valuable
+company in the DAX40. We want our shareholders to participate in our success. Therefore, we have
+proposed an annual dividend of €2.45 per share,³ an increase of approximately 32%. This includes a
+special dividend of €0.50 per share to celebrate our 50th anniversary.
+SAP
+SAP is no exception. We have supported companies and organizations around the globe that are at
+the forefront of the fight against the pandemic. We have helped businesses not only keep running but
+also truly transform, enabling them to become intelligent, networked, and sustainable enterprises. We
+have moved the world closer to zero emissions, zero waste, and zero inequality. These are just a few
+examples. There are many more.
+2021 was another extraordinary year. For all of us, it was a time of challenges, but also of hope. In the
+face of the ongoing pandemic, disrupted global supply chains, and extreme weather events, we also
+witnessed the best of humanity. We have seen solidarity in times of crisis, with individuals,
+organizations, and nations coming together and stepping up to provide social, financial, and material
+support when it has mattered most.
+Dear Fellow Shareholders,
+Letter from the CEO
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+2021 also marked the first anniversary of our revised strategy, and we can confidently say that the
+bold strategic moves we have taken are paying off. Despite the ongoing headwinds of the pandemic
+and economic uncertainties, our customers recognize the way SAP can help them drive their business
+transformation. We delivered an exceptional year, with record cloud growth, exceeding our outlook for
+cloud and software revenue and operating profit.
+8/338
+Our non-financial performance also remained strong. Our constant focus on customers led to a six-
+point increase in the Customer Net Promoter Score to a score of 10, the second subsequent year of
+significant improvement. The Employee Engagement Index remained exceptionally strong at 83%, one
+percentage point below our ambitious target range. We decreased our net greenhouse gas emissions
+by 25 kt to 110 kt. And just in January this year, we announced that we will accelerate our goal to
+achieve net-zero emissions across our value chain by 2030, rather than 2050 - achieving our net-zero
+target 20 years earlier than we originally planned.
+―
+CEO, SAP SE
+Christian Klein
+Sincerely,
+Thank you for your ongoing trust in SAP. You have my word that we will continue to deliver
+outstanding customer and shareholder value. At the end of the day, it's the more than 100,000 people
+behind the name SAP who drive us forward and are key to our success. It is a privilege to head this
+company, and I can't wait for the amazing things we will achieve in 2022 and beyond.
+We've had a record year at SAP, and this is just the beginning. We are strongly positioned to deliver on
+our targets, and our strategy will continue to create opportunities for unceasing and accelerated
+growth both for our customers and SAP.
+2022 is a particularly special year for us at SAP. First, we celebrate our 50th anniversary – a milestone
+in the history of German technology development. Second, 2022 will be crucial in our own
+transformation as we intensify our focus on our cloud goals across the company. The strong
+performance that has followed since we announced our revised strategy to accelerate our growth in
+the cloud shows that we are right on track. For us, it is now all about continuing to execute on our
+strategy and keeping our promise of delivering innovation to our customers that allows them to tackle
+any challenge today and in the future.
+Third, we create a sustainable world together. Our customers trust us with their most mission-
+critical and energy-intense processes. We have the end-to-end transparency and solution portfolio
+to turn our customers into sustainable enterprises. SAP Cloud for Sustainable Enterprises allows
+companies to integrate sustainability metrics seamlessly into how they manage their business.
+Net-net: At SAP, we help our customers manage their green line together with their top and bottom
+lines. We are helping them to become intelligent, networked, and sustainable enterprises, and we
+accompany them along this journey, based on a half-century of experience, innovation, and trusted
+collaboration to create a sustainable world together.
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+We take our social and environmental responsibilities and the opportunity we have to make a
+difference seriously.
+SAP Integrated Report 2021
+10/338
+9/338
+3 Pending approval of Annual General Meeting of Shareholders
+2 Non-IFRS
+1 At constant currencies
+Second, we bring enterprises together in a global business network. With our SAP Business
+Network – the largest B2B network in the cloud - we are truly scaling the power of our companies,
+connecting intelligent enterprises across supply chains so everyone can respond to any disruptions
+in real-time.
+-
+First, we enable every enterprise to become an intelligent, sustainable enterprise. The RISE
+with SAP offering is designed to support our customers as they transform their businesses while at
+the same time moving to the cloud. We help them benchmark their processes against best
+practices we gathered from working with hundreds of thousands of customers across 25 industries,
+move to a modular, agile ERP, and connect them to latest innovations such as our industry cloud,
+SAP Business Network, and SAP Cloud for Sustainable Enterprises solutions.
+For 50 years, SAP has revolutionized the way business is done. Building on this heritage, we will now
+take our purpose to help the world run better and improve people's lives to the next level. Based on
+the biggest issues our customers face worldwide, our vision has three goals:
+We have joined Generation Unlimited as a founding member to provide over 500 million young
+people with access to opportunities and training for employment, entrepreneurship, and social
+impact by 2025.
+Fostering diversity is key: The share of women in management increased to 28.3%, and we want to
+reach 30% by the end of 2022. We remain committed to advancing the share of underrepresented
+minorities at SAP. And last year, we celebrated 20 years of Pride@SAP, our global employee
+network for LGBTQ+ colleagues and allies.
+The Corona-Warn-App for contact tracing has been downloaded 42 million times and is key to
+breaking infection chains.
+We significantly contributed to the fight against COVID-19 by helping 17 of the 20 largest vaccine
+producers ensure production and logistics for the vaccine supply at an unprecedented speed.
+SAP
+7/338
+Sustainability Information
+Assurance Report of the Independent Auditor regarding
+330
+329
+Publication Details
+Financial and Sustainability Publications.......
+Financial Calendar and Addresses.
+Five-Year Summary.
+Additional Information
+328
+Task Force on Climate-Related Financial Disclosure (TCFD)....
+327
+SASB Index..
+325
+Stakeholder Capitalism Metrics..
+334
+313
+304
+Non-Financial Notes: Environmental Performance.
+302
+Non-Financial Notes: Social Performance.
+.300
+Memberships, Partnerships, and Commitments.
+.299
+Public Policy
+.296
+Waste and Water
+293
+Sustainable Procurement
+289
+GRI Content Index and UN Global Compact Communication on Progress.......
+335
+337
+SAP
+43
+the combined non-financial statement
+Limited Assurance Report of the Independent Auditor regarding
+446
+46
+2003 3
+33
+18
+13
+11
+7
+2
+Additional
+Information
+Independent Auditor's Report
+Responsibility Statement
+Report by the Supervisory Board
+Investor Relations
+SAP Executive Board
+Letter from the CEO
+To Our Stakeholders
+About This Report
+To Our Stakeholders
+Further Information on
+Sustainability
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+288
+86
+Cloud revenue continued to be our main growth driver, increasing 19%.1
+Employee Engagement Index (in %)
+Cost of cloud (IFRS)
+Operating Expenses
+4
+72
+75
+Share of more predictable revenue (non-IFRS, in %)
+4
+72
+75
+Share of more predictable revenue (IFRS, in %)
+-4
+3,379
+3,234
+Cost of cloud (non-IFRS)
+Services Segment revenue
+681
+929
+Qualtrics Segment revenue
+2
+22,965
+23,502
+Applications, Technology & Support Segment revenue
+2
+27,343
+27,842
+Total revenue (non-IFRS)
+2
+27,338
+36
+27,842
+Cost of software licenses and support (IFRS)
+Cost of cloud and software (IFRS)
+-7,946
+8
+-4,362
+-4,698
+7
+-4,707
+-5,030
+-5
+-1,911
+-1,822
+-4
+-2,008
+-1,925
+Cost of software licenses and support (non-IFRS)
+17
+-2,876
+15
+-2,699
+-3,105
+Software and support gross margin (non-IFRS, in %)
+Software and support gross margin (IFRS, in %)
+Cloud gross margin (in % of corresponding revenue, non-IFRS)
+Cloud gross margin (in % of corresponding revenue, IFRS)
+Profits and Margins
+Research and development (IFRS)
+Total cost of revenue (non-IFRS)
+Total cost of revenue (IFRS)
+Cost of cloud and software (non-IFRS)
+-2,451
+Total revenue (IFRS)
+4
+23,233
+Revenues
+€ millions, unless otherwise stated
+Key Facts
+SAP Integrated Report 2021
+SAP
+This report was designed by SAP and created with SAP S/4HANA software and the SAP Disclosure
+Management application.
+Concept and Realization
+KPMG AG Wirtschaftsprüfungsgesellschaft has audited our consolidated financial statements and our
+combined management report. Information relating to the non-financial statement included in SAP's
+management report has been audited with limited assurance by KPMG. Additionally, KPMG has
+provided assurance on selected sustainability information in accordance with the International
+Standard on Assurance Engagements (ISAE) 3000, a pertinent standard for the assurance of
+sustainability reporting. The Independent Auditor's Report and the Assurance Reports of KPMG for the
+non-financial statement and selected sustainability information are available in the Independent
+Auditor's Report section, the Limited Assurance Report of the Independent Auditor regarding the
+Combined Non-Financial Statement section and the Assurance Report of the Independent Auditor
+regarding Sustainability Information section.
+Independent Audit and Assurance
+All financial and non-financial data and information for the reporting period is reported utilizing SAP
+software solutions and sourced from the responsible business units.
+Data
+Greenhouse gas data is prepared based on the Greenhouse Gas Protocol.
+The social and environmental data and information included in the SAP Integrated Report is prepared
+in accordance with the GRI Standards: Core option. This GRI option indicates that a report contains
+the minimum information needed to understand the nature of the organization, its material topics and
+related impacts, and how these are managed. We apply the GRI principles (sustainability context,
+stakeholder inclusiveness, materiality, and completeness) for defining report content. We also report
+on SDGs identified as material to our strategy.
+Cloud (IFRS)
+Our consolidated financial statements are prepared in accordance with IFRS. Our executive
+management has confirmed the effectiveness of our internal controls over financial reporting.
+Basis of Presentation
+The SAP Integrated Report also serves as our United Nations (UN) Global Compact progress report.
+We also report on our contribution to the UN Sustainable Development Goals (SDGs) and embedded
+the recommended disclosures of the Task Force on Climate-Related Financial Disclosures (TCFD), of
+the SASB standards, and of the World Economic Forum (WEF) stakeholder capitalism metrics.
+www.sapintegratedreport.com.
+The SAP Integrated Report 2021 presents our full-year financial, social, and environmental
+performance in one integrated report ("SAP Integrated Report") available at
+Content
+About This Report
+SAP Integrated Report 2021
+SAP
+2/338
+SAP
+2021
+SAP Integrated Report
+83
+Our combined management report is prepared in accordance with the German Commercial Code
+and the relevant German Accounting Standards. The combined management report is also a
+management commentary complying with the International Financial Reporting Standards (IFRS)
+Practice Statement Management Commentary.
+Cloud (non-IFRS)
+Software licenses (IFRS)
+Software licenses (non-IFRS)
+24,078
+4
+23,228
+24,078
+-1
+11,506
+11,412
+-1
+11,506
+11,412
+-11
+3,642
+3,248
+-11
+3,642
+3,248
+16
+8,085
+9,418
+17
+8,080
+9,418
+A in %
+2020
+2021
+Cloud and software (non-IFRS)
+Cloud and software (IFRS)
+Software support (non-IFRS)
+Software support (IFRS)
+-7,886
+1
+The reporting period is fiscal year 2021. The report encompasses SAP SE and all subsidiaries of the
+SAP Group. To make this report as current as possible, we have included relevant information
+available up to the auditor's opinion dated February 23, 2022. The report is available in English and
+German.
+-7,362
+9,447
+-24
+26.5
+20.0
+-20
+26.8
+21.5
+14
+51
+58
+-76
+-6,503
+-1,563
+7,155
+A in %
+2021
+Earnings per share, basic (non-IFRS, in €)
+Earnings per share, basic (in €)
+Key SAP Stock Facts
+Current cloud backlog
+Current cloud backlog
+Effective tax rate (non-IFRS, in %)
+Effective tax rate (IFRS, in %)
+Equity ratio (total equity in % of total assets)
+Net liquidity (net debt)
+€ millions, unless otherwise stated
+SAP Integrated Report 2021
+SAP
+2020
+32
+Dividend per share² (in €)
+Market capitalization¹ (in € billions)
+3
+-7,328
+27.5
+28.3
+Women in management¹ (total, in % of total number of employees)
+0
+33.6
+34.3
+Women working at SAP (in %)
+1
+122
+Personnel expenses per employee - excluding share-based payments (in € thousands)
+5
+102,430
+107,415
+Number of employees 1, 3
+Employees and Personnel Expenses
+16
+131.7
+153.4
+32
+1.85
+2.45
+24
+5.41
+6.73
+2
+4.35
+4.46
+3/338
+-16
+122
+5,049
+Gross margin (in % of total revenue, non-IFRS)
+0
+71.2
+71.5
+Gross margin (in % of total revenue, IFRS)
+-1
+81.2
+80.5
+Cloud and software gross margin (in % of corresponding revenue, non-IFRS)
+-1
+79.7
+79.1
+Cloud and software gross margin (in % of corresponding revenue, IFRS)
+0
+87.4
+87.6
+0
+86.7
+86.9
+0
+69.7
+1
+66.6
+67.0
+17
+-4,454
+0
+6,000
+-5,190
+73.7
+73.1
+69.5
+Applications, Technology & Services Segment gross margin (in % of corresponding revenue)
+-2
+30.3
+1
+-31
+24.2
+16.7
+-1
+8,287
+8,230
+-30
+6,623
+4,656
+Free cash flow
+Operating margin (in % of total revenue, non-IFRS)
+Operating margin (in % of total revenue, IFRS)
+29.6
+Operating profit (IFRS)
+79.5
+Operating profit (non-IFRS)
+-1
+79.6
+77.6
+2
+Qualtrics Segment gross margin (in % of corresponding revenue)
+Services Segment gross margin (in % of corresponding revenue)
+34.1
+80.6
+31.5
+8
+November 2023
+Munich
+New office building for approx. 600
+employees
+94
+15
+September 2023
+Germany
+Walldorf
+Germany
+General renovation of headquarters
+building for approx. 1,500 employees
+Sofia
+4
+September 2026
+Bulgaria
+3
+New office building for approx. 1,200
+employees¹
+54
+46
+March 2023
+India
+Bangalore
+New office building for approx. 3,500
+employees
+86
+219
+50
+New office building for approx. 1,250
+employees
+Costs Incurred as at
+12/31/2021
+-5pp
+-4pp
+0
+Opp
+2017
+2018
+2019
+58
+51
+7pp
+Opp
+Estimated
+Completion Date
+2020
+Construction Projects
+€ millions
+Principal Investments and Divestitures Currently in Progress
+In 2021, we finalized various construction projects and continued and started new construction
+activities in several locations. We plan to finance all of these projects from operating cash flow. Our
+most important projects are listed below.
+Country
+Location of Facility
+Short Description
+Germany
+Berlin
+Estimated Total
+Cost
+2021
+December 2025
+95/338
+Tokyo
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+SAP SE Income Statement
+€ millions
+Total revenue
+96/338
+Other operating income
+Personnel expenses
+Depreciation and amortization
+Other operating expenses
+Operating profit
+Finance income
+Income before taxes
+Income taxes
+Income after taxes
+51
+Other taxes
+Net income
+Cost of services and materials
+Japan
+SAP SE's income statement is classified following the nature of expense method and presents
+amounts in millions of euros.
+The SAP SE annual financial statements are prepared in accordance with the reporting standards in
+the German Commercial Code and the German Stock Corporation Act. The full SAP SE annual
+financial report and unqualified audit report are submitted to the operator of the Elektronischer
+Bundesanzeiger (Online German Federal Gazette) for publication and inclusion in the
+Unternehmensregister (German Business Register). It is available from SAP SE on request.
+New office building for approx. 1,500
+employees
+29
+1
+August 2022
+1 In Sofia we bought a building under construction and plan to complete it.
+94/338
+For more information about planned investment expenditures, see the Investment Goals section.
+There were no material divestitures of facilities within the reporting period.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Income
+Management Report
+Further Information on
+Sustainability
+Additional
+Information
+Competitive Intangibles
+The majority of (intangible) resources that are the basis for our current as well as future success does
+not appear in the Consolidated Financial Statements. This is apparent from a comparison of the
+market capitalization of SAP SE (based on all issued shares), which was €153.4 billion at the end of
+2021 (2020: €131.7 billion), with the book value of our equity in the Consolidated Financial
+Statements, which was €41.5 billion (2020: €29.9 billion). This means that the market capitalization of
+our equity is more than three times higher than the book value. The difference is mainly due to certain
+internally generated intangible resources that the applicable accounting standards do not allow to be
+recorded (at all or at fair value) in the Consolidated Financial Statements. These resources include
+customer capital (our customer base and customer relations); employees and their knowledge and
+skills; our ecosystem of partners; the majority of internally developed software; our ability to innovate;
+the brands we have built up, in particular, the SAP brand itself; and our organization.
+On December 31, 2021, SAP was the second most valuable company in the German DAX 40 in terms
+of market capitalization based on all issued shares.
+In 2021, SAP's brand value increased compared to 2020. According to the Interbrand “Best Global
+Brands" annual survey, SAP ranked as the 20th most valued brand in the world (2020: 18th). Against
+other German brands, the SAP brand ranks third behind Mercedes-Benz and BMW, and third globally
+against other brands in the business services sector. Interbrand determined our brand value to be
+US$30 billion, an increase of 7% compared to the previous year (2020: US$28 billion). Kantar BrandZ
+recognized SAP as the world's 26th most valuable brand in the Kantar BrandZ 2021 Most Valuable
+Global Brands ranking (2020: 17th). The ranking estimates SAP's brand value at US$69 billion
+(2020: US$58 billion), an increase of 20% compared to the previous year.
+Report on the Economic Position of SAP SE
+SAP SE is headquartered in Walldorf, Germany, and is the parent company of the SAP Group, which
+comprises 290 companies. SAP SE is the Group holding company and employs most of the Group's
+Germany-based development and service and support personnel.
+As the owner of the intellectual property in most SAP software, SAP SE derives its revenue mainly
+from software license fees and bears the Group-wide research and development expenses for the
+most part.
+On March 5, 2021, SAP SE completed the acquisition of Signavio GmbH, Berlin, Germany ("Signavio"),
+a leader in the enterprise business process intelligence and process management space.
+Subsequently, based on the merger agreement concluded on October 25, 2021, SAP SE took over all
+assets and liabilities of Signavio with effect from January 1, 2021. The difference between the
+acquisition cost of the Signavio shares and the assets and liabilities carried at fair value has been
+recognized as goodwill on the balance sheet.
+On April 13, 2021, SAP SE and investment company Dediq GmbH, Munich, Germany, ("Dediq")
+announced that they had agreed to enter into a partnership in the area of financial services. Following
+the close of the transaction in September 2021, SAP SE and Dediq jointly own the new "SAP Fioneer"
+entity (with SAP owning a minority share). The disposal gain relating to the transfer of the business
+(predominantly IP and employees) is included in Other operating income.
+Consolidated Financial
+Statements IFRS
+56
+To Our
+Percent change since previous year
+Net cash flows from operating activities
+6,223
+7,194
+-13
+Net cash flows from investing activities
+Net cash flows from financing activities
+-3,063
+-2,986
+3
+-56
+-3,997
+-99
+In 2021, cash inflows from operating activities decreased €971 million to €6,223 million
+(2020: €7,194 million). This is particularly due to higher income tax payments (€2.1 billion in 2021
+compared to €1.2 billion in 2020) and lower payments related to restructuring (€0.0 billion in 2021
+compared to €0.2 billion in 2020). Cash collected from customer contracts was at a similar level as in
+2020.
+Cash outflows from investing activities were €3,063 million in 2021 (2020: €2,986 million). We paid, net
+of cash received, a total of €1.1 billion mainly for the Signavio and Clarabridge acquisitions in 2021,
+compared to €0.6 billion mainly for the Emarsys acquisition in 2020. Capital expenditure on intangible
+assets and property, plant, and equipment remained at a comparable level. For more information
+about current and planned capital expenditures, see the Assets section and the Investment Goals
+section.
+In 2021, free cash flow decreased to €5,049 million (2020: €6,000 million). The free cash flow
+conversion rate, defined as free cash flow as a percentage of profit after tax, decreased to 94%
+compared to 114% in 2020.
+Net cash outflows from financing activities were €56 million in 2021, compared to €3,997 million in
+2020. In 2021. we received €2.8 billion in proceeds from the public offerings of Qualtrics shares and
+repaid €1.25 billion of the acquisition term loan for Qualtrics, prior to its final maturity date in 2022.
+Further, we repaid €0.5 billion in Eurobonds, and €0.15 billion of a commercial paper program
+(Commercial Paper). In 2021, we drew two short-term loans of €0.95 billion and €0.5 billion
+respectively, as well as €0.15 billion in Commercial Paper. The cash outflows in 2020 resulted from the
+buyback of treasury shares with a volume of €1.5 billion, repayments of €1.15 billion in Eurobonds
+when they matured, the repayment of €0.75 billion in the acquisition term loan for Qualtrics, the
+repayment of US$0.29 billion in U.S. private placements when they matured, and the repayment of
+€0.17 billion in Commercial Paper.
+The dividend payment of €2,182 million made in 2021 exceeded the amount paid the preceding year
+(€1,864 million), while the dividend paid per share increased from €1.58 to €1.85.
+SAP
+SAP Integrated Report 2021
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+A in %
+2020
+2021
+€ millions
+-2,182
+-
+Free Cash Flow +5,049
++2,828
++390
+-1,563
+Net
+Debt
+12/31/2020
+PY: -8,286
+Operating
+Cash
+Flow
++7,194
+Capital
+Expen-
+diture
+Lease
+Payments
+Additional
+Information
+-816
+Business
+Combi-
+nations
+-664
+Dividends
+Proceeds from
+IPO
+Other
+Net
+Debt
+12/31/2021
+-1,864
++95
+-1,784
+-6,503
+92/338
+Analysis of Consolidated Statements of Cash Flow
+-378
+Assets (IFRS)
+Analysis of Consolidated Statements of Financial Position
+Total assets increased 22% year over year to €71,169 million.
+2021
+2020
+Liabilities
+Percent
+■Shareholder's equity
+■Non-current
+51
+58
+27
+19
+Current
+Total non-current assets grew 18% to €51,125 million (2020: €43,395 million). Among other effects,
+this change was mainly due to an increase in goodwill resulting from foreign-exchange-related
+revaluations as well as the Clarabridge and Signavio acquisitions and an increase in listed and
+unlisted equity investments resulting from fair value increases and purchases.
+23
+Current liabilities grew 26% to €16,136 million in 2021 (2020: €12,842 million). This was mainly due to
+an increase in current financial liabilities. For more information about our financing activities in 2021,
+see the Finances (IFRS) section.
+Total non-current liabilities decreased 14% to €13,510 million in 2021 compared to the previous year's
+figure of €15,696 million. This was mainly due to a decrease in non-current financial liabilities. For
+more information about our financing activities in 2021, see the Finances (IFRS) section.
+93/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+The equity ratio (that is, the ratio of shareholders' equity to total assets) grew 7pp to 58% (2020: 51%).
+Equity Ratio
+22
+60
+2021
+1,780
+-78%
+2021
+2020
+Assets
+Percent
+■Non-current
+Current
+72
+74
+28
+26
+Total current assets increased 33% in 2021 from €15,069 million to €20,044 million, mainly driven by
+an increase in cash and cash equivalents.
+Investment in Goodwill, Intangible Assets, and Property, Plant,
+and Equipment
+2020
+(Incl. Additions from Business Combinations)
+128%
+42%
+3,715
+1,630
+2017
+2018
+8,090
+118%
+2019
+98%
+3,522
+€ millions | change since previous year
+German Commercial Code (Short Version)
+Combined Group
+2020
+SAP determines which non-financial information has to be disclosed based on a materiality analysis
+we perform using internal and external input. The individual non-financial aspects to be covered by
+the non-financial statement are addressed in the following sections of our combined management
+report if material. The aspects human rights and social matters have not been identified as material
+topics according to section 289c (3) HGB. Nevertheless, these topics are important for SAP and
+discussed in the Human Rights and Labor Standards and Social Investments sections in our
+combined management report. No material risks according to section 289c (3) sentence nos. 3
+and 4 HGB have been identified.
+99/338
+Employee Matters
+Environmental
+Matters
+Anti-Corruption and
+Bribery Matters
+Customer Matters
+Security, Data
+Protection, and
+Privacy
+100/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Due Diligence; Policies and
+Guidelines (Concepts)
+Employees and Social Investments:
+Vision and Strategy; Due Diligence
+Expected Developments and
+Opportunities:
+Opportunities from Our Employees
+Energy and Emissions:
+Non-Financial Disclosures in SAP's Combined Management Report
+SAP's business model is described in the Strategy section of the combined management report. Good
+governance is a prerequisite for continued success and is described throughout the combined
+management report. Therefore, we do not explicitly list this material topic in our non-financial
+statement.
+Business Model
+The social and environmental data and information included in the SAP Integrated Report has been
+prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core Option.
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Opportunities and Risks
+SAP SE is subject to essentially the same opportunities and risks as the SAP Group. For more
+information, see the Risk Management and Risks section and the Expected Developments and
+Opportunities section.
+Vision and Strategy; Due Diligence
+SAP
+To Our
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Non-Financial Statement
+Including Information on
+Sustainable Activities
+With this section and the information referenced to in this section, SAP SE fulfills its duty to produce a
+non-financial statement (NFS) for the holding company, pursuant to section 289b–e of the German
+Commercial Code (HGB), and a non-financial group statement, pursuant to section 315b-c in
+conjunction with section 289c-e of the German Commercial Code (HGB), in the form of a combined
+non-financial statement. The relevant non-financial matters are referenced in the table below and can
+be found in the relevant sections of our combined management report.
+Additionally, following Article 8 of Regulation 2020/852 of the European Parliament and of the Council
+of the European Union (EU Taxonomy), we have included information on how and to what extent
+SAP's activities are associated with economic activities that qualify as environmentally sustainable
+under this regulation.
+For more information, see the Sustainable Finance: EU Taxonomy Disclosures subsection.
+Reporting Framework
+SAP Integrated Report 2021
+Business Conduct:
+Vision and Strategy; Due Diligence
+Measures and Results, Including Main
+KPIs
+Revenue
+Operational
+Expenditures
+Capital Expenditures
+8.1 Data Processing and Hosting
+(contributing to climate change
+mitigation)
+9,217
+-898
+-261
+Non-eligible activities
+18,625
+-5,502
+2021
+-1,472
+27,842
+-6,400
+-1,733
+Proportion of eligible activities (in %)
+33%
+14%
+15%
+Accounting Policy and Contextual Information
+Eligibility Assessment
+In 2021, we identified the activity “8.1 Data processing, hosting, and related activities" as our only
+relevant Taxonomy-eligible economic activity contributing to climate change mitigation. SAP has
+-1,145
+Total
+SAP Integrated Report 2021
+€ millions, unless otherwise stated
+Consolidated Income Statements - Total
+Revenue
+Main KPI: Employee Engagement Index
+Employees and Social Investments:
+How We Measure and Manage Our
+Performance
+Strategy: Measuring Our Success
+Expected Developments and Opportunities
+Main KPI: Net carbon emissions
+Energy and Emissions:
+How We Measure and Manage Our
+Performance
+Strategy: Measuring Our Success
+Expected Developments and Opportunities
+Business Conduct:
+How We Measure and Manage Our
+Performance
+References to Financial Statements and
+Notes
+Sustainable Finance: EU Taxonomy Disclosures
+Notes to the Consolidated Financial
+Statements, Section B - Employees
+Customers:
+Vision and Strategy; Due Diligence
+Security, Data Protection, and Privacy:
+Vision and Strategy; Due Diligence for
+Security Topics; Due Diligence for
+Data Protection Topics
+Main KPI: Customer Net Promoter Score,
+Revenues
+Customers:
+How We Measure and Manage Our
+Performance
+Strategy: Measuring Our Success
+Financial Performance: Review and Analysis
+Expected Developments and Opportunities
+Security, Data Protection, and Privacy:
+How We Measure and Manage Our
+Performance
+Notes to the Consolidated Financial
+Statements, Section A - Customers
+Notes to the Consolidated Financial
+Statements, Note (G.3)
+SAP
+98/338
+97/338
+SAP SE operating profit decreased 46% to €756 million (2020: €1,401 million). Other operating
+income decreased €358 million to €1,026 million (2020: €1,385 million). The year-over-year decrease
+is primarily due to a €494 million decrease in gains from currency effects, partly offset by the disposal
+gain relating to the transfer of the business to SAP Fioneer of €117 million.
+SAP SE cost of services and materials increased 8% to €9,859 million (2020: €9,112 million). Services
+received increased €724 million to €7,715 million (2020: €6,991 million), mainly due to increased
+services received in the context of intra-Group cost allocations. The costs for licenses and
+commissions increased €17 million to €2,111 million (2020: €2,094 million).
+SAP SE personnel expenses, mainly the labor cost of software developers, service and support
+employees, and administration staff employed by SAP SE, increased by 17% to €2,765 million
+(2020: €2,362 million), primarily due to an increase in shared-based compensation expenses and
+headcount increase over the year.
+Other operating expenses decreased €275 million to €2,298 million (2020: €2,573 million). This
+decrease is mainly attributable to a €495 million decrease in currency exchange losses and a
+€47 million decrease in impairment of receivables. The decrease in other operating expenses was
+partly offset by a €122 million increase in services purchased and a €63 million increase in other
+services expense.
+Finance income was €2,530 million (2020: €1,724 million), representing a year-over-year increase of
+€806 million. This increase is primarily due to a €120 million increase in income from investments, a
+€770 million increase in results from profit and loss transfer agreements, and an offsetting effect of
+€78 million increase in write-downs on financial assets.
+SAP SE income before taxes increased €161 million to €3,286 million (2020: €3,125 million). Income
+taxes decreased €43 million to €583 million (2020: €626 million). After deducting taxes, the resulting
+net income was €2,692 million (2020: €2,485 million), an increase of €207 million year over year.
+Assets and Financial Position
+In 2021, SAP SE total assets closed at €47,320 million (2020: €44,922 million).
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Service revenue increased 86% to €845 million in 2021 (2020: €453 million), other revenue increased
+2% to €2,314 million (2020: €2,273 million).
+Combined Group
+Management Report
+Further Information on
+Sustainability
+Additional
+Information
+SAP SE Balance Sheet as at December 31
+€ millions
+Assets
+Intangible assets
+Property, plant, and equipment
+Financial assets
+Fixed assets
+Inventories
+-
+Consolidated Financial
+Statements IFRS
+German Commercial Code (Short Version)
+The total revenue of SAP SE in 2021 was €15,370 million (2020: €14,669 million), an increase of 5%.
+Product revenue increased 2% to €12,211 million (2020: €11,943 million). As in previous years,
+product revenue was primarily generated from license fees paid by subsidiaries of SAP SE.
+2,692
+15,370
+14,669
+1,026
+1,385
+-9,859
+-9,112
+-2,765
+-2,362
+-719
+-606
+-2,298
+2,485
+-2,573
+1,401
+2,530
+1,724
+3,286
+3,125
+-583
+-625
+2,703
+2,500
+-12
+-15
+756
+2021
+2021
+1,792
+47,320
+44,922
+Equity and liabilities
+Shareholders' equity
+Provisions
+Liabilities
+Deferred income
+Total shareholders' equity and liabilities
+15,693
+15,122
+2,233
+Total assets
+2,046
+27,740
+22
+13
+47,320
+44,922
+Intangible assets increased €395 million year over year to €1,792 million (2020: €1,398 million). This
+increase was mainly caused by the addition of €632 million in goodwill and additions of €71 million in
+intellectual property and other similar rights in connection with the Signavio merger.
+Financial assets increased €1,193 million year over year to €36,050 million (2020: €34,857 million),
+mainly due to capital contributions to subsidiaries and the acquisition of AppGyver Inc.
+The increase of €700 million in accounts receivable and other assets was primarily the result of a
+€479 million increase in receivables from affiliated companies and a €198 million increase in
+tax assets.
+Marketable securities and liquid assets increased €687 million to €1,391 million (2020: €703 million).
+SAP SE shareholders' equity increased 4% to €15,693 million (2020: €15,122 million). Against outflows
+of €2,182 million associated with the payment of the dividend, there was a €2,692 million increase
+due to net income for 2021. The equity ratio (that is, the ratio of shareholders' equity to total assets) is
+33% (2020: 34%).
+Provisions increased €187 million to €2,233 million (2020: €2,046 million). Other provisions increased
+€235 million to €1,529 million (2020: €1,294 million), primarily as a result of an increase in other
+obligations toward employees. In contrast, provisions for tax decreased €50 million to €689 million
+(2020: €739 million).
+Liabilities increased €1,632 million to €29,372 million (2020: €27,740 million). This increase mainly
+resulted from a €1,787 million increase in liabilities to affiliated companies, primarily due to higher
+cash contributions by subsidiaries through SAP SE's centralized management of finance and liquidity.
+29,372
+2020
+1
+Surplus arising from offsetting
+1,398
+1,350
+1,417
+36,050
+34,857
+39,192
+37,672
+1
+1
+Accounts receivable and other assets
+5,244
+1
+4,544
+1,391
+703
+Short-term assets
+6,635
+5,248
+Prepaid expenses and deferred charges
+979
+1,487
+Deferred taxes
+512
+514
+Marketable securities and liquid assets
+-374
+54
+-11,801
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Cash Flows and Liquidity
+2021 Actual Cash Flow and Liquidity Performance Compared to Outlook
+We met or exceeded the outlook for 2021.
+€ billions
+Operating cash flows
+Capital expenditure
+Free cash flow
+Income taxes payouts
+2020 Results
+2021 Outlook¹
+2021 Results
+7.2
+Around 6.0
+6.2
+-0.8
+-2,120
+Modest increase
+-23
+-8,623
+-800
+€ millions
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
++6,223
+-6,503
+Development of Net Debt
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+91/338
+For information about the impact of cash, cash equivalents, current investments, and our financial
+liabilities on our income statements, see the analysis of our financial income, net, in the Operating
+Results (IFRS) section.
+Net debt is group liquidity less financial debt. For more information about our liquidity, see the Notes
+to the Consolidated Financial Statements, Note (E.3).
+The increase in group liquidity compared to 2020 was mainly due to the cash inflows from our
+operations and the proceeds from the public offerings of Qualtrics shares.
+Group liquidity consists of cash and cash equivalents (for example, cash at banks, money market
+funds, and time deposits with original maturity of three months or less) and current investments (for
+example, time deposits and debt securities with original maturities of greater than three months, and
+remaining maturities of less than one year included in current other financial assets). Group liquidity
+on December 31, 2021, primarily comprised amounts in euros and U.S. dollars.
+4,916
+-3,706
+-0.8
+Additional
+Information
+Above 4.5
+SAP Integrated Report 2021
+To Our
+6.0
+6,781
+4,750
+Current financial debt
+-3,755
+-1,482
+-2,273
+Non-current financial debt
+-9,338
+2,463
+Financial debt
+Net debt (-)
+-13,094
+-13,283
+189
+-1,563
+-6,503
+4,939
+Lease liability
+SAP
+Net debt including lease liability
+-2,143
+Δ
+2,632
+5,311
+1,470
+1,162
+Group liquidity
+11,530
+8,898
+Cash and cash equivalents
+Current time deposits and debt securities
+3,587
+2021
+€ millions
+Group Liquidity and Net Debt
+1 The 2021 outlook was communicated in January 2021 and was updated in April 2021. The 2021 outlook numbers above reflect the
+updated outlook from April 2021.
+-2.1
+Higher
+-1.2
+5.0
+2020
+\-3pp
+67 7+5pp
+Simplification of
+Processes
+percent
+84
+83
+83
+Leadership Trust
+Net Promoter Score
+Business Health
+Culture Index
+percent
+2017
+percent
+2019
+2020
+2021
+83
+Innovation Index
+2018
+85
+percent
+Employee
+Retention
+percent
+With #Unfiltered, we strengthen our commitment to listen regularly to our employees and act together
+on their feedback. In 2021, we defined strategy, health and well-being, and equality as areas where
+we increased our focus. We gauged the sentiment on these topics, as well as employee engagement
+12 In the Employees and Social Investments section, the metrics Employee Retention, External Hires, Female External Hires, Headcount,
+Women in Management, and Women in Workforce include Qualtrics data. All other metrics are reported excluding Qualtrics.
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+and leadership trust, twice over the year. The average scores from both data collections were used as
+the full-year Employee Engagement Index and Leadership Trust Net Promoter Score (NPS).
+The Employee Engagement Index 13 decreased to 83% (-3 pp compared to 2020) and is slightly
+below our target range. For 2022 through 2025, our ambition remains to keep the Employee
+Engagement Index score between 84% and 86%. Our Leadership Trust NPS reached an all-time
+high of 67 in 2021 (2020: 62) since its introduction in 2013. For more information about the
+measurement of leadership trust, see the Performance Management System section.
+We measure the progress of individual employee and organizational health through the Business
+Health Culture Index 14 (BHCI). In 2021, the BHCI was 81% (2020: 80%) and exceeded the upper
+end of our target range. For 2022 through 2025, our ambition remains to keep the BHCI between 78%
+and 80%. We continuously monitor our innovation culture and simplification of processes. We
+adjusted the composition of both indices to better reflect the dimensions we would like to improve,
+even though we consider the scores comparable. In 2021, we achieved a very strong Innovation
+Culture Index 15 of 89% (last measured in 2019 based on different survey questions and reported as
+an Innovation Score of 79%). After a slight dip in 2020 (58%), the Simplification of Processes
+Index 16 rebounded to 66% in 2021, indicating that our investments in this area took effect.
+In addition, we measured a Retention Rate of 92.8% (2020: 95.3%). We define retention as the ratio
+of the average number of employees, minus employees who voluntarily departed (excluding
+restructuring-related terminations), to the average number of employees (in full-time equivalents or
+FTES). The rate of Women in Management 17 increased to 28.3% compared to 27.5% in 2020.
+Through 2022, our ambition remains to increase the rate of women in management to 30%.
+Our Key People-Related KPIs at a Glance
+Employee Engagement Index
+86
+81 7+1pp
+Global data protection and privacy training is conducted globally every two years and mandatory for
+SAP employees. This training helps our workforce handle personal data with due care and in
+accordance with the law and to maintain compliance with data protection requirements in their work.
+SAP has implemented a data protection management system (DPMS) for our organization. The
+DPMS is set according to the generally recognized standard for data protection management systems
+as defined in the British Standard BS 10012, which comprises the data protection requirements of the
+European Union (EU) General Data Protection Regulation (GDPR) since version 10012:2017. The
+DPMS covers almost all LoBs (excluding Qualtrics) and is planned to be implemented in all acquired
+companies as well. It is designed as a framework covering all aspects of data protection compliance
+of SAP organizations and employees. The DPMS is used as SAP standard methodology to ensure
+compliance with data protection legislation. The maintenance of the framework is subject to
+certification from the British Standards Institution that confirms data protection compliance annually.
+Guidelines and Policies
+Management
+percent
+The SAP Global Data Protection and Privacy Policy outlines a group-wide minimum standard for data
+protection-compliant processing of personal data. It defines requirements for business processes that
+involve personal data, and assigns clear responsibilities. The principles established by this policy take
+into account the requirements of the EU GDPR. They apply generally and globally to SAP Group
+affiliates. Additional data protection and privacy requirements, if applicable, are adopted on a local
+level as necessary. We actively monitor changes to applicable laws and regulations so that we can
+update our standards on an ongoing basis as necessary to meet data protection compliance. The
+policy was last updated in 2019.
+How We Measure and Manage Our Performance
+Security
+Compliance processes at SAP adhere to trust-service criteria established by the American Institute of
+Certified Public Accountants (AICPA). Our security, availability, privacy, confidentiality, and processing
+integrity controls are designed to achieve the appropriate control objectives. In addition, independent,
+external auditing partners regularly conduct security compliance audits.
+SAP discloses vulnerabilities on the second Tuesday of every month ("Patch Day"). This disclosure
+mechanism provides customers with authoritative, public information about SAP software
+vulnerabilities from SAP that can be integrated with their existing risk management processes and
+tools.
+SAP strives to reduce risk by continuously improving our processes for detecting and remediating
+attacks and vulnerabilities. To that end, we:
+- Engage in approximately 130 internal and external audits across SAP globally
+Monitor and support our cloud and IT units with 1,700 controls that are audited and tested for
+design and operating effectiveness
+-
+Offer service organization control (SOC) reports – such as SOC 1 Type II/ISAE 3402 and SOC 2
+Type II/ISAE 3000 - to provide insights into the design and operating effectiveness of internal
+control systems implemented within cloud delivery units
+Let external, internationally accredited auditors assess and certify our cloud services according to
+various reporting standards and ISO certifications, such as ISO 9001, ISO 27001, ISO 27017,
+ISO 27018, and ISO 22301, in addition to BS 10012
+105/338
+106/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Data Protection
+To help ensure necessary knowledge about data protection, global data protection and privacy
+training is mandatory for SAP employees. The latest training was rolled out in 2021 as per the two-
+year renewable cycle.
+We monitor compliance of data protection-relevant procedures across SAP. We maintain a record of
+processing activities ("procedure enrollment tool"), in which procedures that process personal data
+must be documented. The record entries contain general information about the procedure according
+to defined criteria necessary to meet proper documentation. The record entries are reportable and
+regularly reviewed.
+The impact of our people strategy is measured by seven KPIs. 12 Five out of the seven KPIs are based
+on the results of our engagement survey program “#Unfiltered."
+legislative process. In this regard, SAP is participating in external working groups to help align industry-
+specific interests with respective governments.
+As part of our strategic pillar "building the skills for the future," we focus on our skill transformation.
+SAP expects a shift in current skills that will cease to exist and new capabilities that will be needed in
+the future. In some cases, this shift is predictable, while in others it will require an adaptive workforce
+management approach focusing on continuous skill transformation to ensure our people are
+equipped to support future work requirements.
+Even when employees leave SAP, it is important that we stay connected. Our SAP Alumni Network
+offers a program to keep our former colleagues connected and foster a trusted network for the benefit
+of SAP and our ecosystem. In 2021, our alumni community included 14,909 former (2020: 9,096) and
+4,379 current (2020: 4,082) SAP employees.
+897+10pp
+667+8pp
+92.8-2.5pp
+28.37+0.8pp
+Below is an overview of how we put the three themes of our people strategy and overall KPIs into
+practice.
+Building the Skills for the Future
+Attracting, hiring, and onboarding the best and most diverse talent is key for the future success of SAP.
+After a unique 2020 shaped by the global pandemic, in 2021, we saw a significantly increased
+competition for talent all over the globe. Our refreshed employer value proposition - including a
+13 We define employee engagement as an index score of five items measuring the satisfaction and commitment of our employees, how
+proud they are of our company, and how strongly they identify with SAP.
+14 The index covers questions concerning how employees rate their personal well-being and the working conditions at SAP, including our
+leadership culture.
+15 The index consists of four items showing to what extent employees feel encouraged and supported to innovate.
+16 The index consists of seven items showing ease of understanding and use of our processes at SAP.
+17 This includes manager managing teams, manager managing managers, Executive Board members.
+109/338
+Women in
+110/338
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+stronger focus on “Early Talents” (defined as hires with 0-3 years of experience in a professional
+setting hired into professional roles 18) and innovation is key to us attracting people with the right fit.
+-
+Despite ongoing challenges due to the pandemic, we were still able to make advancements in
+building a highly inclusive workforce across various demographic aspects (among others, e.g.
+generations, gender, nationalities). Overall, we externally hired 13,854 (2020: 8,486) employees, of
+whom 33.1% (2020: 29.4%) were Early Talents and 38.1% (2020: 35.5%) women.
+We strive to position SAP as a talent magnet. SAP has earned 160 (2020: 125) employer recognitions,
+most notably the World's Best Workplaces by Great Place to Work, World's Most Attractive
+Employer by Universum and LinkedIn Talent Award – Best Employer Brand by LinkedIn.
+Additionally, we worked closely with more than 2,700 academic institutions on events, executive
+lectures, office visits, competitions, student club sponsorships, and workshops to attract students and
+graduates. Our universal SAP Internship Experience Program has continued to expand and now
+exists in 22 countries with a total of 1,461 (2020: 597) participants around the world. In 2021, more
+than 1,200 students were enrolled in SAP's vocational training program (in Australia, Brazil, China,
+Germany, Hungary, India, Ireland, Japan, New Zealand, Singapore, South Korea, Switzerland, and the
+United States). The conversion rate (number of students who stayed with SAP after completing their
+dual studies) for vocational training students was 75% in 2021 (2020: 67%).
+The average tenure remained at the same high level (2021: 8.0 years; 2020: 7.6 years).
+SAP
+How We Measure and Manage Our Performance
+Information
+Guidelines and Policies
+We develop and pursue our global data protection and privacy strategy in accordance with our
+business strategy. Our global data protection and privacy strategy is to constantly monitor the global
+regulatory data protection compliance landscape, identify relevant stakeholders, and enable them to
+take necessary measures for their adoption. It is also designed to safeguard the processing of
+personal data. The strategy consists of four pillars to help meet compliance with applicable data
+protection laws and regulations. These pillars comprise the global data protection and privacy policy;
+mandatory global data protection and privacy training for employees; our global data protection and
+privacy coordinator network; and the global data protection management system – and are all aiming
+to ensure that we comply with applicable data protection laws.
+With our global product and services portfolio, SAP aims to protect the rights of individuals involved
+and meet relevant local requirements when processing personal data. In addition, we strive to
+strengthen SAP's reputation in the long term as a sustainable and trustworthy partner in the market.
+We have implemented safeguards to help protect the fundamental rights of everyone whose data is
+processed by SAP, whether they are customers, suppliers, partners, prospects, employees, or
+applicants.
+Data Protection
+SGS supports key stakeholders in our lines of business (LoBs), IT, and the presales organization in
+securing solutions, and drives operational excellence for security across the enterprise. To protect the
+organization's data and assets and support high-quality risk management and reporting, SGS regularly
+reviews and adapts our security policies, standards, and frameworks.
+The SAP strategy is focused on helping customers transform into intelligent and sustainable
+enterprises. Our SAP Global Security (SGS) organization supports this journey with its goal of
+reducing risk and promoting regulatory compliance, and by aligning people, procedures, and
+technology to protect business processes and data. The organization embraces and encourages a
+security-minded culture that embeds security in our development and deployment processes and
+helps secure digital transformation.
+Cloud solutions and services are increasingly important to many companies' daily operations. The
+COVID-19 pandemic has shown that digital solutions are critical to business resilience. As a result,
+digital transformation is accelerating and cybersecurity is now even more crucial to IT security
+professionals and business leaders, particularly in those enterprises that have moved their core
+processes to the cloud.
+SAP Global Security
+Every day, organizations around the world trust SAP with their data – either on premise at their
+physical locations, in the cloud, or when using mobile devices while on the move. Our customers
+need to know that our goal is to keep their data safe, process it in a manner that complies with local
+legislation, and protect it from malicious use. For this reason, cybersecurity and security, as well as
+data protection and privacy, are of paramount importance to us.
+Vision and Strategy
+Security, Data Protection, and
+Privacy
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+-
+103/338
+SAP is committed to ensuring a fair and equal treatment of all employees in a sustainable manner.
+For that reason, we established comprehensive policies that guide us in our daily business. Examples
+are our Global Anti-Discrimination Policy and Global Health & Safety Policy.
+SAP
+All SAP employees are required to read and adhere to this internal policy. The SAP Security Policy
+Framework consists of several levels of security documents that support the requirements described
+in the policy. In addition, the different LoBs at SAP may have supporting policies, standards,
+procedures, and practices.
+This policy provides high-level requirements for numerous security domains. These include, but are
+not limited to, access control, physical security, network security management, incident response, and
+acceptable use. These requirements apply to all SAP employees, our contractors, consultants, as well
+as external parties that are granted access to SAP information and information assets. SAP reviews
+the SAP Global Security Policy annually and enacts modifications as deemed appropriate and
+necessary to protect SAP and our own and our customers' data and assets where new threats or
+vulnerabilities are identified.
+The purpose of the SAP Global Security Policy is to provide governance and structure for an
+appropriate and effective level of information security within SAP and our affiliated businesses.
+Aligned with the overall SAP corporate strategy and vision, it details the management intent,
+expectations, and strategic goals and objectives for SAP security.
+Guidelines and Policies
+Our commitment to customers is to be open and transparent about security vulnerabilities. To ensure
+this, we work with several external stakeholder groups including SAP user groups for the Americas
+and for German-speaking countries.
+The SAP Security Governance Model is designed to ensure executive engagement and facilitates
+shared responsibility in semiannual SAP Security Advisory Board and monthly Security Council
+meetings, as well as in biweekly updates to the Executive Board.
+SGS is led by a chief security officer who reports directly to the SAP CEO. SGS divisions are
+responsible for areas such as product and application security, cyberdefense, operational security risk
+management, security compliance, executive protection, physical security, and a Trust Office that
+supports customers and partners with security-related issues.
+Governance
+To Our
+Due Diligence for Security Topics
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Information
+SAP Integrated Report 2021
+SAP
+The content of the non-financial statement was not subject to the statutory audit of the combined
+group management report. However, our external auditor carried out an independent limited
+assurance engagement on the non-financial statement including the EU Taxonomy disclosures. In
+addition, all non-financial aspects referenced to in the table Non-Financial Disclosures in SAP's
+Combined Management Report are assured by our external auditor, however, on different audit
+assurance levels (reasonable or limited). The Audit Scope box at the end of the respective
+chapters in the management report explains the audit scope of the disclosures in the respective
+chapter.
+Infrastructure as a service (laaS)
+Platform as a service (PaaS)
+Software as a service (SaaS)
+As described in the Notes to the Consolidated Financial Statements, Note A.1, in detail, SAP's cloud
+revenue consists mainly of fees earned from providing the following services:
+As outlined above, we have identified only one activity as a relevant Taxonomy-eligible economic
+activity to which revenues can be attributed. We considered materiality aspects in this process. While
+SAP may conduct more activities that could be designated as Taxonomy-eligible, currently only "8.1
+Data processing, hosting, and related activities" was identified as material in terms of associated
+revenues. This may change in the future as SAP is aiming to extend our sustainability management
+product portfolio and increase the corresponding revenue share.
+Revenue
+In addition, we performed an eligibility assessment of the activity "8.2 Computer programming,
+consultancy and related activities" relating to climate change adaptation. According to the EU
+Taxonomy regulation, only activities that are classified as "enabling,” that is, activities that help other
+activities substantially contribute to climate change adaptation, can be included in the turnover KPI.
+Activity 8.2 is not categorized as an “enabling" activity and therefore we cannot attribute any turnover
+to this activity. Based on our current understanding of the FAQ document published by the European
+Commission on February 2, 2022, regarding the interpretation of certain legal provisions of the
+Delegated Act under Article 8 of the EU Taxonomy Regulation of July 6, 2021, we also concluded that
+operating and capital expenditures relating to activity 8.2 (climate change adaptation) are not
+Taxonomy-eligible.
+We also evaluated the relevance of the economic activity "8.2 Data-driven solutions for GHG
+emissions reductions." In light of our strategic commitment to sustainability management solutions
+that, for example, help our customers minimize carbon footprints and reduce waste through
+responsible supply chain management, we expect the share of associated revenues, operational
+expenditures, and capital expenditures to increase over the next years. In 2021, however, SAP has not
+recognized material revenues, operational expenditures, and capital expenditures associated to this
+activity that could be classified as Taxonomy-eligible. For more information about our sustainability
+management portfolio, see the Environment and Emissions section.
+These services conform with the description of activity 8.1. Therefore, we have designated the revenue
+resulting from these services as eligible for the EU Taxonomy. Other revenues that qualify as cloud
+revenue but cannot be classified as Taxonomy-eligible have been excluded.
+evaluated the description of the activity 8.1 provided in the Annex 1 to the EU Taxonomy Climate
+Delegated Act of June 4, 2021, and concluded that the operation of SAP's cloud infrastructure
+comprising both SAP's own data centers and third parties engaged by SAP match the description of
+the activity "8.1 Data processing, hosting, and related activities" and is therefore considered as
+Taxonomy-eligible.
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+Information
+Due Diligence for Data Protection Topics
+Total revenue was determined according to IFRS, specifically IFRS 15, and matches total revenue
+presented in SAP's Consolidated Income Statements. For more information about how we recognize
+revenue and the components of revenue, see the Notes to the Consolidated Financial Statements,
+Note A.1.
+Operational Expenditures
+QAudit Scope
+Taxonomy-eligible capital expenditures relate to assets and processes that are associated with the
+economic activity "8.1 Data processing, hosting, and related activities." We also considered materiality
+aspects in the identification process of relevant costs and activities. These expenses comprise mostly
+investments in SAP's cloud infrastructure.
+In line with the EU Taxonomy regulation, total capital expenditures presented in this section include
+additions to tangible and intangible assets accounted for based on IAS 16, IAS 38, and IFRS 16, as
+well as additions to tangible and intangible assets (excluding additions to goodwill) resulting from
+business combinations.
+Capital Expenditures
+For a detailed description of the development and key drivers of all operating expenses, see the
+Performance Against Our Outlook for 2021 (Non-IFRS) and Operating Profit and Operating Margin
+sections in our combined management report.
+Total operating expenses according to the EU Taxonomy mainly include the following non-capitalized
+cost elements: research and development, short-term lease, and maintenance and repair relating to
+property, plant, and equipment. Other major expense components in SAP's Consolidated Income
+Statement, such as, for instance, depreciation, utilities (for example, costs for heating and electricity
+consumption), as well as most general and administrative cost, restructuring, and sales and marketing
+cost do not fall in scope of the definition of operating expenses according to the EU Taxonomy and
+are therefore excluded.
+this activity mainly include expenses for maintenance and repair relating to SAP's own cloud
+infrastructure as well as leasing expenses for hosting services provided by third parties.
+Information
+For a detailed description of the development and key drivers of SAP's revenue, see the Performance
+Against Our Outlook for 2021 (Non-IFRS) and Operating Results (IFRS) sections in the combined
+management report.
+Additional
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+102/338
+101/338
+We have designated those costs as Taxonomy-eligible that relate to assets and processes associated
+with the Taxonomy-eligible activity "8.1 Data processing, hosting, and related activities." We considered
+materiality aspects in the identification process of relevant costs and activities. The costs connected to
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Governance
+104/338
+To meet and ensure consistent security and data protection compliance, SAP has implemented a
+formal governance model that assigns clear responsibilities across the SAP Group. Upon request, the
+DPO attends steering committee meetings and reports on matters relevant to data protection to the
+Audit and Compliance Committee of the SAP Supervisory Board.
+107/338
+11 As part of a multi-year harmonization process, the survey question used to measure NPS was adjusted in 2021. Therefore, the results
+may not be fully comparable. For more information, see the Performance Management System section.
+For related risks, see Sales and Services in the Risk Management and Risks section.
+For more information about the Customer NPS, see the Performance Management System section.
+Related Risks for SAP
+Customer NPS is a KPI in Executive Board remuneration as part of the short-term incentive
+component.
+We aim to continue to increase our Customer NPS to a range of 11 to 15 points in 2022. Further, we
+want to see continuous improvements and increase the score steadily in the medium term.
+In 2021, our Customer NPS 11 increased 6 points year over year to 10 (2020: 4), achieving the upper
+end of our target range of 5 to 10.
+We use the Customer Net Promoter Score (NPS) as a feedback mechanism to measure customer
+loyalty. This and other results from the customer survey allow us to directly understand what our
+customers are thinking and identify key pain points for action. Because of the importance of
+customers to SAP, Customer NPS is one of our main KPIs.
+How We Measure and Manage Our Performance
+Numerous policies govern our relationships with our customers, including the Employee Code of
+Conduct, SAP Human Rights Commitment statement, and applicable General Terms and
+Conditions for our products.
+Guidelines and Policies
+The head of Customer Success leads customer-facing engagements across SAP's business. The Chief
+Marketing & Solutions Officer leads the development of our solution value propositions to provide
+clarity on SAP's core differentiators. The People & Operations Board area is responsible for
+conducting the Company-Wide XM program, including conducting the Customer Net Promoter
+Score (NPS) survey.
+Governance
+Due Diligence
+To further address and improve on customer feedback through research conducted using Qualtrics
+solutions, we developed the Company-Wide Experience (XM) program. This is an example of a
+program we have implemented aiming to achieve a consistent end-to-end experience for our
+customers. This program includes standardizing experience initiatives and methodologies to help
+identify and improve experience gaps across SAP.
+Company-Wide Experience (XM) Program
+customers.
+108/338
+SAP
+Within the scope of their responsibilities, our global data protection officer (DPO) monitors the
+compliance of activities involving the processing of personal data. The DPO reports to the SAP CFO.
+Within the Executive Board, the SAP CFO is responsible for compliance and enforcement of data
+protection and privacy. The DPO owns the SAP Global Data Protection and Privacy Policy that
+addresses SAP's data protection governance, and regularly informs the CFO about the status of data
+protection compliance in the SAP Group.
+To Our
+To best support our People Strategy, we reshaped our HR organization in 2021 and it now includes
+the following functional areas: a newly introduced Future of Work team (including Global Health &
+Well-Being); Global Diversity & Inclusion; SAP Learning; Talent Attraction; and Total Rewards. In
+addition, Global People Success Services combines the HR Business Partner organization with Global
+HR Service Delivery.
+Since January 1, 2021, Sabine Bendiek has served as Chief People Officer and Labor Relations
+Director and led our HR organization. On July 1, 2021, she also became Chief Operating Officer and
+has since been responsible for the Executive Board area People & Operations as Chief People &
+Operating Officer.
+Governance
+Due Diligence
+Changing the Way We Lead by driving for accountability and empowerment, in a healthy,
+inclusive, and diverse environment
+Driving SAP's Winning Culture by fostering a culture enabling and rewarding impact and
+business outcomes
+Building the Skills for the Future by attracting the best and most diverse talent and continuously
+up-/reskilling our people
+Interwoven with our product and go-to-market strategies, our People Strategy is centered around the
+employee journey and their experience. Just as we help our customers digitalize and simplify their
+processes, we strive to do the same for our employees by empowering them to bring value to our
+customers. We continue to evolve and execute along seven strategic pillars from 2020 that contribute
+to our business strategy and value generation. We summarize this value generation across three
+themes, powered by operational excellence to showcase Human Experience Management:
+We aim to maximize the value our customers derive from their investment in and relationship with
+SAP at every touchpoint in their experience with us over the engagement lifecycle. Our focus on value
+and experience drives our customers' success. Our customer-facing teams - across solutions, sales,
+services, customer engagement, ecosystem, and others – work together along an operating model
+that aims to harmonize internal processes with the goal of delivering improved outcomes for our
+People are at the heart of our organization. Aiming for a highly engaged, diverse, future-fit workforce
+equipped with the right skills helps SAP attract the best talent.
+Investments
+Employees and Social
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+Vision and Strategy
+Focusing on Customer Success
+SAP Integrated Report 2021
+Customers
+With our next-generation performance management approach, we aim to establish a high-
+performance culture, by linking business goals to the impact of individuals and teams with
+development opportunities and meaningful reward packages. Smart and transparent goal-setting
+approaches and continuous review processes, as well as equitable, competitive, and differentiated
+compensation structures, are a necessary foundation to drive high performance.
+Driving SAP's Winning Culture
+The successful delivery of our strategy also requires a robust succession management process.
+Therefore, in 2021, we launched a systematic approach focusing on our most critical and highest
+value-generating roles. It incorporates a clearly defined succession pipeline and targeted
+development and exposure for incumbents and successors to these roles.
+Information
+Additional
+Further Information on
+Sustainability
+It is critical that our employees see the link between their individual contribution and SAP's future
+success. Early in 2021, SAP's top leadership set goals for their organization and made them visible to
+Consolidated Financial
+Statements IFRS
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+SAP has established a global network of data protection and privacy coordinators (DPPCs) across all
+SAP Group entities that process personal data. This DPPC network is aimed to ensure data
+protection and privacy compliance on a local level. Local DPPCs increase awareness by conducting
+local training. Where new data protection laws evolve, they also help the Data Protection and
+Privacy (DPP) team acting on behalf of the DPO identify and analyze them. If this requires
+compliance activities, they align with the affected LoBs and help drive the relevant implementation.
+Additional regional DPPCs further support and monitor changes to applicable laws. The DPPC
+network regularly engages with SAP's government relations team to represent SAP's interests in the
+Vision and Strategy
+Management Report
+18 In 2021, we adjusted the definition of Early Talents In the past, the term referred to external hires of graduates with up to two years'
+professional experience post graduation.
+At SAP, learning mainly happens on the job, through interactions with colleagues and formal learning
+activities. Self-paced online programs and live interactive training, including courses for technical,
+functional, and professional skills, are open to all employees. Our peer-to-peer learning portfolio
+encompasses coaching, mentoring, job shadowing, and facilitation opportunities. In 2021, 97% of our
+employees participated in learning and logged more than three million hours of trackable learning.
+Additionally, 22,574 of our employees went through targeted upskilling programs tied to SAP's cloud
+journey.
+SAP's own quality standards and international regulations require careful selection and monitoring of
+subprocessors processing personal data on behalf of SAP and SAP customers. With the goal that all
+subprocessors meet protection and security requirements for the processing of personal data, SAP
+has implemented a subprocessor verification process. All of SAP's subprocessors (for example,
+suppliers, vendors, and partners) are subject to this process. The process comprises three main
+compliance criteria for data protection-relevant subprocessors: (i) contractual compliance; (ii) self-
+assessments based on a questionnaire including transfer impact assessments on international data
+transfers to third countries; and (iii) remote and/or on-site audits.
+Stakeholders
+We also track the quality of our data protection compliance level based on the annual recertification
+of our DPMS by the British Standards Institution (BSI). SAP has been audited by the BSI annually and
+awarded certifications according to BS 10012 since 2011. The most recent certification is valid until
+2022.
+SAP Integrated Report 2021
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+To Our
+SAP
+QAudit Scope
+For related risks, see the Risk Management and Risks section, specifically the Cybersecurity and
+Security and Data Protection and Privacy subsections.
+Additional
+Information
+Related Risks for SAP
+In 2021, SAP experienced two significant incidents in processing personal data - on our own behalf –
+that were subject to GDPR only and were reported to the supervisory authorities.
+SAP respects the rights of the data subjects to obtain information as to whether or not personal data
+concerning them is being processed. All necessary information is made available to the data subjects
+within the framework of the privacy statements on the respective SAP Web sites.
+The content of the section Security, Data Protection, and Privacy was not subject to the statutory audit
+of our combined group management report. However, our external auditor performed an independent
+limited assurance engagement for the content of this section.
+272
+179
+161
+185
+86
+180
+177
+176
+265
+138
+318
+We have introduced initiatives to drive efficiency and innovation with respect to our buildings, data
+center operations, and infrastructure (such as the installment of new co-generation units and the
+replacement of old back-up batteries with more efficient lithium-ion batteries in the data centers in
+St. Leon-Rot, Germany). At our SAP headquarters in Germany and North America, we operate our
+own data centers with an efficient power usage effectiveness (PUE) of 1.38. The PUE is a ratio that
+describes the efficiency of a data center, with 1.0 being the ideal.
+429
+338
+■ External
+Internal
+Gigawatt hours (GWh)
+Total Data Center Electricity
+We realize our green cloud by using two strategic levers: On the one hand, by investing in very high-
+quality, EKOenergy-certified energy attribute certificates (EACs) 25 to foster renewable energy
+generation; and on the other hand, by producing renewable electricity in selective SAP locations
+worldwide through solar panels (such as Palo Alto, CA, in the United States, and Bangalore, India).
+Operating all our facilities and data centers with 100% renewable electricity allows us to compensate
+our entire electricity consumption-related emissions (2021: 219.5 kt). This is why customers can
+reduce their carbon emissions (Scope 3) by using our green cloud solutions and services.
+In 2014, SAP strengthened the integration of our environmental strategy into our business strategy by
+creating a "green cloud" - running all data centers with 100% renewable electricity. 24 This is one
+major step towards achieving carbon neutrality and upholding our commitment towards the RE100
+initiative. The term “data center" refers to both SAP-owned and external data centers (co-location data
+centers and hyperscalers).
+157
+As more business moves to the cloud, data centers play an increasing key role in SAP providing
+solutions to our customers. Running solutions on SAP data centers and completing thousands of
+cloud solution transactions per day requires central processing units (CPUs), memory, storage, and
+cooling, and therefore electricity - which ultimately results in carbon emissions. This is why our
+internal data centers have become a primary focus of our carbon reduction efforts.
+361
+2017
+The vast majority of our overall carbon emissions result from the use of our software. To address this,
+we have developed a downstream emissions strategy to help our customers, hardware providers, and
+others run greener operations. One of the most important ways we help our customers reduce their
+energy usage and emissions is by managing their SAP systems through cloud services provided by
+our carbon-neutral green cloud offerings. In addition, our SAP Cloud for Sustainable Enterprises
+offering bundles a broad portfolio of sustainability-related solutions, such as SAP Sustainability
+Control Tower, SAP Environment, Health, and Safety Management, and SAP Product
+Footprint Management, which enable our customers to collect, organize, and report financial and
+non-financial metrics or to manage their greenhouse gas footprint and resources, such as electricity,
+more efficiently.
+2019
+26 Zero emission vehicles refer to a vehicle that does not emit exhaust gas or other pollutants from the onboard source of power.
+To generate a shift in alternative commuting habits, we continue to offer a company bike program in
+Germany, where employees can lease bicycles with the option of purchasing them after three years.
+In 2021, we expanded the mobility budget pilot to the whole of Germany to foster inter-/multimodal
+mobility. A pilot group of employees receives a monthly fixed mobility budget at their free disposal to
+use any mode of transport to commute to work or in their leisure time (bike, e-scooter, rental car, train,
+bus, and so on).
+SAP also works with customers to optimize their on-premise landscapes so that they consume less
+energy. We achieve this by helping them decommission legacy systems, archive unused data,
+consolidate business applications, and virtualize their system landscape. In 2021, we started to
+develop a carbon footprint sizing approach with the aim of enabling our customers to gain
+transparency on the carbon impact of their SAP applications that run in SAP's internal and external
+data centers, answering the question of how much our customers can reduce their environmental
+footprint by running SAP solutions on SAP's green cloud compared to a cloud that is not powered by
+100% renewable electricity.
+To lead by example and continually improve the environmental footprint of its own operations, SAP
+has thus far implemented an environmental management system (EMS) at more than 50 sites in
+around 30 countries worldwide. The EMS is certified by the renowned ISO 14001:2015 standard and
+successfully maintained its certification in 2021. Its scope will be gradually increased from currently
+77% to 100% of SAP's major company-owned sites by 2025. To further increase our energy efficiency,
+selected sites such as SAP's headquarters in Germany also operate an ISO 50001:2018-certified
+energy management system.
+We continuously expand SAP's global charging infrastructure (2021: >970 charging stations;
+2020: >900 charging stations).
+In Germany, we offer employees a battery subsidy that partially offsets the higher costs of an
+electric vehicle, and introduced "Charge at Home," a program to reimburse the employee's
+electricity costs for charging at home.
+In selected locations, we offer employees a subsidy to install a charging point at home which
+deploys the new SAP E-Mobility solution to ease billing of the consumed electricity for both car
+fleet managers and employees.
+Consumption of fuel for our company cars remains the single greatest contributor to our direct
+emissions (Scope 1). To counteract this emission source, SAP released a new commitment in
+Q4/2021. We aim to enhance our climate protection measures by transitioning our global car fleet to
+electric or zero-emission 26 vehicles. From 2025 onwards, employees will no longer be able to order
+vehicles with internal combustion engines (ICEV) or plug-in hybrid electric vehicles (PHEV) as
+company cars. To ensure a carbon-neutral car fleet reflecting this new commitment, we continue to
+power all charging stations at SAP locations with 100% renewable electricity. We also continue and
+strengthen our incentive offers for our employees, for example:
+Corporate Cars and Commuting
+Sustainable Solutions and Products in Use
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+120/338
+119/338
+25 We formerly used the term „,Renewable Energy Certificates" (RECs) to refer to Energy Attribute Certificates.
+24 We also run all our SAP office facilities with 100% renewable electricity.
+2021
+2020
+2018
+Facilities, Data Centers, and Renewable Electricity
+-3%
+Additional
+Accelerate social business
+The pace of innovation and technology progress impacts people, organizations, and communities
+globally. As a result, the competencies and skills needed for people and businesses to succeed in
+today's digital world are rapidly changing. Our corporate social responsibility (CSR) strategy puts
+SAP's purpose to help the world run better and improve people's lives into action. As such, SAP CSR
+considers issues including the access, adoption, and application of 21st century skills for under-
+resourced people, communities, and nations, and the acceleration of social enterprises through
+innovation, adoption of organizational best practices, and market development. SAP CSR has three
+focus areas that create equitable access to economic opportunity, quality education, and
+employment:
+Vision and Strategy
+Social Investments
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+Build future skills
+To Our
+SAP
+114/338
+113/338
+Information
+We define headcount in FTE as the number of people on permanent employment contracts, taking
+into account their staffing percentage. Numbers disclosed in the Employees and Social Investment
+section are based on FTE or headcount. Students, individuals employed by SAP but currently not
+working for reasons such as maternity leave, and temporary employees on limited contracts of less
+than six months, are excluded from our figures. The number of temporary employees is not material.
+Our average personnel expense for each employee grew to approximately €149,000 in 2021 (2020:
+approximately €132,000). This increase is primarily due to an increase of share-based payment
+expenses. The personnel expense for each employee is defined as the overall personnel expense
+divided by the average number of employees. In 2021, we had 128 restructuring-related terminations
+(0.1%) compared to 1,037 in 2020 (1%).
+As at December 31, 2021, we employed 107,415 full-time equivalent (FTE) employees worldwide
+(2020: 102,430). This represents an increase in the workforce of 4,985 FTEs (914 thereof from
+acquisitions) in comparison to 2020. The average number of employees in 2021 was 104,364
+(2020: 101,476).
+Headcount and Personnel Expense
+No material risks were identified through our framework which is detailed in the Risk Management
+Methodology and Reporting section.
+Related Risks for SAP
+Delivering engaging experiences for SAP's customers starts with our own workforce. A continued
+emphasis on operational excellence and experience management is key to delivering our human
+experience management (HXM) solutions and services efficiently, with both empathy and compliance.
+SAP runs SAP SuccessFactors-branded solutions as our global software to manage people data.
+Additionally, the adoption of Qualtrics solutions integrated with SAP SuccessFactors solutions enables
+us to determine ways to improve the experience of our candidates and employees along the
+employee journey. Such data insights are the fuel to leverage intelligent technologies such as
+SAP Conversational Al services on our SAP Careers site along with Brilliant Hire by SAP as a
+skills and interest-based matching engine for candidates to receive job recommendations from SAP.
+Our internal HR chatbot provides instant responses to HR-related questions to all SAP employees
+around the world, 24x7. Machine learning capabilities are leveraged to analyze the skills needed for
+the future, based on external and internal data sources to provide a decision framework for hiring and
+learning programs.
+SAP Integrated Report 2021
+Pushing Operational Excellence and Showcasing Human Experience
+Management to Customers
+Connect employees with purpose
+Governance, Guidelines, and Policies
+Focus Area - Build Future Skills
+The pandemic accelerated the importance of collaboration and partnerships on a macro level in
+creating opportunities to build sustainable, resilient value chains. In support of SAP's 5 & 5 by '25
+social procurement initiative, SAP continued efforts to build capacity for social enterprises seeking to
+enter corporate supply chains through MovingWorlds' S-GRID program and engagement with the
+COVID-19 Response Alliance for Social Entrepreneurs.
+employees develop their leadership and social innovation skills by solving organizational challenges
+and offering business coaching.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP's CSR strategy is linked to our core business, meaning that we integrate social innovations into
+our own value chain through, for example, dedicated social procurement initiatives. In addition, we are
+offering a broad portfolio of corporate volunteering opportunities and pro bono consulting programs to
+deploy the professional skills of our employees for a good cause..
+SAP Integrated Report 2021
+19 Exchange rate date: December 31, 2021.
+SAP set out to bring our pro bono consulting to the next level, scaling virtual models that were tested
+in 2020. For example, SAP and PYXERA Global launched a new program called Pro Bono for
+Economic Equity to support social and racial justice. Through the program, SAP provides expertise
+via pro bono consulting to help Black-owned businesses and social enterprises address systemic and
+business challenges. Further, SAP and MovingWorlds launched the Acceleration Collective, a
+support network to help social enterprises grow their organizations and impact, while helping SAP
+SAP provides skills, expertise, products, and financial support to social businesses that, in turn,
+accelerate their ability to drive sustainable social impact. In 2021, SAP built capacity for over 2,000
+innovative non-profit organizations and social enterprises through in-kind contributions of
+US$1.8 million (€1.58 million) 19.
+Accelerate Social Business
+-
+Focus Area
+We measure the performance and impact of our CSR engagements and investments regularly and
+report the following output indicators for all initiatives and regions: number of employees engaged,
+volunteering projects delivered, lives impacted, engagements with customers and partners, non-profit
+organizations and social enterprises enabled, and employees on our SAP Together employee
+engagement and donation platform. In addition, every signature initiative follows a dedicated impact
+measurement framework and logic model. In 2021, SAP donated €25.5 million.
+How We Measure and Manage Our Performance
+The guidelines in our internal CSR policy aim to ensure lawful, compliant donations and good
+stewardship of SAP's social investment budget to create a positive, sustainable impact. They articulate
+our strategic focus areas, set the standards and policies under which we operate, and explain the
+different roles and responsibilities between global CSR, regional CSR, and line of business activities.
+Our Global Head of CSR leads the global SAP CSR team, which is part of the Marketing & Solutions
+Board area. SAP has established a Global CSR Governance Committee consisting of executive-
+level representatives from different Board areas at SAP to advise, supervise, and approve the direction
+of our overall CSR strategy. In addition, Regional CSR Governance Committees advise and approve
+all major CSR partnerships and efforts with the respective regional SAP CSR lead.
+SAP
+In 2021, digital skill-building and coding programs trained 119,000 teachers and engaged 3.5 million
+underserved youth, of which 50% were girls. As part of the multi-stakeholder initiative Generation
+Unlimited (GenU), SAP and UNICEF have addressed several strategic areas within education since
+2019. The partnership continued to equip and empower young people with the 21st century digital
+and life skills they need to find suitable work. In 2021, SAP became a Founding Member of GenU,
+with SAP CEO Christian Klein joining the GenU Board. In India, under the umbrella of Code Unnati,
+SAP announced a partnership with Microsoft called TechSaksham. The program aims to provide
+62,000 young graduating women and 1,500 teachers with Industry 4.0 skills for careers in emerging
+technology by the end of 2022.
+Accessibility: SAP is designing a work experience where all employees feel that they belong and can
+contribute to a culture of equality and inclusion. A major component of this effort is creating
+accessibility in the workplace that removes barriers for differently abled persons. New technologies,
+such as eye-tracking are in our focus and will be continuously evaluated and implemented.
+inclusion efforts. The employee-driven Pride@SAP LGBTQ+ network also celebrated its 20th
+anniversary in 2021.
+SAP
+112/338
+111/338
+In 2021, SAP's Global Pandemic Taskforce continued to coordinate and adjust countermeasures
+against the pandemic around the globe, utilizing employee feedback based on regular remote pulse
+checks on how employees experience their individual situation. Another focus was on COVID-19
+Health and Well-Being: When people are healthy, respected, and cared for, it results in greater
+productivity, engagement, innovation, and customer satisfaction. The global pandemic has enforced
+changes to societal living that are resulting in increasing trends of mental health challenges and
+sedentary lifestyles. Listening to employees' feedback in the #Unfiltered survey, we have enhanced
+health offerings that support a healthy workplace and work culture.
+In addition to our new leadership culture, one further strategic pillar is to pursue an agile,
+entrepreneurial, healthy, and innovative organization. With the COVID-19 pandemic already into a
+second year, our environment is changing at an increasing pace and the needs of our customers are
+shifting quickly. To deliver our business ambitions in this environment, SAP will continue to evolve our
+organization toward greater agility and innovation. It is our ambition to foster a culture that enables
+people to run at their best, by providing innovative health and well-being programs and solutions.
+Future of Work: In June, the Executive Board announced “Pledge to Flex," an SAP-wide
+commitment that empowers our employees to choose when and where to work best as their roles
+and tasks allow. Flexibility at work is considered a critical factor to attract and retain talent in the tech
+industry; Pledge to Flex also strengthens SAP's employer brand. The local implementation of flex work
+along aligned guidelines and country-specific legal regulations is essential to providing an engaging
+and collaborative working environment. These activities are complemented by efforts to leverage
+advanced technologies and new facility concepts in frontrunner locations such as Dublin/Galway,
+London, Montréal, and Zurich.
+In 2021, we focused on a more consistent enablement of our people managers. We scaled the
+delivery of our flagship leadership programs, and focused on training on psychological safety across
+our organization. We report that 29.4% of SAP's people managers have completed these leadership
+development training sessions.
+Strong, future-oriented leadership is key for successfully executing our strategy and becoming more
+agile, ethical, inclusive, and accountable. To guide our leaders, support their development, and move
+our organization forward in our journey to the cloud, we began the rollout in 2021 of a refreshed
+leadership culture and credo: “Do what's right. Make SAP better for generations to come." This
+empowers our leaders to make decisions and holds them accountable while focusing on the future of
+SAP. Our leadership culture is reinforced by traditional, peer, and experiential learning journeys. These
+journeys focus on building management, leadership, and cloud skills to promote a shared
+understanding and reinforce leadership behavior and accountability.
+Changing the Way We Lead
+Furthermore, in 2021, we also launched an equity-based COVID-19 Recognition Plan for all non-
+executive employees to recognize their resilience and commitment to business continuity during this
+difficult period.
+SAP Integrated Report 2021
+For more information, see the Notes to the Consolidated Financial Statements, Note (B.3).
+all employees. During a newly established “People Day," all employees at SAP were given time to
+reflect on SAP's strategy and connect their goals and development to our direction. During "SAP Talk"
+dialogues, goals are set and viewed by the employees together with their managers.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+To strengthen the link between employees' compensation and SAP's corporate success, we also
+increased our investment in Move SAP, our long-term share-based incentive plan that rewards
+employees who provide a significant impact to SAP's business success. Another model component of
+our equity offering is Own SAP, a global share purchase plan, where 78% of our employees overall
+participated with an investment of 5,655,937 shares.
+In addition, SAP supports numerous global Employee Network Groups that offer activities and
+events from which SAP can help attract and retain people from diverse backgrounds.
+To Our
+Stakeholders
+Management Report
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+LGBTQ+ inclusion: SAP was among the first supporters of the United Nations Global LGBTI
+Standards of Conduct for Business and has been named again the Top #1 employer in Germany's
+Pride Index. SAP has also been recognized by organizations including the Human Rights Campaign in
+the United States, the Pride Business Forum in the Czech Republic, and the Swiss LGBTI Label for our
+Combined Group
+Race and ethnicity: Back in 2016, SAP identified challenges with underrepresentation of Black,
+African American, Latinx, and Native American employees in the workforce. We created reporting to
+track our progress toward a better representation in accordance with required regulations in different
+countries and in line with our diversity and inclusion objectives. Among many efforts across the globe,
+this included the establishment of a new goal kicked off in 2020 to double the share of Black and
+African American employees in the workforce in the United States within the next three years. Built on
+the "Equality for All" initiative by the Human Rights Campaign, SAP supported the Spotlight Black
+Businesses program to showcase and promote small Black-owned businesses and introduce them
+to new audiences.
+Gender inclusion, advancement, and equality: Currently, SAP's representation of women in the
+overall workforce is 34.3% (2020: 33.6%), with the representation of women in management roles at
+28.3% (2020: 27.5%). We continue to advance workplace equity through promoting inclusive policies
+on flexible work arrangements, enhanced parental leave benefits, and a focus on fair pay. We are
+present in the Bloomberg Gender-Equality Index in 2019, 2020, and again in 2021, confirming our
+commitment to gender equity.
+At SAP, we are always striving for inclusion and reflecting the diversity of society. As a global
+organization with 161 nationalities in our workforce, our aspiration is that SAP's employees mirror the
+diversity in society that includes the gender parity and demographics of all of the regions where we
+have employees. With our Diversity and Inclusion Strategy, we set our long-term focus to ensure
+we cover critical areas such as providing inclusive career journeys, creating a culture of inclusive
+collaboration, and improving our diverse ecosystem through supplier diversity efforts, an inclusive
+language campaign, and accessibility efforts.
+Another initiative to foster innovation is the prestigious Hasso Plattner Founders' Award. It provides
+the highest internal employee recognition at SAP, based on the three categories: Go-To-Market,
+Operational Excellence, and Products and Technology. For 2021, the awards went to "Support
+Assistant: Delighting Customers by Solving Issues Faster" (Go-To-Market); “Cloud Health Score Based
+on Machine Learning" (Operational Excellence); and "SAP Information Collaboration Hub for Life
+Sciences" (Products and Technology). Winners were chosen from 192 nominations, with a total of
+1,260 employees participating from 42 countries.
+Innovation: In support of our entrepreneurial journey, SAP.IO accelerates, incubates, and scales
+startup innovation and explores new business models for SAP. In 2021, the SAP.IO intrapreneurship
+program continued to help identify high-potential entrepreneurial employees at SAP and was able to
+jump-start 275 venture ideas, seeking investment by the SAP.IO Venture Studio.
+In addition, SAP participates in the Healthy Workplaces Lighten the Load campaign by the
+European Agency for Safety and Health at Work, which enables leaders and employees to discover
+new ways to lighten the load of life's stressors by fostering healthy working and lifestyle habits for
+good physical and mental health.
+Seeing the need for employees to unplug, April 27, 2021, was dedicated as Mental Health Day, a
+company-sponsored global vacation day for all employees. SAP provided the opportunity for all
+employees to take the time off for themselves and their families.
+Vaccination Programs in many SAP locations, where we offered vaccinations free of charge to SAP
+employees, their dependents, and, in some instances, to the general public.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Autism inclusion: The Autism at Work program supports a workforce that includes 217 colleagues
+on the autism spectrum in 16 countries. The Autism Inclusion Network is an employee-led network
+group focused on spreading autism acceptance. The SAP Autism Inclusion Pledge extends SAP's
+autism inclusion endeavors by sharing what we have learned with our customer and partner
+ecosystem.
+Focus Area
+For more information about employee compensation and a breakdown of the components of
+personnel expense, see the Notes to the Consolidated Financial Statements, Note (B.1) and
+Note (B.2).
+In 2021, globally, SAP employees dedicated more than 100,000 volunteer hours, of which 76% were
+skills-based. SAP Together has 37,741 employees registered and offers 548 virtual volunteering
+projects. SAP CSR's employee engagement campaign, Month of Service, evolved to become
+Moments of Service. The campaign has a renewed focus on learning by offering employees virtual
+and on-site volunteering opportunities and speaker sessions with inspiring leaders inside and outside
+SAP. With a focus on year-round volunteering, employees can take action and deepen their
+understanding of social and environmental issues, what SAP is doing about them, and their capacity
+to impact as an individual.
+879
+7%
+-21%
+2020
+2021
+Our focus on climate action has contributed to a cumulative cost avoidance of €743.5 million in the
+past three years. We achieved 55% of this cost avoidance in 2021. Cost avoidance is a financial key
+figure that indicates the financial benefits of SAP's engagement in sustainability measures compared
+to a business-as-usual scenario where no sustainability measures have been implemented (base
+year: 2016).
+To become carbon neutral even in times of ongoing growth in our business, we continue to drive our
+three-pillar strategy of "avoid - reduce - compensate." In 2021, key initiatives following this approach
+included:
+23 Before 2021, our total energy consumption graph covered direct energy consumption (Scope 1) and selected indirect energy
+consumption (Scope 2). In 2021, we added indirect energy consumption of our value chain (Scope 3) to all years shown.
+SAP Integrated Report 2021
+SAP
+941
+To Our
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Kilotons CO2e
+Total Net Carbon Emissions
+310
+325
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Combined Group
+2019
+2017
+300
+-5%
+-14%
+135
+110
+2017
+2018
+2019
+-19%
+-55%
+2018
+2020
+Due to the COVID-19 pandemic and SAP's pledge to flexible, trust-based working styles, electricity
+consumption in our offices continued to be low as the majority of employees remained in a remote
+working model. Our total energy consumption 23 remains lower than before the COVID-19 pandemic.
+However, in light of an increasing external data center electricity consumption (including hyperscale
+services), the total amount of energy consumption has slightly increased year over year.
+1,055
+1,005
+Connect Employees with Purpose
+Total Energy Consumption
+Gigawatt hours (GWh)
+1,115
+5%
+6%
+-1%
+2021
+Stakeholders
+Additional
+Information
+SAP Integrated Report 2021
+SAP Integrated Report 2021
+SAP
+Our global environmental policy provides the core framework for how we manage our environmental
+impact in our own operations and with our customers. Updated regularly and approved by the CFO,
+this policy guides our efforts to reduce our ecological footprint, provide environmental performance
+transparency, and demonstrate sustainable leadership through transformational strategies. In addition,
+it helps us to comply with internationally recognized sustainability standards as well as stakeholder
+expectations, primarily those of customers, investors, and employees.
+Guidelines and Policies
+To be able to innovate and embed sustainability further, we regularly engage externally with various
+stakeholder groups such as non-governmental organizations (NGOs), non-profit organizations (NPOs),
+and academia. This notably includes an external sustainability advisory panel comprised of expert
+representatives from our customers, investors, partners, NGOs, and academia, which provide us with
+valuable outside-in feedback and advice.
+The Executive Board sponsor for sustainability, including climate action, is the SAP CFO. The
+responsibility for driving SAP's holistic, cross-company sustainability agenda is shared between the
+core sustainability team and the Sustainability Council, which are both chaired and led by the chief
+sustainability officer (CSO). The CSO's team coordinates SAP's response to climate change (including
+assessing and managing climate-related risks through a quarterly risk review, setting reduction targets,
+measuring and monitoring carbon emissions on a quarterly basis, and embedding sustainability-
+related initiatives across SAP), while it is the Council members' responsibility to integrate sustainability
+into the core business of their particular Board area, measure and report on their Board areas'
+progress, act as an ethical advisory board for the Company, and communicate with internal and
+external audiences on the business relevance of the topic. This happens in close cooperation with
+various other departments such as the global procurement organization, which aims to ensure that
+the Company purchases energy-efficient, sustainable products and services. The global facilities
+management team designs and operates our facilities based on robust environmental standards such
+as ISO 14001. Our global cloud services organization considers the optimization of the energy
+consumption in our data centers, while SAP's IT operations personnel is encouraged to use IT
+equipment and business software responsibly.
+Governance
+Due Diligence
+Our strategy to create positive impact and to address climate action is implemented through a dual
+approach: (1) SAP as enabler: We aim to provide products and services to our customers to reduce
+their carbon emissions and pave the way towards a low-carbon future together; and (2) SAP as
+exemplar: To live up to our corporate responsibility and to build climate resilience, we strive towards
+leading by example in SAP's business operations and practices by running our own operations more
+sustainably.
+To bring SAP's purpose of "helping the world run better and improving people's lives" to life, our
+sustainability activities and programs are aimed at creating positive economic, environmental, and
+social impact within planetary boundaries. In light of the aggravating climate change impacts and
+other intensifying global challenges, such as biodiversity loss and population growth, climate action
+has been put at the top of SAP's corporate sustainability agenda – which was also reconfirmed by the
+latest conducted materiality analysis.
+Vision and Strategy
+Energy and Emissions
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+116/338
+115/338
+The majority of the information in the Employees and Social Investments section was not part of the
+statuatory audit of our combined group management report by our external auditor. Only the
+quantitative indicators Business Health Culture Index, Employee Engagement Index, Employee
+Retention, Women in Management, as well as Headcount and Personnel Expense are audited at a
+reasonable assurance level. For the remaining content of the Employees and Social Investments
+section, our auditor performed a limited assurance engagement.
+QAudit Scope
+No material risks were identified through our framework which is detailed in the Risk Management
+Methodology and Reporting section.
+Related Risks for SAP
+To Our
+Stakeholders
+To Our
+Combined Group
+Consolidated Financial
+Statements IFRS
+21 Scope 3 includes: Rental Cars, Business Flights, Train Travel, Business Trips with Private Cars, Employee Commuting, Electricity
+External Data Centers, Electricity Used by Hyperscale Services, and Logistics.
+22 We report all our carbon emissions in CO2 equivalents (CO₂e).
+Management Report
+117/338
+118/338
+SAP
+Performance and Measures to Progress
+20 Scope 1 includes: Stationary Combustion and Refrigerants in Facilities, Mobile Combustion and Refrigerants in Corporate Cars, Mobile
+Combustion in Corporate Jets. Scope 2 includes: Electricity in Offices, Electricity in Data Centers, Purchases of Chilled and Hot Water,
+Steam.
+Since 2017, we have complied with the requirements of the Science Based Targets initiative (SBTI)
+and are committed to reducing emissions by 85% by 2050 compared to the base-year level 2016,
+including our entire Scope 3 value chain emissions such as our products-in-use emissions at our
+customers. Confirmed by the SBTI in a 2019 reassessment, this target reflects the level of
+decarbonization required to keep the global temperature increase below 1.5 degrees Celsius
+compared to preindustrial temperatures. However, to meet a net-zero future, in 2022 we aim to further
+accelerate our climate ambitions by committing to achieve net zero across our entire value chain
+by 2030 in alignment with the SBTi Net-Zero Standard - 20 years earlier than originally planned.
+This target refers to our total net carbon emissions, which are calculated by deducting purchased
+renewable energy certificates, self-generated renewable energy, and carbon offsets from our gross
+carbon emissions in the respective reporting period. Our carbon neutral target includes all direct and
+indirect emissions from running our business (Scope 1 and Scope 2) 20 as well as a selected subset of
+indirect emissions from our value chain (Scope 3). 21 This objective is key to reducing SAP's own
+environmental footprint and to combatting climate change – one important step towards contributing
+to SAP's overarching purpose.
+In 2017, we set our leading environmental target of making our operations carbon neutral by 2025.
+However, to consider the impact of the COVID-19 pandemic on our carbon emissions, to strive toward
+a role model position in sustainability, and to maintain our ambition level, we decided to revise and
+accelerate our carbon neutral target: We now aim to become carbon neutral in our own
+operations by 2023 – two years earlier than what we had aimed for thus far.
+Our Targets
+How We Measure and Manage Our Performance
+Information
+Additional
+Further Information on
+Sustainability
+To achieve our carbon neutral target and to track its progress, we have derived annual targets for our
+internal operational steering. Since the beginning of 2020, these annual targets have been integrated
+in the Executive Board's short-term performance-based compensation.
+As a result of the ongoing COVID-19 pandemic, as well as the introduction of a more flexible working
+model at SAP, carbon-intensive business activities, in particular business travel-related activities,
+increased moderately during the year, but remained at a low level overall. As a result, our carbon
+emissions have continued to decrease. Even though our employee headcount increased by 4.9%, our
+net carbon emissions dropped to 110 kilotons 22 (kt), representing a year-over-year decrease of 18.5%
+(2020: 135 kt). In July 2021, we had already reduced our carbon emissions outlook for 2021 from
+145 kt to a range of 90 kt to 110 kt to reflect the expected impact of the COVID-19 pandemic on SAP's
+business results.
+Our "Five Pillars of Compliance” online training is mandatory for all employees wherever legally
+permissible.
+127/338
+To Our
+SAP Integrated Report 2021
+SAP
+128/338
+Despite restrictions caused by the COVID-19 pandemic, field compliance officers continued to hold
+training sessions – albeit virtually – for employees across the organization, from customer-facing staff
+to individuals in supporting roles, such as corporate affairs and marketing.
+-
+Monitoring employee certification of the CoBC for employees worldwide continued. During the 2021
+monitoring cycle, a 99.9% certification rate was recorded for permanent SAP employees (excluding
+newly acquired companies).
+Stakeholders
+Our training programs cover topics such as anticorruption and antibribery, competition law,
+governance for customer commitments, intellectual property, and information security.
+Our Code of Business Conduct (COBC) provides the primary ethical and legal framework within
+which we conduct business and remain on course for success. It is adapted locally and translated into
+over 20 languages.
+Quarterly OEC newsletters provide all employees with information on a range of compliance-related
+topics. We also include at least one business ethics and compliance-related question in our annual
+employee engagement survey and in company-wide polls throughout the year. Employees can use
+the SAP One employee portal at any time to access all global policies, guidelines, and additional
+information. The SAP Compliance mobile app also provides convenient, ongoing access to
+compliance-related information.
+All Board areas have re-committed their support for OEC's Compliance Ambassador Program and
+have nominated employees to participate in it. In 2021, a fourth cohort was introduced, bringing the
+number of participants from 177 in 2020 to over 500 in 2021. The program is designed to give
+employees a further point of contact in the business when compliance matters arise. Ambassadors
+participate in an extensive curriculum of monthly on-boarding sessions over a two-year period and are
+expected to cascade and transfer information on the importance of compliance and ethics throughout
+their teams and lines of business.
+The OEC's dedicated communications team promotes a consistent distribution of integrity-related
+communications, at all levels of the Company - including senior leaders, managers, and front-line
+employees. Executive Board members and senior leaders regularly host all-hands meetings as well as
+leadership team meetings and smaller gatherings, which include integrity-focused topics,
+demonstrating their dedication to ethical business.
+Communication
+The COBC is communicated to employees globally and contains a fundamental set of rules that
+define how we conduct our business. It sets SAP's standard for our dealings with each other and with
+customers, partners, competitors, and vendors. All of our employees are bound by it. In 2021, the
+policy was reviewed and revised. It is now called the Code of Ethics and Business Conduct and was
+rolled out globally in January 2022.
+Enforcing Policies and Guidelines
+How We Measure and Manage Our Performance
+We also expect our partners and suppliers to commit to meeting our high standards of integrity and
+sustainability. For this reason, we have the SAP Partner Code of Conduct and the SAP Supplier Code
+of Conduct in place so that partners and suppliers understand what is expected of them.
+Combined Group
+Management Report
+Guidelines and Policies
+Training Offerings
+Consolidated Financial
+Statements IFRS
+Our cross-company agenda on human rights is driven by SAP's Sustainability team. In 2021, we
+established a new project organization to respond to increasing legal requirements such as the
+German Supply Chain Due Diligence Act. The project organization comprises executives and
+employees from various Executive Board areas who embed human rights due diligence in their areas
+of responsibility. We regularly consult experts from academia, civil society, and industry in our external
+Sustainability Panel on how SAP can generate the greatest positive social impact.
+Additional
+Information
+To assess our human rights measures, we consider legal requirements, performance ratings, audit
+results, and stakeholder feedback. For example, since 2012, we have conducted regular internal
+audits to help us verify that subsidiaries adhere to human rights standards, and check whether
+employees feel empowered to raise concerns.
+At the end of 2021, we started a labor audit at SAP China, whereby we reviewed labor conditions,
+wages and hours, health and safety, environmental management system, and business practices. The
+audit has been subject to finalization in the first quarter of 2022. We plan to adapt our global internal
+audit program based on recent legal requirements.
+129/338
+130/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Employees
+Our employees receive training on human rights issues most relevant to SAP. For example, they are
+trained on our policies on discrimination, health and safety management, and data protection and
+privacy.
+We encourage all employees, including groups at heightened risk of becoming disadvantaged or
+marginalized (also called “vulnerable groups") such as temporary external staff, to report conduct that
+violates our policies. Employees can reach out to their managers, HR officers, compliance officers, or
+colleagues who are trained to be part of our internal mediation pool. Our global ombudsperson also
+receives employee complaints and mediates fair settlements as well as helps our Executive Board
+analyze HR-related complaints and issues. Our complaints mechanisms (for example, our Speak Out
+at SAP tool) are also accessible to external groups.
+Suppliers and Partners
+We expect suppliers and partners to respect human rights, and our codes of conduct require them to
+uphold labor rights and provide a safe and healthy work environment for all employees.
+For more information, see the Sustainable Procurement section.
+Product Development
+We seek to respect human rights throughout the product lifecycle – from design through development
+to use. Protection of personal information and accessibility are key areas of focus.
+For more information, see the Security, Data Protection, and Privacy section.
+Our innovative solutions help customers embed human rights standards into their own business. For
+example, they can use the SAP Ariba Supplier Risk solution to gain the intelligence and
+transparency to understand human rights risks within their supply chains.
+Al Ethics
+To steer the ethical development, deployment, and sale of our Al solutions, we created SAP's Guiding
+Principles for Artificial Intelligence that we continue to evaluate and update in conjunction with an
+external advisory panel. Our guiding principles are an evolving reflection on the challenges of Al in an
+everchanging technological landscape. In January 2022, we rolled out a Global Al Ethics Policy to
+help ensure that our Al systems are developed, deployed, and sold in line with the ethical standards
+laid out in our guiding principles.
+Related Risks
+No material risks were identified through our framework which is detailed in the Risk Management
+Methodology and Reporting section.
+QAudit Scope
+The content of the section Human Rights and Labor Standards was not subject to the statutory audit
+of the combined group management report. However, our external auditor performed an independent
+limited assurance engagement for the content of this section.
+DAX Chief Compliance Officer Round Table. SAP is also a Corporate Member of the Association of
+Certified Fraud Examiners (ACFE).
+Assessing Human Rights Measures
+Further Information on
+Sustainability
+How We Measure and Manage Our Performance
+Guidelines
+Compliance Processes
+The OEC also evaluates SAP's third-party service providers to check that SAP's compliance standards
+are met. New suppliers and third parties seeking a partnership with SAP are scrutinized according to a
+risk-based compliance due diligence process, which is repeated every two years thereafter. Supplier
+and partner relationships are formally defined in contracts that outline their obligation to abide by
+SAP's compliance requirements and a "right to audit" clause. The OEC also has a team dedicated to
+conducting compliance audits of partners and suppliers to assess adherence to SAP's requirements
+and to identify and address compliance risks.
+The OEC's Compliance Monitoring & Analysis (CMA) team monitors the effectiveness of SAP's
+compliance processes and controls through regular testing of high-risk transactions, identified using a
+recently introduced data analytics tool developed with PricewaterhouseCoopers GmbH (PwC) and
+through manual sampling. The CMA team also analyzes findings from investigations and partner audit
+reports to identify potential enterprise-wide process deficiencies and patterns of misconduct that
+indicate a compliance risk. The team then conducts root cause analyses on the highest-risk topics
+and recommends remediation actions to mitigate the risks.
+Whistleblower Reporting Tool
+In 2021, SAP replaced its existing whistleblower reporting tool with one that is independently
+managed, so that any matters or concerns can continue to be reported easily and anonymously. The
+new tool - Speak Out at SAP – is available both internally to SAP employees and externally to
+concerned parties.
+Reports may be submitted either directly by the reporter through the tool, or through the multilingual
+call center by an agent acting on the reporter's behalf. In all cases, SAP continues to operate a strict
+non-retaliation policy.
+Investigating Misconduct
+Where appropriate, the OEC engages the assistance of an external law firm when investigating
+conduct that may violate antibribery and anticorruption laws.
+For more information about the material allegations currently being investigated by the OEC, see the
+Notes to the Consolidated Financial Statements, Note (G.3).
+Related Risks for SAP
+The actions and processes to address risks in business conduct are described above. For related
+risks, see also Ethical Behavior in the Risk Management and Risks section.
+QAudit Scope
+The content of the Business Conduct section was not subject to the statutory audit of the combined
+group management report. However, our external auditor performed an independent limited
+assurance engagement for the content of this section.
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Human Rights and Labor
+Standards
+Vision and Strategy
+SAP is committed to respecting and promoting human rights across our operations, extended supply
+chain, and product lifecycle, and we are guided by the United Nations (UN) Guiding Principles on
+Business and Human Rights in doing so. We also expect all of our business partners to respect
+human rights and avoid complicity in any abuse.
+Due Diligence
+Governance
+The Artificial Intelligence (AI) Ethics Steering Committee guides our internal efforts to implement
+and enforce Al ethics in our operations and policies. It comprises SAP executives from all Executive
+Board areas with supervision of topics relevant to guiding and implementing Al ethics. Also made up
+of experts from academia, industry, and public policy, our external Al Ethics Advisory Panel advises
+us on how to further develop and operationalize our guiding principles for Al.
+We support the Universal Declaration of Human Rights; the Organization for Economic Co-operation
+and Development (OECD) Guidelines for Multinational Enterprises; and the International Labor
+Organization Declaration on Fundamental Principles and Rights at Work. The SAP Global Human
+Rights Commitment Statement is our public commitment to respecting and promoting human rights
+across our value chain. Overseen by our chief sustainability officer and approved by our Executive
+Board, the current version of the Human Rights Commitment Statement is available at
+www.sap.com/corporate-sustainability.
+Information
+To Our
+Stakeholders
+Further Information on
+Sustainability
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+SAP
+SAP Integrated Report 2021
+Material agreements with change-of control-provisions: SAP SE has concluded the following
+material agreements with provisions that take effect in the event of a change of control, whether
+following a takeover bid or otherwise:
+The Annual General Meeting of Shareholders on May 17, 2018, granted a power to the Executive
+Board in accordance with the German Stock Corporation Act, section 71 (1)(8), to buy back for
+treasury on or before May 16, 2023, SAP SE shares attributable in total to not more than €120 million
+of the share capital. This power is subject to the proviso that the shares repurchased, together with
+any shares that were previously acquired and are still held by SAP in treasury and any other shares
+controlled by SAP, must not in total exceed 10% of SAP's share capital. Executive Board powers, such
+as those described to issue and repurchase stock and to grant rights of conversion and subscription to
+shares of SAP, are widely followed common practice among German companies such as SAP. These
+powers give the Executive Board the flexibility it needs, in particular, the option to use SAP shares as
+consideration in equity investments, raise funds on the financial markets at short notice on favorable
+terms, or return value to shareholders during the course of the year.
+Power to issue and repurchase shares: The Annual General Meeting of Shareholders on
+May 12, 2021, granted powers to the Executive Board, subject to the consent of the Supervisory
+Board, to issue convertible and/or warrant-linked bonds, profit-sharing rights and/or income bonds (or
+combinations of these instruments), and to grant conversion or option rights in respect of SAP SE
+shares representing a total attributable portion of the share capital of not more than €100 million
+secured by a corresponding amount of contingent capital. These powers will expire on May 11, 2026.
+The Executive Board is also authorized until May 19, 2025, to increase the share capital by not more
+than €250 million by issuing new shares against contributions in cash and to increase the share
+capital by not more than €250 million by issuing new shares against contributions in cash or in kind.
+For more information about the different tranches of authorized capital and the aforementioned
+contingent capital, see the Articles of Incorporation, section 4.
+Requirements concerning appointments and dismissals of members of the Executive Board
+and amendments to the Articles of Incorporation: Conditions for the appointment and dismissal
+of members of the Executive Board and amendments to the Articles of Incorporation reflect the
+relevant provisions of applicable European and German law, including Council Regulation (EC)
+No. 2157/2001 on the Statute for a European Company ("SE Regulation") and the German Stock
+Corporation Act. Under the Articles of Incorporation, the Executive Board consists of at least two
+members, who are appointed for a period of not more than five years by the Supervisory Board in
+accordance with the SE Regulation, articles 39 and 46. The number of members of the Executive
+Board is decided by the Supervisory Board. Executive Board members may be reappointed for, or
+their term of office extended by, a maximum of five years. A simple majority of the Supervisory Board
+members is required for Executive Board appointments. In the event of a tie, the chairperson of the
+Supervisory Board has the deciding vote. The Supervisory Board can appoint a chairperson of the
+Executive Board and one or more deputy chairpersons from among the members of the Executive
+Board. The Supervisory Board can revoke appointments to the Executive Board in accordance with
+the SE Regulation, article 9, and the German Stock Corporation Act, section 84, if compelling reasons
+exist, such as gross negligence on the part of the Executive Board member. If the Executive Board is
+short of a required member, one may be appointed in urgent cases by a court in accordance with the
+SE Regulation, article 9, and the German Stock Corporation Act, section 85. In accordance with the
+SE Regulation, article 59, and the German Stock Corporation Act, section 179, an amendment of the
+Articles of Incorporation requires a resolution of the General Meeting of Shareholders with a majority
+of at least three-quarters of the valid votes cast. For any amendments of the Articles of Incorporation
+that require a simple majority for stock corporations established under German law, however, the
+simple majority of the valid votes cast is sufficient if at least half of the subscribed capital is
+represented or, in the absence of such quorum, the majority prescribed by law (that is, two-thirds of
+the votes cast, pursuant to article 59 of the SE Regulation) is sufficient. Section 11 (2) of the Articles of
+Incorporation authorizes the Supervisory Board to amend the Articles of Incorporation where such
+amendments only concern the wording.
+Information
+Additional
+Additional
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+124/338
+123/338
+Type of control over voting rights applying to employee shareholders who do not directly
+exercise their control rights: As with other shareholders, employee holders of SAP shares exercise
+their control rights in accordance with the law and the Articles of Incorporation. In votes on the formal
+approval of their acts at the Annual General Meeting of Shareholders, employee representatives on
+the Supervisory Board, as all other members of the Supervisory Board, are prohibited from exercising
+the voting rights associated with their shares.
+Shares with special rights conferring powers of control: No SAP shareholder has special rights
+conferring powers of control.
+Shareholdings that exceed 10% of the voting rights: We are not aware of any direct or indirect
+SAP SE shareholdings that exceed 10% of the voting rights.
+Further Information on
+Sustainability
+Information
+The terms of SAP's syndicated €2.5 billion revolving credit facility include a change-of-control clause.
+For more information about this syndicated credit facility, see the Notes to the Consolidated Financial
+Statements, Note (F.1). This clause obliges SAP SE to notify the banks in case of a change of control.
+If, on receiving the notification, banks that represent at least two-thirds of the credit volume so require,
+the banks have the right to cancel the credit facility and demand complete repayment of the
+outstanding debt. If no continuation agreement is reached, the credit facility would end and the
+obligation to repay would become effective at an ascertainable time.
+SAP had bonds totaling €9.6 billion and US$0.3 billion outstanding as at December 31, 2021. For
+more information about SAP's bonds, see the Notes to the Consolidated Financial Statements,
+Note (E.3). Under the terms agreed with the buyers, we are required to notify the buyers, without
+delay, of any change of control. If there is a change of control and SAP is consequently assigned a
+lower credit rating within a defined period, buyers are entitled to demand repayment.
+The OEC has field compliance officers based all around the world, in high-risk and low-risk
+jurisdictions, and in markets where there are local language needs. Field compliance officers are often
+the first point of contact for the business regarding compliance matters. In those high-risk countries in
+which the OEC is not physically represented, the OEC operates a network of compliance stewards
+drawn largely from either our legal, finance, or human resources (HR) departments. They are
+equipped to offer advice on specific and straightforward compliance questions, and they work
+alongside our global network of compliance ambassadors (drawn from all areas of the Company) to
+amplify compliance messages and provide a further link for local employees to the relevant field
+compliance officer.
+Additional
+At SAP, ethical behavior is an integral part of our cultural values that influence our daily decision-
+making at every level of the business. To help nurture this environment, the OEC's various teams
+continually address compliance challenges and improve policies, guidelines, systems, and measures
+related to their implementation.
+In 2021, our aim to maintain a robust compliance program, based on our corporate values and
+voluntary commitments, as well as international standards, continued. The OEC team grew for the
+fourth consecutive year, from 123 employees in 2020 to 142 employees in 2021. The group chief
+compliance officer (GCCO) continues to report directly to the group CEO.
+The Office of Ethics and Compliance (OEC) contributes to SAP's success by providing trusted
+advice to SAP managers, leaders, and employees across the entire business. The OEC strives to
+advance SAP's business goals by promoting a strong culture of integrity and helping SAP to "Win the
+Right Way" by providing guidance and training that enables employees to make ethical and compliant
+choices.
+Governance
+Due Diligence
+At SAP, we also expect our business practices to not only meet international rules and legal
+requirements, but to adhere to our internal high standards of ethics and integrity. We understand that
+our customers expect this as well. SAP's reputation for doing business the right way is one of our most
+important assets. By striving to make ethical choices and to stay within high bounds of compliance,
+we aim to continue to grow SAP in a way that encourages and is conducive to compliant and ethical
+behavior.
+In an increasingly complex business environment, making the right decisions and abiding by ethical
+choices has never been more important. As a company operating in numerous countries across the
+globe, SAP is required to adhere to strict international legislation that defines acceptable business
+conduct and practices.
+Vision and Strategy
+126/338
+Business Conduct
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+125/338
+Change-of-control provisions in Executive Board compensation agreements: Agreements have
+been concluded with the members of the Executive Board of SAP SE concerning compensation in the
+event of a change of control. These agreements, which are customary internationally, are described in
+the Compensation Report. We have no analogous compensation agreements with our other
+employees.
+We have entered into relationships with other companies to jointly develop and market new software
+products. These relationships are governed by development and marketing agreements with the
+respective companies. Some of the agreements include provisions that, in the event of a change of
+control over one of the parties, give the other party a right to consent to the assignment of the
+agreement or to terminate it.
+To finance the acquisition of Signavio GmbH and create additional financial flexibility during the
+COVID-19 pandemic, SAP took out two bilateral bank loans amounting to €0.95 billion and €0.5 billion
+at the beginning of 2021, both of which were fully outstanding as at December 31, 2021. Both loan
+agreements contain a change-of-control clause which obliges SAP SE to notify the bank in case of a
+change of control. On receiving the notification, the bank has the right to cancel the loan agreement
+and demand complete repayment of the outstanding debt. If no continuation agreement is reached,
+the loan agreement would end and the obligation to repay would become effective at an
+ascertainable time.
+Under the terms of our U.S. private placements totaling approximately US$0.87 billion as at
+December 31, 2021, we are required to offer lenders repayment of outstanding debt if there is a
+change of control and SAP is consequently assigned a lower credit rating within a defined period. For
+more information about these private placements, see the Notes to the Consolidated Financial
+Statements, Note (E.3). Lenders would have up to 30 days to accept the offer.
+Restrictions applying to share voting rights or transfers: SAP shares are not subject to transfer
+restrictions. SAP held [48,924,892] treasury shares as at December 31, 2021 (see the Notes to the
+Consolidated Financial Statements, Note (E.2)). Treasury shares do not carry voting rights or dividend
+rights or other rights. We are not aware of any other restrictions applying to share voting rights or to
+share transfers.
+Composition of share capital: For information about the composition of SAP SE's share capital as
+at December 31, 2021, see the Notes to the Consolidated Financial Statements, Note (E.2). Each
+share entitles the bearer to one vote. American depositary receipts (ADRs) representing our shares are
+listed on the New York Stock Exchange (NYSE) in the United States. ADRs are certificates
+representing non-U.S. shares and are traded on U.S. stock exchanges instead of the underlying
+shares. One SAP ADR corresponds to one SAP share.
+Management Report
+Information Concerning Takeovers
+121/338
+27 Exchange rate date: December 31, 2021.
+Furthermore, SAP joined the 1t.org Corporate Alliance in 2021, which mobilizes business leaders to
+responsibly conserve, restore, and grow trees worldwide while pursuing 1.5 degrees Celsius science-
+based target. Restored and protected in the right places, trees and forests are invaluable in
+maintaining planetary stability, slowing climate change, safeguarding biodiversity, and providing critical
+ecosystem services to people around the world. Thus, SAP added the goal of planting 21 million
+trees by the end of 2025 to its comprehensive portfolio of climate measures and carbon-reducing
+innovations. This will help foster the much-needed transition to a nature-positive and net-zero future.
+Since 2012, SAP has helped to plant more than 12.2 million trees and is on track to reach its 2025
+goal.
+In addition to avoiding business flights by investing in virtual collaboration and communication
+technologies, we charge an internal carbon price for business flights in the majority of countries we
+travel from, to counterbalance the carbon emissions caused. Since 2016, we invest the collected
+internal air travel fees in high-quality carbon offsets (such as the Gold Standard) to support climate
+projects worldwide and compensate the adverse impact of necessary business flights. As a result,
+this measure has tangibly impacted our progress towards achieving our emission goals.
+Investments in sustainable projects and the corresponding carbon offsets represent a unit of reduced,
+avoided, or removed greenhouse gas emissions.
+In 2021, SAP made a US$2 million (€1.76 million) 27 commitment to the LEAF (Lowering Emissions
+by Accelerating Forest finance) Coalition, a public-private initiative seeking to mobilize US$1 billion
+to protect tropical forests in joint effort with national and subnational governments and local
+communities. LEAF issues emission reduction credits (ERCs) to its corporate partners that are
+verified and validated under the ART's (Architecture for REDD+ Transactions) TREES standard (The
+REDD+ Environmental Excellence Standard) to ensure high-quality offsets. Due to the ongoing
+funding process, LEAF does not yet offer carbon offsets.
+A key part of SAP's carbon offsetting strategy is the long-term investment in the Livelihoods Carbon
+Funds (LCF). The funds finance much-needed climate action and sustainable development in
+developing countries through ecosystem restoration, agroforestry, biodiversity preservation, and
+clean energy projects. This has generated high-quality carbon offsets certified by internationally
+recognized and demanding standards (such as the Gold Standard) and improved people's lives. In
+2020, SAP committed to invest €3 million in the third LCF and an additional €0.6 million in the first
+LCF. Due to the strong impact of the COVID-19 pandemic on our carbon emissions, we did not
+require our financial contribution to the LCF to offset our emissions in 2021. Instead, we used an
+investment in a nature-based forest project to compensate our emissions, the majority of which
+was were caused by business flights.
+To offset a share of our Scope 1 and Scope 3 emissions that cannot yet be avoided, we invest in
+different offset schemes with a strategic focus on nature-based solutions to compensate for these
+emissions (2021: 17.5 kt):
+Carbon Offsets
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Compliance matters are discussed with senior leadership at quarterly Audit and Compliance
+Committee meetings as well as during regular touchpoints with Executive Board and Supervisory
+Board members. Compliance matters are also discussed by the GCCO in quarterly Global
+Compliance Governance Committee meetings.
+Where appropriate, and in response to identified compliance concerns, the OEC engages external
+counsel and forensic consulting resources to perform corruption risk assessments of high-risk market
+units. This process also includes a comprehensive root cause analysis for identified risks.
+Outside SAP, the OEC regularly exchanges ideas and best practices for compliance processes with
+relevant peers in the software industry and beyond. In Germany, the OEC participates in the annual
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Information required under the German Commercial Code, sections 289a (1) and 315a (1), with an
+explanatory report:
+Consolidated Financial
+Statements IFRS
+Management Report
+122/338
+SAP
+SAP
+To Our
+Since January 1, 2021, Sabine Bendiek has served as chief people officer and labor relations director
+and has led the Human Resources organization. In mid-2021, she assumed additional responsibility
+and became SAP's chief people and operating officer.
+Changes in Management
+SAP Integrated Report 2021
+In January 2021, SAP announced that Julia White and Scott Russell had been appointed to the
+Executive Board. On February 1, 2021, Scott Russell took over the Customer Success organization
+from Adaire Fox-Martin, who departed the Executive Board at the end of January 2021 and left the
+Company at the end of June 2021. Julia White joined the Executive Board effective March 1, 2021,
+and took up the newly created Board role of chief marketing and solutions officer.
+The German Commercial Code, section 315d in connection with section 289f, requires that, as a listed
+company, SAP SE publishes a corporate governance statement either as part of our management
+report or on our Web site. The Executive Board and the Supervisory Board of SAP SE issued the
+Corporate Governance Statement on February 22, 2022, and published it on our Web site at
+www.sap.com/corporate-en/investors/governance.
+Corporate Governance Statement
+Corporate Governance
+Fundamentals
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+Additional
+Information
+SAP
+Further Information on
+Sustainability
+SAP Integrated Report 2021
+Information
+Combined Group
+Management Report
+Related Risks for SAP
+Additional
+QAudit Scope
+Stakeholders
+The content of the Energy and Emissions section was not subject to the statutory audit of our
+combined group management report. However, our auditor has performed an independent assurance
+engagement on the contents of this section. Under this engagement, the quantitative indicators
+Carbon Emissions (Scope 1 and 2 as well as selected Scope 3 emissions including business flights
+and employee commuting), Renewable Electricity, and Total Energy Consumed were audited at a
+reasonable assurance level. For the remaining content of this section, our auditor performed a limited
+assurance engagement.
+We have analyzed climate change risks and their potential impact on our largest office buildings,
+major data centers, and SAP's workforce. Risk drivers were chosen based on the Intergovernmental
+Panel on Climate Change (IPCC) reports AR5 and SR15 (that is, rising sea levels, temperature
+extremes, and tropical storms). The risk assessment was performed in accordance with the SAP
+Global Risk Management Policy as outlined in the Risk Management and Risks section. As part of our
+last analysis in 2019, no material risks have been identified potentially impacting our business
+operations, revenue, or expenditure.
+Consolidated Financial
+Statements IFRS
+Major
+Medium
+Major
+Likely
+Partner Ecosystem
+Medium
+Cybersecurity and Security
+Operational Business Risks
+Sales and Services
+Medium
+Major
+Likely
+Medium
+Likely
+Ethical Behavior
+Corporate Governance and Compliance Risks
+Unlikely
+Business-Critical
+Mergers and Acquisitions
+Technology and Products
+Global Economic and Political Environment: Uncertainty in the global economy, financial
+markets, and social and political instability caused by state-based conflicts, terrorist attacks,
+civil unrest, war, or international hostilities could lead to disruptions in our business.
+Economic, Political, Social, and Regulatory Risks
+Major
+Medium
+Major
+Unlikely
+Innovation
+Medium
+High
+Major
+Medium
+Business-Critical
+Unlikely
+Market Share and Profit
+Strategic Risks
+Medium
+Major
+Likely
+Unlikely
+Likely
+The table below provides an overview of major and business critical risk categories (together with the
+respective risk factors). Therein, risk factors are categorized with their net value (after the
+Medium
+SAP
+implementation of mitigations) according to our framework that is detailed in the Risk Management
+Methodology and Reporting section.
+Despite the ongoing COVID-19 pandemic, SAP has been able to take effective measures to mitigate
+the risks arising from it. There has been no significant disruption to business operations or adverse
+effects on revenues, with some savings in operating expenses. While monitoring continues, we expect
+the remaining impact of the pandemic to be insignificant, and estimate the probability of occurrence
+of material risks of this risk factor to be remote.
+The following sections outline our risk categories and risk factors that we have identified and
+continuously track. To further streamline our integrated report, we disclose material and relevant risks
+and focus on "major" and "business-critical" risk factors as per our assessment. Thus, the following risk
+factors are not included in the Integrated Report 2021 as they do not currently fall into either the
+"major" or "business-critical” category: Corporate Governance; Sustainability; Taxation; Sales and
+Revenue Conditions; Liquidity; Use of Accounting Policies and Judgment; Currency, Interest Rate, and
+Share Price Fluctuation; Insurance and Venture Capital; Unauthorized Disclosure of Information;
+Investor Relations; Corporate Affairs; Marketing; Corporate Development; Portfolio; SAP Strategy;
+Cloud Operations; Human Workforce; and Government Security & Secrecy.
+Risk Factors
+We use our own risk management software, namely SAP Governance, Risk, and Compliance (GRC)
+solutions powered by SAP HANA, to support the governance process. GR&AS risk managers record
+and track identified risks using our risk management software online and in real time to help create
+transparency across all known risks that exist in the Group, as well as to facilitate risk management
+and the associated risk reporting. This GRC solution also supports the risk-based approach of the
+ICRMSFR. Our continuous control monitoring activities are performed utilizing our GRC software as
+well. This information is available to managers through direct access to our SAP Fiori application for
+enterprise risk reporting, and in regularly issued reports, and is consolidated and aggregated for the
+quarterly risk report to the Executive Board.
+Supporting Software Solution
+Additionally, and in compliance with German commercial law requirements, SAP maintains an internal
+control system beyond financial reporting. This is supported through automated controls (continuous
+control monitoring) as part of our business processes.
+SAP Integrated Report 2021
+The assessment, conducted by SAP and external audit, of the effectiveness of the ICRMSFR related to
+our IFRS consolidated financial statements concluded that, on December 31, 2021, the Group had an
+effective internal control system over financial reporting in place.
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+To Our
+Stakeholders
+SAP Integrated Report 2021
+As a global company, we are influenced by multiple external factors that are difficult to predict and
+beyond our influence and control. Any of these factors could have a significant adverse effect on the
+global economy as well as on our business.
+SAP
+CFO. The committee meets regularly to set the annual scope for the test of effectiveness, to assess
+and evaluate any weaknesses in the controls, and to determine measures to address them timely and
+adequately. The Audit and Compliance Committee of the Supervisory Board regularly scrutinizes the
+resulting assessments of the effectiveness of the internal controls over financial reporting with respect
+to the IFRS consolidated financial statements.
+Data Protection and Privacy
+To Our
+Stakeholders
+Consolidated Financial
+Statements IFRS
+Major
+Likely
+Legal and IP
+Medium
+Business-Critical
+Unlikely
+International Laws and Regulations
+Medium
+Combined Group
+Management Report
+Major
+Global Economic and Political Environment
+Economic, Political, Social, and Regulatory Risks
+Risk Level
+Impact
+Probability
+Overview of Risk Factors (Aggregated Statement for 2021)
+Additional
+Information
+Further Information on
+Sustainability
+Likely
+We are subject to risks and associated consequences in the following areas, among others:
+We conduct audits based on various audit standards on a regular basis to identify and remediate
+issues early on.
+Prolonged deterioration of global economic conditions (impact on accurate forecast) or budgetary
+constraints of national governments
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+140/338
+139/338
+We regularly update and enhance our compliance programs to improve our effectiveness and to
+ensure that our employees understand and comply with the SAP Code of Business Conduct
+(COBC). This process is coordinated by the OEC.
+We continue efforts to strengthen the Export Control team and continue with our cross-Board
+project to overhaul SAP's export control and trade sanctions policies, operations, and controls, to
+safeguard compliance with applicable EU and U.S. laws in all delivery channels both on premise
+and in the cloud.
+We maintain a data protection and privacy office and associated policy.
+Combined Group
+We have a legal and compliance office presence in various countries, with compliance safeguards
+supported and monitored by our Office of Ethics & Compliance (OEC), a team of dedicated
+resources who are tasked with managing our policy-related compliance measures.
+We engage with authorities on public policy issues, including the creation of reasonable framework
+conditions for new technologies such as cloud computing, Big Data, artificial intelligence, the
+Internet of Things (IoT), and for international trade.
+We receive guidance from external economic consultants, law firms, tax advisors, and authorities in
+the concerned countries, and take legal actions when necessary.
+We have established a dedicated unit within our Global Legal organization that proactively
+assesses newly emerging regulatory initiatives, advises internal departments on these initiatives,
+and supports their swift adherence thereto.
+We continuously invest and strive to improve, harmonize, and standardize our global processes,
+procedures, and solutions to increase our efficiency and effectivity in meeting the various legal
+requirements to ensure compliance, while also utilizing scenario impact analyses.
+We continuously monitor new and increased regulatory requirements, updated or new enforcement
+trends, and publicly available information on compliance issues in the computer software industry,
+in the emerging markets where we invest our resources, and in the business environment in
+general to cope with an increase in regulation enforcement efforts of certain countries or state-
+driven protectionism.
+-
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Any of these events could have a material adverse effect on our operations globally or in one or more
+countries or regions, which could have a material adverse effect on our business, financial position,
+profit, and cash flows.
+136/338
+As we expand into new countries and markets or extend our business activities in these markets,
+including emerging and high-risk markets, these risks could intensify. The application of the respective
+local laws and regulations to our business is sometimes unclear, subject to change over time, and
+often conflicting among jurisdictions. Additionally, these laws and government approaches to
+enforcement continue to change and evolve, just as our products and services continually evolve.
+Compliance with these varying laws and regulations could involve significant costs or require changes
+in products or business practices. Non-compliance could result in the imposition of penalties or
+cessation of orders due to alleged non-compliant activity. Governmental authorities could use
+considerable discretion in applying these statutes and any imposition of sanctions against us could be
+material.
+Management Report
+Additional
+Information
+Identification
+Analysis
+Response
+Validation
+and Monitoring
+The outcome of litigation and other claims or lawsuits is intrinsically uncertain. Management's view of
+the litigation might also change in the future. Actual outcomes of litigation and other claims or lawsuits
+Any legal action we bring to enforce our proprietary rights could also involve enforcement against a
+partner or other third party, which might have an adverse effect on our ability, and our customers'
+ability, to use that partner's or other third party's products.
+Third parties might reverse-engineer or otherwise obtain and use technology and information that we
+regard as proprietary. Accordingly, we might not be able to protect our proprietary rights against
+unauthorized third-party copying or utilization. Adverse outcomes to some or all of the claims and
+lawsuits pending against us might result in the award of significant damages or injunctive relief against
+us or brought against us in the future that could hinder our ability to conduct our business and could
+have a material adverse effect on our reputation, brand, business, competitive or financial position,
+financial performance, profit, and cash flows. Third parties could require us to enter into royalty and
+licensing arrangements on terms that are not favorable to us, cause product shipment delays, subject
+our products to injunctions, require a complete or partial redesign of products, result in delays to our
+customers' investment decisions, and damage our reputation. Third-party claims might require us to
+make freely accessible under open source terms one of our products or third-party (non-SAP)
+software upon which we depend.
+Despite our efforts, we might not be able to prevent third parties from obtaining, using, or selling
+without authorization what we regard as our proprietary technology and information. In addition,
+proprietary rights could be challenged, invalidated, held unenforceable, or otherwise affected.
+Moreover, the laws and courts of certain countries might not offer effective means to enforce our
+legal or intellectual property rights. Finally, SAP may not be able to collect all judgments awarded
+to it in legal proceedings.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+We integrate open source software components from third parties into our software. Open source
+licenses might require that the software code in those components or the software into which they
+are integrated be freely accessible under open source terms.
+We might become dependent in the aggregate on third-party technology, including cloud and Web
+services, that we embed in our products or that we resell to our customers.
+Claims and lawsuits might be brought against us.
+We are subject to risks and associated consequences in the following areas, among others:
+Moreover, protecting and defending our intellectual property is crucial to our success. The outcome of
+litigation and other claims or lawsuits is intrinsically uncertain.
+We have in the past and believe that we will continue to be subject to claims and lawsuits, including
+intellectual property infringement claims, as our solution portfolio grows; as we acquire companies
+with increased use of third-party code including open source code; as we expand into new industries
+with our offerings, resulting in greater overlap in the functional scope of offerings; and as non-
+practicing entities that do not design, manufacture, or distribute products assert intellectual property
+infringement claims.
+Legal and IP: Claims and lawsuits against us, such as for IP infringements, or our inability to
+obtain or maintain adequate licenses for third-party technology, or if we are unable to protect
+or enforce our own intellectual property, may result in adverse outcomes.
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+business-critical. We estimate the probability of occurrence to be unlikely. We classify this risk factor
+as medium.
+OEC coordinates and provides guidance on implementation, training; and enforcement efforts with
+respect to compliance-related policies throughout SAP, including but not limited to the Third-Party
+Sales Commission Policy and accompanying training.
+Third parties have claimed, and might claim in the future, that we infringe their intellectual property
+rights or that we are overusing or misusing licenses to these technologies.
+Expenses associated with the localization of our products and compliance with varying and
+potentially conflicting local regulatory requirements
+Information
+Additional
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Any of these events could limit our ability to reach our targets, as they could have a material adverse
+effect on our business operations, our business in general, our financial position, profit, and cash
+flows.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+Ongoing shift to a higher share of cloud subscriptions and software support revenue streams,
+which will lead to more predictable revenue streams over time, providing increased stability against
+financial volatility
+SAP Integrated Report 2021
+138/338
+137/338
+Regional conflicts, which may affect data centers as critical infrastructure assets
+Terrorist attacks or other acts of violence, civil unrest, pandemics, or natural disasters, impacting
+our business
+Increased number of foreclosures and bankruptcies among customers, business partners, and key
+suppliers
+Higher credit barriers for customers, reducing their ability to finance software purchases
+Financial market volatility episodes, global economic crises, chronic fiscal imbalances, slowing
+economic conditions, or disruptions in emerging markets
+Diplomatic confrontations, frictions, trade or tariff conflicts with potential global implications as
+indicated by a prolonged and widespread economic slowdown
+SAP
+- Internal cost discipline and a conservative financial planning
+The illustration below describes the key elements of the risk management process under SAP's risk
+management policy.
+Reshaping of our organizational structure and processes to increase flexibility and efficiency
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+Compliance with and stringent enforcement of laws and regulations (including interpretations),
+implications of government elections, lack of reforms, data protection and privacy rules, regulatory
+requirements and standards (such as the Payment Card Industry Data Security Standard [PCI
+DSS]), other compliance requirements (such as Service Organization Controls [SOC]), or
+sometimes even country-specific certifications or requirements in particular for cloud service
+provider or data center operations
+Violations of country-specific sanctions
+Protectionist trade policies, import and export regulations, and trade sanctions, counter or even
+conflicting sanctions, and embargoes including, but not limited to, country-specific software
+certification requirements
+Workforce restrictions and travel bans resulting from changing laws and regulations, from political
+decisions, or through required works council involvements, labor union approvals, and immigration
+laws in different countries
+Discriminatory, protectionist, or conflicting fiscal policies and tax laws
+Changes in external reporting standards and tax laws including, but not limited to, conflict and
+overlap among tax regimes as well as the introduction of new tax concepts that harm digitalized
+business models
+Changes in tax laws and changes in the interpretation of the complex tax rules in certain countries,
+impacting our business situation, financial condition, and results of operations
+Our business is subject to numerous risks inherent to international business operations. We are
+subject to risks and associated consequences in the following areas, among others:
+The SAP Group has a global presence and operates in most countries of the world. As a European
+company domiciled in Germany with securities listed in Germany and the United States, we are
+subject to European, German, U.S., and other governance-related regulatory requirements of
+countries we operate in.
+International Laws and Regulations: Laws, regulatory requirements and standards in
+Germany, the United States, and elsewhere continue to be very stringent. Our international
+business activities and processes expose us to numerous and often conflicting laws and
+regulations, policies, standards, or other requirements and sometimes even conflicting
+regulatory requirements.
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. Such occurrence could exacerbate the
+other risks we describe in this report or cause a negative deviation from our revenue and operating
+profit target. We classify this risk factor as medium.
+Monitoring and evaluation of global and political developments, supported by our global
+government affairs unit, to share insights and provide guidance to allow for proactive preparation
+and timely mitigation
+General economic, political, social, environmental, public health, and market developments, and
+general unrest
+135/338
+131/338
+We have outsourced some tasks, such as valuing projected benefit obligations and share-based
+payouts, quarterly tax calculations for most entities, and purchase price allocations in the context of
+asset acquisitions and business combinations, and the local statutory financial statements for a few of
+our subsidiaries. These outsourced tasks are subject to the same stringent requirements that are
+mandated for all of our internally generated financially relevant information.
+L
+80% to 99%
+Business-Critical
+(From
+€500 million)
+(€ 100 million to
+€500 million)
+Major
+Moderate
+(€50 million to
+€100 million)
+Minor
+(€25 million to
+€50 million)
+(€0 to €25 million)
+M
+Insignificant
+The combination of the likelihood that a risk will occur and its impact on SAP's reputation, business,
+financial position, profit, and/or cash flows leads to a subsequent classification of the risk as either
+"high," "medium," or "low."
+From €500 million
+From €100 million to
+€500 million
+From €50 million to
+€100 million
+From €25 million to
+€50 million
+From €0 to €25 million
+Impact
+Detrimental negative impact on business, financial position, profit, and/or
+cash flows
+Probability
+Considerable negative impact on business, financial position, profit,
+and/or cash flows
+H
+H
+M
+M
+L
+L
+L
+20% to 39%
+H
+M
+H
+M
+L
+40% to 59%
+H
+H
+M
+M
+L
+60% to 79%
+L
+1% to 19%
+Some potential negative impact on business, financial position, profit,
+and/or cash flows
+Negligible negative impact on business, financial position, profit, and/or
+cash flows
+Remote
+Description
+80% to 99%
+60% to 79%
+40% to 59%
+20% to 39%
+1% to 19%
+Probability/Likelihood of Occurrence
+Unlikely
+The scales for measuring these two indicators are given in the following tables.
+A risk assessment covers the identification and analysis of a risk, as well as the determination of a
+response to that risk. We use various approaches to identify risks. For example, we have identified risk
+indicators and have developed a comprehensive risk catalog that includes risk mitigation strategies.
+Risk identification takes place at various levels of our organization to ensure that common risk trends
+are identified and end-to-end risk management across organizational borders is enabled. We apply
+both qualitative and quantitative risk analyses and other risk analysis methods such as sensitivity
+analyses and simulation techniques.
+Risk Assessment
+Risk planning and risk identification for internal and external risks are conducted jointly by GR&AS risk
+managers and the relevant business units or SAP entities.
+Based on SAP's risk management policy and framework, the risk planning phase serves to align on
+the definition and assignment of roles and responsibilities, the definition of risk-relevant business
+activities (such as processes, projects or other aspects affecting Company assets), the determination
+of objectives and value drivers, the planning of risk assessments, and the determination of adequate
+information flow.
+Risk Planning
+KO
+Closing
+Planning
+To determine which risks pose the greatest threat to the viability of the SAP Group, we classify them
+as high, medium, or low based on the likelihood that a risk will occur within the assessment horizon
+and the impact the risk would have on SAP's business objectives if it were to occur.
+Limited negative impact on business, financial position, profit, and/or
+cash flows
+Likely
+Near Certainty
+Business-Critical
+Major
+Moderate
+Minor
+Insignificant
+Impact Definition
+Impact Level
+Additional
+Information
+Highly Likely
+Further Information on
+Sustainability
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+134/338
+133/338
+The period for analyzing our risks correlates with that of the respective associated business activities,
+considering a relevant forecast horizon. The period for analyzing risks that could be possible threats to
+the Group's ability to continue as a going concern is eight rolling quarters.
+Consolidated Financial
+Statements IFRS
+L
+L
+L
+Risk Validation and Monitoring
+Risk Management Methodology and Reporting
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+Risk assessment is followed by risk validation and risk monitoring. The risk exposure and the risk
+description, as well as the appropriateness of agreed responses, are validated by the accountable
+management. Our GR&AS risk managers work in close cooperation with the relevant business
+owners, ensuring that strategies are implemented to address identified risks. Business owners are
+responsible for continuously monitoring the risks and associated mitigation strategies, with support
+from the respective GR&AS risk managers. To ensure greater risk transparency and enable
+appropriate decision-making for business owners, we have established a risk delegation of authority
+(RDOA) for relevant parts of the organization as deemed appropriate. RDOA is a risk management
+decision-making hierarchy that helps business owners gain timely insight into business transactions
+that pose the greatest risk, so that they are better able to review the relevant information, understand
+the risk profile and associated mitigation strategies, and determine whether their approval is
+warranted. Depending on the exposure, approval is required at various levels of the Company, up to
+and including the Executive Board.
+SAP Integrated Report 2021
+The GR&AS unit, led by the Chief Risk Officer, also acting as chief audit executive, combines internal
+audit, SOX, internal controls and global governance, risk, and compliance. The Chief Risk Officer
+reports to our Group CFO and is responsible for SAP's internal control and risk management
+programs.
+The exposure of SAP business units to potential compliance risks is reviewed on a regular basis.
+Quantitative and qualitative internal data as well as external information, such as the Transparency
+International Corruption Perceptions Index, are considered in our wider compliance risk analysis.
+Based on this information, we performed a detailed assessment for all SAP-relevant high-risk
+countries and derived local as well as global mitigations.
+During the merger and acquisition and post-merger integration phase, newly acquired companies are
+subject to risk management performed by our Corporate Development M&A function. Furthermore, for
+as long as the newly acquired companies are not integrated, existing risk management structures are
+maintained or enhanced within the acquired companies for the purposes of compliance with legal
+requirements.
+Further financial risk management activities are performed for example by our Global Treasury and
+Global Tax departments. General legal risks are managed by the Global Legal department. Sanction
+and embargo-related risks are managed by the Export Control department, harassment and other HR-
+related issues by our Global Labor & Employee Relations Office, security-related risks by our SAP
+Global Security Office, and IP risks by our Global IP Office. All risks are tracked, maintained, and
+reported within SAP's risk management system.
+All GR&AS risk managers, working with assigned risk contacts in the relevant business units, identify
+and assess risks associated with material business operations using a uniform approach and monitor
+the implementation and effectiveness of the measures chosen to mitigate risks.
+Our global risk management organization is responsible for the implementation of a Group-wide
+effective risk management system. Furthermore, GR&AS is responsible for the regular maintenance
+and implementation of our risk management policy, as well as the standardized internal and external
+risk reporting.
+Our Global Risk Management Organization
+The risk management policy, updated in June 2021, stipulates responsibilities for conducting risk
+management activities and defines reporting and monitoring structures. Our global SAP risk
+management policy clearly states that each employee is responsible for active engagement in the risk
+management process as well as for the continuous identification of risks, based upon clear rules of
+engagement in adherence to the policy. The risk management system primarily analyzes risks.
+Opportunities are assessed or analyzed where it is deemed appropriate.
+SAP
+Our Global Risk Management Policy
+Risk Reporting
+SAP
+Our Corporate Financial Reporting (CFR) department codifies all accounting policies in our Group
+accounting and global revenue recognition guidelines. These policies and the corporate closing
+schedule, together with our process descriptions, define the closing process. Under this closing
+process, we prepare, predominately through centralized or external services, the financial statements
+of all SAP entities for consolidation by CFR. CFR and other corporate departments are responsible for
+ensuring compliance with Group accounting policies and monitor the accounting work. CFR also
+conducts reviews of our accounting processes and books. The employees who work on SAP's
+financial reporting receive training in the respective policies and processes.
+measures.
+Our ICRMSFR also includes policies, procedures, and measures designed to ensure compliance of
+SAP's financial reports with applicable laws and standards. We analyze new statutes, standards, and
+other pronouncements concerning IFRS accounting and its impact on our financial statements and
+the ICRMSFR. Failure to adhere to these would present a substantial risk to the compliance of our
+financial reporting. Finally, the ICRMSFR has both preventive and detective controls, including, for
+example, automated and non-automated reconciliations, segregated duties with two-person
+responsibility, authorization concepts in our software systems, and corresponding monitoring
+SAP'S ICRMSFR is based on our Group-wide risk management methodology. It includes
+organizational, control, and monitoring structures designed to ensure that data and information
+concerning our business is collected, compiled, and analyzed in accordance with applicable laws and
+properly reflected in our IFRS Consolidated Financial Statements.
+Our internal control system consists of the internal control and risk management system for financial
+reporting (ICRMSFR), which also covers the broader business environment and is part of the overall
+risk management system of SAP. Using the current COSO Internal Control - Integrated Framework of
+2013, we have defined and implemented internal controls along the value chain on a process and
+subprocess level to ensure that sound business objectives are set in line with the organization's
+strategic, operational, financial, and compliance goals.
+The purpose of our system of internal control over financial reporting is to provide reasonable
+assurance that our financial reporting is reliable and compliant with generally accepted accounting
+principles. Because of the inherent limitations of internal control over financial reporting, it might not
+prevent or bring to light all potential misstatements in our financial statements.
+Internal Control and Risk Management System for Financial Reporting
+Risks are closed once a reassessment concludes that a risk is no longer existent or does not require
+continued monitoring. Risk closure criteria include the risk event occurring, the risk no longer being
+considered a risk, or the risk having been successfully mitigated.
+All identified and relevant risks are reported at local, regional, and global levels in accordance with our
+risk management policy and the global risk reporting standard. At these levels, we have established
+executive risk councils that regularly discuss risks and responses and that monitor the success of risk
+Risk Closure
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+mitigation. In addition, the Executive Board is informed regularly about individual risks based on
+clearly defined qualitative reporting criteria. Newly identified or existing risks that are above a defined
+threshold, meet a qualitative criterion, or have a potential significant impact are also reported to the
+Audit and Compliance Committee and the chairperson of the Supervisory Board on a quarterly basis.
+This includes risks along our strategic portfolio for services and solutions as well as any risks to our
+ability to continue as a going concern, the latter supported by a process that analyzes those risks with
+respect to potential effects on liquidity, excessive indebtedness, and insolvency.
+Our Executive Board is responsible for ensuring the effectiveness of the internal control system and
+the risk management system. The effectiveness of both systems and their implementation in the
+different Board areas is monitored by each Executive Board member. The Audit and Compliance
+Committee of the Supervisory Board regularly monitors the effectiveness of SAP's internal control and
+risk management systems. Our Global Risk & Assurance Services (GR&AS) organization regularly
+provides a status update on the internal control and the risk management systems to the Audit and
+Compliance Committee of the Supervisory Board. Every year, SAP's external auditors assess as to
+whether the SAP Group early-warning system for risk detection is adequate to identify risks that might
+endanger our ability to continue as a going concern. Additional assurance is obtained through the
+external audit of the effectiveness of our system of internal controls over financial reporting.
+continuously foster SAP's risk culture, we conduct risk activities for the entire SAP organization such
+as mandatory training in ethical behavior, code of conduct, and risk management.
+Information
+Risk Management and Risks
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+Our Risk Management
+SAP Integrated Report 2021
+In the final stage of the risk assessment, after identifying and analyzing the risk, we determine a
+response for each identified risk. We have different response categories such as mitigating, retaining
+for research, transferring, delegating, accepting, or avoiding, for example, by deciding not to start or
+not to continue the activity that may lead to a risk.
+H = High Risk
+M = Medium Risk
+Reporting
+L = Low Risk
+Impact
+M
+L
+SAP
+Internal Control and Risk Management Systems
+As a global company, SAP is exposed to a broad range of risks across our business operations.
+Consequently, our Executive Board has established comprehensive internal control and risk
+management structures that enable us to identify and analyze risks early and take appropriate action.
+Our internal control and risk management systems are designed to identify potential events that could
+negatively impact the Company and to provide reasonable assurance regarding the operating
+effectiveness of our internal controls over our financial reporting.
+These systems comprise numerous control mechanisms and are an essential element of our
+corporate decision-making process; they are therefore implemented across the entire Group as an
+integral part of SAP's business processes. We have adopted an integrated internal control and risk
+management approach to help maintain effective global risk management while also enabling us to
+aggregate risks and report on them transparently.
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+132/338
+The risk management governance framework at SAP represents a comprehensive system of
+approaches and processes to ensure control through a clearly structured risk management system
+and a supporting risk culture. The risk culture is considered the basis of SAP's risk management
+system. Risk culture at SAP comprises a system of values, beliefs, knowledge, attitudes, and
+understanding concerning risks and risk management as part of our corporate culture. To support and
+Our Global Risk Management Governance Framework
+In accordance with the COSO framework, SAP's enterprise risk management covers risks in the areas
+of strategy, operations, finance, and compliance which also covers ethical behavior, corporate
+governance, and sustainability.
+Our risk management system is based on the framework published by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO) entitled “Enterprise Risk Management -
+Integrating with Strategy and Performance." Updated in 2017, this framework is built on four pillars,
+which include a global risk management governance framework, a dedicated risk management policy,
+a global risk management organization, and a standardized risk management methodology.
+Risk Management Pillars
+The risk management policy issued by our Executive Board governs how we manage risk in line with
+the Company's risk appetite and defines a methodology that is applied uniformly across all parts of
+the Group.
+Risk Management Policy and Framework
+Due to our public listings in both Germany and the United States, we are subject to both German and
+U.S. regulatory requirements that relate to internal controls and risk management over financial
+reporting, such as provisions in the German Stock Corporation Act, section 91 (2), and the U.S.
+Sarbanes-Oxley Act (SOX) of 2002, specifically sections 302 and 404. Hence, our Executive Board has
+established an early warning system (risk management system) to enable compliance with applicable
+regulations.
+Legal and Regulatory Requirements
+In addition, we have a governance model in place across the internal control and risk management
+systems to ensure both are effective, as well as a central software solution to store, maintain, and
+report all risk-relevant information.
+Based on an analysis of the design and operating effectiveness of our respective internal controls over
+financial reporting, a committee presents the results of the assessment on the ICRMSFR effectiveness
+with respect to our IFRS consolidated financial statements as at December 31 each year to our Group
+Risk Assessment
+Exposure of our business operations and service delivery due to threats, including virtual attack,
+disruption, damage, unauthorized access, theft, destruction, industrial or economic espionage,
+serious or organized crime, and other illegal activities, as well as violent extremism and terrorism
+State-driven economic espionage or competitor-driven industrial espionage, and criminal activities
+including, but not limited to, cyberattacks and breaches against cloud services and hosted on-
+premise software, whether managed by us or our customers, partners, or other third parties
+Disruptions to back-up, disaster recovery or business continuity management processes
+Disruptions due to exposure of our network systems to cybersecurity attacks via defects and
+vulnerabilities in the IT systems of our customers, or in the systems of third parties that facilitate our
+business activities such as cloud service providers, including those that are beyond SAP's
+Management Report
+Termination of partners that do not pass our partner compliance audit process, or remediation
+of their deficiencies
+Establishment of a Partner Integrity Initiative aiming to examine the compliance programs of
+partners in SAP's ecosystem and to review the SAP-related deals closed by them
+Despite our comprehensive and continuously evolving compliance program and established internal
+controls, intentional efforts of individuals to circumvent controls or engage in corruption, especially by
+way of collusion with other involved parties, cannot always be prevented.
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. We classify this risk factor as medium.
+Operational Business Risks
+Sales and Services: Sales and implementation of SAP software and services, including cloud,
+are subject to several significant risks sometimes beyond our direct control.
+Guidance in our travel, entertainment, gift, and expense policies
+A core element of our business is the successful implementation of software and service solutions.
+The implementation of SAP software and cloud-based service deliveries is led by SAP, by partners, by
+customers, or by a combination thereof.
+Insufficient or incorrect information provided by customers, subsequently leading to mismatches in
+contractual commitments, requirements, solution definition, architectures, or technologies
+Insufficient customer expectation management, including scope, integration capabilities and
+aspects, as well as lack of purposeful selection, implementation, and utilization of SAP solutions
+Lack of customer commitments and respective engagements, including insufficient commitment of
+resources or lack of solution migrations to latest offerings, leading to delays or deviations from
+recommended best practices
+Challenges to effectively implement acquired technologies
+Challenges to achieve a seamlessly integrated, sufficiently automated and aligned service delivery
+in complex deliveries or implementations, for example due to lack of insights especially in the
+event of limited project involvement of SAP
+Protracted installation or significant third-party consulting costs
+Improper calculations or estimates leading to costs exceeding the fees agreed in fixed-price
+contracts
+Unrenderable services committed during the sales stage
+We are subject to risks and associated consequences in the following areas, among others:
+Implementation risks, if, for example, implementations take longer than planned, or fail to generate
+the profit originally expected, scope deviations, solution complexity, high pace of engineering
+innovation, individual integration and migration needs or functional requirement changes, or
+insufficient milestone management and tracking leading to delays in timeline, maybe even
+exceeding maintenance cycles of solutions in scope
+Inadequate contracting and consumption models based on subscription models for services,
+support, and application management
+Implementation of compliance policies and processes aimed at managing third parties and
+preventing misuse of third-party payments for illegal purposes, including the performance of
+compliance due diligence activities prior to the engagement of third parties
+Information
+Review of partner business models, to mitigate risks of corruption while meeting agility
+requirements
+Internal audit of our compliance program as it relates to bribery, corruption, and substantial
+fraud
+Several educational, counseling, control, and investigative measures
+-
+Requirement for mandatory CoBC training applicable to every SAP employee, providing
+practical guidance on how to avoid corrupt behavior and approach dilemma situations
+143/338
+Annual reconfirmation of commitment to the CoBC by SAP's workforce (except where
+disallowed by local legal regulations)
+144/338
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+SAP
+Refraining from engaging sales agents and paying third-party sales commissions on public
+sector deals in high-risk countries
+SAP
+To Our
+Stakeholders
+Recommended project approaches, guidance, and best practices for customers to optimize their IT
+solutions in a non-disruptive manner
+Adequate financial planning provisions for the remaining risks
+Continuous project monitoring and controlling activities
+An escalation management process
+Adjustment of delivery models to support customers
+Ongoing development of new commercial models to address customer flexibility needs
+Simplification, review, alignment, approval, and enforcement of contractual standard terms and
+conditions while conducting legal and operational assessments in case deviations are required
+A policy that clearly outlines communication rules on future functionalities as well as legal
+requirements for commitments to customers
+Scope reviews and monitoring that are adapted as required as part of a clearly defined change
+request process to support successful implementations together with respective project
+governance and steering
+Early warning through executive risk committees on regional and global level
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be unlikely. We classify this risk factor as medium.
+Partner Ecosystem: If we are unable to scale, maintain, and enhance an effective partner
+ecosystem, revenue might not increase as expected.
+We are subject to risks and associated consequences in the following areas, among others:
+Failure to establish and enable a network of qualified and fully committed partners supporting our
+scalability needs and speed and impact in market reach
+Products or services model being less strategic or attractive compared to our competition
+Failure of partners to develop sufficient innovative solutions and content on our platforms or to
+provide high-quality products or services to meet customer expectations
+145/338
+Exposure approval through an RDOA
+SAP Integrated Report 2021
+Risk management processes that are integrated into SAP's project management methods intended
+to safeguard implementations through coordinated risk and quality management programs
+-
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+-
+Deviations from standard terms and conditions, which may lead to an increased risk exposure
+Joint innovations with partners or customers
+Any of these events could have an adverse effect on our business, financial position, profit, and cash
+flows.
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+-
+-
+―
+Statements on solution developments might be misperceived by customers as commitments on
+future software functionalities
+146/338
+Root cause analysis related to corrupt or fraudulent behavior, to improve associated business
+processes and prevent further and future violations
+Continuous development of our comprehensive compliance program based on the three
+pillars of prevention, detection, and response
+As a global software and service provider, SAP is required to comply with local laws wherever it does
+business. One of the relevant European data protection laws is GDPR. International data transfers to
+third countries that do not provide for an adequate level of data protection require additional
+safeguards to justify a transfer from the EU to a third country based on the standard contractual
+clauses. In 2021, SAP experienced two significant incidents in processing personal data - on our own
+behalf - that were subject to GDPR only and were reported to the supervisory authorities.
+Furthermore, evolving regulations and laws globally (such as the California Consumer Privacy Act, the
+Brazilian General Data Protection Law, and the EU's proposed e-Privacy Regulation including data
+localization requirements) regarding data protection and privacy or other standards increasingly aimed
+at the use of personal data, such as for marketing purposes and the tracking of individuals' online
+activities, may impose additional burdens for SAP due to increasing compliance standards that could
+restrict the use and adoption of SAP's products and services (in particular cloud services) and make it
+more challenging and complex to meet customer expectations. This refers to a compliant use of new
+technology, such as machine learning (ML) and Al for product development and deployment of
+intelligent applications.
+This could lead to increased risks for SAP, which could harm SAP's business and limit SAP's growth.
+Non-compliance with applicable data protection and privacy laws by SAP or any of the subprocessors
+engaged by SAP within the processing of personal data could lead to risks. We are subject to risks
+and associated consequences in the following areas, among others:
+Mandatory disclosures of breaches to affected individuals, customers, and data protection
+supervisory authorities
+141/338
+142/338
+SAP
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. We classify this risk factor as medium.
+We are named as a defendant in various legal proceedings for alleged intellectual property
+infringements. For more information and a more detailed report relating to certain of these legal
+proceedings, see the Notes to the Consolidated Financial Statements, Notes (A.4), (C.5), and (G.3).
+Data Protection and Privacy: Non-compliance with increasingly complex and stringent,
+sometimes even conflicting, applicable data protection and privacy laws or failure to meet
+the contractual requirements of SAP's customers with respect to our products and services
+could lead to civil liabilities and fines, as well as loss of customers.
+SAP Integrated Report 2021
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Investigations and administrative measures by data protection supervisory authorities, such as the
+instruction to alter or stop non-compliant data processing activities, including the instruction to stop
+using non-compliant subprocessors
+To Our
+Stakeholders
+Damage claims by customers and individuals or contract terminations and potential fines
+We rely on a combination of the protections provided by applicable statutory and common law
+rights, including trade secret, copyright, patent, and trademark laws, license and non-disclosure
+agreements, and technical measures to establish and protect our proprietary rights in our products
+and customer projects.
+- We endeavor to protect ourselves in the respective third-party software agreements by obtaining
+certain rights in case such agreements are terminated.
+-
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Consolidated Financial
+Statements IFRS
+We are party to certain patent cross-license agreements with third parties, which removes the risk
+of litigation with respect to the involved patents.
+Further Information on
+Sustainability
+Information
+could differ from the assessments made by management in prior periods, which are the basis for our
+accounting for these litigations and claims under IFRS.
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Our OEC sets and manages internal policies related to our CoBC.
+Our GR&AS organization works closely with the OEC and Global Legal and is jointly responsible for
+the management and reporting of potential risks associated with third-party intellectual property.
+We have established various internal programs, such as internal policies, processes, and
+monitoring, to assess and manage the risks associated with open source, and third-party
+intellectual property.
+Additional
+- Expansion of the OEC's bandwidth through additional staffing
+Harm to SAP's reputation
+In addition, the German Federal Office for the Protection of the Constitution and security industry
+experts continue to warn of risks related to a globally growing number of cybersecurity attacks aimed
+at obtaining or violating company data including personal data. We anticipate cyberattack techniques
+to continue to evolve and increase in sophistication, which could make it difficult to anticipate,
+prevent, detect, and mitigate attacks and intrusions, thus leading to, for example, risks described in
+the Cybersecurity and Security section.
+Additional
+Information
+Corporate Governance and Compliance
+Ethical Behavior: Our global business exposes us to risks related to unethical behavior and
+non-compliance with policies by employees, other individuals, partners, or entities
+associated with SAP.
+SAP's leadership position in the global market is founded on the long-term and sustainable trust of
+our stakeholders worldwide. Our overarching approach is one of corporate transparency, open
+communication with financial markets, regulators, and authorities, and adherence to recognized
+standards of business integrity. This commitment to recognized standards of business integrity is
+formalized in SAP's CoBC and supporting guidelines.
+We are subject to risks and associated consequences in the following areas, among others:
+Non-compliance with our policies and violation of compliance related rules, regulations, and
+legal requirements including, but not limited to, anti-corruption and anti-bribery legislation in
+Germany, the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, and other local laws
+prohibiting corrupt conduct
+Further Information on
+Sustainability
+Unethical and fraudulent behavior by individual employees, other individuals, partners, or
+entities associated with SAP leading to criminal charges, fines, and claims by affected parties
+Fraud and corruption, especially in countries with a low Transparency International Corruption
+Perceptions Index score and particularly in emerging markets
+Public sector transactions in territories exposed to a high risk of corruption
+Increased exposure and impact on business activities in highly regulated industries such as
+public sector, healthcare, banking, or insurance
+Any of these events could have a material adverse effect on our business, reputation, brand,
+competitive or financial position, share price, profit, and cash flows.
+SAP has encountered situations that required clear messaging and strong action on non-compliance
+in the context of corrupt behavior that has the potential to harm our business and reputation. SAP is
+continuing to investigate its dealings with the public sector. For more information about the alleged
+violations, see the Notes to the Consolidated Financial Statements, Note (G.3).
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Collusion with external third parties, for example, by aiding in securing business
+Increased complexity in times of digitalization with regard to legal requirements in the context of
+cross-border data transfer and data localization requirements
+Consolidated Financial
+Statements IFRS
+Combined Group
+Any of these events could have a material adverse effect on our reputation, business, financial
+performance, competitive or financial position, profit, and cash flows.
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+We have implemented internal processes and measures to enable SAP to comply successfully and
+sufficiently with applicable data protection requirements.
+We have anchored data protection requirements in the mandatory product standards of SAP's
+product development lifecycle.
+We continuously review SAP's existing standards and policies to address changes to applicable
+laws and regulations.
+We continuously enhance our data center operations worldwide, also considering local and sector-
+specific market and legal requirements. For compliance with local legal requirements, we have
+established a network of local and regional data protection and privacy coordinators.
+Management Report
+We have a data protection management system in place in all our Board areas. Furthermore, this
+data protection management system will be continuously enhanced and extended to apply to
+newly acquired companies within the SAP Group. SAP has been awarded the British Standards
+Institution (BSI) certification for the implementation and operation of SAP's data protection
+management system, which underlines SAP's compliance with data protection laws, including
+GDPR.
+We strive to provide clear governance and guidance on data handling, processing standards, and
+external communication as part of our data management framework, specifically incorporating
+aspects of new technologies such as those represented in embedded intelligence applications.
+We increase the automation of security processes and secure product development to reduce
+human error and ensure consistency and dependability of security outcomes.
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. We classify this risk factor as medium.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+We actively monitor legal developments and engage with political stakeholders and government
+authorities, directly or through industry associations, to clarify questions relevant to SAP and SAP's
+business.
+SAP
+An open and vibrant partner ecosystem is a fundamental pillar of our success and growth strategy. We
+have entered into partnership agreements that drive co-innovation on our platforms, profitably expand
+our routes to market to optimize market coverage, optimize cloud delivery, and provide high-quality
+services capacity in all market segments. Partners play a key role in driving market adoption of our
+entire solutions portfolio, by co-innovating on our platforms, embedding our technology, and reselling
+or implementing our software.
+To Our
+Stakeholders
+Certification of relevant IT-related organizations to the internationally recognized Business
+Continuity Management standard
+-
+-
+Information
+Additional
+Further Information on
+Sustainability
+A responsible disclosure process to detect vulnerabilities, as well as security patch days to rapidly
+respond to customer security needs and provide fixes
+Consolidated Financial
+Statements IFRS
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+Disaster recovery and business continuity plans to protect our key IT infrastructure (especially our
+data centers), including implementation of data redundancies and daily data backup strategies
+Product standard requirements such as mandatory non-erroneous modeling that takes software
+dependencies into account
+Management Report
+An SAP Global Security Policy that is mandatory for all employees and supported by documented
+security standards, procedures, and good practices including specific security training curricula for
+our developers
+Increased investments, coordination, and resources, including various internal initiatives, to achieve
+SAP's objective of ensuring over time that our cybersecurity infrastructure meets or exceeds
+evolving industry standards
+Improved roll-out procedures for security-relevant notes, patches, and service packs to ensure easy
+and fast consumption on the customer side
+150/338
+149/338
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+business-critical. We estimate the probability of occurrence to be likely. We classify this risk factor as
+high. For more information, see the Security, Data Protection, and Privacy section.
+· Integrated enhanced security capabilities in our hosting environment, cloud platforms, and cloud
+deployment tools
+Engagement of experts to advise on appropriate cybersecurity protocols and to further increase
+attention and awareness of cybersecurity protocols and protection options
+SAP Integrated Report 2021
+Improved monitoring with respect to implementing enhancements to our cybersecurity
+infrastructure
+Increased employee, contractor, third-party, and partner awareness through campaigns and
+cybersecurity awareness training courses and projects, including execution of security reviews, as
+required
+Physical security measures such as access control systems and employee identification
+Focus on increased coordination across our various lines of business with respect to our ability to
+detect, identify, and respond to unauthorized incursions in our systems in a timely manner
+Investment in data and asset governance of SAP's global asset repository
+Measures such as technical IT security measures, identity and access management, and
+mandatory security and compliance training
+Monitoring of cybersecurity posture to gain visibility on exposed vulnerabilities of third-party
+vendors
+Focus on development and implementation of heightened cybersecurity measures designed to
+further safeguard SAP's most strategic assets
+Continuous vigilance, adaptation, standardization, and modification of our security procedures,
+such as security risk identification, threat modeling, advanced threat defense, a comprehensive
+security testing strategy, container security enhancements, mandatory security training for all
+developers, and security validation of our critical components, products, patches, and services
+before shipment
+Focus on increased training, development, and retention of skilled personnel in SAP's cybersecurity
+and product security workforce
+Provision of security certifications (such as ISO/IEC 27001), security white papers, product
+documentation, and reports from independent auditors and certification bodies to our customers
+Review/audit of our certifications and representations to customers concerning our cybersecurity
+infrastructure and protocols in alignment with contractual agreements
+Alignment of our software security development lifecycle to the recommendations of
+ISO/IEC 27034, applying methods to develop secure software
+-
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+148/338
+147/338
+Breach of cybersecurity measures due to, for example, but not limited to, error or wrongdoing by
+employees or affiliated persons, system vulnerabilities, code defects, malfunctions, or attempts of
+third parties to fraudulently induce employees, users, partners, or customers to gain access to our
+systems, data, or customers' data
+Combined Group
+Operational disruptions due to an increasing number of destructive malwares, ransomware, or
+other cybersecurity attacks
+Insufficient or ineffective asset management potentially endangering secure operations
+Challenges in effectively synchronizing cybersecurity processes across our various lines of business
+in a heterogeneous environment
+-
+- Cybersecurity threats for SAP and customers due to delayed or insufficient responses to identified
+cybersecurity issues attributable to complexity, interdependencies, or other factors
+Failure of any cloud service provider to deliver cloud services securely and successfully, which
+could have a negative impact on customer trust in cloud solutions
+cybersecurity infrastructure and protocols
+Customer systems or systems operated by SAP being compromised by vulnerabilities due to threat
+actor exploitation
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+-
+-
+SAP has established measures intended to address the described risks and adverse effects, such as:
+Software security development lifecycle as a mandatory, integral part of our software development
+process, including checks on open source component coverage and enhanced development tools
+with integrated security features and functionalities
+-
+In response to the increasing number of cybersecurity attacks, and because we anticipate threat actor
+techniques to continue to evolve in our cybersecurity landscape, SAP has expended significant
+resources to enhance its cybersecurity program, has increased the Executive Board and Supervisory
+Board's governance of and involvement in cybersecurity matters, and continues to investigate and
+remediate vulnerabilities.
+Any of these events could have a material adverse effect on our customers, partners, financial
+performance, profit, cash flows, operations, brand, reputation, competitive position, the perception of
+our products and services by current and prospective customers, and our business in general.
+Inaccurate or incomplete third-party or SAP audit results, certifications, or representations
+concerning the adequacy of our cybersecurity infrastructure and protocols
+Failure to maintain SAP's cybersecurity infrastructure and protocols in connection with the
+divestiture of businesses and network systems from SAP, or failure to achieve a holistic level of
+required transparency reflecting current states
+Failure to integrate SAP's cybersecurity infrastructure and protocols with other network systems
+obtained through acquisition, including addressing, identifying, and remediating cybersecurity
+defects and vulnerabilities and related breaches in acquired systems
+Material costs and time associated with enhancing our cybersecurity infrastructure, which may
+impact the ongoing pace of development and delivery of our products and services and our
+financial performance
+Insufficient investment, coordination, or resources to achieve our objective of ensuring over time
+that our cybersecurity infrastructure meets or exceeds evolving industry standards, and defending
+against the ever-evolving and emerging threat landscape
+• Inability to anticipate attacks or implement sufficient mitigating measures
+Material costs to attempt to detect, prevent, and mitigate any successful attacks, including, but not
+limited to the costs of third-party legal and cybersecurity experts and consultants, insurance costs,
+additional personnel and technologies, organizational changes, and incentives to customers and
+partners to compensate for any losses or retain their business
+Expansion of cybersecurity attack surface due to increased connectivity of operational data
+Information
+SAP
+SAP Integrated Report 2021
+Local and regional crisis management teams to respond and minimize losses in case of crisis
+situations
+Combined Group
+We introduced a partner delivery quality framework to monitor and safeguard the success of
+partner-led projects while ensuring that SAP quality criteria are met.
+We included selected services in the free tier model as part of our Pay-as-You-Go for SAP BTP
+agreement.
+We maintain a certification process for third-party solutions to ensure consistent high-quality and
+seamless integration.
+We provide customer guidance and support as required during partner dissolutions.
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. We classify this risk factor as medium.
+Cybersecurity and Security: A cybersecurity attack or breach, or cybersecurity vulnerabilities
+in our products, infrastructure, or services, or economic espionage could result in significant
+legal and financial exposure.
+We enable and encourage partners to leverage SAP technology, by providing guidance about
+business opportunities, architecture, and technology, such as through demo solutions, to enable
+partners to lead business value discussions on cloud and on-premise solutions with customers.
+We offer training opportunities on a wide range of resources for our partners and provide
+safeguarding services to customers and partners.
+SAP continues to grow organically and through acquisitions, delivers a full portfolio of solutions via the
+cloud, hosts or manages elements of our customers' businesses in the cloud, processes large
+amounts of data, and offers more mobile solutions to users. While SAP executes each of these areas
+either directly or through partners and other third parties, we face a progressively more complex and
+threatening cybersecurity environment. The severity of the challenges posed by this cybersecurity
+environment is amplified due to the increasingly sophisticated and malicious global cybersecurity
+threat landscape in which we operate. This includes third-party data, products, and services that we
+incorporate into SAP products and services, and the continually evolving and increasingly advanced
+techniques employed by threat actors targeting IT products and businesses in general. Such threat
+actors include, but are not limited to, highly sophisticated parties such as nation-states and organized
+criminal syndicates.
+To Our
+Stakeholders
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+SAP Integrated Report 2021
+Additional
+We continue to develop and enhance a wide range of partner programs to retain existing and
+attract new partners of all types.
+- We invest in long-term, mutually beneficial relationships and agreements with partners.
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+-
+-
+Failure of partners to embed our solutions sufficiently enough to profitably drive product adoption,
+especially with innovations in SAP S/4HANA, the SAP Customer Experience portfolio, business
+process intelligence from SAP, and SAP Business Technology Platform (SAP BTP)
+Failure of partners and their products to meet quality requirements expected by our customers or
+us
+Failure of partners to transform their business model in accordance with the transformation of
+SAP's business model in a timely manner
+Failure of partners to comply with contract terms in embargoed or high-risk countries
+If any of these risks materialize, this might have an adverse effect on the demand for our products and
+services as well as the partner's loyalty and ability to deliver. As a result, we might not be able to scale
+our business to compete successfully with other vendors, which could have an adverse effect on our
+reputation, business, financial position, profit, and cash flows.
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Failure of partners to adhere to applicable legal and compliance regulations
+Information
+SAP
+In addition, while we are continually taking steps to enhance our cybersecurity defenses, increased
+investments, coordination, and resources are required to achieve our objective of ensuring over time
+that our cybersecurity infrastructure meets or exceeds evolving industry standards. Achieving this
+objective will require continued effort and vigilance, including sustained investment of money and
+management resources to support the ongoing development and maintenance of systems that meet
+these standards. As a result, we are subject to risks and associated consequences in the following
+areas, among others:
+Lack of customer references for new products and solutions
+Inability to fulfil expectations of customers regarding time and quality in the defect resolution
+process
+Inability to define and provide adequate solution packages and scope for all customer segments
+Inability of algorithms to correctly adapt to evolving circumstances, which may lead to adverse
+decision-making processes in the context of Al-related technologies
+New products, services, and cloud offerings, including third-party technologies, might not comply
+with local standards and requirements or might contain defects or might not be mature enough
+from the customer's point of view for business-critical solutions after shipment despite all the due
+diligence SAP puts into quality.
+We might not be as fast as expected in integrating our platforms and solutions, enabling the
+complete product and cloud service portfolio, harmonizing our user interface design and
+technology, integrating acquired technologies and products, or bringing packages, services, or new
+solutions based on SAP BTP to the market.
+As a leading cloud company and service provider to some of the largest and best-known customers in
+the world, we are naturally a prominent target for cybersecurity attacks. We have observed increased
+threat activity to our products and systems, and we experience cybersecurity attacks of varying types
+and degrees on a regular basis. Should we become aware of unauthorized access to our systems, we
+have action plans in place intended to identify and remediate the source and impact of the incursions,
+and steps to comply with related necessary notification and disclosure obligations. To date, we have
+not experienced any incursions resulting in a material adverse effect on our business. However, we
+may be subject to incursions which we are not aware.
+Any of these events could have a material adverse effect on our business, brand, competitive or
+financial position, profit, and cash flows.
+-
+We are subject to risks and associated consequences in the following areas, among others:
+Technology and Products: Our technology and products may experience undetected defects,
+coding, or configuration errors, may not integrate as expected, or may not meet customer
+expectations.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+-
+SAP has established measures to address and mitigate the described risks and adverse effects, such
+Failure of software products and services to fully meet market needs or customer expectations
+Failure of software products and services from acquired companies to fully comply with SAP
+quality standards
+-
+A globally increasing number of threat actor attacks aimed at obtaining or violating Company data
+including personal data, as observed in recent prominent cases of cyberattacks where the use of
+ransomware was the preferred method of threat actors
+as:
+Increased complexity, risk of exploitation, and potential vulnerabilities due to utilization of
+source software components, such as Log4j vulnerabilities
+open
+A comprehensive certification program designed to ensure that relevant third-party solutions are of
+consistently high quality
+Enablement of our current product portfolio for SAP HANA, development of innovative solutions
+based on SAP HANA, and offering of comprehensive cloud-based services, supported by SAP BTP
+and intelligent technologies
+Identified or undetected cybersecurity defects and vulnerabilities
+· Ongoing maintenance of the high quality-level of our products, which is made transparent in the
+defined KPIs for quality transparency and confirmed by our satisfaction ratings as measured by our
+customer survey
+· Regular, direct customer feedback is considered in the market release decision process
+A holistic testing strategy to validate the state of quality and security for every product before
+market introduction
+Threat modelling at the beginning of every development project to identify potential risks including,
+but not limited to using centrally provided tools, also as part of information security measures
+certified to ISO 27001:2013
+A broad range of techniques, including project management, project monitoring, product standards
+and governance, and rigid and regular quality assurance measures certified to ISO 9001:2015,
+applicable to SAP's reportable segments
+Increased focus on localization needs to further meet customer demands
+Integration and convergence of our offerings such as SAP S/4HANA, the SAP Customer Experience
+portfolio, SAP BTP, and acquired technologies
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+As far as opportunities are likely to occur, we have incorporated them into our business plans, our
+outlook for 2022, and our medium-term prospects outlined in this report. Therefore, the following
+section focuses on future trends or events that might result in an uplift of our outlook and medium-
+term prospects should they develop more positively than anticipated in our forecasts.
+Opportunities
+Our customers choose SAP as a trusted partner for their digital business transformation. We have
+established a framework for opportunity management by evaluating and analyzing key areas such as
+current markets, external scenarios, economic conditions, and technological trends. We have also
+researched customer and product segmentation, growth drivers, and industry-specific factors for
+success. These combined insights play a key role for the Executive Board in the development of our
+market strategies. Our shareholder value relies heavily upon a fine balance of risk mitigation and
+value-driven opportunities. Therefore, our governance model helps ensure that decisions are based
+on return, investment required, and risk mitigation.
+SAP SE is the parent company of the SAP Group and earns most of its revenue from subscription
+fees, software license fees, and dividends paid by affiliates. Consequently, the opportunities described
+below also apply - directly or indirectly - to SAP SE.
+Opportunities from Economic Conditions
+Economic conditions clearly influence our business, financial position, profit, and cash flows. Should
+the global economy recover faster than is reflected in our plans today, our revenue and profit may
+exceed our current outlook and medium-term prospects. Our medium-term planning considers
+changes in market conditions as a result of the ongoing COVID-19 pandemic. Although we continue
+Among the assumptions underlying this outlook are those presented above concerning the economy
+and our expectations for the performance of the SAP Group.
+SAP Integrated Report 2021
+Information
+The outlook for the SAP Group in respect to liquidity, finance, investment, and dividend are equally
+applicable to SAP SE.
+Strategic Risks
+Impact on SAP
+(H) IDC FutureScape: Worldwide Future of Digital Innovation 2022 Predictions, Doc #US47148621, Oct. 2021
+(G) IDC FutureScape: Worldwide IT Industry 2022 Predictions, Doc #US48312921, Oct. 2021
+(F) IDC FutureScape: Worldwide Cloud 2022 Predictions, Doc #US47241821, Oct. 2021
+(E) IDC FutureScape: Worldwide Digital Transformation 2022 Predictions, Doc #US47115521, Oct. 2021
+(D) European Central Bank, Economic Bulletin, Issue 8/2021, Publication Date: January 13, 2022
+(https://www.ecb.europa.eu/pub/pdf/ecbu/eb202108.en.pdf)
+Sources:
+digital. By 2023, 90% of worldwide organizations will be prioritizing investments in digital tools to
+augment physical spaces and assets, and by 2024, 55% of all ICT investment will be linked to digital
+transformation," predicts IDC. (F) The software sector in particular will be impacted as "by 2024, the
+majority of legacy applications will receive some modernization investment, with cloud services used
+by 65% of the applications to extend functionality or replace inefficient code." IDC's rationale for the
+investments is "modernizing applications brings value to the business by increased competitiveness
+and the ability to outflank competitors.” As a result, IDC guides companies to “move proactively to
+modernize more critical applications where you can. Your competitors will be doing the same, and
+failure to invest can leave an organization in a disadvantaged competitive position."(H)
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+Despite ongoing uncertainties in the global economy and supply chain disruptions as well as the
+ongoing pandemic situation, the resurgence of the global demand is noticeable. SAP expects more
+companies will choose SAP to help them transform their businesses, build resilient supply chains, and
+become sustainable enterprises. For SAP, moving to the cloud is not an option anymore but a
+required step in business transformation for our customers. We saw this momentum reflected in the
+success of our RISE with SAP offering and are confident about further growth and even greater
+potential going forward across our complete portfolio. This is manifested in our accelerated cloud
+guidance for 2022. SAP is confident that its positive momentum will continue throughout 2022.
+SAP
+157/338
+SAP
+€11.55 billion to €11.85 billion cloud revenue at constant currencies (2021: €9.42 billion), up 23% to
+26% at constant currencies.
+For the full year 2022, SAP expects:
+For 2022, SAP expects its cloud growth to continue to accelerate. The pace and scale of SAP's cloud
+momentum places the Company well on track towards its mid-term ambition.
+Outlook 2022
+Revenue and Operating Profit Targets and Prospects (Non-IFRS)
+Financial Targets and Prospects
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+158/338
+€25.0 billion to €25.5 billion cloud and software revenue at constant currencies
+SAP Integrated Report 2021
+Sustainability has become a top priority for corporations, and IDC highlights that "decarbonization
+initiatives will be a key goal of digital transformations; fewer than 10% of organizations say they are
+not applicable or not implementing objectives to reduce carbon by the end of 2023." Therefore,
+"carbon accounting systems will rise up the priority list for systems implementation. The adage 'you
+can't manage what you can't measure' applies to carbon emissions as well," says IDC. (E) As a
+guidance, IDC proposes: “Establish the IT organization as the provider of the data management
+foundation that collects all sustainability data company-wide with the purpose of measuring progress
+against IT and general business sustainability contribution and efficacy across each factor."(G)
+Additionally, IDC observes a shift in vendor to customer relationships and predicts that "by 2023,
+traditional distribution models will crumble as 20% of businesses in some sectors use technology to
+go direct to customers, seeking to improve customer satisfaction and product development."(H)
+Furthermore, IDC predicts that "by 2022, organizations that allocate 50%+ of their software
+development projects to customer-facing initiatives will see revenue grow 15% faster compared with
+those that focus more on internal projects.” In addition, company sales portfolios will be impacted as
+"by 2026, 30% of software development teams will be focused on turning traditional products into
+outcomes as a service," states IDC. (G)
+4.7
+-5.2
+4.0
+5.6
+-3.4
+3.7
+4.0
+-1.7
+4.3
+4.2
+-2.8
+3.5
+6.5
+-1.8
+3.8
+4.1
+With regard to macroeconomic factors, IDC states that “organizations continue to navigate the
+disruptions, accelerations, and crosscurrents spurred by the COVID-19 pandemic and the changing
+economic conditions. By 2022, more than half the global economy will be based on or influenced by
+-6.9
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be likely. We classify this risk factor as medium.
+"2022 might be the year the global economy becomes more digital than physical," says International
+Data Corporation (IDC), a U.S.-based market research firm. (E) “Cloud in all its permutations will
+continue to play ever greater, and even dominant, roles across the IT industry as enterprises pivot to a
+digital-first economy. Entire industries want to intelligently leverage data to their advantage and can do
+so because they have faster access to digital technologies built on a cloud foundation. Cloud is now
+firmly established as an essential element of a digital-first strategy, as organizations look to automate
+operations, deliver rich customer experiences, and launch new products and services, cloud has
+become the primary accelerator of innovation," says IDC. (F)
+Outlook for 2022 and Beyond
+The IT Market:
+Source: International Monetary Fund (IMF), World Economic Outlook Update January 2022, Rising Caseloads, a Disrupted Recovery,
+and Higher Inflation (https://www.imf.org/-/media/Files/Publications/WEO/2022/Update/January/English/text.ashx), p. 6.
+p = projection
+China
+4.8
+8.1
+2.3
+5.9
+7.2
+-0.9
+3.3
+1.6
+-4.5
+6.8
+(2021: €24.08 billion), up 4% to 6% at constant currencies.
+€7.8 billion to €8.25 billion non-IFRS operating profit at constant currencies (2021: €8.23 billion), flat
+to down 5% at constant currencies.
+The share of more predictable revenue (defined as the total of cloud revenue and software support
+revenue) is expected to reach approximately 78% (2021: 75%).
+In addition to our financial goals, we also focus on three non-financial targets: customer loyalty,
+employee engagement, and carbon impact.
+Non-Financial Goals 2022 and Ambitions for 2025
+In 2022, we intend to repay €900 million in Eurobonds, US$445 million in U.S. Private Placements,
+and €1.45 billion in bank loans. At the date of this report, debt repayments of around €4.3 billion until
+the end of 2023 are scheduled. The ratio of net debt as at December 31, 2021, divided by the total of
+operating profit (IFRS) plus depreciation and amortization was 0.24x, therefore, already below our
+2023 target of 0.5x.
+In 2022, we expect a free cash flow of above €4.5 billion (compared to €5.0 billion in 2021),
+predominantly due to our expectation of flat to slightly declining operating profit. Since payouts for
+capital expenditures and leasing are expected on a level similar to the last three years, a separate
+outlook on operating cash flow is not provided. For 2025, we continue to expect around €8.0 billion in
+free cash flow.
+As at December 31, 2021, we had net debt of €1.6 billion. We believe that our liquid assets combined
+with our undrawn credit facilities are sufficient to meet our operating financing needs in 2022 as well,
+and, together with expected cash flows from operations, will support debt repayments and our
+currently planned capital expenditure requirements over the near and medium term.
+Goals for Liquidity and Finance
+Our planned investment expenditures for 2022 and 2023, other than for business combinations,
+consist primarily of the purchase of IT infrastructure and the construction activities described in the
+Assets (IFRS) section. We expect investments in IT infrastructure of approximately €500 million and in
+construction activities of approximately €300 million in 2022. In 2022, we expect total capital
+expenditures of approximately €850 million. In 2023, capital expenditures are expected to stay at a
+similar level as in 2022.
+Investment Goals
+Free cash flow of approximately €8 billion
+A significant expansion of the Company's more predictable revenue share to approximately 85%,
+reaching more than €30 billion
+A non-IFRS cloud gross margin of approximately 80%
+More than €11.5 billion non-IFRS operating profit
+More than €36 billion total revenue
+More than €22 billion cloud revenue
+SAP confidently reiterates its mid-term ambition published on October 25, 2020. By 2025, SAP
+continues to expect:
+For 2022 through 2025, we aim to maintain employee engagement, measured by the Employee
+Engagement Index, at a high level between 84% and 86% (2021: 83%).
+SAP expects to steadily grow its more predictable revenue while increasing operating profit. We
+expect to achieve double-digit growth of non-IFRS operating profit from 2023 onwards followed by
+double-digit growth of total revenue as we approach 2025. Our strategic objectives are focused
+primarily on our main financial and non-financial objectives: growth, profitability, customer loyalty, and
+employee engagement.
+We measure customer loyalty using the Customer Net Promoter Score (Customer NPS). We are
+targeting to increase the Customer NPS to a score of 11 to 15 in 2022 and to steadily increase the
+Customer NPS through 2025 (2021: 10).
+160/338
+We expect that SAP SE will continue to receive investment income in the form of profit transfers and
+dividends from its subsidiaries. The growth we expect for the SAP Group should have a positive effect
+on this investment income.
+Based on the outlook for cloud and software revenue for the SAP Group at constant currency in non-
+IFRS in 2022, we expect product revenue for SAP SE in 2022 to increase slightly compared to 2021.
+Assuming there are no significant effects from acquisitions or other unforeseeable occurrences in
+2022, we also expect the operating profit of SAP SE to decrease moderately compared to 2021.
+The financial ambitions of the SAP Group for the years 2023 to 2025 provide for future growth of
+revenue and profit. We expect that such growth will also result in revenue and profit growth for
+SAP SE to the same degree.
+The primary source of revenue for SAP SE is the license fees it charges subsidiaries for the right to
+market and maintain SAP software solutions. Consequently, the performance of SAP SE in operating
+terms is closely tied to the cloud and the software revenue of the SAP Group.
+Outlook for SAP SE
+In preparing our outlook and prospects, we have taken into account all events known to us at the time
+we prepared this report that could influence SAP's business going forward.
+Premises on Which Our Outlook and Prospects Are Based
+We aim to reach net greenhouse gas emissions in our operations of 70 kilotons (kt) in 2022
+(2021: 110 kt) with a steady decrease further on, reaching 0 kt by 2023 and maintaining net carbon
+emissions in our own operations of 0 kt from that point onward. Further, SAP has also committed to
+achieve net-zero along our value chain in line with a 1.5 degrees Celsius future in 2030.
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+159/338
+Information
+Additional
+Further Information on
+Sustainability
+Acquisition-related charges
+€ millions
+The following table shows the estimates of the items that represent the differences between our non-
+IFRS financial measures and our IFRS financial measures.
++1pp to +3pp
+Operating profit growth (non-IFRS)
++1pp to +3pp
+Cloud and software revenue growth
++2pp to +4pp
+Cloud revenue growth
+FY 2022
+In percentage points (pp)
+While SAP's full year 2022 business outlook is at constant currencies, actual currency reported figures
+are expected to be impacted by currency exchange rate fluctuations as the Company progresses
+through the year. See the table below for the full year 2022 expected currency impacts. These
+currency expectations for the full year 2022 are based on the December 2021 level.
+To achieve a year-end current cloud backlog growth rate similar to 2021.
+A full-year effective tax rate (IFRS) of 25.0% to 28.0% (2021: 21.5%) and an effective tax rate (non-
+IFRS) of 22.0% to 25.0% (2021: 20.0%), strongly depending on the development of Sapphire
+Ventures' investments.
+Free cash flow above €4.5 billion (2021: €5.01 billion).
+Share-based payment expenses
+Restructuring
+Proposed Dividend
+Estimated Amounts for Actual Amounts for
+2022
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+In this section, all numbers (except cloud revenue and total revenue) are based exclusively on non-
+IFRS measures.
+2.7
+Medium-Term Prospects
+157
+20-40
+2,794
+3,000-3,300
+623
+570-670
+2021
+In 2022, we intend to pay a dividend of €2.45 per share (subject to shareholder approval at the
+Annual General Shareholders Meeting in May 2022). This dividend includes a special payment of
+€0.50 to celebrate SAP's 50th anniversary. For more information, see the Financial Performance:
+Review and Analysis section.
+-4.6
+2.4
+5.2
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+Unfulfilled needs of the acquired company's customers or partners
+Failure to successfully integrate acquired entities, operations, cultures, or languages, all within the
+constraints of applicable local laws
+Failure to integrate acquired technologies or solutions successfully and profitably into SAP's
+solution portfolio and strategy
+Incorrect information or assumptions during the due diligence process for the acquisition, including
+information or assumptions related to the business environment or business and licensing models
+To expand our business, we acquire businesses, products, and technologies, and we expect to
+continue doing so in the future. Over time, some of these acquisitions have increased in size and in
+strategic importance for SAP. Management negotiation of potential acquisitions and the integration of
+acquired businesses, products, or technologies demands time, focus, and resources of both
+management and the workforce, and exposes us to unpredictable operational difficulties.
+We are subject to risks and associated consequences in the following areas, among others:
+Mergers and Acquisitions: We might not acquire and integrate companies effectively or
+successfully.
+3.9
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+business-critical. We estimate the probability of occurrence to be unlikely. We classify this risk factor
+as medium.
+Incompatible practices or policies regarding compliance requirements
+Impairment of goodwill and other intangible assets acquired in business combinations
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+154/338
+153/338
+Inability to anticipate and develop technological improvements or succeed in adapting SAP
+products, services, processes, and business models to technological change, changing regulatory
+requirements, emerging industry standards, and changing requirements of our customers and
+partners (especially with innovations such as industry cloud, SAP Business Network, and business
+process intelligence offerings supported by SAP BTP) to strengthen the Intelligent Enterprise
+strategy
+Inability to develop and sell new cloud products spanning various organizations on time and in line
+with market demands due to complexity in heterogeneous technical environments
+Inability to bring new business models, solutions, solution enhancements, intelligent technologies,
+integrations and interfaces or services to market before our competitors or at equally favorable
+terms
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be unlikely. We classify this risk factor as medium.
+Innovation: We might not be able to compete effectively if we strategize our solution
+portfolio ineffectively or if we are unable to keep up with rapid technological and product
+innovations, enhancements, new business models, and changing market expectations.
+Our future success depends on our ability to keep pace with technological and process innovations
+and new business models, as well as on our ability to develop new products and services, enhance
+and expand our existing products and services portfolio, and integrate products and services we
+obtain through acquisitions. To be successful, we are required to adapt our products and our go-to-
+market approach to a cloud-based delivery and consumption model to satisfy increasing customer
+demand and to ensure an appropriate level of adoption, customer satisfaction, and retention.
+We are subject to risks and associated consequences in the following areas, among others:
+Process, risk, and control analyses accompanied by subsequent integration into SAP's processes
+and control framework, and supported by mitigations as required by any specific circumstances to
+subsequently increase adherence to SAP's standards and policies
+A standardized methodology for detailed integration planning, which is conducted by a dedicated
+integration team
+Identification, implementation, and tracking of risk mitigation measures for material transactions or
+integration risks
+SAP has established measures intended to address and mitigate risks and adverse effects, such as:
+Technical, operational, financial, and legal due diligence on the company or assets to be acquired
+A holistic evaluation of material transaction and integration risks
+Any of these events could have a material adverse effect on our business, brand, competitive or
+financial position, profit, and cash flows.
+Non-compliance of the acquired company with regulatory requirements, for example, accounting
+standards, export control laws, data privacy, and trade sanctions, for which SAP, through the
+acquisition, assumes responsibility and liability, including potential fines and the obligation to
+remedy the non-compliance
+Debt incurrence or significant unexpected cash expenditures
+Combined Group
+Continue to move SAP HANA Enterprise Cloud towards a full-stack offering and increase the share
+of high-value cloud application services to further improve the margin
+Deliver standard software and product packages that are fast, easy to install, and highly
+automated, as well as financially attractive financing and subscription models
+Share our overall long-term cloud strategy and our integration road map with our customers, and
+continuously implement improvements to enhance our cloud solutions through our Intelligent
+Enterprise strategy, also covering the integration of experiential and operational data
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Any of these events could have a material adverse effect on our business, brand, competitive or
+financial position, profit, and cash flows.
+- Inability to achieve the planned margin increase in time as planned
+Price pressure, cost increases, and loss of market share through traditional, new, and especially
+cooperating competitors and hyperscalers
+Strategic alliances among competitors or their growth-related efficiency gains in the cloud
+business, which could lead to significantly increased competition in the market with regard to
+pricing and the ability to integrate solutions
+Existing customers deciding to cancel or not renew their contracts (such as maintenance or cloud
+subscriptions) or not buy additional products and services
+Customers and partners reluctant or unwilling to migrate and adapt to the cloud, or customers
+considering cloud offerings from our competitors
+Insufficient solution and service adoption together with increased complexity, as well as failures
+during the execution of our Intelligent Enterprise strategy in the context of our portfolio for solutions
+and services, which could lead to a loss of SAP's position as a leading cloud company and
+subsequently to reduced customer adoption
+Adverse, near-term revenue effects due to increasing cloud business and conversions from on-
+premise licenses to cloud subscriptions from existing SAP customers, which could have an adverse
+effect on related maintenance and services revenue
+· Inability to successfully execute on our hyperscaler strategy
+Inability to deliver fully suitable solution and transformation services to our customers on the cloud
+transformation journey, both in cloud-only and hybrid scenarios
+We are subject to risks and associated consequences in the following areas, among others:
+The market for cloud computing is increasingly competitive and is exhibiting strong growth relative to
+the market for on-premise solutions. To maintain or improve our operating results in the cloud
+business, it is important that we not only attract new customers but also that our existing customers
+renew their agreements with us when the initial contract term expires and purchase additional
+modules or additional capacity. Additionally, we need to bring innovations to the market in line with
+demands of our ecosystem and ahead of our competitors, such as solutions to support new data-
+driven applications and the extension of the intelligent suite based on SAP BTP. Innovative
+applications supporting the Intelligent Enterprise strategy include, among others, SAP Customer
+Experience solutions, SAP S/4HANA, and SAP BTP, as well as technologies such as IoT, ML, intelligent
+robotic process automation (which automates rule-based, repetitive tasks), digital assistants including
+voice recognition and interaction, and blockchain.
+Market Share and Profit: Our market share and profit could decline due to increased
+competition, market consolidation, technological innovation, and new business models in
+the software industry.
+151/338
+Enable and encourage partners to leverage SAP technology by providing guidance about business
+opportunities, architecture, and technology, as well as a comprehensive certification program
+designed to ensure that relevant third-party solutions are of consistent high quality
+152/338
+SAP Integrated Report 2021
+Enable our portfolio for hyperscalers to extend customer reach and further meet customer
+expectations
+Continue to drive the solution integration and harmonization of data models to support integrated
+business processes, applications, and technology while focusing on resilience, profitability, and
+sustainability
+Place strong focus on providing our cloud services efficiently and to customer expectations,
+including service provisioning, quality, security, and data protection and privacy
+Engage with our customers and offer a broader range of services to support and drive the digital
+transformation for our customers, for example with our RISE with SAP package and our premium
+service offerings
+Balance the allocation of our strategic investments by evolving and protecting our core businesses
+and simultaneously developing new solutions, technologies, and business models for markets,
+such as those in analytics, applications, and database and technology
+Enable and support our customers in their transition path from on-premise to cloud, for example
+through the cloud extension policy, our SAP S/4HANA Movement program (a cross-departmental
+initiative to promote the migration of our existing ERP customers to an intelligent enterprise), our
+scalable SAP S/4HANA Cloud, private edition, or the SAP HANA Enterprise Cloud advanced
+edition offerings
+Demonstrate the benefits of our solution and services portfolio through end-to-end integration
+scenarios, consistent and compelling user interfaces, intelligent technologies, customer references,
+and success stories
+-
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+Management Report
+Failure in implementing, restoring, or maintaining internal controls, disclosure controls and
+procedures, and policies within acquired companies
+Additional
+Middle East and Central Asia
+Emerging and Developing Europe
+Germany
+Euro Area
+Regions (according to IMF taxonomy)
+Emerging Markets and Developing Economies
+Advanced Economies
+World
+%
+Economic Trends - GDP Growth Year Over Year
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+Sub-Saharan Africa
+To Our
+United States
+Latin America and the Caribbean
+-6.4
+4.8
+6.5
+-2.0
+3.9
+5.0
+-4.5
+4.4
+5.9
+-3.1
+2022p
+2021p
+2020
+Emerging and Developing Asia
+Japan
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+SAP Integrated Report 2021
+Canada
+156/338
+Make strategic acquisitions in white spots of our portfolio
+Conduct wide-ranging market and technology analyses and research or co-innovation projects,
+also in close cooperation with our customers and partners, to remain competitive
+Explore future trends as well as the latest technologies, for example through our network of
+innovation centers as part of the Technology & Innovation Board area, and adapt these to the
+market if there is a clear business opportunity for SAP and value to our customers
+Develop innovative technologies and solutions, such as industry cloud solutions, SAP Business
+Network, and business process intelligence offerings supported by SAP BTP
+Focus all investment decisions related to innovative technologies and solutions on portfolio
+compatibility and readiness as well as high customer value
+Continuously benchmark, match, and challenge the entire portfolio at a corporate, portfolio
+category, and individual business case level
+SAP has established measures intended to address and mitigate the described risks and adverse
+effects, such as:
+Any of these events could have a material adverse effect on our business, financial position, profit,
+and cash flows.
+- Inability to drive growth of references through customer use cases and demo systems
+Increasing competition from open source software initiatives or comparable models in which
+competitors might provide software and intellectual property free of charge or at terms and
+conditions unfavorable for SAP
+Our product and technology strategy might not be successful, or our customers and partners might
+not adopt our technology platforms, applications, or cloud services quickly enough or they might
+consider other competing solutions in the market, or our strategy might not match customers'
+expectations and needs, specifically in the context of expanding the product portfolio into
+additional markets.
+Lower level of adoption of our new solutions, technologies, business models, and flexible
+consumption models, or no adoption at all
+Uncertainties regarding new SAP solutions, technologies, and business models as well as delivery
+and consumption models, which might lead customers to wait for proofs of concepts or holistic
+integration scenarios through reference customers or more mature versions
+Information
+SAP
+We cannot exclude the possibility that if risks of this risk factor were to occur, the impact could be
+major. We estimate the probability of occurrence to be unlikely. We classify this risk factor as medium.
+Consolidated Risk Profile
+Align our organization, processes, products, delivery, commercial and consumption models, and
+services to changing markets and customer and partner demands
+SAP
+As for the APJ region, the ECB expects economic activity in Japan to rebound solidly in early 2022. In
+China, the government introduced policy actions in 2021 that should manage the slowdown and
+avoid a sharper contraction in 2022, ensuring energy security and supporting the property sector. A
+stronger slowdown in the Chinese real estate sector than currently expected by the ECB would
+dampen the economic outlook not only for China, but also worldwide.
+In the Americas region, the subdued economic growth seen in the United States in the latter half of
+the previous year might extend into the first quarter of 2022. The ECB suggests that once the current
+supply bottlenecks dissipate, the United States should return to growth, supported by a fiscal
+package. However, inflationary pressures will probably remain high at the beginning of 2022. In Brazil,
+double-digit inflation is likely to continue, but decline in the course of 2022 and 2023.
+Concerning the EMEA region, economic activity in the euro area could exceed its pre-pandemic level
+already in the first quarter of 2022 and pick up further in the course of the year, driven by a robust
+domestic demand, an improving labor market, and ongoing policy support. Thereafter, the ECB
+expects an increasingly self-sustaining growth, as it believes the basis for an ongoing recovery in the
+euro area is intact. In central and eastern Europe, rising energy prices might put additional pressure on
+inflation over the coming months, peaking in the course of 2022 and declining gradually afterwards.
+Correspondingly, global demand for oil and gas and the associated positive terms of trade should
+support economic activity in Russia, but at the cost of high inflation.
+Supply bottlenecks, which caused disruption in 2021, will start easing from the second quarter of
+2022 and unwind fully by 2023, predicts the European Central Bank (ECB) in its current Economic
+Bulletin. (D) The ECB therefore maintains its previous optimistic projections for the full year 2022 and
+has even raised them for 2023. Persisting shortages, high commodity prices, and the emergence of
+the Omicron variant of the coronavirus might initially weigh on near-term growth prospects, though.
+According to the ECB, the future course of the pandemic remains the key uncertainty when it comes
+to projections for the global economy.
+Future Trends in the Global Economy
+Expected Developments and
+Opportunities
+In our view, considering their impact level and likelihood of occurrence, the risks described in our
+aggregated risk report do not individually or cumulatively threaten our ability to continue as a going
+concern. While individual risks and assessments may have changed during fiscal 2021, the overall
+situation did not change materially compared to the prior year. Management remains confident that
+the Group's earnings strength forms a solid basis for our future business development and provides
+the necessary resources to pursue the opportunities available to the Group. Based on our structured
+processes for early risk identification, we are confident that we can continue to counter the challenges
+arising from the risks in our current risk profile in 2022.
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+155/338
+Management Report
+Combined Group
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+SAP
+SAP Integrated Report 2021
+Additional
+Information
+162/338
+To Our
+Stakeholders
+Our extensive experience in applications and analytics, as well as database and technology, continue
+to offer solid multiyear growth opportunities as we bring innovative technologies with simplified
+consumption to our installed base and continue to acquire new customers.
+Opportunities from Our Employees
+Opportunities from Our Partner Ecosystem
+SAP's partner ecosystem is defined by the interdependent relationships of our customers, our
+employees, our suppliers, our partners, and our competition. Our ecosystem, which includes more
+than 22,500 partners with different areas of expertise, carries the SAP brand into global markets and
+expands our portfolio with their expertise, services, and products. Our ecosystem includes partners in
+four different tracks: partners in the “Build” track develop solutions on top of, or integrate with, SAP
+technology and platforms; partners in the “Sell” track resell, implement, and support customers in the
+cloud and on premise; partners in the “Service” track (systems integrators) provide strategic business
+consulting, system design, solution integration, and project implementation of SAP solutions; partners
+in the "Run" track are outsourcing or hosting companies that offer SAP solutions to customers through
+a private or public cloud.
+SAP and our partner ecosystem offer solutions to help customers grow their businesses and
+accelerate their move to the cloud. SAP partners build innovative extensions for SAP applications
+based on SAP BTP, and in doing so, enhance the customer value with SAP. By providing innovations
+that extend SAP applications, partners can influence the adoption of SAP technologies to support
+customers' unique business needs. Thus, customers maximize their SAP investment through partner
+offerings such as solution extensions, industry-specific solutions, line-of-business (LOB) solutions, and
+mobile solutions.
+Partners constantly respond to the market needs while raising awareness around strategic offerings,
+such as RISE with SAP, SAP BTP, and our industry cloud solutions, which drive the cloud
+transformation of our customers. Partners offer customers a vast array of SAP technologies and
+services specific to their LoB or industry, making it easy for customers to purchase the right
+combination of products and services (such as consulting, implementation, and development) to meet
+their business needs.
+Partners contribute to SAP's growth by expanding our market reach in sales and services, specifically
+by retaining and increasing sales to existing customers, attracting new customers, and satisfying our
+joint customers' requirements through (co-)innovation. Together with all of the aforementioned
+measures, this may positively impact our revenue, profit, and cash flows, and enable SAP to exceed
+our stated medium-term prospects.
+Our employees drive innovation, provide value to our customers, and consistently enable our growth
+and profitability. We continuously invest in our people with the aim of retaining their high level of
+engagement, further strengthening their skills, fostering an agile and innovative organization, and
+ensuring a healthy, diverse, and inclusive workforce. By doing so, we anticipate improvements in our
+employee productivity and innovation capabilities.
+Our outlook and medium-term prospects are based on certain assumptions regarding employee
+retention and our Business Health Culture Index. Should these develop at a rate that is better than
+expected, employee productivity and engagement may increase. A stronger-than-expected increase in
+the Employee Engagement Index can therefore be an opportunity that could positively impact our
+revenue, profit, and cash flows, enabling SAP to exceed our stated medium-term prospects.
+161/338
+The stronger focus on customer success enabled through our shift to a new operating model that
+aligns sales, services, and customer engagement activities may positively impact our revenue, profit,
+and cash flows. This potential may result in our stated medium-term prospects being exceeded.
+SAP seeks to establish new business models and leverage our expanding ecosystem of partners to
+achieve scale and maximize opportunities. We see additional opportunities in potential future strategic
+partnerships, such as those for the migration of critical business systems to the cloud linked to the
+RISE with SAP offering. In addition, a promising joint venture in the financial services industry called
+SAP Fioneer was founded in 2021, enabling a better coverage of the rapidly changing banking and
+insurance industry.
+To Our
+Stakeholders
+Opportunities from Our Strategy for Profitable Growth
+For more information about future opportunities relating to our employees, see the Employees and
+Social Investments section.
+SAP Integrated Report 2021
+SAP
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+SAP strives to generate profitable growth across our portfolio of products, solutions, and services to
+keep or improve our market position. Our aim is to continue to expand our addressable market
+through the adjustment of our portfolio and our new technologies and innovations. The COVID-19
+pandemic has strengthened the readiness in the market to consume software in the cloud, including
+core business process platforms. This could result in an even faster adoption of our core ERP offering
+in the cloud than anticipated, translating into higher cloud and total revenue growth from 2023
+onwards than currently provided for in our midterm ambition. Greater efficiency in our cloud
+operations may also positively affect the profitability of our cloud business.
+Information
+For more information about future trends in the global economy and the IT market outlook, as well as
+their potential influence on SAP, see the beginning of the Expected Developments and Opportunities
+section.
+Opportunities Through Innovation
+Our continued growth through innovation is based on our ability to leverage research and
+development (R&D) resources effectively. We continue to improve our products through design
+thinking and lean methodologies. We are accelerating innovation cycles, especially in our cloud
+solutions, and engaging even more closely with our customers to enable success.
+In addition, we continue to expand innovation initiatives to support long-term projects in strategic
+opportunity areas, supporting talented entrepreneurs within SAP, as well as, for example, external
+startups.
+Based on our innovation capability, we see opportunities in growing product and market areas, such
+as in the further enhancement of business processes with intelligent technologies. In addition to the
+increased focus on innovation, we also focus on ease of adoption and consumption, so our customers
+can receive the benefits from our software applications, technologies, and platforms at reduced time
+to value. For example, the accelerated adoption of technology that helps companies transform into
+more sustainable businesses could result in additional upsell opportunities for customers migrating to
+SAP S/4HANA Cloud.
+In particular, we see three innovation areas that have the potential to grow beyond our
+expectations.
+First, with its open APIs and value services, SAP Business Technology Platform (SAP BTP) may be
+adopted faster than internally planned. Second, business process intelligence (BPI) may see
+increased demand for intelligent automation realized through services such as application lifecycle
+management (ALM) and robotic process automation (RPA), for example. Third, we see high growth
+potential in the area of sustainability management. Our vision to enable customers to transform into
+intelligent, sustainable enterprises is based on our commitment to "chasing zero" - - zero emissions,
+zero waste, zero inequality. If this conviction is shared by increasing numbers of customers, this may
+lead to an increased demand for our business process logics.
+For more information about future opportunities in research and development for SAP, see the
+Products, Research & Development, and Services section.
+to be mindful of the negative aspects of this global situation, we do see a trend developing to
+prioritize investments in digital transformation. This could result in an acceleration of the digitalization
+of business processes that exceeds what we had originally planned.
+SAP
+(G.3)
+To Our
+1,229
+543
+27,336
+1,234
+-1,580
+28,761
+45
+28,807
+3,321
+3,321
+50
+3,370
+-52
+536
+483
+483
+3,268
+536
+3,804
+50
+3,854
+2
+2
+2
+-1,790
+(E.2)
+-1,790
+(E.2)
+(E.2)
+interests
+Other changes
+12/31/2020
+Il Profit after tax
+Other comprehensive income
+Comprehensive income
+Share-based payments
+Dividends
+Transactions with non-controlling
+interests
+Other changes
+12/31/2021
+Additional
+Information
+Issued
+Share
+Retained
+Capital
+Premium
+Earnings
+Other
+Components
+of Equity
+Treasury
+Total
+Non-
+Controlling
+Interests
+Total Equity
+Shares
+(E.2)
+Changes in non-controlling
+-19
+-29
+1
+-1,864
+-1,864
+-2
+-1,866
+-1,492
+-1,492
+-1,492
+-64
+-64
+-64
+-4
+-4
+0
+-5
+1,229
+545
+32,026
+-1,012
+-3,072
+29,716
+211
+29,927
+5,256
+5,256
+SAP Integrated Report 2021
+-1,810
+1
+138
+-29
+-29
+-2
+-2
+0
+-2
+1,229
+545
+28,783
+1,770
+-1,580
+30,746
+76
+30,822
+5,145
+5,145
+138
+5,283
+30
+-2,782
+-2,752
+-2,752
+5,175
+-2,782
+2,393
+2,531
+Purchase of treasury shares
+Dividends
+Share-based payments
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+1,580
+1,367
+304
+414
+(E.3), (D.5)
+4,528
+2,348
+(B.3), (B.5), (G.2)
+5,203
+4,643
+(A.4), (B.4), (B.5), (B.6)
+(A.1)
+89
+73
+4,431
+3,996
+16,136
+12,842
+122
+98
+827
+667
+(E.3), (D.5)
+11,042
+13,605
+Total equity and liabilities
+(B.3), (B.5), (G.2)
+Total equity
+Equity attributable to owners of parent
+51,125
+43,395
+71,169
+58,464
+Trade and other payables
+Tax liabilities
+Financial liabilities
+Other non-financial liabilities
+Provisions
+Contract liabilities
+Total current liabilities
+Trade and other payables
+Tax liabilities
+Financial liabilities
+Other non-financial liabilities
+Provisions
+Deferred tax liabilities
+Contract liabilities
+Total non-current liabilities
+Total liabilities
+Issued capital
+Share premium
+Retained earnings
+Other components of equity
+Treasury shares
+Non-controlling interests
+860
+770
+(A.4), (B.4), (B.5), (B.6)
+71,169
+58,464
+167/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Consolidated Statements of Changes in Equity of SAP Group for the Years Ended December 31
+Equity Attributable to Owners of Parent
+€ millions
+Notes
+1/1/2019
+Il Profit after tax
+Other comprehensive income
+Comprehensive income
+Share-based payments
+Dividends
+Hyperinflation
+Other changes
+12/31/2019
+Il Profit after tax
+Other comprehensive income
+Comprehensive income
+29,927
+41,523
+(E.2)
+211
+355
+362
+(C.5)
+291
+158
+(A.1)
+13
+36
+13,510
+15,696
+29,646
+28,537
+121
+1,229
+1,918
+545
+37,022
+32,026
+1,757
+-1,012
+-3,072
+-3,072
+38,853
+29,716
+(E.2)
+2,670
+1,229
+1,188
+5,376
+2,768
+-2,182
+-1,864
+-1,790
+Dividends paid on non-controlling interests
+-54
+-2
+-17
+Purchase of treasury shares
+(E.2)
+0
+-1,492
+0
+Proceeds from changes in ownership interests in subsidiaries that do not result in the loss of control
+2,828
+95
+0
+Proceeds from borrowings
+(E.3)
+1,680
+2,132
+3,622
+Repayments of borrowings
+(E.3)
+-1,952
+-2,430
+(E.2)
+-1,309
+Dividends paid
+-2,986
+(D.1)
+-1,142
+-662
+-6,215
+Cash flows from sale of subsidiaries or businesses
+-72
+203
+61
+Purchase of intangible assets and property, plant, and equipment
+-800
+-816
+-817
+Proceeds from sales of intangible assets or property, plant, and equipment
+91
+88
+71
+Purchase of equity or debt instruments of other entities
+-4,368
+-2,535
+-900
+Proceeds from sales of equity or debt instruments of other entities
+Net cash flows from investing activities
+3,229
+-3,063
+735
+778
+-7,021
+Cash flows for business combinations, net of cash and cash equivalents acquired
+Payments of lease liabilities
+-378
+169/338
+170/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Notes
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(IN.1) Basis for Preparation
+General Information
+The registered domicile of SAP SE is in Walldorf, Germany (Commercial Register of the Lower Court of
+Mannheim HRB 719915). The Consolidated Financial Statements for 2021 of SAP SE and its
+subsidiaries (collectively, “we,” “us,” “our,” “SAP,” “Group," and "Company") have been prepared in
+accordance with International Financial Reporting Standards (IFRS).
+We have applied all IFRS standards and interpretations that were effective on and endorsed by the
+European Union (EU) as at December 31, 2021. There were no standards or interpretations as at
+December 31, 2021, impacting our Consolidated Financial Statements for the years ended
+December 31, 2021, 2020, and 2019, that were effective but not yet endorsed. Therefore, our
+Consolidated Financial Statements comply with both, IFRS as issued by the International Accounting
+Standards Board (IASB) and IFRS as endorsed by the EU.
+Our Executive Board approved the Consolidated Financial Statements on February 23, 2022, for
+submission to our Supervisory Board which approved the Consolidated Financial Statements on the
+same day.
+All amounts included in the Consolidated Financial Statements are reported in millions of euros
+(€ millions) except where otherwise stated. As figures are rounded, numbers presented throughout
+this document may not add up precisely to the totals we provide and percentages may not precisely
+reflect the absolute figures.
+Amounts disclosed in the Notes that are taken directly from our
+and 44,
+Consolidated Income Statements
+or our Consolidated Statements of Financial Position are marked with the symbols
+respectively.
+Accounting Policies, Management Judgments, and Sources of Estimation
+Uncertainty
+How We Present Our Accounting Policies, Judgments, and Estimates
+To ease the understanding of our financial statements, we present the accounting policies,
+management judgments, and sources of estimation uncertainty (hereafter: accounting policies,
+judgments, and estimates) on a given subject together with other disclosures related to the same
+subject in the Note that deals with this subject. Accounting policies, judgments, and estimates that do
+not relate to a specific subject are presented in the following section.
+For easier identification of our accounting policies, judgments, and estimates, the respective
+disclosures are marked with the symbol and highlighted with a light gray box. They focus on the
+accounting choices made within the framework of the prevailing IFRS and refrain from repeating the
+underlying promulgated IFRS guidance, unless we consider it particularly important to the
+understanding of a Note's content.
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+-374
+5,314
+8,898
+-403
+Transactions with non-controlling interests
+(E.2)
+-2
+-59
+0
+Net cash flows from financing activities
+-56
+-3,997
+102
+Effect of foreign currency rates on cash and cash equivalents
+484
+-214
+110
+Net decrease/increase in cash and cash equivalents
+3,587
+-4
+-3,313
+Cash and cash equivalents at the beginning of the period
+(E.3)
+5,311
+5,314
+8,627
+Cash and cash equivalents at the end of the period
+(E.3)
+5,311
+3,496
+7,194
+6,223
+38,853
+2,670
+41,523
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+168/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Consolidated Statements of Cash Flows of SAP Group for the Years Ended December 31
+€ millions
+Notes
+2021
+2020
+2019
+Il Profit after tax
+5,376
+5,283
+3,370
+Adjustments to reconcile profit after tax to net cash flow from operating activities:
+Depreciation and amortization
+Share-based payment expenses
+-3,072
+Il Income tax expense
+1,757
+1,918
+2,802
+51
+2,853
+5,290
+2,768
+8,058
+172
+8,230
+1,373
+1,373
+311
+1,684
+-2,182
+-2,182
+-88
+-2,271
+1,933
+1,933
+2,050
+3,983
+-44
+-44
+14
+-30
+1,229
+37,022
+Il Financial income, net
+Decrease/increase in allowances on trade receivables
+Other adjustments for non-cash items
+-651
+-583
+475
+293
+328
+100
+128
+984
+Share-based payments
+Interest paid
+Interest received
+-1,120
+-1,310
+-1,257
+-202
+-244
+-341
+56
+122
+97
+Income taxes paid, net of refunds
+-2,063
+-1,194
+-2,329
+Net cash flows from operating activities
+-706
+-1,469
+821
+414
+(D.2)-(D.4)
+1,775
+1,831
+1,872
+(B.3)
+2,794
+1,084
+1,835
+(C.5)
+1,471
+1,938
+1,226
+34
+(C.4)
+-776
+-198
+-11
+68
+14
+39
+-198
+-54
+Decrease/increase in trade and other receivables
+Decrease/increase in other assets
+Increase/decrease in trade payables, provisions, and other liabilities
+Increase/decrease in contract liabilities
+-2,174
+1,779
+1
+271
+Events After the Reporting Period..
+261
+(G.9) Scope of Consolidation, Subsidiaries and Other Equity Investments
+262
+(G.10) German Code of Corporate Governance
+273
+Management's Annual Report on Internal Control over Financial Reporting
+in the Consolidated Financial Statements
+275
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+■lil Consolidated Income Statements of SAP Group for the Years Ended December 31
+€ millions, unless otherwise stated
+Notes
+2021
+2020
+2019
+Cloud
+9,418
+8,080
+6,933
+(G.8)
+Software licenses
+261
+260
+Section F - Management of Financial Risk Factors
+234
+(F.1)
+Financial Risk Factors and Risk Management.
+(F.2) Fair Value Disclosures on Financial Instruments
+.234
+246
+Section G - Other Disclosures
+252
+(G.1)
+Prepaid Expenses and Other Tax Assets
+252
+(G.2)
+Other Tax Liabilities
+252
+Other Litigation, Claims, and Legal Contingencies...
+252
+(G.4)
+Board of Directors......
+.255
+(G.5)
+Executive and Supervisory Board Compensation........
+.259
+(G.6)
+Related Party Transactions Other Than Board Compensation.
+(G.7) Principal Accountant Fees and Services
+228
+3,248
+4,533
+General and administration
+Restructuring
+Other operating income/expense, net
+(B.6)
+Total operating expenses
+Operating profit
+Other non-operating income/expense, net
+Finance income
+Finance costs
+Financial income, net
+Profit before tax
+Income tax expense
+Profit after tax
+Attributable to owners of parent
+Attributable to non-controlling interests
+-3,105
+-2,699
+-2,534
+-1,925
+-2,008
+-2,159
+-5,030
+-4,707
+-4,692
+-2,916
+Sales and marketing
+3,642
+Research and development
+Total cost of revenue
+Software support
+Software licenses and support
+Cloud and software
+Services
+Total revenue
+11,412
+11,506
+11,547
+14,660
+15,148
+16,080
+24,078
+23,228
+23,012
+3,764
+4,110
+4,541
+(A.1), (C.2)
+27,842
+27,338
+27,553
+Cost of cloud
+Cost of software licenses and support
+Cost of cloud and software
+Cost of services
+Gross profit
+(E.3) Liquidity
+226
+Total Equity..
+Trade and Other Receivables
+180
+(A.3)
+Capitalized Cost from Contracts with Customers.....
+181
+(A.4)
+Customer-Related Provisions........
+182
+Section B - Employees
+184
+(B.1)
+Employee Headcount......
+184
+(B.2) Employee Benefits Expenses.
+184
+(B.3)
+Share-Based Payments.
+185
+(B.4)
+Pension Plans and Similar Obligations..........
+193
+(B.5)
+Other Employee-Related Obligations..
+196
+(B.6)
+(A.2)
+Restructuring
+175
+(C.5)
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Consolidated Financial
+Statements IFRS
+Consolidated Financial Statements IFRS
+Consolidated Income Statements of SAP Group
+Consolidated Statements of Comprehensive Income of SAP Group
+Consolidated Statements of Financial Position of SAP Group..
+Consolidated Statements of Changes in Equity of SAP Group
+Consolidated Statements of Cash Flows of SAP Group...
+Additional
+Information
+163
+165
+166
+167
+168
+169
+Notes
+(IN.1) Basis for Preparation
+(IN.2) Implications of the COVID-19 Pandemic...
+170
+170
+174
+Section A
+-
+Customers
+175
+Revenue
+196
+Section C - Financial Results
+198
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(D.3) Intangible Assets...
+(D.4) Property, Plant, and Equipment.....
+219
+221
+(D.5)
+Leases
+.222
+(D.6)
+Equity Investments
+.223
+(D.7)
+Non-Current Assets by Region........
+225
+(D.8)
+Purchase Obligations...
+225
+Section E- Capital Structure, Financing, and Liquidity
+226
+(E.1)
+Capital Structure Management.
+226
+(E.2)
+Management Report
+Combined Group
+Stakeholders
+To Our
+(C.1)
+Results of Segments.
+198
+(C.2)
+Reconciliation of Segment Measures to the Consolidated Income Statements.
+202
+(C.3)
+Other Non-Operating Income/Expense, Net
+.202
+(C.4)
+Financial Income, Net.
+203
+-3,178
+(C.5) Income Taxes
+(C.6) Earnings per Share
+208
+Section D Invested Capital
+209
+(D.1) Business Combinations and Divestitures
+209
+(D.2) Goodwill
+214
+163/338
+164/338
+SAP
+SAP Integrated Report 2021
+.203
+-3,662
+(A.1)
+-7,886
+2,819
+-2,782
+536
+Other comprehensive income, net of tax
+2,853
+-2,752
+483
+Total comprehensive income
+8,230
+2,531
+3,854
+Attributable to owners of parent
+8,058
+2,393
+3,804
+Attributable to non-controlling interests
+172
+138
+50
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+166/338
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Other comprehensive income for items that will be reclassified to profit or loss, net of tax
+Combined Group
+Management Report
+-1
+-26
+0
+Exchange differences, net of tax
+(E.2)
+2,846
+-2,792
+537
+Gains (losses) on cash flow hedges/cost of hedging, before tax
+-39
+20
+-24
+Reclassification adjustments on cash flow hedges/cost of hedging, before tax
+4
+-6
+22
+Cash flow hedges/cost of hedging, before tax
+(F.1)
+-35
+14
+-2
+Income taxes relating to cash flow hedges/cost of hedging
+9
+-4
+0
+Cash flow hedges/cost of hedging, net of tax
+(E.2)
+10
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Consolidated Statements of Financial Position of SAP Group as at December 31
+Intangible assets
+(D.3)
+3,966
+3,784
+Property, plant, and equipment
+(D.4), (D.8)
+4,977
+5,041
+Other financial assets
+(D.6), (E.3)
+6,275
+Trade and other receivables
+Other non-financial assets
+Tax assets
+Deferred tax assets
+Total non-current assets
+Total assets
+(A.2)
+147
+137
+(A.3), (G.1)
+2,628
+1,926
+263
+-7,946
+27,538
+31,090
+(D.2)
+15,069
+€ millions
+Notes
+2021
+2020
+Cash and cash equivalents
+(E.3)
+8,898
+5,311
+Other financial assets
+(D.6), (E.3)
+2,758
+1,635
+1
+Trade and other receivables
+Tax assets
+Total current assets
+Goodwill
+(A.2)
+6,352
+6,593
+(A.3), (G.1)
+1,633
+1,321
+403
+210
+20,044
+Other non-financial assets
+-9
+3,512
+537
+1,473
+787
+-949
+-697
+-589
+(C.4)
+2,174
+776
+198
+(C.2)
+6,847
+7,220
+4,596
+(C.5)
+-1,471
+-1,938
+-1,226
+5,376
+5,283
+3,370
+5,256
+5,145
+3,321
+121
+138
+3,123
+50
+-74
+17
+-8,355
+Income taxes relating to exchange differences on translation
+19,897
+19,453
+19,199
+-5,190
+-4,454
+-4,292
+-7,106
+-7,693
+-2,431
+-1,356
+-1,629
+-157
+3
+-1,130
+43
+84
+18
+-23,186
+4,656
+-20,715
+-23,081
+6,623
+4,473
+(C.3)
+-179
+Earnings per share, basic (in €)
+-7,505
+4.46
+39
+-57
+Income taxes relating to remeasurements on defined benefit pension plans
+-9
+-9
+5
+Remeasurements on defined benefit pension plans, net of tax
+34
+30
+-52
+Other comprehensive income for items that will not be reclassified to profit or loss, net of tax
+Items that will be reclassified subsequently to profit or loss
+34
+30
+-52
+Gains (losses) on exchange differences on translation, before tax
+Reclassification adjustments on exchange differences on translation, before tax
+Exchange differences, before tax
+2,825
+-2,793
+30
+0
+0
+-2,793
+(C.6)
+2,855
+43
+Remeasurements on defined benefit pension plans, before tax
+537
+3,370
+Items that will not be reclassified to profit or loss
+Earnings per share, diluted (in €)
+(C.6)
+4.46
+2.78
+The accompanying Notes are an integral part of these Consolidated Financial Statements.
+165/338
+SAP
+SAP Integrated Report 2021
+4.35
+To Our
+Stakeholders
+4.35
+Combined Group
+Management Report
+5,283
+5,376
+2019
+2020
+2021
+Notes
+2.78
+Il Profit after tax
+€ millions
+Consolidated Statements of Comprehensive Income of SAP Group for the Years Ended December 31
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Cloud and software revenue, as presented in our Consolidated Income Statements, is the sum of
+our cloud revenue, our software license revenue, and our software support revenue.
+Cloud revenue represents fees earned from providing customers with any of the following:
+Software as a service (SaaS), that is, a right to use software functionality (including standard
+functionalities and custom cloud applications and extensions) in a cloud-based infrastructure hosted
+by SAP or third parties engaged by SAP, where the customer does not have the right to terminate the
+hosting contract and take possession of the software to either run it on its own IT infrastructure or to
+engage a third-party provider unrelated to SAP to host and manage the software; SaaS also includes
+transaction and agent fees for transactions that customers of our network business execute on our
+cloud-based transaction platforms.
+We derive our revenue from fees charged to our customers for the use of our cloud offerings, for
+licenses to our on-premise software products, and for standardized and premium support services,
+consulting, customer-specific software developments, training, and other services.
+Classes of Revenue
+Accounting for Revenue from Contracts with Customers
+(A.1) Revenue
+This section discusses disclosures related to contracts with our customers. These include but are not
+limited to explanations of how we recognize revenue, revenue disaggregation, and information about
+our trade receivables and customer-related obligations.
+Section A - Customers
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+Management Judgments and Estimates Due to the COVID-19 Pandemic
+To Our
+SAP Integrated Report 2021
+(IN.2) Implications of the COVID-19 Pandemic
+The overall impact of the COVID-19 pandemic on SAP's consolidated financial statements has not
+been significant.
+The impact of global travel restrictions on SAP's Concur business continues, leading to an overall
+further decline in pay-as-you-go transactional revenues as part of software as a service revenue
+(defined in Note (A.1)) compared to 2020. Over the course of the second half of 2021, such revenues
+I have started to increase again.
+We will continue to analyze possible future effects of the COVID-19 pandemic on the measurement of
+individual assets and liabilities.
+As the pandemic continues, it remains difficult to predict its duration and the magnitude of its impact
+on assets, liabilities, results of operations, and cash flows. We based our financial-statement-related
+estimates and assumptions on existing knowledge and best information available at the time, and
+applied a scenario that assumes the COVID-19 situation will continue to improve as vaccine programs
+continue to take effect globally, leading to a growing demand environment in 2022.
+Platform as a service (PaaS), that is, access to a cloud-based platform to develop, deploy, integrate,
+and manage applications.
+Management judgments and estimates can affect the amounts and reporting of assets and liabilities
+as at the reporting date, and the amounts of income and expense reported for the period. Due to the
+global consequences of the ongoing COVID-19 pandemic, these management judgments and
+estimates continue to be subject to uncertainty. Actual amounts may differ from the management
+judgments and estimates; changes could have a material impact on the Consolidated Financial
+Statements. All available information on the expected economic developments and country-specific
+governmental mitigation measures was included when updating the management judgments and
+estimates. This information was also included in the analysis of the recoverability and collectability of
+assets and receivables.
+Stakeholders
+SAP
+To Our
+Stakeholders
+Premium cloud support, that is, support beyond the regular support embedded in the underlying
+cloud subscription services.
+Only very rarely do our contracts include significant financing components. We do not account for
+financing components if the period between when SAP transfers the promised goods or services to
+the customer and when the customer pays for those goods or services is one year or less.
+Allocation of Transaction Price
+Our typical cloud services do not provide the customer with a software license because the customer
+does not have the right to terminate the hosting contract and take possession of the software.
+Consequently, cloud fees that are based on transaction volumes are considered in the transaction
+price based on estimates rather than being accounted for as sales-based license royalties.
+We apply judgment in determining the amount to which we expect to be entitled in exchange for
+transferring promised goods or services to a customer. This includes estimates as to whether and to
+what extent subsequent concessions may be granted to customers and whether the customer is
+expected to pay the contractual fees. In this judgment, we consider our history with the respective
+customer or on a portfolio basis.
+Information
+When selling goods or services, we frequently grant customers options to acquire additional goods or
+services (for example, renewals of renewable offerings, or additional volumes of purchased software).
+We apply judgment in determining whether such options provide a material right to the customer that
+the customer would not receive without entering into that contract (material right options). In this
+judgment, we consider, for example, whether the options entitle the customer to a discount that
+exceeds the discount granted for the respective goods or services sold together with the option.
+Determination of Transaction Price
+Our customer contracts often include various products and services. Typically, the products and
+services outlined in the Classes of Revenue section qualify as separate performance obligations and
+the portion of the contractual fee allocated to them is recognized separately. Judgment is required,
+however, in determining whether a good or service is considered a separate performance obligation.
+In particular for our professional services and implementation activities, judgment is required to
+evaluate whether such services significantly integrate, customize, or modify the on-premise software
+or cloud service to which they relate. In this context, we consider the nature of the services and their
+volume relative to the volume of the on-premise software or cloud service to which they relate. In
+general, the implementation services for our cloud services go beyond pure setup activities and
+qualify as separate performance obligations. Similarly, our on-premise implementation services and
+our custom development services typically qualify as separate performance obligations. Non-distinct
+goods and services are combined into one distinct bundle of goods and services (combined
+performance obligation).
+Identification of Performance Obligations
+New arrangements with existing customers can be either a new contract or the modification of prior
+contracts with the customer. Our judgment in making this determination considers whether there is a
+connection between the new arrangement and the pre-existing contracts, whether the goods and
+services under the new arrangement are highly interrelated with the goods and services sold under
+prior contracts, and how the goods and services under the new arrangement are priced. In
+determining whether a change in transaction price represents a contract modification or a change in
+variable consideration, we examine whether the change in price results from changing the contract or
+from applying unchanged existing contract provisions.
+in evaluating whether various contracts are interrelated, which includes considerations as to whether
+they were negotiated as a package with a single commercial objective, whether the amount of
+consideration on one contract is dependent on the performance of the other contract, or if some or all
+goods in the contracts are a single performance obligation.
+Additional
+Information
+Infrastructure as a service (laaS), that is, hosting and related application management services for
+software hosted by SAP or third parties engaged by SAP.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Combined Group
+SAP Integrated Report 2021
+SAP
+176/338
+175/338
+We frequently enter into multiple contracts with the same customer. For accounting purposes, we
+treat these contracts as a single contract if they are entered into at or near the same time and are
+economically interrelated. We do not combine contracts with closing days more than three months
+apart because we do not consider them being entered into near the same time. Judgment is required
+Identification of Contract
+Services revenue primarily represents fees earned from professional consulting services, premium
+support services, and training services.
+Software support revenue represents fees earned from providing customers with standardized
+support services that comprise unspecified future software updates, upgrades, and enhancements as
+well as technical product support services for on-premise software products.
+Software license revenue represents fees earned from the sale or license of software to customers
+for use on the customer's premises, in other words, where the customer has the right to take
+possession of the software for installation on the customer's premises or on hardware of third-party
+hosting providers unrelated to SAP (on-premise software). Software license revenue includes revenue
+from both the sale of our standard software products and customer-specific on-premise-software
+development agreements.
+Management Report
+Additional
+(A.2)
+Management Report
+(A.1)
+Note
+The accounting policies that most frequently or significantly require us to make judgments, estimates,
+and assumptions, and therefore are critical to understanding our results of operations, include the
+following:
+We base our judgments, estimates, and assumptions on historical and forecast information, and on
+regional and industry economic conditions in which we or our customers operate. Changes to these
+conditions could adversely affect our estimates. Although we believe we have made reasonable
+estimates about the ultimate resolution of the underlying uncertainties, no assurance can be given
+that the final outcome of these matters will be consistent with what is reflected in our recognized
+assets, liabilities, revenues, and expenses and disclosed contingent liabilities. Actual results could
+differ significantly from original estimates.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+> Significant Accounting Policies
+SAP
+The preparation of the Consolidated Financial Statements requires our management to make
+judgments, estimates, and assumptions that affect the application of accounting policies and the
+reported amounts of assets, liabilities, revenues, and expenses, as well as disclosure of contingent
+liabilities.
+Management Judgments and Sources of Estimation Uncertainty
+General and administration includes the costs related to finance and administrative functions, human
+resources, and general management as long as they are not directly attributable to one of the other
+operating expense line items.
+General and Administration
+Sales and marketing includes the costs incurred for the selling activities (such as sales commissions
+and amortization of capitalized sales commissions) and marketing activities related to our software
+and cloud solutions and our service portfolio. For more information about the capitalization of costs
+from contracts with customers, see Note (A.3).
+Sales and Marketing
+Research and development includes the costs incurred by activities related to the development of
+software solutions (new products, updates, and enhancements) including resource and hardware
+costs for the development systems. For more information about the recognition of internally generated
+intangible assets from development, see Note (D.3).
+We have established a hierarchy to identify the standalone selling prices (SSPs) that we use to
+allocate the transaction price of a customer contract to the performance obligations in the contract.
+Where standalone selling prices for an offering are observable and reasonably consistent across
+customers (that is, not highly variable), our SSP estimates are derived from our respective pricing
+Cost of services includes the costs incurred in providing the services that generate service revenue.
+Consequently, this line item primarily includes employee expenses and related training, system and
+system administration costs, and costs for third-party resources.
+Research and Development
+SAP Integrated Report 2021
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Revenue recognition
+(A.4), (G.3)
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+174/338
+173/338
+The IASB has issued various amendments to IFRS standards (such as IAS 1 (Classification of
+Liabilities as Current or Non-current), IAS 37 (Provisions, Contingent Liabilities and Contingent
+Assets)) that are relevant for SAP but not yet effective. We are currently in the process of finalizing the
+assessment of the impact on SAP, but do not expect material effects on our financial position or
+results of operations.
+New Accounting Standards Not Yet Adopted
+Our management periodically discusses these significant accounting policies with the Audit and
+Compliance Committee of our Supervisory Board.
+Accounting for equity investments
+Valuation of trade receivables
+(D.6)
+(D.3)
+Accounting for goodwill
+(D.2)
+Accounting for business combinations
+(D.1)
+Accounting for income taxes
+(C.5)
+Accounting for share-based payments
+(B.3)
+Accounting for legal contingencies
+Accounting for intangible assets (including recognition of internally generated intangible assets from
+development)
+SAP
+2021
+To Our
+Stakeholders
+Americas
+2,109
+1,996
+2,099
+Rest of Americas
+9,085
+9,110
+8,870
+United States
+12,105
+10,969
+12,067
+EMEA
+8,158
+8,052
+8,246
+3,948
+4,015
+4,343
+2019
+2020
+Rest of EMEA
+12,589
+Germany
+11,106
+Japan
+Jil SAP Group
+Cost of Services
+APJ
+Americas
+EMEA
+€ millions
+Major Revenue Classes by Region
+27,553
+27,338
+27,842
+11,194
+lil SAP Group
+4,165
+4,285
+APJ
+3,074
+2,859
+2,984
+Rest of APJ
+1,180
+1,305
+1,301
+4,254
+SAP Integrated Report 2021
+€ millions
+Additional
+Information
+178/338
+177/338
+For such development agreements, we recognize revenue over time as the software development
+progresses. Judgment is required in identifying an appropriate method to measure the progress
+toward complete satisfaction of such performance obligations. We typically measure progress of
+our development agreements based on the direct costs incurred to date in developing the software
+as a percentage of the total reasonably estimated direct costs to fully complete the development
+work (percentage-of-completion method). This method of measuring progress faithfully depicts the
+transfer of the development services to the customer, as substantially all of these costs are cost of
+the staff or third parties performing the development work. In estimating the total cost to fully
+complete the development work, we consider our history with similar projects.
+Provide us with an enforceable right to payment for performance completed to date
+■
+Are for software developed for specific needs of individual customers and therefore it does not
+I have any alternative use for us
+"
+· Typically, our customer-specific on-premise software development agreements:
+Licenses for our standard on-premise software products are typically delivered by providing the
+customer with access to download the software. We recognize revenue for these on-premise
+licenses at the point in time when we grant the license rights to the customer and the customer has
+access to and thus control over the software. In judging whether our on-premise software offerings
+grant customers a right to use, rather than a right to access, our intellectual property, we have
+considered the usefulness of our software without subsequent updates to it.
+Software revenue is recognized at a point in time or over time depending on whether we deliver
+standard software, customer-specific software, or software subscription contracts that combine the
+delivery of software and the obligation to deliver, in the future, unspecified software products:
+SAP
+Cloud revenue is recognized over time as the services are performed. Where our performance
+obligation is the grant of a right to continuously access and use a cloud offering for a certain term,
+revenue is recognized based on time elapsed and thus ratably over this term. In limited scenarios
+where the transaction price is entirely variable and determined by the customer's usage, we recognize
+revenue based on usage in the period in which it was earned.
+We review the SSPs periodically or whenever facts and circumstances change to ensure the most
+objective input parameters available are used.
+Judgment is required when estimating SSPs. To judge whether the historical pricing of our goods and
+services is highly variable, we have established thresholds of pricing variability. For judging whether
+contractual renewal prices are substantive, we have established floor prices that we use as SSPS
+whenever the contractual renewal prices are below these floor prices. In judging whether contracts
+are expected to renew at their contractual renewal prices, we rely on our respective renewal history.
+The SSPS of material right options depend on the probability of option exercise. In estimating these
+probabilities, we apply judgment considering historical exercise patterns.
+For offerings that lack renewals, have highly variable pricing, and lack substantial direct costs to
+estimate based on a cost-plus-margin approach, we allocate the transaction price by applying a
+residual approach. We use this technique in particular for our standard on-premise software
+offerings.
+Where sales prices for an offering are not directly observable or highly variable across customers,
+we use estimation techniques. For renewable offerings with highly variable pricing across
+customers, these techniques consider the individual contract's expected renewal price as far as this
+price is substantive. Typically, our cloud offerings follow this approach. For non-renewable
+offerings, these estimations follow a cost-plus-margin approach.
+history. Typically, our standardized support offerings and our professional service offerings follow
+this approach.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+Recognition of Revenue
+Total Revenue by Region
+SAP Integrated Report 2021
+Combined Group
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+The amounts for revenue by region in the following tables are based on the location of customers.
+The regions in the following table are EMEA (Europe, Middle East, and Africa), Americas (North
+America and Latin America), and APJ (Asia Pacific Japan).
+Geographic Information
+To Our
+Stakeholders
+Typically, we invoice fees for on-premise standard software on contract closure and software delivery.
+Periodic fixed fees for cloud subscription services, software support services, and other multi-period
+agreements are typically invoiced yearly or quarterly in advance. Such fee prepayments account for
+the majority of our contract liability balance. Fees based on actual transaction volumes for cloud
+subscriptions and fees charged for non-periodical services are invoiced as the services are delivered.
+While payment terms and conditions vary by contract type and region, our terms typically require
+payment within 30 to 60 days.
+Contract Balances
+All of the judgments and estimates mentioned above can significantly impact the timing and amount
+of revenue to be recognized.
+Judgment is also required to determine whether revenue is to be recognized at a point in time or over
+time. For performance obligations satisfied over time, we need to measure progress using the method
+that best reflects SAP's performance. When using cost incurred as a measure of progress for
+recognizing revenue over time, we apply judgment in estimating the total cost to satisfy the
+performance obligation.
+Revenue for combined performance obligations is recognized over the longest period of all promises
+in the combined performance obligation.
+Service revenue is typically recognized over time. Where we stand ready to provide the service (such
+as access to learning content), we recognize revenue based on time elapsed and thus ratably over the
+service period. Consumption-based services (such as separately identifiable consulting services and
+premium support services and classroom training services) are recognized over time as the services
+are utilized, typically following the percentage-of-completion method or ratably. When using the
+percentage-of-completion method, we typically measure the progress toward complete satisfaction of
+the performance obligation in the same way and with the same reasoning and judgment as we do for
+customer-specific on-premise software development agreements. We apply judgment in determining
+whether a service qualifies as a stand-ready service or as a consumption-based service.
+Software support revenue is typically recognized based on time elapsed and thus ratably over the
+term of the support arrangement. Under our standardized support services, our performance
+obligation is to stand ready to provide technical product support and unspecified updates, upgrades,
+and enhancements on a when-and-if-available basis. Our customers simultaneously receive and
+consume the benefits of these support services as we perform.
+For agreements that combine the delivery of software and the obligation to deliver, in the future,
+unspecific software products, we recognize revenue at a point in time for licenses that are made
+immediately accessible to the customer. We recognize revenue ratably over the term of the
+software subscription contract for the unspecified software products, as our performance obligation
+is to stand ready to deliver such products on a when-and-if-available basis.
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+We recognize trade receivables for performance obligations satisfied over time gradually as the
+performance obligation is satisfied and in full once the invoice is due. Judgment is required in
+determining whether a right to consideration is unconditional and thus qualifies as a receivable.
+Contract liabilities primarily reflect invoices due or payments received in advance of revenue
+recognition.
+Cost of cloud and software includes the costs incurred in producing the goods and providing the
+services that generate cloud and software revenue. Consequently, this line item primarily includes
+employee expenses relating to these services, amortization of acquired intangibles, fees for third-party
+licenses, depreciation of our property, plant, and equipment (for example, of our data centers in which
+we host our cloud solutions), and costs for third-party hosting services. For more information about
+the capitalization of costs from contracts with customers, see Note (A.3).
+Determining our expected credit loss allowance involves significant judgment. In this judgment, we
+primarily consider our historical experience with credit losses in the respective provision matrix risk
+class and current data on overdue receivables. We expect that our historical default rates represent a
+reasonable approximation for future expected customer defaults. Besides historical data, our
+judgment used in developing the provision matrix considers reasonable and supportable forward-
+looking information (for example, changes in country risk ratings, and fluctuations in credit default
+swaps of the countries in which our customers are located).
+Cost Classification
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+172/338
+171/338
+Income and expenses and operating cash flows of our foreign subsidiaries that use a functional
+currency other than the Euro are translated at average rates of foreign exchange (FX) computed on a
+Foreign Currencies
+The financial statements of our subsidiaries to which hyperinflation accounting applies are restated.
+Monetary assets and liabilities denominated in foreign currencies are translated at period-end
+exchange rates.
+Post-employment benefits are measured at the present value of the defined benefit obligations
+less the fair value of the plan assets.
+Combined Group
+Derivative financial instruments, liabilities for cash-settled share-based payments, and financial
+assets with cash flows that are not solely payments of principal or interest are measured at fair
+value.
+Bases of Measurement
+General Accounting Policies
+Executive and Supervisory Board Compensation
+(G.5)
+Other Litigation, Claims, and Legal Contingencies
+(G.3)
+Fair Value Disclosures on Financial Instruments
+(F.2)
+Financial Risk Factors and Risk Management
+(F.1)
+The Consolidated Financial Statements have been prepared on the historical cost basis except for the
+following:
+Liquidity
+Management Report
+Additional
+Information
+The amount of revenue recognized in the reporting period that was included in the contract liability
+balance at the beginning of the reporting period was €3.6 billion (December 31, 2020: €3.5 billion).
+(A.2)
+Trade and Other Receivables
+Accounting for Trade and Other Receivables
+We measure trade receivables and contract assets from contracts with customers at amortized cost
+less expected credit losses. We account for expected credit losses by recording an allowance on a
+portfolio basis. We apply the simplified impairment approach. On initial measurement of the
+receivables, we consider all credit losses that are expected to occur during the lifetime of the
+receivables. We use a provision matrix to estimate these losses.
+Additionally, we recognize allowances for individual receivables if there is objective evidence of credit
+impairment.
+Account balances are written off either partially or in full if we judge that the likelihood of recovery is
+remote.
+For information about how the default risk for trade receivables is analyzed and managed, how the
+loss rates for the provision matrix are determined, how credit impairment is determined and what our
+criteria for write-offs are, see the section on credit risk in Note (F.1).
+In our Consolidated Income Statements, net gains/losses from expected credit loss allowances are
+included in Other operating income/expense, net. Gains/losses from foreign currency exchange rate
+fluctuations are included in Other non-operating income/expense, net.
+The assessment of whether a receivable is collectible involves the use of judgment and requires us to
+make assumptions about customer defaults that could change significantly.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+By applying this judgment, we record an allowance for a specific customer when it is probable that a
+credit loss has occurred and the amount of the loss is reasonably estimable. Basing the expected
+credit loss allowance for the remaining receivables primarily on our historical loss experience likewise
+requires judgment, as history may not be indicative of future development. Also, including reasonable
+and supportable forward-looking information in the loss rates of the expected credit loss allowance
+requires judgment, as they may not provide a reliable prediction for future development.
+2021
+2020
+2021
+as at 12/31
+Equivalent to €1
+Annual Average Exchange Rate
+Middle Rate
+Exchange Rates
+The exchange rates of key currencies affecting the Company were as follows:
+monthly basis. Exchange differences resulting from foreign currency transactions are recognized in
+other non-operating income/expense, net.
+2020
+2 Other includes, for example, the impact of foreign currency translation and business acquisition.
+(E.3)
+(E.2)
+(B.3)
+(A.4)
+(A.3)
+(A.2)
+Revenue
+(A.1)
+Implications of the COVID-19 Pandemic
+(IN.2)
+Basis for Preparation
+(IN.1)
+Trade and Other Receivables
+Accounting Policies, Judgments, and Estimates
+The following table provides an overview of where our accounting policies, management judgments,
+and estimates are disclosed:
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+Cloud and Software Revenue
+Note
+Total Equity
+Capitalized Cost from Contracts with Customers
+Share-Based Payments
+Equity Investments
+(D.6)
+Leases
+(D.5)
+Property, Plant, and Equipment
+(D.4)
+Intangible Assets
+(D.3)
+Goodwill
+(D.2)
+Customer-Related Provisions
+Business Combinations and Divestitures
+Income Taxes
+(C.5)
+Results of Segments
+(C.1)
+Restructuring
+(B.6)
+Other Employee-Related Obligations
+(B.5)
+Pension Plans and Similar Obligations
+(B.4)
+(D.1)
+Cost of Cloud and Software
+1 The prior year number was reduced by €0.2 billion to conform to the presentation requirement regarding payments received in
+advance for cancelable contracts. The corresponding balance is presented in the line "Trade and other payables."
+0.6
+GBP
+Pound sterling
+122.06
+121.78
+129.86
+126.49
+130.38
+JPY
+Japanese yen
+1.1196
+0.8403
+1.1413
+1.2271
+1.1326
+USD
+U.S. dollar
+2019
+2021
+2020
+2019
+2021
+2020
+1.1835
+2019
+0.8990
+0.8892
+1.6106
+1.6554
+1.5747
+1.5896
+1.5615
+AUD
+Australian dollar
+1.4857
+1.5294
+1.4835
+0.8600
+1.5633
+CAD
+Canadian dollar
+1.1127
+1.0703
+1.0814
+1.0802
+1.0331
+CHF
+Swiss franc
+0.8773
+1.4393
+4.4
+3,308
+2,115
+179/338
+180/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+The following table presents the activities impacting contract liabilities balances during the year ended
+December 31, 2021:
+Additional
+Information
+€ billions
+1/1/20211
+Increases resulting from billing and invoices becoming due
+Decreases resulting from satisfaction of performance obligations
+Other²
+44 12/31/2021
+2021
+4.0
+8.8
+-9.0
+Contract Liabilities
+2,608
+Contract Balances
+Currency fluctuations
+10,931 10,364
+10,211
+4,894
+4,439
+3,945
+9,348
+9,239
+9,172
+1,217
+1,033
+The contract period of our cloud and software support contracts remaining at the balance sheet
+date and thus by the timing of contract renewals
+872
+3,625
+3,629
+9,418
+8,080
+6,933 24,078 23,228 23,012
+For information about the breakdown of revenue by segment and segment revenue by region, see
+Note (C.1).
+Remaining Performance Obligations
+Amounts of a customer contract's transaction price that are allocated to the remaining performance
+obligations represent contracted revenue that has not yet been recognized. They include amounts
+recognized as contract liabilities and amounts that are contracted but not yet due.
+The transaction price allocated to performance obligations that were unsatisfied or partially
+unsatisfied as at December 31, 2021, was €39.9 billion (December 31, 2020: €33.4 billion). This
+amount mostly comprises obligations to provide software support or cloud subscriptions services, as
+the respective contracts typically have durations of one or multiple years. The portion of remaining
+performance obligations related to services consists of non-cancelable revenue from contracts for
+projects with a predefined output.
+The majority of this amount is expected to be recognized as revenue over the next 12 months
+following the respective balance sheet date. This estimate is based on our best judgment, as it needs
+to consider estimates of possible future contract modifications. The amount of transaction price
+allocated to the remaining performance obligations, and changes in this amount over time, are
+impacted by, among others:
+3,798
+Cloud Revenue
+Additional
+Information
+Share price
+1,647
+Thereof equity-settled share-based payments
+1,664
+893
+1,147
+Thereof cash-settled share-based payments
+1,835
+1,084
+2,794
+Share-based payment expenses
+461
+157
+1,230
+General and administration
+191
+562
+655
+429
+296
+513
+246
+175
+266
+82
+55
+70
+56
+40
+59
+2019
+360
+2020
+171
+a) Cash-Settled Share-Based Payments
+The number of MSUS initially awarded is likewise multiplied by a performance factor. The
+performance factor depends on the amount of the TSR on the SAP share, measured for an entire
+performance period of approximately three years, compared to the TSR for NASDAQ-100 companies.
+If the TSR on the SAP share equals the median, the performance factor will be 100%. If the TSR on
+the SAP share over the performance period is negative, the maximum performance factor will,
+however, in deviation from the summary above, be 100%.
+Target achievement
+130%
+120%
+110%
+100%
+90%
+80%
+0%
+70%
+Operating income
+50%
+100%
+Total revenue
+150%
+Our major share-based payment plans are described below.
+Cloud revenue
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+200%
+Performance factor
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+The number of FSUs initially awarded is multiplied by a performance factor. The performance factor
+consists of three equally weighted individual performance indicators relating to the three non-IFRS
+KPIs at constant currencies, derived from SAP's long-term strategy: total revenue, cloud revenue, and
+operating income. The performance period throughout which the target achievement for these three
+KPIs is measured starts at the beginning of the financial year in which the FSUs are awarded and
+concludes upon the end of the second year following the year in which the share units were awarded.
+A numerical target value equaling 100% target achievement is set for each KPI. This constitutes, in
+each case, a cumulative value for the three years of the performance period.
+The LTI 2020 is a long-term, multi-year performance-based compensation element that is granted in
+annual tranches. The LTI 2020 reflects SAP's long-term strategy and thus sets uniform incentives for
+the Executive Board members to achieve key targets from the long-term strategic plans. The LTI 2020
+also serves to reward the Executive Board members for long-term SAP share price performance as
+compared to the market, thus ensuring that shareholders' interests are also honored. In addition, the
+LTI 2020 includes a component to ensure long-term retention of our Executive Board members.
+The LTI 2020 is a virtual share program under which annual tranches with a term of approximately four
+years each are granted. When the individual tranches are granted, a certain grant amount specified in
+the Executive Board member's service contract is converted into virtual shares (Share units). For this
+purpose, the grant amount is divided by the price of the SAP share which corresponds to the
+arithmetic mean of the SAP share price on the 20 trading days after scheduled publication of the
+preliminary results for the fourth quarter and the year as a whole (grant price). The share units
+allocated are composed of 1/3 Financial Performance Share Units (FSUS), 1/3 Market Performance
+Share Units (MSUs), and 1/3 Retention Share Units (RSUs). All three types of share units have a
+vesting period of approximately four years. In contrast to RSUs, FSUS and MSUS are subject to
+changes in quantity. In this context, the following applies:
+SAP Long-Term Incentive Program 2020 (LTI 2020)
+Information
+Performance factor
+2021
+Research and development
+SAP Integrated Report 2021
+SAP
+14,870
+13,420
+15,552
+Employee benefits expenses
+47
+72
+101
+Termination benefits outside of restructuring plans
+1,111
+-7
+25
+Employee-related restructuring expenses
+To Our
+369
+408
+Pension expenses
+1,835
+1,084
+2,794
+Share-based payment expenses
+1,477
+1,439
+1,589
+Social security expenses
+10,031
+10,635
+Salaries
+2019
+419
+Sales and marketing
+Stakeholders
+Management Report
+Cost of services
+Cost of software
+Cost of cloud
+€ millions
+Share-Based Payment Expenses by Functional Area
+The operating expense line items in our income statement include the following share-based payment
+expenses:
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+186/338
+Combined Group
+185/338
+Presentation in the Statements of Cash Flows
+Under certain programs, we grant our employees discounts on purchases of SAP shares. Since those
+discounts are not dependent on future services to be provided by our employees, the discount is
+recognized as an expense when the discounts are granted.
+The fair values of our equity-settled Qualtrics Plan equal the Qualtrics share price at grant date, as the
+expected dividend yield is 0%. The future settlement of Performance Share Units (PSUs) under this
+plan will also be dependent on meeting non-market-based Qualtrics performance conditions.
+We believe that the expected volatility is the most sensitive assumption we use in estimating the fair
+values of our share options. Regarding future payout under our cash-settled plans, the SAP share
+price is the most relevant factor. With respect to our LTI 2016 Plan, we believe that future payout will
+be significantly impacted not only by our share price but also by the relative performance against the
+Peer Group Index. With respect to our LTI 2020, we believe that future payout will be significantly
+impacted not only by our share price but also by the relative performance against the NASDAQ-100
+companies. Future payouts under our LTI 2020 will also be dependent on meeting non-market-based
+performance conditions based on SAP's long-term strategy. The latter, however, is not incorporated
+into our fair value calculation but leads to adjustments of the quantity of awards granted. Changes in
+these factors could significantly affect the estimated fair values as calculated by the valuation model,
+and the future payout.
+We use certain assumptions in estimating the fair values for our share-based payments, including
+expected share price volatility and expected award life (which represents our estimate of the average
+remaining life until the awards are exercised or expire unexercised). In addition, the final payout for
+plans also depends on the achievement of performance indicators and on our share price on the
+respective exercise dates. Changes to these assumptions and outcomes that differ from these
+assumptions could require material adjustments to the carrying amount of the liabilities we have
+recognized for these share-based payments. The fair value of the share units granted under the
+LTI 2016 Plan are dependent on our performance against a group of peer companies (Peer Group
+Index), the volatility, and the expected correlation between the price of the index and our share price.
+The fair value of the share units granted under the LTI 2020 are dependent on our performance
+against the total shareholder return (TSR) for NASDAQ-100 companies, the volatility, and the
+expected correlation between the TSR of the NASDAQ-100 companies and our TSR.
+Valuation, Judgment, and Sources of Estimation Uncertainty
+Share-based payments cover cash-settled and equity-settled awards issued to our employees. The
+respective expenses are recognized as employee benefits and classified in our Consolidated Income
+Statements according to the activities that the receiving employees perform.
+Classification in the Income Statement
+Accounting for Share-Based Payments
+Share-Based Payments
+(B.3)
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+We present the payments of our share-based payment plans separately in our Statements of Cash
+Flows under cash flows from operating activities. As a result, the changes in other assets and in other
+liabilities presented in the reconciliation of operating cash flow do not consider share-based payment-
+related assets or liabilities.
+2020
+200%
+100%
+Information how fair value was measured at measurement date
+Weighted average fair value as at 12/31/2020
+33.66
+105.52
+94.75
+72.94
+Qualtrics
+Rights
+RSU Plan
+(2017-2020
+Tranches)
+Tranches)
+LTI 2020
+(2020 Tranche)
+Additional
+Information
+LTI 2016 Plan
+(2017-2019
+€, unless otherwise stated
+Fair Value and Parameters Used at Year End 2020 for Cash-Settled Plans
+Option pricing model used
+Sustainability
+Combined Group
+Management Report
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+189/338
+1 For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until
+maturity of the respective award from the prevailing share price as at the valuation date.
+1.1
+2.8
+0.7
+Weighted average remaining life of awards outstanding as at 12/31/2021 (in years)
+1.52
+NA
+1.52
+Expected dividend yield (in %)
+Consolidated Financial Further Information on
+Statements IFRS
+ΝΑ
+Monte Carlo
+Other¹
+The risk-free interest rate is derived from German government bonds with a similar duration. The SAP
+dividend yield is based on expected future dividends.
+For the LTI 2020 valuation, the NASDAQ-100 Total Return Index on December 31, 2021, was
+US$19,217.94 (2020: US$15,072.29). The expected volatility of the NASDAQ-100 companies of 36%
+to 38% (2020: 36%), and the expected correlation of SAP and the NASDAQ-100 companies of 31% to
+34% (2020: 31%) are based on historical TSR data for SAP and the NASDAQ-100 companies.
+For the LTI 2016 Plan valuation, the Peer Group Index price on December 31, 2021, was US$593.37
+(2020: US$481.65); the expected dividend yield of the index of 1.00% (2020: 1.14%), the expected
+volatility of the index of 17% to 18% (2020: 26% to 31%), and the expected correlation of the SAP
+share price and the index price of 35% to 36% (2020: 27% to 30%) are based on historical data for
+the SAP share price and index price.
+1.5
+1 For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until
+maturity of the respective award from the prevailing share price as at the valuation date.
+1.0
+3.2
+1.2
+190/338
+Weighted average remaining life of awards outstanding as at 12/31/2020
+(in years)
+1.54
+1.54
+ΝΑ
+1.54
+Monte Carlo
+NA
+30
+34 to 42
+Expected dividend yield (in %)
+Expected volatility (in %)
+-0.77 to -0.37
+-0.77 to -0.32
+ΝΑ
+-0.75 to -0.11
+Risk-free interest rate, depending on maturity (in %)
+107.22
+107.22
+107.22
+107.22
+Other¹
+NA
+150%
+30 to 32
+Expected volatility (in %)
+Over a three-year service period and upon achieving certain key performance indicators (KPIs)
+From 2021 onwards, the number of PSUs that will vest under the different tranches is mainly
+contingent upon achievement of two equally weighted KPIs in the year of grant: operating profit (non-
+Over a one-to-three-year service period only, or
+Over a half-year service period only
+Granted share units will vest in different tranches, either:
+To retain and engage executives and certain employees, we grant virtual shares representing a
+contingent right to receive a cash payment determined by the SAP share price and the number of
+share units that ultimately vest. In June 2020 and 2021, we granted share units under the new
+Grow SAP Plan. This fixed term plan has broadly the same terms and conditions as the
+Move SAP Plan, recognizes all employees' commitment to SAP's success, and deepens their
+participation in our future company performance. In March 2021, we granted share units under the
+COVID-19 Recognition Plan to thank all employees for their commitment, dedication, and resilience.
+Except for a six-month vesting period, this non-recurring plan has broadly the same terms and
+conditions as the Move SAP Plan.
+Restricted Stock Unit Plan Including Move SAP Plan, Grow SAP Plan, and COVID-
+19 Recognition Plan (RSU Plan)
+If an Executive Board member's service contract is terminated before the end of the third year
+following the year in which the share units were granted, both the RSUs and PSUs are forfeited in
+whole or in part, depending on the circumstances of the relevant resignation from office or termination
+of the service contract.
+The number of PSUs ultimately paid out depends on the performance of the SAP share - absolute
+and relative to the Peer Group Index. In contrast, the final number of RSUs is fixed. SAP's absolute
+share price performance is measured by comparing the grant price against the payout price. If the
+SAP share price performance equals the Peer Group Index performance over the same period, the
+performance factor is set at 100%. If the SAP share price performs better than the Peer Group Index
+(measured as difference between SAP share price performance and Peer Group Index performance),
+the performance factor is increased by the percentage point of the outperformance of the SAP share
+price. The percentage point is doubled if, additionally, the payout price is higher than the grant price.
+The performance factor is capped at 150%. If the Peer Group Index performs better than the SAP
+share price, the performance factor is decreased by the percentage point of the outperformance of
+the Peer Group Index. All PSUs lapse if the performance factor is below 50%.
+All share units granted in this way, comprising 60% PSUs and 40% RSUs, have a vesting period of
+approximately four years. At the end of the vesting period, the corresponding share units are non-
+forfeitable. The payout price used for the settlement is the arithmetic mean of the XETRA closing
+prices of the SAP share on the 20 trading days following the publication of SAP's fourth-quarter results
+subsequent to the end of the vesting period. The payout price is capped at 300% of the grant price.
+The LTI tranche is cash-settled and paid in euros after the Annual General Shareholders' Meeting of
+the corresponding year.
+An LTI tranche was granted annually and has a term of four years (2016-2019 tranches). Each grant
+started with determining a grant amount in euros. The grant amount was based on the Executive
+Board members' contractual LTI target amount and the operating profit target achievement for the
+previous year. The Supervisory Board set the grant amount at a level between 80% and 120% of the
+contractual LTI target amount, taking into account the operating profit target achievement. This grant
+amount was converted into virtual shares, referred to as share units, by dividing the grant amount by
+the grant price. The grant price was the arithmetic mean of the XETRA closing prices of the SAP share
+on the 20 trading days following the publication of SAP's fourth-quarter results.
+retention of our Executive Board members, and to reward them for the long-term SAP share price
+performance as compared to its main peer group (Peer Group).
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+€, unless otherwise stated
+Management Report
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+188/338
+187/338
+The purpose of the LTI 2016 Plan was to reward our Executive Board members for the annual
+achievement of SAP's operating profit (non-IFRS at constant currencies) targets, to ensure long-term
+Long-Term Incentive 2016 Plan (LTI 2016 Plan)
+The performance of the share units is linked to the performance of the SAP share price, including
+dividend payments. Accordingly, an amount is paid out for each share unit which equals the SAP
+share price plus those dividends disbursed in respect of an SAP share in the period from the
+beginning of the year in which the share units were awarded until the end of the third year following
+the year in which the share units were awarded. The arithmetic mean of the SAP share price on the
+20 trading days after scheduled publication of the preliminary results for the fourth quarter and the
+year as a whole will be used as the SAP share price. The payout amount per share unit, including the
+dividend amounts due on the share units, is capped at 200% of the grant price. The tranche is cash-
+settled and paid in euros after the Annual General Meeting of Shareholders of the corresponding year.
+If an Executive Board member's service contract is terminated before the end of the third year
+following the year in which the share units were granted, the RSUs and PSUs are forfeited in whole or
+in part, depending on the circumstances of the relevant resignation from office or termination of the
+service contract.
+Ranking
+75th percentile
+Median
+25th percentile
+0%
+50%
+Combined Group
+21
+SAP Integrated Report 2021
+To Our
+Stakeholders
+-0.72 to -0.32
+ΝΑ
+-0.72 to -0.12
+Risk-free interest rate, depending on maturity (in %)
+124.90
+Other¹
+Monte Carlo
+124.90
+124.90
+Share price
+Monte Carlo
+Option pricing model used
+Information how fair value was measured at measurement date
+Weighted average fair value as at 12/31/2021
+122.88
+SAP
+(2018-2021
+Tranches)
+118.73
+LTI 2020
+(2020-2021
+Tranches)
+64.16
+LTI 2016 Plan
+(2018-2019
+Tranches)
+Fair Value and Parameters Used at Year End 2021 for Cash-Settled Plans
+The valuation of our outstanding cash-settled plans was based on the following parameters and
+assumptions:
+In conjunction with the acquisition of Qualtrics in 2019, under the terms of the acquisition agreement,
+SAP exchanged unvested Restricted Share Awards (RSAs), Restricted Share Units (RSUs), and
+Performance Share Units (PSUs), and options held by employees of Qualtrics into cash-settled share-
+based payment awards of SAP (Qualtrics Rights). After completion of a voluntary exchange offer in
+conjunction with the Qualtrics IPO in 2021, most of the Qualtrics Rights were exchanged into equity-
+settled Qualtrics RSU awards. For more information about this voluntary exchange offer, see the
+section Qualtrics Equity Awards - Exchange Offer in this Note (B.3).
+Qualtrics Cash-Settled Awards Replacing Pre-Acquisition Qualtrics Awards
+(Qualtrics Rights)
+IFRS at constant currencies) and cloud revenue (non-IFRS at constant currencies). Until 2021,
+operating profit (non-IFRS at constant currencies) was the only KPI. Depending on the weighted
+average performance, the number of PSUs vesting ranges between 0% and 200% of the number
+initially granted. Performance against the KPI target was 130.9% in 2021 (2020: 100.4%,
+2019: 118.7%). All share units are paid out in cash upon vesting.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+RSU Plan
+2021
+10,413
+(B.2) Employee Benefits Expenses
+49
+as % of Other non-financial
+assets
+Capitalized contract cost
+3,247
+1,926
+1,321
+4,261
+2,628
+1,633
+Other non-financial assets
+2,270
+1,687
+583
+3,127
+89
+2,333
+Capitalized contract cost
+customer contracts
+242
+151
+91
+301
+175
+126
+Capitalized cost to fulfill
+customer contracts
+2,028
+1,536
+491
+2,826
+793
+2,158
+73
+88
+Contingent liabilities exist in respect of customer-related litigation and claims for which no provision
+has been recognized. It is not practicable to estimate the financial impact of these contingent liabilities
+due to the uncertainties around these lawsuits and claims as outlined above.
+At the end of each reporting period, we reassess the potential obligations related to our pending
+claims and litigation and adjust our respective provisions to reflect the current best estimate. In
+addition, we monitor and evaluate new information that we receive after the end of the respective
+reporting period, but before the Consolidated Financial Statements are authorized for issue, to
+determine whether this provides additional information regarding conditions that existed at the end of
+the reporting period. Changes to the estimates and assumptions underlying our accounting for legal
+contingencies, and outcomes that differ from these estimates and assumptions, could require material
+adjustments to the carrying amounts of the respective provisions recorded and additional provisions.
+The expected timing or amounts of any outflows of economic benefits resulting from these lawsuits
+and claims are uncertain and not estimable, as they generally depend on the duration of the legal
+proceedings and settlement negotiations required to resolve the litigation and claims and the
+unpredictability of the outcomes of legal disputes in several jurisdictions.
+€ millions
+- Determining whether the amount of an obligation is reliably estimable
+Determining the probability of outflow of economic benefits
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+Determining whether an obligation exists
+Due to uncertainties relating to these matters, provisions are based on the best information available.
+Significant judgment is required in the determination of whether and when a provision is to be
+recorded and what the appropriate amount for such provision should be. Notably, judgment is
+required in the following areas:
+44
+Customer-related provisions also include obligations resulting from customer-related litigation and
+claims. We are currently confronted with various claims and legal proceedings, including claims that
+relate to customers demanding indemnification for proceedings initiated against them based on their
+use of SAP software, and occasionally claims that relate to customers being dissatisfied with the
+products and services that we have delivered to them. The obligations arising from customer-related
+litigation and claims comprise cases in which we indemnify our customers against liabilities arising
+from a claim that our products infringe a third party's patent, copyright, trade secret, or other
+proprietary rights.
+Customer-related provisions mainly include expected contract losses. We adjust these provisions as
+further information becomes available and as circumstances change. Non-current provisions are
+measured at the present value of their expected settlement amounts as at the reporting date.
+The unit of account for the identification of potential onerous customer contracts is based on the
+contract definition of IFRS 15 including the contract combination guidance. The economic benefits
+considered in the assessment comprise the future benefits we are directly entitled to under the
+contract as well as the anticipated future benefits that are the economic consequence of the contract
+if these benefits can be reliably determined.
+129
+171
+450
+523
+2020
+2021
+Expected Contract Losses
+(A.4) Customer-Related Provisions
+Capitalized cost to fulfill customer contracts
+Capitalized cost of obtaining customer contracts
+€ millions
+Amortization Expense
+70
+Customer-Related Litigation and Claims
+183/338
+667
+Non-Current
+498
+103
+395
+611
+146
+465
+Other receivables
+6,232
+33
+6,199
+5,888
+1
+5,887
+Trade receivables, net
+AA Total
+Total
+Total
+Non-Current
+Current
+€ millions
+2020
+2021
+Trade and Other Receivables
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Current Non-Current
+Capitalized cost of obtaining
+6,352
+6,499
+Current
+Total
+Current Non-Current
+Total
+2020
+2021
+€ millions
+Capitalized Cost from Contracts with Customers
+Amortization of capitalized costs to fulfill contracts for custom cloud applications and extensions is
+included in the cost of cloud.
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+147
+SAP Integrated Report 2021
+182/338
+181/338
+Capitalized costs incurred to fulfill customer contracts mainly consist of direct costs for set-up and
+implementation of cloud products and custom cloud development contracts as far as these costs are
+not in scope of other accounting standards than IFRS 15. These costs are amortized after completion
+of the setup and implementation or the development, respectively, on a straight-line basis over the
+expected life of the cloud subscription contract including expected renewals. For the life of the
+contract, we consider our expectation about future contract renewals which we evaluate periodically
+to confirm that the resulting amortization period properly reflects the expected contract life. The
+amortization periods range from six to eight years depending on the type of offering. In addition, the
+capitalized costs include third-party license fees which are amortized over the term of the third-party
+license contract. Judgment is required in evaluating whether costs are directly related to customer
+contracts and in estimating contract lives.
+> Costs to Fulfill Customer Contracts
+Our sales commission payments for customer contract renewals are typically not commensurate with
+the commissions paid for new contracts. Thus, the commissions paid for renewable new contracts
+also relate to expected renewals of these contracts. Consequently, we amortize sales commissions
+paid for new customer contracts on a straight-line basis over the expected contract life including
+probable contract renewals. Judgment is required in estimating these contract lives. In exercising this
+judgment, we consider our expectation about future contract renewals which we evaluate periodically
+to confirm that the resulting amortization period properly reflects the expected contract life.
+Commensurate payments are amortized over the contract term to which they relate. The amortization
+periods range from 18 months to eight years depending on the type of offering. Amortization of the
+capitalized costs of obtaining customer contracts is classified mainly as sales and marketing expense.
+We expense incremental costs of obtaining a customer contract as incurred if we expect an
+amortization period of one year or less.
+The capitalized assets for the incremental costs of obtaining a customer contract primarily consist of
+sales commissions earned by our sales force and partners. Judgment is required in determining the
+amounts to be capitalized, particularly where the commissions are based on cumulative targets and
+where commissions relate to multiple performance obligations in one customer contract. We
+capitalize such cumulative target commissions for all customer contracts that count towards the
+cumulative target but only if nothing other than obtaining customer contracts can contribute to
+achieving the cumulative target. Commissions for contracts with multiple performance obligations or
+for probable renewals thereof are allocated to these performance obligations and probable renewals
+relative to the respective standalone selling price.
+Capitalized costs from customer contracts are classified as Other non-financial assets in our
+statement of financial position.
+> Costs of Obtaining Customer Contracts
+Capitalized Cost from Contracts with Customers
+(A.3)
+Contract assets as at December 31, 2021, were €360 million (December 31, 2020: €295 million).
+For more information about financial risk, how we manage credit risk, and details of our trade
+receivables and contract assets allowances, see Note (F.1).
+6,730
+137
+6,593
+SAP
+SAP
+- Estimating the amount of the expenditure required to settle the present obligation
+To Our
+654
+984
+2,220
+4,094
+696
+1,107
+2,291
+4,786
+824
+1,353
+2,609
+Infrastructure
+administration
+6,530
+3,859
+1,246
+3,161
+6,689
+1,243
+2,161
+3,285
+6,879
+1,199
+2,306
+3,374
+General and
+SAP Integrated Report 2021
+10,368
+25,834 10,205
+5,000
+2,123
+10,485
+SAP Group
+31,660 29,113 107,415
+184/338
+end average)
+29,368 27,092 99,157
+42,697
+101,476
+30,306 27,830
+28,354 104,364 43,340
+30,651
+45,359
+SAP Group (months'
+acquisitions
+2,113
+137
+1,638
+46,641
+338
+75
+97
+609
+914
+45
+407
+462
+Thereof
+(December 31)
+100,330
+29,712 27,571
+27,979 102,430 43,048
+30,369
+44,082
+781
+10,348
+5,209 25,781
+5,481
+15,646
+5,113
+4,586
+28,215
+Cloud and software
+Total
+APJ
+EMEA Americas
+Total
+APJ
+EMEA Americas
+Total
+APJ
+EMEA Americas
+6,278
+Full-time equivalents
+12/31/2020
+12/31/2021
+Employee Headcount by Region and Function
+The following table provides an overview of employee headcount, broken down by function and by
+the regions EMEA (Europe, Middle East, and Africa), Americas (North America and Latin America), and
+APJ (Asia Pacific Japan).
+Employee Headcount
+(B.1)
+This section provides financial insights into our employee benefit arrangements. It should be read in
+conjunction with the compensation disclosures for key management personnel in Note (G.5).
+Section B - Employees
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Stakeholders
+Combined Group
+12/31/2019
+4,589
+5,947
+16,392
+11,598
+11,136
+Sales and marketing
+development
+27,634
+9,131
+5,793
+29,580 12,710
+9,781
+5,525
+13,705
+32,244
+6,326 10,571
+15,347
+Research and
+6,094
+5,971
+6,501
+4,426
+20,239
+Services
+8,229
+5,491
+5,361 16,288
+8,175
+5,934
+5,733
+19,842
+8,250
+6,018
+5,924 19,644
+7
+10
+10
+100%
+In the past fiscal year, the Supervisory Board took the key results from a Spring 2021 questionnaire
+reviewing the efficiency of the Supervisory Board's work as an opportunity to change the structure,
+size, and duties of its committees so as to further optimize their work and decision-making processes
+in the interest of good corporate governance. At its meeting on April 15, 2021, for example, it
+deliberated on proposals for reorganizing the Supervisory Board committees, as drawn up by the
+Personnel and Governance Committee based on the aforementioned efficiency review of the plenary
+and committee work. The Supervisory Board subsequently resolved on the new composition and
+structure of the committees by circular correspondence vote in May 2021. Some of the tasks of the
+committees were rearranged and some of the committees were renamed to better reflect their roles.
+In addition, the number of committees was partially reduced, or their memberships filled anew, as
+described in the section on the work of the committees below. Notably, the General and
+Compensation Committee was renamed to Personnel and Governance Committee, the Audit
+Committee was renamed to Audit and Compliance Committee, and the People and Organization
+Committee was renamed to People and Culture Committee. The Personnel and Governance
+Committee was downsized from 10 to eight members, and the number of seats on the Technology
+1 Helmut Stengele joined the Supervisory Board as an employee representative on October 29, 2021. As at December 31, 2021, he has
+not served on any committee, nor have there been any Supervisory Board meetings since his appointment. However, he did participate in
+four circular resolutions during this period.
+Reorganization of Supervisory Board Responsibilities in Committees
+5
+7
+20/338
+3
+5
+Ralf Zeiger (until 28.10.2021)
+14.3
+16.3
+26.9
+total return index
+1 Assuming all dividends were reinvested. Source: Bloomberg
+Dividend Increased to €2.45
+It is our policy to pay a dividend totaling 40% or more of IFRS profit after tax.
+At the Annual General Meeting of Shareholders, the Executive Board and the Supervisory Board of
+SAP SE will recommend increasing the total dividend for fiscal year 2021 by approximately 32% to
+€2.45 per share (2020: €1.85). This includes a special dividend of €0.50 to celebrate SAP's 50th
+anniversary. The payout ratio would be 54% (2020: 41%). Excluding the special dividend, the ratio
+would be 43%.
+Dividend per Share
+€ | change since previous year
+2.45
+1.85
+32%
+1.58
+1.50
+1.40
+17%
+S&P 500 Composite —
+7%
+Performance comparators
+10,745
+-
+- 803054204 (CUSIP)
+Percent, unless otherwise stated
+Initial investment US$10,000
+Date of investment
+12/31/2011
+Period of investment
+10 years
+Value at 12/31/2021¹ (in US$)
+Average annual return
+26,461
+10.2
+12/31/2016
+5 years
+16,211
+3
+12/31/2020
+1 year
+7.5
+Return on SAP ADRs
+5%
+2017
+Retail / Not identified 24 %
+Rest of World
+Treasury
+North America 21 %
+Germany 7%
+4 %
+Founders 11 %
+4%
+*40% of institutional investors are classified as ESG investors.
+17/338
+18/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+United Kingdom/
+Ireland
+14%
+12%
+Europe (ex Germany)
+16%
+Applying the definition accepted on the Frankfurt Stock Exchange, which excludes treasury stock from
+the free float, as at December 31, 2021, the free float stood at 85% (December 31, 2020: 86%).
+2018
+2019
+2020
+2021
+Capital Stock Unchanged
+SAP's capital stock as at December 31, 2021, was €1,228,504,232 (2020: €1,228,504,232). It is issued
+as 1,228,504,232 no-par shares, each with an attribute value of €1 in relation to capital stock.
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Shareholder Structure
+Institutional
+Investors
+Additional
+Information
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+-
+Percent, unless otherwise stated
+Initial investment €10,000
+WKN 716460/ISIN DE007164600
+Date of investment
+Period of investment
+Value as at 12/31/2021¹ (in €)
+Average annual return
+Performance comparators
+DAX 40 Performance
+total return index
+REX General Bond -
+total return index
+12/31/2011
+10 years
+30,575
+11.8
+Return on SAP Common Stock -
+Berlin, Frankfurt, Stuttgart
+1 Source: Qontigo
+Dow Jones STOXX 50
+Additional
+Information
+In addition, we provide a Webcast for all key investor events at which members of our Executive
+Board speak, and we post all relevant presentations on the Investor Relations Web site.
+Key Facts About SAP Stock/SAP ADRS
+Listings
+Germany
+United States (ADRs)
+IDS and symbols
+WKN/ISIN
+NYSE (ADRs)
+Reuters
+Bloomberg
+Weight (%) in indexes as at 12/31/2021¹
+DAX 40
+Prime All Share
+CDAX
+HDAX
+Dow Jones EURO STOXX 50
+New York Stock Exchange
+716460/DE0007164600
+803054204 (CUSIP)
+S&P 500 Composite ―
+15.8
+14.5
+36.3
+total return index
+S&P North American
+23.8
+26.8
+35.0
+Technology Software Index
+1 Assuming all dividends were reinvested.
+15/338
+16/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+-1.3
+0.2
+0.9
+15.8
+SAPG.F or .DE
+SAP GR
+12/31/2016
+5 years
+15,083
+8.6
+9.29
+7.54
+Consolidated Financial
+Statements IFRS
+8.75
+2.87
+4.21
+12/31/2020
+1 year
+11,649
+16.5
+10.4
+6.7
+8.06
+Further Information on
+Sustainability
+Additional
+Information
+Report by the Supervisory
+Board
+15
+100%
+Lars Lamadé
+5
+5
+13
+13
+18
+18
+100%
+Peter Lengler (since 10.08.2021)
+1
+1
+5
+5
+6
+6
+15
+100%
+10
+5
+5
+8
+8
+13
+13
+100%
+Margret Klein-Magar
+5
+5
+20
+20
+20
+25
+25
+100%
+Monika Kovachka-Dimitrova
+5
+10
+Bernard Liautaud
+5
+5
+100%
+Christine Regitz
+5
+5
+12
+12
+17
+17
+100%
+Dr. Friederike Rotsch
+5
+5
+29
+29
++4
+34
+Heike Steck
+28
+28
+23
+23
+तु
+11
+11
+16
+16
+16
+100%
+Dr. Qi Lu
+5
+5
+8
+7
+13
+12
+92%
+Gerhard Oswald
+5
+5
+5
+Further Information on
+Sustainability
+Prof. Dr. Gesche Joost
+19
+19/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Meeting Participation of SAP SE Supervisory Board Members During Fiscal Year 2021
+Plenum
+Committees
+All Meetings
+Supervisory Board Members
+Meetings
+Participation
+Meetings
+Participation
+In October 2020, SAP announced a revised corporate strategy in the form of an accelerated transition
+to the cloud, which resulted in a series of measures and investments in line with customer
+requirements. We continued to monitor and discuss with the Executive Board the implementation of
+this revised company strategy in 2021. We satisfied ourselves that the activities introduced by the
+Executive Board created room for organic innovation, expedited the harmonization of SAP's cloud
+business, and, last but not least, contributed to the good results for fiscal 2021. In this regard, the
+Executive Board reported, inter alia, on the progress made with respect to SAP Business Technology
+Platform (which companies can use to run own developments or existing SAP or third-party services),
+and on its measures to implement SAP's People Strategy. A further significant step was the acquisition
+of Signavio, a provider of cloud solutions for business process management. We approved this
+acquisition during our extraordinary meeting on January 25, 2021, on recommendation of the Finance
+and Investment Committee because we, like the Executive Board, consider investment in business
+process intelligence (BPI, or applications and tools for capturing and analyzing process data) to be
+strategically worthwhile. BPI enables SAP to leverage the experiences of its customers to identify and
+eliminate inefficiencies and vulnerabilities of their business operations. Prior to this, in its meetings on
+January 15 and 25, 2021, the Finance and Investment Committee had thoroughly discussed the
+opportunities and risks associated with this acquisition as well as the two fairness opinions (external
+assessments of the purchase price determination and company valuation of the planned acquisition).
+At our meeting on February 24, 2021, the Executive Board presented the RISE with SAP offering to us.
+Introduced at the end of January 2021, this flexible cloud service package provides customers with a
+holistic approach for accelerating their transition to the cloud and transforming into an intelligent
+enterprise. As part of its ongoing reports to the full Supervisory Board, the Executive Board kept us
+apprised of the package's success among SAP customers. When we met in April and July 2021, we
+deliberated with the Executive Board on the Company's China strategy, the future direction of the
+marketing strategy, and HR measures to attract new cloud development talent.
+Meetings
+Strategy and RISE with SAP
+Information
+Dear Shareholders,
+In the following, we would like to inform you about the work of the Supervisory Board in the fiscal year
+2021.
+Collaboration Between the Supervisory Board and the Executive Board
+In the past fiscal year, the Supervisory Board of SAP SE advised the Executive Board on an ongoing
+basis with regard to the management of the Company and kept the Executive Board's management of
+the Company under observation for legal compliance, adherence to proper accounting principles,
+business focus, and expediency. We were involved whenever decisions of fundamental importance to
+SAP were made.
+The Supervisory Board received regular, full, and timely reports from the Executive Board, both from
+members in person and in written documents. The Supervisory Board was also in regular exchange
+with senior internal officers through its various committees. This ensured that we were always up to
+date, even between meetings, on the Company's strategy, planning, business performance, risks, risk
+management, compliance (in other words, adherence to laws, to the Company's Articles of
+Incorporation, and to internal policies), and on transactions of special significance for SAP. In its
+reports, the Executive Board also informed us in particular where business deviated from plan or
+target, and why. In addition, the Supervisory Board members can turn to SAP Digital Boardroom at
+any time to call up comprehensive metrics for all business areas in real time and generate evaluations
+and analyses as required. The solution affords us an up-to-date view of SAP's business performance
+whenever we need it - with maximum transparency.
+The content and scope of the Executive Board's reports to us fully met our requirements for them: The
+Executive Board came to Supervisory Board meetings for discussion of the agenda items. We
+questioned and probed the Executive Board to satisfy ourselves that the information it gave us was
+plausible. All transactions requiring approval by the Supervisory Board whether by law, the Articles of
+Incorporation, or the Supervisory Board's list of transactions requiring its consent were carefully
+examined and discussed with the Executive Board prior to approval.
+The Supervisory Board chairperson and the CEO were in continuous contact, which meant the
+Supervisory Board chairperson was always informed without delay of all important events that were
+significant for assessing SAP's situation and progress or for the management and governance of the
+Company. Moreover, the chairperson of the Supervisory Board discussed SAP's strategy, business
+performance, risks, risk management, compliance, and other key topics and decisions regularly with
+the CEO. This enabled the Supervisory Board chairperson to update the members of the Supervisory
+Board between meetings.
+Supervisory Board Meetings and Resolutions
+In the past fiscal year, the Supervisory Board of SAP SE held four ordinary meetings and one
+extraordinary meeting at which we deliberated and resolved on all matters of relevance to the
+Company. Due to the ongoing travel and contact restrictions imposed on us as a result of the COVID-
+19 pandemic, we also conducted the majority of our plenary meetings and Committee meetings,
+which are normally held as physical meetings, in 2021 as video conferences or as hybrid sessions,
+where some members attended physically and the remainder online. We also adopted eleven
+resolutions by correspondence vote. The following table provides an overview of the individual
+members' attendance at the Supervisory Board's plenary sessions and committee meetings in the
+year under review.
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+The Supervisory Board and its committees also convened wholly or partly without the Executive
+Board as necessary in the reporting year to deliberate on items that pertained to the Executive Board
+or required internal discussion among Supervisory Board members alone. This was the case in three
+of the plenary sessions, and in five committee meetings. In addition, the shareholder representatives
+and the employee representatives independently discussed individual agenda items as required prior
+to the adoption of resolutions in plenary sessions. The Supervisory Board addressed the following key
+topics during the year:
+Participation
+Participation
+in %
+Prof. Dr. h.c. Hasso Plattner
+67%
+(since 08.07.2021)
+Panagiotis Bissiritsas
+3
+3
+13
+13
+16
+16
+100%
+(until 07.07.2021)
+Aicha Evans
+5
+5
+15
+14
+20
+2
+3
+1
+1
+5
+5
+15
+13
+20
+18
+90%
+Pekka Ala-Pietilä (until 12.05.2021)
+95%
+3
+6
+6
+9
+9
+100%
+Manuela Asche-Holstein
+2
+1
+3
+Consolidated Financial
+Statements IFRS
+10.1
+Combined Group
+Other board memberships: Executive Board, Bitkom e.V., Berlin,
+Year of Birth: 1966
+Nationality: German
+Current Executive Board term expires: 2023
+Appointed to the Executive Board: 2021
+Joined SAP: 2021
+Chief People & Operating Officer, Labor Relations Director
+Sabine Bendiek
+Supervisory Board, adidas AG, Herzogenaurach, Germany
+Other board memberships:
+Year of Birth: 1980
+Nationality: German
+Current Executive Board term expires: 2025
+Appointed to the Executive Board: 2018
+Joined SAP: 1999
+Chief Executive Officer (CEO)
+Christian Klein
+SAP Executive Board
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Germany; Supervisory Board, Schaeffler AG, Herzogenaurach, Germany
+Combined Group
+Luka Mucic
+Joined SAP: 1996
+Nationality: German
+Current Executive Board term expires: 2024
+Appointed to the Executive Board: 2019
+Joined SAP: 2013
+Chief Technology Officer
+Juergen Mueller
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+12/338
+11/338
+Supervisory Board, HeidelbergCement AG, Heidelberg, Germany
+Other board memberships:
+Year of Birth: 1971
+Nationality: German
+Current Executive Board term expires: 2026
+Appointed to the Executive Board: 2014
+Chief Financial Officer
+Year of Birth: 1982
+To Our
+SAP
+2
+13
+13
+15
+15
+100%
+Gunnar Wiedenfels
+5
+5
+22
+22
+27
+27
+Management Report
+100%
+James Wright
+5
+5
+26
+26
+31
+31
+100%
+2
+SAP Integrated Report 2021
+Dr. Rouven Westphal (ab 12.05.2021)
+14
+16
+16
+21
+21
+Helmut Stengele (since 29.10.2021)¹
+ΝΑ
+ΝΑ
+NA
+NA
+ΝΑ
+$ ཟླ -
+34
+100%
+21
+100%
+NA
+NA
+Christa Vergien-Knopf
+5
+5
+9
+9
+14
+(until 09.08.2021)
+Scott Russell
+Customer Success
+100%
+Appointed to the Executive Board: 2021
+1. December 30, 2020 Closing Price €107.22
+Dec.
+Nov.
+Oct.
+Sept.
+Aug.
+July
+June
+May
+Apr.
+Mar.
+Feb.
+Jan.
+95
+11
+6
+4
+100
+105
+68
+3
+1
+110
+6.
+115
+May 13, 2021 Ex dividend, €1.85 per share
+January 14, 2021 Preliminary results Q4 2020
+December 30, 2021 Closing price €124.90
+10.
+Continuous Engagement with the Investment Community
+SAP continuously engaged with the investment community in 2021. Throughout the year, members of
+the Executive Board of SAP SE and the Investor Relations (IR) team discussed our latest strategy, its
+execution and business development, and how SAP was helping customers in the new virtual world,
+with institutional investors, analysts, and private investors worldwide. Given the ongoing pandemic,
+most events were held virtually.
+The IR team, together with senior management, held more than 100 meetings in 2021 to maintain the
+dialogue with investors and analysts, including one-on-one phone calls, video conferences, and virtual
+road shows as well as a limited number of in-person meetings under strict hygiene standards.
+Members of the Executive Board and the IR team participated in more than 20 conferences
+worldwide. In June, we hosted the virtual Financial Analyst Conference as a part of our SAPPHIRE
+NOW event for investors and financial analysts. Once again, SAP held the 2021 Annual General
+Meeting of Shareholders (AGM) virtually without physical presence.
+We continued our dialogue with socially responsible investors (SRI), providing them with insights into
+our environmental, social, and corporate governance policies. SAP's leadership in this area is being
+recognized by leading organizations. SAP was one of only three enterprise software companies to
+make the Carbon Disclosure Project's (CDP) A List 2021. And SAP remains the software industry
+leader in the Dow Jones Sustainability Indices for the 15th year in a row.
+SAP representatives engaged with retail shareholders at virtual events. The IR team and the Treasury
+team also maintained regular communication with the debt investor community.
+We provide a wide range of information online about SAP and its shares. Our communications
+channels include our Twitter feed @sapinvestor and the quarterly SAP INVESTOR magazine.
+Shareholders can reach the IR team directly by telephone hotline and by e-mail at investor@sap.com.
+We also publish an overview of the latest analyst consensus in collaboration with Vara Research.
+SAP Integrated Report 2021
+Joined SAP: 2010
+SAP
+To Our
+Stakeholders
+April 22, 2021 Final results Q1 2021
+5.
+October 21, 2021 Final results Q3 2021
+9.
+April 13, 2021 Preliminary results Q1 2021
+October 12, 2021 Preliminary results Q3 2021
+8.
+January 29, 2021 Final results Q4/ Full year 2020
+3.
+July 21, 2021 Financial results Q2 2021
+7.
+2.
+120
+4.
+125
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+Year of Birth: 1973
+Nationality: U.S. citizen
+Current Executive Board term expires: 2024
+Additional
+Information
+Appointed to the Executive Board: 2021
+Current Executive Board term expires: 2024
+5
+Nationality: Australian
+Joined SAP: 2021
+Chief Marketing & Solutions Officer
+Julia White
+Year of Birth: 1985
+Nationality: German
+Current Executive Board term expires: 2025
+Appointed to the Executive Board: 2019
+Joined SAP: 2004
+Thomas Saueressig
+SAP Product Engineering
+Investor Relations
+Year of Birth: 1973
+New Highs Despite Challenging Environment
+To Our
+Stakeholders
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+SAP Stock Versus Major Indices (December 30, 2020 to December 30, 2021)
+130
+SAP Stock (Xetra)
+DAX 40 Performanceindex (Xetra)
+SAP Integrated Report 2021
+SAP
+percent
+13/338
+Investment appetite remained high during 2021, enabling the markets to develop favorably overall
+and even break new records in the final months of the year. Macroeconomic issues were the main
+driver of market movements, including the ongoing COVID-19 pandemic and its effects on global
+supply chains. Further, persistent supply bottlenecks for key products, such as semiconductors, and a
+jump in energy, and commodity prices slowed down economic growth significantly. Rising inflation,
+and interest rate concerns also contributed to volatility in the marketplace. SAP stock largely followed
+general market trends in this environment, gaining 16.5% on the year to finish higher than the DAX
+(+15.8%) but below the NASDAQ-100 (+26.6%). With a market capitalization of €153.4 billion at year
+end, SAP was the second most valuable company on the DAX.
+Cloud Strategy Resonates -SAP Stock Gains Ground
+14/338
+SAP stock started the year at €107.22 (1, see graphic below), the Xetra closing price on
+December 31, 2020. Though buoyed temporarily at the end of January by the Qualtrics IPO, the share
+price reached its lowest level for the year of €101.78 just a few weeks later.
+Combined Group
+Management Report
+October then saw SAP stock benefit from stronger than expected preliminary results for the third
+quarter and a renewed guidance increase for the full year (8). Analysts were impressed above all with
+the strength of SAP's cloud business, and the share price jumped 3.9% to €121.50, but subsequent
+publication of our final third-quarter results (9), together with a reiteration of expected margin
+development in fiscal 2022, had a dampening impact on the share price. The share price nevertheless
+climbed to its high for the year of €128.98 by early November. The subsequent market downturn,
+triggered by new COVID-19 concerns, was almost made up for by the end of the year, with the share
+benefitting in December from positive industry news as well as a buy recommendation from another
+major financial institution, which had forecast accelerated cloud growth in 2022. SAP stock ultimately
+ended the fourth quarter at €124.90, or 16.5% above its opening price for the year.
+announcement.
+Increasing demand for technology shares in August, however, ultimately lifted SAP stock slightly
+above its previous high for the year, before mounting concerns about interest rates and the Chinese
+economy melted away gains in September.
+NASDAQ 100 Index
+Thanks also to good results in the first quarter of 2021 (4), (5), SAP stock was able to rally back in
+April, rising to an interim high of €120.70 before broad market rotation out of technology stocks and
+into value names triggered by interest rate concerns pushed it back down again. By contrast, the ex-
+dividend markdown of €1.85 (6) in May had no appreciable effect on the share price. SAP stock
+ultimately recovered in June and, continuing its upward trajectory, reached a new interim high of
+€125.78 in July following a clear buy recommendation from a major financial institution.
+SAP's strategic focus on cloud business resonated with the market: analysts particularly praised the
+benefits of cloud migration, the switch to a long-term, more profitable subscription model, and the
+'RISE with SAP' offering. Despite strong first-half results (7) attesting to the successful implementation
+of the cloud strategy, SAP shares declined 2.5% to €118.46 amidst a positive overall market. Market
+analysts pointed out that even more optimistic expectations had emerged prior to the earnings
+The segment information for 2021 and the comparative prior periods were restated to conform with
+the new segment composition.
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+The acquisition of Signavio GmbH, combined with our business process intelligence unit, led to a new
+operating segment called Business Process Intelligence. The segment derives its revenues from the
+sale of business process transformation offerings from SAP and Signavio. Due to its size, Business
+Process Intelligence is not a reportable segment. For more information about the acquisition of
+Signavio GmbH, see Note (D.1).
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Segment Reporting Policies
+Our management reporting system, and hence our segment reporting system, reports our
+intersegment services as cost reductions and does not track them as internal revenue. Intersegment
+services mainly represent utilization of human resources of one segment by another segment on a
+project basis. Intersegment services are charged based on internal cost rates including certain indirect
+overhead costs but excluding a profit margin.
+Stakeholders
+Additional
+Information
+General Information
+In 2021, the finance and legal functions of Qualtrics were reintegrated into the Qualtrics segment.
+Additionally, the Clarabridge business, acquired by Qualtrics International Inc. in October 2021, was
+added to the Qualtrics segment accordingly (for more information, see Note (D.1)). The Qualtrics
+segment derives its revenues mainly from the sale of experience management cloud solutions that
+run front-office functions across experience data, and from the sale of related services. The figures of
+the Qualtrics segment of SAP and the financial results of Qualtrics International Inc. cannot be
+compared, notably due to different accounting standards.
+-1,130
+197/338
+-157
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+The finance and information technology functions of the Emarsys segment have already been
+integrated into SAP's corporate functions and therefore their expenses are not included in the Emarsys
+segment anymore. All other functions are still included in the Emarsys segment, which derives its
+revenues mainly from the sale of cloud-based customer experience offerings and from the sale of
+related services. Due to its size, Emarsys is not a reportable segment.
+Consolidated Financial
+Statements IFRS
+Additional
+Information
+Section C - Financial Results
+This section provides insight into the financial results of SAP's reportable segments and of SAP overall
+as far as not already covered by previous sections. This includes but is not limited to segment results,
+income taxes, and earnings per share.
+(C.1) Results of Segments
+3
+At year end 2021, SAP had five operating segments that are regularly reviewed by the Executive
+Board, which is responsible for assessing the performance of the Company and for making resource
+allocation decisions as our chief operating decision-maker (CODM). The operating segments are
+largely organized and managed separately according to their product and service offerings, notably
+whether the products and services relate to our services activities, experience management solutions,
+business process transformation offerings, or our customer experience portfolio of Emarsys, or cover
+other activities of our business.
+Following organizational changes, and to further strengthen our cloud offerings and support the new
+cloud strategy, functions related to SAP's travel management solutions in the Concur segment were
+mainly integrated into the Applications, Technology & Support segment and the Services segment.
+Hence, the Concur segment was dissolved.
+The Applications, Technology & Support segment derives its revenues primarily from the sale of
+software licenses, support offerings, and cloud subscriptions (as far as not included in one of the
+other segments).
+The Services segment covers most of SAP's services activities. Revenues are mainly generated from
+the sale of various professional services, premium support services, implementation services for our
+software products, and education services on the use of our products. However, the services segment
+does not reflect the full services business, as other segments provide services as well.
+Further Information on
+Sustainability
+198/338
+To Our
+Our management reporting system produces a variety of reports that differ by the currency exchange
+rates used in the accounting for foreign-currency transactions and operations, where both actual and
+constant currency numbers are reported to and used by our CODM. Reports based on actual
+currencies use the same currency rates as are used in our financial statements. Reports based on
+constant currencies report revenues and expenses using the average exchange rates from the
+previous year's corresponding period.
+2019
+€ millions
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+2020
+Cloud
+8,661
+7,541
+7,685
+6,632
+lil Restructuring expenses
+Software licenses
+3,244
+8,509
+Most of our depreciation and amortization expense affecting segment profits is allocated to the
+segments as part of broader infrastructure allocations and is thus not tracked separately on the
+operating segment level. Depreciation and amortization expense that is directly allocated to the
+operating segments is immaterial in all segments presented.
+2021
+Sustainability
+We use an operating profit indicator to measure the performance of our operating segments. The
+measurement of operating segment revenues and results includes recurring revenue that is not
+recognized under IFRS due to fair value accounting for the contracts in effect at the time of the
+respective acquisitions. Starting in 2021, we no longer adjust our IFRS revenues. Due to immateriality,
+prior year revenue numbers continue to be based on our previous accounting policies. The accounting
+policies applied in the measurement of operating segment expenses and profit continue to differ as
+follows from the IFRS accounting principles used to determine the operating profit measure in our
+income statement:
+The expense measures exclude:
+■
+Acquisition-related charges such as amortization expense and impairment charges for
+intangibles acquired in business combinations and certain stand-alone acquisitions of
+intellectual property (including purchased in-process research and development) as well as
+sale/disposal gains and losses for these intangibles, settlements of pre-existing business
+relationships in connection with a business combination, and acquisition-related third-party
+expenses
+■ Share-based payment expenses
+■ Restructuring expenses
+SAP headquarter functions which are exclusively managed on corporate level, such as finance,
+accounting, legal, human resources, global business operations, and corporate marketing, are not
+included in the results of our reportable segments.
+Additional
+Information
+Revenues and expenses of our operating but non-reportable segments, and the certain activities
+managed on corporate level, as outlined above, are presented under the Other revenue and Other
+expenses items in the reconciliation in Note (C.2).
+199/338
+SAP
+SAP Integrated Report 2021
+Stakeholders
+Applications, Technology & Support
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Information about assets and liabilities and additions to non-current assets by segment are not
+regularly provided to our Executive Board. Goodwill by segment is disclosed in Note (D.2).
+-71
+€ millions
+-2
+(B.6) Restructuring
+Recognition of Restructuring Provisions
+We only recognize provisions for restructuring if and when the following occurs:
+SAP has designed a program that materially changes the scope of one of our businesses or the
+manner in which the business is conducted, and
+A detailed and documented restructuring plan has been approved by our Executive Board, a
+member thereof, or a direct report of an Executive Board member, and
+The program established is planned to start shortly after the program plan is approved and is
+expected to be completed in a timeframe that makes significant changes to the plan unlikely, and
+The program has been announced to the parties affected or has commenced.
+We consider whether a change in business is material based on the business affected rather than for
+SAP as a whole. In judging whether a unit qualifies as a business for restructuring purposes, we
+consider if the unit has its own management team, has access to all inputs and processes necessary
+to provide outputs, and generates or could generate revenues. The materiality of a change to a
+business is assessed based on both the size and the nature of the change and therefore does not
+necessarily involve a material quantitative impact on our financial statements.
+To accelerate the modernization of our cloud infrastructure and to harmonize our platform structure,
+we initiated a restructuring program in the Global Cloud Services area. The implementation started in
+the first quarter of 2021 and is expected to conclude in the first half of 2023. The majority of the
+expenses recognized as a result of this program are impairments of data centers and related assets.
+Restructuring expenses presented in SAP's income statement primarily include the following
+components:
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Other employee-related liabilities mainly relate to obligations from bonuses and sales commissions,
+outstanding vacation, time credits accumulated in the working time account, employee-related social
+security expenses, severance payments outside restructuring programs, and jubilee expenses.
+Other non-financial liabilities
+64
+41
+3,147
+3,236
+316
+3,464
+liabilities
+Other non-financial liabilities
+5,203
+860
+Restructuring Expenses
+6,063
+770
+5,413
+Other employee-related
+liabilities as % of
+71
+46
+68
+68
+4,643
+2021
+2020
+2019
+-20
+Cost of software licenses and support
+-5
+1
+-118
+Cost of services
+Research and development
+-13
+0
+-3
+-12
+1
+-467
+Sales and marketing
+3
+3
+-299
+General and administration
+-154
+2
+-127
+2020
+Employee-related restructuring expenses
+-25
+7
+-1,111
+Onerous contract-related restructuring expenses and
+-132
+-4
+-19
+2019
+restructuring-related impairment losses
+-157
+3
+-1,130
+If not presented separately in our income statement, restructuring expenses would have been
+classified in the different expense items in our income statement as follows:
+Restructuring Expenses by Functional Area
+€ millions
+Cost of cloud
+2021
+lil Restructuring expenses
+3,637
+137
+4,523
+757
+371
+529
+518
+780
+757
+Cloud and software
+780
+Actual
+Currency
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+€ millions
+2019
+2020
+2021
+Constant
+Currency¹
+518
+529
+371
+-33
+-43
+-43
+-66
+-65
+Cost of cloud
+508
+696
+681
+957
+929
+Total segment revenue
+166
+162
+177
+172
+Services
+Qualtrics
+1 The 2021 constant currency amounts are only comparable to 2020 actual currency amounts; 2020 constant currency amounts are only comparable to 2019 actual currency
+amounts.
+9,773
+9,934
+Total cost of revenue
+-421
+-399
+-393
+-412
+-406
+Cost of services
+-4,057
+-4,161
+-4,071
+-4,470
+-4,401
+Cost of cloud and software
+-1,910
+-1,790
+-1,757
+4,115
+-4,808
+Cost of software licenses and support
+-4,882
+-4,560
+9,722
+9,718
+9,567
+-8,800
+-8,953
+-8,779
+-9,216
+-9,127
+18,573
+18,887
+18,500
+18,934
+18,694
+Segment profit
+Other segment expenses
+Segment gross profit
+-4,478
+-4,464
+3,765
+0
+0
+285
+289
+355
+Total segment revenue
+23,502
+23,816
+22,965
+343
+23,446
+Cost of cloud
+-2,685
+-2,737
+-2,315
+-2,371
+-2,147
+Cost of software licenses and support
+23,051
+339
+Services
+22,696
+Software support
+11,410
+11,576
+11,502
+11,707
+11,542
+Software licenses and support
+14,654
+14,812
+15,139
+15,473
+16,065
+Cloud and software
+23,163
+23,473
+22,680
+23,157
+-1,716
+-1,733
+200/338
+1 The 2021 constant currency amounts are only comparable to 2020 actual currency amounts; 2020 constant currency amounts are only comparable to 2019 actual currency
+amounts.
+-194
+-190
+Total cost of revenue
+-78
+-112
+-110
+-128
+-125
+Cost of services
+-33
+-43
+-43
+-66
+-65
+Cost of cloud and software
+0
+0
+-152
+0
+-155
+Segment gross profit
+_9
+-5
+-4
+44
+44
+Segment profit
+-407
+-545
+-533
+-719
+-696
+Other segment expenses
+398
+541
+528
+763
+739
+-110
+398
+Cloud
+Other employee-related
+16
+54
+21
+19
+59
+24
+191/338
+192/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+4,643
+Combined Group
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+b) Equity-Settled Share-Based Payments
+Recognized Expense for Equity-Settled Plans
+€ millions
+Own
+Qualtrics Plan
+Others
+Total
+2021
+2020
+Management Report
+2019
+6,063
+SAP Integrated Report 2021
+-5
+ΝΑ
+-211
+Adjustment based upon KPI target achievement
+0
+9,238
+202
+0
+Granted
+16,007
+16,128
+0
+SAP
+1,110
+Qualtrics
+Rights
+RSU Plan
+(2017-2021
+Tranches)
+LTI 2020
+(2020-2021
+Tranches)
+Tranches)
+(2017-2019
+Thousands, unless otherwise stated
+LTI 2016 Plan
+Changes in Outstanding Awards Under Our Cash-Settled Plans
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Combined Group
+Management Report
+To Our
+Stakeholders
+12/31/2019
+ΝΑ
+200
+171
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Information
+Qualtrics Equity-Settled Options Replacing Clarabridge Options
+In conjunction with the acquisition of Clarabridge in 2021, Qualtrics assumed outstanding Clarabridge
+stock options, which were converted into Qualtrics options. The conversion factor was set to preserve
+the intrinsic value of the outstanding Clarabridge options. The replacement awards mirror the terms of
+the replaced awards except that the awards are settled by issuing Qualtrics shares while retaining
+their initial vesting schedules. For some Qualtrics options, additional vesting terms were agreed. The
+majority of the assumed options were either fully vested or partially vested as at the acquisition date
+and had a strike price well below the fair value of the awards at the conversion date. The modification
+date fair value of the stock options was determined to approximate the intrinsic value of the options
+with an underlying Qualtrics share price of US$43.88.
+Changes in Outstanding Awards Under Our Equity-Settled Plans
+Qualtrics Plan¹
+Thousands, unless otherwise stated
+12/31/2020
+Exchanged
+Granted
+Exercised
+Combined Group
+Forfeited
+Awards
+Weighted Average Grant
+Date Fair Value
+0
+NA
+12,872
+US$30.04
+80,856
+US$44.27
+-7,467
+US$33.43
+-2,241
+US$41.29
+12/31/2021
+191
+To Our
+Stakeholders
+SAP Integrated Report 2021
+1,426
+0
+0
+21
+0
+0
+1,647
+191
+171
+Own SAP Plan (Own)
+Under Own, employees have the opportunity to purchase, on a monthly basis, SAP shares without
+any required holding period. The investment per each eligible employee is limited to a percentage of
+the respective employee's monthly base salary. SAP matches the employee investment by 40% and
+adds a subsidy of €20 per month for non-executives. This plan is not open to members of the
+Executive Board.
+Numbers of Shares Purchased
+SAP
+Millions
+2021
+2020
+2019
+5.7
+5.5
+5.2
+As a result of our Own SAP Plan, we have commitments to grant SAP shares to employees. We intend
+to meet these commitments by reissuing treasury shares or through an agent who administers the
+equity-settled programs and purchases shares on the open market. We have fulfilled the obligations
+of Own through an agent.
+Qualtrics Equity Awards
+Qualtrics Omnibus Plan (Qualtrics Plan)
+Qualtrics grants equity awards settled with Qualtrics shares to eligible employees and the executive
+officers of Qualtrics. Qualtrics intends to meet these commitments by issuing shares. Granted units
+are either RSU awards subject to a time-based vesting, or PSUs subject to the achievement of certain
+performance conditions, as established by Qualtrics' board of directors and measured annually
+(Qualtrics RSUs). Additionally, there are Qualtrics equity-settled options resulting from acquisitions as
+described below. The RSUs mainly vest with 25% one year after grant and ratably thereafter for 12
+quarters. The PSUs vest in four equal annual installments and are measured annually, with vesting of
+100% of each installment in the event that the performance targets are achieved, and ratable
+downward adjustments in the event that the performance targets are partially achieved.
+Exchange Offer
+After completion of a voluntary exchange offer for eligible Qualtrics employees in conjunction with the
+IPO on January 28, 2021, 5.4 million cash-settled Qualtrics Rights and 1.3 million SAP RSU awards
+were exchanged into 12.8 million equity-settled Qualtrics RSU awards. The terms and conditions of
+the voluntary exchange offer, including the exchange ratio, were designed to preserve the intrinsic
+value of the Qualtrics Rights and SAP RSUs that were tendered. The modification date fair value of
+the Qualtrics RSU awards was US$30.00, which is equivalent to the Qualtrics IPO price.
+Furthermore, a subsequent exchange offer for certain Qualtrics employees in Australia took place in
+September 2021.
+Own
+84,018
+Exercised
+0
+132
+760
+6
+-9
+2020
+461
+1,087
+NA
+44
+2019
+Total expense (in € millions) recognized in
+105.10
+2021
+107.69
+106.68
+113.34
+109.75
+ΝΑ
+124.03
+2021
+2020
+Weighted average share price (in €) for awards exercised in
+0
+0
+4
+38
+NA
+12/31/2021
+-11
+1,139
+3,717
+860
+5,203
+863
+1,302
+462
+839
+Non-Current
+Current
+Total
+Non-Current
+Current
+9
+2021
+770
+1,317
+454
+Total
+2020
+Other non-financial liabilities
+Share-based payment liabilities as % of
+Other non-financial liabilities
+Share-based payment liabilities
+€ millions
+Share-Based Payment Balances
+11
+5,413
+-129
+0
+3
+-8,092
+0
+-92
+Exercised
+ΝΑ
+153
+ΝΑ
+-150
+Adjustment based upon KPI target achievement
+0
+12,204
+238
+-1,780
+0
+7,518
+16,993
+172
+767
+12/31/2020
+-699
+-1,164
+-30
+-3
+Forfeited
+-7,791
+-7,204
+Granted
+0
+Exchanged
+NA
+32
+12/31/2020
+Total intrinsic value of vested awards (in € millions) as at
+1
+1,260
+15
+28
+193
+1,027
+6
+49
+12/31/2021
+ΝΑ
+12/31/2020
+44
+18,783
+340
+469
+12/31/2021
+-243
+-1,165
+-70
+-57
+Forfeited
+-5,451
+-1,309
+Total carrying amount (in € millions) of liabilities as at
+US$43.13
+Additional
+The weighted average remaining life of Qualtrics Plan awards outstanding as at December 31, 2021
+(in years) was 3.0 years.
+968
+626
+573
+495
+203
+185
+154
+1,964
+1,824
+1,617
+points higher
+Discount rate was 50 basis
+points lower
+1,260
+1,195
+1,090
+714
+663
+576
+223
+204
+159
+2,196
+2,062
+1,825
+194/338
+SAP
+SAP Integrated Report 2021
+1,066
+To Our
+1,134
+benefit obligations if:
+1.2
+0.9
+0.8
+0.5
+0.4
+0.3
+3.1
+3.0
+3.7
+rate
+The sensitivity analysis table below shows how the present value of all defined benefit obligations
+would have been influenced by reasonably possible changes to significant actuarial assumptions. The
+sensitivity analysis considers change in discount rate assumptions, holding all other actuarial
+assumptions constant.
+Domestic Plans
+Foreign Plans
+Other Foreign Post-
+Employment Plans
+Total
+2021
+2020
+2019
+1 The number of awards and their weighted average grant date fair values in this table include Qualtrics RSUs and Qualtrics equity-settled
+options replacing Clarabridge options.
+2020
+2019
+2021
+2020
+2019
+2021
+2020
+2019
+Discount rate was 50 basis
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+1,254
+7
+1,207
+Our expected contribution in 2022 to our domestic and foreign defined benefit pension plans is
+immaterial. The weighted duration of our defined benefit plans amounted to 11 years as at
+December 31, 2021, and 12 years as at December 31, 2020.
+Total future benefit payments from our defined benefit plans as at December 31, 2021, are expected
+to be €2,289 million (2020: €1,969 million). Of this amount, 77% (2020: 77%) has maturities of over
+five years, and 62% (2020: 64%) relates to domestic plans.
+195/338
+196/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(B.5)
+Other Employee-Related Obligations
+Accounting Policy
+As far as the obligation for long-term employee benefits is secured by pledged reinsurance coverage,
+it is offset with the relating plan asset.
+Other Employee-Related Liabilities
+€ millions
+Current Non-Current
+2021
+2020
+Total
+Current Non-Current
+Total
+39
+0
+151
+0
+Additional
+Information
+Investments in Plan Assets
+Our investment strategy on domestic benefit plans is to invest all contributions in stable insurance
+policies.
+Our investment strategies for foreign benefit plans vary according to the conditions in the country in
+which the respective benefit plans are situated. We have adopted a long-term investment horizon for
+all major foreign benefit plans. Although our policy is to invest in a risk-diversified portfolio consisting
+of a mix of assets, both the defined benefit obligation and plan assets can fluctuate over time, which
+exposes the Group to actuarial and market (investment) risks. Depending on the statutory
+requirements in each country, it might be necessary to reduce any underfunding by addition of liquid
+assets.
+Plan Asset Allocation
+€ millions
+Total plan assets
+Thereof: Asset category
+Equity investments
+Corporate bonds
+Insurance policies
+2021
+Discount
+2020
+Active Market
+Not Quoted in an
+Active Market
+Quoted in an
+Active Market
+Not Quoted in an
+Active Market
+597
+1,254
+485
+1,207
+182
+0
+149
+0
+202
+Quoted in an
+2019
+2021
+2021
+408
+419
+369
+Defined Benefit Plans
+Present Value of the Defined Benefit Obligations (DBO) and the Fair Value of the Plan Assets
+€ millions
+Present value of the DBO
+Fair value of the plan assets
+2020
+Net defined benefit liability (asset) as % of:
+Non-current other financial assets
+Non-current provisions
+Sensitivity Analysis
+€ millions
+Present value of all defined
+Domestic Plans
+Foreign Plans
+Other Foreign Post-
+Employment Plans
+Total
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+1,194
+55
+1,127
+93
+314
+Under Qualtrics' equity-settled plans, we expect to transfer US$300 million to the tax authority to
+settle the employees' tax obligation in 2022.
+(B.4)
+Pension Plans and Similar Obligations
+Defined Contribution Plans
+Amounts for domestic and foreign defined contribution plans are based on a percentage of the
+employees' salaries or on the amount of contributions made by employees. In Germany and some
+other countries, we make contributions to public pension schemes that are operated by national or
+local government or similar institutions. Expenses for such local state pension plans are recognized as
+short-term employee benefits, that is, social security expenses.
+Defined Benefit Pension Plans
+The discount rates used in measuring our post-employment benefit assets and liabilities are derived
+from rates available on high-quality corporate bonds and government bonds for which the timing and
+amounts of payments match the timing and the amounts of our projected pension payments. Net
+interest expense and other expenses related to defined benefit plans are recognized as employee
+benefits expenses and classified in our Consolidated Income Statements according to the activities
+that the employees owning the awards perform. Since our domestic defined benefit pension plans
+primarily consist of an employee-financed post-retirement plan that is fully financed with qualifying
+insurance policies, current service cost may become a credit as a result of adjusting the defined
+benefit liability's carrying amount to the fair value of the qualifying plan assets. Such adjustments are
+recorded in service cost. Total expenses on defined benefit pension plans comprise related current
+and past service costs as well as interest income and expense.
+193/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Total Expense of Pension Plans
+€ millions
+Defined contribution plans
+Defined benefit pension plans
+Pension expenses
+2021
+2020
+2019
+346
+326
+62
+667
+Net defined benefit liability (asset)
+216
+3
+4
+27
+31
+35
+32
+65
+66
+Of the present value of the DBO of our domestic plans, €1,125 million (2020: €1,054 million) relate to
+plans that provide for lump-sum payments not based on final salary; of the present value of the DBO
+of our foreign plans, €524 million (2020: €479 million) relate to plans that provide for annuity
+payments not based on final salary.
+The following significant weighted average assumptions were used for the actuarial valuation of our
+domestic and foreign pension liabilities as well as other post-employment benefit obligations as at the
+respective measurement date:
+0
+Significant Actuarial Assumptions
+616
+Other Foreign Post-Employment
+Plans
+Percent
+2021
+2020
+2019
+2021
+2020
+2019
+Domestic Plans
+0
+Foreign Plans
+0
+110
+89
+15
+11
+1,852
+73
+91
+506
+578
+1,112
+1,183
+1,932
+2,077
+0
+189
+125
+116
+1,691
+241
+0
+0
+0
+0
+225
+0
+0
+2021
+Additional
+Information
+Other segment expenses
+Segment profit
+Segment gross profit
+Total cost of revenue
+Cost of services
+Further Information on
+Sustainability
+2020
+Currency
+Actual
+0
+1
+0
+0
+0
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+Constant
+Currency¹
+Cost of cloud and software.
+2019
+Cost of software licenses and support
+To Our
+Total segment revenue
+19
+19
+Other financial assets
+14
+11
+Trade and other receivables
+Pension provisions
+Share-based payments
+58
+0
+115
+Cost of cloud
+Services
+SAP Integrated Report 2021
+SAP
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Cloud
+Software licenses
+Software support
+Software licenses and support
+Cloud and software
+Services
+€ millions
+0
+97
+0
+4,230
+4,302
+4,084
+27,665
+28,055 27,024
+€ millions
+EMEA
+2020
+2019
+Actual
+Americas
+APJ
+2020
+2019
+2020
+2019
+Total Segment Revenue
+2020
+2019
+Actual Constant
+Actual Constant
+Currency Currency Currency Currency Currency
+Actual Actual
+Currency Currency
+Constant
+Currency
+10,927
+Actual Actual Constant Actual
+Currency Currency Currency Currency
+11,242
+12,512 12,013
+711
+528
+86
+89
+55
+Services
+1,458
+1,455
+1,479
+1,370
+1,414
+1,491
+406
+414
+408
+929
+3,234
+957
+3,283
+681
+3,379
+Total
+reportable
+segments
+12,513
+10,922
+Applications,
+Technology
+10,437
+1,621
+408
+415
+490
+3,379
+696
+3,432
+508
+3,679
+Total
+reportable
+12,013
+12,139
+11,942
+10,927
+11,267
+11,089
+4,084
+4,169
+4,207
+27,024
+27,574
+1,527
+1,491
+1,568
+1,491
+10,549
+10,306
+8,907
+9,200
+9,066
+3,621
+3,698
+3,679 22,965 23,446 23,051
+& Support
+Qualtrics
+690
+Property, plant, and equipment
+68
+528
+540
+403
+55
+56
+37
+681
+Services
+1,479
+99
+97
+157
+153
+-74
+-76
+-62
+-18
+-19
+-32
+-33
+-54
+-97
+-99
+-106
+-109
+-116
+-2,035
+-2,062
+-2,209
+-2,254
+-2,579
+-2,131
+-2,161
+-2,315
+-80
+-78
+3,679
+3,432
+0
+4
+4
+5
+0
+0
+4
+4
+5
+0
+-2,363
+0
+5
+5
+3,234
+3,282
+3,374
+3,428
+3,674
+3,234
+3,283
+3,379
+5
+0
+-2,695
+1,122
+2020
+€ millions
+Actual
+Currency
+Constant Actual
+Currency Currency
+Actual
+Currency
+Constant Actual
+Currency Currency
+Actual Constant
+Currency
+Actual
+Currency Currency
+Actual Constant Actual
+Currency Currency Currency
+Applications,
+Technology
+10,902
+10,900 10,437
+8,862
+9,116
+8,907
+3,737
+3,799
+3,621
+23,502 23,816 22,965
+& Support
+Qualtrics
+2021
+2020
+2021
+2020
+1,063
+1,070
+983
+-375
+-379
+-418
+-427
+-466
+728
+743
+1,102
+645
+517
+1 The 2021 constant currency amounts are only comparable to 2020 actual currency amounts; 2020 constant currency amounts are only comparable to 2019 actual currency
+amounts.
+Segment Revenue by Region
+EMEA
+Americas
+APJ
+Total Segment Revenue
+2021
+2020
+2021
+642
+455
+Foreign
+2020
+6,623
+4,473
+17
+17
+-179
+-179
+-74
+2,174
+2,174
+776
+776
+198
+6,847
+6,847
+7,220
+7,220
+4,596
+1 The 2021 constant currency amounts are only comparable to 2020 actual currency amounts; 2020 constant currency amounts are only comparable to 2019 actual currency
+amounts.
+202/338
+(C.3)
+Other Non-Operating Income/Expense, Net
+6,623
+€ millions
+4,656
+-1,130
+Il Financial income, net
+Il Profit before tax
+0
+0
+-5
+-5
+-81
+-623
+-623
+-577
+-577
+-689
+-2,794
+-2,794
+-1,084
+-1,084
+-1,835
+-157
+-157
+3
+3
+4,656
+2021
+2020
+2019
+-179
+-74
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+(C.4) Financial Income, Net
+€ millions
+2021
+2020
+2019
+Finance income
+3,123
+1,473
+787
+Thereof gains from financial assets at fair value through profit or loss
+Finance costs
+17
+Other non-operating income/expense, net
+-23
+-25
+Foreign currency exchange gain/loss, net
+49
+-154
+-51
+Thereof from financial assets at fair value through profit or loss
+316
+601
+358
+Thereof from financial assets at amortized cost
+111
+■ Other non-operating income/expense, net
+-134
+Thereof from financial liabilities at fair value through profit or loss
+-382
+-487
+-396
+Thereof from financial liabilities at amortized cost
+-70
+-34
+-176
+Miscellaneous income/expense, net
+-33
+194
+Il Operating profit
+Il Restructuring
+Share-based payment expenses
+27,024
+27,574
+27,238
+Other revenue
+177
+177
+319
+322
+396
+Adjustment for currency impact
+0
+-390
+0
+-554
+0
+Adjustment of revenue under fair value accounting
+0
+0
+-5
+-5
+-81
+28,055
+27,665
+Total segment revenue for reportable segments
+508
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+Constant
+Currency¹
+Actual
+Currency
+Applications, Technology & Support
+23,502
+23,816
+22,965
+23,446
+Total revenue
+23,051
+3,234
+3,283
+3,379
+3,432
+3,679
+Qualtrics
+929
+957
+681
+696
+Services
+3,067
+27,842
+27,338
+Other revenue
+177
+177
+319
+322
+396
+Other expenses
+-2,286
+-2,274
+-2,395
+-2,390
+-2,469
+Adjustment for currency impact
+0
+-178
+0
+-216
+0
+Adjustment for
+Revenue under fair value accounting
+Acquisition-related charges
+10,281
+10,571
+10,363
+10,505
+27,338
+27,553
+Applications, Technology & Support
+9,567
+9,718
+9,722
+9,934
+9,773
+Services
+728
+27,842
+743
+642
+517
+Qualtrics
+44
+44
+-4
+-5
+-9
+Total segment profit for reportable segments
+10,339
+645
+759
+1,360
+-949
+Additional
+Information
+Relationship Between Tax Expense and Profit Before Tax
+€ millions, unless otherwise stated
+Il Profit before tax
+Tax expense at applicable tax rate of 26.4%
+2021
+2020
+2019
+6,847
+7,220
+4,596
+1,808
+1,901
+1,212
+(2020: 26.3%; 2019: 26.4%)
+Tax effect of:
+Foreign tax rates
+Non-deductible expenses
+Tax-exempt income
+-126
+-166
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+-171
+Management Report
+Combined Group
+Profit Before Tax by Geographic Location
+€ millions
+2021
+2020
+2019
+Germany
+2,040
+2,481
+2,012
+Foreign
+4,807
+4,739
+2,584
+.lil Total
+6,847
+7,220
+4,596
+The following table reconciles the expected income tax expense, computed by applying our
+combined German tax rate of 26.4% (2020: 26.3%; 2019: 26.4%), to the actual income tax expense.
+Our 2021 combined German tax rate includes a corporate income tax rate of 15.0% (2020: 15.0%;
+2019: 15.0%), plus a solidarity surcharge of 5.5% (2020: 5.5%; 2019: 5.5%) thereon, and trade taxes of
+10.6% (2020: 10.5%; 2019: 10.6%).
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+420
+254
+116
+23
+1,471
+1,938
+1,226
+21.5
+26.8
+26.7
+205/338
+206/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Components of Recognized Deferred Tax Assets and Liabilities
+€ millions
+Deferred tax assets
+Intangible assets
+2021
+57
+-105
+Effective tax rate (in %)
+il Total income tax expense
+-630
+-282
+-131
+Withholding taxes
+204
+105
+138
+Research and development and foreign tax credits
+-75
+-100
+1,226
+-89
+9
+128
+80
+Reassessment of deferred tax assets, research and
+-34
+41
+48
+development tax credits, and foreign tax credits
+48
+Other
+Prior-year taxes
+1,938
+1,471
+-552
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Tax Expense by Geographic Location
+€ millions
+Current tax expense
+Germany
+27,238
+Total current tax expense
+Deferred tax expense/income
+Germany
+Foreign
+Total deferred tax expense/income
+Total income tax expense
+Major Components of Tax Expense
+€ millions
+Current tax expense/income
+Tax expense for current year
+SAP Integrated Report 2021
+SAP
+204/338
+203/338
+-697
+-589
+Thereof losses from financial assets at fair value through profit or loss
+-654
+-342
+-151
+Thereof interest expense from financial liabilities at amortized cost
+Thereof interest expense from financial liabilities at fair value through
+profit or loss
+-160
+-179
+-207
+Taxes for prior years
+-50
+-155
+Jil Financial income, net
+2,174
+776
+198
+(C.5)
+Income Taxes
+Judgments and Estimates
+We are subject to changing tax laws in multiple jurisdictions within the countries in which we operate.
+Our ordinary business activities also include transactions where the ultimate tax outcome is uncertain
+due to different interpretations of tax laws, such as those involving transfer pricing and intercompany
+transactions between SAP Group entities. In addition, the amount of income taxes we pay is generally
+subject to ongoing audits by domestic and foreign tax authorities. In determining our worldwide
+income tax provisions, judgment is involved in assessing whether to consider each uncertain tax
+treatment separately or together with one or more other uncertain tax treatments and whether to
+reflect the respective effect of uncertainty based on the most likely amount or the expected value. In
+applying these judgments, we consider the nature and the individual facts and circumstances of each
+uncertain tax treatment as well as the specifics of the respective jurisdiction, including applicable tax
+laws and our interpretation thereof.
+The assessment whether a deferred tax asset is impaired requires judgment, as we need to estimate
+future taxable profits to determine whether the utilization of the deferred tax asset is probable. In
+evaluating our ability to utilize our deferred tax assets, we consider all available positive and negative
+evidence, including the level of historical taxable income and projections for future taxable income
+over the periods in which the deferred tax assets are recoverable. Our judgment regarding future
+taxable income is based on assumptions about future market conditions and future profits of SAP.
+Judgment is also required in evaluating whether interest or penalties related to income taxes meet the
+definition of income taxes, and, if not, whether it is of financial nature. In this judgment, we particularly
+consider applicable local tax laws and interpretations on IFRS by national standard setters in the area
+of group financial reporting.
+-76
+596
+2021
+2019
+1,818
+261
+243
+-40
+1,968
+1,896
+1,778
+Total current tax expense
+Deferred tax expense/income
+Origination and reversal of temporary differences
+-526
+47
+-710
+Unused tax losses, research and development tax credits, and
+foreign tax credits
+29
+-5
+158
+Total deferred tax expense/income
+Total income tax expense
+-497
+42
+1,653
+1,707
+2019
+2020
+608
+895
+625
+1,360
+1,001
+1,153
+1,968
+1,896
+1,778
+109
+2020
+-38
+-606
+80
+-549
+-497
+42
+-552
+1,471
+1,938
+1,226
+2021
+-3
+segments
+2019
+201/338
+-35
+Weighted average shares outstanding, basic¹
+1,180
+1,182
+1,194
+Weighted average shares outstanding, diluted¹
+1,180
+1,182
+1,194
+Earnings per share, basic, attributable to equity
+4.46
+4.35
+-46
+2.78
+Earnings per share, diluted, attributable to equity
+4.46
+4.35
+2.78
+holders of SAP SE (in €)
+1 Number of shares in millions
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+holders of SAP SE (in €)
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+-49
+1,229
+Reform of International Taxation Rules
+In October 2021, over 135 jurisdictions agreed on a new framework for the international tax system
+covering the re-allocation of taxing rights and the introduction of a global minimum corporate tax rate.
+On December 20, 2021, the Organization for Economic Co-operation and Development (OECD)
+released model rules, which shall ensure that multinational enterprises with revenue above
+€750 million will be subject to a 15% minimum corporate tax rate. Based on this release, on
+December 22, 2021, the European Commission (EC) proposed a directive for implementation within
+the EU. We expect to be subject to such rules. However, since they still need to be implemented into
+national law and are expected to only apply starting 2023, we cannot yet assess possible impacts for
+SAP.
+207/338
+208/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Effect of treasury shares¹
+Additional
+Information
+Earnings per Share
+€ millions, unless otherwise stated
+2021
+2020
+2019
+Profit attributable to equity holders of SAP SE
+5,256
+5,145
+3,321
+Issued ordinary shares¹
+1,229
+1,229
+(C.6)
+We are subject to ongoing tax audits by domestic and foreign tax authorities. Currently, we are in
+dispute mainly with the German and only a few foreign tax authorities. The German dispute is in
+respect of certain secured capital investments, while the few foreign disputes are in respect of the
+deductibility of intercompany royalty payments and intercompany services. In all cases, we expect
+that a favorable outcome can only be achieved through litigation. For all of these matters, we have not
+recorded a provision as we believe that the tax authorities' claims have no merit and that no
+adjustment is warranted. If, contrary to our view, the tax authorities were to prevail in their arguments
+before the court, we would expect to have an additional expense of approximately €1,283 million
+(2020: €1,221 million) in total (including related interest expenses and penalties of €677 million
+(2020: €648 million)).
+Additional
+Section D - Invested Capital
+Goodwill
+Total consideration transferred
+255
+73
+328
+108
+108
+220
+729
+949
+The initial accounting for the Signavio business combination is incomplete because we are still
+obtaining the information necessary to identify and measure items such as tax-related assets and
+liabilities of Signavio. Accordingly, the amounts recognized in our financial statements for these items
+are regarded provisional as at December 31, 2021.
+In general, the goodwill arising from our acquisitions consists largely of the synergies and the know-
+how and skills of the acquired businesses' workforces.
+Total identifiable net assets
+Signavio goodwill was attributed to expected synergies from the acquisition, particularly in the
+following areas:
+Cross-selling opportunities to existing SAP customers across all regions, using SAP's sales
+organization
+The acquisition of Signavio complements SAP's business process intelligence offerings and will
+help create new offerings by combining Signavio products and SAP products, but is also expected
+to result, for example, in increased SAP S/4HANA and RISE with SAP sales.
+Improved profitability in Signavio sales and operations
+The allocation of the goodwill resulting from the Signavio acquisition to our operating segments
+depends on how our operating segments actually benefit from the synergies of the Signavio business
+combination. For more information, see Note (D.2).
+Clarabridge Acquisition
+On October 1, 2021 (after receipt of required regulatory approvals and satisfaction or waiver of other
+customary closing conditions), Qualtrics completed its previously announced acquisition of
+Clarabridge, a customer experience management software company headquartered in Reston,
+Virginia, United States, pursuant to an Agreement and Plan of Reorganization and Merger. The
+number of Qualtrics class A common stock issued to the sellers was fixed based on a valuation of
+US$1,125 million (subject to certain adjustments) – the assumed Qualtrics share price was US$37.33.
+The actual consideration transferred (mainly in shares valued at the acquisition date fair value of the
+common stock) amounted to US$1,298 million (€1,116 million). This includes €910 million of issued
+shares, €115 million of assumed awards as well as €91 million of cash paid.
+-
+Qualtrics has (1) assumed, amended, and restated Clarabridge stock plans, and (2) converted the
+assumed options to purchase shares of Clarabridge stock outstanding into corresponding Qualtrics
+options. Qualtrics has granted equity incentive awards to certain continuing employees of Clarabridge
+and its subsidiaries under their own Qualtrics equity plan at Qualtrics' sole discretion. For more
+information see Note (B.3).
+The following table summarizes the values of identifiable assets acquired and liabilities assumed in
+connection with the acquisition of Clarabridge, as at the acquisition date:
+2021
+€ millions
+For a breakdown of revenue by region for the SAP Group, see Note (A.1).
+-
+Information
+Total identifiable liabilities
+Total identifiable assets
+This section highlights our non-current assets including investments that form the basis of our
+operating activities. Additions to invested capital include separate asset acquisitions or business
+combinations. Further, we disclose information about purchase obligations and capital contributions.
+(D.1) Business Combinations and Divestitures
+Measuring Non-Controlling Interests and Allocation of Consideration Transferred
+We decide for each business combination whether to measure the non-controlling interest in the
+acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets.
+We classify costs related to executing business combinations as general and administration expense.
+In our accounting for business combinations, judgment is required in determining whether an
+intangible asset is identifiable, and should be recorded separately from goodwill. Additionally,
+estimating the acquisition-date fair values of the identifiable assets acquired and liabilities assumed
+involves considerable judgment. The necessary measurements are based on information available on
+the acquisition date and are based on expectations and assumptions that have been deemed
+reasonable by management. These judgments, estimates, and assumptions can materially affect our
+financial position and profit for several reasons, including the following:
+Fair values assigned to assets subject to depreciation and amortization affect the amounts of
+depreciation and amortization to be recorded in operating profit in the periods following the
+acquisition.
+Subsequent negative changes in the estimated fair values of assets may result in additional
+expense from impairment charges.
+Subsequent changes in the estimated fair values of liabilities and provisions may result in
+additional expense (if increasing the estimated fair value) or additional income (if decreasing the
+estimated fair value).
+We acquire businesses in specific areas of strategic interest to us, particularly to broaden our product
+and service portfolio.
+2021 Acquisitions
+In 2021, we closed the acquisition of Signavio GmbH, Berlin, Germany, ("Signavio") and of
+Clarabridge, Inc., Reston, Virginia, United States, ("Clarabridge”).
+Signavio Acquisition
+In January 2021, SAP announced it had entered into an agreement to acquire Signavio, a leader in
+the enterprise business process intelligence and process management space that enables companies
+to understand, improve, transform, and manage all their business processes quickly and at scale.
+The purchase price was €949 million. The transaction closed on March 5, 2021, following satisfaction
+of regulatory and other approvals. The Signavio operating results and assets and liabilities are
+reflected in our consolidated financial statements starting on that date.
+Other identifiable liabilities
+The following table summarizes the values of identifiable assets acquired and liabilities assumed in
+connection with the acquisition of Signavio, as at the acquisition date:
+210/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+€ millions
+Intangible assets
+Other identifiable assets
+209/338
+Income Tax-Related Litigation
+Signavio Acquisition: Recognized Assets and Liabilities
+Of the unused tax losses, €183 million (2020: €179 million; 2019: €187 million) relate to U.S. state tax
+loss carryforwards.
+3,065
+Deferred tax liabilities
+Intangible assets
+Property, plant, and equipment
+Other financial assets
+Trade and other receivables
+Pension provisions
+Share-based payments
+Other provisions and obligations
+Contract liabilities
+Other
+Total deferred tax liabilities
+3,559
+Total deferred tax assets, net
+854
+525
+529
+169
+239
+206
+178
+29
+21
+1
+0
+50
+903
+87
+Total deferred tax assets
+134
+SAP Integrated Report 2021
+We have not recognized a deferred tax liability on approximately €24.04 billion (2020: €18.37 billion)
+for undistributed profits of our subsidiaries, because we are in a position to control the timing of the
+reversal of the temporary difference and it is probable that such differences will not reverse in the
+foreseeable future.
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(C.2) Reconciliation of Segment Measures to the Consolidated Income Statements
+2020
+196
+194
+108
+278
+Other provisions and obligations
+1,097
+1,155
+Contract liabilities
+631
+Carryforwards of unused tax losses
+146
+123
+Research and development and foreign tax credits
+77
+57
+Other
+197
+7
+781
+181
+63
+Expiring after the following year
+309
+338
+373
+Total unused tax losses
+765
+933
+1,124
+Deductible temporary differences
+602
+587
+25
+538
+Not expiring
+26
+28
+Expiring after the following year
+20
+17
+17
+Total unused tax credits
+48
+4
+45
+43
+Unused research and development and foreign tax credits
+26
+28
+570
+2,035
+123
+688
+1,488
+1,030
+The increase in deferred tax assets for intangible assets mainly results from the capitalization of
+research and development expenses for tax purposes. Furthermore, the deferred tax assets for
+contract liabilities increased mainly because of deferred revenue.
+Deferred tax assets for other provisions and obligations in the amount of €472 million
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+(2020: €452 million) and deferred tax liabilities for property, plant, and equipment in the amount of
+€405 million (2020: €400 million) result from the accounting of liabilities and right-of-use assets from
+leases.
+Further Information on
+Sustainability
+430
+2019
+2020
+Consolidated Financial
+Statements IFRS
+2021
+Expiring in the following year
+Not expiring
+2,071
+Unused tax losses
+€ millions
+Additional
+Information
+Items Not Resulting in a Deferred Tax Asset
+1,226
+Thereof software and database licenses
+2
+Total identifiable assets
+2,074
+Trade and other payables
+Financial liabilities
+Current and deferred tax liabilities
+317
+Provisions and other non-financial liabilities
+Contract liabilities
+41
+Total identifiable net assets
+129
+97
+53
+Thereof customer relationship and other intangibles
+Total identifiable liabilities
+Trade and other receivables
+Thereof acquired technology
+Information
+The liabilities incurred related to the earned portion of unvested share-based payment awards. These
+liabilities were incurred by replacing, upon acquisition, equity-settled share-based payment awards
+held by employees of Qualtrics with cash-settled share-based payment awards, which are subject to
+forfeiture. The respective liabilities represent the portion of the replacement awards that relates to pre-
+acquisition services provided by the acquiree's employees and were measured at the fair value
+determined under IFRS 2.
+637
+Measurement period adjustments recorded in both 2020 and 2019 were not material.
+The following table summarizes the values of identifiable assets acquired and liabilities assumed in
+connection with the acquisition of Qualtrics, as at the acquisition date.
+Qualtrics Acquisition: Recognized Assets and Liabilities
+€ millions
+Cash and cash equivalents
+575
+Other financial assets
+Property, plant, and equipment
+Intangible assets
+138
+1
+37
+20
+75
+1,803
+Other non-financial assets
+1,437
+as Reported
+Total consideration transferred
+lil Revenue
+Il Profit after tax
+2019
+Contribution of
+Qualtrics
+27,553
+429
+3,370
+-526
+€ millions
+Had Qualtrics been consolidated as at January 1, 2019, our 2019 revenue and profit after tax would
+not have been materially different.
+Goodwill and Intangible Asset Impairment Testing
+The annual goodwill impairment test is performed at the level of our operating segments, since there
+are no lower levels in SAP at which goodwill is monitored for internal management purposes.
+In general, the test is performed at the same time (at the beginning of the fourth quarter) for all
+operating segments.
+In making impairment assessments for our goodwill and intangible assets, the outcome of these tests
+is highly dependent on management's assumptions regarding future cash flow projections and
+economic risks, which require significant judgment and assumptions about future developments. They
+can be affected by a variety of factors, including:
+Changes in business strategy
+Additional
+Internal forecasts
+(D.2) Goodwill
+Goodwill
+Qualtrics Acquisition: Impact on SAP's Financials
+Impact of the Business Combination on Our Financial Statements
+5,012
+6,449
+In general, the goodwill arising from our acquisitions consists largely of the synergies and the know-
+how and skills of the acquired businesses' workforces.
+Qualtrics goodwill was attributed to expected synergies from the acquisition, particularly in the
+following areas:
+Cross-selling opportunities to existing SAP customers across all regions, using SAP's sales
+organization
+Creation of new offerings by combining Qualtrics products and SAP products to deliver an end-to-
+end experience and operational management system to the customers
+- Improved profitability in Qualtrics sales and operations
+The allocation of the goodwill resulting from the Qualtrics acquisition to our operating segments was
+depending on how our operating segments actually benefit from the synergies of the Qualtrics
+business combination.
+The amounts of revenue and profit or loss of the Qualtrics business acquired in 2019 since the
+acquisition date were included in our 2019 consolidated income statements as follows:
+213/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+214/338
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+In general, the goodwill arising from our acquisitions consists largely of the synergies and the know-
+how and skills of the acquired businesses' workforces.
+Combined Group
+297
+103
+103
+194
+922
+1,116
+The initial accounting for the business combination is preliminary as at December 31, 2021 (as we are
+still in the process of collecting the information necessary to determine the fair value of, for example,
+intangible assets as well as tax assets and liabilities).
+The Clarabridge goodwill consists largely of the synergies that SAP expects to achieve from
+combining the acquired assets and operations with its existing operations, especially in its Qualtrics
+subsidiary.
+79
+For more information about the allocation of goodwill to our segments (benefitting from the
+acquisition), see Note (D.2).
+The amounts of revenue and profit or loss of the Signavio and Clarabridge businesses acquired in
+2021 since the acquisition date are included in the 2021 consolidated income statements as follows:
+2021 Acquisitions: Impact on SAP's Financials (Signavio and Clarabridge)
+€ millions
+lil Revenue
+Il Profit after tax
+2021
+as Reported
+27,842
+5,376
+Contribution of 2021 Acquisitions
+Impact of Business Combinations on Our Financial Statements
+70
+-89
+218
+Goodwill
+Estimation of weighted average cost of capital
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Total consideration transferred
+Sustainability
+Clarabridge Acquisition: Recognized Assets and Liabilities
+€ millions
+Intangible assets
+Other identifiable assets
+Total identifiable assets
+Other identifiable liabilities
+Total identifiable liabilities
+Total identifiable net assets
+Additional
+Information
+Management Report
+Had the acquired entities been consolidated as at January 1, 2021, our 2021 revenue and profit after
+tax would not have been materially different.
+On April 13, 2021, SAP and investment company Dediq GmbH, Munich, Germany, ("Dediq”)
+announced that they had agreed to enter into a partnership in the area of financial services. Following
+the close of the transaction in September 2021 (after satisfaction of all closing conditions including
+regulatory approvals), SAP and Dediq jointly own the new “SAP Fioneer” entity (with SAP owning a
+minority share).
+On May 5, 2020, SAP and Sinch AB, Stockholm, Sweden, ("Sinch”) announced that they had entered
+into a definitive agreement for Sinch to acquire the SAP Digital Interconnect group. The business sold
+(which was a non-reportable segment to SAP) consists of several SAP subsidiaries as well as assets
+transferred from certain SAP entities. The initial cash purchase price was €225 million (on a cash-free,
+debt-free basis). The disposal gain of €194 million (IFRS) and €128 million (non-IFRS) is included in
+Other operating income/expense, net.
+The transaction closed on November 1, 2020, following satisfaction of applicable regulatory and other
+approvals.
+Due to immateriality, we have not separately presented the business as a discontinued operation.
+2019 Acquisitions
+On January 23, 2019, we concluded the acquisition of Qualtrics International Inc. ("Qualtrics"),
+following satisfaction of applicable regulatory and other approvals.
+Qualtrics is a leading provider of experience management solutions. By combining Qualtrics products
+and SAP products, we aim to deliver an end-to-end experience and operational management system
+to our customers.
+We acquired 100% of the Qualtrics shares for approx. US$35 per share, representing consideration
+transferred in cash of approximately US$7.1 billion. In addition to the cash payments, SAP also
+incurred liabilities and post-closing expenses relating to assumed share-based payment awards
+amounting to approximately US$0.9 billion.
+The operating results and assets and liabilities of Qualtrics are reflected in our consolidated financial
+statements from January 23, 2019, onward.
+Qualtrics Acquisition: Consideration Transferred
+2020 Divestitures
+€ millions
+Liabilities incurred
+Total consideration transferred
+6,212
+237
+6,449
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Cash paid
+2021 Divestitures
+- Improved profitability in Emarsys sales and operations
+Cross-selling opportunities to existing SAP customers across all regions, using SAP's sales
+organization
+SAP and SAP Fioneer have executed transition service and go-to-market agreements, among others.
+The disposal gain relating to the transfer of the business (predominantly IP and employees) is
+included in Other operating income/expense, net (€77 million for both IFRS and non-IFRS).
+211/338
+212/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Emarsys offerings complementing the existing SAP Customer Experience solutions
+Management Report
+Additional
+Information
+2020 Acquisitions
+On November 4, 2020, we concluded the acquisition of 100% of the shares of Emarsys eMarketing
+Systems AG, Vienna, Austria, (“Emarsys") following satisfaction of applicable regulatory and other
+approvals.
+The operating results and assets and liabilities of Emarsys are reflected in our consolidated financial
+statements from November 4, 2020, onwards.
+Measurement period adjustments recorded in both 2021 and 2020 were not material (the
+measurement period adjustments have resulted in an adjustment of our 2020 numbers - reducing
+goodwill along with non-current provisions by €6 million; a further reduction of goodwill by €16 million
+was caused by adjustments of tax items).
+In general, the goodwill arising from our acquisitions consists largely of the synergies and the know-
+how and skills of the acquired businesses' workforces.
+Emarsys goodwill is attributed to expected synergies from the acquisition, particularly in the following
+areas:
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Changes to the assumptions underlying our goodwill and intangible assets impairment assessments
+could require material adjustments to the carrying amount of our recognized goodwill and intangible
+assets as well as the amounts of impairment charges recognized in profit or loss.
+Stakeholders
+Changes in our segment structure result in the reallocation of goodwill with the reallocated goodwill
+being calculated based on relative values (if a direct allocation is not possible).
+Acquired
+Technology
+Database Licenses
+Software and
+Additional
+Information
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Historical cost
+€ millions
+Intangible Assets
+SAP
+219/338
+Amortization expenses of intangible assets are classified as cost of cloud, cost of services, research
+and development, sales and marketing, and general and administration, depending on the use of the
+respective intangible assets.
+We classify intangible assets according to their nature and use in our operations. Software and
+database licenses consist primarily of technology for internal use, whereas acquired technology
+consists primarily of purchased software to be incorporated into our product offerings. Customer
+relationship and other intangibles consist primarily of customer relationships and acquired trademark
+licenses.
+Classification of Intangibles
+Both the amortization period and the amortization method have an impact on the amortization
+expense that is recorded in each period.
+The amortization method, as IFRS requires the straight-line method to be used unless we can
+reliably determine the pattern in which the asset's future economic benefits are expected to be
+consumed by us
+The useful life of an intangible asset, as this is based on our estimates regarding the period over
+which the intangible asset is expected to generate economic benefits to us
+Customer
+Relationships and
+Other Intangibles
+Judgment is required in determining the following:
+Total
+929
+-148
+70
+60
+0
+10
+Transfers
+Retirements/disposals
+Other additions
+244
+184
+59
+1
+Additions from business combinations
+-705
+-467
+-224
+-14
+Foreign currency exchange differences
+10,096
+6,415
+2,752
+1/1/2020
+-22
+All our purchased intangible assets other than goodwill have finite useful lives. They are initially
+measured at acquisition cost and subsequently amortized based on the expected consumption of
+economic benefits over their estimated useful lives ranging from two to 20 years.
+These judgments impact the total amount of intangible assets that we present in our balance sheet as
+well as the timing of recognizing development expenses in profit or loss.
+Given the fact that the Business Process Intelligence segment is expected to show disproportionate
+growth in the coming years and has not yet reached a steady state, we have used a longer and more
+detailed planning period than one would apply in a more mature segment.
+The recoverable amount was determined based on fair value less costs of disposal calculation. The
+fair value measurement was categorized as a Level 3 fair value based on the inputs used in the
+valuation. The cash flow projections were based on actual operating results and specific estimates
+covering a detailed planning period and the terminal growth rate thereafter. The projected results were
+determined based on management's estimates and are consistent with the assumptions a market
+participant would make (a target operating margin of 24.8% was used in the valuation).
+Business Process Intelligence Segment
+ΝΑ
+1 No formal test was performed in 2020 as the acquisition was after the annual testing date.
+However, we performed a quantitative and qualitative analysis to monitor whether triggering
+events exist.
+-14
+NA
+-1.7
+2020¹
+2021
+Emarsys
+Target operating margin at the end of the budgeted period
+(change in pp)
+(change in pp)
+Budgeted revenue growth
+Sensitivity to Change in Assumptions
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+The recoverable amount exceeded the carrying amount by €1,225 million.
+Measurement of Intangibles
+The following table shows the amounts by which the key assumptions would need to change
+individually (that is, without changing the other key assumptions) for the recoverable amount to be
+equal to the carrying amount. For budgeted revenue growth sensitivity, the cost structure was not
+adjusted, hence leading to a modified terminal operating margin:
+Budgeted revenue growth
+· Determining whether a cost is directly or indirectly attributable to an intangible asset and whether a
+cost is necessary for completing a development
+The term "technical feasibility" is not defined in IFRS, and therefore determining whether the
+completion of an asset is technically feasible requires judgment and a company-specific approach.
+Determining the future ability to use or sell the intangible asset arising from the development and
+the determination of the probability of future benefits from sale or use
+Determining whether activities should be considered research activities or development activities
+Determining whether the conditions for recognizing an intangible asset are met requires
+assumptions about future market conditions, customer demand, and other developments.
+Whereas in general, expenses for internally generated intangibles are expensed as incurred,
+development expenses incurred on standard-related customer development projects (for which the
+IAS 38 criteria are met cumulatively) are capitalized on a limited scale with those amounts being
+amortized over the estimated useful life for the majority of the projects of eight years.
+Recognition of Intangibles
+(D.3) Intangible Assets
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+-20
+-2.5
+2021
+Business Process Intelligence
+Target operating margin at the end of the budgeted period
+(change in pp)
+(change in pp)
+Sensitivity to Change in Assumptions
+To Our
+-142
+15
+77
+Additions amortization
+393
+211
+171
+11
+Foreign currency exchange differences
+5,612
+3,046
+2,043
+523
+12/31/2020
+-300
+-131
+-22
+-147
+Retirements/disposals
+719
+420
+214
+85
+189
+Additions amortization
+412
+Retirements/disposals
+3,966
+3,076
+604
+286
+3,784
+2,992
+522
+270
+220/338
+12/31/2021
+12/31/2020
+Carrying amount
+6,598
+3,659
+2,392
+547
+12/31/2021
+-85
+-10
+-11
+-64
+678
+-312
+-412
+-180
+0
+19
+Other additions
+537
+304
+233
+0
+Additions from business combinations
+644
+427
+205
+12
+Foreign currency exchange differences
+9,396
+6,038
+2,565
+793
+12/31/2020
+3
+-12
+0
+66
+-219
+85
+Transfers
+-13
+Foreign currency exchange differences
+5,605
+2,976
+2,031
+598
+1/1/2020
+Accumulated amortization
+10,564
+6,735
+2,996
+833
+4
+-89
+0
+93
+-102
+-11
+-7
+-84
+12/31/2021
+Retirements/disposals
+The outcome of goodwill impairment tests may also depend on the allocation of goodwill to our
+operating segments. This allocation involves judgment as it is based on our estimates regarding which
+operating segments are expected to benefit from the synergies of business combinations.
+SAP Integrated Report 2021
+218/338
+215/338
+A portion (€43 million) of the goodwill in the Applications, Technology & Support segment was moved
+to the newly formed Business Process Intelligence segment. Based on the expected synergies, the
+goodwill added through the acquisition of Signavio (€766 million) was provisionally allocated to the
+Applications, Technology & Support segment (€383 million) and the Business Process Intelligence
+segment (€383 million). As the initial accounting for the Signavio business combination is incomplete
+(for more information, see Note (D.1)), the allocation of goodwill is provisional. The allocation of the
+31,090
+408
+27,538
+NA
+395
+395
+2,637
+3,846
+3,307
+ΝΑ
+26,074
+20,844
+12/31/2020
+12/31/2021
+Total
+Business
+Process
+Intelligence
+Support
+Emarsys
+Qualtrics
+Concur
+Services
+Applications,
+Technology &
+€ millions
+SAP
+Goodwill by Operating Segment
+SAP Integrated Report 2021
+Combined Group
+Percent, unless
+Key Assumptions and Detailed Planning Period
+Our estimated cash flow projections for periods beyond the business plan were extrapolated using segment-specific terminal
+growth rates. These growth rates do not exceed the long-term average growth rates for the markets in which our segments
+operate.
+Our estimated cash flow projections are discounted to present value using discount rates (after-tax rates). Discount rates are
+based on the weighted average cost of capital (WACC) approach.
+Operating margin budgeted for a given budget period equals the operating margin achieved in the current year, increased by
+expected efficiency gains. Values assigned reflect past experience, except for efficiency gains.
+Revenue growth rate achieved in the current year, adjusted for an expected increase in SAP's addressable cloud and database
+markets; expected growth in the established software applications and analytics markets. Values assigned reflect our past
+experience and our expectations regarding an increase in the addressable markets.
+Basis for Determining Values Assigned to Key Assumption
+The key assumptions on which management based its cash flow projections for the period covered by
+the underlying business plans are as follows:
+Goodwill Impairment Test
+Note (D.1)), we disposed €20 million of goodwill (thereof €9 million from the Applications, Technology
+& Support segment and €11 million from the Services segment).
+In conjunction with the creation of the SAP Fioneer joint venture (for more information, see
+Due to the dissolution of the Concur segment in 2021 (for more information, see Note (C.1)), the
+Concur goodwill (€3,307 million) was moved to the Applications, Technology & Support segment.
+Given the close proximity to the 2020 annual goodwill impairment test and the significant headroom,
+no formal impairment test was performed on the reallocation date of the Concur segment.
+goodwill resulting from the Clarabridge acquisition (by Qualtrics) to our operating segments depends
+on how our operating segments actually benefit from the synergies of the Clarabridge business
+combination. As we have not yet completed the identification of those benefits and the initial
+accounting for the business combination is preliminary (for more information, see Note (D.1)), the
+entire goodwill (€924 million) was provisionally allocated to the Qualtrics segment.
+Terminal growth rate
+Discount rates
+Budgeted operating margin
+Budgeted revenue growth
+Key Assumption
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+To Our
+Stakeholders
+otherwise stated
+For impairment testing purposes, the carrying amount of goodwill is allocated to the operating
+segments expected to benefit from goodwill as follows:
+For more information about our segments and the changes in 2021, see Note (C.1).
+Throughout 2021 (particularly in light of the COVID-19 pandemic and its development), we have -
+through a qualitative and quantitative analysis - been continuously monitoring whether triggering
+events exist.
+Accumulated amortization
+12/31/2021
+Retirements/disposals
+Additions from business combinations
+Foreign currency exchange differences
+12/31/2020
+Retirements/disposals
+Additions from business combinations
+Foreign currency exchange differences
+1/1/2020
+Historical cost
+€ millions
+Goodwill
+Statements IFRS
+Management Report
+Further Information on
+Sustainability
+Consolidated Financial
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+1/1/2020
+Based on our analysis, which we updated in the fourth quarter and which served as the basis for our
+regular goodwill impairment test, we assume that the COVID-19 situation will continue to improve as
+vaccine programs continue to take effect globally, leading to a growing demand environment in 2022.
+For more information, see Note (IN.2).
+Foreign currency exchange differences
+Foreign currency exchange differences
+31,090
+27,538
+101
+3
+98
+-3
+101
+31,191
+-20
+1,737
+1,838
+27,636
+-9
+395
+-2,010
+29,260
+Additional
+Information
+12/31/2021
+12/31/2020
+Carrying amount
+12/31/2021
+12/31/2020
+SAP
+Business Process
+Intelligence
+Applications, Technology
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+The recoverable amount of these segments was determined based on fair value less costs of disposal
+calculation. The fair value measurement was categorized as a Level 3 fair value based on the inputs
+For more information about our 2021 segment changes, see Note (C.1).
+On October 1, 2021, we performed a goodwill impairment test for the segments mentioned above.
+Applications, Technology & Support Segment and Services Segment
+1 As we are using Level 1 inputs for Qualtrics in 2021, no information on assumptions and the detailed planning period is presented.
+2 No formal test was performed in 2020 as the acquisition was after the annual testing date. However, we performed a quantitative and
+qualitative analysis to monitor whether triggering events exist.
+216/338
+period (in years)
+NA
+14
+ΝΑ
+12
+13
+NA
+5
+5
+5
+Additional
+5
+Information
+We believe that no reasonably possible change in any of the above key assumptions would cause the
+carrying amount of our Applications, Technology & Support segment to exceed the recoverable
+amount.
+217/338
+The following table shows the amounts by which the key assumptions would need to change
+individually (that is, without changing the other key assumptions) for the recoverable amount to be
+equal to the carrying amount. For budgeted revenue growth sensitivity, the cost structure was not
+adjusted, hence leading to a modified terminal operating margin:
+The recoverable amount exceeded the carrying amount by €547 million.
+Given the fact that the Emarsys segment is expected to show disproportionate growth in the coming
+years and has not yet reached a steady state, we have used a longer and more detailed planning
+period than one would apply in a more mature segment.
+The recoverable amount was determined based on fair value less costs of disposal calculation. The
+fair value measurement was categorized as a Level 3 fair value based on the inputs used in the
+valuation. The cash flow projections were based on actual operating results and specific estimates
+covering a detailed planning period and the terminal growth rate thereafter. The projected results were
+determined based on management's estimates and are consistent with the assumptions a market
+participant would make (a target operating margin of 24.6% was used in the valuation).
+Emarsys Segment
+Qualtrics International Inc. completed its initial public offering ("IPO”) on January 28, 2021. The
+recoverable amount was determined based on fair value less costs of disposal calculation. The fair
+value measurement was categorized as a Level 1 fair value based on the market capitalization
+derived from publicly listed shares of Qualtrics. We believe that no reasonably foreseeable change in
+the share price of Qualtrics would cause the carrying amount of our Qualtrics segment to exceed its
+recoverable amount.
+Qualtrics Segment
+-2
+-4
+Target operating margin at the end of the budgeted period
+(change in pp)
+(change in pp)
+-0.6
+-0.8
+Budgeted revenue growth
+2020
+2021
+Services
+Sensitivity to Change in Assumptions
+The following table shows the amounts by which the key assumptions would need to change
+individually (that is, without changing the other key assumptions) for the recoverable amount to be
+equal to the carrying amount. For budgeted revenue growth sensitivity, the cost structure was not
+adjusted, hence leading to a modified terminal operating margin:
+For our Services segment, the recoverable amount exceeded the carrying amount by €1,377 million
+(2020: €1,416 million).
+used in the valuation. The cash flow projections were based on actual operating results and specific
+estimates covering a detailed planning period and the terminal growth rate thereafter. The projected
+results were determined based on management's estimates and are consistent with the assumptions
+a market participant would make (target operating margins of 33.1% (Applications, Technology &
+Support) (2020: 32.4%) and 5.1% (Services) (2020: 2.4%) were used in the valuation).
+2020
+Detailed planning
+3.0
+20.6
+NA
+3.4
+0.4
+5.4
+8.4
+growth (average of the
+Budgeted revenue
+2021
+20202
+2021
+2020
+2021¹
+2020
+2021
+2020
+2021
+Emarsys
+& Support
+Qualtrics
+Services
+15.3
+ΝΑ
+ΝΑ
+NA
+NA
+3.0
+3.0
+NA
+3.0
+0.0
+3.0
+3.0
+Terminal growth rate
+NA
+11.5
+ΝΑ
+10.0
+9.7
+ΝΑ
+7.2
+7.9
+8.8
+8.8
+After-tax discount rate
+budgeted period)
+31.7
+Determining whether internally generated intangible assets from development qualify for recognition
+requires significant judgment, particularly in the following areas:
+355
+367
+Stakeholders
+1,234
+537
+-1
+536
+1,776
+-6
+1,770
+Other comprehensive income for items that will be reclassified to profit or loss, net of tax
+-2,792
+10
+-2,782
+12/31/2020
+-1,016
+4
+-1,012
+Other comprehensive income for items that will be reclassified to profit or loss, net of tax
+2,846
+-5
+1,239
+12/31/2019
+Other comprehensive income for items that will be reclassified to profit or loss, net of tax
+1,228.5
+-48.9
+1,228.5
+-48.9
+On January 13, 2022, SAP announced a new share repurchase program to service future share-based
+compensation awards. The program, with a volume of up to €1 billion, is planned to be executed in
+the period between February 1, 2022, and December 31, 2022.
+Authorized Shares
+The Articles of Incorporation authorize the Executive Board to increase the issued capital as follows:
+-
+-26
+By up to a total amount of €250 million by issuing new no-par value bearer shares against
+contributions in cash until May 19, 2025 (Authorized Capital I). The issuance is subject to the
+statutory subscription rights of existing shareholders.
+Contingent Shares
+SAP SE's share capital is subject to a contingent capital increase, which may be effected only to the
+extent that the holders or creditors of convertible bonds or stock options issued or guaranteed by
+SAP SE or any of its directly or indirectly controlled subsidiaries under certain share-based payments
+exercise their conversion or subscription rights, and no other methods for servicing these rights are
+used. As at December 31, 2021, €100 million, representing 100 million shares, was still available for
+issuance (2020: €100 million).
+Other Components of Equity
+€ millions
+Exchange
+Differences
+Cash Flow
+Hedges/Cost of
+Hedging
+Total
+1/1/2019
+By up to a total amount of €250 million by issuing new no-par value bearer shares against
+contributions in cash or in kind until May 19, 2025 (Authorized Capital II). Subject to the consent of
+the Supervisory Board, the Executive Board is authorized to exclude the shareholders' statutory
+subscription rights in certain cases.
+-14.1
+2,819
+1,830
+On November 11, 2021, Qualtrics announced the closing of its public offering and issued an
+additional 4% of its shares, which reduced SAP's ownership in Qualtrics to 74%. The offering-related
+cash inflow amounted to €981 million and the corresponding value of non-controlling interests in net
+assets was €250 million.
+(E.3) Liquidity
+Accounting for Non-Derivative Financial Instruments
+Classification and Measurement of Non-Derivative Financial Debt Investments
+Our non-derivative financial debt investments comprise cash at banks and cash equivalents (highly
+liquid investments with original maturities of three months or less, such as time deposits and money-
+market funds), loans and other financial receivables, and acquired debt securities.
+As we do not designate financial assets as “at fair value through profit or loss," we generally classify
+financial assets as: at amortized cost (AC), at fair value through other comprehensive income (FVOCI),
+or at fair value through profit or loss (FVTPL), depending on the contractual cash flows of, and our
+business model for, holding the respective asset. Financial assets having cash flow characteristics
+other than solely principal and interest such as money market and similar funds are generally
+classified as FVTPL. Generally, all other financial assets with cash flows consisting solely of principal
+and interest are classified as AC because we follow a conservative investment approach, safeguarding
+our liquidity by ensuring the safety of principal investment amounts.
+Gains/losses on non-derivative financial debt investments at FVTPL are reported in Financial income,
+net and show interest income/expenses separately from other gains/losses which include gains/losses
+from fair value fluctuations and disposals. Gains/losses on non-derivative financial debt investments
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+at AC are reported in Financial income, net and show interest income/expenses separately from other
+gains/losses which include gains/losses disposals and changes in expected and incurred credit
+losses. Gains/losses from foreign currency exchange rate fluctuations are included in Other non-
+operating income/expense, net. Regular way purchases and sales are recorded as at the trade date.
+Impairment of Non-Derivative Financial Debt Investments
+On October 1, 2021, Qualtrics completed its acquisition of Clarabridge in the form of Qualtrics shares
+and cash. Following the issuance of new Qualtrics shares, SAP's ownership further decreased to 78%,
+resulting in an additional value of non-controlling interests of €261 million in net assets to be
+recognized.
+On January 28, 2021, Qualtrics successfully issued 12% of its shares on the Nasdaq Stock Market
+(NASDAQ). The IPO-related cash inflow amounted to €1,847 million and the initial value of non-
+controlling interests in net assets was €909 million.
+Non-Controlling Interests
+The total dividend available for distribution to SAP SE shareholders is based on the profits of SAP SE
+as reported in its statutory financial statements prepared under the accounting rules in the German
+Commercial Code (Handelsgesetzbuch). For the year ended December 31, 2021, the Executive
+Board intends to propose that a dividend of €2.45 per share (that is, an estimated total dividend of
+€2,890 million), be paid from the profits of SAP SE, which includes an extraordinary dividend
+component of €0.50 per share to celebrate SAP's 50th anniversary in 2022.
+-22
+1,808
+Treasury Shares
+By resolution of SAP SE's Annual General Meeting of Shareholders held on May 17, 2018, the
+authorization granted by the Annual General Meeting of Shareholders on June 4, 2013, regarding the
+acquisition of treasury shares was revoked to the extent it had not been exercised at that time, and
+replaced by a new authorization of the Executive Board of SAP SE to acquire, on or before
+May 16, 2023, shares of SAP SE representing a pro rata amount of capital stock of up to €120 million
+in aggregate, provided that the shares purchased under the authorization, together with any other
+shares in the Company previously acquired and held by, or attributable to, SAP SE do not account for
+227/338
+228/338
+SAP
+SAP Integrated Report 2021
+12/31/2021
+To Our
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+more than 10% of SAP SE's issued share capital. Although treasury shares are legally considered
+outstanding, there are no dividend or voting rights associated with them. We may redeem or resell
+shares held in treasury, or we may use treasury shares for the purpose of servicing option or
+conversion rights under the Company's share-based payment plans. Also, we may use shares held in
+treasury as consideration in connection with mergers with, or acquisitions of, other companies.
+Distribution Policy and Dividends
+Our general intention is to remain in a position to return liquidity to our shareholders by distributing
+annual dividends totaling 40% or more of our profit after tax and by potentially repurchasing treasury
+shares in future.
+In 2021, we distributed €2,182 million (€1.85 per share) in dividends for 2020 compared to
+€1,864 million (€1.58 per share) paid in 2020 for 2019 and €1,790 million (€1.50 per share) paid in
+2019 for 2018.
+Combined Group
+0
+-34.9
+1,228.5
+39
+Current liabilities
+16,136
+23
+12,842
+22
+26
+Non-current liabilities
+13,510
+15,696
+27
+-14
+Liabilities
+29,646
+42
+28,537
+49
+51
+29,927
+58
+41,523
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+-
+Section E – Capital Structure,
+Financing, and Liquidity
+This section describes how SAP manages its capital structure. Our capital management is based on a
+high equity ratio, modest financial leverage, a well-balanced maturity profile, and deep debt capacity.
+(E.1)
+Capital Structure Management
+4
+The primary objective of our capital structure management is to maintain a strong financial profile for
+investor, creditor, and customer confidence, and to support the growth of our business. We seek to
+maintain a capital structure that will allow us to continuously cover our funding requirements through
+the capital markets on reasonable terms and, in so doing, ensure a high level of independence,
+confidence, and financial flexibility.
+12/31/2021
+12/31/2020
+€ millions
+% of
+Total Equity
+and Liabilities
+€ millions
+% of
+Total Equity
+and Liabilities
+A in %
+Equity
+SAP SE's long-term credit rating is "A2" by Moody's and "A" by Standard & Poor's, both with stable
+outlook.
+Thereof financial debt
+13,094
+18
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Number of Shares
+Millions
+SAP
+1/1/2019
+Purchase of treasury shares
+12/31/2020
+12/31/2021
+Additional
+Information
+Issued Capital
+Treasury Shares
+1,228.5
+-34.9
+12/31/2019
+For these financial assets, we apply considerable judgment by employing the general impairment
+approach as follows:
+SAP SE has issued no-par value bearer shares with a calculated nominal value of €1 per share. All of
+the shares issued are fully paid.
+Changes in SAP's interest in a subsidiary that do not result in a loss of control are accounted for as
+equity transactions. When SAP loses control over the subsidiary, it derecognizes the assets and
+liabilities of the subsidiary and any related non-controlling interests (NCI) and other components of
+equity. Any resulting gain or loss is recognized in profit or loss.
+13,283
+23
+-1
+Thereof lease liabilities
+2,143
+3
+2,120
+4
+Issued Capital
+1
+71,169
+100
+58,464
+100
+22
+In 2021, we drew two short-term loans of €950 million and €500 million with the tenor of one year and
+a flexible repayment schedule, as well as €150 million in issued commercial paper (CP). At maturity,
+we repaid €500 million in Eurobonds, as well as €150 million in CP. Making use of the flexible
+structure, we further repaid €1,250 million in acquisition loan for Qualtrics prior to its final maturity
+date in 2022. The ratio of total nominal volume of financial debt to total equity and liabilities
+decreased 4 pp.
+(E.2) Total Equity
+Accounting for Interests in Subsidiaries
+Total equity and liabilities
+Management Report
+For cash at banks, time deposits, and debt securities such as acquired bonds and acquired
+commercial paper, we apply the low credit risk exception, as it is our policy to invest only in high-
+quality assets of issuers with a minimum rating of at least investment grade to minimize the risk of
+credit losses. Thus, these assets are always allocated to stage 1 of the three-stage credit loss
+model, and we record a loss allowance at an amount equal to 12-month expected credit losses.
+This loss allowance is calculated based on our exposure at the respective reporting date, the loss
+given default for this exposure, and the credit default swap spread as a measure for the probability
+of default. Even though we invest only in assets of at least investment-grade, we also closely
+observe the development of credit default swap spreads as a measure of market participants'
+assessments of the creditworthiness of a debtor to evaluate probable significant increases in credit
+risk to timely react to changes should these manifest. Among others, we consider cash at banks,
+time deposits, and debt securities to be in default when the counterparty is unlikely to pay its
+obligations in full, when there is information about a counterparty's financial difficulties or if there is
+a drastic increase in a counterparty's credit default swap spread for a prolonged time period while
+the overall market environment remains generally stable. Such financial assets are written off either
+partially or in full if the likelihood of recovery is considered remote, which might be evidenced, for
+example, by the bankruptcy of a counterparty of such financial assets.
+Non-Derivative Financial Liabilities
+Total
+Time deposits
+2,605
+0
+2,605
+1,448
+0
+1,448
+Debt securities
+30
+0
+30
+24
+0
+24
+Financial instruments related to employee benefit plans
+0
+Non-Current
+Current
+Total
+Non-Current
+-3
+0
+-3
+-3
+0
+-3
+44 Cash and cash equivalents
+8,898
+201
+0
+5,311
+0
+5,311
+Non-Derivative Financial Debt Investments
+2021
+2020
+€ millions
+Current
+8,898
+Expected credit loss allowance
+201
+162
+Other financial assets
+2,758
+6,275
+9,033
+1,635
+3,512
+5,147
+Non-derivative financial debt investments
+as % of Other financial assets
+98
+5
+33
+95
+8
+35
+230/338
+Time deposits with original maturity of three months or less are presented as cash and cash
+equivalents, and those with original maturities of greater than three months (investments considered
+in group liquidity) are presented as other financial assets. Debt securities consist of acquired CP and
+acquired bonds of mainly financial and non-financial corporations and municipalities.
+For more information about financial risk and the nature of risk, see Note (F.1).
+1,822
+269
+1,552
+3,019
+162
+Loans and other financial receivables
+79
+107
+186
+83
+107
+190
+0
+Expected credit loss allowance
+0
+-3
+-3
+0
+-3
+Non-derivative financial debt investments
+2,711
+308
+-3
+0
+0
+0
+5,311
+3,587
+Current time deposits and debt securities
+2,632
+1,470
+1,162
+Group liquidity
+11,530
+6,781
+4,750
+Current financial debt
+-3,755
+-1,482
+-2,273
+Non-current financial debt
+-9,338
+-11,801
+8,898
+Cash and cash equivalents
+Δ
+2020
+Non-derivative financial liabilities include bank loans, issued bonds, private placements, and other
+financial liabilities. Included in other financial liabilities are customer funding liabilities which are funds
+we draw from and make payments on behalf of our customers for customers' employee expense
+reimbursements, related credit card payments, and vendor payments. We present these funds in cash
+and cash equivalents and record our obligation to make these expense reimbursements and
+payments on behalf of our customers as customer funding liabilities.
+As we do not designate financial liabilities as FVTPL, we generally classify non-derivative financial
+liabilities as AC.
+Expenses and gains or losses on financial liabilities at AC mainly consist of interest expense, which is
+shown in Financial income, net. Gains/losses from foreign currency exchange rate fluctuations are
+included in Other non-operating income/expense, net.
+Group Liquidity, Financial Debt, and Net Debt
+Group liquidity consists of cash at banks, money market and other funds, as well as time deposits and
+debt securities (both with remaining maturities of less than one year). Financial debt is defined as the
+nominal volume of bank loans, issued commercial paper, private placements, and bonds. Net debt is
+group liquidity less financial debt.
+229/338
+SAP
+SAP Integrated Report 2021
+2,463
+To Our
+Combined Group
+Management Report
+Group Liquidity and Net Debt
+€ millions
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+2021
+Stakeholders
+Financial debt
+-13,094
+-13,283
+2,732
+Time deposits
+1,420
+0
+1,420
+927
+0
+927
+0
+Money market and other funds
+0
+4,281
+1,655
+1,655
+Debt securities
+50
+0
+50
+4,281
+Loans and other financial receivables are monitored based on borrower-specific internal and
+external information to determine whether there has been a significant increase in credit risk since
+initial recognition. We consider such assets to be in default if they are significantly beyond their due
+date or if the borrower is unlikely to pay its obligation. A write-off occurs when the likelihood of
+recovery is considered remote, for example when bankruptcy proceedings have been finalized or
+when all enforcement efforts have been exhausted.
+2,732
+0
+189
+Net debt (-)
+-1,563
+-6,503
+4,939
+While we continuously monitor the ratios presented in the capital structure table, we actively manage
+our liquidity and structure of our financial indebtedness based on the ratios group liquidity and net
+debt.
+Cash and Cash Equivalents
+2021
+3,149
+2020
+Current
+Non-Current
+Total
+Current
+Non-Current
+Total
+Cash at banks
+3,149
+€ millions
+Combined Group
+19
+SAP Integrated Report 2021
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(D.5)
+Leases
+Accounting Policies, Judgments, and Estimates
+Under IFRS 16, a contract is or contains a lease if the contract conveys the right to control the use of
+an identified asset for a period of time in exchange for consideration. As a lessee, SAP recognizes a
+right-of-use asset representing its right to use the underlying asset and a lease liability representing its
+obligation to make lease payments. The right-of-use assets are depreciated on a straight-line basis
+and interest expense is recognized on the lease liabilities. The vast majority of our leases consist of
+facility and data center leases. Payments for short-term and low-value leases are expensed over the
+lease term. Extension options are included in the lease term if their exercise is reasonably certain.
+Leases in the Balance Sheet
+€ millions
+Right-of-use assets
+12/31/2021
+12/31/2020
+Right-of-use assets - land and buildings
+1,800
+1,816
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Additions
+2020
+66
+404
+424
+25
+87
+1,006
+Right-of-use assets - other property, plant, and equipment
+2021
+313
+518
+23
+69
+1,067
+The additions (other than from business combinations) relate primarily to the replacement and
+purchase of information technology equipment and the construction and leasing of buildings and data
+centers. For more information about the impairment of data centers, see Note (B.6). For more
+information about leases, see Note (D.5).
+221/338
+222/338
+144
+4,977
+40
+Total right-of-use assets
+1,740
+11,042
+13,605
+16
+13
+SAP is committed to future minimum lease payments in the amount of €172 million for facility leases
+that had not yet commenced as at December 31, 2021. For data centers, we have future
+commitments to spend €226 million on services and IFRS 16-related assets. Because this agreement
+does not specify the required split, the entire amount has been included in the purchase obligations
+reported in Note (D.8).
+Leases in the Income Statement
+€ millions
+Lease expenses within operating profit
+Depreciation of right-of-use assets
+2021
+2020
+398
+396
+For more information about right-of-use asset additions, see Note (D.4), and for a maturity analysis of
+lease liabilities, see Note (F.1). For more information about the cash flow related to lease liabilities,
+see the "Reconciliation of Liabilities Arising from Financing Activities" table within Note (E.3).
+SAP
+SAP Integrated Report 2021
+1,736
+Non-current lease liabilities as % of Non-current financial liabilities
+Non-current financial liabilities
+Non-current lease liabilities
+1,840
+1,857
+Property, plant, and equipment
+4,977
+5,041
+Right-of-use assets as % of Property, plant, and equipment
+37
+To Our
+41
+Lease liabilities
+407
+380
+Current financial liabilities
+4,528
+2,348
+Current lease liabilities as % of Current financial liabilities
+9
+16
+Current lease liabilities
+77
+40
+1,450
+9 to 13
+Callidus Customer relationships
+241
+262
+7 to 11
+Qualtrics Acquired technologies
+286
+360
+4
+Qualtrics
+Customer relationships
+983
+991
+11 to 16
+Emarsys - Customer relationships
+163
+174
+786
+755
+Concur Customer relationships
+4 to 6
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+6 to 13
+Additional
+Information
+Carrying Amount
+€ millions, unless otherwise stated
+2021
+2020
+Remaining
+Useful Life
+(in years)
+Ariba - Customer relationships
+174
+203
+Significant Intangible Assets
+Signavio Customer relationships
+184
+ΝΑ
+Other Property,
+Other Property,
+Advance Payments
+Land and Buildings
+Leased
+Plant, and
+Equipment
+Plant, and
+Equipment Leased
+and Construction in
+Land and Buildings
+Total
+1,457
+1,816
+1,628
+41
+99
+5,041
+1,609
+1,801
+Progress
+To Our
+2 to 5 years
+Based on the term of the lease contract
+2 to 6 years
+15
+Total significant intangible assets
+2,786
+2,776
+(D.4) Property, Plant, and Equipment
+Depreciation of Property, Plant and Equipment
+Property, plant, and equipment are typically depreciated using the straight-line method. Judgment is
+required in estimating the useful life of the assets. In this assessment we consider, among others, our
+history with similar assets and current and future changes in technology.
+Useful Lives of Property, Plant, and Equipment
+4 to 20 years
+Buildings
+Information technology equipment
+Office furniture
+Automobiles
+Property, Plant, and Equipment
+€ millions
+12/31/2020
+12/31/2021
+Predominantly 25 to 50 years
+Leased assets and leasehold improvements
+Stakeholders
+37
+Management Report
+Non-Current Assets by Region
+The table below shows non-current assets excluding financial instruments, deferred tax assets, post-
+employment benefit assets, and rights arising under insurance contracts.
+Non-Current Assets by Region
+€ millions
+Germany
+Rest of EMEA
+EMEA
+United States
+Rest of Americas
+Combined Group
+APJ
+SAP Group
+2021
+2020
+5,305
+4,350
+5,927
+(D.7)
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+2021
+2020
+255
+237
+SAP invests and holds interests in unrelated parties that manage investments in venture capital. On
+December 31, 2021, total commitments to make such investments amounted to €757 million
+(2020: €607 million), of which €502 million had been drawn (2020: €370 million). By investing in such
+venture capital funds, we are exposed to the risks inherent in the business areas in which the entities
+operate. Our maximum exposure to loss is the amount invested plus contractually committed future
+capital contributions.
+Maturities
+€ millions
+Due 2022
+5,798
+Total
+Investments in
+Venture Capital Funds
+255
+255
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+12/31/2021
+Investments in venture capital funds
+11,232
+30,143
+4,779
+3,791
+The contractual obligations for acquisition of property, plant, and equipment and intangible assets
+relate primarily to the purchase of hardware, software, patents, office equipment, and vehicles. The
+remaining obligations relate mainly to marketing, consulting, maintenance, license agreements, cloud
+services, and other third-party agreements. The increase is mainly due to new purchase obligations
+related to cloud services. Historically, the majority of such purchase obligations have been realized.
+Maturities
+€ millions
+Due 2022
+Due 2023 to 2026
+Due thereafter
+Total
+12/31/2021
+Purchase Obligations
+1,199
+2,946
+634
+4,779
+225/338
+226/338
+SAP
+3,685
+4,680
+106
+99
+26,829
+441
+379
+30,584
+27,208
+1,263
+1,216
+43,079
+10,149
+38,572
+(D.8)
+Purchase Obligations
+2021
+2020
+€ millions
+Contractual obligations for acquisition of property, plant, and equipment and
+intangible assets
+Other purchase obligations
+Purchase obligations
+For a breakdown of our employee headcount by region, see Note (B.1), and for a breakdown of
+revenue by region, see Note (A.1).
+€ millions
+Americas
+For a list of the names of other equity investments, see Note (G.9).
+Equity securities
+0
+5,799
+5,799
+0
+3,113
+3,113
+Investments in associates
+0
+155
+155
+0
+14
+14
+Equity investments
+0
+5,954
+Total
+Non-
+Current
+Current
+Total
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+(D.6)
+Equity Investments
+Accounting Policies, Judgments, and Estimates
+As we do not designate financial assets as “at fair value through profit or loss," we generally classify
+financial assets into the following categories: at amortized cost (AC), at fair value through other
+comprehensive income (FVOCI), and at fair value through profit or loss (FVTPL), depending on the
+contractual cash flows of and our business model for holding the respective asset.
+For equity securities, as the cash flow characteristics are typically other than solely principal and
+interest, we take an investment-by-investment decision whether to classify as FVTPL or FVOCI.
+5,954
+Financial Commitments in Venture Capital Funds
+Considerable judgment and assumptions are involved with regard to the selection of appropriate
+comparable company data, the assessment of cash requirements of the business, the acceptance of
+the technology or products in the addressable markets, the actual and forecasted performance, the
+milestone achievements, the adequacy of price points from financing rounds, the transaction of similar
+securities of the same company, the rights and preferences of the underlying securities, the selection
+of adequate equity allocation parameters, and the possible exit scenarios and associated weightings.
+Because all of these assumptions could change significantly and because of the inherent uncertainty
+of valuation, our estimated fair values may differ significantly from the values that would have been
+used had market prices for the investments existed and that will ultimately be realized, and those
+differences could be material.
+Gains/losses on equity securities at FVTPL include gains/losses from fair value fluctuations, from
+disposals as well as dividends, while gains/losses on equity securities at FVOCI only include
+dividends, all of which are shown in Financial income, net. Regular way purchases and sales are
+recorded as at the trade date.
+Equity Investments
+2021
+2020
+€ millions
+Current
+Non-
+Current
+We take the most recent qualitative and quantitative information aspects into consideration to
+determine the fair value estimates of these equity securities.
+0
+The valuation of equity securities of private companies requires judgment, since it is typically based
+on significant unobservable inputs as no market prices are available and there is an inherent lack of
+liquidity.
+3,127
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Investments in Associates
+SAP also has interests in a number of individually immaterial associates. We own more than 20% of
+the equity interests or have at least 20% of the voting rights. Based on these facts and the nature of
+the relationships, SAP has determined that it has significant influence.
+The following table shows, in aggregate, the carrying amount and share of profit of these associates.
+€ millions
+Combined Group
+Carrying amount of interest in associates
+2021
+2020
+155
+-9
+-1
+SAP contributed certain software solutions specific to the financial services industry to SAP Fioneer
+(with SAP employees also transferring over on a voluntary basis) in exchange for a minority share in
+the new entity. The transaction closed on September 1, 2021. The associated accounting for this
+transaction is preliminary and the accounting alignment is ongoing. As such, the proportionate share
+of earnings is provisional.
+The proportionate share of earnings of SAP Fioneer is included in SAP's Consolidated Financial
+Statements with a time lag of one month. The figures for the equity result relate to the period from
+September 1, 2021, to November 30, 2021.
+3,127
+Share of profit and losses from continuing operations
+To Our
+14
+SAP
+SAP Integrated Report 2021
+2,758
+6,275
+Other financial assets
+1,635
+3,512
+5,147
+Equity investments as % of
+9,033
+95
+66
+0
+89
+61
+Other financial assets
+223/338
+0
+224/338
+1.250% (fix)
+900
+899
+Eurobond 19 - 2018
+2024
+99.227%
+0.750% (fix)
+845
+€850
+847
+Eurobond 20 - 2018
+2028
+98.871%
+0.89%
+€900
+1.50%
+0.250% (fix)
+€500
+1.38%
+499
+498
+Eurobond 16 - 2018
+2030
+0.36%
+98.687%
+€500
+491
+510
+Eurobond 18 - 2018
+2022
+99.654%
+1.375% (fix)
+€1,000
+2026
+1,009
+1.06%
+If, on December 31, 2021, 2020, and 2019, interest rates had been higher/lower than as described
+above, this would not have had a material effect on Financial income, net, for our variable interest rate
+investments and would have had the following effects on Financial income, net.
+€800
+0.51%
+0.375% (fix)
+98.787%
+2029
+Eurobond 24 - 2020
+596
+596
+€600
+0.26%
+0.125% (fix)
+99.200%
+Eurobond 23 - 2020
+599
+599
+Eurobond 21 - 2018
+2031
+98.382%
+1.625% (fix)
+1.78%
+€1,250
+982
+1,223
+Eurobond 22 - 2020
+2023
+99.794%
+0.000% (fix)
+0.07%
+€600
+1,279
+1.000% (fix)
+Due to the different interest rate expectations for the U.S. dollar and the euro area, we base our
+sensitivity analyses on a yield curve upward shift of +75/+20 basis points (bps) for the U.S. dollar/euro
+area (2020: +50/+10bps for the U.S. dollar/euro area; 2019: +50/+10bps for the U.S. dollar/euro area),
+and a yield curve downward shift of -25/-20bps for the U.S. dollar/euro area (2020: -50/-20bps for
+the U.S. dollar/euro area; 2019: -50/- 20bps for the U.S. dollar/euro area).
+2026
+€ millions
+Change in value used for calculating hedge ineffectiveness
+Cash flow hedge
+2021
+-28
+-28
+Cost of hedging
+-2
+Balances remaining in cash flow hedge reserve for which hedge accounting is no longer
+applied
+0
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+The amounts as at December 31, 2021, designated as hedging instruments were as follows:
+Designated Hedging Instruments in Foreign Currency Exchange Rate Hedges
+€ millions
+Forecasted License Payments
+The amounts as at December 31, 2021, relating to items designated as hedged items were as follows:
+Designated Hedged Items in Foreign Currency Exchange Rate Hedges
+For all years presented, no previously highly probable transaction designated as a hedged item in a
+foreign currency cash flow hedge relationship ceased to be probable. Therefore, we did not
+discontinue any of our cash flow hedge relationships. Also, ineffectiveness was either not material or
+non-existent in all years reported. Generally, the cash flows of the hedged forecasted transactions are
+expected to occur and to be recognized in profit or loss monthly within a time frame of 12 months
+from the date of the statement of financial position.
+We enter into derivative financial instruments, primarily foreign exchange forward contracts, to hedge
+significant forecasted cash flows (royalties) from foreign subsidiaries denominated in foreign
+currencies with a hedge ratio of 1:1 and a hedge horizon of up to 12 months, which is also the
+maximum maturity of the foreign exchange derivatives we use.
+We are exposed to various financial risks, such as market risks (that is, foreign currency exchange rate
+risk, interest rate risk, and equity price risk), credit risk, and liquidity risk.
+We manage market risks, credit risk, and liquidity risk on a Group-wide basis through our global
+treasury department, global risk management, and global credit management. Risk management
+policies are established to identify risks, to set appropriate risk limits, and to monitor risks. Risk
+management policies and hedging strategies are laid out in our internal guidelines (for example,
+treasury guideline and other internal guidelines), and are subject to continuous internal review,
+analysis, and update to reflect changes in market conditions and our business.
+We only purchase derivative financial instruments to reduce risks and not for speculation, which is
+defined as entering into derivative instruments without a corresponding underlying transaction.
+Foreign Currency Exchange Rate Risk
+Foreign Currency Exchange Rate Risk Factors
+As we are active worldwide, our ordinary operations are subject to risks associated with fluctuations in
+foreign currencies. Since the Group's entities mainly conduct their operating business in their own
+235/338
+236/338
+SAP
+SAP Integrated Report 2021
+Nominal amount
+To Our
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+functional currencies, our risk of exchange rate fluctuations from ongoing ordinary operations is not
+considered significant. However, SAP occasionally generates foreign currency-denominated
+receivables, payables, and other monetary items by transacting in a currency other than the functional
+currency. To mitigate the extent of the associated foreign currency exchange rate risk, the majority of
+these transactions are hedged as described below.
+In rare circumstances, transacting in a currency other than the functional currency also leads to
+embedded foreign currency derivatives being separated and measured at fair value through profit or
+loss.
+In addition, the intellectual property (IP) holders in the SAP Group are exposed to risks associated
+with forecasted intercompany cash flows in foreign currencies. These cash flows arise out of royalty
+payments from subsidiaries to the respective IP holder. The royalties are linked to the subsidiaries'
+external revenue. This arrangement leads to a concentration of the foreign currency exchange rate risk
+with the IP holders, as the royalties are mostly denominated in the subsidiaries' local currencies, while
+the functional currency of the IP holders with the highest royalty volume is the euro. The highest
+foreign currency exchange rate exposure of this kind relates to the currencies of subsidiaries with
+significant operations, for example the U.S. dollar, the pound sterling, the Japanese yen, the Swiss
+franc, and the Australian dollar.
+Generally, we are not exposed to any significant foreign currency exchange rate risk with regard to our
+investing and financing activities, as such activities are normally conducted in the functional currency
+of the investing or borrowing entity.
+Foreign Currency Exchange Rate Risk Management
+We continuously monitor our exposure to currency fluctuation risks based on monetary items and
+forecasted transactions and pursue a Group-wide strategy to manage foreign currency exchange rate
+risk, using derivative financial instruments, primarily foreign exchange forward contracts, as
+appropriate, with the primary aim of reducing profit or loss volatility. Most of the hedging instruments
+are not designated as being in a hedge accounting relationship.
+Currency Hedges Designated as Hedging Instruments (Cash Flow Hedges)
+Combined Group
+Carrying amount
+Other financial assets
+Other financial liabilities
+Average EUR:AUD forward rate
+Average EUR:USD forward rate
+770
+253
+0.87
+0.86
+130.52
+130.32
+1.08
+1.07
+Average EUR:CHF forward rate
+1.58
+1.19
+1.16
+Foreign Currency Exchange Rate Exposure
+Our risk exposure is based on the following assumptions:
+The SAP Group's entities generally operate in their functional currencies. In exceptional cases and
+limited economic environments, operating transactions are denominated in currencies other than
+the functional currency, leading to a foreign currency exchange rate risk for the related monetary
+instruments. Where material, this foreign currency exchange rate risk is hedged. Therefore,
+fluctuations in foreign currency exchange rates do not have a significant impact on either profit or
+other comprehensive income with regard to our non-derivative monetary financial instruments and
+related income or expenses.
+Our free-standing derivatives designed for hedging foreign currency exchange rate risks almost
+completely balance the changes in the fair values of the hedged item attributable to exchange rate
+movements in the Consolidated Income Statements in the same period. As a consequence, the
+hedged items and the hedging instruments are not exposed to foreign currency exchange rate
+risks, and thereby have no effect on profit.
+Consequently, we are only exposed to significant foreign currency exchange rate fluctuations with
+regard to the following:
+237/338
+SAP
+To Our
+1.61
+We continue to monitor the IBOR reform project, assess any impact, manage our transition to
+alternative benchmark rates, and provide respective disclosures. Apart from that, the IBOR reform had
+no impact on our risk management strategy.
+Average EUR:JPY forward rate
+Net exposure in € millions
+Change in value recognized in OCI
+Hedge ineffectiveness recognized in Finance income, net
+Cost of hedging recognized in OCI
+Amount reclassified from cash flow hedge in OCI to Other non-operating income, net
+Amount reclassified from cost of hedging in OCI to Finance income, net
+Forecasted License Payments
+2021
+1,023
+1
+-31
+Average EUR:GBP forward rate
+-28
+2
+-4
+-3
+On December 31, 2021, we held the following instruments to hedge exposures to changes in foreign
+currency:
+Details on Hedging Instruments in Foreign Currency Exchange Rate Hedges
+Maturity
+2021
+1-6 Months
+7-12 Months
+Forward exchange contracts
+0
+Stakeholders
+Non-derivative financial instruments: We are in the process of reviewing and amending the
+respective contracts well before the respective IBOR will no longer be quoted, which is the case for
+our USD bond of US$300 million referencing to three-month USD LIBOR.
+We are impacted by the IBOR reform with regard to:
+13,344
+Accrued interest
+67
+0
+0
+0
+0
+-6
+61
+Interest rate swaps
+7
+0
+0
+2
+-123
+-114
+Lease¹
+2,204
+-378
+15
+-125
+14
+117
+-109
+2
+0
+0
+13,283
+Basis adjustment
+13
+0
+0
+-4
+117
+0
+0
+126
+-64
+-16
+0
+0
+0
+14
+-66
+Financial debt (carrying amount)
+13,616
+-298
+Transaction costs
+404
+2,120
+Total liabilities from financing activities
+In addition, we occasionally have contracts that contain foreign currency embedded derivatives that
+are required to be accounted for separately.
+Fair value fluctuations in the spot component of such derivatives at FVTPL are included in Other non-
+operating income/expense, net while the forward element is shown in Financial income, net.
+Derivatives Designated as Hedging Instruments
+a) Cash Flow Hedge
+In general, we apply cash flow hedge accounting to the foreign currency risk of highly probable
+forecasted transactions. With regard to foreign currency risk, hedge accounting relates to the spot
+price and the intrinsic values of the derivatives designated and qualifying as cash flow hedges.
+Accordingly, the effective portion of these components determined on a present value basis is
+recorded in other comprehensive income. The forward element and time value as well as foreign
+currency basis spreads excluded from the hedging relationship are recorded as cost of hedging in a
+separate position in other comprehensive income. As the amounts are not material, they are
+presented together with the effective portion of the cash flow hedges in our consolidated statements
+of comprehensive income and consolidated statements of changes in equity. All other components
+including counterparty credit risk adjustments of the derivative and the ineffective portion are
+immediately recognized in Financial Income, net profit or loss. Amounts accumulated in other
+comprehensive income are reclassified to profit or loss to Other non-operating income/expense, net
+and Financial income, net in the same period when the hedged item affects profit or loss.
+b) Fair Value Hedge
+We apply fair value hedge accounting for certain of our fixed-rate financial liabilities and show the fair
+value fluctuations in Financial income, net.
+c) Valuation and Testing of Effectiveness
+At inception of a designated hedging relationship, we document our risk management strategy and
+the economic relationship between hedged item and hedging instrument. The existence of an
+economic relationship is demonstrated as well as the effectiveness of the hedging relationship tested
+SAP
+SAP Integrated Report 2021
+Many transactions constitute economic hedges, and therefore contribute effectively to the securing of
+financial risks but do not qualify for hedge accounting under IFRS 9. To hedge currency risks inherent
+in foreign-currency denominated and recognized monetary assets and liabilities, we do not designate
+our held-for-trading derivative financial instruments as accounting hedges, because the profits and
+losses from the underlying transactions are recognized in profit or loss in the same periods as the
+profits or losses from the derivatives.
+To Our
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+prospectively by applying the critical terms match for our foreign currency hedges, since currencies,
+maturities, and the amounts are closely aligned for the forecasted transactions and for the spot
+element of the forward exchange rate contract or intrinsic value of the currency options, respectively.
+For interest rate swaps, effectiveness is tested prospectively using statistical methods in the form of a
+regression analysis, by which the validity and extent of the relationship between the change in value
+of the hedged items as the independent variable and the fair value change of the derivatives as the
+dependent variable is determined. The main sources of ineffectiveness are:
+The effect of the counterparty and our own credit risk on the fair value of the forward exchange
+contracts and interest rate swaps, which is not reflected in the respective hedged item, and
+- Differences in the timing of hedged item and hedged transaction in our cash flow hedges.
+Amendments to IFRS 9, IAS 39, IFRS 16, IFRS 4, and IFRS 7 - Interest Rate Benchmark
+Reform
+The IASB issued amendments to IFRS 9, IAS 39, IFRS 16, IFRS 4, and IFRS 7 on August 26, 2020,
+completing Phase 2 of the Interest Rate Benchmark Reform (IBOR reform) project. This was
+necessary because major interest rate benchmarks were reformed or even replaced.
+We are exposed to interest rate benchmarks due to our investing, financing, and hedging activities.
+The impact of the interest rate benchmark reform, however, is very limited either because the interest
+rate benchmarks we are mainly using will stay in place (that is, Euribor, USD Fed Funds Rate), the
+instruments will mature well before the respective benchmark rate is discontinued, or because the
+instruments have fixed interest rates.
+Combined Group
+Derivatives held in a hedging relationship: We have already replaced the old interest rate
+benchmark with the new risk-free rate for our EUR interest rate swaps designated in hedging
+relationships for which we transitioned from EONIA to Euro Short-Term Rate (€STR) + 8.5bps in the
+first quarter of 2021, or
+We use derivatives to hedge foreign currency risk or interest rate risk and designate them as cash flow
+or fair value hedges if they qualify for hedge accounting under IFRS 9, which involves judgment.
+Derivatives Not Designated as Hedging Instruments
+Financial Risk Factors and Risk Management
+15,895
+-675
+17
+-233
+-5
+413
+15,411
+1 Other includes new lease liabilities.
+233/338
+234/338
+Accounting for Derivative Financial Instruments
+SAP
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Section F - Management of
+Financial Risk Factors
+This section discusses financial risk factors and risk management regarding foreign currency exchange
+rate risk, interest rate risk, equity price risk, credit risk, and liquidity risk. Further, it contains information
+about financial instruments.
+(F.1)
+SAP Integrated Report 2021
+-105
+Combined Group
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+500
+1,250
+0.893%
+0.233%
+0.868%
+1.031%
+None of the fair value adjustment from the receiver swaps, the basis adjustment on the underlying
+hedged items held in fair value hedge relationships, and the difference between the two recognized in
+Financial income, net, is material in any of the years presented.
+239/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Interest Rate Exposure
+Our interest rate exposure (and our average/high/low exposure) as at December 31 was as follows:
+Interest Rate Risk Exposure
+€ billions
+Fair value interest rate risk
+2021
+800
+1,000
+1,000
+1.469%
+0.890%
+Details on Hedging Instruments in Interest Rate Hedges
+€ millions
+EUR interest rate swaps
+Nominal amounts
+Average variable interest rate
+USD interest rate swaps
+7
+0
+7
+2021
+Maturity
+2020
+2022
+2027
+2028
+2029
+2030
+2031
+Nominal amounts
+196
+88
+Average variable interest rate
+1.011%
+2024
+Year-End
+Average
+High
+2.95
+1.70
+1.99
+3.18
+3.93
+1.99
+From interest rate swaps
+4.83
+4.82
+4.83
+2.07
+4.81
+4.78
+5.10
+4.30
+240/338
+Interest Rate Sensitivity
+A sensitivity analysis is provided to show the impact of our interest rate risk exposure on profit or loss
+and equity in accordance with IFRS 7, considering the following:
+Changes in interest rates only affect the accounting for non-derivative fixed-rate financial
+instruments if they are recognized at fair value. Therefore, such interest rate changes do not
+change the carrying amounts of our non-derivative fixed-rate financial liabilities, as we account for
+them at amortized cost. Investments in fixed-rate financial assets classified as fair value through
+profit or loss were not material at each year end reported. Thus, we do not consider any fixed-rate
+instruments in the equity-related sensitivity calculation.
+Income or expenses recorded in connection with non-derivative financial instruments with variable
+interest rates are subject to interest rate risk if they are not hedged items in an effective hedge
+relationship. Thus, we take into consideration interest rate changes relating to our variable-rate
+financing and our investments in money market instruments in the profit-related sensitivity
+calculation.
+99.576%
+The designation of interest rate receiver swaps in a fair value hedge relationship leads to interest
+rate changes affecting Financial income, net. The fair value movements related to the interest rate
+swaps are not reflected in the sensitivity calculation, as they offset the fixed interest rate payments
+for the bonds and private placements as hedged items. However, changes in market interest rates
+affect the amount of interest payments from the interest rate swap. As a consequence, we include
+those effects of market interest rates on interest payments in the profit-related sensitivity
+calculation.
+4.81
+As at December 31, 2021, we held the following instruments to hedge exposures to changes in
+interest rates:
+1.71
+5.77
+Low
+Year-End
+Average
+High
+Low
+From investments
+0.03
+0.03
+0.03
+0.02
+4.58
+0.02
+0.02
+0.02
+Cash flow interest rate risk
+From investments (including cash)
+From financing
+7.72
+6.25
+7.72
+4.67
+4.58
+5.14
+0.02
+Management Report
+-49
+0
+2021
+2020
+2019
+2021
+2020
+2019
+Derivatives held within a designated cash flow hedge relationship
+All major currencies -10% (2020: all major currencies -10%;
+2019: all major currencies -10%)
+All major currencies +10% (2020: all major currencies +10%;
+2019: all major currencies +10%)
+Embedded derivatives
+All currencies -10%
+All currencies +10%
+238/338
+Interest Rate Risk
+40
+40
+53
+-49
+-49
+-53
+106
+Effects on Other Comprehensive Income
+Effects on Other Non-Operating Expense, Net
+€ millions
+Foreign Currency Sensitivity
+Additional
+Information
+The spot component of derivatives held within a designated cash flow hedge relationship affecting
+other comprehensive income
+Foreign currency embedded derivatives affecting other non-operating expense, net
+Thus, our foreign currency exposure (and our average/high/low exposure) as at December 31, 2021,
+was as follows:
+Foreign Currency Exposure
+€ billions
+Year-end exposure toward all our major currencies
+Average exposure
+Highest exposure
+Lowest exposure
+43
+2021
+1.4
+0.9
+1.3
+0.9
+1.6
+1.0
+1.0
+0.9
+Foreign Currency Exchange Rate Sensitivity
+We calculate our sensitivity on an upward/downward shift of +/-10% of the foreign currency exchange
+rate between the euro and all major currencies (2020: +/-10% of the foreign currency exchange rate
+between the euro and all other major currencies; 2019: +/-10% of the foreign currency exchange rate
+between the euro and all other major currencies). If, on December 31, 2021, 2020, and 2019, the
+foreign currency exchange rates had been higher/lower as described above, this would have had the
+following effects on other non-operating expense, net and other comprehensive income:
+2020
+53
+-106
+-43
+4,550
+285
+4,508
+284
+59
+-24
+59
+-9
+0
+The amounts as at December 31, 2021, designated as hedging instruments were as follows:
+Designated Hedging Instruments in Interest Rate Hedges
+in USD
+€ millions
+Carrying amount
+Other financial assets
+Other financial liabilities
+Change in fair value used for measuring ineffectiveness
+-16
+2021
+Interest Rate Swaps for
+EUR Borrowing
+Interest Rate Swaps for
+USD Borrowing
+4,550
+285
+Notional amount
+-49
+Fixed-Rate Borrowing
+2021
+-53
+Interest Rate Risk Factors
+We are exposed to interest rate risk as a result of our investing and financing activities mainly in euros
+and U.S. dollars, since a large part of our investments are based on variable rates and/or short
+maturities (2021: 67%; 2020: 67%) and most of our financing transactions are based on fixed rates
+and long maturities (2021: 87%; 2020: 85%).
+Interest Rate Risk Management
+The aim of our interest rate risk management is to reduce profit or loss volatility and optimize our
+interest result by creating a balanced structure of fixed and variable cash flows. We therefore manage
+interest rate risks by adding interest-rate-related derivative instruments to a given portfolio of
+investments and debt financing. The desired fixed-floating mix of our net debt is set by the Treasury
+Committee.
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Fixed-Rate Borrowing
+in EUR
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Information
+Derivatives Designated as Hedging Instruments (Fair Value Hedges)
+To match the interest rate risk from our financing transactions to our investments, we use receiver
+interest rate swaps to convert certain fixed-rate financial liabilities to floating, and by this means
+secure the fair value of the swapped financing transactions on a 1:1 ratio. Including interest rate
+swaps, 50% (2020: 48%) of our total interest-bearing financial liabilities outstanding as at
+December 31, 2021, had a fixed interest rate.
+The amounts as at December 31, 2021, relating to items designated as hedged items were as follows:
+Designated Hedged Items in Interest Rate Hedges
+€ millions
+Notional amount
+Carrying amount
+Accumulated fair value adjustments in Other financial liabilities
+Change in fair value used for measuring ineffectiveness
+Accumulated amount of fair value hedge adjustments for
+hedged items ceased to be adjusted for hedging gains/losses
+Additional
+2
+SAP Integrated Report 2021
+13,668
+9,844
+500
+9,751
+8,851
+900
+8,965
+Bonds
+Total
+Non-
+Current
+Current
+Non-
+Current
+Current
+Total
+Current Non-Current
+Non-
+Current
+Current
+Carrying Amount
+500
+9,868
+10,369
+Private placement
+930
+931
+0
+931
+0
+930
+Commercial paper
+transactions
+Nominal Volume
+742
+0
+707
+0
+790
+393
+396
+373
+393
+742
+0
+Carrying Amount
+Nominal Volume
+US$300
+264
+243
+Bonds
+9,751
+10,369
+All of our Eurobonds are listed for trading on the Luxembourg Stock Exchange.
+231/338
+SAP
+SAP Integrated Report 2021
+Private Placements
+U.S. private placements
+Tranche 7-2012
+Tranche 8-2012
+Tranche 9 2012
+Private placements
+To Our
+0.80%
+0.721% (var.)
+100.000%
+2025
+2020
+2021
+Additional
+Information
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+€ millions
+To Our
+SAP
+Financial Debt
+769
+789
+Eurobonds
+9,487
+10,125
+USD bond 2018
+SAP Integrated Report 2021
+931
+0
+931
+998
+999
+€1,000
+1.24%
+1.125% (fix)
+1.750% (fix)
+99.478%
+99.284%
+2027
+Eurobond 9 - 2014
+2023
+Eurobond 8 - 2014
+millions)
+(in € millions)
+(in € millions)
+Carrying Amount
+Carrying
+Amount
+respective
+currency in
+Effective
+Interest Rate
+1.87%
+€1,000
+985
+1,006
+Eurobond 15 - 2018
+500
+-282
+0
+€500
+-0.15%
+0.000% (var.)
+100.519%
+Coupon Rate
+2021
+597
+597
+€600
+1.13%
+1.000% (fix)
+99.264%
+2025
+Eurobond 12 - 2015
+Eurobond 14 - 2018
+Issue Price
+Maturity
+Nominal
+Volume (in
+4,528
+Financial liabilities
+9,245
+3,760
+9,338
+3,756
+Financial debt
+1,302
+11,042
+1,250
+1,250
+52
+1,533
+0
+1,533
+0
+1,533
+Bank loans
+52
+Stakeholders
+13,005
+15,570
+11,801
+2020
+2021
+For more information about the risk associated with our financial liabilities, see Note (F.1). For more
+information about fair values, see Note (F.2).
+Financial liabilities are unsecured, except for the retention of title and similar rights customary in our
+industry. Effective interest rates on our financial debt (including the effects from interest rate swaps)
+were 0.83% in 2021, 0.87% in 2020, and 1.09% in 2019.
+Bonds
+84
+87
+63
+1,482
+84
+83
+Financial debt as % of
+Financial liabilities
+15,953
+13,605
+2,348
+13,344
+11,860
+1,484
+84
+Combined Group
+900
+Consolidated Financial Further Information on
+Statements IFRS
+-1,251
+0
+-88
+1
+2,000
+11,139
+Non-current financial debt
+1,482
+1,251
+0
+-17
+2
+-2,282
+2,529
+Current financial debt
+Changes
+Currency
+Management Report
+11,801
+€ millions
+-1
+0
+0
+11
+-55
+Financial debt (carrying amount)
+13,344
+-272
+3
+Combinations
+82
+11
+13,005
+Accrued interest
+61
+0
+0
+0
+0
+-163
+12/31/2020
+Other
+60
+-6
+297
+15,250
+1 Other includes new lease liabilities.
+232/338
+SAP Integrated Report 2021
+SAP
+To Our
+187
+Stakeholders
+Combined Group
+Management Report
+Statements IFRS
+Sustainability
+Additional
+Information
+Business
+Foreign
+Fair Value
+Consolidated Financial Further Information on
+0
+7
+15,411
+Cash Flows
+Interest rate swaps
+-114
+0
+0
+-1
+157
+0
+-646
+42
+2,120
+-374
+4
+106
+0
+287
+2,143
+Total liabilities from financing activities
+Lease¹
+0
+1/1/2020
+Transaction costs
+In 2021, prior to its original maturity date, SAP repaid the remaining €1,250 million from the term loan
+drawn in 2019 for the acquisition of Qualtrics.
+The net proceeds from our commercial paper program (Commercial Paper, or CP) are being used for
+general corporate purposes, including dividends and share repurchases. As at December 31, 2021, we
+had €930 million of issued commercial paper outstanding with maturities generally less than six
+months and the carrying amount was €931 million (December 31, 2020: €931 million). The weighted
+average interest rate of our CP was -0.48% as at December 31, 2021 (December 31, 2020: -0.40%).
+Loans
+Commercial Paper
+The U.S. private placement notes were issued by one of our subsidiaries that has the U.S. dollar as its
+functional currency.
+742
+-1,252
+790
+88
+94
+US$100
+3.57%
+3.53% (fix)
+2027
+281
+300
+US$323
+3.37%
+In March 2021, SAP drew two short-term bank loans of €950 million and €500 million with tenors of
+one year. In November 2021, the tenors were extended to September 30, 2022. The loans can be
+repaid flexibly over time, and currently bear interest at 0.55% and 0.52%, respectively.
+3.33% (fix)
+Reconciliation of Liabilities Arising from Financing Activities
+The changes in our financial debts are reconciled to the cash flows from borrowings included in the cash flow from financing
+activities.
+Business
+Combinations
+Foreign
+Currency
+Fair Value
+Changes
+Other
+12/31/2021
+Current financial debt
+1,482
+980
+1
+1
+0
+Financial debt (nominal volume)
+1,291
+3,755
+Non-current financial debt
+11,801
+€ millions
+-66
+Cash Flows
+2024
+396
+-1,291
+9,338
+Financial debt (nominal volume)
+13,283
+-272
+3
+79
+0
+0
+0
+Basis adjustment
+126
+0
+0
+3
+-163
+0
+-34
+13,094
+373
+Sustainability
+Additional
+Information
+US$444.5
+3.22%
+3.18% (fix)
+2022
+(in € millions)
+(in € millions)
+Carrying Amount
+2
+78
+Carrying
+Amount
+2020
+2021
+currency in
+millions)
+(in respective
+Effective Interest
+Rate
+Coupon Rate
+Maturity
+Nominal Volume
+1/1/2021
+-11,179
+To Our
+Stakeholders
+-31
+-31
+Not designated as hedging instrument
+Interest rate swaps
+FX forward contracts
+Designated as hedging instrument
+Derivatives
+-281
+-31
+-281
+-2,424
+AC
+Other non-derivative financial liabilities³
+-801
+-801
+-790
+-790
+Private placements
+-2,424
+-31
+-49
+-49
+SAP Integrated Report 2021
+SAP
+247/338
+-978
+4,881
+-695
+-5,164
+9,997
+-3,194
+7,158
+-62
+-62
+-62
+-62
+FVTPL
+Total financial instruments, net
+FX forward contracts
+-49
+-49
+Combined Group
+Management Report
+AC
+1,655
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+6,232
+6,232
+Other receivables²
+Other financial assets
+Debt securities
+498
+5,147
+AC
+24
+24
+24
+24
+Equity securities
+FVTPL
+3,113
+3,113
+72
+-
+-931
+Financial instruments related to employee benefit
+plans²
+1,445
+1,445
+1,445
+AC
+1,445
+Time deposits
+14
+Investments in associates²
+3,113
+2,505
+536
+AC
+Trade receivables¹
+6,730
+Trade and other receivables
+Level 1
+At Fair
+Value
+Amortized
+Cost
+Amount
+At
+Carrying
+Level 2
+Category
+Measurement Categories
+12/31/2020
+Additional
+Information
+Assets
+€ millions
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+Fair Value
+162
+Level 3
+Cash and cash equivalents
+1,655
+1,655
+1,655
+FVTPL
+Money market and similar funds
+924
+Total
+924
+Time deposits¹
+2,732
+2,732
+AC
+Cash at banks¹
+5,311
+AC
+-10,248
+3,149
+-1,533
+Other receivables²
+Other financial assets
+Debt securities
+611
+9,033
+AC
+30
+30
+30
+30
+Equity securities
+FVTPL
+5,888
+5,799
+772
+155
+4,871
+5,799
+Investments in associates²
+155
+Time deposits
+AC
+2,602
+2,602
+2,602
+2,602
+5,799
+Financial instruments related to employee benefit plans²
+5,888
+Trade receivables¹
+Amount
+Amortized
+At Fair
+Value
+Level 1
+Level 2
+Level 3
+Total
+Cost
+Cash and cash equivalents
+8,898
+Cash at banks¹
+AC
+AC
+Loans and other financial receivables
+Time deposits¹
+AC
+1,467
+1,467
+Money market and similar funds
+FVTPL
+4,281
+4,281
+4,281
+4,281
+Trade and other receivables
+6,499
+3,149
+-1,533
+-
+Loans and other financial receivables
+10
+10
+10
+10
+Liabilities
+Trade and other payables
+41
+0
+10
+Trade payables¹
+Other payables²
+Financial liabilities
+FVTPL
+-1,702
+-1,089
+-1,089
+-613
+-15,571
+Non-derivative financial liabilities
+Loans
+AC
+-1,533
+Bonds
+AC
+-10,682
+-1,533
+-10,682
+AC
+201
+Call option on equity shares
+0
+AC
+186
+186
+186
+186
+Derivative assets
+Designated as hedging instrument
+FX forward contracts
+1
+1
+1
+1
+0
+7
+7
+7
+Interest rate swaps
+Not designated as hedging instrument
+FX forward contracts
+FVTPL
+41
+41
+41
+Call options for share-based payments
+FVTPL
+0
+7
+AC
+Determination of Fair Value/Valuation
+Technique
+190
+-61
+AC
+-16,904
+-16,904
+Determination of Fair Values
+A description of the valuation techniques and the inputs used in the fair value measurement is given
+below:
+249/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+-61
+Sustainability
+Туре
+Other financial assets
+Fair Value
+Hierarchy
+NA
+Discounted cash flow using par
+method. Expected future cash flows
+based on forward exchange rates are
+discounted over the respective
+remaining term of the contracts using
+the respective deposit interest rates
+and spot rates.
+Level 2
+FX forward contracts
+Other financial assets/ Financial liabilities
+ΝΑ
+NA
+Market approach. Venture capital
+method evaluating a variety of
+quantitative and qualitative factors
+such as actual and forecasted results,
+cash position, recent or planned
+transactions, and market comparable
+companies.
+Level 3
+Financial Instruments Measured at Fair Value on a Recurring Basis
+Call option on equity
+shares
+FVTPL
+11,547
+10,131
+13,323
+10,131
+13,323
+FVTPL
+-62
+-62
+AC
+-16,517
+-16,517
+Fair Values of Financial Instruments by Instrument Classification
+€ millions
+Financial assets
+4,846
+At fair value through profit or loss
+Financial liabilities
+At fair value through profit or loss
+At amortized cost
+12/31/2020
+Category
+Carrying Amount
+At Amortized Cost
+At Fair Value
+FVTPL
+AC
+4,846
+11,547
+At amortized cost
+AC
+- Reported net asset value of
+respective fund were higher
+(lower)
+-The respective analyzed share
+class would be affected by this
+change due to its rights and
+preferences
+Unlisted equity
+securities
+ΝΑ
+ΝΑ
+Quoted prices in an active market
+deducting a discount for the disposal
+restriction derived from the premium
+for a respective put option.
+Level 2
+securities
+ΝΑ
+ΝΑ
+Quoted prices in an active market
+Level 1
+Listed equity
+ΝΑ
+Level 3
+ΝΑ
+Level 1
+Debt securities
+ΝΑ
+ΝΑ
+Quoted prices in an active market
+Level 1
+Money-market and
+similar funds
+Interrelationship Between
+Significant Unobservable Inputs
+and Fair Value Measurement
+Information
+Additional
+At
+Significant Unobservable
+Inputs
+Quoted prices in an active market
+The estimated fair value would
+increase (decrease) if:
+Market approach. Comparable
+company valuation using revenue
+multiples derived from companies
+comparable to the investee.
+Last financing round valuations
+- The overall company value were
+higher (lower)
+- Price of latest financing round
+increases (decreases)
+The estimated fair value would
+increase (decrease) if:
+- The imminent exit value
+increases (decreases)
+- Estimated time to exit increases
+(decreases)
+- Volatility assumptions were
+higher (lower)
+-Weighting of the applied equity
+allocation methods changes
+- Weighting of financing rounds
+changes
+- Different financing rounds are
+selected
+The estimated fair value would
+increase (decrease) if:
+- The liquidity discounts were
+lower (higher)
+- The investees' revenues were
+higher (lower)
+Market approach. Venture capital
+method evaluating a variety of
+quantitative and qualitative factors
+such as actual and forecasted results,
+cash position, recent or planned
+transactions, and market comparable
+companies.
+- The revenue multiples were
+higher (lower)
+Net asset value
+calculations of the
+respective funds
+Nature and pricing
+indication of latest
+financing round
+- Imminent exit value
+- Estimated time to exit
+- Volatility assumptions
+- Weighting of equity
+allocation method such
+as option pricing model
+and common stock
+equivalent model
+- Discounts for lack of
+marketability
+- Weighting of financing
+rounds
+- Nature and selection of
+financing rounds
+- Revenues of investees
+- Discounts for lack of
+marketability (10% to
+32.3%)
+- Peer companies used
+(revenue multiples range
+from 3.5 to 11.5)
+Net asset value/fair market value as
+reported by the respective funds
+The estimated fair value would
+increase (decrease) if:
+190
+FVTPL
+At Amortized Cost
+4
+4
+4
+Liabilities
+Trade and other payables
+Trade payables¹
+Other payables²
+Financial liabilities
+-1,312
+AC
+-1,014
+-1,014
+4
+-298
+Non-derivative financial liabilities
+Loans
+AC
+-1,301
+Bonds
+AC
+-11,300
+-1,301
+-11,300
+-1,301
+-1,301
+-10,966
+-931
+-15,953
+-11,897
+FVTPL
+36
+190
+190
+Derivative assets
+Designated as hedging instrument
+FX forward contracts
+7
+7
+7
+7
+114
+114
+114
+Call option on equity shares
+114
+Not designated as hedging instrument
+FX forward contracts
+FVTPL
+38
+38
+38
+38
+Call options for share-based payments
+FVTPL
+36
+36
+36
+Interest rate swaps
+At Fair Value
+Private placements
+Other non-derivative financial liabilities³
+2,509
+-61
+-7,833
+1 We do not separately disclose the fair value for cash and cash equivalents, trade receivables, and accounts payable as their carrying amounts are a reasonable approximation
+of their fair values.
+2 Since the line items Trade receivables, Trade payables, and Other financial assets contain both financial and non-financial assets or liabilities (such as other taxes or advance
+payments), the carrying amounts of non-financial assets or liabilities are shown to allow a reconciliation to the corresponding line items in the Consolidated Statements of
+Financial Position.
+3 For lease liabilities, included in the line item Other non-derivative financial liabilities, separate disclosure of fair value is not required.
+248/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+-1,128
+Consolidated Financial
+Statements IFRS
+Fair Values of Financial Instruments by Instrument Classification
+€ millions
+Financial assets
+At fair value through profit or loss
+At amortized cost
+Financial liabilities
+At fair value through profit or loss
+At amortized cost
+Additional
+Information
+12/31/2021
+Category
+Carrying Amount
+Further Information on
+Sustainability
+AC
+-61
+4,904
+AC
+-742
+-2,547
+-742
+-2,547
+-771
+-771
+-427
+-427
+Derivatives
+Designated as hedging instrument
+FX forward contracts
+Interest rate swaps
+-1
+-9,214
+-1
+-1
+0
+0
+0
+0
+Not designated as hedging instrument
+Total financial instruments, net
+FVTPL
+-61
+-77
+-5,357
+-61
+-1
+Carrying
+Risk class 1 - low risk
+Fair Value
+4,898
+0
+-6
+243/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+As at December 31, 2021, the major part of our other loans and other financial receivables was
+concentrated in Germany. There were no loans, or other financial receivables past due but not
+impaired and we had no indications of impairments of such assets that were not past due and not
+impaired as at that date.
+-0.1%
+Trade Receivables and Contract Assets
+Credit Risk Exposure from Trade Receivables and Contract Assets
+€ millions, unless otherwise stated
+Weighted Average Loss
+Rate
+Gross Carrying Amount
+Not Credit-Impaired
+Gross Carrying Amount
+Credit-Impaired
+2021
+ECL Allowance
+AR not due and due
+-0.5%
+4,106
+6
+As at December 31, 2021, our exposure to credit risk from trade receivables was as follows:
+-19
+Total
+0
+-0.1%
+6,930
+0
+-6
+2020
+€ millions, unless otherwise stated
+Equivalent to External Weighted Average Loss
+Rating
+Rate
+Gross Carrying Amount Gross Carrying Amount
+Not Credit-Impaired
+Credit-Impaired
+ECL Allowance
+Risk class 1 - low risk
+Risk class 2 high risk
+-3
+AAA to BBB-
+4,846
+0
+-3
+BB to D
+0.0%
+29
+0
+0
+Risk class 3 - unrated
+NA
+-11.3%
+23
+-0.1%
+-3
+AR overdue 1 to 30 days
+611
+0
+-10
+-0.9%
+511
+71
+-5
+-1.8%
+380
+61
+-8
+-16.8%
+695
+4,426
+273
+-2.9%
+6,012
+405
+-186
+244/338
+For 2021, the movement in the ECL allowance for trade receivables and contract assets is as follows:
+Movement in ECL Allowance for Trade Receivables and Contract Assets
+€ millions
+Balance as at 1/1
+Net credit losses recognized
+Amounts written off
+Balance as at 12/31
+-163
+-1.0%
+-0.2%
+AR overdue more than 90 days
+57
+-7
+AR overdue 30 to 90 days
+-1.8%
+514
+48
+-10
+AR overdue more than 90 days
+-19.3%
+482
+240
+-139
+TOTAL
+TOTAL
+5,713
+351
+-175
+2020
+€ millions, unless otherwise stated
+Weighted Average Loss Rate
+Gross Carrying Amount
+Not Credit-Impaired
+Gross Carrying Amount
+Credit-Impaired
+ECL Allowance
+AR not due and due
+AR overdue 1 to 30 days
+AR overdue 30 to 90 days
+-2.9%
+Liquidity Risk
+0
+-10.3%
+8
+Equity Price Risk
+Equity Price Risk Factors
+We are exposed to equity price risk with regard to our investments in equity securities and our share-
+based payments plans.
+Equity Price Risk Management
+Our listed equity investments are monitored based on the current market value that is affected by the
+fluctuations in the volatile stock markets worldwide. Unlisted equity investments are monitored based
+on detailed financial information provided by the investees. The fair value of our listed equity
+investments depends on the equity prices, while the fair value of the unlisted equity investments is
+influenced by various unobservable input factors.
+We also monitor the exposure with regard to our share-based payment plans. To reduce resulting
+profit or loss volatility, we historically hedged certain cash flow exposures associated with these plans
+by purchasing derivative instruments, but we did not apply hedge accounting. This practice ceased in
+June 2021.
+Equity Price Exposure
+On December 31, 2021, our exposure from our investments in equity securities was €5,799 million
+(2020: €3,113 million; 2019: €1,996 million).
+For information about the exposure from our share-based payments plans, see Note (B.3).
+Equity Price Sensitivity
+Our sensitivity towards a fluctuation in equity prices is as follows:
+Equity Price Sensitivity
+6
+€ millions
+2020
+2019
+Investments in equity securities
+Increase in equity prices and respective
+unobservable inputs of 10% - increase of
+515
+259
+156
+financial income, net
+Decrease in equity prices and respective
+unobservable inputs of 10% decrease of
+financial income, net
+-515
+2021
+-259
+5
+-8
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Interest Rate Sensitivity
+€ millions
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Effects on Financial Income, Net
+2021
+Interest rates-25bps for U.S. dollar area/-20bps for euro area (2020: -50/-20bps for
+U.S. dollar/euro area; 2019: -50/-20bps for U.S. dollar/euro area)
+2020
+Derivatives held within a designated fair value hedge relationship
+Interest rates +75bps for U.S. dollar area/+20bps for euro area (2020: +50/+10bps for
+U.S. dollar/euro area; 2019: +50/+10bps for U.S. dollar/euro area)
+-70
+-41
+-41
+Interest rates -25bps for U.S. dollar area/-20bps for euro area (2020: -50/-20bps for
+U.S. dollar/euro area; 2019: -50 /-20bps for U.S. dollar/euro area)
+Variable-rate financing
+68
+79
+76
+Interest rates +75bps for U.S. dollar area/+20bps for euro area (2020: +50/+10bps for
+U.S. dollar/euro area; 2019: +50/+10bps for U.S. dollar/euro area)
+-10
+-6
+2019
+29
+-156
+242/338
+Cash, Time Deposits, and Debt Securities
+As at December 31, 2021, our exposure to credit risk from cash, time deposits, and debt securities
+I was as follows:
+Credit Risk Exposure from Cash, Time Deposits, and Debt Securities
+2021
+€ millions, unless otherwise stated
+Equivalent to External
+Weighted Average
+Rating
+Loss Rate
+Gross Carrying
+Amount Not Credit-
+Impaired
+Gross Carrying
+Amount Credit-
+Impaired
+ECL Allowance
+Credit Risk Exposure
+Risk class 2 high risk
+Total
+AAA to BBB-
+-0.0%
+6,864
+0
+-3
+BB to D
+0.0%
+37
+0
+0
+NA
+Risk class 3 - unrated
+241/338
+The impact of default on our trade receivables from individual customers is mitigated by our large
+customer base and its distribution across many different industries, company sizes, and countries
+worldwide. For more information about our trade receivables, see Note (A.2).
+The default risk of our trade receivables is managed separately, mainly based on assessing the
+creditworthiness of customers through external ratings and on our past experience with the customers
+concerned. Based on this assessment, individual credit limits are established for each customer and
+deviations from such credit limits need to be approved by management.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Credit Risk
+Management Report
+ΝΑ
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Credit Risk Factors
+To reduce the credit risk in investments, we arrange to receive rights to collateral for certain investing
+activities in the full amount of the investment volume, which we would be allowed to make use of only
+in the case of default of the counterparty to the investment. In the absence of other significant
+agreements to reduce our credit risk exposure, the total amounts recognized as cash and cash
+equivalents, current investments, loans, and other financial receivables, trade receivables, and
+derivative financial assets represent our maximum exposure to credit risks, except for the agreements
+mentioned above.
+We apply the simplified impairment approach using a provision matrix for all trade receivables and
+contract assets to take into account any lifetime expected credit losses already at initial recognition.
+For the purpose of the provision matrix, customers are clustered into different risk classes, mainly
+based on market information such as the country risk assessment of their country of origin. Loss rates
+used to reflect lifetime expected credit losses are determined using a roll-rate method based on the
+probability of a receivable progressing through different stages of being overdue and on our actual
+credit loss experience over the past years. These loss rates are enhanced by forward-looking
+information to reflect differences between economic conditions during the period over which the
+historical data has been collected, current conditions, and the expected changes in the economic
+conditions over the expected life of the receivables. Forward-looking information is based on changes
+in country risk ratings, or fluctuations in credit default swaps of countries of the customers we do
+business with. We continuously monitor outstanding receivables locally to assess whether there is
+objective evidence that our trade receivables and contract assets are credit-impaired. Evidence that
+trade receivables and contract assets are credit-impaired include, among the trade receivables being
+past due, information about significant financial difficulty of the customer or non-adherence to a
+payment plan. We consider receivables to be in default when the counterparty is unlikely to pay its
+obligations in full, However, a delay of payments (for example, more than 90 days past due) in the
+normal course of business alone does not necessarily indicate a customer default. We write off
+account balances either partially or in full if we judge that the likelihood of recovery is remote, which
+might be evidenced, for example, when bankruptcy proceedings for a customer are finalized or when
+all enforcement efforts have been exhausted.
+Credit Risk Management
+To mitigate the credit risk from our investing activities and derivative financial assets, we conduct all
+our activities only with approved major financial institutions and issuers that carry high external
+ratings, as required by our internal treasury guideline. Among its stipulations, the guideline requires
+that we invest only in assets from issuers with a minimum rating of at least “BBB flat." We only invest
+in issuers with a lower rating in exceptional cases. Such investments were not material in 2021 and
+2020. The weighted average rating of our financial assets is A. We pursue a policy of cautious
+investments characterized by predominantly current investments, standard investment instruments, as
+well as a wide portfolio diversification by doing business with a variety of counterparties.
+To further reduce our credit risk, we require collateral for certain investments in the full amount of the
+investment volume, which we would be allowed to make use of in the case of default of the
+counterparty to the investment. As such collateral, we only accept bonds with at least investment-
+grade rating level.
+In addition, the concentration of credit risk that exists when counterparties are involved in similar
+activities by instrument, sector, or geographic area is further mitigated by diversification of
+counterparties throughout the world and adherence to an internal limit system for each counterparty.
+This internal limit system stipulates that the business volume with individual counterparties is
+restricted to a defined limit that depends on the lowest official long-term credit rating available by at
+least one of the major rating agencies, the Tier 1 capital of the respective financial institution, or
+participation in the German Depositors' Guarantee Fund or similar protection schemes. We
+continuously monitor strict compliance with these counterparty limits. As the premium for credit
+default swaps mainly depends on market participants' assessments of the creditworthiness of a
+debtor, we also closely observe the development of credit default swap spreads in the market to
+evaluate probable risk developments and react in a timely manner to changes should these manifest.
+For cash at banks, time deposits, and debt securities such as acquired bonds or commercial paper,
+we apply the general impairment approach. As it is our policy to only invest in high-quality assets of
+issuers with a minimum rating of at least investment grade so as to minimize the risk of credit losses,
+we use the low credit risk exception. Thus, these assets are always allocated to stage 1 of the three-
+stage credit loss model and we record a loss allowance for an amount equal to 12-month expected
+credit losses. This loss allowance is calculated based on our exposure as at the respective reporting
+date, the loss given default for this exposure, and the credit default swap spread as a measure for the
+probability of default. To ensure that during their lifetime our investments always fulfill the requirement
+of being investment-grade, we monitor changes in credit risk by tracking published external credit
+ratings. Among other things, we consider cash at banks, time deposits, and debt securities to be in
+default when the counterparty is unlikely to pay its obligations in full, when there is information about
+a counterparty's financial difficulties, or in case of a drastic increase in the credit default swap spread
+of a counterparty for a prolonged time period while the overall market environment remains rather
+stable. Such financial assets are written off either partially or in full if the likelihood of recovery is
+considered remote, which might be evidenced, for example, by the bankruptcy of a counterparty of
+such financial assets.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Trade Receivables
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Cash at Banks, Time Deposits, and Debt Securities
+Category
+2021
+-186
+-919
+-141
+Cash inflows
+885
+139
+Interest rate derivatives designated as hedging instruments
+-49
+0
+Cash outflows
+-48
+-476
+Cash inflows
+Cash outflows
+60
+Total of derivative financial liabilities
+-142
+-76
+-67
+-63
+-62
+-7
+Derivative financial assets
+Currency derivatives not designated as hedging instruments
+45
+38
+Cash outflows
+421
+-2,878
+-1
+Currency derivatives designated as hedging instruments
+Contractual Maturities of Derivative Financial Liabilities and Financial Assets
+€ millions
+Carrying
+Amount
+Contractual Cash Flows
+Carrying
+Amount
+Contractual Cash Flows
+12/31/2021
+2022
+Thereafter
+12/31/2020
+2021 Thereafter
+Derivative financial liabilities and assets
+-31
+Derivative financial liabilities
+-62
+-61
+Cash outflows
+-2,381
+-12
+-2,902
+-7
+Cash inflows
+2,327
+0
+2,842
+0
+Currency derivatives not designated as hedging instruments
+Additional
+Information
+-2,452
+2,923
+Total of derivative financial liabilities and assets
+-89
+-25
+-65
+95
+6
+90
+246/338
+(F.2)
+Fair Value Disclosures on Financial Instruments
+Level Transfers
+It is our policy that transfers between the different levels of the fair value hierarchy are deemed to
+have occurred at the beginning of the period of the event or change in circumstances that caused the
+transfer.
+97
+Fair Value of Financial Instruments
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
+€ millions
+Assets
+12/31/2021
+Measurement Categories
+We use various types of financial instruments in the ordinary course of business, which are classified
+as either amortized cost (AC) or fair value through profit or loss (FVTPL). For those financial
+instruments measured at fair value or for which fair value must be disclosed, we have categorized the
+financial instruments into a three-level fair value hierarchy depending on the inputs used to determine
+fair value and their significance for the valuation techniques.
+Cash inflows
+68
+2
+2,493
+Currency derivatives designated as hedging instruments
+1
+7
+Cash outflows
+-136
+-291
+Cash inflows
+137
+297
+Interest rate derivatives designated as hedging instruments
+7
+158
+114
+-4
+-4
+-48
+-398
+Cash inflows
+9
+6
+69
+495
+Total of derivative financial assets
+53
+51
+Cash outflows
+2020
+Sustainability
+Combined Group
+Management Report
+12/31/2021
+2022
+2023
+2024
+2025
+2026
+Thereafter
+Non-derivative financial liabilities
+Trade payables
+-1,089
+-1,089
+0
+Contractual Cash Flows
+0
+0
+0
+Lease liabilities
+-2,143
+-448
+-338
+-263
+-208
+-184
+-934
+Other financial liabilities
+-13,285
+0
+-4,084
+Carrying
+Amount
+Contractual Maturities of Non-Derivative Financial Liabilities
+-131
+-87
+-97
+98
+42
+-175
+-186
+Liquidity Risk Factors
+We are exposed to liquidity risk from our obligations towards suppliers, employees, and financial
+institutions.
+Liquidity Risk Management
+Our liquidity is managed by our global treasury department with the primary aim of maintaining
+liquidity at a level that is adequate to meet our financial obligations.
+Generally, our primary source of liquidity is funds generated from our business operations. Our global
+treasury department manages liquidity centrally for all subsidiaries. Where possible, we pool their
+€ millions
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+cash surplus so that we can use liquidity centrally for our business operations, for subsidiaries' funding
+requirements, or to invest any net surplus in the market. With this strategy, we seek to optimize yields,
+while ensuring liquidity, by investing only with counterparties and issuers of high credit quality, as
+explained before. Hence, high levels of liquid assets and marketable securities provide a strategic
+reserve, helping keep SAP flexible, sound, and independent.
+Apart from effective working capital and cash management, we have reduced the liquidity risk
+inherent in managing our day-to-day operations and meeting our financing responsibilities by
+arranging an adequate volume of available credit facilities with various financial institutions on which
+we can draw if necessary.
+In order to retain high financial flexibility, in 2017, SAP SE entered into a €2.5 billion syndicated credit
+facility agreement with a term until 2024. The use of the facility is not restricted by any financial
+covenants. Borrowings under the facility bear interest of EURIBOR or LIBOR for the respective
+currency plus a margin of 17bps. We are also required to pay a commitment fee of 5.95bps per
+annum on the unused available credit. We have not drawn on the facility.
+In September 2019, we initiated a commercial paper program (Commercial Paper, or CP). As at
+December 31, 2021, we had €930 million of CP outstanding with maturities generally less than six
+months (2020: €930 million).
+Additionally, as at December 31, 2021 and 2020, the Group had available lines of credit totaling
+€346 million and €372 million, respectively. There were immaterial borrowings outstanding under
+these lines of credit in all years presented.
+Liquidity Risk Exposure
+The table below is an analysis of the remaining contractual maturities of all our financial liabilities held
+as at December 31, 2021. Financial liabilities for which repayment can be requested by the contract
+partner at any time are assigned to the earliest possible period. Variable interest payments were
+calculated using the latest relevant interest rate fixed as at December 31, 2021. As we generally settle
+our derivative contracts gross, we show the pay and receive legs separately for all our currency and
+interest rate derivatives, whether or not the fair value of the derivative is negative. The cash outflows
+for the currency derivatives are translated using the applicable spot rate.
+SAP
+Consolidated Financial Further Information on
+Statements IFRS
+-1,695
+-936
+-426
+-359
+-262
+-218
+-165
+-931
+Other financial liabilities
+-13,770
+-1,982
+-2,640
+-1,700
+-1,211
+-2,120
+-918
+-16,904
+-3,422
+-2,999
+-1,962
+-1,429
+-1,083
+-5,933
+-6,864
+245/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Total of non-derivative financial liabilities
+-1,228
+Lease liabilities
+0
+Total of non-derivative financial liabilities
+-16,517
+-5,621
+-2,033
+-1,491
+-1,144
+-1,165
+-1,349
+-4,773
+-5,707
+Carrying
+Contractual Cash Flows
+Amount
+€ millions
+0
+12/31/2020
+2022
+2023
+2024
+2025
+Thereafter
+Non-derivative financial liabilities
+Trade payables
+-1,014
+-1,014
+0
+0
+0
+2021
+250/338
+FX forward contracts
+1,633
+To Our
+SAP Integrated Report 2021
+SAP
+Following comprehensive investigations, SAP entered into a non-prosecution agreement with the
+U.S. DOJ and mutual settlement agreements with the BIS and OFAC in April 2021. Among other
+things, the settlement agreements require SAP to conduct internal audits of its compliance with
+U.S. export control laws and regulations and produce audit reports for a period of three years. In
+addition, SAP paid non-material monetary penalties in May 2021.
+Furthermore, SAP voluntarily self-disclosed potential export control and economic sanctions violations
+to the U.S. DOJ and the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) in
+September 2017. At the same time, SAP provided notification to the U.S. SEC and responded to a
+U.S. SEC comment letter on export restriction matters in October 2017. SAP also provided disclosure
+to the U.S. Department of Commerce's Bureau of Industry and Security (BIS) based on the same
+alleged facts.
+For the reasons outlined above, it is impossible at this point in time to determine whether the potential
+anti-bribery law violations represent present obligations of SAP and, if so, to reliably estimate the
+amount of these obligations. We recognized no material provisions for these potential violations in our
+consolidated financial statements 2021. It is also not practicable to estimate the financial effect of any
+contingent liabilities that may result from these potential violations.
+The alleged conduct may result in monetary penalties or other sanctions under the FCPA and/or other
+anti-bribery laws. In addition, SAP's ability to conduct business in certain jurisdictions could be
+negatively impacted. The comprehensive and exhaustive investigations and the corresponding
+remediation activities are still ongoing. In South Africa, SAP is seeking resolution of pending civil
+claims relating to ongoing investigations. Considering the complexity of individual factors and the large
+number of open questions, it is not entirely possible at this point in time to assess the risk of a
+financial impact.
+SAP has received communications and whistleblower information alleging conduct that may violate
+anti-bribery laws in the United States (including the U.S. Foreign Corrupt Practices Act (FCPA)), and
+other countries. The Office of Ethics and Compliance (OEC) of SAP is conducting investigations with
+the assistance of an external law firm and voluntarily advised the U.S. Securities and Exchange
+Commission (U.S. SEC) and the U.S. Department of Justice (U.S. DOJ), as well as local authorities
+where potential violations are being investigated. The investigations and dialogue between SAP and
+the local authorities and the U.S. SEC and U.S. DOJ are ongoing.
+Anti-Bribery and Export Control Matters
+For more information about our income tax-related litigation, see Note (C.5).
+€195 million (2020: €154 million). We have not recorded a provision for these matters, as we believe
+that we will prevail.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Chief Financial Officer
+Luka Mucic
+Supervisory Board, Schaeffler AG, Herzogenaurach, Germany
+HR Strategy, Business Transformation, Leadership Development, Talent Development
+Chief People & Operating Officer, Labor Relations Director
+Sabine Bendiek (from January 1, 2021)
+Supervisory Board, adidas AG, Herzogenaurach, Germany
+Stakeholders
+Corporate Development and Strategy, Security and Secrecy, Compliance
+Christian Klein
+than subsidiaries of SAP, on December 31, 2021
+Memberships on supervisory boards and other comparable governing bodies of enterprises, other
+Executive Board
+(G.4) Board of Directors
+Information
+Additional
+Chief Executive Officer
+Global Finance and Administration including Investor Relations, Internal Audit, Data Protection &
+Privacy, Business Process Intelligence, Sustainability
+Combined Group
+SAP Integrated Report 2021
+SAP
+The outcome of litigation and claims is intrinsically subject to considerable uncertainty. Management's
+view of these matters may also change in the future. Actual outcomes of litigation and claims may
+differ from the assessments made by management in prior periods, which could result in a material
+impact on our business, financial position, profit, cash flows, or reputation. Most of the lawsuits and
+The policies outlined in Note (A.4) for customer-related provisions, which include provisions for
+customer-related litigation cases and claims, equally apply to our other litigation, claims, and legal
+contingencies disclosed in this Note.
+Uncertainty in Context of Legal Matters
+matters.
+This Note discloses information about intellectual property-related litigation and claims, tax-related
+litigation other than income tax-related litigation (see Note (C.5)), and anti-bribery and export control
+Other Litigation, Claims, and Legal Contingencies
+(G.3)
+Other tax liabilities primarily consist of VAT, payroll tax, sales tax, and withholding tax.
+12
+0
+14
+11
+0
+12
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+SAP
+254/338
+253/338
+We are subject to ongoing audits by domestic and foreign tax authorities. In respect of non-income
+taxes, we are involved in various proceedings with only a few foreign tax authorities regarding
+assessments and litigation matters on intercompany royalty payments and intercompany services. The
+total potential amount in dispute related to these matters for all applicable years is approximately
+Tax-Related Litigation
+In June 2018, Teradata Corporation, Teradata US, Inc. and Teradata Operations, Inc. (collectively
+“Teradata”) filed a civil lawsuit against SAP SE, SAP America, Inc., and SAP Labs, LLC in U.S. federal
+court in California. Teradata alleged that SAP misappropriated trade secrets of Teradata, infringed
+Teradata's copyrights (this claim was subsequently withdrawn by Teradata), and violated U.S. antitrust
+laws. Teradata sought unspecified monetary damages and injunctive relief. In 2019, SAP asserted
+patent infringement counterclaims against Teradata seeking monetary damages and injunctive relief.
+In 2020, Teradata initiated a second civil lawsuit against SAP asserting patent infringement, seeking
+monetary damages and injunctive relief; in February 2021, SAP filed patent infringement
+counterclaims against Teradata in this second U.S. lawsuit as well as a civil lawsuit against Teradata in
+Germany asserting patent infringement, seeking monetary damages and injunctive relief. Currently, all
+claims between the parties have been dismissed. Teradata has appealed the dismissal of its trade
+secret and antitrust claims; this appeal is expected to be completed by late 2023.
+Individual cases of intellectual property-related litigation and claims include the following:
+To Our
+Intellectual property-related litigation and claims are cases in which third parties have threatened or
+initiated litigation claiming that SAP violates one or more intellectual property rights that they possess.
+Such intellectual property rights may include patents, copyrights, and other similar rights.
+Contingent liabilities exist from intellectual property-related litigation and claims for which no provision
+has been recognized. Generally, it is not practicable to estimate the financial impact of these
+contingent liabilities due to the uncertainties around the litigation and claims, as outlined above. The
+total amounts claimed by plaintiffs in those intellectual property-related lawsuits or claims in which a
+claim has been quantified were not material to us as at December 31, 2021 and 2020. Based on our
+past experience, most of the intellectual property-related litigation and claims tend to be either
+dismissed in court or settled out of court for amounts significantly below the originally claimed
+amounts. We currently believe that resolving the intellectual property-related claims and lawsuits
+pending as at December 31, 2021, will neither individually nor in the aggregate have a material
+adverse effect on our business, financial position, profit, or cash flows.
+Among the claims and lawsuits disclosed in this Note are the following classes:
+We are subject to a variety of claims and lawsuits that arise from time to time in the ordinary course of
+our business, including proceedings and claims that relate to companies we have acquired. We will
+continue to vigorously defend against all claims and lawsuits against us. The provisions recorded for
+these claims and lawsuits as at December 31, 2021, are neither individually nor in the aggregate
+material to SAP.
+Further, the expected timing of any resulting outflows of economic benefits from these lawsuits and
+claims is typically uncertain and not estimable, as it depends generally on the duration of the legal
+proceedings and settlement negotiations required to resolve them.
+claims are of a very individual nature and claims are either not quantified by the claimants or the
+claim amounts quantified are, based on historical evidence, not expected to be a good proxy for the
+expenditure that would be required to resolve the case concerned. The specifics of the jurisdictions
+where most of the claims are located further impair the predictability of the outcome of the cases.
+Therefore, it is typically not practicable to reliably estimate the financial effect that these lawsuits and
+claims would have if SAP were to incur expenditure for these cases.
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Intellectual Property-Related Litigation and Claims
+5,413
+Supervisory Board, HeidelbergCement AG, Heidelberg, Germany
+Chief Technology Officer
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Member of the SAP SE Works Council (Europe)
+Chief Operations Expert
+Monika Kovachka-Dimitrova 1, 2, 4, 7
+Chairperson of the Spokespersons' Committee of Senior Managers of SAP SE
+Vice President, Head of SAP Alumni Relations
+Deputy Chairperson (until December 31, 2021)
+Margret Klein-Magar 1, 2, 3, 8
+Supervisory Board, ING-DiBa AG, Frankfurt, Germany
+Supervisory Board, Ottobock SE & Co. KGaA, Duderstadt, Germany
+Additional
+Information
+Peter Lengler (from August 10, 2021)¹, ³,
+3,7
+Board of Directors, 2121 Atelier, Inc., Brooklyn, NY, United States (from November 18, 2021)
+Board of Directors, Sweep SAS, Paris, France (from December 14, 2021)
+Board of Directors, Kili Technology SAS, Paris, France (from July 26, 2021)
+Board of Directors, Traefik Labs SAS, Lyon, France
+Board of Directors, Toucan Toco SAS, Paris, France
+Board of Directors, Citymapper Ltd., London, United Kingdom
+Board of Directors, Tim Talent SAS, Paris, France
+Board of Directors, Peakon Aps, Copenhagen, Denmark (until March 9, 2021)
+Professor for Design Research and Head of the Design Research Lab, Berlin University of the Arts,
+Berlin, Germany
+Board of Directors, Virtuo Technologies, Paris, France
+Board of Directors, Dashlane, Inc., New York, NY, United States
+Board of Directors, Vestiaire Collective SA, Levallois-Perret, France (until April 2, 2021)
+Board of Directors, nlyte Software Ltd., London, United Kingdom (until October 5, 2021)
+Managing Partner Balderton Capital, London, United Kingdom
+Bernard Liautaud², 4
+Member of the SAP Germany SE & Co. KG Works Council and Member of the SAP SE Works
+Council (Europe)
+Value Advisor Expert
+Board of Directors, Qubit Digital Ltd., London, United Kingdom (until October 10, 2021)
+Board of Directors, Aircall.io, New York City, NY, United States
+Juergen Mueller
+Prof. Dr. Gesche Joost4, 7
+Chief Executive Officer and Member of the Board of Directors, Zoox, Inc., Foster City, CA, United
+States
+SAP
+256/338
+255/338
+Global Marketing, Corporate Communications, Government Affairs
+Chief Marketing and Solutions Officer
+Julia White (from March 1, 2021)
+Global Responsibility for all SAP Business Software Applications, Cloud Operations and Support,
+Cross-Development Functions, SAP Enterprise Adoption Organization
+SAP Product Engineering
+Thomas Saueressig
+Global Field Organization including Sales, Services, Partner Ecosystem, and Customer Engagement
+Customer Success
+Scott Russell (from February 1, 2021)
+Supervisory Board, DFKI GmbH, Kaiserslautern, Germany
+Technology and Innovation Strategy, SAP HANA Database, SAP Business Technology Platform,
+Analytics, Cloud Infrastructure
+Technology & Innovation
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Aicha Evans², 4, 6, 7
+Member of the SAP Germany SE & Co. KG Works Council
+Industry Advisor Expert
+Manuela Asche-Holstein (from July 8, 2021)
+Supervisory Board, Rhein-Neckar Loewen GmbH, Kronau, Germany
+Head of Global Sponsorships
+Deputy Chairperson (from January 1, 2022)
+Board of Directors, Joby Aviation LLC, Santa Cruz, CA, United States
+Lars Lamadé1, 2, 4, 8
+Prof. Dr. h.c. mult. Hasso Plattner 2, 4, 6, 8
+Memberships on supervisory boards and other comparable governing bodies of enterprises, other
+than subsidiaries of SAP, on December 31, 2021
+Supervisory Board
+Adaire Fox-Martin (until June 30, 2021, member of the Executive Board until January 31, 2021)
+Executive Board Members Who Left During 2021
+Information
+Additional
+Chairperson
+Dr. Qi Lu4, 7, 8
+770
+6,063
+-455
+0
+0
+1,896
+2,508
+2020
+2021
+Included in financial income, net
+Gains/losses
+Sales
+Purchases
+Out of Level 3
+Into Level 3
+Transfers
+1/1
+-201
+1,076
+728
+-852
+Prepaid expenses
+€ millions
+251/338
+Transfers out of Level 3 are due to initial public offerings of the respective investees. Changing the
+unobservable inputs to reflect reasonably possible alternative assumptions would not have a material
+impact on the fair values of our unlisted equity securities held as FVTPL as at the reporting date.
+376
+1,789
+Change in unrealized gains/losses in profit or loss for equity investments held at the
+end of the reporting period
+€ millions
+2,508
+12/31
+-183
+256
+Included in exchange differences in other comprehensive income
+501
+2,348
+-233
+4,881
+Other tax assets
+Reconciliation of Level 3 Fair Values
+Level 3 Fair Value Disclosures
+Significant Unobservable
+Inputs
+Determination of Fair Value/Valuation
+Technique
+Fair Value
+Hierarchy
+Туре
+Interrelationship Between
+Significant Unobservable Inputs
+and Fair Value Measurement
+Information
+Additional
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Interest rate swaps
+Level 2
+Discounted cash flow. Expected future
+cash flows are estimated based on
+forward interest rates from observable
+yield curves and contract interest rates,
+discounted at a rate that reflects the
+credit risk of the counterparty.
+ΝΑ
+Transfers of equity securities from Level 2 to Level 1, which occurred because disposal restrictions
+lapsed and deducting a discount for such restriction was no longer necessary, were €1,030 million in
+2021 (2020: €91 million), while transfers from Level 1 to Level 2 did not occur at all.
+Transfers Between Levels 1 and 2
+For other non-derivative financial assets/liabilities and variable rate financial debt, it is assumed that
+their carrying value reasonably approximates their fair values.
+Future cash outflows for fixed interest and principal are
+discounted over the term of the respective contracts using
+the market interest rates as at the reporting date.
+Level 2
+Fixed-rate private placements/ loans (financial
+liabilities)
+Discounted cash flows
+The following table shows the reconciliation of fair values from the opening to the closing balances for
+our unlisted equity securities and call options on equity shares classified as Level 3 fair values:
+Quoted prices in an active market
+Fixed-rate bonds (financial liabilities)
+Financial liabilities
+Determination of Fair Value/Valuation Technique
+Fair Value Hierarchy
+Туре
+Financial Instruments Not Measured at Fair Value
+ΝΑ
+Level 1
+4,643
+Total
+Other non-financial assets
+53
+26
+11
+49
+3,247
+1,926
+1,321
+4,261
+2,628
+943
+239
+704
+1,102
+295
+807
+12
+29
+Prepaid expenses primarily consist of prepayments for hyperscalers, support services, and software
+royalties. Other tax assets primarily consist of value-added tax (VAT).
+(G.2) Other Tax Liabilities
+860
+5,203
+632
+0
+632
+646
+0
+261
+646
+Non-Current
+Current
+Total
+Non-Current
+Current
+2020
+2021
+Total
+SAP
+52
+272
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+252/338
+non-financial liabilities
+Other tax liabilities as % of 4 Other
+Other non-financial liabilities
+Other tax liabilities
+€ millions
+assets as % of 44 Other non-
+financial assets
+Prepaid expenses and other tax
+Information
+Section G - Other Disclosures
+This section provides additional disclosures on miscellaneous topics, including information pertaining
+to the Executive Board, the Supervisory Board, related party transactions, and other corporate
+governance topics.
+(G.1) Prepaid Expenses and Other Tax Assets
+53
+219
+682
+187
+495
+830
+242
+209
+588
+Non-Current
+Current
+Total
+Non-Current
+Current
+2020
+2021
+Total
+CEO, MiraclePlus Ltd., Beijing, China
+Combined Group
+Chairperson of the Board of Directors, Pine Field Holding Limited, Cayman Islands
+DBO 12/31
+Annual pension entitlement
+2021
+2020
+2019
+3,435
+3,520
+5,497
+€ thousands
+108
+215
+The total annual compensation of the Supervisory Board members is as follows:
+Supervisory Board Compensation
+€ thousands
+Total compensation
+Thereof fixed compensation
+Thereof committee remuneration
+2021
+98
+2020
+Retirement Pension Plan for Executive Board Members
+44,447
+2,056
+3
+1
+769
+50,574
+28,677
+52,596
+Share-Based Payment for Executive Board Members
+The defined benefit obligation (DBO) for pensions to Executive Board members and the annual
+pension entitlement of the members of the Executive Board on reaching age 62 based on
+entitlements from performance-based and salary-linked plans were as follows:
+Number of share units granted
+2021
+2020
+2019
+238,428
+201,690
+344,047
+6,356
+11,173
+Total expense in € thousands
+487
+2019
+3,755
+2019
+Payments
+2,159
+3,010
+2,081
+DBO 12/31
+42,313
+44,043
+2020
+44,306
+(G.6)
+Related Party Transactions Other Than Board
+Compensation
+Certain Supervisory Board members of SAP SE currently hold, or held within the last year, positions of
+significant responsibility with other entities. We have relationships with certain of these entities in the
+ordinary course of business, whereby we buy and sell products, assets, and services at prices
+believed to be consistent with those negotiated at arm's length between unrelated parties.
+Companies controlled by Hasso Plattner, Chairperson of the Supervisory Board of SAP SE and Chief
+Software Advisor of SAP, engaged in the following transactions with SAP: providing consulting services
+to SAP, receiving sport sponsoring from SAP, and making purchases of SAP products and services.
+Occasionally, members of the Executive Board of SAP SE obtain services from SAP for which they pay
+a consideration consistent with those negotiated at arm's length between unrelated parties.
+All amounts related to the abovementioned transactions were immaterial to SAP in all periods
+presented.
+In total, we sold products and services to companies controlled by members of the Supervisory Board
+in the amount of €2 million (2020: €3 million), we bought products and services from such companies
+in the amount of €4 million (2020: €2 million), and we provided sponsoring and other financial support
+to such companies in the amount of €3 million (2020: €4 million). Outstanding balances at year end
+from transactions with such companies were €0 million (2020: €0 million) for amounts owed to such
+companies and €0 million (2020: €0 million) for amounts owed by such companies. All of these
+balances are unsecured and interest-free and settlement is expected to occur in cash. Commitments
+(the longest of which is for 2 years) made by us to purchase further goods or services from these
+companies and to provide further sponsoring and other financial support amount to €6 million as at
+December 31, 2021 (2020: €10 million).
+In total, we sold services to members of the Executive Board and the Supervisory Board in the
+amount of €0 million (2020: €0 million), and we received services from members of the Supervisory
+Board (including services from employee representatives on the Supervisory Board in their capacity
+as employees of SAP) in the amount of €2 million (2020: €2 million). Amounts owed, but not yet paid,
+to Supervisory Board members from these transactions were €0 million as at December 31, 2021
+(2020: €0 million). All of these balances are unsecured and interest-free and settlement is expected to
+occur in cash.
+For information about the compensation of our Executive Board and Supervisory Board members, see
+Note (G.5).
+Further, we have relationships to associated entities. In total, we sold products and services to these
+entities in the amount of €6 million (2020: €2 million), we bought products and services from such
+Board of Directors, Pinduoduo Inc., Shanghai, China
+SAP did not grant any compensation advance or credit to, or enter into any commitment for the
+benefit of, any member of the Executive Board or Supervisory Board in 2021, 2020, or 2019.
+Detailed information about the different elements of the compensation is disclosed in the
+Compensation Report and in the Annual Report on Form 20-F, both of which are available on SAP's
+Web site.
+3,856
+2021
+Payments to/DBO for Former Executive Board Members
+3,770
+3,176
+3,149
+3,218
+680
+606
+553
+The Supervisory Board members do not receive any share-based payment for their services. As far as
+members who are employee representatives on the Supervisory Board receive share-based payment,
+€ thousands
+259/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Information
+such compensation is for their services as employees only and is unrelated to their status as
+members of the Supervisory Board.
+260/338
+461
+Additional
+488
+Member of the SAP SE Works Council and Member of the SAP SE Works Council (Europe)
+Helmut Stengele (from October 29, 2021)
+On Early Retirement
+Dr. Rouven Westphal (from May 12, 2021)³, 5,
+5,6
+Member of the Executive Board of the Hasso Plattner Foundation, Potsdam, Germany, and Managing
+Director of the General Partner of HPC Germany GmbH & Co. KG, Potsdam, Germany
+Advisory Board, Sharks Sports & Entertainment LLC, San José, CA, United States
+Dr. Gunnar Wiedenfels³,5
+Senior Operations Manager
+Chief Financial Officer, Discovery, Inc., New York, NY, United States
+Board of Directors, OWN LLC, West Hollywood, CA, United States
+James Wright¹, 3, 4, 5
+Chairperson of the SAP SE Works Council (Europe)
+Supervisory Board Members Who Left During 2021
+Pekka Ala-Pietilä (until May 12, 2021)
+Panagiotis Bissiritsas (until July 7, 2021)
+Christa Vergien-Knopf (until August 9, 2021)
+Ralf Zeiger (until October 28, 2021)
+Board of Directors, Motor Trend Group, LLC, El Segundo, CA, United States (until July 1, 2021)
+Appointed by the SAP SE Works Council (Europe)
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Chairperson of the Board of Directors, Pine Field Holding Limited, Hong Kong, China
+Chairperson of the Board of Directors, Pine Field Ltd., Beijing, China
+2,825
+Gerhard Oswald 5,8
+Managing Director of Oswald Consulting GmbH, Walldorf, Germany
+Advisory Board, TSG 1899 Hoffenheim Fußball-Spielbetriebs GmbH, Sinsheim, Germany
+Christine Regitz 1, 2, 4, 5, 8
+Vice President, User Experience
+Vice President, Head of Women in Tech@SAP
+Additional
+Dr. Friederike Rotsch 2, 3, 6, 7, 8
+257/338
+258/338
+SAP
+To Our
+Stakeholders
+Combined Group
+Heike Steck¹, 4, 5, 7, 8
+Management Report
+Group General Counsel and Head of Group Legal & Compliance, Merck KGaA, Darmstadt, Germany
+2 Member of the Company's Personnel and Governance Committee
+SAP Integrated Report 2021
+4 Member of the Company's Technology and Strategy Committee
+Subtotal
+Post-employment benefits
+Thereof defined-benefit
+Thereof defined-contribution
+Total
+2021
+2020
+2019
+Share-based payment
+25,015
+25,095
+23,095
+32,393
+50,110
+28,189
+3 Member of the Company's Audit and Compliance Committee
+464
+49,771
+17,378
+Short-term employee benefits
+5,094
+Executive Board Compensation
+6 Member of the Company's Nomination Committee
+€ thousands
+5 Member of the Company's Finance and Investment Committee
+8 Member of the Company's China Strategy Committee
+SAP
+SAP Integrated Report 2021
+7 Member of the Company's People and Culture Committee
+Combined Group
+Stakeholders
+Management Report
+To Our
+Additional
+Information
+(G.5) Executive and Supervisory Board Compensation
+Accounting Policy
+In the table "Share-Based Payment for Executive Board Members," the share-based payment expense
+is the amount recorded in profit or loss under IFRS 2 (Share-Based Payment) in the respective period.
+The total compensation of the Executive Board members for each of the years 2021, 2020, and 2019
+was as follows:
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+The share-based payment amounts disclosed below in the table “Executive Board Compensation" are
+based on the grant date fair value of the share units in the respective year. In 2021 and 2020, share
+units were issued to the Executive Board members under the LTI 2020 and in 2019 under the
+LTI 2016 Plan.
+100
+SAP East Africa Limited, Nairobi, Kenya
+100
+SAP Dritte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+100
+100
+16
+100
+16
+100
+SAP Danmark A/S, Copenhagen, Denmark
+100
+100
+SAP Egypt LLC, Cairo, Egypt
+100
+16
+SAP EMEA Inside Sales S.L., Madrid, Spain
+100
+SAP Erste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+8,9
+SAP Estonia OÜ, Tallinn, Estonia
+100
+SAP Financial, Inc., Toronto, Canada
+16
+100
+100
+SAP Finland Oy, Espoo, Finland
+16
+100
+SAP Beteiligungs GmbH, Walldorf, Germany
+SAP Cyprus Limited, Nicosia, Cyprus
+LLC "SAP Labs", Moscow, Russia
+LLC "Emarsys", Moscow, Russia
+SAP Foreign Holdings GmbH, Walldorf, Germany
+Learning Seat Pty. Ltd., Sydney, Australia
+Learning Seat Holdings Pty. Ltd., Sydney, Australia
+Learning Seat Group Pty. Ltd., Sydney, Australia
+Learning Seat Borrowings Pty. Ltd., Sydney, Australia
+10
+100
+Learning Heroes Ltd., Feltham, United Kingdom
+Additional
+Information
+Name and Location of Company
+SAP Belgium – Systems, Applications and Products S.A., Brussels, Belgium
+Ownership
+Footnote
+100
+100
+SAP Bulgaria EOOD, Sofia, Bulgaria
+100
+SAP Business Services Center Nederland B.V., 's-Hertogenbosch, the Netherlands
+100
+11
+SAP Chile Limitada, Santiago de Chile, Chile
+SAP CIS, LLC, Moscow, Russia
+100
+100
+SAP Colombia S.A.S., Bogotá, Colombia
+SAP Costa Rica, S.A., San José, Costa Rica
+SAP ČR, spol. s r.o., Prague, Czech Republic
+SAP d.o.o., Zagreb, Croatia
+100
+49
+100
+SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia
+100
+SAP MENA FZ L.L.C., Dubai, United Arab Emirates
+100
+16
+SAP Middle East and North Africa L.L.C., Dubai, United Arab Emirates
+5, 16
+SAP Nederland Holding B.V., 's-Hertogenbosch, the Netherlands
+100
+11
+SAP New Zealand Limited, Auckland, New Zealand
+100
+SAP Norge AS, Oslo, Norway
+100
+SAP North West Africa Ltd, Casablanca, Morocco
+100
+16
+267/338
+268/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+LLC "SAP Ukraine", Kiev, Ukraine
+Further Information on
+Sustainability
+100
+SAP Latvia SIA, Riga, Latvia
+100
+SAP Labs Korea, Inc., Seoul, South Korea
+SAP Global Marketing, Inc., New York, NY, United States
+100
+SAP Hellas Single Member S.A., Athens, Greece
+SAP Hong Kong Co., Ltd., Hong Kong, China
+SAP Hosting Beteiligungs GmbH, St. Leon-Rot, Germany
+SAP India (Holding) Pte. Ltd., Singapore, Singapore
+SAP International Panama, S.A., Panama City, Panama
+SAP International, Inc., Miami, FL, United States
+100
+100
+16
+100
+8,9
+100
+100
+100
+SAP Investments, Inc., Wilmington, DE, United States
+100
+SAP Ireland Limited, Dublin, Ireland
+100
+12
+SAP Ireland US - Financial Services Designated Activity Company, Dublin, Ireland
+100
+SAP Israel Ltd., Ra'anana, Israel
+100
+16
+SAP Korea Ltd., Seoul, South Korea
+100
+SAP Labs France S.A.S., Mougins, France
+100
+SAP Labs Israel Ltd., Ra'anana, Israel
+100
+SAP France Holding S.A., Levallois-Perret, France
+100
+Qualtrics India Private Limited, Mumbai, India
+100
+Qualtrics Korea, LLC, Seoul, South Korea
+100
+Qualtrics Japan LLC, Tokyo, Japan
+4
+100
+Qualtrics Ireland Limited, Dublin, Ireland
+74
+Qualtrics International Inc., Wilmington, DE, United States
+4
+100
+4
+100
+Qualtrics Hong Kong Limited, Hong Kong, China
+100
+100
+100
+Quadrem Peru S.A.C., Lima, Peru
+100
+Quadrem Overseas Cooperatief U.A., 's-Hertogenbosch, the Netherlands
+11
+100
+Quadrem Netherlands B.V., 's-Hertogenbosch, the Netherlands
+100
+Quadrem International Ltd., Hamilton, Bermuda
+100
+Quadrem Chile Ltda., Santiago de Chile, Chile
+100
+100
+Qualtrics Holdings Inc., Wilmington, DE, United States
+100
+4
+100
+Additional
+Information
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+100
+16
+100
+SAP Andina y del Caribe C.A., Caracas, Venezuela
+SAP AZ LLC, Baku, Azerbaijan
+100
+Ariba Technologies India Private Limited, Bangalore, India
+100
+Further Information on
+Sustainability
+100
+4
+100
+4
+100
+100
+4
+100
+4
+100
+Qualtrics Netherlands B.V., Amsterdam, the Netherlands
+Qualtrics Provo HQ, LLC, Wilmington, DE, United States
+Qualtrics Sweden AB, Stockholm, Sweden
+Qualtrics Switzerland AG, Zurich, Switzerland
+Qualtrics Technologies Brasil Ltda., São Paulo, Brazil
+Qualtrics Technologies Spain, S.L.U., Madrid, Spain
+QUL Technologies Limited, London, United Kingdom
+SAP (Beijing) Software System Co., Ltd., Beijing, China
+SAP (China) Holding Co., Ltd., Beijing, China
+4
+100
+100
+100
+100
+Outerjoin, Inc., San Ramon, CA, United States
+OrientDB Limited, Feltham, United Kingdom
+Nihon Ariba K.K., Tokyo, Japan
+New Debden Merger Sub II LLC, Wilmington, DE, United States
+Market Metrix, A Clarabridge Company, LLC, Wilmington, DE, United States
+Market Metrix Singapore Pte. Ltd., Singapore, Singapore
+Market Metrix Iberia S.L., Barcelona, Spain
+Name and Location of Company
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+OutlookSoft Deutschland GmbH, Walldorf, Germany
+Stakeholders
+SAP Integrated Report 2021
+SAP
+266/338
+265/338
+100
+Loyalsys Technologies Israel Ltd., Tel Aviv, Israel
+100
+Loyalsys GmbH, Vienna, Austria
+16
+100
+100
+100
+100
+To Our
+Plat.One Inc., Newtown Square, PA, United States
+Plat.One Lab S.r.l., Genoa, Italy
+PT SAP Indonesia, Jakarta, Indonesia
+100
+100
+100
+100
+99
+100
+100
+8,9
+100
+100
+10
+100
+100
+100
+4
+100
+4
+100
+4
+100
+Footnote
+Ownership
+Quadrem Brazil Ltda., Rio de Janeiro, Brazil
+Quadrem Africa Pty. Ltd., Johannesburg, South Africa
+QSL Technologies Pte. Ltd., Singapore, Singapore
+QPL Technologies sp. z o.o., Kraków, Poland
+QIL Technologies Limited, Dublin, Ireland
+QAL Technologies Pty Ltd, Sydney, Australia
+QCL Techonologies Ltd., Toronto, Canada
+QDL Technologies GmbH, Munich, Germany
+QFL Technologies S.A.R.L., Paris, France
+Q (AGF2) Inc., Wilmington, DE, United States
+100
+Name and Location of Company
+€ thousands
+SAP Perú S.A.C., Lima, Peru
+Sybase International Holdings Corporation, LLC, San Ramon, CA, United States
+100
+Sybase, Inc., San Ramon, CA, United States
+100
+Systems Applications Products (Africa Region) Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products (Africa) Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products (South Africa) Proprietary Limited, Johannesburg, South Africa
+Systems Applications Products Nigeria Limited, Victoria Island, Nigeria
+Technology Management Associates Inc., Chantilly, VA, United States
+100
+100
+70
+16
+100
+16
+100
+Temkin Group, LLC, Wilmington, DE, United States
+100
+TM Property Holdings, LLC, Wilmington, DE, United States
+100
+100
+100
+TRX Europe Limited, Feltham, United Kingdom
+100
+TRX Technologies India Private Limited, Bangalore, India
+100
+TRX UK Limited, Feltham, United Kingdom
+TRX, Inc., Bellevue, WA, United States
+Usermind d.o.o Beograd, Belgrade, Serbia
+Usermind International, Inc., Seattle, WA, United States
+100
+10
+100
+TomorrowNow, Inc., Bryan, TX, United States
+100
+Sybase Iberia, S.L., Madrid, Spain
+45
+Signavio Schweiz GmbH, Zug, Switzerland
+Signavio Sweden AB, Stockholm, Sweden
+Signavio UK Ltd, Birmingham, United Kingdom
+Signavio, Inc., Burlington, VT, United States
+Statwing, LLC, Wilmington, DE, United States
+Success Factors (Philippines), Inc., Pasig City, Philippines
+SuccessFactors Cayman, Ltd., Grand Cayman, Cayman Islands
+SuccessFactors, Inc., Newtown Square, PA, United States
+SurveyVitals A Qualtrics Company, LLC, Wilmington, DE, United States
+Sybase Angola, LDA, Luanda, Angola
+100
+4
+100
+15
+4
+4
+100
+4
+100
+4
+100
+100
+16
+100
+100
+100
+4
+100
+100
+4
+100
+4
+Other Equity Investments
+Name and Location of Company
+Joint Arrangements and Investments in Associates
+China DataCom Corporation Limited, Guangzhou, China
+Procurement Negócios Eletrônicos S/A, Rio de Janeiro, Brazil
+SAP Fioneer GmbH, Walldorf, Germany
+Name and Location of Company
+Equity Investments with Ownership of at Least 5%
+83North IV, L.P., Hertzalia, Israel
+Adverity GmbH, Vienna, Austria
+Alation, Inc., Redwood City, CA, United States
+Alchemist Accelerator Fund I LLC, San Francisco, CA, United States
+Aleph-Bigg SPV, L.P., Grand Cayman, Cayman Islands
+All Tax Platform Solucoes Tributarias S.A., São Paulo, Brazil
+Amplify Partners II L.P., Menlo Park, CA, United States
+17 Dissolved on January 7, 2022, by merger into SAP SE.
+Amplify Partners III, L.P., Menlo Park, CA, United States
+Amplify Partners Select Fund IV, L.P., Menlo Park, CA, United States
+Amplify Partners, L.P., Menlo Park, CA, United States
+BGS Holdings, Inc., Austin, TX, United States
+Bitonic Technology Labs, Inc., Karnataka, India
+Blue Yard Capital 1 Alternative GmbH & Co. KG, Berlin, Germany
+Blue Yard Capital | GmbH & Co. KG, Berlin, Germany
+Blue Yard Crytpo 1, L.P., Hot Springs Village, AR, United States
+Boldstart Ventures V, L.P., New York, NY, United States
+Boldstart Ventures VI, L.P., New York, NY, United States
+Brightfield Holdings, Inc., New York, NY, United States
+Ownership
+%
+28
+17
+20
+Amplify Partners IV, L.P., Menlo Park, CA, United States
+15 Pursuant to Angola Tax Law and Presidential Decree no. 147/13 of October 1, 2013, the entity does not qualify as being a Large
+Taxpayer and therefore is exempt from having its financial statements audited in respect of its financial year ended December 31, 2021.
+16 Entity with support letter issued by SAP SE.
+14 Pursuant to section 211 (3) of the New Zealand Companies Act 1993 and section 45 (2) of the Financial Reporting Act 2013, the entity
+had approved exclusions and is not required to lodge audited financial statements in respect of its financial year ended
+September 30, 2021.
+13 Pursuant to article 727a, paragraph 2 of the Swiss Code of Obligations, the entity is exempt from having its financial statements audited
+in respect of its financial year ended December 31, 2021, or in respect of its financial year ended September 30, 2021, respectively.
+Usermind International, LTD, Bristol, United Kingdom
+Usermind, Inc., Seattle, WA, United States
+Volume Integration, Inc., Reston, VA, United States
+100
+4
+100
+4
+100
+1 These figures are based on our local IFRS financial statements prior to eliminations resulting from consolidation and therefore do not
+reflect the contribution of these companies included in the Consolidated Financial Statements. The translation of the equity into Group
+currency is based on period-end closing exchange rates, and on average exchange rates for revenue and net income/loss.
+2 As at December 31, 2021, including managing directors, in FTE.
+3 Figures for profit/loss after tax and total equity pursuant to HGB, section 285 and section 313 are not disclosed if they are of minor
+significance for a fair presentation of the profitability, liquidity, capital resources, and financial position of SAP SE, pursuant to HGB,
+section 313 (2) sentence 3 no. 4 and section 286 (3) sentence 1 no. 1.
+4 Consolidated for the first time in 2021.
+5 Agreements with the other shareholders provide that SAP SE fully controls the entity.
+6 SAP SE has the following structured entities: SAP.io Fund, L.P., Sapphire Fund Investments II Holdings, LLC, Sapphire Fund Investments
+II, L.P., Sapphire Fund Investments III, L.P., Sapphire SAP HANA Fund of Funds, L.P., Sapphire Ventures Fund I, L.P., Sapphire Ventures
+Fund II, L.P., Sapphire Ventures Fund III, L.P., Sapphire Ventures Fund IV, L.P., Sapphire Ventures Fund V, L.P., Sapphire Ventures Fund
+269/338
+270/338
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+VI, L.P., SAPV (Mauritius). The results of operations of these entities are included in SAP's consolidated financial statements in accordance
+with IFRS 10 (Consolidated Financial Statements).
+7 Entity whose personally liable partner is SAP SE.
+8 Entity with (profit and) loss transfer agreement.
+9 Pursuant to HGB, section 264 (3) or section 264b, the subsidiary is exempt from applying certain legal requirements to their statutory
+stand-alone financial statements including the requirement to prepare notes to the financial statements and a review of operations, the
+requirement of independent audit, and the requirement of public disclosure.
+10 Pursuant to section 480 of the UK Companies Act 2006, the entity is exempt from having its financial statements audited on the grounds
+that the entity is entitled to the benefits from a dormant entity exemption in respect of its financial year ended December 31, 2021.
+11 Pursuant to article 2:403 of the Dutch Civil Code, the entity is exempt from applying certain legal requirements to their statutory stand-
+alone financial statements including the requirement to prepare the financial statements, the requirement of independent audit, and the
+requirement of public disclosure, on the basis that SAP SE has provided a guarantee of the entity's liabilities in respect of its financial year
+ended December 31, 2021, or in respect of its financial year ended September 30, 2021, respectively.
+12 Pursuant to Irish Companies Act 2014, chapter 16 of Part 6, section 365, the entity is exempt from having its financial statements
+audited on the grounds that the entity is entitled to the benefits from a dormant entity exemption in respect of its financial year ended
+December 31, 2021.
+Signavio Pte. Ltd., Singapore, Singapore
+4
+100
+Signavio Japan KK, Tokyo, Japan
+8,9
+100
+8,9
+100
+100
+SAP Software and Services LLC, Doha, Qatar
+49
+5,16
+SAP Svenska Aktiebolag, Stockholm, Sweden
+100
+SAP System Application and Products Asia Myanmar Limited, Yangon, Myanmar
+100
+SAP Systems, Applications and Products in Data Processing (Thailand) Ltd., Bangkok, Thailand
+100
+100
+100
+SAP Technologies Inc., Palo Alto, CA, United States
+100
+SAP Training and Development Institute FZCO, Dubai, United Arab Emirates
+100
+SAP Türkiye Yazilim Üretim ve Ticaret A.Ş., Istanbul, Turkey
+100
+SAP UAB, Vilnius, Lithuania
+100
+SAP Ventures Investment GmbH, Walldorf, Germany
+100
+8,9
+SAP Vierte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+SAP Taiwan Co., Ltd., Taipei, Taiwan
+16
+75
+100
+SAP Philippines, Inc., Taguig City, Philippines
+SAP Polska Sp. z o.o., Warsaw, Poland
+Ownership
+Footnote
+100
+100
+16
+100
+16
+100
+SAP Portals Europe GmbH, Walldorf, Germany
+100
+SAP Portals Holding Beteiligungs GmbH, Walldorf, Germany
+100
+SAP Portals Israel Ltd., Ra'anana, Israel
+100
+SAP Portugal - Sistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda.,
+Porto Salvo, Portugal
+100
+SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf, Germany
+100
+SAP Public Services, Inc., Washington, DC, United States
+SAP Puerto Rico GmbH, Walldorf, Germany
+SAP Retail Solutions Beteiligungsgesellschaft GmbH, Walldorf, Germany
+SAP Romania SRL, Bucharest, Romania
+SAP Saudi Arabia Software Services Ltd, Riyadh, Kingdom of Saudi Arabia
+SAP Saudi Arabia Software Trading Ltd, Riyadh, Kingdom of Saudi Arabia
+SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+SAP Siebte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+SAP sistemi, aplikacije in produkti za obdelavo podatkov d.o.o., Ljubljana, Slovenia
+SAP Slovensko s.r.o., Bratislava, Slovakia
+100
+100
+8,9,16
+100
+100
+100
+SAP Österreich GmbH, Vienna, Austria
+SAP Vietnam Company Limited, Ho Chi Minh City, Vietnam
+SAP West Balkans d.o.o., Belgrade, Serbia
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Name and Location of Company
+Signavio ANZ Pty Ltd, Melbourne, Australia
+Signavio Benelux B.V., Amsterdam, the Netherlands
+Ownership
+Footnote
+100
+4
+To Our
+100
+Signavio France S.A.S., Paris, France
+100
+4
+Signavio GmbH, Berlin, Germany
+100
+100
+4, 17
+Signavio India Private Limited, Gurugram, India
+100
+4
+Signavio Italia S.r.l., Milan, Italy
+100
+4
+4
+SAP Integrated Report 2021
+SAP
+6
+100
+SAP Zweite Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany
+SAP.io Fund, L.P., Austin, TX, United States
+100
+8,9
+0
+6
+Sapphire Fund Investments II Holdings, LLC, Austin, TX, United States
+100
+6
+Sapphire Fund Investments II, L.P., Austin, TX, United States
+Sapphire Fund Investments III, L.P., Austin, TX, United States
+Sapphire SAP HANA Fund of Funds, L.P., Austin, TX, United States
+Sapphire Ventures Fund I, L.P., Austin, TX, United States
+Sapphire Ventures Fund II, L.P., Austin, TX, United States
+Sapphire Ventures Fund III, L.P., Austin, TX, United States
+Sapphire Ventures Fund IV, L.P., Austin, TX, United States
+Sapphire Ventures Fund V L.P., Austin, TX, United States
+Sapphire Ventures Fund VI, L.P., Austin, TX, United States
+SAPV (Mauritius), Ebene, Mauritius
+0
+6
+0
+6
+0
+6
+0
+6
+0
+6
+0
+6
+0
+6
+0
+6
+0
+4,6
+100
+100
+Lead Formix, Inc., Dublin, CA, United States
+Qualtrics Mexico, S. DE R.L. DE C.V., Mexico City, Mexico
+IP Asset Holdings, LLC, Provo, UT, United States
+SAP (China) Co., Ltd., Shanghai, China
+100
+1,106,711
+-1,577
+-213,060
+6,147
+16
+SAP (Schweiz) AG, Biel, Switzerland
+100
+1,092,657
+127,116
+264,263
+810
+3,380
+SAP (UK) Limited, Feltham, United Kingdom
+1,235,416
+60,404
+45,239
+1,697
+SAP America, Inc., Newtown Square, PA, United States
+100
+6,215,786
+-309,232
+19,337,747
+8,731
+SAP Argentina S.A., Buenos Aires, Argentina
+100
+162,335
+100
+3,129
+8,228,091
+898,901
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+Total
+All other fees
+Tax fees
+Audit-related fees
+Audit fees
+€ millions
+100
+80,790
+9,481
+34,185
+-1,440,737
+1,281
+100
+1,318,872
+499,785
+5,276,448
+1,772
+Concur Technologies, Inc., Bellevue, WA, United States
+100
+1,621,912
+188,665
+7,878,818
+3,485
+Qualtrics, LLC, Wilmington, DE, United States
+100
+Ariba, Inc., Palo Alto, CA, United States
+67,259
+1,132
+16
+100
+510,602
+29,557
+341,508
+791
+SAP France S.A., Levallois-Perret, France
+100
+1,099,071
+198,617
+1,794,013
+1,506
+SAP Hungary Rendszerek, Alkalmazások és Termékek az
+Adatfeldolgozásban Informatikai Kft., Budapest, Hungary
+100
+SAP España - Sistemas, Aplicaciones y Productos en la Informática,
+S.A., Madrid, Spain
+133,643
+23,817
+1,163
+SAP India Private Limited, Bangalore, India
+100
+633,680
+SAP Industries, Inc., Newtown Square, PA, United States
+100
+588,508
+103,453
+105,770
+359,149
+2,125
+1,122,929
+276
+4,563
+7,9
+4,463
+1,912,583
+SAP Asia Pte. Ltd., Singapore, Singapore
+100
+550,036
+7,457
+-6,721
+1,110
+16
+SAP Australia Pty Ltd, Sydney, Australia
+SAP Brasil Ltda, São Paulo, Brazil
+100
+740,871
+44,741
+67,725
+1,205
+100
+467,512
+-22,415
+44,060
+2,379 16
+SAP Canada Inc., Toronto, Canada
+100
+1,036,257
+139,927
+700,086
+3,012
+SAP Deutschland SE & Co. KG, Walldorf, Germany
+100
+4,921,867
+946,574
+Combined Group
+SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A.,
+Vimercate, Italy
+Management Report
+Additional
+Total
+The additions relate to legal entities added in connection with acquisitions and foundations. The
+disposals are mainly due to mergers, and liquidations of legal entities.
+12/31/2021
+Disposals
+Additions
+12/31/2020
+Disposals
+Additions
+12/31/2019
+Entities Consolidated in the Financial Statements
+Investments
+Scope of Consolidation, Subsidiaries and Other Equity
+(G.9)
+264
+Additional
+Information
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+262/338
+261/338
+Other than that, no events have occurred since December 31, 2021, that have a material impact on
+the Company's Consolidated Financial Statements.
+On January 27, 2022, SAP announced its intent to acquire a majority stake of Taulia, a leading
+provider of working capital management solutions. The acquisition is expected to further expand
+SAP's Business Network capabilities and strengthen SAP's solutions for the CFO office. The
+acquisition is expected to close in March 2022, following completion of customary closing conditions
+and regulatory approvals.
+Events After the Reporting Period
+(G.8)
+Audit fees are the aggregate fees charged by KPMG for auditing our consolidated financial statements
+and the statutory financial statements of SAP SE and its subsidiaries. Audit-related fees are fees
+charged by KPMG for assurance and related services that are reasonably related to the performance
+of the audit, for service organization attestation procedures, and fees charged by KPMG for services
+regarding the initial public offering of Qualtrics.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+10
+17
+269
+100
+€ thousands
+€ thousands
+%
+Foot-
+note
+Number of
+Employees as at
+12/31/20212
+as at
+12/31/20211
+for 2021¹
+Total Equity
+Profit/Loss
+(-) After Tax
+in 2021¹
+Total Revenue
+Owner-
+ship
+-12
+Name and Location of Company
+Subsidiaries
+Additional
+Information
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP
+SAP Integrated Report 2021
+290
+-18
+39
+Major Subsidiaries
+8
+3
+14
+7
+3
+12
+9
+3
+12
+8
+3
+KPMG Firms
+Total
+Foreign
+KPMG AG
+(Germany)
+Total
+10
+Foreign
+KPMG Firms
+(Germany) KPMG Firms
+Total
+Foreign
+KPMG AG
+2019
+2020
+2021
+At the Annual General Meeting of Shareholders held on May 12, 2021, our shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) as SAP's independent auditor for 2021. KPMG has
+been the Company's principal auditor since the fiscal year 2002. Bodo Rackwitz has signed as auditor
+responsible for audit of the financial reporting and the group reporting of SAP SE since the fiscal year
+2018. KPMG and other firms in the global KPMG network charged the following fees to SAP for audit
+and other professional services related to 2021 and the previous years:
+Principal Accountant Fees and Services
+(G.7)
+For more information about the SAP Fioneer divestment (SAP Fioneer is an associated entity of SAP
+and thus treated as a related party), see Note (D.1) and Note (D.6).
+companies in the amount of €37 million (2020: €0 million). Outstanding balances at year end from
+transactions with such companies were €15 million (2020: €0 million) for amounts owed to such
+companies and €4 million (2020: €0 million) for amounts owed by such companies. All of these
+balances are unsecured and interest-free, and settlement is expected to occur in cash.
+Information
+KPMG AG
+(Germany)
+2
+5
+7
+10
+3
+19
+13
+6
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+1
+1
+0
+2
+1
+0
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+100
+100
+37,154
+Concur (Japan) Ltd., Tokyo, Japan
+97
+Concur (New Zealand) Limited, Wellington, New Zealand
+100
+14
+Concur (Philippines) Inc., Makati City, Philippines
+Concur (Switzerland) GmbH, Zurich, Switzerland
+Concur Holdings (France) S.A.S., Levallois-Perret, France
+100
+100
+13
+100
+SAP
+SAP Integrated Report 2021
+To Our
+8,9
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Name and Location of Company
+Concur Holdings (Netherlands) B.V., 's-Hertogenbosch, the Netherlands
+Ownership
+Footnote
+100
+11
+Concur Technologies (Australia) Pty. Limited, Sydney, Australia
+100
+Combined Group
+Concur Technologies (Hong Kong) Limited, Hong Kong, China
+Concur Technologies (India) Private Limited, Bangalore, India
+Concur Technologies (Singapore) Pte. Ltd., Singapore, Singapore
+Concur Technologies (UK) Limited, Feltham, United Kingdom
+ConTgo Consulting Limited, Feltham, United Kingdom
+100
+100
+100
+Christie Partners Holding C.V., 's-Hertogenbosch, the Netherlands
+100
+Clarabridge Netherlands B.V., Amsterdam, the Netherlands
+100
+4
+Clarabridge UK Ltd, London, United Kingdom
+100
+4
+Clarabridge, Inc., Reston, VA, United States
+100
+4
+C-Learning Pty. Ltd., Sydney, Australia
+Concur (Germany) GmbH, Frankfurt am Main, Germany
+100
+100
+ClearTrip Inc., George Town, Cayman Islands
+57
+Clicktools Limited, Feltham, United Kingdom
+100
+10
+CNQR Operations Mexico S. de. R.L. de. C.V., Mexico City, Mexico
+100
+Concur (Canada), Inc., Toronto, Canada
+100
+Concur (Czech) s.r.o., Prague, Czech Republic
+100
+Concur (France) S.A.S., Levallois-Perret, France
+ClearTrip Inc. (Mauritius), Ebene, Mauritius
+100
+100
+100
+Emarsys UK Ltd, London, United Kingdom
+100
+EMARSYS-Technologies Informatikai Szolgáltató Kft., Budapest, Hungary
+100
+Engagor N.V., Ghent, Belgium
+Engagor, Inc., Wilmington, DE, United States
+100
+4
+100
+4
+ESS Cubed Procurement Proprietary Limited, Johannesburg, South Africa
+100
+Extended Systems, Inc., San Ramon, CA, United States
+100
+100
+100
+FreeMarkets Ltda., São Paulo, Brazil
+100
+Hipmunk, Inc., San Francisco, CA, United States
+100
+hybris (U.S.) Corporation, Wilmington, DE, United States
+100
+hybris GmbH, Munich, Germany
+100
+8,9
+Inxight Federal Systems Group, Inc., Wilmington, DE, United States
+615,004
+100
+Financial Fusion, Inc., San Ramon, CA, United States
+Emarsys Schweiz GmbH, Zurich, Switzerland
+100
+Emarsys S.A.S., Levallois-Perret, France
+16
+100
+100
+ConTgo Limited, Feltham, United Kingdom
+Crystal Decisions (UK) Limited, Feltham, United Kingdom
+Delighted, LLC, Wilmington, DE, United States
+Emarsys Beijing Limited, Beijing, China
+Emarsys eMarketing Systems GmbH, Vienna, Austria
+Emarsys İletişim Sistemleri Tic. Ltd Şti., Istanbul, Turkey
+100
+10
+100
+10
+100
+12
+100
+100
+100
+100
+Emarsys Interactive Services GmbH, Berlin, Germany
+100
+Emarsys Limited, Hong Kong, China
+100
+Emarsys North America, Inc., Indianapolis, IN, United States
+100
+Emarsys Pte. Ltd., Singapore, Singapore
+100
+Emarsys Pty Ltd, Sydney, Australia
+100
+CallidusCloud Pty. Ltd., Sydney, Australia
+100
+Datahug Limited, Dublin, Ireland
+100
+SAP National Security Services, Inc., Newtown Square, PA, United
+States
+100
+858,772
+127,178
+651,935
+636
+SAP Nederland B.V., 's-Hertogenbosch, the Netherlands
+100
+708,927
+208,699
+443,701
+610
+=1
+16
+11
+100
+209,533
+14,186
+50,793
+1,705
+SAP Services s.r.o., Prague, Czech Republic
+100
+83,428
+2,074
+15,285
+1,191
+263/338
+264/338
+SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland
+SAP
+964
+415,025
+750
+265,312
+CallidusCloud Holdings Pty. Ltd., Sydney, Australia
+SAP Japan Co., Ltd., Tokyo, Japan
+1,251,106
+138,785
+458,761
+1,318
+SAP Labs Bulgaria EOOD, Sofia, Bulgaria
+100
+78,971
+3,321
+21,544
+26,097
+1,125
+100
+628,073
+60,855
+205,586
+9,882
+SAP Labs, LLC, Palo Alto, CA, United States
+100
+575,665
+159,933
+608,787
+1,893
+SAP México S.A. de C.V., Mexico City, Mexico
+100
+SAP Labs India Private Limited, Bangalore, India
+SAP Integrated Report 2021
+111,265
+Stakeholders
+Ariba International Holdings, Inc., Wilmington, DE, United States
+100
+Ariba International Singapore Pte. Ltd., Singapore, Singapore
+100
+Ariba International, Inc., Wilmington, DE, United States
+100
+Ariba Slovak Republic, s.r.o., Košice, Slovakia
+100
+Ariba Software Technology Services (Shanghai) Co., Ltd., Shanghai, China
+100
+Ariba Technologies Netherlands B.V., 's-Hertogenbosch, the Netherlands
+Business Objects Holding B.V., 's-Hertogenbosch, the Netherlands
+11
+100
+11
+Business Objects Option, LLC, Wilmington, DE, United States
+100
+Business Objects Software Limited (Trading as SAP Solutions), Dublin, Ireland
+100
+Callidus Software Inc., San Ramon, CA, United States
+100
+Callidus Software Ltd., Feltham, United Kingdom
+100
+10
+Callidus Software Pty. Ltd., Sydney, Australia
+100
+CallidusCloud (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia
+To Our
+CallidusCloud (India) Private Limited, Hyderabad, India
+100
+100
+Ariba India Private Limited, Gurugram, India
+100
+100
+Management Report
+Combined Group
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+16
+Additional
+Information
+Other Subsidiaries³
+Name and Location of Company
+Ownership
+Footnote
+"SAP Kazakhstan" LLP, Almaty, Kazakhstan
+100
+110405, Inc., Newtown Square, PA, United States
+100
+Abakus Ukraine Limited Liability Company, Kiev, Ukraine
+%
+100
+4
+100
+AppGyver Oy., Helsinky, Finland
+Ambin Properties Proprietary Limited, Johannesburg, South Africa
+4
+100
+Ariba Czech s.r.o., Prague, Czech Republic
+AppGyver Inc., Indianapolis, IN, United States
+Apex Expert Solutions LLC, Chantilly, VA, United States
+16
+100
+100
+SV Angel IV, L.P., San Francisco, CA, United States
+Tetrate.io, Inc., Milpitas, CA, United States
+Sun Basket, Inc., San Francisco, CA, United States
+Storm Ventures V, L.P., Menlo Park, CA, United States
+Management Report
+StackHawk, Inc., Denver, CO, United States
+SumoLogic, Inc., Redwood City, CA, United States
+SAP
+Third Kind Venture Capital II, L.P., New York, NY, United States
+Third Kind Venture Capital III, L.P., New York, NY, United States
+Tribe Capital LLC Series 3, Redwood City, CA, United States
+SAP Integrated Report 2021
+Combined Group
+To Our
+Spring Mobile Solutions, Inc., Salt Lake City, UT, United States
+Stakeholders
+The SaaStr Fund II, L.P., Palo Alto, CA, United States
+The SaaStr Fund, L.P., Palo Alto, CA, United States
+SportsTech Parallel Fund, L.P., Palo Alto, CA, United States
+Pivot North Early Fund I, L.P., Atherton, CA, United States
+Point Nine Annex GmbH & Co. KG, Berlin, Germany
+Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
+Point Nine Capital Fund III GmbH & Co. KG, Berlin, Germany
+Point Nine Capital Fund IV GmbH & Co. KG, Berlin, Germany
+Point Nine Capital Fund V GmbH & Co. KG, Berlin, Germany
+Project 44, Inc., Chicago, IL, United States
+Splashtop, Inc., San Jose, CA, United States
+OpenX Software Limited, Pasadena, CA, United States
+NOTATION I SPV SV OCT 2020, LLC, Brooklyn, NY, United States
+Consolidated Financial
+Statements IFRS
+Notation Capital, L.P., Brooklyn, NY, United States
+OpsRamp, Inc., San Jose, CA, United States.
+Pendo.io, Inc., Raleigh, NC, United States
+SportsTech Fund, L.P., Palo Alto, CA, United States
+PubNub, Inc., San Francisco, CA, United States
+Restream, Inc., Austin, TX, United States
+Ridge Software Investments I, LLC, San Francisco, CA, United States
+Ridge Ventures IV, L.P., San Francisco, CA, United States
+SafeGraph, Inc., Denver, CO, United States
+Side, Inc., San Francisco, CA, United States
+Smart City Planning, Inc., Tokyo, Japan
+Reltio, Inc., Redwood Shores, CA, United States
+Further Information on
+Walldorf, Baden
+Additional
+Information
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Walldorf, February 23, 2022
+SAP SE
+The Executive Board
+Christian Klein
+Sabine Bendiek
+Luka Mucic
+Notation Capital III, L.P., Brooklyn, NY, United States
+Scott Russell
+Julia White
+SAP Integrated Report 2021
+Sustainability
+SAP
+273/338
+Name and Location of Company
+Tribe Capital LLC Series 3, Redwood City, CA, United States
+UJET, Inc., San Francisco, CA, United States
+Unmind Ltd., London, United Kingdom
+Upfront V, L.P., Santa Monica, CA, United States
+Uptycs, Inc., Waltham, MA, United States
+VerbIT, Inc., New York, NY, United States
+Vistex, Inc., Hoffman Estates, IL, United States
+Walkabout Ventures Fund II L.P., Los Angeles, CA, United States
+Yapily Ltd., London, United Kingdom
+Zesty Tech Ltd., Ramat Gan, Israel
+(G.10) German Code of Corporate Governance
+The German federal government published the German Corporate Governance Code (the "Code") in
+February 2002 and introduced a commission that amends the Code from time to time. The Code
+contains statutory requirements and a number of recommendations and suggestions. Only the legal
+requirements are binding for German companies. With regard to the recommendations, the German
+Stock Corporation Act, section 161, requires that every year, listed companies publicly state the extent
+to which they have implemented them. Companies can deviate from the suggestions without having
+to make any public statements.
+In 2021 and 2020, the Executive Board and Supervisory Board of SAP SE issued the required
+declarations of implementation. The declaration for 2021 was issued at the end of October 2021.
+These statements are available on our Web site:
+www.sap.com/investors/en/governance.
+274/338
+Notation Capital II, L.P., Brooklyn, NY, United States
+Canvas Ventures 3, L.P., Portola Valley, CA, United States
+Mosaic Partners II, L.P., London, United Kingdom
+Costanoa Venture Capital II L.P., Palo Alto, CA, United States
+Costanoa Venture Capital III L.P., Palo Alto, CA, United States
+Costanoa Venture Capital QZ, LLC, Palo Alto, CA, United States
+Creandum SPV TR (D) AB, Stockholm, Sweden
+Culture Amp, Inc., San Francisco, CA, United States
+Data Collective II L.P., Palo Alto, CA, United States
+Data Collective III L.P., Palo Alto, CA, United States
+Data Collective IV, L.P., Palo Alto, CA, United States
+DataRobot, Inc., Boston, MA, United States
+Contentful GmbH, Berlin, Germany
+Digital Hub Rhein-Neckar GmbH, Ludwigshafen, Germany
+FeedZai S.A., Lisbon, Portugal
+Felix Capital Fund III, London, United Kingdom
+Felix Ventures II, L.P., London, United Kingdom
+Finco Services, Inc. (dba Current), New York, NY, United States
+Follow Analytics, Inc., San Francisco, CA, United States
+GitGuardian SAS, Paris, France
+Dremio Corporation, Santa Clara, CA, United States
+ComponentLab Inc., Seattle, WA, United States
+Clari, Inc., Sunnyvale, CA, United States
+CircleCI, Inc., San Francisco, CA, United States
+Juergen Mueller
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Name and Location of Company
+BY Capital 2 GmbH & Co. KG, Berlin, Germany
+Catchpoint Systems, Inc., New York, NY, United States
+CDQ AG, St. Gallen, Switzerland
+Chalfen Ventures Fund IL.P., St Heiler, Jersey, Channel Islands
+Chalfen Ventures Fund II L.P., St Helier, Jersey, Channel Islands
+Greater Pacific Capital (Cayman) L.P., Grand Cayman, Cayman Islands
+Notation Capital II CIRC, LLC, Brooklyn, NY, United States
+Haystack Ventures V, L.P., Mill Valley, CA, United States
+IEX Group, Inc., New York, NY, United States
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+SAP Integrated Report 2021
+Additional
+Local Globe X, L.P., St. Peter Port, Guernsey, Channel Islands
+Local Globe XI, L.P., St. Peter Port, Guernsey, Channel Islands
+Mango Capital 2018, L.P., Los Altos, CA, United States
+Mango Capital 2020, L.P., Los Altos, CA, United States
+Matillion Ltd., Altrincham, United Kingdom
+Medable Inc., Palo Alto, CA, United States
+Information
+SAP
+272/338
+271/338
+InfluxData, Inc., San Francisco, CA, United States
+Initialized CBH SPV LLC, Walnut, CA, United States
+Innovation Lab GmbH, Heidelberg, Germany
+innoWerft Technologie- und Gründerzentrum Walldorf Stiftung GmbH, Walldorf, Germany
+Integral Ad Science Holiding Corp., New York, NY, United States
+Involve.ai, Inc., Santa Monica, CA, United States
+JFrog, Ltd., Netanya, Israel
+JupiterOne, Inc., Morrisville, NC, United States
+Kaltura, Inc., New York, NY, United States
+LeanData, Inc., Sunnyvale, CA, United States
+LGVP F I LLC, Dover, DE, United States
+Local Globe Opportunity Fund, L.P., St. Peter Port, Guernsey, Channel Islands
+Local Globe VII, L.P., St. Peter Port, Guernsey, Channel Islands
+Local Globe VIII, L.P., St. Peter Port, Guernsey, Channel Islands
+Additional
+Information
+IDG Ventures USA III, L.P., San Francisco, CA, United States
+Thomas Saueressig
+Name and Location of Company
+SAP Integrated Report 2021
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Connectivity of Financial and
+Non-Financial Indicators
+Combined Group
+Where We Come From: Putting a Value on Non-Financial
+Performance Indicators
+BHCI
+Employee
+Engagement
+Employee
+Retention
+Women in
+Management
+Growth
+Social
+Investment
+At SAP, we have put a monetary value on how selected non-financial indicators impact our operating
+profit. For example, how well we engage with our employees and inspire them to commit to our
+purpose and strategy, support a healthy business culture, and succeed in reducing our carbon
+emissions.
+To Our
+SAP Integrated Report 2021
+SAP
+Additional
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+About This Further
+Information on Economic,
+Environmental, and Social
+Performance
+The social and environmental data and information included in the SAP Integrated Report has been
+prepared in accordance with the GRI Standards: Core option. This option indicates that a report
+contains the minimum information needed to understand the nature of the organization, its material
+topics and related impacts, and how these are managed.
+The Further Information on Economic, Environmental, and Social Performance includes information
+that is required to comply with the GRI Standards. In addition, we present our Connectivity model that
+shows the interrelations between social, environmental, and financial performance. We also report on
+our contribution towards the United Nations Sustainable Development Goals (SDGs) and respond to
+the recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD).
+Starting in 2021, we map our reporting to two additional frameworks:
+-
+The Software & IT Services Sustainability Accounting Standards prepared by the Sustainability
+Accounting Standards Board (SASB), now part of the Value Reporting Foundation.
+The core "Stakeholder Capitalism Metrics" as proposed by the World Economic Forum's
+International Business Council (WEF IBC).
+277/338
+278/338
+Profitability
+Information
+Customer
+Loyalty
+Carbon
+Emissions
+A New and Broader Focus
+In line with our purpose to help the world run better and improve people's lives, we have moved
+beyond financial measures to evaluate the consequences of our actions on society and the
+environment as well as the wider economy. As well as exploring cause-and-effect chains within SAP's
+own operations, we also measure positive and negative societal impacts across our complete value
+chain.
+Building on our many years of experience in connecting financial and non-financial measures, we
+cofounded the Value Balancing Alliance (VBA) in 2019. This alliance looks at ways in which
+businesses can better understand their societal and environmental impacts and formulate corporate
+strategies to address these areas.
+The VBA was founded by eight companies: BASF SE, Robert Bosch GmbH, Deutsche Bank AG,
+LafargeHolcim Ltd, Novartis International AG, Philip Morris International Inc, SAP SE, and SK Group.
+The organization is supported by the world's four largest accounting companies: Deloitte Touche
+Tohmatsu Limited, Ernst and Young Global Ltd, KPMG International Ltd, and PricewaterhouseCoopers
+International Limited. It is also supported by leading universities such as Harvard Business School,
+together with stakeholders from governments, civil societies, and standard-setting organizations. As at
+the end of 2021, the alliance consisted of 19 companies. By participating in the VBA's methodology
+279/338
+280/338
+Using the connectivity model as outlined above, we have been able to embed non-financial KPIs into
+our software solutions. This integrated approach to financial and non-financial performance is
+reflected in the solutions developed for climate action, circular economy, social responsibility and
+holistic steering and reporting.
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+SAP
+SAP Integrated Report 2021
+We will continue to share our approach and methodology with our customers to help them win in the
+marketplace. We believe that companies achieve higher profits – resulting from both greater cost
+efficiency as well as revenue growth - by addressing economic, social, and environmental
+considerations in a holistic and integrated manner. More importantly, these companies are better
+equipped to lead in the future, as they navigate the world's most pressing challenges and help bring
+about long-term sustainable change.
+By embedding this approach into our decision-making and quarterly business reviews, our
+sustainability performance steers our business alongside factors such as revenue and profit. Our goal
+is for all senior managers and experts at SAP to recognize - and be held accountable for – the fact
+that improving such measures as employee engagement also boosts financial performance.
+Embedding Non-Financial Performance Indicators into Our Solutions
+Our findings have helped us shift the conversation for managers, investors, employees, and other key
+stakeholders, and firmly establish non-financial indicators as playing a crucial role in our financial
+success. As a result, engaging employees or reducing our emissions is no longer seen as a nice-to-
+have, but rather as essential to carrying out a successful business strategy.
+Total Energy
+Consumed
+Figure 1: Connectivity Between Social, Environmental, and Economic Performance. SAP's main KPIs
+are marked in orange.
+To achieve this, we created cause-and-effect chains that show how specific actions we take at SAP
+lead to shifts in behavior. This behavior impacts our business and has a financial consequence.
+By doing so, we established more than just a correlation between non-financial and financial
+indicators. The cause-and-effect chains also reveal why and how something such as employee
+engagement ultimately leads to gains or losses in business performance. We believe that such
+insights are a prerequisite for fully modeling the financial impact of non-financial performance.
+Magnitude of Financial Impact
+From 2014 to 2018, SAP used techniques such as linear regression analysis to document the financial
+impact of four non-financial indicators: the Business Health Culture Index, the Employee Engagement
+Index, employee retention, and carbon emissions. In the past, we assessed each indicator to see what
+a change of one percentage point (pp) (or 1% for carbon emissions) would mean for our operating
+profit. The results for 2018, for example, showed that a 1pp change in the Business Health Culture
+Index affected our operating profit by €90 million to €100 million (non-IFRS).
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Having illustrated this impact with concrete numbers, we are now turning our focus to a broader
+perspective of impact (for example, see Our Contribution to the UN Sustainable Development Goals
+and A New and Broader Focus). We still strongly believe in the fundamental conclusions of the
+analysis, but do not see a need to continuously update specific monetary values on the well-
+established connections. This is because the values have not been subject to any large fluctuations
+over the years. Instead, they have increased steadily, as expected.
+Promoting Sustainability Measures to Boost Financial
+Performance
+Documenting the financial impact of non-financial indicators has helped us move closer to achieving
+our sustainability goals. Rather than simply stating the business case for social or environmental
+change, we also have the numbers to back it up.
+Capability
+Building
+development and piloting phases, SAP is playing an active part in shaping the future of impact
+measurement and valuation.
+Memberships, Partnerships, and Commitments
+Accounting systems often ignore the value of environmental and societal impacts, leading to
+misallocation of resources. However, as is increasingly recognized by institutions such as Harvard
+Business School, monetary evaluation of these impacts has the potential to change accounting
+systems and transform capital markets. The development of impact-weighted accounting metrics is a
+necessary precondition for this.
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+SAP Integrated Report 2021
+Information
+About This Further Information on Economic, Environmental,
+and Social Performance
+277
+Connectivity of Financial and Non-Financial Indicators
+278
+Materiality
+282
+Further Information about
+Economic, Environmental,
+and Social Performance
+SAP
+276/338
+275/338
+Meeting the Challenges of Non-Financial Value Measurement
+Environmental degradation, rising societal inequalities, and the COVID-19 pandemic have highlighted
+the need for corporate accountability and value creation beyond financial markets. However, most
+corporations are failing to tackle climate change, biodiversity loss, and inequality, because - as one of
+multiple reasons - decisions are based on insufficient information.
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Management's Annual Report
+on Internal Control over
+Financial Reporting in the
+Consolidated
+Financial Statements
+The management of SAP is responsible for establishing and maintaining adequate internal control
+over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
+U.S. Securities Exchange Act of 1934. SAP's internal control over financial reporting is a process
+designed under the supervision of SAP's CEO and CFO to provide reasonable assurance regarding
+the reliability of financial reporting and the preparation of financial statements for external reporting
+purposes in accordance with International Financial Reporting Standards as issued by the
+International Accounting Standards Board.
+SAP's management assessed the effectiveness of the Company's internal control over financial
+reporting as at December 31, 2021. In making this assessment, it used the criteria set forth by the
+Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated
+Framework (2013).
+Based on the assessment under these criteria, SAP management has concluded that, as at
+December 31, 2021, the Company's internal control over financial reporting was effective.
+Stakeholder Engagement
+286
+U.S. law requires that management submit a report on the effectiveness of internal control over
+financial reporting in the consolidated financial statements. For 2021, that report is as follows:
+288
+Task Force on Climate-Related Financial Disclosure (TCFD)
+328
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Training: Money spent on offering training to employees positively impacts their employability,
+earnings, skills, and knowledge. However, it also results in “softer” impacts such as enhanced
+Analysis took place across multiple impact categories, and resulted, for example, in the following
+findings from the GHG and training categories:
+Wherever possible, we used primary data for the calculations. Where primary data was not available,
+we used proxies, modeling techniques, and assumptions that were well-defined and documented in
+the VBA method papers. Key stakeholders across all relevant lines of business were engaged in the
+pilot, which was sponsored by our CFO.
+Ending in November 2021, our second VBA pilot analyzed categories including GDP contribution,
+health and safety, training, consumptive water use, water pollution, greenhouse gas (GHG), air
+emissions, land use and biodiversity, and waste. We used data from our Integrated Report 2020, from
+our internal controlling and HR systems, and from our environmental management system. The
+analysis focused on our complete operations and our supply chain. An analysis of the "downstream"
+impacts resulting from customers' use of our software solutions and services will be piloted in the next
+phase.
+Piloting the Measurement of Non-Financial Impacts
+To help the European Union (EU) achieve its commitment to making Europe the first climate-neutral
+continent by 2050 as part of the European Green Deal, the VBA is acting as an advisor on EU
+regulatory activities. Furthermore, the VBA is working to help drive the establishment of a globally
+accepted system of standards for non-financial disclosure.
+Sustainability Management
+Increasing regulatory pressure has also resulted in an urgent requirement for a reporting standard for
+environmental, social, and governance criteria. In response, organizations such as the Sustainability
+Accounting Standards Board (now part of the Value Reporting Foundation) and the Global Reporting
+Initiative are adapting and aligning their efforts to develop reporting systems that help investors make
+more sustainable decisions.
+We co-founded the VBA to support the development of a standardized methodology that helps
+companies, investors, and other stakeholders compare non-financial performance. These insights
+enable companies to create business value beyond revenue or profit growth while taking into
+consideration the long-term impacts of their business operations on the environment and society as a
+whole.
+327
+SASB Index
+GHG: Our analysis enabled us to identify the GHG impact of each subsidiary and location, and we
+now have insights into which SAP locations have the highest CO2 footprints and which locations
+have the lowest. Negative impacts of GHG were monetized at €136 million and this has helped
+inform decision-making regarding our CO2-reduction strategy. It has also helped us quantify the
+investment required for offsetting emissions by funding alternative energy resources to achieve
+carbon neutrality in our operations by 2023.
+Stakeholder Capitalism Metrics
+Sustainable Procurement
+289
+325
+Our Contribution to the UN Sustainable Development Goals
+293
+Waste and Water
+Public Policy
+299
+296
+300
+Non-Financial Notes: Social Performance
+302
+Non-Financial Notes: Environmental Performance
+304
+GRI Content Index and UN Global Compact Communication on Progress
+313
+Energy
+matters
+Procedures and rules concerning a company's control
+and decision-making system, as well as relationship
+management with investors and stakeholders
+9*
+Talent and development
+Talent attraction, retention, and development
+10*
+Environmental
+11*
+Customer matters
+Energy consumption by operations and products, and the
+transition to renewable energy
+Responsibility to help ensure customer satisfaction and
+customer rights, including responsible marketing and
+selling practices
+Employee matters
+Environmental
+matters
+12*
+Employee engagement
+Corporate culture, employee engagement and
+motivation, and strategic decisions involving workforce
+changes
+Employee matters
+(Non-)greenhouse gas emissions from operations and
+products, as well as present or potential disruptive
+impacts of climate change
+13**
+Customer responsibility
+Social, economic, psychological, and physical conditions
+of employees in their workplace, as well as employees'
+occupational health and safety
+4*
+Employee matters
+Transparency
+Ethics and compliance
+Definitions
+Related Non-
+Financial Matters
+Protection of private, confidential, or sensitive information
+and data, as well as the vulnerability of critical
+information systems
+Responsible business conduct, including anti-corruption,
+anti-bribery, fair competition, respect for intellectual
+property, and responsible tax principles
+Anti-corruption and
+bribery matters
+3*
+Employee rights
+Fair and inclusive workplace
+5*
+Human rights
+6*
+Well-being, health, and safety
+7*
+Climate change and air quality
+8**
+Governance
+Active integration, equal opportunity, as well as fair
+treatment and remuneration of all employees
+Labor rights, including unionization, as well as
+compensation and benefits offered to employees by their
+employer
+Employee matters
+Employee matters
+Respect for human
+rights
+Fundamental rights of all individuals to live in dignity
+14*
+Information
+15*
+matters
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on Additional
+Statements IFRS
+Sustainability
+2*
+* Sustainability challenges affect SAP and are also impacted by us.
+**
+Sustainability management practices offer guidance on how to deal with these challenges.
+Environmental
+In our reporting, we seek to meet the materiality requirements of both the GRI Standards and
+section 289c (3) of the German Commercial Code (Handelsgesetzbuch, HGB). Because of the
+diverging definitions of materiality, we see the following difference in material topics:
+Index Topic
+1*
+Security, privacy, and data protection
+2*
+Ethics and compliance
+3*
+Employee rights
+4*
+Fair and inclusive workplace
+5*
+According to the GRI Standards, the following topics are material:
+Resource efficiency and waste
+Customer matters
+Environmental
+Water
+16*
+Geopolitical events
+17**
+Responsible supply chain
+18**
+Local community support
+19**
+Solutions for an inclusive and
+circular economy
+20*
+matters
+Product responsibility
+Biodiversity
+Transparency through non-financial reporting on public
+policy practices and executive compensation
+(Non-)hazardous waste as well as resource usage,
+reduction, reuse, or recycling
+Use, management, conservation, reduction, and
+contamination of water
+Political conditions, demographic changes, and
+catastrophic or other events with an influence on
+business
+Procurement practices to help ensure respect of the
+environment and human rights throughout the entire
+supply chain
+Programs and projects to help ensure the well-being and
+positive development of communities with which a
+company interacts, including employee volunteering
+Products and services that create positive environmental
+and social impact during their whole lifecycle
+Product and service quality, as well as the information
+shared with customers so that they can make informed
+decisions
+Variety of flora and fauna on earth, and the foundation
+for ecosystem services that are essential for nature and
+human well-being
+Environmental
+matters
+21*
+Security, privacy, and data
+protection
+10
+Index Topics
+Information
+Materiality
+Defining Key Priorities for Our Non-Financial Reporting
+To select the topics to be included in our integrated reporting, we conducted a comprehensive
+materiality assessment in 2020 using an artificial intelligence (AI) and Big Data solution from
+Datamaran Limited that helped us build an evidence-based materiality matrix. We assessed
+economic, social, and environmental topics according to three criteria:
+1) Importance of topic for stakeholders (Y-axis)
+2) Relevance to SAP's business success (X-axis: Impact of topic on SAP)
+3) Magnitude of SAP's impact on the topic (differently colored circles)
+Below, we have detailed the key stages of the process.
+Identification
+We compiled a list of approximately 100 potentially relevant topics based on guidance from standards
+of the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), as
+well as our existing materiality topics. We also considered a materiality assessment for the information
+and communications technology industry by the Global Enabling Sustainability Initiative (GeSI) as well
+as the United Nations' Sustainable Development Goals (SDGs). When identifying key topics and their
+boundaries, we looked at areas related to our operations and supply chain as well as at topics related
+to our solutions. Since we oriented ourselves on the topics provided in the Datamaran matrix, the
+selected topics are more detailed than in our last materiality assessment.
+Prioritization
+Additional
+We ranked topics by their importance to stakeholders by analyzing six external sources. These
+sources included corporate peer reports; mandatory and voluntary regulations for the software sector;
+online news related to the technology equipment and services industry; tweets; and questionnaires
+gathering non-financial information from socially responsible investors and clients.
+Finally, based on survey responses gathered from SAP sustainability experts, we considered the
+potential impacts on society, the environment, and the economy, ranking topics as either low,
+medium, or high. We have estimated our impact on today's society, environment, and economy and
+we expect the impact level to change as we continue to design solutions to manage areas such as
+climate change.
+Validation
+In 2020, the results of the materiality analysis were reviewed and confirmed by our steering committee
+for integrated reporting, our sustainability council, and our sustainability advisory panel. Our chief
+financial officer, who is also our Board sponsor for sustainability and integrated reporting, was also
+informed about the results. In 2021, our materiality assessment was reviewed, updated, and
+confirmed by our Integrated Report Steering Committee.
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Next, we evaluated the financial, operational, and strategic relevance of each topic to SAP's business
+success and resilience, drawing on an analysis by SAP sustainability experts from various units and
+regions.
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+confidence, self-awareness, and active listening. This can result in improved mental well-being,
+with benefits for our employees' immediate social environment, as well as social and civic
+engagement. The analysis identified that our global employee training programs have a material
+positive impact and thus valuation of training is being prioritized in our future journey in shaping
+impact measurement and valuation.
+We aim to add further indicators and share best practices and lessons learned with external
+stakeholders and other VBA member companies to help improve the methodology and input process.
+In addition, we will make results available to the public.
+Shaping the Environment of Impact Measurement
+Since the outbreak of COVID-19, impact measurement and valuation as a science is evolving globally.
+The connection between economic, social, and environmental impacts will become a guiding
+principle for the way businesses are evaluated and steered.
+We are using insights gained during our impact valuation journey in the development of our
+sustainability management initiative. We strive to embed impact measurement into our corporate and
+relevant business unit decision-making and target-setting. Holistic steering and reporting are being
+developed across the value chain, incorporating our response to legal requirements and using
+capabilities embedded in our software solutions.
+Our impact measurement experiences form a foundation for software innovations in the fields of
+climate action, circular economy, social responsibility, and holistic steering and reporting, helping
+customers on their environmental, social, and governance journey. We see the monetary evaluation of
+environmental and societal impacts as crucial in achieving a sustainable economy, and by simplifying,
+aligning, and optimizing enterprise sustainability reporting, we help customers address global
+sustainability challenges.
+QAudit Scope
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+281/338
+282/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Additional
+Information
+1*
+The changes in 2021 compared to 2020 include:
+We have extended the thresholds for defining topics as material, to better align our reporting with
+our strategic priorities.
+16
+20
+< Low
+Impact of topic on SAP
+High >
+SAP's impact on topic:
+Low
+Medium
+High
+Materiality Matrix for Prioritizing Our Reporting Topics (numbers in the matrix are explained in the
+table below)
+19
+283/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Sustainability challenges* and management practices** included in our materiality assessment are as
+follows:
+284/338
+18
+17
+12
+We have applied the definition of materiality according to the GRI Standards more strictly. We now
+identify material topics by considering their importance for stakeholders or SAP's impact on the
+topic. Previously, we combined both dimensions.
+Review
+Feedback on and analysis of our integrated report will be taken into account during future materiality
+assessments.
+Results
+Our materiality matrix for prioritizing our reporting topics is shown in the following graphic. We have
+categorized topics according to whether they are sustainability challenges or sustainability
+management practices. The former affect SAP and are also impacted by us, whereas the latter offer
+guidance on how to deal with these challenges.
+Importance of topic for stakeholders
+High >
+< Low
+2
+21
+15
+14
+3
+7
+5
+Human rights
+6
+8
+1
+2
+9
+13
+11
+To achieve greater consistency with definitions in reporting standards, we deleted the topics
+"Business resilience" and "Innovation and digitalization" from the matrix. “Business resilience" is
+redundant to the y-axis of our matrix; “Innovation and digitalization” is at the heart of our business
+model and described as such.
+6*
+9*
+7*
+Employees and Social Investments
+Indirect:
+SAP solutions for healthcare; SAP Environment, Health, and
+Safety Management; SAP Success Factors Well-Being
+Management by Virgin Pulse; Corona-Warn-App
+SAP and SDG 3, Healthcare, SAP Environment, Health, and Safety Management, SAP Mental Health Initiative, SAP'S COVID-
+19 Response, Corona-Warn-App, SAP Vaccine Collaboration Hub
+289/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Global Health and Safety Management Policy; Employee
+Assistance Program; Corporate Oncology Program for
+Employees; Mental Health Initiative
+Consolidated Financial
+Statements IFRS
+Additional
+Information
+Our Potential Direct and
+Indirect Impact
+SDG 4 Quality Education
+Direct:
++ Train and educate SAP employees
+Our KPIs and Targets
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts
+and Mitigate Negative
+Impacts
+Indirect:
++
+Build capability in our ecosystem and among our
+Further Information on
+Sustainability
+customers
+Direct:
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts
+and Mitigate Negative
+Impacts
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Our Contribution to the UN
+Sustainable Development
+Goals
+The 17 United Nations Sustainable Development Goals (SDGs) provide a globally accepted
+framework anchored in human rights, which we use for communicating our purpose to "help the world
+run better and improve people's lives." We strive to execute on this purpose by being a role model for
+sustainable, purpose-led operations and by enabling our customers to operate in a sustainable way.
+Following the adoption of the SDGs by world leaders in September 2015, we identified and aligned
+existing initiatives with all 17 SDGs. For example, we looked at the environmental and social impacts
+of customers using SAP technology and applications, linking these impacts to the SDGs. The resulting
+Web book (www.sap.com/unglobalgoals) was published in early 2016 and has been updated
+regularly.
+In discussions with our Sustainability Council and external sustainability advisory panel, we defined
+the SDGs for which there is a tangible and material link between our own operational activities or the
+use of our software by customers.
+The following table describes the potential positive (+) and negative (-) direct or indirect impacts of
+our company and of our products and services related to the selected SDGs. We use "direct" when we
+refer to impacts through our own operations; "indirect" describes impacts through the use of our
+solutions and technology or in our ecosystem.
+QAudit Scope
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+Our Potential Direct and
+Indirect Impact
+Direct:
++ Provide access to a healthy lifestyle and a safe and
+healthy working environment for our employees
+Our KPIs and Targets
+Business Health Culture Index
+Indirect:
++
+-
+Enhance safe and healthy working conditions,
+healthcare, and personalized medicine on a global scale
+Increase transparency of physical, medical, and health
+conditions of individuals, which might be abused
+SDG 3 Good Health and Well-Being
+Stakeholders
+Engaging two million children, youth, and young adults in digital skills and coding programs by 2022
+Indirect:
+SAP Rural Sourcing Management;
+SAP Ariba Supplier Risk;
+Partnership with Social Enterprise UK
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+Employees and Social Investments
+SAP and SDG 8, Skilled and Inclusive Workforce, Pledge to Flex, Supporting Social Entrepreneurship, Powering Opportunity
+Through Digital Inclusion, SAP Solutions for Social Responsibility, SAP Rural Sourcing Management
+Our Potential Direct and
+Indirect Impact
+SDG 9 Industry, Innovation, and Infrastructure
+Direct:
++ Increase inclusive and sustainable industrialization
+through SAP's investments in research and
+development (including in developing countries)
+Indirect:
+Indirect:
++ Provide “Best Practice” business processes through
+standard software solutions
++ Integrate small and medium-sized enterprises into
+global value chains and markets
+Our KPIs and Targets
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts and
+Mitigate Negative Impacts
+ΝΑ
+Direct:
+SAP Labs Network; One Billion Lives initiative fostering
+purpose-driven innovation
+Indirect:
+SAP support for startups through various programs
+290/338
++ Support providers of infrastructure, financial services
+and clean technologies
+Direct:
+SAP recruiting programs
+Number of employees
+Cloud-based learning management system for employees
+openSAP; CSR digital literacy programs;
+SAP digital learning initiative
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+Employees and Social Investments
+SAP and SDG 4, SAP Learning for Life, Powering Opportunity Through Digital Inclusion, SAP Digital Learning Initiative
+SDG 8 Decent Work and Economic Growth
+Our Potential Direct and
+Indirect Impact
+Direct:
+Indirect:
++ Create decent jobs at SAP through our growth plans,
+specifically in developing markets
+Direct:
++
++
+Enable an inclusive economy
++
+Respect human rights across value chains
++
+Combat forced and child labor throughout supply chains
+Fuel negative effects on employment through
+digitalization and automation; potentially increase
+precarious jobs
+Our KPIs and Targets
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts
+and Mitigate Negative
+Impacts
+Create three million jobs in our ecosystem (based on a
+2017 study by SAP and PwC)
+Combined Group
+To Our
+SAP Integrated Report 2021
+Ethics and compliance
+4*
+Fair and inclusive workplace
+7*
+Climate change and air quality
+8**
+Governance
+Talent and development
+11*
+Customer responsibility
+2*
+12*
+285/338
+286/338
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Employee engagement
+Additional
+Information
+Security, privacy, and data protection
+Index Topic
+Climate change and air quality
+8**
+Governance
+9*
+Talent and development
+10*
+Energy
+11*
+Customer responsibility
+12*
+1*
+Employee engagement
+Transparency
+14*
+Resource efficiency and waste
+17**
+Responsible supply chain
+19**
+Solutions for an inclusive and circular economy
+20*
+Product responsibility
+According to the HGB, the following topics are material:
+13**
+Stakeholder Engagement
+For SAP, stakeholder engagement and collaboration are deeply embedded into our process of
+innovation and the development of our products and services. Before we can design a new solution,
+we must first understand the issue we are addressing. This is why we regularly liaise with the
+stakeholder groups described below, including our sustainability and Al ethics advisory panels.
+Customers
+288/338
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+287/338
+Sustainability Management
+With SAP's purpose to help the world run better and improve people's lives, sustainability is firmly
+anchored in our business strategy, governance, and executive compensation system. For more
+information about our renewed corporate strategy, see the Strategy section.
+We aim to create positive economic, environmental, and social impact within the planetary
+boundaries using two key levers:
+1) Providing products and services that meet the sustainability challenges and opportunities of our
+customers (enabler)
+2) Leading by example in our own sustainable business operations and practices (exemplar)
+Our chief sustainability officer (CSO) reports directly to the chief financial officer (CFO), who is the
+sponsor for sustainability on the Executive Board. The CSO chairs the Sustainability Council which
+consists of dedicated senior executives in charge of sustainability in each Board area. Together with
+the CSO's team, the Council is accountable for driving SAP's holistic, cross-company sustainability
+agenda and setting annual objectives and priorities.
+In addition to the Sustainability Council, we have governance and project structures in place to
+address specific topics such as solution development, environmental management, and human rights.
+Changing Our Behavior and Culture
+Employee engagement is essential for driving change throughout SAP. We set up a number of
+programs to help employees understand how sustainability is engrained in our purpose and strategy,
+and how they can contribute. For example, SAP continues to include sustainability in its onboarding
+training for new hires and various line-of-business-specific learning offerings. Furthermore, employees
+can take open SAP online courses on sustainability, which are also available to the general public for
+free. Due to the COVID-19 pandemic, onsite offerings have been on hold, but in many cases have
+shifted to new virtual alternatives.
+To help drive progress in our sustainability initiatives, we need the support of employees in every part
+of SAP. We have a global internal network of more than 300 sustainability champions who represent
+different regions and areas of the business at SAP. Not only do they act as role models and
+multipliers, these champions also tailor sustainability engagement activities to local and lines-of-
+business needs and interests and share best practices.
+We measure the success of our initiatives through our employee engagement surveys. The latest
+results from 2021 showed that 79% of our employees stated “I actively contribute to SAP's
+sustainability goals.” This is down from 87% in 2019 but up from 47% in 2009 when we introduced the
+question.
+SAP
+Putting Sustainability at the Heart of Our Strategy
+Our Al ethics advisory panel consists of academic, policy, and industry experts who advise us on the
+development and operationalization of the guiding principles for artificial intelligence. In 2021, the
+panel discussed, for example, the importance of harmonizing Al ethics with SAP's overall human
+rights agenda and operationalizing these topics.
+Al Ethics Advisory Panel
+Our sustainability advisory panel consists of expert representatives from our customers, investors,
+partners, NPOs, and academia. In 2021, the panel discussed key initiatives related to corporate social
+responsibility, environmental performance, and our sustainability management solutions.
+For more information about our customer engagement programs, see the Customers section.
+Employees
+We survey our employees regularly throughout the year. For the results of our latest employee survey
+and action items resulting from it, see the Employees and Social Investments section.
+We strive for constructive labor relations across the world, working within each country's requirements.
+We currently have social partners in 37 countries in Europe, Asia, and the Americas. These employee
+representative bodies consist of elected union members and/or non-union members, and are
+consulted by SAP management mainly on topics that define the work environment and work
+processes. Collective bargaining agreements with unions are only made in countries where legally
+required. Overall, about 49% of our employees are represented by works councils or an independent
+trade union, or are covered by collective bargaining agreements.
+In addition, the Executive Board answers employees' questions in quarterly all-hands meetings. In
+regular coffee corner sessions, senior executives explain our strategy to employees and answer their
+questions directly.
+Financial Analysts and Investors
+For more information about our dialog with the financial community (that is, financial analysts,
+institutional investors, and retail shareholders), see the Investor Relations section.
+Governments
+For more information about our dialog with governments, see the Public Policy section.
+Industry Analysts
+Our Analyst Relations team, the Executive Board, and executives have strong relations with IT analysts
+and engage with them on strategic SAP solutions and services on a frequent basis.
+Partners
+With more than 22,500 partners around the world, the SAP ecosystem is vital to our success. We take
+a multifaceted approach to engagement that begins with the dedicated, interactive SAP Partner
+Portal. Partners receive regular communications including customized newsletters, training offers, and
+Web seminars, with the latest announcements and thought leadership relevant to their specific
+partnership type. Additionally, virtual events are held throughout the year, around the globe, to further
+gauge partners' feedback on how SAP can continuously improve. For more information about our
+ecosystem, see the section Products, Research & Development, and Services.
+Non-Profit Organizations (NPOs) and Academia
+Our dialog with NPOs and academic institutions helps us understand how we can address today's
+most pressing issues with our solutions and what is expected from us as a corporation. For example,
+SAP Integrated Report 2021
+SAP
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+SAP University Alliances introduces students and faculty to SAP software by providing networking and
+educational activities and partnering to build technology skills. For more information about how we
+engage with NPOs, see the Employees and Social Investments and Our Contribution to the UN SDGS
+sections.
+Sustainability Advisory Panel
+Well-being, health, and safety
+To Our
+Stakeholders
+SAP
+28/338
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+24/338
+23/338
+In May 2021, we adopted, besides the above resolution, two further resolutions by correspondence,
+namely: one resolution appointing a SAP regional president for the Greater China region (China,
+Taiwan, Hong Kong), and one resolution approving an additional venture capital fund (Sapphire
+Ventures Fund VI).
+Resolutions Adopted by Correspondence in May
+On April 15, 2021, the Supervisory Board reviewed the first quarter results for 2021 and SAP's
+competitive situation. A senior analyst from global asset management company AllianceBerstein
+joined this session to share an outside view of SAP from the investors' standpoint. With this expert, we
+also examined the most important metrics in SAP's financial reports and the capital markets'
+expectations of SAP. We also assessed the effectiveness of the work of the full Supervisory Board and
+its committees (the so-called the efficiency review), as is regularly required pursuant to the
+recommendations of the German Corporate Governance Code (GCGC, herein: Code). For more
+information relating to this assessment, see the Corporate Governance Statement for 2022. In this
+regard, an electronic survey was sent to all the Supervisory Board members ahead of the meeting,
+with questions addressing all aspects of the Supervisory Board's work. We evaluated the
+questionnaire and discussed the consolidated survey responses and comments in the plenum. In
+closing, we dealt with the question of waiving a former Executive Board member's contractually
+agreed non-compete provisions.
+Meeting in April
+In February 2021, the Supervisory Board approved by way of correspondence vote the corporate
+governance statement for 2021 as well as the appointment of new regional presidents for the APJ
+(Asia Pacific Japan) and EMEA North (Europe, Middle East, and North Africa) regions.
+Resolutions Adopted by Correspondence in February
+consolidated financial statements for 2020, the audits conducted by KPMG AG
+Wirtschaftsprüfungsgesellschaft (KPMG), and the Executive Board's proposed resolution on the
+appropriation of retained earnings for 2020. The auditor attended the meeting and reported in detail
+on the audit and its findings for each of the focus areas that had been agreed between the auditor
+and the Audit and Compliance Committee. The auditor also related the discussions on those matters
+at the preceding meetings of the Audit and Compliance Committee. The auditor then discussed the
+results of the audit with the Supervisory Board and answered our questions. The Audit and
+Compliance Committee had comprehensively prepared all topics in connection with the financial
+statements and the consolidated financial statements for 2020, and in particular reported on the form
+and scope of its examination of the documents relating to the financial statements, which it
+recommended we approve. The Supervisory Board approved the audit. There were no findings from
+our own examination, so we gave our consent to the SAP SE and consolidated financial statements
+for 2020. We endorsed the Executive Board's proposal concerning the appropriation of retained
+earnings for 2020, in accordance with the Audit and Compliance Committee's recommendation to us,
+and subsequently passed the proposed resolutions for the SAP SE Annual General Meeting of
+Shareholders on May 12, 2021. In particular, this included our proposal to the Annual General Meeting
+concerning the election of an auditor for fiscal 2021. Next, we extended the appointment of Juergen
+Mueller as member of the Executive Board for a further three years. In compliance with auditor
+rotation legislation, we resolved, on recommendation of the Audit and Compliance Committee, to
+propose to the 2022 Annual General Meeting that BDO AG Wirtschaftsprüfungsgesellschaft be
+appointed as SAP SE's auditor for fiscal 2023, so as to facilitate optimal familiarization with and
+preparation for the new auditor. Prior to this, the Audit and Compliance Committee had conducted a
+tender and selection process to identify a suitable new auditor and, following its own in-depth analysis
+of the candidates, proposed two of them to the Supervisory Board while citing a clear preference. In
+addition, the Executive Board gave us an overview of the Company's equity investments in 2020 and
+SAP's donation activities.
+Further Information on
+Sustainability
+Additional
+Information
+Meeting in July
+-
+Resolution Adopted by Correspondence in December
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+Information
+SAP
+We adopted two resolutions by correspondence in November 2021. In the first correspondence vote,
+the Supervisory Board extended Thomas Saueressig's Executive Board contract by a further three
+years to October 2025, and in that regard defined a new total compensation for this Executive Board
+member effective November 1, 2022. We had deliberated on this resolution in advance in our October
+session. In the second correspondence vote, we consented, on recommendation of the Finance and
+Investment Committee, to the execution of a share repurchase program in the amount of €1 billion.
+The program is to be executed between February 2022 and December 2022, and is intended to
+enable SAP to service future awards under the global share-based employee compensation program
+predominantly through SAP shares. This resolution was based on the authorization granted by the
+Annual General Meeting of Shareholders on May 17, 2018, under agenda item 8.
+Resolution Adopted by Correspondence in November
+At our meeting on October 28, 2021, the Executive Board first reported on business performance in
+the third quarter. As is regularly the case, we also dealt with the topic of independence. Based on the
+findings from our own examination, we determined that all shareholder representatives were
+independent in the meaning of the Code and were therefore to be named as such in the Corporate
+Governance Statement. We also resolved on what we believe to be the appropriate number of
+independent shareholder representative members, and determined that the Supervisory Board has an
+appropriate number of independent members in the meaning of the Code, also when the shareholder
+structure is taken into account. In agreement with the Executive Board, we also adopted, for regular
+publication in October 2021, the annual Declaration of Implementation of the Code, and approved an
+amendment to the objectives for the composition of the Supervisory Board. On recommendation of
+the Finance and Investment Committee, we consented to a follow-on share offering by Qualtrics,
+under which the subsidiary offered additional Qualtrics shares through the stock market in
+November 2021. Prior to this decision, the Executive Board explained to the meeting members the
+planned use of the funds collected in this way and how the move would affect SAP SE's stake in
+Qualtrics. The Executive Board also reported on the efficiency review we had requested in the
+Research & Development area.
+Meeting in October
+In August 2021, the Supervisory Board resolved by way of correspondence the appointment of a new
+chief strategy officer for SAP.
+Resolutions Adopted by Correspondence in August
+When we met on July 29, 2021, we resolved to file a petition to the court for the removal of an
+employee representative from the Supervisory Board. The Supervisory Board was advised in this
+regard by a law firm it had commissioned to examine the underlying facts. The Supervisory Board
+member in question was first given the opportunity to comment on matter, and then left the meeting
+to allow the other members of the Supervisory Board to discuss and vote on the agenda item. The
+member rejoined the meeting once the item had been dealt with. After that, we discussed the effects
+of an adjustment in the non-IFRS definition – which from a Group point of view was not material - on
+the Group budget. In addition, we updated the list of transactions that go beyond the scope of the
+Company's articles of incorporation and for which the Executive Board must obtain the Supervisory
+Board's prior consent. On recommendation of the Finance and Investment Committee, we also
+agreed to the planned acquisition of the U.S.-based company Clarabridge by Qualtrics, a listed SAP
+subsidiary in which SAP holds a majority interest, based on the details of the acquisition contract
+explained to us previously. Fairness opinions of two independent consulting firms confirmed that the
+purchase price was fair. With the combination of both companies' products, now made possible by
+the acquisition, SAP aims to reinforce Qualtrics' leading position in the Experience Management (XM)
+space.
+SAP Integrated Report 2021
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+As already announced publicly in a May 4, 2020, mandatory disclosure, the Company has also
+stepped up its cybersecurity efforts in the wake of internal investigations. The Audit and Compliance
+Committee monitored, from the outset and continuously in the year under review, the progress of
+cybersecurity measures introduced by the Executive Board in relation to SAP cloud products, as well
+as the other steps taken to continuously improve security standards.
+The Audit and Compliance Committee continued to seek assistance from its own external consultants
+to help address the complex technical and legal nature of the compliance and cybersecurity matters
+being investigated, and reported on their opinions to the Supervisory Board, which – where required -
+resolved on the next steps. In particular, representatives of the external legal consultant referred to
+above attended the Supervisory Board's July 2021 meeting as experts and explained to the plenum
+the results of their legal audits and the status of the internal investigations. At present, SAP is still in
+discussions with the U.S. DOJ and the U.S. Securities and Exchange Commission (U.S. SEC) with a
+view to reaching a global resolution with regard to the compliance matters. The Supervisory Board
+and notably the Audit and Compliance Committee are regularly updated on these matters. The
+negotiations are expected to close in 2022.
+SAP's Office of Ethics & Compliance (OEC) kept the Audit and Compliance Committee continually
+informed about the ongoing investigations being conducted with the assistance of external counsel
+into potential violations of anticorruption laws (including the U.S. Foreign Corrupt Practices Act
+(FCPA)). Said updates included reports on the implementation of further significant improvements to
+compliance processes and controls at the Company, which had been introduced in response to the
+relevant investigations and as part of the general evolution of the compliance management program.
+The Audit and Compliance Committee reported in turn on the status of these compliance matters and
+on the discussions with the U.S. Department of Justice (U.S. DOJ), which intensified significantly in
+the third quarter, to the full Supervisory Board at our extraordinary meeting held on January 25, 2021,
+and at our ordinary plenary meetings held in February, April, July, and October 2021.
+The Supervisory Board and the Audit and Compliance Committee dealt at length with the ongoing
+compliance and cybersecurity matters and immediately addressed all governance issues that arose
+during the reporting year.
+Compliance, Cybersecurity, and Governance Matters
+and Strategy Committee was reduced from 12 to 10 members. We subsequently adopted the rules of
+procedure of the committees – except for the China Strategy Committee and the Nomination
+Committee - in updated form at our meeting on July 29, 2021. As part of a circular correspondence
+vote at the beginning of October 2021, a new employee representative was appointed to each of the
+Personnel and Governance Committee and the People and Culture Committee as successor to an
+employee representative who had left both committees. When we convened on October 28, 2021, we
+updated the rules of procedure of the full Supervisory Board and of the Audit and Compliance
+Committee, primarily to take account of the new regulations, insofar as they pertained to the work of
+the Supervisory Board, in the German Act to Strengthen Financial Market Integrity, which for the most
+part entered into force on July 1, 2021. The rules of procedure were also updated to reflect the
+increased requirements of investors regarding the handling of ESG (environmental, social and
+governance) issues in the supervisory bodies. For more information about the Supervisory Board
+committees, particularly their respective tasks and responsibilities, see Corporate Governance
+Statement for 2022 and the Corporate Governance section of SAP's Web site. We also resolved, by
+way of correspondence vote in December 2021, on the creation of an eight-member Go-to-Market
+and Operations Committee effective January 1, 2022, comprising an equal number of employer and
+employee representatives. Our objective with this new Committee is to provide more space for
+deliberating the sales and marketing strategy and discussing same with the relevant Executive Board
+members, and thereby ease the burden on the Strategy and Technology Committee. We believe that
+the work in the committees is now structured even better than before.
+Information
+Further, the Supervisory Board was informed that, following comprehensive investigations into
+potential export controls and economic sanctions violations, SAP had entered into a non-prosecution
+agreement with the U.S. DOJ and mutual settlement agreements with the U.S. Bureau of Industry and
+Additional
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+SAP
+Further Information on
+Sustainability
+In December 2021, we gave our approval, as recommended by the Personnel and Governance
+Committee, for compensation-related changes to be made to the Executive Board contracts of Scott
+Russell effective January 1, 2022, and Thomas Saueressig effective November 1, 2022.
+21/338
+SAP
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+In the plenary session on February 24, 2021, we approved a change to the Executive Board's
+schedule of portfolios. This was followed by a report on business in 2020, and the adoption of the
+budget for 2021 after discussing same extensively with the Executive Board. Next, we turned to the
+matter of Executive Board compensation. We first determined the total target achievement under the
+Short-Term Incentive (STI) 2020 Plan, which, due to the COVID-19 pandemic, had not resulted in any
+payouts. After that, we deliberated on Executive Board compensation for 2021. We set the specific
+target numbers for, and relative weighting of, each key performance indicator (KPI) of the STI 2021. In
+addition, we set the specific target numbers for each KPI of the Long-Term Incentive Program 2020
+(LTI 2020), tranche 2021. The Supervisory Board, as required, evaluated the appropriateness of the
+individual Executive Board members' total compensation for fiscal 2021, and in each case found it to
+be appropriate in terms of amount, structure, objective criteria, and for each member's responsibilities
+and tasks. We referred in this regard to an appropriateness certificate obtained beforehand from an
+external consulting firm for compensation matters. In addition, the Supervisory Board approved, on
+recommendation of the Personnel and Governance Committee, the payment of supplementary
+compensation to the Executive Board members as permitted by the compensation system in the
+event of extraordinary situations. In doing so, the Supervisory Board honored the fact that, despite
+unprecedented challenges posed by the COVID-19 pandemic, the related restrictions, and the
+ensuing economic crisis, the Executive Board members exhibited extraordinary performance, ensuring
+the company remained profitable and positioned for long-term, sustainable success. In accordance
+with the agreement, the Executive Board members invested the net payout amount of this
+supplementary compensation in the purchase of SAP shares with a holding period of three years. The
+Supervisory Board referred prior to this decision to a corresponding analysis from an independent
+consulting firm for compensation matters as well as a legal opinion from an external law firm. For
+more information about the STI 2021, the LTI 2020, tranche 2021, the supplementary compensation,
+and the other compensation elements for Executive Board members, see the Compensation Report.
+In addition, the Supervisory Board turned its attention to the SAP SE financial statements and the
+Other key topics addressed at our meetings in 2021 notably included the following:
+Meeting in February (Meeting to Discuss the Financial Statements)
+22/338
+Another topic of interest, initially dealt with at length by the responsible Finance and Investment
+Committee at a March 2021 meeting, was SAP Fioneer, SAP's joint venture with Dediq. At said
+meeting, the Committee and the Executive Board examined all the details of the joint venture
+agreement, the ownership structure, and the underlying strategic and economic considerations. After
+comprehensive analysis, the Committee members approved the joint venture by correspondence
+vote. When later media reports criticized the shareholder structure of the joint venture, the Audit and
+Compliance Committee probed the governance aspects of the transaction to follow up on the
+concerns expressed. To this end, the Committee commissioned two independent external opinions to
+assess the valuation of SAP's and participating partners' stake in SAP Fioneer and to report on
+whether the decision process regarding the joint venture complied with applicable law. The opinions
+confirmed that the valuation was in line with the market and the decision process compliant.
+In an extraordinary meeting in December 2021, the Audit and Compliance Committee dealt with
+allegations in media reports about inadequate corporate governance measures in connection with a
+past legal dispute that SAP had already settled many years earlier in 2014. A representative of the law
+firm commissioned by the Supervisory Board at the time informed the Committee about the checks
+and deliberations actually carried out by the Supervisory Board during the period in question. The
+external counsel and the Committee jointly concluded that the modus operandi chosen by the
+Supervisory Board at the time was appropriate and that the Supervisory Board had no reason to
+question it after the fact.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+Security (BIS) and U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) in
+April 2021. SAP had voluntarily self-disclosed potential violations to the U.S. DOJ and OFAC in
+September 2017 and had notified the U.S. SEC at the same time. Since then, the Audit and
+Compliance Committee and the full Supervisory Board have been kept continually apprised of the
+status of the investigations.
+The Work of the Supervisory Board Committees
+Management Report
+-
+Additional
+Information
+Training and Professional Development
+The members of the Supervisory Board once again took advantage of various training and
+professional development opportunities throughout the year, with appropriate support from the
+Company. At the start of their term of office, new Supervisory Board members were made familiar
+with their tasks and responsibilities through on-boarding sessions and leaflets. In addition, the
+members of the Audit and Compliance Committee were invited to a presentation in April 2021 on
+"New regulatory reporting requirements," and a short seminar in July 2021 on the impact of the
+"OECD/G20 New World Tax Order for Digital Business" (a new basic approach adopted by OECD/G20
+to reform international business taxation) on SAP. In January 2021, the Supervisory Board members
+were invited to the professional development events “Resilient and Sustainable Supply Chain with
+SAP Digital Supply Chain," and "RISE with SAP." In March 2021, the Supervisory Board members were
+invited to a seminar on "Professional Negotiation Management" and a training course focusing on
+pending business models in Retail Solutions (digital solutions for the retail industry). Where it made
+sense, the training offerings were recorded and placed on a specially configured training platform to
+enable the remaining Supervisory Board members to take part in them as well.
+SAP SE and Consolidated Financial Reports for 2021
+KPMG audited the SAP SE and consolidated financial reports for 2021. The Annual General Meeting
+of Shareholders elected KPMG as the SAP SE and SAP Group auditor on May 12, 2021. The
+Supervisory Board proposed the appointment of KPMG on the recommendation of the Audit and
+Compliance Committee. Prior to the proposed resolution being put to the Annual General Meeting of
+Shareholders, KPMG had confirmed to the chairperson of the Supervisory Board and the Audit and
+Compliance Committee that circumstances did not exist that might prejudice or raise any doubt
+concerning its independence as the Company's auditor. In that connection, KPMG also informed us of
+the volume of the services that were not part of the audit which it had either provided to the Group in
+the past year or was engaged to provide in the year to come. The Supervisory Board has agreed with
+KPMG that the auditor should report to the Supervisory Board and record in the auditor's report any
+fact found during the audit that is inconsistent with the declaration given by the Executive Board and
+the Supervisory Board concerning implementation of the German Corporate Governance Code.
+KPMG examined the SAP SE financial statements prepared in accordance with the German
+Commercial Code, the consolidated financial statements prepared in accordance with International
+Financial Reporting Standards (IFRSS) as required by the German Commercial Code, section 315e,
+and the combined SAP Group and SAP SE management report prepared in accordance with the
+German Commercial Code, and certified them without qualification. The auditor thus confirmed that,
+in its opinion and based on its audit in accordance with the applicable accounting principles, the
+SAP SE and consolidated financial statements give a true and fair view of the net assets, financial
+position, and results of operations of SAP SE and the SAP Group. The auditor also confirmed that the
+combined SAP SE and SAP Group management report is consistent with the corresponding financial
+statements and as a whole gives a suitable view of the position of SAP SE and the SAP Group and of
+foreseeable opportunities and risks. In accordance with section 317 (3a) of the German Commercial
+Code, the auditor also examined and confirmed that the renderings of the financial statements, the
+management report, the consolidated financial statements, and the combined management report
+contained in the files submitted on an electronic data carrier, which can be accessed by the issuer on
+the secure client portal, and prepared for the purposes of disclosure comply in all material respects
+with the requirements of section 328 (1) of the German Commercial Code regarding the electronic
+reporting format (“ESEF format”). KPMG had completed its audit of SAP's internal control over
+financial reporting and certified without qualification that it complies with the applicable U.S.
+standards. The auditor stated in its opinion that it considers SAP's internal controls with respect to the
+consolidated financial statements to be effective in all material respects. Additionally, it provided
+assurance on the non-financial declaration in the combined management report, and on the separate
+review of the compensation report and selected qualitative and quantitative sustainability disclosures
+outside of the financial statements and management report. All Audit and Compliance Committee
+members and Supervisory Board members received - initially in the form of drafts that were identical
+to the final documents – the documents concerning the financial statements mentioned above, the
+29/338
+30/338
+Further Information on
+Sustainability
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+audit reports prepared by KPMG, and the Executive Board's proposal concerning the appropriation of
+retained earnings in good time. On February 23, 2022, the Executive Board prepared the financial
+accounts of SAP SE and the Group for 2021, comprising the SAP SE financial statements, the
+consolidated financial statements, and the combined management report, and submitted them
+without delay to the Supervisory Board.
+SAP Integrated Report 2021
+The Executive Board explained the financial statements of SAP SE and the SAP Group and its
+proposal concerning the appropriation of retained earnings at the meeting of the Audit and
+Compliance Committee on February 22, 2022 (based on the drafts identical to the final documents)
+and at the meeting of the Supervisory Board on February 23, 2022. Members of the Executive Board
+answered questions from the Committee and Supervisory Board members. At the Audit and
+Compliance Committee meeting, they also explained the compensation report and the Annual Report
+on Form 20-F prepared in accordance with the applicable U.S. standards.
+Consolidated Financial
+Statements IFRS
+Combined Group
+The committees made a key contribution to the work of the Supervisory Board in 2020, and reported
+on their work to us, including their preparatory work for and decisions made on the relevant agenda
+items of the subsequent Supervisory Board meetings. The following committees were in place in the
+year under review:
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Management Report
+Additional
+Information
+The People and Culture Committee held four meetings in fiscal year 2021. The focus of the
+meeting in February 2021 was SAP's People Strategy. In this connection, the Committee was given
+an overview of the implementation status, the future concept for performance management, and
+the attraction, hiring, and onboarding of top talents. Also at this meeting, and again in August and
+October 2021, the Committee was updated on the impact of the coronavirus pandemic and the
+global measures introduced both within and outside the Company as a result. At its April meeting,
+the Committee turned its attention to the early talent process and looked back at the SAP People
+Day, reviewing both the successes and insights for potential improvement. In addition, the
+Executive Board updated the Committee on the measures taken in the various Board areas to
+harness and integrate the diverse socio-cultural backgrounds of the workforce into SAP's corporate
+culture, and explained the key metrics in that regard. The August meeting focused on the new
+Future of Work organization at SAP, which deals with the changing world of work and its impact on
+society, the process of attracting leaders, the leadership culture at SAP, and the new onboarding
+experience, that is, the process of familiarizing new leaders with their roles. In October 2021, after
+receiving an update on the diversity strategy focused on the topics "women in management" and
+"promoting ethnic diversity at SAP," the Committee discussed SAP's revised employee
+compensation strategy planned for the next two years, the management culture, and the talent
+development process.
+The Nomination Committee met twice in the reporting year. In January 2021, the Committee
+resolved the nomination of Qi Lu and Rouven Westphal as candidates for election to the
+Supervisory Board by the Annual General Meeting on May 12, 2021. The Committee met again on
+December 10, 2021, to deliberate on the candidates for election to the Supervisory Board at the
+Annual General Meeting in May 2022. It resolved to nominate Hasso Plattner, Rouven Westphal,
+and Gunnar Wiedenfels as candidates for reelection at the Annual General Meeting on
+May 18, 2022. Further, the Committee discussed the subject of succession planning for the
+Supervisory Board. It decided to solicit the help of an international personnel consulting firm, so as
+to obtain an overview of available top managers who might be potential candidates to succeed
+departing shareholder representatives in future.
+The work of the committees and their regular reports to the full Supervisory Board ensured that we
+were kept fully informed of all matters covered by the committees and were able to discuss them
+thoroughly.
+Corporate Governance
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+China. In December 2021, the Committee received a written final report from the Executive Board
+summarizing their jointly-developed China strategy and the planned measures for implementing it.
+The task of the Committee was thus fulfilled, and it concluded its activities at the end of the fiscal
+year 2021.
+After the Executive Board had explained them, the Audit and Compliance Committee and the
+Supervisory Board reviewed the financial statement documents (based on drafts identical to the final
+documents), taking KPMG's audit reports (or the drafts identical to the final documents) into account.
+The Audit and Compliance Committee then passed the compensation report on to the Supervisory
+Board for release. The representative of the auditor who attended presented full reports on the audit
+and the results of the audit to the Audit and Compliance Committee and Supervisory Board meetings
+and explained its audit reports (or final drafts thereof). The auditor also reported that it had not
+identified any material weaknesses in SAP's internal control and risk-management systems for
+financial reporting. Both the Audit and Compliance Committee and the Supervisory Board asked
+detailed questions about the form, scope, and results of the audit. The Audit and Compliance
+Committee reported to the Supervisory Board on its own review of the financial statements of SAP SE
+and the SAP Group, its discussions with the Executive Board and with the auditor, and its supervision
+of the financial reporting process. It confirmed that as part of its supervisory work, it had addressed
+the SAP Group's internal control, risk management, and internal auditing systems, and found the
+systems to be effective.
+SAP's corporate governance and insider trading compliance officer monitored our compliance with
+those recommendations in the Code with which we claim to comply in SAP SE's declaration, and
+reported in full to the Personnel and Governance Committee in this regard at the latter's meeting on
+February 10, 2021. Detailed information about compliance with the Code is available in the Executive
+and Supervisory Boards' Corporate Governance Statement. Members of the Supervisory Board and of
+the Executive Board had no conflicts of interest that recommendations E.1 and E.2 of the Code
+require to be disclosed to the Supervisory Board. Insofar as Supervisory Board members hold
+executive positions in companies or have material equity in companies that currently have business
+dealings with SAP, we do not see any impairment of their independence. The scope of these
+transactions is relatively small and, moreover, takes place at arm's length. During the year under
+review, the Personnel and Governance Committee approved transactions involving a member of the
+Executive Board in 2020 which were all consistent with industry standards and immaterial. Other than
+those contracts mentioned in this report, the Company made no other contracts with members of the
+Executive Board or Supervisory Board that would have required a resolution of the Supervisory Board.
+The Audit and Compliance Committee and the Supervisory Board satisfied themselves that KPMG
+had conducted the audit properly. In particular, they concluded that both the audit reports and the
+audit itself fulfilled the legal requirements. On the basis of the report and the Audit and Compliance
+Committee's recommendation, the Supervisory Board approved the results of the audit and, since
+there were no findings from our own examination, we gave our consent to the SAP SE financial
+statements, the consolidated financial statements, the combined Group management report, and
+adopted the compensation report pursuant to the German Stock Corporation Act, section 162. The
+financial statements and combined management report were thus formally adopted upon approval by
+the Supervisory Board. The Supervisory Board's opinion of the Company and the Group coincided
+with that of the Executive Board as set out in the combined management report. The Supervisory
+Board considered the proposal presented by the Executive Board concerning the appropriation of
+retained earnings. We had regard to the requirements of dividends policy, the effects on the liquidity of
+SAP SE and the SAP Group, and the interests of the shareholders. We also discussed these matters
+with the auditor. We then endorsed the Executive Board's proposal concerning the appropriation of
+retained earnings, in accordance with the Audit and Compliance Committee's recommendation. The
+corporate governance statement pursuant to the German Commercial Code, sections 315d and 289f
+was approved for publication by the Supervisory Board by way of correspondence vote prior to the
+meeting to discuss the financial statements on February 22, 2022. Finally, we adopted this present
+Report.
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+26/338
+25/338
+The Personnel and Governance Committee held four regular meetings in the reporting year. In
+particular, the Committee, in fulfillment of the tasks assigned to it, extensively prepared and
+discussed in advance the deliberations of the Supervisory Board and its resolutions on the self-
+assessment and reorganization of the Supervisory Board committees, on a termination agreement
+for a departing Executive Board member, and on Executive Board compensation, or it adopted its
+-
+Combined Group
+Besides the matters described above, the committees focused primarily on the following topics in
+2021:
+China Strategy Committee: Gerhard Oswald (chairperson), Margret Klein-Magar, Lars Lamadé,
+Qi Lu (since February 24, 2021), Hasso Plattner, Christine Regitz (since February 24, 2021),
+Friederike Rotsch, Heike Steck
+People and Culture Committee (formerly People and Organization Committee): Aicha Evans
+(chairperson since June 1, 2021), Pekka Ala-Pietilä (until May 12, 2021), Manuela Asche-Holstein
+(since October 8, 2021), Gesche Joost, Monika Kovachka-Dimitrova, Peter Lengler (since
+August 10, 2021), Gerhard Oswald (until May 31, 2021, as chairperson and member), Friederike
+Rotsch (since June 1, 2021), Heike Steck, Christa Vergien-Knopf (until August 9, 2021), Ralf Zeiger
+(until October 7, 2021)
+· Technology and Strategy Committee: Hasso Plattner (chairperson), Christine Regitz (deputy
+chairperson), Aicha Evans, Gesche Joost, Monika Kovachka-Dimitrova, Lars Lamadé, Bernard
+Liautaud, Qi Lu (since February 24, 2021), Gerhard Oswald (until May 31, 2021), Heike Steck,
+Christa Vergien-Knopf (until May 31, 2021), James Wright
+Finance and Investment Committee: Rouven Westphal (since June 1, 2021, as chairperson and
+member), Panagiotis Bissiritsas (until May 31, 2021), Christine Regitz, Friederike Rotsch (until
+May 31, 2021, as chairperson and member), Heike Steck (since June 1, 2021), Gunnar Wiedenfels,
+James Wright
+Audit and Compliance Committee (formerly Audit Committee): Gunnar Wiedenfels
+(chairperson), Panagiotis Bissiritsas (until May 31, 2021), Margret Klein-Magar, Peter Lengler (since
+August 10, 2021), Gerhard Oswald (until May 31, 2021), Friederike Rotsch, Christa Vergien-Knopf
+(June 1 until August 9, 2021), Rouven Westphal (since June 1, 2021), James Wright
+The Committee also reported that KPMG had told it that no circumstances had arisen that might give
+cause for concern about KPMG's impartiality, and informed us about the services KPMG had provided
+that were not part of the audit. The Committee reported that it had examined the auditor's
+independence, taking the non-audit services it had rendered into consideration, and stated that, in the
+Committee's opinion, the auditor possessed the required degree of independence and professional
+qualification.
+Personnel and Governance Committee (formerly General and Compensation Committee):
+Friederike Rotsch (chairperson since June 1, 2021), Pekka Ala-Pietilä (until May 12, 2021),
+Panagiotis Bissiritsas (until May 31, 2021), Aicha Evans, Margret Klein-Magar, Monika Kovachka-
+Dimitrova (since October 8, 2021), Lars Lamadé, Bernard Liautaud, Hasso Plattner (chairperson
+until May 31, 2021), Christine Regitz, Ralf Zeiger (until October 7, 2021)
+Nomination Committee: Hasso Plattner (chairperson), Pekka Ala-Pietilä (until May 12, 2021),
+Aicha Evans (since June 1, 2021), Bernard Liautaud (until May 31, 2021), Gerhard Oswald (until
+May 31, 2021), Friederike Rotsch (since June 1, 2021), Rouven Westphal (since June 1, 2021)
+Each of the aforementioned committees was active in 2021. For more information about the
+Supervisory Board committees and their duties, see the Corporate Governance section of SAP's Web
+Management Report
+site.
+Further Information on
+Sustainability
+The China Strategy Committee met three times in the reporting year. At its meeting in February, the
+Committee discussed SAP's business performance in China in the past years, the current situation
+in China, and the software market there. It also analyzed SAP's future strategy, particularly the
+areas in which SAP sought to make adjustments to cater to the growing importance of the Chinese
+market. When it met in April, the Committee examined SAP's product, sales, and partner strategies
+and the associated risks. To this end, it received reports in particular on the temporary tensions
+between the United States and China. The July meeting focused on the current geopolitical
+situation and SAP's half-year 2021 results. In addition, the Committee discussed the appointment
+of a new SAP regional president for Greater China and plans to increase SAP's market share in
+27/338
+Consolidated Financial
+Statements IFRS
+The Technology and Strategy Committee met four times in 2021. It discussed key technology
+trends in the software industry in the years to come and SAP's corporate and product strategies.
+The Executive Board explained SAP's technology strategy to the Committee members at its
+February meeting, where the two bodies also discussed the improved competitive situation in
+marketing as a result of the 2020 acquisition of Emarsys. At the meeting in April, the Committee
+turned its attention to how SAP's partner network and SAP itself used SAP technologies to develop
+cloud applications for organizations. In July 2021, the Executive Board updated the Committee on
+the strategy plans for small and medium-sized enterprises. The Executive Board also reported on
+how SAP planned to leverage machine learning and direct integration in business processes to set
+itself above the competition in the workflow management domain, that is, in the collaborative
+processes or business processes used by companies and authorities. When it met in
+October 2021, the Committee examined SAP's long-term innovation strategy and the changes in
+company culture that had been triggered to support this. To this end, the Executive Board
+explained that the lever for these changes was the REINVENT strategy, which, through the
+integration of SAP's product portfolio, the use of artificial intelligence, and a wide range of new
+functions and applications, was intended to support customers on their journey to an intelligent
+enterprise and greater sustainability.
+February 2021, the Executive Board updated the Committee on the status of both projects as well
+as on the closing of the sale of SAP Digital Interconnect (SDI). The Executive Board also reported
+on the acquisition of Finnish company AppGyver, provider of a no-code platform enabling app
+development without prior coding experience. Further, the Committee received its regular written
+update on SAP's equity investments during the preceding fiscal year. In the joint meeting with the
+Audit and Compliance Committee that followed, the members of both Committees discussed the
+annual budget for 2021 and voted in favor of recommending its approval to the Supervisory Board.
+On March 15, 2021, the Committee convened to deliberate on a small acquisition by an SAP
+subsidiary. At the meeting in April, the Executive Board reported to the Committee on selected
+Investor Relations activities. In addition, representatives from Sapphire Ventures gave the
+Committee an overview of the European and U.S. market for venture capital in technology and a
+status report on the active SAP venture capital funds, and presented the details of the planned
+additional venture capital fund, Sapphire Venture Fund VI. A resolution to recommend the
+Supervisory Board's approval of this new fund was subsequently adopted by the Committee by
+correspondence in May 2021. At our extraordinary meeting on July 23, 2021, we deliberated on
+Qualtrics' planned acquisition of Clarabridge. At our ordinary meeting on July 29, 2021, the
+Executive Board presented an analysis of the acquisitions and shareholding transactions of the
+past three years, updated us on the SAP's liquidity situation, and compared the current business
+performance with the budget presented for fiscal 2021. At the Committee's regular meeting in
+October, the Executive Board took the Committee through SAP's current product portfolio. In
+addition, the Committee deliberated on the Executive Board's proposed restructuring of current
+financing activities and recommended the Supervisory Board approve it as well. The Committee
+was also given a funding and strategy update on the Sapphire Ventures funds manager, and
+provided with a written report on SAP's business performance up to the third quarter. In
+December 2021, the Committee held a second joint meeting with the Audit and Compliance
+Committee, at which the Executive Board presented the preliminary Group annual plan for 2022.
+This meeting was held in preparation for the Supervisory Board meeting in February 2022, at which
+the full Supervisory Board resolved to approve the Group annual plan for 2022.
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Additional
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+Additional
+Information
+own resolutions in these matters. At its first meeting in February 2021, the Committee reviewed the
+annual report from SAP's corporate governance and insider trading compliance officer, as
+presented to it. In its second meeting in February, the Committee dealt with the extension of
+Juergen Mueller's appointment to the Executive Board. When it met in July 2021, the Committee
+approved the acceptance of an outside supervisory board seat by an Executive Board member and
+the conclusion of a consulting contract with a former Executive Board member. It also discussed
+the lessons learned from the voting results at the Annual General Meeting in May 2021 and the
+feedback from institutional investors. In October 2021, the Committee prepared the Supervisory
+Board's resolutions regarding an update to the objectives for the composition of the Supervisory
+Board, submission of the implementation declaration, and determination of the independence of
+Supervisory Board members. The Committee also discussed the succession planning process for
+the Executive Board and the development of top talent as potential successors for departing
+members. At its ordinary meeting on December 16, 2021, the Committee approved its resolution
+proposal to the Supervisory Board regarding the Executive Board compensation for Scott Russell
+effective January 1, 2022, and for Thomas Saueressig effective November 1, 2022.
+Combined Group
+The Audit and Compliance Committee held ten regular meetings – two of which jointly with the
+Finance and Investment Committee - and three extraordinary meetings in 2021. It also adopted
+one resolution by way of correspondence. The Committee comprehensively prepared the
+resolutions of the Supervisory Board for all topics assigned to it, as described above, and dealt at
+its meetings with the course of business in the respective quarter, the accounting processes, the
+preparation of end-of-quarter closings, and the quarterly reports due for publication. In addition, the
+Committee chairperson was in regular contact with the auditor. Other recurring meeting topics
+included SAP's risk management system, its internal control system, its compliance system
+(including specific compliance issues, the status of corresponding SAP-internal investigations, and
+case-related collaboration with authorities), and cybersecurity. During its meeting in February 2021,
+the Committee focused on the financial accounts of SAP SE and the SAP Group for 2020 and
+prepared the Supervisory Board's proposed resolutions to the Annual General Meeting of
+Shareholders concerning the election of an auditor and the appropriation of retained earnings. The
+decision on the recommendation regarding the election of the auditor was preceded by a review of
+the auditor's independence, qualifications, and quality of work. To monitor the latter, the Audit and
+Compliance Committee obtained regular reports from the auditor on its internal quality assurance
+standards and on any material findings from internal quality audits, from external quality controls
+via peer review, and from any inspections conducted by the government or regulators into the
+auditor's audits. Other material topics deliberated on by the Committee beyond the regular meeting
+topics in its ordinary and extraordinary meetings included quarter-specific matters and the
+compensation system for SAP's Sales organization. Further, the Committee discussed the progress
+of selected lawsuits involving SAP. The Audit and Compliance Committee also received regular
+updates on the activities relating to the change in auditor for SAP's financial statements and
+consolidated financial statements. The Committee discussed the audit focus with the auditor at its
+meeting in July. At its meeting in April, and again at its meeting in July, the Committee resolved to
+commission non-audit services from the auditor in relation to the compensation report (April
+meeting) and in relation to the non-financial report (July meeting). Specifically, this included a
+limited assurance review of the documents and a report to the Committee on the results of the
+review. As reported in more detail below, the Committee also held two joint meetings with the
+Finance and Investment Committee in February and December 2021 to discuss the Group annual
+plan for 2021 and the preliminary Group annual plan for 2022. The auditor attended all Audit and
+Compliance Committee meetings except for the extraordinary meetings in June, July, and
+December, as well as the joint meetings with the Finance and Investment Committee, and reported
+in depth on its audit work and on its quarterly reviews of selected software agreements.
+The Finance and Investment Committee held six regular meetings and six extraordinary meetings
+in 2021, and outside these meetings it passed two resolutions by correspondence. Two of its
+meetings, one in February and one in December 2021, were joint meetings with the Audit and
+Compliance Committee. In two extraordinary meetings in January 2021, the Committee was given
+detailed status reports on the Qualtrics IPO and the planned acquisition of Signavio. In
+11%
+27%
+26%
+26%
+Percent of total spend
+Percent of Suppliers per Region
+Americas
+EMEA
+32%
+20%
+54%
+Combined Group
+Management Report
+We believe that diverse and sustainable businesses bring significant added value to SAP.
+Establishing an inclusive supplier network – that is, minority enterprises defined by gender, ethnicity,
+disability, sexual orientation, and other characteristics, as well as certified social enterprises that focus
+their company's mission on making social impact - have become a key priority for SAP. We believe
+that our commitment to an inclusive, bias-free culture in our workplace must be mirrored in our
+approach to our supplier base.
+Driven by our GPO, SAP's supplier diversity and social enterprise programs are an integral part of our
+transformation into a purpose-driven organization. These programs aim to build the capacity of
+diverse and social businesses to provide a fair chance at competing for contracts and are treated
+equally with other SAP suppliers. Utilizing the procurement skills and expertise within the organization,
+our GPO engages in skills-based volunteering to build the capacity of social enterprises in the
+Sustainable Growth of Revenues for International Development (S-GRID) program by the social
+purpose organization MovingWorlds.
+To support these programs, the GPO established the Procurement with Purpose Ambassador
+Network. This network consists of volunteers within the GPO across the various procurement spend
+categories and regions; its functions include identifying new opportunities to engage with certified
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+diverse suppliers and social enterprises, engaging with their regional procurement teams on current
+and upcoming activities, supporting Environmental Management System (EMS) audits for ISO 14001
+certification, and acting as a multiplier for passing on Procurement with Purpose knowledge, learning,
+and training opportunities to the GPO.
+APJ
+As part of its Procurement with Purpose program, SAP was a corporate member of the following
+supplier and social enterprise certification organizations in 2021:
+Supplier Diversity:
+Social Procurement
+Workplace Infrastructure
+293/338
+Marketing & Travel
+Our CPO and chief sustainability officer meet each quarter to discuss the progress and challenges
+related to embedding sustainability in our procurement practices.
+National Minority Supplier Development Council (NMSDC)
+Upholding High Standards Across Our Supply Chain
+SAP's supplier code of conduct (SCOC) is included in our standard supplier contracts and is an
+essential part of our supplier registration. This supplier registration ensures that potential suppliers of
+SAP are aware of SAP's SCoC. We review and update our SCoC regularly to maintain high standards
+within our supplier network. This strengthens the code's enforceability and sends a clear message
+about its importance for SAP.
+In addition to requirements for sustainable packaging (such as plastic-free, appropriately sized boxes),
+our SCoC contains provisions on the Modern Slavery Act and diversity and inclusion, as well as a
+labor standards chapter that expressly refers to human rights. Furthermore, we recommend to SAP
+suppliers that they deliver goods and services that are accessible to everyone, including people with
+disabilities.
+In early 2022, the GPO will implement the Procurement with Purpose supplier qualification process.
+This process will capture information pertaining to the performance of our suppliers in three focus
+areas: Social & Inclusive Supply Chain, Environmental Supply Chain, and Human Rights in Value
+Chain. This data will enable the GPO to make an informed supplier selection based on environmental
+and social performance.
+What We Buy and Where We Buy It From
+We consider our suppliers to be key partners in our business success. In 2021, we spent
+approximately €5.3 billion in purchases from more than 15,000 suppliers worldwide
+(2020: approximately €5.1 billion from more than 14,700 suppliers worldwide). Within our five
+categories and our Sourcing Excellence Champions unit, we approach sustainability from different
+28 Car Fleet includes procurement relating to the global Company car fleet. IT Infrastructure procures products and services for SAP's
+cloud business such as network services and data center and co-location goods and services. Marketing & Travel supports topics related
+to SAP's marketing, events, merchandise, and business travel areas. Professional Services includes application and development services
+as well as financial and legal services. Workplace Infrastructure includes procurement for areas such as facility services, client services,
+and equipment, communication, and collaboration services. Sourcing Excellence Champions are responsible for the seamless execution of
+procurement and sourcing activities and are drivers for customer satisfaction and end user success.
+294/338
+SAP
+Professional Services
+SAP Integrated Report 2021
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+angles: Workplace Infrastructure (example: reduce single-use plastics packaging and packaging
+material), Professional Services (example: CO2-reduced mobility concepts, electronic contracts),
+Marketing & Travel (example: sustainable merchandise and events), IT Infrastructure (example:
+sustainable cooling of data centers), and Car Fleet (example: sustainable mobility concepts).
+Suppliers by Category (Tier 1)
+Percent of total spend
+Car Fleet
+4%
+IT Infrastructure
+To Our
+Stakeholders
+WEConnect International
+■Thermal Recycling
+Social Enterprise:
+Waste of electrical and electronic equipment (WEEE, or e-waste) is one of the world's fastest-growing
+waste streams. As a global cloud company running data centers and office buildings across the world
+with a large amount of IT devices in place for our more than 100,000 employees, the ecological
+footprint of our electrical and electronic equipment (EEE) and their end-of-life treatment is a growing
+area of focus for SAP. Thus, the ultimate goal is to give our discarded electronic devices and assets a
+second life through refurbishment and remarketing. If the device is non-repairable or unmarketable,
+the subsequent priority is to recover valuable materials through mechanical recycling.
+In multiple SAP locations, we cooperate with international and/or local IT asset lifecycle partners to
+refurbish, recycle, and dispose our EEE. In late 2020, we started to transform our e-waste reporting.
+Instead of reporting only scrapped e-waste, we began collaborating with our major IT asset lifecycle
+partners to establish a more distinguished (W)EEE reporting that enables us to see more precisely
+what type of end-of-life treatment was applied to our disposed IT assets and devices.
+End-of-Life Treatment of Electrical and Electronic Equipment
+Remarketing
+WEEE
+■Mechanical Recycling
+101
+Tons
+13
+3 117
+■Disposal
+Managing Our Discarded Electrical and Electronic Devices
+151
+In 2020, we made a commitment with our customers to strive for a significantly cleaner ocean by 2030
+at the World Economic Forum in Davos, alongside the Ellen MacArthur Foundation, World Wildlife
+Fund, and the Global Plastic Action Partnership. To make the circular economy the de facto approach
+to material use and waste management, we are working with our customers and partners on solutions
+that address full-circle transparency across all material flows to enable three priorities: eliminate,
+circulate, and regenerate.
+Eliminate: Manage packaging and regulatory risks including extended producer responsibility
+obligations and plastic taxes holistically across global markets, and embed circularity principles into
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+core busines processes to eliminate waste through the SAP Responsible Design and Production
+solution
+Also reporting to the CPO, the chief operating officer (COO) is responsible for enabling processes and
+governance within the GPO.
+Building Regenerative Business in a Circular Economy
+Disability:IN
+We believe in SAP's capabilities to help transform the economy into a low-carbon, circular system to
+reach a restorative and regenerative world of zero waste and significantly cleaner oceans by 2030. In
+alignment with SAP's Global Environmental Policy, our waste and water strategy and corresponding
+Company-wide initiatives aim to continuously reduce SAP's impact on the environment by generating
+less waste, reducing water consumption, and enabling our customer to do the same.
+Waste and Water
+-
+Social Enterprise UK
+Buy Social Canada
+Social Traders (Australia)
+Social Enterprise NL
+-
+Akina Foundation
+Social Entrepreneurship Network Germany
+These organizations enable the GPO to identify opportunities to engage with diverse suppliers and
+social enterprises, to support the 5 & 5 by '25 social procurement spend targets. This target is defined
+as 5% addressable spend with diverse suppliers and 5% addressable spend with Social Enterprises
+by year end 2025. As at the end of 2021, we had achieved €200.9 million (3.9%) diverse spend with
+958 diverse suppliers in the United States.
+To ensure that all diverse and social spend is captured, our GPO evaluates its supplier network to
+identify and register all existing certified diverse suppliers and social enterprises. Activities such as this
+and expanding our efforts with the Buy Social Corporate Challenge aim to enable SAP to fulfill our
+pledge and shift our addressable spend to diverse suppliers and social enterprises. With Ariba
+Network, we invite existing suppliers, as well as potential suppliers, to engage more in the area of
+diversity and social enterprises.
+Improving Sustainability Through Practice
+Aspiring to a World of Zero Waste
+As part of our Third Party Risk Management (TPRM) program, we have created a Responsible
+Sourcing questionnaire to identify, manage, mitigate, and avoid sustainability risks within our supply
+chain. The risk domains evaluated include: Environmental, Human Rights, Diversity, Equity & Inclusion,
+Social Enterprise, and Health & Safety.
+295/338
+296/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+As outlined in the Waste and Water section, the GPO is one of the focus areas of the interdisciplinary
+Beyond Single-Use Plastics initiative. From addressing plastic packaging materials, to the items in our
+SAP Ariba catalog, our GPO is engaging with all relevant suppliers to remove single-use plastics from
+their packaging material and their offered product portfolio.
+SAP's GPO is led by our chief procurement officer (CPO). Reporting to our CPO are the heads of our
+procurement categories (1) Car Fleet, (2) IT Infrastructure, (3) Marketing & Travel, (4) Professional
+Services, and (5) Workplace Infrastructure and their teams. 28
+Our Potential Direct and
+Indirect Impact
+A significant part of our social and environmental impact is delivered through our supply chain.
+Eliminating single-use plastics, decreasing carbon emissions, reducing oversized packages, and close
+collaboration with our supplier network are factors that contribute to a sustainable supply chain.
+Our Global Procurement Organization (GPO) aims to transform into an even more purpose-driven
+organization consistent with diversity and social enterprises. That is why we established the
+overarching Procurement with Purpose strategy, which promotes purpose-driven programs such as
+diversity and social inclusion and responsible resource usage.
+Indirect:
+SAP solutions for social responsibility; SAP Ariba Supplier
+Risk Management
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+SAP and SDG 10, Human Rights Commitment Statement, Equality for All, Diversity and Inclusion, Social Justice, Spotlight
+Black Businesses, Equal Pay for Equal Work, Fostering Corporate Spend with Diverse Suppliers, Powering Opportunity
+Through Digital Inclusion, SAP Product Accessibility, SAP Solutions for Social Responsibility, SAP Rural Sourcing
+Management
+Circulate: Establish responsible sourcing and secondary marketplaces to stimulate an increase in
+value of materials for re-use as well as gain transparency into material flows across global supply
+networks. For instance, the SAP Rural Sourcing Management solution was used to engage waste
+collector communities ethically and responsibly in the first-mile acquisition of waste materials,
+while the GreenToken by SAP solution provides full multitier transparency of raw material flows,
+including co-mingled commodities.
+Our KPIs and Targets
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts and
+Mitigate Negative Impacts
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+SDG 12 Responsible Consumption and Production
+Direct:
++ Drive sustainable business practices and integrated
+reporting
+Human Rights Commitment Statement; Diversity & Inclusion
+programs including EDGE certification; SAP Global Anti-
+Discrimination Policy; 5 & 5 by '25 initiative
+Use energy, water, and resources; produce waste
++ Decouple economic prosperity from resource
+consumption by enabling transparency and optimizing
+resource productivity in linear or circular economies
+Increase absolute resource and energy consumption
+because efficiency gains through automation may be
+counteracted (rebound effect)
+We drive resource productivity with an aspiration to a world with zero waste.
+Direct:
+Beyond Single-Use Plastics initiative; Supplier Code of
+Conduct; Sustainable Procurement; e-waste recycling
+Indirect:
+SAP Responsible Design and Production; 5 & 5 by '25
+initiative; SAP Ariba Supplier Risk Management; SAP Digital
+Supply Chain; SAP Rural Sourcing Management;
+SAP Logistics Business Network and Material Traceability
+Energy and Emissions, Waste and Water, Sustainable Procurement
+Environmental Policy, SAP and SDG 12, Circular Economy, SAP Solutions for Circular Economy, Circular Design Project, SAP
+and Topolytics Launch COP26 Waste Insights Project, Phase out single-use plastics, Buy social: 5 & 5 by '25, SHIFT: Digital
+tools to fight ocean plastics, Material traceability, Green Token by SAP
+291/338
+SAP
+SAP Integrated Report 2021
+Indirect:
+To Our
+Direct:
+Double the representation of African-American talent in the U.S. over the next three years
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+Products, Research & Development, and Services, Employees and Social Investments
+SAP and SDG 9, SAP Innovation, One Billion Lives Initiative, SAP.io
+Reach 5% of annual addressable procurement spend with social enterprises and with diverse businesses by 2025
+Our Potential Direct and
+Indirect Impact
+SDG 10 Reduced Inequalities
+Direct
+Ensure equal opportunity and inclusion of all
+employees, irrespective of age, sex, disability, race,
+ethnicity, origin, religion, or economic or other status
+Indirect
++ Enable an inclusive economy by providing tools and
+systems to foster inclusion of all in workforce and
+supply chains
+Decouple societal groups from entire areas of
+employment through an accelerated digital divide and
+lack of digital skills
+Our KPIs and Targets
+"
+30% women in management by year end 2022
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts and
+Mitigate Negative Impacts
+•
++
+Stakeholders
+Combined Group
+Management Report
+SDG 17 Partnerships for the Goals
+Direct:
++
+Build capacity throughout our broader ecosystem
+NA
+Activities and Programs to
+Enhance Positive Impacts and
+Mitigate Negative Impacts
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+For more information, see the section
+Memberships, Partnerships, and Commitments
+Employees and Social Investment, Memberships, Partnerships, and Commitments
+Our Policies and Selected
+SAP and SDG 17, SAP and UNICEF, SAP Founding Member of Value Balancing Alliance, SDG Ambition, SAP joins the Ellen
+MacArthur Foundation, WEF Global Plastic Action Partnership, SAP Is Innovation Partner in WBSCD's Value Chain Carbon
+Transparency Pathfinder, SAP joins the Global Alliance for YOUth
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Sustainable Procurement
+Making Our Supply Chain More Sustainable
+292/338
+Our KPIs and Targets
+Indirect Impact
+Our Potential Direct and
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Our Potential Direct and
+Indirect Impact
+SDG 13 Climate Action
+Direct:
++
+Assume responsibility for products in use-related
+emissions by running customer applications in the SAP
+green cloud
+Emit greenhouse gases
+Indirect:
++ Contribute to climate change mitigation and strengthen
+resilience and adaptive capacity to climate-related
+hazards and natural disasters of our customers
++ Enable holistic operational steering by integrating
+-
+climate-change relevant parameters and help
+understand and minimize the climate footprint of a
+company's products, operations, and services
+Increase customers' energy consumption through use of
+software
+Our KPIs and Targets
+Our Policies and Selected
+Activities and Programs to
+Enhance Positive Impacts and
+Mitigate Negative Impacts
+Where You Can Find More
+Information in the SAP
+Integrated Report and Other
+Sources
+Become carbon neutral by 2023
+Direct:
+Global Environmental Policy; Report and reduce CO2
+emissions and energy consumption; Procure 100%
+renewable electricity; Carbon impact relevance for
+Executive Board compensation
+Energy and Emissions, Compensation Report
+Indirect:
+Green Cloud; Business ambition for 1.5°C; Climate 21
+program; SAP Product Carbon Footprint Management;
+SAP Landscape Management Cloud; SAP Transportation
+Management; Concur Travel, and TripIT
+Environmental Policy, SAP and SDG 13, Climate Action, Climate Change: What SAP Is Doing, SAP sets 1.5°C science-based
+emissions reduction targets aligned with a net-zero future, SAP's investment in Livelihoods Carbon Funds, SAP joins 1t.org
+with a pledge to plant 21 million trees, Climate 21, SAP Product Carbon Footprint Management, SAP Concur Sustainable
+Travel
+Governance
+Regenerate: Leverage new regenerative business models to accelerate the shift from consumption
+to re-use models, by way of industry cloud innovations from SAP.
+Information
+Finding Alternatives to Single-Use Plastics
+LEAF Coalition
+Klimabündnis Baden-Württemberg
+JA Worldwide (JA Americas and INJAZ Al-Arab)
+Information Technology Industry Council
+Impact 2030 (founding member)
+Gucci CEO Carbon Neutral Challenge
+GlobalGiving
+Global Alliance for YOUth
+Federation of German Industries
+European Roundtable for Industry (ERT)
+European Climate Pact Pledge
+EU Green Deal CEO Pledge
+EMF ERP Pledge
+econsense e.V.
+DIGITALEUROPE
+Deloitte Digital
+CEO letter on EU 2030 emissions targets
+Business Call to Action
+Bitkom e.V.
+ASEAN Foundation
+Alliance for Development and Climate
+Accounting Standards Committee of Germany (ASCG)
+Organization
+To better understand and evolve sustainable performance, dialogue, and exchange of knowledge and
+different perspectives on a national, regional, and global level, is vital for SAP, both for our company
+and customers. Hence, SAP subscribes to, commits to, and routinely engages in a range of third-party
+organizations, including:
+and Commitments
+Memberships, Partnerships,
+Information
+Metropolregion Rhein-Neckar
+Breakthrough Energy Ventures
+Business for Social Responsibility
+Climate Neutral Now
+SAP also advocates global systems change at scale to accelerate the transition to a circular economy:
+in addition to endorsing meaningful proposals such as calling for the implementation of extended
+producer responsibility schemes for packaging, it enables citizens to find their role and best-fit
+solutions to help solve ocean plastic pollution, through the SHIFT platform developed in close
+collaboration with Emily Penn, ocean advocate and co-founder of the non-profit organization
+eXxpedition.
+Thrive Global
+The Female Quotient
+The Climate Pledge
+Society of Corporate Compliance & Ethics
+Social Enterprise World Forum
+Science Based Targets initiative
+RE100
+The Green Web Foundation
+The Conference Board, Inc.
+Terra Carta of the Sustainable Markets Initiative by Prince
+Charles
+Sustainable Markets Initiative
+Social Traders
+Additional
+Social Enterprise UK
+Race to Zero
+Ocean Plastics Leadership Network
+Network for Teaching Entrepreneurship (NFTE)
+National Chambers of Commerce
+Livelihood Funds
+Industrial Internet Consortium
+Global Partnership for Sustainable Development Data
+Global Business Alliance
+European Green Digital Coalition (EGDC)
+European CEO Alliance
+ESMIG
+Ellen MacArthur Foundation (EMF)
+Deutschland sicher im Netz e.V.
+Schmalenbach-Gesellschaft für Betriebswirtschaft e.V.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Advancing Women Executives
+Alliance for Integrity
+Stakeholders
+13%
+16%
+1,185
+1,376
+1,332
+Thousand cubic meters
+Global Water Usage
+In 2021, our global water usage further decreased due to the prevailing COVID-19 pandemic and the
+strong reduction in the usage of our offices coupled with our implemented water-reduction measures.
+Based on the Aqueduct Water Risk Atlas of the World Resource Institute, we conducted a water risk
+assessment for our ISO 14001-certified sites. Twenty percent of these sites are located in high to
+extremely high water-risk regions. We address this issue with dedicated water management efforts.
+For instance, in Bangalore, India, we will install a rainwater harvesting system at the beginning of 2022
+to improve water conservation. In Johannesburg, South Africa, smart water meters and a water
+catchment solution were installed to decrease municipal water consumption. In Ra'anana, Israel, we
+implemented a building management system (BMS) to monitor and track consumption, and various
+detectors were installed to limit irrigation on rainy days and to detect water leakages early on.
+Climate change affects – and is affected by - global water resources and management. This is why
+we continue to use water as efficiently as possible in our data centers and offices even though our
+operations are not water-intensive. For example, in the data centers of our headquarters, we use
+adiabatic cooling (evaporative cooling) as well as a closed water circuit to minimize water
+consumption for cooling our server racks. In 2021, we set the target to reduce water consumption for
+cooling purposes in our headquarters data centers by at least 1,200 m³ per year (achievement rate
+2021: 100%). At our headquarters and other office locations, we use rain and run-off water for
+irrigation and toilets.
+Using Water Efficiently
+Furthermore, we reduced our paper usage by 88% (over 73 million pages) since 2009, despite a
+125.7% increase in employee full-time equivalents over the same period. Initiatives such as the
+continuous global rollout of a secure pull-printing system (about 82,000 registered employees) or the
+implementation of double-sided, black-and-white printouts by default supported this decrease. In
+2021, we also continued our approach of paperless contracting. By using the SAP Signature
+Management application by DocuSign, which enables electronic signatures, we were able to further
+cut down on the printing of paper-based contracts by about 185,600 pages in 2021 (2020: over
+224,000 pages) - considering the same procurement contract types as in 2020. As most employees
+continued to work from home in 2021 due to the pandemic, the printing volume further decreased
+42% (6.9 million pages) compared to 2020.
+Additional
+-3%
+Further Information on
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+298/338
+297/338
+In 2021, our continuous effort to improve waste segregation and evolve our processes at offices
+across the globe failed to pick up its original speed due to the persisting COVID-19 pandemic, as
+many sites remained closed or opened with major restrictions. Nonetheless, as part of our ISO 14001
+program, SAP introduced the 'Too Good to Go' app in Germany. For a small fee, employees can pick
+up leftover lunches from the cafeterias to fight food waste. At SAP Mexico, the amount of waste
+segregation stations was further expanded, while SAP Philippines implemented systematic
+hazardous-waste management practices.
+Cutting Down on Further Residual Waste
+We also continue to exclude single-use plastics in our internal procurement processes (such as for
+office supply packaging) as outlined in the Sustainable Procurement section. The established "Choose
+to Reuse" campaign aims to increase visibility and usage of reusable products by encouraging
+employees to take photos of reusable items of their everyday work and share them on social media.
+Thanks to the continuous efforts of our global network of sustainability champions, our Environmental
+Management System (EMS) colleagues, and other internal stakeholders, and their persistent
+engagement of and communication with external suppliers and partners, we overcame our setbacks
+from 2020 caused by the COVID-19 pandemic and, by midyear 2021, had successfully phased out
+nearly all single-use plastics at the Company. The project was operationalized at the end of the
+second quarter 2021 and handed over to the three core lines-of-business in the area of facilities,
+procurement, and events to ensure SAP remains free of single-use plastics going forward.
+Worldwide, SAP locations continued to collaborate with their suppliers and service providers to
+eliminate single-use plastic products such as bottles, cups, stirrers, straws, cutlery, and food
+packaging. For example, we rolled-out a digital reusable food packaging system for takeout, delivery,
+and convenience in all SAP locations with a canteen in Germany, and piloted the first two single-use
+plastic-free cafeteria kiosks at SAP's headquarters in Walldorf. At SAP locations in the United States
+and Canada, meanwhile, "Sustainability on the Go" kits with reusable utensils were distributed among
+the employees. The lessons learned and experiences of such practices will be used to refine the
+concepts and make them suitable for a global rollout.
+Management Report
+To lead by example, SAP continued to execute on its original commitment to phase out single-use
+plastics by the end of 2020 as part of its global environmental policy's goals. The interdisciplinary
+'Beyond Single-Use Plastics' initiative is based on identifying and eliminating single-use plastics and
+introducing more sustainable alternatives based on three principles: reduce waste, reuse items, and
+recycle materials.
+Consolidated Financial
+Statements IFRS
+988
+Information
+765
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+300/338
+299/338
+In accordance with the SAP Code of Business Conduct (CoBC), SAP does not support any political
+parties. By the laws of the United States, SAP employees exercise their right to operate a political
+action committee (PAC). The SAP America PAC is an independent, registered, and strictly regulated
+organization that allows eligible SAP employees to voluntarily contribute to the SAP America PAC in
+the United States to financially support candidates seeking public office at the state and federal levels.
+Consistent with U.S. laws, SAP exercises no control over or influence on the SAP America PAC.
+SAP America PAC expenditure figures are transparent and accessible through the U.S. Federal
+Election Commission Web site.
+Political Contributions
+SAP engages with governments around the globe on various policy issues as well as on creating
+reasonable framework conditions for the adoption of new beneficial technologies or business models
+such as cloud computing, the Internet of Things, and Big Data.
+SAP has developed trusting and transparent relationships with governments worldwide by
+cooperatively exploring the potential for information and communications technologies to spur
+economic growth, create jobs, and address societal challenges. This includes consideration of the role
+governments play as consumers as well as policy makers, and by supporting the digital
+transformation of the public sector to become more efficient, effective, and citizen oriented.
+Public Policy
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+SAP believes in transparency in the political process. Accordingly, we are registered in the European
+Transparency Register for interest representatives. In the United States, SAP is registered, and reports
+in compliance with, the federal Lobbying Disclosure Act. We are also registered in other countries,
+where this is required by local law.
+2019
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+2021
+2020
+-23%
+2018
+-26%
+2017
+Management Report
+Non-Financial Notes:
+Environmental Performance
+Data for our environmental indicators is collected and reported on a quarterly basis and is subject to
+external assurance for annual reporting.
+We understand environmental performance as the measurable outcome of SAP's ability to meet
+environmental objectives and targets set forth in our environmental policy. In this context, we
+determine SAP's greenhouse gas footprint (in the following called carbon emissions), total energy
+consumed, and data center electricity as the three key environmental performance indicators.
+Furthermore, we realize external reductions through self-generated renewable electricity and by
+purchasing offsets and Energy Attribute Certificates (EACs). Plus, we identify water consumption and
+the end-of-life treatment of SAP's electrical and electronic equipment as additional environmental
+aspects.
+Further Information on
+Sustainability
+Additional
+Information
+By looking at the energy usage and emissions throughout our entire value chain, we gain insights to
+help us manage our environmental performance and, in turn, help our customers to do the same.
+Our gross carbon emissions for 2021 were 345 kilotons of CO2 equivalents (CO2e) (2020: 410 kilotons
+CO2e), including all carbon emission categories of Scope 1 and 2, as well as selected categories of
+Scope 3 relevant for our carbon neutral target as described in Methodology and Further Details
+below. Our net carbon emissions (110 kilotons in 2021) are calculated by deducting purchased EACS,
+self-generated renewable electricity, and carbon offsets from our gross carbon emissions in the
+respective reporting period.
+Reporting Approach
+We consider the principle of Sustainability Context (the performance of the organization in the context
+of the limits and demands placed on environmental or social resources at the sectoral, local, regional,
+or global level) in a number of ways, such as by looking at global issues or trends including climate
+change and demographic shifts. For example, we assess our carbon emissions in the context of the
+emissions of the entire information and communications technology landscape, with particular focus
+on the abatement potential of the industry. When it comes to completeness, we recognize that while
+we comply with this principle in reporting on our own operations, we are still developing
+methodologies to reliably quantify our impact through our solutions.
+Boundaries
+Our reporting takes two different perspectives into account: SAP as a company, which includes all our
+legal entities and operations and supply chain, and SAP as a solution provider enabling our
+customers. These boundaries are listed in the Content Index of the Global Reporting Initiative (GRI).
+31 In 2021, we achieved an EAC market boundary alignment of 87% based on the criteria of RE100 and GHG Protocol Scope 2 Guidance.
+Consolidated Financial
+Statements IFRS
+General Information
+Management Report
+October, 70,386 participated (response rate: 68%). All employees were invited to take part in the 2021
+#Unfiltered survey cycle.29
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+304/338
+303/338
+29 Eligible are all headcount-relevant employees (permanent contracts) and employees from acquired companies if their acquisition status
+allows for it. In Germany, additional non-headcount-relevant employees are eligible (temporary staff with tenure of more than six months,
+employees on long-term leave or parental leave, PhD students, and vocational trainees).
+The BHCI is calculated based on the results of our "#Unfiltered" program (April 2021 survey).
+The Business Health Culture Index (BHCI) is an indicator of the extent to which SAP successfully
+offers employees a working environment that promotes health supporting their long-term
+employability and their active engagement in reaching our corporate goals. The index covers
+questions concerning how employees rate their personal well-being and the working conditions at
+SAP, including our leadership culture.
+Business Health Culture Index
+Additional
+Information
+Reporting on total energy consumed and data center electricity is based on the data collected for the
+calculation of our carbon emissions. All numbers are based on the metric system. Whenever we state
+"tons," we mean metric tons.
+Stakeholders
+SAP
+To Our
+To Our
+Further Information on
+Sustainability
+Stakeholders
+Combined Group
+SAP Integrated Report 2021
+SAP
+306/338
+305/338
+If a significant error is found in the current year that has an impact on the preceding year's emissions,
+it will be corrected not only in the current year but also retrospectively. An error is significant if it
+affects SAP's gross carbon footprint by more than 5%. No restatement due to an error correction of
+historical data was necessary in 2021.
+Error Correction
+We aim to continuously refine SAP's emissions calculation methodology and to increase the usage of
+measured instead of extrapolated input data. Methodology changes include changes in the source of
+activity data, additional new activity types, changes in emission factors, and changes in the
+methodology used to calculate carbon emissions. As we implemented our methodology approaches
+to the best of our current knowledge and ability, and consider such changes to be continuous desired
+progress, methodology changes will not lead to retrospective data adjustments. Hence, changes will
+be applied from the current year onward. The current year's methodology changes are made
+transparent in this chapter, particularly under Methodology and Further Details.
+Methodology Change
+Data Consistency
+In most instances, however, SAP has 100% ownership of its subsidiaries. Accordingly, the difference
+between applying the control versus the equity approach is about 0.8% based on SAP revenue. If
+investments in associates were included, the difference would be even smaller, about 0.6%.
+A portion of SAP's leased facilities operates under full-service or multitenant leases, where SAP does
+not have access to actual energy consumption information. SAP includes these facilities in our
+definition of operational control and accounts for them by estimating related energy consumption.
+To support the growing demand for SAP's cloud offerings, we subcontract computation power in local
+third-party data centers. Carbon emissions are approximated and included based on the consumed or
+extrapolated computation power.
+SAP Integrated Report 2021
+Operational control is established when SAP has the full authority to introduce and implement its
+operating policies. The emissions of all operations over which the company has operational control
+and all owned, leased facilities, co-location data centers, and vehicles that the company occupies or
+operates are accounted for in the carbon emissions. They are based either on measurements or,
+where no measured data is available, on estimations and extrapolations.
+Organizational Boundaries
+In alignment with the GHG Protocol Scope 2 Guidance, we report our net carbon emissions based on
+the two different calculation approaches: the classic location-based method and the market-based
+method.
+SAP's preparation of the carbon emissions is based on the Corporate Accounting and Reporting
+Standard, the GHG (Greenhouse Gas) Protocol Scope 2 Guidance, and the Corporate Value Chain
+(Scope 3) Accounting and Reporting Standard of the World Resources Institute/World Business
+Council for Sustainable Development. This approach conforms to the requirements of GRI Standard
+indicators 305-1, 305-2, and 305-3.
+Reporting Principles
+We define the gross carbon emissions as the sum of all greenhouse gas emissions, measured and
+reported as CO₂e, while net carbon emissions include the compensation with renewable electricity
+and carbon offsets (see External Reductions).
+Definition
+Carbon Emissions
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+SAP defines its organizational boundaries by applying the operational control approach as set out in
+the GHG Protocol.
+Consolidated Financial
+Statements IFRS
+TRACE International
+Stakeholders
+QAudit Scope
+WWF OneSource Coalition
+World Business Council for Sustainable Development
+(WBCSD)
+"We Mean Business" Letter to G20 Leaders
+Women in Data Science (WDS)
+WEF Stakeholder Capitalism Coalition
+WEF Global Plastic Action Partnership
+WEF Commitment to Stakeholder Capitalism Metrics
+WEConnect International
+Verband Deutscher Maschinen- und Anlagenbau e. V.
+(VDMA)
+Unternehmen für ein leistungsfähiges Klimapaket
+UN Global Compact SDG Ambition
+Transparency International Germany
+Topolytics
+World Economic Forum (WEF)
+World Bank: "Put a Price on Carbon" statement
+Wirtschaft macht Klimaschutz
+"We Mean Business" coalition
+WEF 1t.org
+WEF Global Battery Alliance
+WEF CEO Climate Leaders
+We Are Family Foundation
+Value Balancing Alliance e.V. (founding member)
+UNICEF
+United Nations Global Compact (since 2000)
+Management Report
+Together with Nature Principles for Nature-Based Solutions
+Organization
+Additional
+Information
+Further Information on
+Sustainability
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+301/338
+302/338
+SAP
+Combined Group
+To Our
+SAP
+SAP Integrated Report 2021
+It is calculated based on the average of the scores retrieved in each of the surveys we run for our
+engagement survey program “#Unfiltered.” Adopting the Experience Management (XM) philosophy of
+Qualtrics, we changed our engagement survey concept to a continuous listening approach that
+includes multiple data collections throughout the year. The overall program focuses on measuring the
+key people outcome indices Employee Engagement and Leadership Trust, as well as the
+organizational and team factors derived from the strategy that impact engagement. In the #Unfiltered
+survey in April, 73,598 employees participated (response rate: 72%), and in the #Unfiltered survey in
+We define employee engagement as an index score of five items measuring the satisfaction and
+commitment of our employees, how proud they are of our company, and how strongly they identify
+with SAP.
+Employee Engagement
+Board members
+Managers managing managers: Refers to managing managers who manage teams.
+Managers managing teams: Refers to managing teams of at least one employee or vacant
+positions.
+We define "women in management" as the share of women in management positions as compared to
+the total number of managers, expressed by the number of individuals and not FTEs.
+Women in Management
+We define employee retention as the ratio of the average number of employees minus the employees
+who voluntarily departed, to the average number of employees, taking into account the past 12
+months (in full-time equivalents, or FTEs). This ratio puts emphasis on employee-initiated turnover - in
+other words, we seek to measure how many employees choose to stay with SAP. As opposed to
+keeping a low turnover rate, we aim to keep our retention rate high. The number of voluntarily
+departed employees excludes the voluntary part of restructuring-related departures for more
+transparency and precise headcount management purposes.
+Employee Retention
+Management Report
+Data for our social indicators is collected and reported on a quarterly or annual basis and is audited at
+a reasonable assurance level.
+Our reporting takes two different perspectives into account: SAP as a company, which includes all our
+legal entities and operations and supply chain, and SAP as a solution provider enabling our
+customers. These boundaries are listed in detail in the GRI Standard Content Index.
+Boundaries
+General Information About Social Indicators
+Social Performance
+Non-Financial Notes:
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+Social Indicators
+Consolidated Financial
+Statements IFRS
+To Our
+Additional
+Information
+Downstream
+In previous years, the only downstream emission category included in SAP's carbon neutral target was
+"Data Download.” In 2021, this KPI was incorporated into the newly created upstream Scope 3
+category "Logistics" as described above.
+Use of Sold Products: The vast majority of our overall emissions stem from the use of our software
+(customers running SAP solutions on their hardware and premises). Due to our lack of control over
+our customers' IT landscapes, these emissions are not included in our carbon neutral target.
+Nonetheless, we have been calculating the emissions for indicative purposes for many years and take
+them into account for our science-based target.
+The annual energy need per year is determined using a landscape simulation. It is extrapolated
+globally based on the number of productive installations and PUE. We use a PUE factor of 1.55, which
+is the average PUE of our external data centers. Emissions are calculated using a global electricity
+emission factor. Due to the special characteristics of software products, we chose an assessment of
+resource need per year. This deviates from the minimum boundaries as defined by the GHG Protocol's
+Corporate Value Chain (Scope 3) Accounting and Reporting Standard, which requires assessment
+and disclosure of "direct use-phase emissions of sold products over their expected lifetime." The
+calculation covers all of our major solutions, including on-premise software. Cloud solutions are not
+included, as they are part of internal, external, and hyperscale data center electricity emissions.
+Mobile solutions (for example, SAP apps running on customer IT equipment) are also not included.
+Calculation parameters will be adapted when significant technology changes occur.
+Excluded Scope 3 Emissions
+The following Scope 3 emissions sources are not applicable to SAP's business operations: Upstream
+Leased Assets, Processing of Sold Products, End-of-Life Treatment of Sold Products, Downstream
+Leased Assets, Franchises, and Investments.
+SAP's 2021 Gross Carbon Emissions Along the Value Chain
+Scope 3
+Scope 1
+Scope 2
+Upstream
+14%
+1,475 kt CO₂e
+L
+1%
+1%
+Scope 3
+Downstream
+84%
+96 kt CO₂e 112 kt CO₂e
+345 kt CO₂e
+Relevant for SAP's Carbon Neutral Target
+8,586 kt CO₂e
+10,269 kilotons (kt) CO₂e
+Relevant for SAP's Science-Based Target
+Scope 1
+Emission Categories
+Stationary combustion and refrigerants in buildings
+Mobile combustion and refrigerants in corporate cars
+Mobile combustion in corporate jets
+2021 by multiplying the four key contributors to our previous year's upstream emissions with the year-
+over-year change of operating expenses between 2020 and 2021.
+Scope 2
+Additional
+Information
+Management Report
+Consolidated Financial
+Statements IFRS
+Electricity in Office Buildings: Emissions caused by the consumption of purchased electricity in
+office buildings. Calculation of emissions is based on building electricity consumption. Country-
+specific emission factors are updated annually. Where no measured data is available, stable values
+(kWh/m²) based on the previous year's energy consumption data are used for extrapolation (75%
+data coverage).
+Electricity in Data Centers: Emissions caused by the consumption of purchased electricity in
+SAP-owned and operated data centers. The calculation of emissions is based on data center
+electricity consumption (100% data coverage). CO2e conversion factors are updated annually
+based on country-specific grid factors.
+Purchased Chilled and Hot Water and Steam: Emissions caused by the consumption of
+purchased heat or steam in office buildings (district heating). Calculation of emissions is based on
+consumption of district heating. Emission factors are updated annually. Where no measured data is
+available, stable values (kWh/m²) based on the previous year's energy consumption data are used
+for extrapolation (38% data coverage).
+Scope 3
+Refers to other indirect carbon emissions and is defined as emissions that are a consequence of
+operations of an organization, but are not directly owned or controlled by the organization. Scope 3
+emissions are divided into upstream and downstream emissions.
+Upstream
+Only selected upstream emissions are measured directly and hence included in our corporate carbon
+target. The following upstream Scope 3 carbon emissions are included in our target:
+Business Flights: Emissions caused by business trips by airplane. Calculation of emissions is
+based on actual distance travelled and actual costs spent (79% data coverage). This data is used
+307/338
+308/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+to determine an average emission factor per euro spent based on short, medium, and long-haul
+flight emission factors. For CO2 calculation, this factor is applied to actual controlling costs for
+business flights. Emission factors for business flights do not consider the radiative forcing factors.
+Rental Cars: Emissions caused by business trips by rental car. An average emission factor from
+rental cars is calculated based on actual distance traveled and actual costs spent (90% data
+coverage). This average emission factor is used for extrapolation based on the controlling costs.
+Train Travel: Emissions from business trips by train. An average emission factor from train travel is
+calculated based on actual distance traveled and actual costs spent (24% data coverage). This
+average factor is used for extrapolation based on the controlling costs. In Germany, business trips
+by train are considered carbon neutral as they are compensated with 100% green electricity by
+Deutsche Bahn.
+Business Trips with Private Cars: Emissions from business trips with employee-owned cars and
+company cars without fuel card. Carbon calculation is based on distance traveled with car (100%
+data coverage). Company car trips with fuel cards are excluded from this activity type.
+Employee Commuting: Emissions caused by commuting between home and work at an SAP
+office location. Considered are all modes of transport, excluding commuters with corporate cars.
+An SAP-global, system-integrated commuting survey about the distance to work and the mode of
+transport is conducted to collect relevant data. However, due to the COVID-19 pandemic, no new
+commuting survey has been conducted since 2018. Approximately 28,000 employees responded
+to the 2018 survey. These responses are the basis for carbon calculation of employee commuting
+in 2021. Commuting data for non-responding employees and quarterly updates are extrapolated
+based on the number of FTEs excluding those employees who own a company car (24% data
+coverage).
+Electricity in External Data Centers: Emissions caused by the consumption of purchased
+electricity in data centers not operated by SAP. An external data center (co-location) is a local
+computing center with server units running SAP software that is operated by an external partner.
+CO2e conversion factors are updated annually based on country-specific grid factors. Electricity
+consumption for external data centers is extrapolated based on the consumed data center
+capacity and a power usage effectiveness (PUE) factor. Where no data is available, average factors
+are applied (78% data coverage).
+Electricity Consumed by Hyperscale Services: Emissions caused by the consumption of
+purchased electricity resulting from the usage of hyperscale services in providers' hyperscale data
+centers. Hyperscale data centers enable massive, efficient, and robust scalability of computing,
+system, and server architecture in order to respond to the increasing demand for cloud computing
+and Big Data solutions. Electricity consumption is calculated based on the total allocated server
+memory size (RAM) of all hyperscale services. A power conversion factor is used to convert the
+allocated RAM value into a server power value, and an average PUE factor is used to extrapolate
+the total hyperscale service electricity (100% data coverage).
+- Logistics: Newly established category which consists of the following three emission sources: 1)
+Emissions caused by mail and parcel, 2) Emissions caused by the consumption of paper, and 3)
+Emissions caused by our customers downloading software data from our servers (originally a
+downstream emissions category). Due to their insignificant emissions impact, calculation is done
+based on an average factor 'carbon emissions per FTE.' This factor has been determined based on
+the emissions data of each category of the previous three years (0% data coverage).
+Each year, we measure the following additional upstream Scope 3 carbon emissions based on the
+GHG Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard: Purchased
+Goods and Services, Capital Goods, Waste Generated and Water Consumed in Operations, Other
+Fuel- and Energy-Related Activities. These emission categories are not included in our carbon neutral
+target but our science-based target. The emissions calculation is based on an estimate. Due to the
+link of our upstream emissions to operating expenses, we extrapolated these upstream figures for
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Emission Categories
+Electricity in own buildings and data centers
+Indirect energy in buildings (chilled / hot water, steam)
+Refers to indirect carbon emissions and is defined as emissions from the consumption of purchased
+electricity, steam, or other sources of energy generated upstream from the organization. To determine
+SAP's global net emissions, we use the location-based method to calculate the Scope 2 emissions.
+Additionally, we disclose our market-based Scope 2 emissions in the interactive chart generator. At
+SAP, the following emission categories are covered by Scope 2:
+Scope 2
+Mobile Combustion in Corporate Jets: Emissions caused by business trips with SAP-owned or
+chartered jets. Emission calculation for SAP's own jets is based on actual fuel consumption (100%
+data coverage).
+Refrigerants in Corporate Cars: HFC emissions caused by air conditioning devices in company
+cars. Refrigerant emissions are based on an estimate of HFC1234yf emissions per car (in Europe)
+and HFC134a emissions per car (for the rest of the world) and are extrapolated based on the
+number of corporate cars reported (100% data coverage).
+Mobile Combustion in Corporate Cars: Emissions from fuel combustion of company cars. In the
+context of carbon reporting, the term company car refers to all cars for which SAP permanently
+covers the fuel costs. Emission calculation is based on fuel consumption. In 2021, 29 countries
+reported actual fuel data (93% data coverage); for other countries, stable values (liters/car) are
+used for extrapolation based on the number of corporate cars reported. The stable values for
+extrapolation are based on the previous year's carbon emissions data.
+Refrigerants in Facilities: HFC emissions caused by the use of refrigeration and air conditioning
+equipment. The emissions are extrapolated based on the number of server units in data centers
+and office space with an air conditioning (A/C) system (100% data coverage). All refrigerants are
+assumed to be HFC134a.
+impact of burning wood pellets as 'outside of scopes' carbon emissions. In 2021, these emissions
+accounted for 0.375 kilotons of carbon emissions.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+Stationary Combustion in Facilities: Emissions caused by oil or gas combustion of heating
+systems and generators in SAP office buildings and data centers. Emission calculation is based on
+gas and oil consumption in kWh. Where no measured data is available, stable values (kWh/m²)
+based on the previous year's stationary combustion consumption data are used for extrapolation
+(78% data coverage). In cases where no specific information is available, natural gas reported by
+local sites is assumed to be reported in Lower Heating Value. Besides gas and oil, we also began
+using wood pellets to produce thermal heat for our buildings. The Scope 1 emissions of wood
+pellets can be set to net '0', since the wood itself absorbs an equivalent amount of carbon
+emissions during the growth phase as the amount of emissions released through combustion. Still,
+to ensure complete accounting for all emissions caused, we document the direct carbon dioxide
+Refers to direct carbon emissions and is defined as emissions from sources that are owned or
+controlled by the organization. At SAP, the following areas are covered by Scope 1:
+Scope 1
+Below you will find the different parameters contributing to our carbon emissions. We use "carbon
+emissions" as the common term for greenhouse gas emissions or CO2e. Data coverage refers to the
+share of measured data (compared to extrapolated data) that is the basis for emissions calculation,
+such as kWh for electricity emissions or liters of fuel for corporate car emissions.
+Methodology and Further Details
+Due to office closures and travel restrictions during the COVID-19 pandemic, the 2021 extrapolation
+factors for the following emission categories were reduced by a factor considering the ratio between
+limited and business-as-usual operations: stationary combustion in facilities, refrigerants in facilities
+and corporate cars, mobile combustion in corporate cars, electricity in office buildings, purchased
+chilled and hot water, steam, and employee commuting.
+Where relevant, our conversion factors consider CO2e for greenhouse gases. Global Warming
+Potential factors are based on the Fifth Assessment Report of the Intergovernmental Panel on Climate
+Change (IPCC). We report all our carbon emissions in CO2 equivalents including the impact from CH4
+and N2O in our target-relevant Scope 1, Scope 2, and Scope 3. The emission impact of refrigerants
+includes hydrofluorocarbons (HFCs) only. As SF6 and PFCs mainly occur in chemical processes, they
+are not relevant for us. Since 2016, we annually review all our emissions and extrapolation factors and
+update them if required.
+The calculation of the carbon emissions is based on factors for conversion and extrapolation,
+provided by IEA, US EPA, UK DEFRA, Environment Canada, and GHG Protocol. SAP also uses
+extrapolation factors based on own reported data (of previous quarters) to determine an average
+consumption value per base unit (such as corporate cars: liters of fuel per car; facility: electricity
+consumption per m²).
+We annually measure the cumulative cost avoidance of our carbon emissions, compared to a
+business-as-usual scenario. Since 2015, our calculation approach uses a triennial rolling method.
+Conversion Factors
+Financial Impact of Sustainability Measures
+For other types of structural or organizational changes, we use a significance threshold of 5% of total
+current-year emissions. A structural or organizational change that increases or decreases the total
+carbon inventory by 5% or more will trigger an adjustment of past years. A structural or organizational
+change that increases or decreases the total inventory by less than 5% will be considered insignificant
+and thus no adjustment will be made.
+A structural change due to company acquisitions will be considered in our emission calculations by
+extrapolating the company's emissions based on FTEs for relevant emission categories.
+Structural Changes
+30 Not included in SAP's carbon neutral target but in SAP's science-based target.
+In addition, all of our purchased renewable electricity is EKO energy-certified, a high-quality,
+internationally recognized not-for-profit ecolabel for renewable energy installations that fulfill
+additional sustainability criteria. Through the purchase of EKOenergy-certified electricity, we also
+contribute to EKOenergy's Climate Fund, which finances solar projects tackling energy poverty.
+To calculate the carbon reductions of the EACS, the amount of purchased electricity is multiplied by
+the country-specific carbon factor derived from the location where the renewable electricity was
+Accounting: SAP uses the country-specific emissions factor to calculate the carbon reduction
+achieved by the EACs. EACS are considered independently to the electricity achieved through their
+procurement. SAP aims to consider the latest guidelines on EAC market boundaries.31
+Vintage: The renewable electricity must be produced in the same year or the year preceding the
+reporting period to which it will be applied.
+309/338
+310/338
+SAP
+SAP Integrated Report 2021
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Scope 3
+Upstream Emission Categories
+Business travel (train, plane, rental car, private car)
+Further Information on
+Sustainability
+Employee commuting
+Logistics
+Purchased Goods and Services 30
+Capital Goods 30
+Waste Generated and Water Consumed in Operations 30
+Downstream Emission Categories
+Use of sold products 30
+(Data Download - incorporated in "Logistics")
+External Reductions
+SAP uses external reductions, such as purchases of EACS and certified voluntary "offsets," to achieve
+its carbon neutral target. Emission reductions are subtracted from gross Scope 1 to Scope 3 emissions
+to achieve a net carbon inventory.
+Renewable Electricity
+We define renewable electricity as electricity coming from renewable electricity sources such as wind,
+solar, hydro, and geothermal. The amount of renewable electricity used by SAP is calculated by
+adding the amounts of renewable electricity produced onsite by our own solar cells and covered by
+EACs.
+As recommended by the Greenhouse Gas Protocol and CDP, we actively look for the best available
+quality and standards, which support renewable electricity projects that meet robust criteria in terms
+of environmental integrity, stakeholder inclusivity, and reporting and verification. We have developed a
+quality standard that defines key criteria for the procurement of EACs to drive change in the electricity
+market and to avoid the risk caused by low-quality products. The key characteristics of our renewable
+electricity purchasing guidelines are as follows:
+Type of Renewable Electricity: SAP only considers solar and wind for renewable electricity
+sourcing.
+Installation: The power plant producing the renewable electricity shall not be older than 10 years.
+In case of a renovation of an old power plant, the 10-year rule applies only to the additional
+electricity output due to efficiency increase. Furthermore, SAP does not consider EACs from
+government supported power plants.
+Electricity in external data centers and hyperscalers
+Management Report
+Other Fuel- and Energy-Related Activities²
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Combined Group
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+403-1
+SAP has developed an internal health management system called
+"RUN HEALTHY" which is built on International Labour Organization
+Occupational Health and Safety (ILO-OSH) standards. "RUN
+HEALTHY" enables SAP organizations to assess their maturity state
+on health, well-being, and safety, to develop and drive targeted
+initiatives across their organizations, and to boost their local Business
+Health Culture Index, employee engagement, and employer
+attractivity. The implementation is voluntary and driven by the
+managing director according to country/line-of-business needs. We
+give all workers access to global offerings which are complemented
+according to local business needs. Local RUN HEALTHY councils are
+key in the process to self-assess maturity levels in the light of
+covering local requirements and global standards. RUN HEALTHY is
+expanded on a continuous basis. In addition, SAP engages with its
+suppliers, partners, and customers to promote the topics of people
+health and occupational safety beyond the boundaries of our
+company.
+Links, Content, and Omissions
+SAP Supplier Code of Conduct
+Safety Instructions for Contractors
+Additional
+Information
+Boundaries
+External
+Assurance
+403-2
+To Our
+319/338
+SAP
+As an enterprise software company, SAP does not have the
+occupational health and safety issues associated with manufacturing
+or heavy-industry jobs. Most of our people have sedentary,
+intellectually demanding jobs in a constantly changing business
+environment that requires considerable flexibility and agility.
+Therefore, typical health and safety management issues at SAP
+include ergonomic and safe workplaces, stress management, self-
+management, work-life balance, travel medicine, and general medical
+prevention.
+Employees and Social Investments
+GRI Content Index
+Sustainability Management
+Employees and Social Investments
+Global Health and Safety Policy
+SAP Integrated Report 2021
+Conditions in which people live up to their full potential - now and in
+the future of work - are mainly defined by the organization's
+leadership style and working culture. We believe that there can be no
+organizational health without "individual health." SAP and its leaders
+take ownership for workplaces and a caring culture that foster
+physical health, safety, and mental well-being, while every employee
+is enabled and encouraged to take care of their individual health.
+SAP Health and Well-Being team (led by SAP's chief medical officer),
+together with their partners in Human Resources, Real Estate and
+Facilities, Occupational Safety and Personal Security, provide the
+information, education, and support to foster a healthy working
+culture and a supporting environment for all people. In doing so, we
+enable the organization to be a role model in safe, healthy, and
+sustainable people management.
+Employees and Social Investments
+Non-Financial Notes: Social Performance
+SAP provides manifold feedback opportunities and encourages its
+people to get involved and shape SAP's caring culture and working
+conditions to "tell it like it is," and in so doing, help us improve where
+needed. Our success is tracked through the Business Health Culture
+Index (BHCI) and the Stress-Satisfaction Score (measured by regular
+employee surveys, which revealed that job satisfaction was equal or
+higher than the perceived stress for about 70% of SAP participants in
+2021).
+> > > >
+1,3,6
+UN GC
+Principles
+Sustainability Management
+UN SDGS
+3
+SAP + external
+320/338
+SAP
+3
+About This Report
+102-46
+Note (G.9) Scope of Consolidation, Subsidiaries and Other Equity Investments
+All entities are covered by the report.
+SAP's Health and Well-Being team provides global frameworks and a
+comprehensive health and well-being portfolio to enable SAP's
+business with its organizations at all levels to run healthy.
+Please also refer to GRI 403-6.
+Report by the Supervisory Board
+Customers
+102-45
+Employees and Social Investments
+Stakeholder Engagement
+102-44
+Human Rights and Labor Standards
+Products, Research & Development, and Services
+UN GC
+Principles
+By regularly conducting surveys, we continuously receive insights
+which enable SAP and particularly its Health and Well-Being
+organization, together with its strong partners in Human Resources,
+Real Estate and Facilities, Occupational Safety and Personal Security
+to enforce and adjust its initiatives and counteract adverse
+developments in time.
+Employees and Social Investments: How We Measure and Manage
+Our Performance
+parties
+Employees and Social Investments: How We Measure and Manage
+Our Performance
+SAP + external
+3
+1,2
+parties
+Employees and Social Investments: Health and Well-Being
+403-3
+Sustainable Procurement: Improving Sustainability Through Practice
+Global Health and Safety Policy
+Human Rights Commitment Statement
+Pledge to Flex
+SAP regularly conducts health risk assessments on global level with
+reporting on all manager levels. Mental health is key to SAP's ability
+to provide innovative solutions for our customers. SAP has a long
+tradition in taking action against stigmatization and in taking care of
+prevention and case management. With the Stress-Satisfaction Score
+SAP is monitoring an early-watch KPI to measure resilience on
+people level and to detect fields of action on individual and
+organizational level. In 2020, we established a COVID-19-related risk
+assessment to identify stress factors while working remote. An
+SAP Analytics Cloud-based "Country Health Dashboard" supports the
+identification of health risks on country level.
+SAP relies on the enablement of internal multiplier networks such as
+the Health Ambassador Network, and external trainings and
+certifications to ensure health & safety competence across the
+organization.
+Our workers can use various tools to report concerns as outlined in
+the Human Rights Commitment Statement, and are protected against
+retaliation. This document is core to our people-related policies, such
+as the Global Health and Safety Policy. SAP's Pledge to Flex
+empowers employees to choose when and where to work best while
+balancing business requirements and personal needs. This approach
+enables employees to avoid and circumvent hazardous workplace
+situations.
+Employees and Social Investments: Health and Well-Being
+Non-Financial Notes: Social Performance
+Nothing has a greater impact on our long-term success than the
+creativity, talent, commitment, health, safety, and well-being of our
+people. Their ability to collaborate, innovate, and understand the
+needs of our customers has the potential to deliver sustainable value
+to our company, customers, and society.
+103-2
+103-3
+Note (B.1) Employee Headcount
+Chart Generator
+404-1
+Employees and Social Investments
+SAP
+4, 5, 8, 9, 10
+SAP offers a wide portfolio of learning and development offerings to
+help all of our employees to upskill and accelerate their career. Every
+individual employee is encouraged to learn and expand their skills –
+independent of employee level/category or gender. We align training
+activities according to the needs of each employee and they can
+freely choose what makes sense for them.
+8
+404-2
+SAP has dedicated as well as volunteer staff that supports
+generational intelligence on matters of continued employability,
+managing career endings, and cross-generational integration and
+collaboration. These experts work to continuously improve processes
+and design programs that sustain employability for as long as
+possible. They provide training for cross-generation collaboration,
+facilitate flexible career endings for employees (such as part-time
+options), and keep employees connected with the Company after
+retirement (the “HR Lounge - Mature Talents" consultation session,
+for example, provides a platform for our experienced, long-term
+employees in Germany to gain insight on sharing experiences across
+generations, career development, transitioning to retirement, and so
+on).
+404-3
+Employees and Social Investments
+With our performance appraisal approach called SAP Talk, our
+employees receive regular performance and development reviews -
+independent of gender and employee category.
+405-1
+Corporate Governance Statement
+Employees and Social Investments
+https://www.sap.com/investors/en/governance/supervisory-board.html
+SAP
+401-1
+UN GC
+UN SDGS
+Principles
+1,2,6
+Employees and Social Investments
+Women in
+Management
+Employees and Social Investments
+Employees and Social Investments
+Chart Generator
+5
+6
+Employee
+Engagement
+Employees and Social Investments
+SAP
+6
+SAP
+Links, Content, and Omissions
+318/338
+SAP
+Human Rights and Labor Standards
+We are not aware of any operations or suppliers in which the right to
+exercise freedom of association and collective bargaining may be at
+significant risk.
+Sustainable Procurement
+Boundaries
+External
+Assurance
+UN SDGS
+Links, Content, and Omissions
+UN GC
+Principles
+1, 2, 3
+Boundaries
+External
+Assurance
+UN SDGS
+Well-Being, Health, and Safety
+103-1
+8
+Chart Generator
+Stakeholders
+SAP Integrated Report 2021
+4, 5, 8, 9, 10
+6
+SAP
+5,8,10
+6
+SAP
+To Our
+5,8,10
+407-1
+SAP
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+1,2,6
+Business Conduct
+Human Rights and Labor Standards
+102-43
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+Some of our SAP locations collaborate with local providers in addition to our large IT remarketing and
+recycling partners – or even exclusively. To supplement our EEE / WEEE reporting in the Waste and
+Water section, we collect local providers' e-waste data from all locations that are in scope of our
+environmental management system. The remaining data of locations not covered is extrapolated
+based on full-time equivalents. Consequently, 16 tons of WEEE was collected in 2021 on top of our
+WEEE reported in the Waste and Water section. In total, 133 tons of WEEE was collected in 2021
+(98% data coverage).
+Management Report
+Data is based on the weight of the devices. As remarketed EEE is reported in items (and not in
+weight), the IT asset lifecycle partners use average item weights to determine the remarketing weight.
+To determine the share of end-of-life treatment practices (remarketing vs. mechanical vs. thermal
+recycling vs. landfill), our key IT asset lifecycle partners aim to use the specific quotas of the recycling
+sites. If this data is not available, regional quotas or other available country quotas are used for
+approximation.
+Thermal recycling: Generating energy through the incineration of waste
+Mechanical recycling (secondary priority): Extracting raw materials to preserve and reuse them
+(such as plastics, metals, and rare earths)
+Within the WEEE stream, we distinguish between the following processing treatments:
+2. Waste: By waste of electrical and electronic equipment (WEEE) or e-waste, we mean any electric
+devices and assets discarded in our offices and data centers that cannot be refurbished or
+remarketed due to outdatedness or unrepairable dysfunctions.
+1. Remarketing (top priority): Refurbishing and reselling functioning EEE to give it a second life
+The discarded electrical and electronic equipment (EEE) ranges from laptops, peripherals, and mobile
+devices to servers. Our international and local IT asset lifecycle partners test the collected EEE to
+determine its end-of-life treatment. In doing so, EEE is channeled either into the remarketing or waste
+stream. We define these streams as follows:
+Landfill: Disposing waste on a landfill site; this treatment option has to be avoided under all
+circumstances.
+End-of-Life Treatment of SAP's Electrical and Electronic Equipment
+Consolidated Financial
+Statements IFRS
+Additional
+102-3
+Strategy
+102-2
+Strategy
+102-1
+Links and Content
+Further Information on
+Sustainability
+General Standard Disclosures
+QAudit Scope
+To meet our commitment to the UN Global Compact (UN GC) initiative, this chapter serves as an
+annual Communication on Progress (COP) outlining how SAP supports and upholds the Ten
+Principles of the UN GC. We also present the interconnection between the GRI topic-specific
+disclosures that are material to SAP and the 17 United Nations Sustainable Development Goals
+(UN SDGs).
+The 15 material topics in this GRI Content Index were selected based on the comprehensive
+materiality assessment conducted in 2020 and reviewed in 2021, and reflect topics that have been
+identified as sustainability challenges and material topics by the GRI Standards. We have clustered
+these topics according to the relevant non-financial matters set out in the German Commercial Code
+(Handelsgesetzbuch, HGB) (exception: the material topic “ethics and compliance" is not clustered
+under "Anti-corruption and bribery matters" as the corresponding GRI standards are defined more
+broadly). The two material management practices 'Governance' and 'Transparency' are not listed as
+individual disclosures below as they have already been fulfilled through the universal GRI
+standards 102: General Disclosures and/or GRI 103: Management Approach.
+The social and environmental data and information included in the SAP Integrated Report 2021 has
+been prepared in accordance with the GRI Standards: Core option.
+GRI Content Index and
+UN Global Compact
+Communication on Progress
+Information
+The content of the column UN SDGs was not subject to the independent limited assurance
+engagement of our external auditor.
+Strategy
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+A requirement for carbon offsets is the application of the Verified Carbon Standard (VCS) and equally-
+high quality standards. SAP ensures that the quantified carbon emission reductions from offsets are
+credible and that they meet four key principles:
+By charging an internal carbon price for business flights and investing in the forest project, we were
+able to offset 85% (10.7 kt) of our business flights emissions in 2021.
+In 2021, we did not require our financial contribution to the LCF to offset our emissions. Instead, we
+used an investment in a nature-based forest project to compensate for a portion of our business
+flights as well as 100% of the following emissions categories: corporate cars using Novofleet's
+climate fuel cards, corporate jets, business trips with private cars, and logistics.
+Carbon offsets represent a unit of CO2e that is reduced, avoided, and removed to compensate for
+emissions occurring elsewhere. We continuously refine our internal carbon emissions calculation
+methodology and uphold high requirements for dealing with carbon offsets:
+Carbon Offsets
+In the net carbon emissions, the purchased as well as the produced renewable electricity is already
+deducted from our Scope 2 and Scope 3 electricity emissions.
+Real: The carbon reductions represent actual emission reductions that have already occurred.
+Additional: The carbon reductions are surplus to regulation and would not have happened without
+the offset.
+produced. The renewable electricity is only considered if confirmed by an official certificate or written
+confirmation of our respective EAC suppliers (100% data coverage).
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+Information
+Additional
+Permanent: The carbon reductions are permanent or have guarantees to ensure that any losses
+are replaced in the future.
+In the net carbon emissions, purchased offsets are already deducted from our gross emissions.
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+312/338
+Verifiable: The performance of the carbon reduction projects can be readily and accurately
+quantified, monitored, and verified.
+311/338
+Water
+Additional Environmental Aspects
+We define data center electricity as the sum of electricity consumed to provide internal and external
+computation power in SAP data centers, contracted third-party data centers, and hyperscale data
+centers. A data center is any global, regional, or local computing center (location with any number of
+server units) that is part of our global IT infrastructure strategy.
+Data Center Electricity
+We define total energy consumed as the sum of all energy consumed in SAP's own operations and
+value chain (Scope 1, 2, and 3), including energy from renewable sources. It is calculated based on
+the consumption data obtained through our measurements for the carbon emissions and is the sum
+of energy consumption from stationary combustion in facilities, mobile combustion in corporate cars,
+mobile combustion in corporate jets, electricity in offices, electricity in data centers, purchased chilled
+water, purchased hot water, and purchased steam, and electricity in external data centers (co-
+locations and hyperscalers).
+Total Energy Consumed
+By water, we mean the total amount of freshwater withdrawn for our office buildings and data centers.
+Data is based on measurements and estimations from sites. Data was provided for 65% of the total
+water consumption; remaining data is extrapolated based on square meter footage.
+Stakeholder Engagement
+102-4
+Note (G.9) Scope of Consolidation, Subsidiaries and Other Equity Investments
+102-12
+Sustainability Management
+Products, Research & Development, and Services
+Strategy
+Sustainability Management
+We support a precautionary approach towards environmental management, which is why we have
+implemented an environmental management system across various SAP locations worldwide according to
+ISO 14001. While we see little apparent risk for our own operations, we do see an opportunity to help our
+customers anticipate and manage this risk in a more agile and responsive fashion through effective product
+lifecycle management and sustainable design.
+Memberships
+Sustainable Procurement
+Financial Performance: Review and Analysis
+Note (IN.2) Implications of the COVID-19 Pandemic
+Sustainable Procurement
+Strategy
+At SAP, we consider the portion of contingent workers as not significant.
+About This Report
+Strategy
+Employees and Social Investments
+102-13
+102-14
+Business Conduct
+Stakeholder Engagement
+102-42
+Stakeholder Engagement
+102-41
+Stakeholder Engagement
+Memberships
+102-40
+Corporate Governance Report
+102-18
+Employees and Social Investments
+Business Conduct
+102-16
+Letter from the CEO
+Sustainability Management
+Strategy
+Chart Generator
+Links and Content
+UN GC
+Principles
+External
+Assurance
+Note (B.1) Employee Headcount
+Note (G.9) Scope of Consolidation, Subsidiaries and Other Equity Investments
+Financial Performance: Review and Analysis
+Consolidated Financial Statements IFRS
+✓
+http://www.sap.com/industries.html
+Note (C.1) Results of Segments
+Financial Performance: Review and Analysis
+102-7
+102-6
+Strategy
+102-5
+Strategy
+Note (B.1) Employee Headcount
+✓
+✓
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+✓
+To Our
+SAP
+102-11
+102-10
+102-9
+102-8
+313/338
+SAP Integrated Report 2021
+External
+Assurance
+Employees and Social Investments
+Sustainability Management
+Energy and Emissions
+Sustainability Management
+Energy and Emissions
+103-2
+GRI Content Index
+103-1
+Sustainability Management
+UN GC
+Principles
+External
+Assurance
+Boundaries
+8
+7,8,13
+SAP
+8
+UN SDGS
+7, 8, 12, 13
+305-1
+SAP
+Chart Generator
+Non-Financial Notes
+Energy and Emissions
+305-2
+Links, Content, and Omissions
+Stakeholders
+Energy and Emissions
+To Our
+SAP
+Chart Generator
+316/338
+Non-Financial Notes
+7,8
+3, 12, 13, 14, 15
+SAP Integrated Report 2021
+305-3
+SAP
+Links, Content, and Omissions
+Chart Generator
+Non-Financial Notes
+7,8
+7, 8, 12, 13
+SAP
+Energy and Emissions
+302-2
+302-1
+103-3
+Sustainability Management
+Energy and Emissions
+103-2
+GRI Content Index
+Energy and Emissions
+Energy and Emissions
+Sustainability Management
+Energy and Emissions
+Energy and Emissions
+SAP + external
+parties
+Climate Change and Air Quality
+Allocation of energy consumption reductions to conservation and
+efficiency initiatives cannot be presented precisely due to overlapping
+effects (such as reductions caused by the COVID-19 pandemic).
+Non-Financial Notes
+Energy and Emissions
+302-4
+The ratio uses only energy consumption within the organization.
+Non-Financial Notes
+Five-Year Summary
+Non-Financial Notes
+Energy and Emissions
+302-3
+✓
+7,8
+7, 8, 12, 13
+Chart Generator
+103-1
+Energy and Emissions
+Chart Generator
+13, 14, 15
+SAP + external
+parties
+7,8
+3, 12, 13, 14, 15
+External parties
+7,8
+8
+3, 12, 13, 14, 15
+UN GC
+Principles
+UN SDGS
+External
+Assurance
+Boundaries
+Additional
+Information
+Non-Financial Notes
+SAP
+As a software company with no production sites, the generated total
+weight of waste is considered non-material. Considering our business
+model, we only perceive electrical and electronic waste as relevant.
+Waste and Water
+SAP + external
+parties
+8,9
+12, 13, 14
+SAP + external
+parties
+7,8
+12, 13, 14
+SAP + external
+parties
+UN GC
+Principles
+13, 14, 15
+UN SDGS
+Boundaries
+7,8
+3, 12, 13, 15
+✓
+7,8
+3, 12, 13, 14, 15
+External
+Assurance
+Non-Financial Notes
+Suppliers must acknowledge and adhere to the SAP Supplier Code of
+Conduct, which expects compliance with legal obligations. In
+addition, our ISO 14001-certified locations monitor regulatory
+requirements through a legal register. We also work on integrating
+specific waste-related legal demands into supplier contracts of our IT
+asset lifecycle partners.
+Non-Financial Notes
+As a software company with no production sites, emissions of ozone-
+depleting substances (ODS) are not material to SAP.
+Allocation of carbon emission reductions to avoidance and efficiency
+initiatives cannot be connected precisely due to overlapping effects
+(such as reductions caused by the COVID-19 pandemic).
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+305-7
+We report all our carbon emissions in CO2 equivalents (CO₂e)
+including the impact from CH4, N₂O, and HFCS in our Scope 1 and 2
+emissions. We do not provide a breakdown. As a software company
+with no production sites, sulfur oxides (SOX) and other significant air
+emissions are not material to SAP.
+305-6
+Non-Financial Notes
+Energy and Emissions
+305-5
+Non-Financial Notes
+Chart Generator
+305-4
+Chart Generator
+306-3
+Ressource Efficiency and Waste
+Links, Content, and Omissions
+Waste and Water
+306-2
+Waste and Water
+306-1
+Sustainability Management
+Waste and Water
+103-1
+103-3
+Waste and Water
+Energy and Emissions
+103-2
+GRI Content Index
+Waste and Water
+Energy and Emissions
+Sustainability Management
+Boundaries
+UN GC
+Principles
+External
+Assurance
+102-49
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+Non-Financial Notes
+Non-Financial Notes
+Links and Content
+SAP
+102-48
+7,8
+✓
+✓
+Materiality
+✓
+Materiality
+About This Report
+Topic-Specific Disclosures
+Independent Assurance Report
+About This Report
+102-56
+GRI Content Index
+102-55
+102-50
+About This Report
+Financial Calendar and Addresses
+102-53
+Annual Reporting Cycle
+102-52
+March 4, 2021
+102-51
+102-54
+Ethics and Compliance
+10
+7
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Employee Matters
+The management approaches for the material topics 'employee rights,' 'fair and inclusive workplace,' 'talent development,' and
+'employee engagement' strongly overlap. This is why we decided to combine them in one joint table, including their corresponding
+topic-specific disclosures:
+Combined Group
+Management Report
+103-1
+103-3
+Links, Content, and Omissions
+Nothing has a greater impact on our long-term success than the
+creativity, talent, commitment, health, and well-being of our people.
+Their ability to innovate and understand the needs of our customers
+has the potential to deliver sustainable value to our Company and
+our society.
+Employees and Social Investments
+GRI Content Index
+Sustainability Management
+103-2
+✓
+Stakeholders
+SAP Integrated Report 2021
+1
+6
+UN GC
+Principles
+External
+Assurance
+Materiality
+Non-Financial Notes
+To Our
+Materiality
+102-47
+SAP + external
+parties
+12, 13, 14
+7,8
+317/338
+SAP
+314/338
+UN SDGS
+Further Information on
+Sustainability
+External
+Assurance
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Statements IFRS
+207-4
+9, 11, 16
+SAP
+9, 11, 16
+SAP
+9, 11, 16
+SAP
+315/338
+16, 17
+Sustainability
+Links, Content, and Omissions
+Boundaries
+Links, Content, and Omissions
+16, 17
+✓
+SAP
+UN GC
+Principles
+Additional
+Information
+UN SDGS
+Boundaries
+Energy
+Environmental Matters
+Note (G.3) Other Litigation, Claims, and Legal Contingencies
+419-1
+As a German company, we report our tax expense separately for
+Germany and the rest of the world. We are confident that this
+information meets our stakeholders' demands.
+External
+Assurance
+Additional
+Information
+SAP
+16
+103-3
+103-2
+GRI Content Index
+103-1
+Business Conduct
+UN GC
+Principles
+Business Conduct
+UN SDGS
+Boundaries
+Links, Content, and Omissions
+✓
+✓
+✓
+UN GC
+Principles
+External
+Assurance
+10
+SAP's Global Tax Principles
+SAP's Global Tax Principles
+SAP
+10
+SAP's Global Tax Principles
+207-3
+SAP's Global Tax Principles
+207-2
+Business Conduct
+SAP's Global Tax Principles
+Note (G.3) Other Litigation, Claims, and Legal Contingencies
+206-1
+In alignment with the different legal requirements in various countries,
+and as per SAP Global Risk Management Policy and supporting
+processes, SAP, together with legal advisory services as deemed
+appropriate, perform risk assessments globally. These include cross-
+business topics and the evaluation of risks related to compliance,
+bribery, and corruption. Overall, our corporate risk assessments focus
+on compliance topics. In addition, 45% of all audits concluded in
+2021 under the risk-based audit plan are compliance-relevant audits.
+As part of this process, a regular and dedicated focus is also placed
+on identifying high-risk countries to identify deep dive reviews and
+necessary mitigations accompanied by regular monitoring.
+Furthermore, ad hoc audits are performed if there are grounds of
+suspicion. This regular auditing is a vital component of ensuring
+compliance worldwide in our business processes and identifying
+weaknesses or non-compliance to derive adequate measures.
+Given the holistic approach of our compliance risk assessment, SAP
+does not report on the number of audits solely related to corruption.
+Risk Management and Risks
+Business Conduct
+205-1
+207-1
+103-3
+SAP + external
+parties
+SAP
+SAP Integrated Report 2021
+€ millions, unless otherwise stated
+Revenues
+Cloud (IFRS)
+Non-IFRS adjustments
+2021
+2020
+2019
+Additional
+Information
+2018
+9,418
+8,080
+6,933
+4,993
+3,769
+0
+5
+81
+2017
+Sustainability
+Consolidated Financial Further Information on
+Statements IFRS
+Five-Year Summary¹
+Further Information on
+Sustainability
+Additional
+Information
+Additional Information
+Five-Year Summary
+Financial Calendar and Addresses
+330
+334
+Financial and Sustainability Publications
+335
+Publication Details
+337
+329/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+33
+2
+Cloud (non-IFRS)
+9,418
+Software support (IFRS)
+11,412
+11,506
+11,547
+10,981
+10,908
+Non-IFRS adjustments
+0
+4,872
+0
+0
+0
+Software support (non-IFRS)
+11,412
+11,506
+11,548
+10,982
+10,908
+0
+Consolidated Financial
+Statements IFRS
+4,647
+3,642
+8,085
+7,013
+5,027
+3,771
+Software licenses (IFRS)
+3,248
+3,642
+4,533
+4,533
+4,647
+Non-IFRS adjustments
+0
+0
+0
+0
+0
+Software licenses (non-IFRS)
+3,248
+4,872
+Management Report
+Combined Group
+Stakeholders
+TC-SI-130a.3
+Data Privacy & Freedom of
+Expression
+TC-SI-220a.1
+Data Security
+TC-SI-230a.2
+Recruiting & Managing a Global,
+TC-SI-330a.1
+Diverse and Skilled Workforce
+TC-SI-330a.2
+TC-SI-330a.3
+Comments
+Energy and Emissions
+Security, Data Protection, and Privacy
+Security, Data Protection, and Privacy
+Risk Management and Risks
+Employees and Social Investments
+Note (B.1) Employee Headcount
+For more information about data protection
+and privacy, see the SAP Trust Center
+SAP is a multinational company with
+locations all over the world. At each
+location, we hire people based on their
+qualifications and our business needs.
+For an overview of our headcount per
+geographical area, see Note (B.1).
+Key Facts
+Employees and Social Investments
+Non-Financial Notes: Social Performance
+Key Facts
+Waste and Water
+TC-SI-130a.2
+Hardware Infrastructure
+Energy and Emissions
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Employees and Social Investments
+Further Information on
+Sustainability
+Information
+SASB Index
+Starting in 2021, SAP maps existing sustainability disclosures to the standards of the Sustainability
+Accounting Standards Board (SASB). The table below presents a set of sustainable indicators based
+on the SASB standards for Software and IT Services (Version 2018-10).
+Topic
+Code
+Environmental Footprint of
+TC-SI-130a.1
+Links
+Additional
+Cloud and software (IFRS)
+As a global organization with employees
+from over 150 nationalities, our aspiration
+is that SAP's workforce mirrors the
+diversity in society that includes gender
+parity and demographics of all of the
+regions where we have employees.
+TC-SI-550a.2
+Content
+SAP's governance of climate-related risks and opportunities.
+Actual and potential impacts of climate-related risks and opportunities
+on SAP's businesses, strategy, and financial planning where such
+information is material.
+How does SAP identify, assess, and manage climate-related risks?
+Metrics and targets that SAP uses to assess and manage relevant
+climate-related risks and opportunities where such information is
+material.
+Chapter
+Energy and Emissions
+Energy and Emissions
+Risk Management and Risks
+Strategy
+Energy and Emissions
+Energy and Emissions
+Risk Management and Risks
+Non-Financial Notes:
+Environmental Performance
+Chart Generator
+QAudit Scope
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+SAP
+SAP Integrated Report 2021
+To Our
+Metrics and Targets
+Risk Management
+Strategy
+Governance
+Risk Management and Risks
+Technology Disruptions
+QAudit Scope
+The content of this section was not subject to the independent limited assurance engagement of our
+external auditor.
+327/338
+328/338
+SAP
+SAP Integrated Report 2021
+Managing Systemic Risks from
+To Our
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Task Force on Climate-Related
+Financial Disclosure (TCFD)
+The TCFD recommends companies to disclose their climate-related financial risks to investors,
+lenders, insurers, and other stakeholders. SAP started to report in alignment with the TCFD
+recommendations in 2018. For more information, see the table below.
+Area
+Combined Group
+QAudit Scope
+24,078
+23,012
+286
+178
+254
+151
+166
+-2,630
+-3,000
+-3,408
+-3,151
+-7,946
+-7,886
+-8,355
+-7,462
+-2,991
+-7,051
+617
+523
+700
+-3,158
+-3,471
+-3,817
+-3,302
+-3,662
+-2,044
+-3,893
+Non-IFRS adjustments
+332
+345
+446
+343
+423
+Cost of cloud and software (non-IFRS)
+494
+-4,698
+-4,247
+Cost of services (IFRS)
+Non-IFRS adjustments
+Cost of services (non-IFRS)
+Total cost of revenue (IFRS)
+Non-IFRS adjustments
+-2,916
+-3,178
+-4,362
+-1,962
+-4,160
+589
+-7,328
+Sales and marketing (IFRS)
+-7,505
+-7,106
+-7,693
+-6,781
+-6,924
+General and administration (IFRS)
+-2,431
+-1,356
+-1,629
+-1,098
+-1,075
+Depreciation and amortization (IFRS)
+-1,775
+-1,831
+-1,872
+-1,362
+18.0
+19.1
+18.6
+21.5
+-7,362
+-7,655
+-6,969
+-6,462
+Research and development (IFRS)
+-5,190
+-4,454
+-4,292
+Total cost of revenue (non-IFRS)
+-3,624
+Research and development (in % of total revenue, IFRS)
+18.6
+16.3
+15.6
+14.7
+14.3
+Research and development (in % of total operating expenses, IFRS)
+22.4
+-3,352
+-4,692
+-4,707
+-5,030
+23,461
+0
+5
+81
+33
+3
+27,842
+27,343
+27,634
+24,741
+23,464
+75
+72
+67
+65
+63
+75
+3,912
+4,086
+24,708
+27,553
+4,541
+20,622
+19,549
+Non-IFRS adjustments
+0
+5
+81
+33
+3
+72
+Cloud and software (non-IFRS)
+Total revenue (IFRS)
+24,078
+3,764
+23,233
+23,093
+20,655
+19,552
+27,842
+4,110
+27,338
+Services (IFRS = non-IFRS)
+67
+65
+63
+-1,427
+Cost of software licenses and support (IFRS)
+-1,925
+-2,008
+-2,159
+-2,092
+-2,234
+Non-IFRS adjustments
+-1,855
+103
+141
+130
+190
+Cost of software licenses and support (non-IFRS)
+-1,822
+-1,911
+-2,018
+Cost of cloud and software (IFRS)
+97
+23,228
+-2,228
+-2,876
+Non-IFRS adjustments
+Total revenue (non-IFRS)
+Share of more predictable revenue (IFRS, in %)
+Share of more predictable revenue (non-IFRS, in %)
+Operating Expenses
+Cost of cloud (IFRS)
+-3,105
+-2,699
+-2,451
+-2,534
+-1,660
+Non-IFRS adjustments
+229
+248
+305
+213
+233
+Cost of cloud (non-IFRS)
+-2,068
+326/338
+SAP Integrated Report 2021
+Total tax paid
+103-3
+418-1
+Links, Content, and Omissions
+Security, Data Protection, and Privacy
+SAP Trust Center: Data Protection and Privacy
+Security, Data Protection, and Privacy
+We have not received any substantiated complaints concerning
+breaches of customer privacy, neither from outside parties nor
+regulatory bodies. As a result, we have no identified leaks, thefts, or
+losses of customer data.
+Customer Matters
+Customer Responsibility
+Links, Content, and Omissions
+103-1
+103-2
+103-3
+At SAP, we are committed to our purpose of helping the world run
+better and improving people's lives. To this end, we aim to create
+innovations that help accelerate economic prosperity, drive positive
+social impact, and safeguard the planet.
+Strategy
+GRI Content Index
+Sustainability Management
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Security, Privacy, and Data Protection
+103-1
+103-2
+Links, Content, and Omissions
+Security, Data Protection, and Privacy
+GRI Content Index
+Security, Data Protection, and Privacy
+SAP Trust Center: Data Protection and Privacy
+SAP Privacy Statement
+322/338
+Customers
+Boundaries
+UN SDGS
+UN GC
+Principles
+✓
+32 Employees of recently acquired companies and SAP Israel as well as workers who are not SAP employees are excluded.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+External
+Assurance
+✓
+Performance Management System
+Customers
+4,5,8,10
+Performance Management System
+Product Responsibility
+Links, Content, and Omissions
+103-1
+103-2
+103-3
+At SAP, we are committed to our purpose of helping the world run
+better and improving people's lives. To this end, we aim to create
+innovations that help accelerate economic prosperity, drive positive
+social impact, and safeguard the planet.
+Strategy
+GRI Content Index
+Sustainability Management
+Strategy
+Products, Research & Development, and Services
+Sustainability Management
+Strategy
+Products, Research & Development, and Services
+Boundaries
+SAP
+Customers
+Customer
+Loyalty
+Guiding Principles for Artificial Intelligence
+Performance Management System
+Boundaries
+External
+Assurance
+UN SDGS
+SAP + external
+parties
+Additional
+Information
+UN GC
+Principles
+12, 16
+Sustainability Management
+1
+External
+Assurance
+UN SDGS
+UN GC
+Principles
+416-1
+Human Rights and Labor Standards
+As a software company without any physical products or production
+sites, customer health and safety is mainly related to the responsible
+usage of technology, especially artificial intelligence.
+SAP + external
+parties
+3
+Boundaries
+External
+Assurance
+We are not aware of any operations or suppliers being at significant
+risk for incidents of forced or compulsory labor.
+Sustainable Procurement
+3,8,10
+At SAP, we offer a wide range of health and well-being services to
+our employees, ranging from general guidance on how to be more
+active and to deal with stress and challenging situations in- and
+outside SAP, conducting health and people days, consultation on
+ergonomic workplace set-up to prevent back pain, to local
+vaccination initiatives. Employees have access to these services and
+are informed about them in SAP's internal employee portal, monthly
+newsletters, live sessions, and campaigns, or by contacting the
+SAP Health team directly. In addition, we have Web-based tools such
+as the Qualtrics-based SAP Health Navigator which guides SAP
+people toward health offerings and tips according to their individual
+needs. The Run Your Way program on our Fit@SAP activity
+challenge platform encourages people to integrate more physical
+activity into their daily life.
+As outlined in GRI 403-2, we have various approaches to identify
+negative occupational health and safety impacts such as the BHCI
+and Country Health Dashboard as well as various channels to report
+concerns and incidents. In addition, to ensure the health, safety, and
+well-being of our employees worldwide, SAP runs dedicated crises
+management and business continuity frameworks. To safeguard our
+people on business travels, SAP ensures medical and security
+assistance through a Travel Emergency Assistance Program.
+Sustainable Procurement: Improving Sustainability Through Practice
+SAP + external
+parties
+SAP + external
+parties
+SAP + external
+parties
+3
+3
+321/338
+403-10
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Employees and Social Investments: Health and Well-Being
+SAP Health and Well-Being: Fostering a Healthy Culture
+At SAP, we offer a flexible training and enablement portfolio (such as
+SAP's learning platform Success Map) to enable our people to thrive
+in the future of work, foster healthy working habits, and become
+multipliers. In addition to flagship sessions on how to manage stress
+and foster a healthy work lifestyle, new classes and Web seminars
+were introduced with special focus on the pandemic situation to help
+our people adapt to the sudden change in working conditions.
+Specific offerings for leaders support caring for people's health,
+safety, and well-being.
+A RUN HEALTHY council is the execution entity for the RUN
+HEALTHY program (see GRI 403-1 for its purpose and target). It
+meets regularly (usually quarterly) and contains the RUN HEALTHY
+lead, different line-of-business representatives, such as from the
+Human Resources, Facility, and Health departments, as well as an
+employee representative. The program is being expanded step by
+step; not all SAP employees are represented by the RUN HEALTHY
+program.
+SAP'S RUN HEALTHY management system includes a self-
+assessment conducted by a cross-functional staffed council in order
+to drive tailor-made and effective local programs and initiatives.
+Digital solutions are leveraged to guide SAP's people to their relevant
+health content by considering individual needs and location, and to
+gather their feedback to drive highest standards of quality, as we do
+with the permanent Qualtrics-based Health Feedback Survey across
+all health and well-being offerings.
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Boundaries
+Links, Content, and Omissions
+External
+Assurance
+UN GC
+Principles
+SAP
+3
+403-4
+403-5
+403-6
+403-7
+Links, Content, and Omissions
+UN SDGS
+1,2,4
+Fatalities and injuries are not a material issue for SAP, as employees
+work in an office environment. Please refer to GRI 103-1 for the main
+types of work-related ill health.
+Internally, we track and monitor an SAP illness rate (in %) which is
+defined as the total number of days absent (including absences
+shorter than 3 days) / scheduled workdays per year (250 days) x 100.
+In 2021, SAP had a global illness rate of 1.7%. 32
+Human Rights and Labor Standards
+We are not aware of any operations or suppliers in which the right to
+exercise freedom of association and collective bargaining may be at
+significant risk.
+SAP + external
+parties
+Sustainable Procurement
+Human Rights and Labor Standards
+408-1
+We are not aware of any operations or suppliers being at significant
+risk for incidents of child labor.
+SAP + external
+parties
+Sustainable Procurement
+8
+1, 2, 3
+✓
+3,8
+1,2,5
+409-1
+Human Rights and Labor Standards
+SAP + external
+parties
+407-1
+Human Rights and Labor Standards
+103-3
+Human Rights and Labor Standards
+In 2021, our Stress Satisfaction Score evaluation (see GRI 403-2)
+confirmed lower stress levels on average compared to satisfaction.
+Furthermore, we leverage the company reports from our external
+Employee Assistance Program (EAP) providers to recognize health
+trends and to derivate appropriate actions.
+For non-employee workers, we require our suppliers and sub-
+suppliers to uphold health and safety standards via our Global
+Supplier Code of Conduct. In addition, in Germany we have safety
+Instructions for contractors in place.
+Respect for Human Rights
+103-1
+Links, Content, and Omissions
+Human Rights and Labor Standards
+GRI Content Index
+Additional
+Information
+Boundaries
+The identification of work-related hazards that pose a risk of ill health
+(such as via the BHCI or the RUN HEALTHY program), as well the
+actions taken to eliminate/ minimize these hazards and risks, are
+outlined in GRI 403-1 to GRI 403-7.
+External
+Assurance
+UN GC
+Principles
+SAP
+3
+Boundaries
+External
+Assurance
+UN SDGS
+UN GC
+Principles
+103-2
+UN SDGS
+UN SDGS
+> > >
+UN GC
+Principles
+Business Conduct
+Note (G.3) Other Litigation, Claims, and
+Legal Contingencies
+SAP Partner Code of Conduct
+Provisions for material corruption cases
+would be reported together with further
+details in Note (G.3).
+Partners are also requested to complete
+any compliance training available based
+on their partner type. For more
+information, see SAP's Partner Code of
+Conduct.
+Risk and Opportunity Oversight
+Protected ethics advice and reporting
+mechanisms
+Integrating risk and opportunity into
+business process
+Business Conduct
+SAP Speak Out
+Risk Management and Risks
+Expected Developments and
+Opportunities
+Planet
+Theme
+Core Metrics and Disclosures
+Links
+Climate Change
+Stakeholder Engagement
+Materiality
+Note (G.4)
+Form 20-F Item 6
+Further Information on
+Sustainability
+Additional
+Information
+Stakeholder Capitalism
+Metrics
+To support long-term value creation, SAP has committed to applying the World Economic Forum
+(WEF) Stakeholder Capitalism Metrics and encourages further global standardization and
+convergence in the ESG reporting landscape. We include the standards in our own reporting and also
+offer the framework in our core sustainability software solutions.
+The following table provides information about the core metrics proposed by the WEF White Paper
+titled "Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of
+Sustainable Value Creation", published in September 2020.
+The table refers to the chapters of our Management Report, Notes, Form 20-F, and other sources that
+contain the respective disclosures. Core metrics that have not been identified as material for SAP
+during our latest materiality analysis have been omitted.
+Principles of Governance
+Greenhouse gas (GHG) emissions
+Core Metrics and Disclosures
+Comments
+Setting purpose
+Governance body composition
+Material issues impacting stakeholders
+Anti-corruption
+Strategy
+Corporate Governance Statement
+https://www.sap.com/investors/en/gover
+nance/supervisory-board.html
+Links
+Consolidated Financial
+Statements IFRS
+TCFD implementation
+Chart Generator
+SAP among Forbes' America's Best
+Employers For Women 2021
+Wage level (%)
+Compensation Report
+Skills for the Future
+Training provided (#, $)
+Employees and Social Investment
+Comments
+No disclosure of other indicators of
+diversity due to legal requirements in
+Germany.
+Creating an inclusive workplace that
+benefits employees, customers, and
+partners is a strategic commitment for
+SAP. We are the first EDGE-certified
+global technology company and have
+received numerous recognitions for our
+advances in creating an inclusive and
+more equal workplace, such as
+Bloomberg Equality Index, Best Place to
+Work, Forbes' America's Best Employers
+For Women ranking, and many others.
+In our Compensation Report, we
+disclose the vertical pay ratio. This ratio
+compares the total compensation
+granted to the CEO with that of all
+employees who were employed at year
+end.
+Training hours split by gender and
+employee category are not a material
+issue for SAP, as we align our training
+activities according to the needs of each
+employee and do not tolerate
+discrimination.
+Prosperity
+Theme
+Core Metrics and Disclosures
+Links
+Comments
+Community and Social Vitality
+SAP Recertifies with EDGE
+Bloomberg Gender-Equality Index 2021
+SAP Named Among Best Companies to
+Work for in 2021
+Employees and Social Investment
+Chart Generator
+Pay equality (%)
+Diversity and inclusion (%)
+Task Force on Climate-Related Financial
+Disclosure
+Energy and Emissions
+Comments
+325/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Energy and Emissions
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Theme
+Core Metrics and Disclosures
+Links
+Dignity and Equality
+People
+Management Report
+Stakeholders
+Combined Group
+UN GC
+Principles
+Links, Content, and Omissions
+Boundaries
+External
+Assurance
+UN SDGS
+UN GC
+Principles
+103-1
+Sustainable Procurement
+GRI Content Index
+103-2
+Sustainable Procurement
+103-3
+Sustainable Procurement
+308-1
+Sustainable Procurement
+Percentage of
+addressable
+SAP
+UN SDGS
+External
+Assurance
+Boundaries
+323/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Consolidated Financial Further Information on
+Combined Group
+Management Report
+Statements IFRS
+spend with
+Sustainability
+Additional
+Information
+Customer
+Loyalty
+Links, Content, and Omissions
+Customers express their satisfaction with the quality of our products
+and services via the regularly conducted customer net promoter
+score.
+Customers
+Performance Management System
+Responsible Supply Chain
+330/338
+diverse
+suppliers and
+social
+enterprises
+10, 12
+1
+Boundaries
+External
+Assurance
+UN SDGS
+✓
+UN GC
+Principles
+3, 6, 9, 12, 13,
+SAP + external
+parties
+7,8,9
+SAP
+Theme
+Governing Purpose
+Quality of Governing Body
+Stakeholder Engagement
+Ethical Behavior
+SAP Integrated Report 2021
+To Our
+14, 15
+SAP
+7,8
+✓
+All our suppliers have to acknowledge the SAP Supplier Code of
+Conduct, containing environmental expectations of them and their
+sub-suppliers. In addition, we are in the process of setting up a
+holistic third-party risk assessment for SAP suppliers, including
+screening for environmental criteria. Once the process has been
+rolled out, we can report a percentage.
+Sustainable Procurement
+SAP set a social procurement spend target aiming for 5%
+addressable spend with diverse suppliers and 5% addressable spend
+with social enterprises by year end 2025.
+Solutions for an Inclusive and Circular Economy
+Links, Content, and Omissions
+103-1
+Waste and Water
+GRI Content Index
+12, 13
+103-2
+103-3
+Waste and Water
+324/338
+For this material topic, we could not identify a topic-specific GRI
+standard. In addition, we are still working on meaningful key
+performance indicators for measuring the impact of our solutions for
+an inclusive and circular economy, for example through our
+membership in the Value Balancing Alliance. For more information,
+see the Connectivity section.
+SAP + external
+parties
+✓
+10, 12, 13, 17
+1, 2, 7, 8
+Waste and Water
+Analysis of Consolidated Statements of
+Cash Flow
+-1,272
+3,573
+129.40
+107.22
+120.32
+86.93
+93.45
+SAP share price - peak (in €)
+128.98
+142.26
+124.72
+108.02
+100.35
+SAP share price - low (in €)
+101.78
+SAP share price? (in €)
+87.63
+82.47
+82.43
+Market capitalization' (in € billions)
+153.4
+131.7
+147.8
+106.8
+114.8
+Return on SAP shares4, 1-year investment period (in %)
+16.5
+-10.9
+38.4
+-7.0
+84.31
+41
+44
+56
+3.42
+3.35
+Earnings per share, basic (non-IFRS, in €)
+6.73
+5.41
+5.11
+4.35
+4.43
+Earnings per share, diluted (in €)
+4.46
+4.35
+2.78
+3.42
+3.35
+Dividend per share³ (in €)
+2.45
+1.85
+1.58
+1.50
+1.40
+Total dividend distributed³
+2,890
+2,182
+1,886
+1,790
+1,671
+Total dividend distributed³ (in % of profit after tax)
+54
+41
+12.8
+2.78
+Return on SAP shares, 5-year investment period (in %)
+7.9
+7
+32,244
+29,580
+27,634
+27,060
+24,872
+Personnel expenses
+15,552
+13,420
+14,870
+11,595
+11,643
+Personnel expenses - excluding share-based payments
+Number of employees in research and development5,
+12,758
+13,035
+10,765
+10,523
+Personnel expenses per employee - excluding share-based payments (in € thousands)
+122
+122
+131
+115
+121
+Operating profit per employee (in € thousands)
+45
+65
+45
+12,336
+86,999
+93,709
+99,157
+15.6
+6.9
+9.0
+Return on SAP shares4, 10-year investment period (in %)
+11.8
+11.0
+13.9
+13.2
+10.2
+332/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Employees and Personnel Expenses
+Number of employees'
+107,415
+102,430
+100,330
+96,498
+88,543
+Number of employees, annual average5
+104,364
+101,476
+8.6
+61
+4.35
+Earnings per share, basic (in €)
+(cash and cash equivalents/short-term investments/restricted cash)
+Financial debts
+-13,094
+-13,283
+-13,668
+-11,331
+-6,264
+Net liquidity (net debt)
+-1,563
+-6,503
+-8,286
+-2,493
+-1,479
+4,785
+Assets, Equity and Liabilities
+6,499
+6,730
+8,037
+6,480
+6,017
+Total current assets
+Goodwill
+20,044
+15,069
+15,213
+16,620
+11,930
+31,090
+Trade and other receivables
+8,838
+5,382
+6,781
+2,844
+3,770
+Free cash flow in % of total revenue
+18
+22
+8
+12
+16
+Cash conversion rate
+116
+136
+104
+105
+125
+(net cash flows from operating activities in % of profit after tax)
+Cash and cash equivalents
+8,898
+5,311
+5,314
+8,627
+4,011
+Short-term investments
+2,632
+1,470
+67
+211
+774
+Group liquidity
+11,530
+27,538
+4.46
+29,159
+21,271
+4,266
+3,028
+2,771
+Equity ratio (total equity in % of total assets)
+58
+51
+51
+56
+60
+Debt ratio (total liabilities² in % of total assets)
+42
+49
+49
+3,996
+44
+Investments in goodwill, intangible assets, or property, plant, and equipment (including
+capitalizations due to acquisitions)
+3,522
+1,780
+8,090
+3,715
+1,630
+Key SAP Stock Facts
+Issued shares (in millions)
+1,229
+1,229
+1,229
+1,229
+1,229
+40
+4,431
+Contract liabilities/Deferred income - current (IFRS)
+42,484
+Total non-current assets
+51,125
+43,395
+44,999
+34,881
+30,554
+Total current liabilities (including contract liabilities/deferred income)
+16,136
+12,842
+14,462
+10,486
+10,210
+Total non-current liabilities (including contract liabilities/deferred income)
+13,510
+15,696
+14,929
+12,138
+6,759
+Total equity (including contract liabilities/deferred income)
+41,523
+29,927
+30,822
+28,877
+25,515
+Total assets
+71,169
+58,464
+60,215
+51,502
+23,736
+56
+Women working at SAP (in %)
+34.3
+Tel. +49 6227 74 74 74
+Germany
+69190 Walldorf
+Dietmar-Hopp-Allee 16
+SAP SE
+Group Headquarters
+Addresses
+Information
+Additional
+Results for the fourth quarter and full year 2022
+January 26
+2023
+Results for the second quarter and half-year 2022
+Results for the third quarter 2022
+Fax +49 6227 75 75 75
+Annual General Meeting of Shareholders, virtual event
+Dividend payment
+October 25
+July 21
+May 23
+May 18
+April 22
+2022
+Financial Calendar
+Addresses
+Financial Calendar and
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Stakeholders
+Combined Group
+Results for the first quarter 2022
+E-mail info@sap.com
+Web site www.sap.com
+The addresses of all our international subsidiaries and sales partners are available on our public Web
+SAP Compensation Report
+SAP SE Statutory Financial Statements and Review of Operations (HGB, available in German only)
+Half-Year Reports
+SAP Integrated Report (PDF)
+Annual Report on Form 20-F (IFRS, available in English only)
+-
+-
+The following publications are available in English at www.sap.com/investor, or in German at
+www.sap.de/investor.
+We present our financial, social, and environmental performance in the SAP Integrated Report 2021,
+which is available at www.sapintegrated report.com. This SAP Integrated Report 2021 comprises all of
+the information required by accounting and disclosure standards applicable to us.
+Financial and Sustainability
+Publications
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+Web site www.sap.com/press
+E-mail press@sap.com
+Tel. +49 6227 74 63 15
+Press
+Web site www.sap.com/investor
+E-mail investor@sap.com
+Fax +49 6227 74 08 05
+Tel. +49 6227 76 73 36
+Investor Relations
+For more information about the matters discussed in the report, contact:
+site at www.sap.com/directory/main.html.
+To Our
+SAP Quarterly Statements
+SAP Integrated Report 2021
+334/338
+Data center electricity consumption per € revenue³ (in Wh)
+Total data center electricity consumption (in GWh)
+Energy consumed per employee (in kWh)
+1,005
+1,055
+1,115
+879
+941
+Total energy consumption ¹² (in GWh)
+13.9
+12.6
+10.9
+4.9
+Renewable energy sourced (in %)
+3.9
+3.7
+3.3
+3.0
+1.3
+1.0
+Net carbon emissions ¹¹ per employee5 (in tons)
+325
+310
+300
+135
+110
+Net carbon emissions ¹¹ (in kilotons)
+Environment
+Net carbon emissions ¹¹ per € revenue (in grams)
+1 SAP Group. Amounts according to IFRS, unless otherwise stated.
+2 As sum of current and non-current liability
+4 Average annual return assuming all dividends are reinvested.
+333/338
+12 Before 2021, our total energy consumption covered direct energy consumption (Scope 1) and selected indirect energy consumption (Scope 2). In 2021, we added indirect
+energy consumption of our value chain (Scope 3) to all years shown.
+11 In CO2 equivalents
+10 As at January 1, 2019, we changed our free cash flow definition to avoid effects resulting from the adoption of IFRS 16.
+8 Data center electricity consumption normalized against € revenue represents the required energy to develop and operate solutions in internal and external data centers.
+9 Due to changes in sampling in 2018, Customer NPS is not fully comparable to the prior years' scores.
+7 Numbers at year end.
+100
+100
+100
+100
+100
+11
+12
+12
+13
+15
+265
+318
+338
+361
+429
+11,510
+10,630
+11,230
+8,650
+8,980
+6 Relates to different levels of management position.
+5 Full-time equivalents
+3 Numbers are based on the proposed dividend and on level of treasury stock at year end.
+SAP
+SAP INVESTOR, SAP's quarterly shareholder magazine
+(in German)
+Complete information on the governance of SAP SE is available at www.sap.com/corpgovernance.
+Materials include:
+Information about the management of SAP SE, including the current members of the Executive
+Board and the Supervisory Board, their CVs and memberships in boards of other companies
+Information about the Supervisory Boards' committees, including their tasks and current
+composition
+80
+80
+78
+79
+67
+62
+59
+60
+61
+92.8
+95.3
+93.3
+93.9
+81
+94.6
+7.0
+10.7
+7.6
+7.9
+Customer
+Customer Net Promoter Score⁹
+10.0
+4.0
+-6.0
+SAP
+www.sap.com/investor
+www.sap.com
+Germany
+9.0
+85
+84
+83
+33.6
+33.5
+33.0
+32.8
+Women in management (total, in % of total number of employees)
+28.3
+27.5
+26.4
+25.7
+25.4
+Women managing managers6. 7 (in %)
+24.1
+23.5
+22.5
+21.1
+21.7
+Women managing teams 6.7 (in %)
+29.7
+29.0
+27.8
+27.5
+26.8
+Employee Engagement Index (in %)
+Business Health Culture Index (BHCI, in %)
+Leadership Trust Index (LTI, as NPS)
+Employee retention (in %)
+Total turnover rate (in %)
+83
+86
+69190 Walldorf
+Dietmar-Hopp-Allee 16
+SAP SE
+Group Headquarters
+SAP Global Health and Safety Management Policy
+SAP Human Rights Commitment Statement
+―
+Additional SAP policies are made public at www.sap.com/sustainability.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+336/338
+335/338
+Overview of the participation of Supervisory Board members in meetings of the Supervisory Board
+and its committees
+Profile of Skills and Expertise for the SAP SE Supervisory Board
+Rules of Procedure for the SAP SE Executive Board
+Rules of Procedure for the SAP SE Supervisory Board
+pursuant to the German Commercial Code, Sections 315d and 289f
+Global Code of Ethics and Business Conduct for Employees Corporate Governance Statement
+Declaration of Implementation pursuant to the German Stock Corporation Act, Section 161
+―
+German Code of Corporate Governance
+Agreement on the Involvement of Employees in SAP SE
+-
+Documents relating to SAP SE's Annual General Meetings of Shareholder, including voting results
+SAP SE's Articles of Incorporation
+Details of managers' (the Executive and Supervisory Board members') transactions in SAP
+securities
+SAP Environmental Policy
+2,276
+SAP Global Anti-Discrimination Statement
+SAP Partner Code of Conduct
+337/338
+SAP and other SAP products and services mentioned herein as well as their respective logos are
+trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other
+countries. All other product and service names mentioned are the trademarks of their respective
+companies. Please see www.sap.com/about/legal/copyright.html for additional trademark information
+and notices.
+© 2022 SAP SE or an SAP affiliate company. All rights reserved. No part of this publication may be
+reproduced or transmitted in any form or for any purpose without the express permission of SAP SE
+or an SAP affiliate company.
+Germany
+69190 Walldorf
+Dietmar-Hopp-Allee 16
+SAP SE
+Copyright
+of the audited consolidated financial statements can also be requested free of charge by sending an
+email to investor@sap.com or via phone +49 6227 7-67336.
+SAP has decided to publish the SAP Integrated Report solely as an electronic document. A hard copy
+Printing
+with the support of SAP solutions
+SAP Integrated Report project team
+Concept and Realization
+Investor Relations
+SAP SE
+Publisher
+Publication Details
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+Further, the SAP Glossary is available at www.sap.com/glossary
+SAP's Global Tax Principles
+SAP's Guiding Principles for Artificial Intelligence and SAP Global Artificial Intelligence Ethics Policy
+SAP Supplier Code of Conduct
+17.8
+6,000
+-1,275
+24.2
+16.2
+23.1
+20.8
+Operating margin (in % of total revenue, non-IFRS)
+29.6
+30.3
+29.7
+29.0
+28.9
+Financial income, net
+2,174
+776
+198
+-47
+16.7
+188
+Operating margin (in % of total revenue, IFRS)
+7,163
+Operating profit (IFRS)
+4,656
+6,623
+4,473
+5,703
+4,877
+Non-IFRS adjustments
+1,664
+3,735
+1,459
+1,892
+Operating profit (non-IFRS)
+8,230
+8,287
+8,208
+6,769
+72.5
+Profit before tax (PBT)
+7,220
+4,088
+4,046
+Effective tax rate (IFRS, in %)
+21.5
+26.8
+26.7
+27.0
+19.5
+Effective tax rate (non-IFRS, in %)
+20.0
+26.5
+26.2
+26.3
+22.8
+Return on equity (profit after tax in percentage of average equity)
+3,370
+6,847
+5,283
+Profit after tax
+4,596
+5,600
+5,029
+PBT margin (in % of revenues)
+24.6
+26.4
+16.7
+22.7
+21.4
+Income tax expense
+-1,471
+-1,938
+-1,226
+-1,511
+-983
+5,376
+15
+71.8
+73.1
+63.5
+58.6
+56.0
+Cloud gross margin (in % of corresponding revenue, non-IFRS)
+69.5
+69.7
+68.2
+63.1
+62.2
+Cloud and software gross margin (in % of corresponding revenue, IFRS)
+79.1
+79.7
+79.6
+79.8
+80.1
+66.6
+Cloud and software gross margin (in % of corresponding revenue, non-IFRS)
+67.0
+2018
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+€ millions, unless otherwise stated
+Profits and Margins
+Cloud gross margin (in % of corresponding revenue, IFRS)
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+2021
+2020
+2019
+2017
+72.3
+80.5
+81.6
+86.6
+86.6
+85.8
+87.6
+87.4
+87.4
+87.4
+87.0
+71.5
+71.2
+69.7
+69.8
+69.9
+Gross margin (in % of total revenue, non-IFRS)
+73.7
+86.7
+81.2
+86.9
+Software and support gross margin (non-IFRS, in %)
+81.5
+82.2
+Services gross margin (in % of corresponding revenue, IFRS)
+5,049
+22.7
+19.4
+19.2
+19.3
+Services gross margin (in % of corresponding revenue, non-IFRS)
+30.1
+27.0
+25.0
+22.9
+23.5
+Software and support gross margin (IFRS, in %)
+Gross margin (in % of total revenue, IFRS)
+17
+22.5
+15
+23.7
+331/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+€ millions, unless otherwise stated
+2021
+2020
+2019
+2018
+2017
+23.9
+Segment profit
+26.7
+34.1
+ΝΑ
+Segment margin (Segment profit in % of Segment revenue)
+4.7
+-0.6
+-1.7
+ΝΑ
+ΝΑ
+Services
+Segment revenue
+Segment gross margin (in % of corresponding revenue)
+3,234
+3,379
+3,678
+3,390
+3,240
+31.5
+NA
+728
+517
+-7,021
+-3,066
+-1,112
+-56
+-3,997
+102
+3,283
+-3,406
+Capital expenditure
+Free cash flow 10
+-800
+-816
+-817
+-1,458
+11
+-2,986
+645
+-3,063
+4,303
+403
+315
+Segment margin (Segment profit in % of Segment revenue)
+22.5
+19.1
+14.1
+11.9
+9.7
+Liquidity and Cash Flow
+Net cash flows from operating activities
+Net cash flows from investing activities
+Net cash flows from financing activities
+6,223
+7,194
+3,496
+5,045
+-9
+-5.0
+44
+577
+587
+Adjustment for share-based payment expenses
+2,794
+1,084
+1,835
+830
+1,120
+Adjustment for restructuring
+157
+-3
+1,130
+19
+182
+Segment Results
+689
+Applications, Technology & Support
+577
+Adjustment for acquisition-related charges
+-4
+16
+Current cloud backlog
+Current cloud backlog
+9,447
+7,155
+6,681
+NA
+NA
+Non-IFRS Adjustments
+Revenue adjustments
+5
+81
+33
+3
+623
+Segment revenue
+0
+22,965
+42.1
+Qualtrics
+Segment revenue
+929
+681
+508
+ΝΑ
+NA
+79.6
+77.6
+78.3
+ΝΑ
+23,502
+Segment profit
+ΝΑ
+41.7
+42.4
+Segment gross margin (in % of corresponding revenue)
+40.7
+19,881
+20,997
+23,051
+42.3
+Segment gross margin (in % of corresponding revenue)
+79.5
+80.6
+80.8
+80.6
+Segment profit
+Segment margin (Segment profit in % of Segment revenue)
+9,567
+9,722
+8,375
+8,764
+81.7
+9,773
+Additional
+Information
+Key Audit Matters in the Audit of Consolidated Financial Statements
+Key audit matters are those matters that, in our professional judgment, were of most significance in
+our audit of the consolidated financial statements for the financial year from January 1 to December
+31, 2021. These matters were addressed in the context of our audit of the consolidated financial
+statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on
+these matters.
+Software license revenue recognition
+In the financial year 2021 SAP generated revenue of EUR 27,842 million, of which EUR 14,660 million
+relate to revenues from sales of software licenses and support.
+Further Information on
+Sustainability
+Refer to note (A.1) - Revenue and Group Management Report, section Risk Management and Risks.
+THE FINANCIAL STATEMENT RISK
+Our responsibilities under those requirements, principles and standards are further described in the
+"Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Group
+Management Report" section of our auditor's report. We are independent of the group entities in
+accordance with the requirements of European law and German commercial and professional law,
+and we have fulfilled our other German professional responsibilities in accordance with these
+requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we
+declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
+Regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a
+basis for our opinions on the consolidated financial statements and on the Group Management
+Report.
+Consolidated Financial
+Statements IFRS
+33/338
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+34/338
+We conducted our audit of the consolidated financial statements and of the Group Management
+Report in accordance with Section 317 HGB and the EU Audit Regulation No. 537/2014 (referred to
+subsequently as “EU Audit Regulation") and in compliance with German Generally Accepted
+Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of
+Public Auditors in Germany] (IDW) as well as in supplementary compliance with the International
+Standards on Auditing (ISAs) and guidelines of the Public Company Accounting Oversight Board
+(United States).
+Basis for the Opinions
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations
+relating to the legal compliance of the consolidated financial statements and of the Group
+Management Report.
+the accompanying Group Management Report as a whole provides an appropriate view of the
+Group's position. In all material respects, this Group Management Report is consistent with the
+consolidated financial statements, complies with German legal requirements and appropriately
+presents the opportunities and risks of future development. Our opinion on the Group
+Management Report does not cover the content of those components of the Group Management
+Report specified in the "Other Information" section of the auditor's report.
+The evaluation of software licenses revenue recognition bears an inherent risk of errors as SAP's
+software customer contracts are complex. SAP defined detailed policies, procedures and processes to
+manage the accounting for its customer contracts, which are also described in the notes. Applying
+them often requires significant judgments, in particular in the assessment of the following:
+the accompanying consolidated financial statements comply, in all material respects, with the
+IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant
+to Section 315e (1) HGB [Handelsgesetzbuch: German Commercial Code], as well as the IFRSS as
+adopted by the International Accounting Standards Board and, in compliance with these
+requirements, give a true and fair view of the assets, liabilities and financial position of the Group
+as at December 31, 2021, and of its financial performance for the financial year from January 1 to
+December 31, 2021 and
+Management Report
+1. whether various contracts are economically interrelated,
+Information
+3. the allocation of the transaction price of a customer contract to the performance obligations in the
+contract based on standalone-selling prices.
+In our opinion, on the basis of the knowledge obtained in the audit,
+We evaluated the design and tested the operating effectiveness of certain internal controls over the
+tax process including controls over the Group's assessment of tax law and the process to estimate the
+related exposures. We assessed the competency, skills and objectivity of the external experts and
+evaluated the related expert opinions. We inquired of the Group's tax department and inspected
+correspondence with the relevant tax authorities. We involved tax professionals with specialized skills
+and knowledge, who assisted in evaluating SAP's conclusions over the estimate of tax uncertainties
+based on their knowledge and experience regarding the application of relevant legislation by tax
+authorities and courts.
+OUR AUDIT APPROACH
+SAP operates in multiple tax jurisdictions with complexities and uncertainties due to different
+interpretations of tax laws, such as those involving transfer pricing and intercompany transactions
+between SAP Group entities. The determination of provisions for tax uncertainties requires SAP to
+make judgments on tax issues and develop estimates regarding SAP's exposure to tax risks. SAP
+regularly engages external experts to provide tax opinions to support their own risk assessment. The
+risk for the consolidated financial statements relates to the completeness, measurement and
+disclosure of the provision for uncertain tax treatments. As of December 31, 2021 SAP disclosed
+contingent liabilities relating to tax uncertainties of EUR 1,283 million.
+THE FINANCIAL STATEMENT RISK
+Refer to note (C.5) - Income Taxes, and Group Management Report section Risk Management and
+Risks.
+Assessment of the Group's uncertain tax treatments
+SAP has developed an adequate framework for determining the accounting treatment for its revenue.
+For the vast majority of the software arrangements entered into during 2021, it was clear which of
+SAP's revenue recognition policies should be applied. Where there was room for interpretation, SAP's
+judgment was balanced and appropriate.
+For the majority of software support revenue, we compared the actual support revenue with the
+support revenue that is expected based on last year's support revenue, the loss rate of last year's
+support contracts and the current year software sales that trigger additional support revenue.
+OUR OBSERVATIONS
+evaluated the allocation of the transaction price for each of the deliverables that qualified as a
+separate performance obligation by assessing the methodology applied and testing mathematical
+accuracy of the underlying calculations.
+Additional
+2. whether products and services qualify as separate performance obligations, and
+Further Information on
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+obtained and inspected external confirmations of the key terms and conditions from the respective
+customers to test whether contracts were economically interrelated, as well as to evaluate the
+identified performance obligations,
+For a sample of customer contracts, which were selected using a statistical approach, we:
+inspected the underlying contractual agreements and other related documents as well as inquired
+with SAP's accounting and/or sales representatives to evaluate SAP's assessment of whether
+contracts were economically interrelated as well as to evaluate the identified performance
+obligations and allocation of transaction price,
+We evaluated the design and tested the operating effectiveness of certain internal controls related to
+the revenue process including controls related to the identification of economically interrelated
+contracts, separate performance obligations and allocation of the transaction price to the performance
+obligations in the contract.
+On software revenue recognition, we evaluated the compliance of SAP's accounting policies with the
+IFRS Framework and IFRS 15.
+OUR AUDIT APPROACH
+There is the financial statement risk that the recognition cut-off of software license revenue as at the
+balance sheet date is incorrect and that revenues are allocated incorrectly.
+Consolidated Financial
+Statements IFRS
+In addition, we have audited the combined Group Management Report by the SAP Group and the
+Management Report of SAP SE, Walldorf ("Group Management Report") for the financial year from
+January 1 to December 31, 2021. In accordance with German legal requirements, we have not
+audited the content of those components of the Group Management Report specified in the "Other
+Information" section of our auditor's report.
+SAP Integrated Report 2021
+Opinions
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+Finally, we assessed whether the disclosures in the notes with respect to uncertain tax treatments are
+complete and appropriate.
+SAP
+32/338
+31/338
+(Chairperson)
+Professor Hasso Plattner
+For the Supervisory Board
+The ongoing COVID-19 pandemic continued to challenge us all in 2021. The Supervisory Board
+thanks the current members of the Executive Board and all SAP employees for their tireless
+commitment to SAP under these extraordinary circumstances.
+October 20, 2021, which came into effect on October 28, 2021. Helmut Stengele replaced Ralf Zeiger
+as employee representative on October 29, 2021.
+Pekka Ala-Pietilä stepped down from the Supervisory Board at the end of the Annual General Meeting
+of Shareholders on May 12, 2021. The Supervisory Board would like to sincerely thank him for his
+invaluable contribution for the benefit of the Company. On May 12, 2021, the Annual General Meeting
+of Shareholders elected Rouven Westphal to the Supervisory Board as a successor for Pekka Ala-
+Pietilä. Qi Lu, who was initially appointed by the court as member of the Supervisory Board on
+December 21, 2021, was likewise elected to the Supervisory Board by the Annual General Meeting of
+Shareholders. Christa Vergien-Knopf left the Supervisory Board as employee representative on
+August 10, 2021, and was succeeded by Peter Lengler effective the same day. The Supervisory Board
+also thanks Christa Vergien-Knopf for her work on the Supervisory Board. With effect from
+July 8, 2021, Panagiotis Bissiritsas resigned from his seat as employee representative on the
+Supervisory Board. He was succeeded by Manuela Asche-Holstein. Lastly, Ralf Zeiger was removed
+from the SAP SE Supervisory Board by order of the Mannheim Municipal Court dated
+After 13 years at SAP, most recently as Executive Board member responsible for Customer Success,
+Adaire Fox-Martin retired from the Executive Board on January 31, 2021. We thank Adaire Fox-Martin
+for her valuable contribution to the success of the Company over these many years. Her successor,
+Scott Russell, took over said Board area as a new member of the Executive Board effective
+February 1, 2021. In addition, Julia White joined the Executive Board on March 1, 2021, becoming
+SAP's chief marketing officer.
+Changes on the Executive Board and Supervisory Board in 2021
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Combined Group
+Management Report
+To Our
+Stakeholders
+SAP Integrated Report 2021
+Further Information on
+Sustainability
+Responsibility Statement
+Additional
+Information
+To the best of our knowledge, and in accordance with the applicable reporting principles, the
+Consolidated Financial Statements give a true and fair view of the assets, finances, and operating
+results of the SAP Group, and the management report of the Group and SAP SE includes a fair review
+of the development and performance of the business and the position of the Group and SAP SE,
+together with a description of the principal opportunities and risks associated with the expected
+development of the Group and SAP SE.
+Report on the Audit of the Consolidated Financial Statements and
+of the Group Management Report
+TO SAP SE, Walldorf
+For the consolidated financial statements and Group Management Report we have issued an unqualified auditor's report. The English
+language text below is a translation of the independent auditor's report.
+Independent Auditor's Report
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+We have audited the consolidated financial statements of SAP SE, Walldorf, and its subsidiaries (the
+Group), which comprise the consolidated statements of financial position as at December 31, 2021,
+consolidated income statements, consolidated statements of comprehensive income, consolidated
+statements of changes in equity and consolidated statements of cash flows for the financial year from
+January 1 to December 31, 2021 and notes to the consolidated financial statements, including a
+summary of significant accounting policies.
+SAP Integrated Report 2021
+Julia White
+Thomas Saueressig
+Scott Russell
+Jürgen Müller
+Luka Mucic
+Sabine Bendiek
+Christian Klein
+Executive Board of SAP SE
+Walldorf, Germany
+SAP SE
+Walldorf, February 23, 2022
+SAP
+OUR OBSERVATIONS
+Consolidated Financial
+Statements IFRS
+35/338
+Report on Internal Control over Financial Reporting in the Consolidated Financial
+Statements pursuant to PCAOB
+Other Legal and Regulatory Requirements
+We also provide the Supervisory Board with a statement that we have complied with relevant
+independence requirements and communicate with them all relationships and other matters that may
+reasonably be thought to bear on our independence, and where applicable the related safeguards.
+From the matters communicated with the Supervisory Board, we determine those matters that were of
+most significance in the audit of the consolidated financial statements of the current period and are
+therefore the key audit matters. We describe these matters in our auditor's report, unless law or
+regulation precludes public disclosure about the matter.
+We communicate with the Supervisory Board regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal
+control that we identify during our audit.
+Information
+Additional
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP
+SAP Integrated Report 2021
+Evaluate the consistency of the Group Management Report with the consolidated financial
+statements, its conformity with German law, and the view of the Group's position it provides.
+Perform audit procedures on the prospective information presented by the Executive Board in the
+Group Management Report. On the basis of sufficient appropriate audit evidence we evaluate, in
+particular, the significant assumptions used by the Executive Board as a basis for the prospective
+information, and evaluate the proper derivation of the prospective information from these
+assumptions. We do not express a separate opinion on the prospective information and on the
+assumptions used as a basis. There is a substantial unavoidable risk that future events will differ
+materially from the prospective information.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
+business activities within the Group to express opinions on the consolidated financial statements
+and on the Group Management Report. We are responsible for the direction, supervision and
+performance of the group audit. We remain solely responsible for our opinions.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements present the
+underlying transactions and events in a manner that the consolidated financial statements give a
+true and fair view of the assets, liabilities, financial position and financial performance of the Group
+in compliance with IFRSS as adopted by the EU as well as with IFRSS as adopted by the
+International Accounting Standards Board and the additional requirements of German commercial
+law pursuant to Section 315e (1) HGB.
+Obtain an understanding of internal control relevant to the audit of the consolidated financial
+statements and of arrangements and measures (systems) relevant to the audit of the Group
+Management Report in order to design audit procedures that are appropriate in the circumstances.
+Evaluate the appropriateness of accounting policies used by the Executive Board and the
+reasonableness of accounting estimates made by the Executive Board and related disclosures.
+Conclude on the appropriateness of the Executive Board's use of the going concern basis of
+accounting and, based on the audit evidence obtained, whether a material uncertainty exists
+related to events or conditions that may cast significant doubt on the Group's ability to continue as
+a going concern. If we conclude that a material uncertainty exists, we are required to draw
+attention in the auditor's report to the related disclosures in the consolidated financial statements
+and in the Group Management Report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up to the date of
+our auditor's report. However, future events or conditions may cause the Group to cease to be able
+to continue as a going concern.
+Identify and assess the risks of material misstatement of the consolidated financial statements and
+of the Group Management Report, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
+provide a basis for our opinions. The risk of not detecting a material misstatement resulting from
+fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
+accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German
+Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der
+Wirtschaftsprüfer (IDW) as well as in supplementary compliance with ISAs and guidelines of the
+Public Company Accounting Oversight Board (United States) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material if, individually
+or in the aggregate, they could reasonably be expected to influence the economic decisions of users
+taken on the basis of these consolidated financial statements and this Group Management Report.
+We exercise professional judgment and maintain professional scepticism throughout the audit. We
+also:
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Opinion on Internal Control over Financial Reporting in the Consolidated Financial
+Statements
+We have audited the internal control over financial reporting in the consolidated financial statements
+of SAP SE, Walldorf, and its subsidiaries in place as at December 31, 2021. This control system is
+based on criteria set out in the Internal Control - Integrated Framework (2013) issued by the
+Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+In our opinion, SAP maintained, in all material respects, effective internal control over financial
+reporting in the consolidated financial statements as at December 31, 2021 based on the criteria set
+out in the Internal Control - Integrated Framework (2013) issued by the COSO.
+Executive Board's and Supervisory Board's Responsibility for the Internal Control
+over Financial Reporting in the Consolidated Financial Statements
+In addition, the company's management is responsible for such internal control that they have
+considered necessary to enable the preparation of ESEF documents that are free from material
+The company's management is responsible for the preparation of the ESEF documents including the
+electronic rendering of the consolidated financial statements and the group management report in
+accordance with Section 328 (1) sentence 4 item 1 HGB and for the tagging of the consolidated
+financial statements in accordance with Section 328 (1) sentence 4 item 2 HGB.
+We conducted our assurance work on the rendering of the consolidated financial statements and the
+group management report contained in the file made available and identified above in accordance
+with Section 317 (3a) HGB and the IDW Assurance Standard: Assurance Work on the Electronic
+Rendering of Financial Statements and Management Reports Prepared for Publication Purposes in
+Accordance with Section 317 (3a) HGB (IDW ASS 410 (10.2021)). Our responsibility in accordance
+therewith is further described below. Our audit firm applies the IDW Standard on Quality
+Management 1: Requirements for Quality Management in Audit Firms (IDW QS 1).
+In our opinion, the rendering of the consolidated financial statements and the group management
+report contained in the electronic file made available, identified above and prepared for publication
+purposes complies in all material respects with the requirements of Section 328 (1) HGB for the
+electronic reporting format. Beyond this assurance opinion and our audit opinion on the
+accompanying consolidated financial statements and the accompanying group management report
+for the financial year from January 1, 2021 to December 31, 2021 contained in the "Report on the
+Audit of the Consolidated Financial Statements and the Group Management Report” above, we do not
+express any assurance opinion on the information contained within these renderings or on the other
+information contained in the file identified above.
+19f70e106b19b514fedebc79853c98601bd2) made available and prepared for publication purposes
+complies in all material respects with the requirements of Section 328 (1) HGB for the electronic
+reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work
+extends only to the conversion of the information contained in the consolidated financial statements
+and the group management report into the ESEF format and therefore relates neither to the
+information contained in these renderings nor to any other information contained in the file identified
+above.
+We have performed assurance work in accordance with Section 317 (3a) HGB to obtain reasonable
+assurance about whether the rendering of the consolidated financial statements and the group
+management report (hereinafter the “ESEF documents") contained in the electronic file „sap-2021-12-
+31AR.zip" (SHA256 hash value: 3121b1e38e2abffbffc947b3749e
+Report on the Assurance on the Electronic Rendering of the Consolidated Financial
+Statements and the Group Management Report Prepared for Publication Purposes
+in Accordance with Section 317 (3a) HGB
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
+for our opinion.
+Our responsibility is to express an opinion on the internal control over financial reporting in the
+consolidated financial statements based on our audit. We conducted our audit in accordance with the
+standards of the Public Company Accounting Oversight Board (United States). Those standards
+require that we plan and perform the audits to obtain reasonable assurance about whether effective
+internal control over financial reporting in the consolidated financial statements was maintained in all
+material respects. Our audit of internal control over financial reporting in the consolidated financial
+statements included obtaining an understanding of internal control over financial reporting, assessing
+the risk of material deficiencies in internal control, testing and evaluating the design and operating
+effectiveness of internal control based on this assessment, and performing such other procedures as
+we considered necessary in the circumstances.
+Auditor's Responsibility for the Internal Control over Financial Reporting in the
+Consolidated Financial Statements
+Information
+Management Report
+Additional
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+40/338
+39/338
+The Supervisory Board is responsible for overseeing the Group's internal control over financial
+reporting in the consolidated financial statements.
+Because of its inherent limitations, internal control over financial reporting may not prevent or detect
+material misstatements. Also, projections of any evaluation of effectiveness to future periods are
+subject to the risk that controls may become inadequate because of changes in conditions, or that the
+degree of compliance with the policies or procedures may deteriorate.
+A company's internal control over financial reporting in the consolidated financial statements is a
+process designed to provide reasonable assurance regarding the reliability of financial reporting in the
+consolidated financial statements and the preparation of financial statements for external purposes in
+accordance with generally accepted accounting principles. A company's internal control over financial
+reporting in the consolidated financial statements includes policies and procedures to (1) ensure an
+accounting system that in reasonable detail accurately and fairly reflects the transactions and
+dispositions of the company's assets, (2) provide reasonable assurance that transactions are recorded
+as necessary to permit preparation of financial statements in accordance with generally accepted
+accounting principles, and (3) provide reasonable assurance regarding prevention or timely detection
+of unauthorized acquisition, use or disposition of the company's assets that could have a material
+effect on the financial statements.
+SAP SE's Executive Board is responsible for maintaining effective internal control over financial
+reporting in the consolidated financial statements and assessing its effectiveness, which is included in
+the Executive Board's report on the internal control over consolidated financial reporting.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+SAP's judgments as to the amounts recognized as tax provisions for tax uncertainties as of December
+31, 2021 are appropriate. The disclosures in the notes to the consolidated financial statements are
+complete and appropriate.
+Combined Group
+SAP Integrated Report 2021
+The Executive Board and the Supervisory Board, respectively, of SAP SE is responsible for the other
+information. The other information comprises the following components of the Management Report,
+whose content was not audited:
+Other Information
+The valuation method used for the valuation of unlisted equity securities is appropriate and in line
+with the accounting policies. The Company's underlying assumptions and data are appropriate. The
+related disclosures in the notes are appropriate.
+OUR OBSERVATIONS
+Finally, we assessed whether the related disclosures in the notes regarding the determination of fair
+value are appropriate.
+We evaluated the design and implementation and tested the operating effectiveness of certain
+internal controls over the Company's investments process. This included controls related to selection
+of the valuation model and the relevance and reliability of the significant unobservable inputs. We also
+involved financial instrument valuation professionals with specialized skills and knowledge, who
+assisted in testing management's ability to produce a fair value estimate compliant with IFRS 13 Fair
+Value Measurements for a selection of investments by (1) testing the appropriateness of the valuation
+method selected by comparing it to our expectation based on industry experience and knowledge of
+the investment, and (2) assessing the reliability and relevance of the significant unobservable inputs
+by comparing them to historical and market information.
+OUR AUDIT APPROACH
+There is the risk for the consolidated financial statements that the valuations are not appropriate.
+There is also the risk that the related disclosures in the notes are not appropriate.
+The measurement of fair value of such investments is complex and, with regard to the assumptions
+made, highly dependent on management's estimates and judgments. This applies particularly to
+selection of the appropriate valuation method and the determination of the significant unobservable
+inputs.
+As of December 31, 2021, the Company holds unlisted equity securities with a carrying amount of
+EUR 4,871 million. These financial instruments are classified as equity securities at fair value through
+profit and loss and their valuations are based on significant unobservable inputs (Level 3 of the fair
+value hierarchy).
+THE FINANCIAL STATEMENT RISK
+Refer to note (D.6) - Equity Investments and note (F.2) - Fair Value Disclosures on Financial
+Instruments
+Valuation of unlisted equity securities
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+36/338
+-
+the combined non-financial statement, included in section "Non-Financial Statement Including
+Information on Sustainable Activities" of the Group Management Report,
+the corporate governance statement, included in section “Corporate Governance Fundamentals" of
+the Group Management Report, and
+Information extraneous to the Group Management Report and marked as unaudited.
+SAP
+38/338
+37/338
+Our objectives are to obtain reasonable assurance about whether the consolidated financial
+statements as a whole are free from material misstatement, whether due to fraud or error, and
+whether the Group Management Report as a whole provides an appropriate view of the Group's
+position and, in all material respects, is consistent with the consolidated financial statements and the
+knowledge obtained in the audit, complies with the German legal requirements and appropriately
+presents the opportunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the Group Management
+Report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting process for the
+preparation of the consolidated financial statements and of the Group Management Report.
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+In preparing the consolidated financial statements, the Executive Board is responsible for assessing
+the Group's ability to continue as a going concern. The Executive Board also has the responsibility for
+disclosing, as applicable, matters related to going concern. In addition, the Executive Board is
+responsible for financial reporting based on the going concern basis of accounting unless there is an
+intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.
+Furthermore, the Executive Board is responsible for the preparation of the Group Management Report
+that, as a whole, provides an appropriate view of the Group's position and is, in all material respects,
+consistent with the consolidated financial statements, complies with the German legal requirements
+and appropriately presents the opportunities and risks of future development. In addition, the
+Executive Board is responsible for such arrangements and measures (systems) as the Executive
+Board has considered necessary to enable the preparation of the Group Management Report that is
+in accordance with the applicable German legal requirements, the German Accounting Standards
+number 17 and 20 (GAS 17, GAS 20) and the IFRS Practice Statement Management Commentary
+and to be able to provide sufficient appropriate evidence for the assertions in the Group Management
+Report.
+The Executive Board of SAP SE is responsible for the preparation of the consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU and the additional
+requirements of German commercial law pursuant to Section 315e (1) HGB as well as IFRSS as
+adopted by the International Accounting Standards Board and that the consolidated financial
+statements, in compliance with these requirements, give a true and fair view of the assets, liabilities,
+financial position, and financial performance of the Group. In addition, the Executive Board is
+responsible for such internal control as the Executive Board has determined necessary to enable the
+preparation of consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+Responsibilities of the Executive Board and the Supervisory Board for the
+Consolidated Financial Statements and the Group Management Report
+In addition, we were engaged to perform an independent assurance engagement on selected
+qualitative and quantitative sustainability disclosures of the integrated report 2021. In regard to the
+nature, extent and conclusions of this independent assurance engagement we refer to our
+Independence Assurance Report dated on February 23, 2022.
+If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+otherwise appears to be materially misstated.
+To Our
+Stakeholders
+is materially inconsistent with the consolidated financial statements, with the Group Management
+Report information audited for content or our knowledge obtained in the audit, or
+Information
+Additional
+Further Information on
+Sustainability
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+Our opinions on the consolidated financial statements and on the Group Management Report do not
+cover the other information and consequently we do not express an opinion or any other form of
+assurance conclusion thereon.
+The other information does not include the consolidated financial statements, group management
+report information and our auditor's report thereon.
+The other information also includes the annual report on Form 20-F and remaining parts of the annual
+report.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to
+consider whether the other information
+Further Information on
+Sustainability
+SAP
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from
+material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB.
+We exercise professional judgement and maintain professional scepticism throughout the assurance
+work. We also:
+In addition, we conducted the following procedures to obtain reasonable assurance:
+47/338
+48/338
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+An evaluation of the design, existence, and testing of the operation of the systems and methods
+used to collect and process data reported for Business Health Culture Index; Employee
+Engagement Index; Employee Retention Rate; Ratio of Women in Management; Total Gross and
+Net Greenhouse Gas Emissions (Scope 1, Scope 2 and selected Scope 3 emissions including, for
+instance, business flights and employee commuting); Renewable Energy Certificates (Energy
+Attribute Certificates); Total Energy Consumption; and Customer Net Promoter Score, including the
+aggregation of the data into the information as presented in the Integrated Report.
+Auditing the 2021 data using internal and external documentation in order to determine in detail
+whether the data correspond to the information in the relevant underlying sources, and whether all
+the relevant information contained in such underlying sources has been included in SAP's
+Integrated Report.
+Interviews with relevant staff at corporate level responsible for providing the data, carrying out
+internal control procedures and consolidating the data, including the “Non-Financial Notes".
+Evaluating internal and external documentation to determine whether selected qualitative claims
+and quantitative indicators on sustainability performance are supported by sufficient evidence.
+Reviewing the consistency of GRI Standards in accordance with “Core Option” as declared by SAP
+with sustainability performance information presented in the Integrated Report.
+- Conducting (remote) site visits to Walldorf, St. Leon Rot (both Germany), Newtown Square (USA)
+und Vancouver (Canada) to assess the quality of information, management systems and the
+reliability of the data as reported to corporate level.
+Conclusions
+In our opinion the above-mentioned sustainability indicators in the Report, including the Non-Financial
+Notes supplementing these indicators, of SAP SE for the business year from January 1 to December
+31, 2021 are presented, in all material respects, in accordance with the Reporting Criteria.
+Based on the procedures performed and the evidence obtained for the limited assurance, nothing has
+come to our attention that causes us to believe that the above-mentioned sustainability disclosures of
+SAP SE for the business year from January 1 to December 31, 2021, published in the Report, are not
+prepared, in all material respects, in accordance with the Reporting Criteria.
+Restriction of Use/Clause on General Engagement Terms
+This assurance report is issued for purposes of the Executive Board of SAP SE, Walldorf, only. We
+assume no responsibility with regard to any third parties.
+Our assignment for the Executive Board of SAP SE, Walldorf, and professional liability as described
+above was governed by the General Engagement Terms for Wirtschaftsprüfer and
+Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedingungen für Wirtschaftsprüfer und
+Wirtschaftsprüfungsgesellschaften) in the version dated January 1, 2017
+(https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf). By reading and using the information
+contained in this assurance report, each recipient confirms notice of the provisions contained therein
+(including the limitation of our liability as stipulated in No. 9) and accepts the validity of the General
+Engagement Terms with respect to us.
+Mannheim, February 23, 2022
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+Beyer
+Wirtschaftsprüfer
+In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the
+assurance engagement.
+Evaluation of the design and implementation of the systems and processes for the collection,
+processing and control of the data on sustainability performance indicators, including the
+consolidation of the data.
+Reviewing the suitability of the internally developed reporting criteria.
+- Interviewing management at corporate level responsible for sustainability performance goal setting
+and monitoring process.
+For selected qualitative and quantitative sustainability disclosures included in the "Combined Group
+Management Report" (sections: General Information About This Management Report; Human Rights
+and Labor Standards; Social Investments), as well as included in "Further Information on Economic,
+Environmental, and Social Performance" (sections: Materiality; Stakeholder Engagement;
+Sustainability Management; Sustainable Procurement; Waste and Water; Public Policy; Non-Financial
+Notes: Social Performance, and Non-Financial Notes: Environmental Performance; GRI Content Index
+and UN Global Compact Communication on Progress) (further "sustainability disclosures") a limited
+assurance engagement was performed.
+Selected sustainability disclosures included in the scope of our assurance engagement are marked in
+the GRI Content Index with the following symbol: „✔“.
+Management's Responsibility
+The legal representatives of SAP are responsible for the preparation of the Report in accordance with
+the Reporting Criteria. SAP's Report applies the principles and standard disclosures of the Global
+Reporting Initiative (GRI) Sustainability Reporting Standards, the Corporate Accounting and Reporting
+Standard, the Greenhouse Gas Protocol Scope 2 Guidance, and the Corporate Value Chain (Scope 3)
+Accounting and Reporting Standard of the Greenhouse Gas Protocol Initiative by the World Resources
+Institute and the World Business Council for Sustainable Development, in combination with internal
+guidelines, as described in the "Non-Financial Notes: Social Performance" and the "Non-Financial
+Notes: Environmental Performance" as Reporting Criteria (further: “Reporting Criteria”).
+The responsibility includes the selection and application of appropriate methods to prepare the
+Report and the use of assumptions and estimates for individual qualitative and quantitative
+sustainability disclosures, which are reasonable under the circumstances. Furthermore, this
+responsibility includes designing, implementing and maintaining systems and processes relevant for
+the preparation of the Report in a way that is free of - intended or unintended – material
+misstatements.
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Independence and Quality Assurance on the Part of the Auditing
+Firm
+In performing this engagement, we applied the legal provisions and professional pronouncements
+regarding independence and quality assurance, in particular the Professional Code for German Public
+Auditors and Chartered Accountants (in Germany) and the quality assurance standard of the German
+Institute of Public Auditors (Institut der Wirtschaftsprüfer, IDW) regarding quality assurance
+requirements in audit practice (IDW QS 1).
+Practitioner's Responsibility
+Our responsibility is to express a conclusion based on our work performed within the assurance
+engagement on the sustainability indicators and the sustainability disclosures described above.
+We conducted our work in accordance with the International Standard on Assurance Engagements
+(ISAE) 3000 (Revised): "Assurance Engagements other than Audits or Reviews of Historical Financial
+Information", published by IAASB.
+Accordingly, we have to comply with our professional duties and to plan and perform the assurance
+engagement in such a way that we, respecting the principle of materiality, reach our conclusion with a
+reasonable level of assurance on the above-mentioned sustainability indicators. The assurance of the
+sustainability indicators encompasses the performance of assurance procedures to obtain evidence
+for the information included in the Report. The choice of assurance procedures is subject to the
+auditor's own judgement.
+This standard requires that we plan and perform the assurance engagement to obtain limited
+assurance whether any matters have come to our attention that cause us to believe that the above-
+mentioned sustainability disclosures of the entity for the business year January 1 to December 31,
+2021 have not been prepared, in all material respects, in accordance with the Reporting Criteria. We
+do not, however, issue a separate conclusion for each disclosure. As the assurance procedures
+performed in a limited assurance engagement are less comprehensive than in a reasonable
+assurance engagement, the level of assurance obtained is substantially lower. The choice of
+assurance procedures is subject to the auditor's own judgement.
+Within the scope of our engagement, we performed amongst others the following procedures when
+conducting the limited assurance:
+-
+Evaluation of the process for determining material aspects and respective boundaries, including
+results of SAP's stakeholder engagement.
+Risk analysis, including a media search, to identify relevant sustainability aspects for SAP in the
+reporting period.
+[German Public Auditor]
+Wiegand
+Wirtschaftsprüfer
+[German Public Auditor]
+SAP
+Human Rights and Labor Standards
+Risk Management and Risks
+Expected Developments and Opportunities
+116
+123
+126
+129
+131
+155
+49/338
+50/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+General Information About
+This Management Report
+Basis of Presentation
+This combined group management report by the SAP Group (collectively, “we,” “us,” “our," "SAP,"
+"Group," or "Company") and the management report of SAP SE have been prepared in accordance
+with sections 289, 289a, 289b, 289f, 315, 315a, 315b, and 315d of the German Commercial Code and
+German Accounting Standards (GAS) No. 17 and 20. The combined group management report is also
+a management commentary complying with the International Financial Reporting Standards (IFRS)
+Practice Statement "Management Commentary."
+Our auditor, KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), audited SAP's combined group
+management report, except for some information that relates to the Non-Financial Statement
+Including Information on Sustainable Activities that was not subject to the statutory audit of our
+combined group management report, but on which a limited assurance engagement was performed.
+The Security, Data Protection, and Privacy; Employees and Social Investments; Energy and Emissions;
+Business Conduct; and Human Rights and Labor Standards sections include such information that
+was not subject to the statutory audit of our combined group management report, but on which a
+limited assurance engagement was performed. These sections contain further explanations about the
+audit scope in an info box at the end of the respective section marked by the symbol .
+For more information about the scope of the assurance and the underlying reporting criteria, see
+KPMG's Independent Auditor's Report, the Limited Assurance Report of the Independent Auditor
+Regarding the Combined Non-Financial Statement, and the Assurance Report of the Independent
+Auditor Regarding Sustainability Information.
+All of the information in this report relates to the situation as at December 31, 2021, or the fiscal year
+ended on that date, unless otherwise stated. As figures are rounded, numbers presented throughout
+this document may not add up precisely to the totals we provide and percentages may not precisely
+reflect the absolute figures.
+Business Conduct
+For the selected quantitative sustainability indicators Business Health Culture Index; Employee
+Engagement Index; Employee Retention Rate; Ratio of Women in Management; Total Gross and Net
+Greenhouse Gas Emissions (Scope 1, Scope 2 and selected Scope 3 emissions including, for
+instance, business flights and employee commuting); Renewable Energy Certificates (Energy Attribute
+Certificates); Total Energy Consumption; and Customer Net Promoter Score, including the explanatory
+notes supplementing these indicators (further "sustainability indicators"), a reasonable assurance
+engagement was performed.
+Corporate Governance Fundamentals
+108
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Combined Group
+Management Report
+General Information About This Management Report
+Strategy
+50
+Performance Management System
+59
+Products, Research & Development, and Services
+68
+52
+28
+Financial Performance: Review and Analysis
+74
+Non-Financial Statement Including Information on Sustainable Activities
+99
+Security, Data Protection, and Privacy
+103
+Customers
+107
+Employees and Social Investments
+Energy and Emissions
+We have performed an independent assurance engagement on selected qualitative and quantitative
+sustainability disclosures as well as on selected quantitative sustainability indicators included in the
+Integrated Report 2021 (further “Report”) for the business year from January 1 to December 31, 2021
+of SAP SE, Walldorf (further "Company" or "SAP").
+To the Executive Board of SAP SE, Walldorf
+Assurance Report of the
+Independent Auditor
+regarding Sustainability
+Information
+Mannheim, February 23, 2022
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+[signature] Rackwitz
+Wirtschaftsprüfer
+[German Public Auditor]
+[signature] Conrad
+Wirtschaftsprüfer
+[German Public Auditor]
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Limited Assurance Report of
+the Independent Auditor
+regarding the combined non-
+financial statement
+To the Supervisory Board of SAP SE, Walldorf
+We have performed an independent limited assurance engagement on the non-financial statement of
+SAP SE (further "Company" or "SAP") and on the non-financial statement of the parent company that
+is combined with it, which are published in the Management Report, (further "combined non-financial
+statement") for the period from January 1 to December 31, 2021.
+Management's Responsibility
+The legal representatives of the Company are responsible for the preparation of the combined non-
+financial statement in accordance with §§ 315b, 315c in conjunction with 289b to 289e HGB and with
+Article 8 of REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
+of June 18, 2020 on the establishment of a framework to facilitate sustainable investment, and
+amending Regulation (EU) 2019/2088 (further „EU Taxonomy Regulation “) and the supplementing
+Delegated Acts as well as the interpretation of the wordings and terms contained in the EU Taxonomy
+Regulation and in the supplementing Delegated Acts by the Company as disclosed in Section
+"Sustainable Finance: EU Taxonomy Disclosures” of the combined non-financial statement.
+This responsibility of the legal representatives includes the selection and application of appropriate
+methods to prepare the combined non-financial statement and the use of assumptions and estimates
+for individual disclosures which are reasonable under the given circumstances. Furthermore, the legal
+representatives are responsible for the internal controls they deem necessary for the preparation of
+the combined non-financial statement that is free of - intended or unintended - material
+misstatements.
+The EU Taxonomy Regulation and the supplementing Delegated Acts contain wordings and terms that
+are still subject to substantial uncertainties regarding their interpretation and for which not all
+clarifications have been published yet. Therefore, the legal representatives have included a
+description of their interpretation in Section “Sustainable Finance: EU Taxonomy Disclosures" of the
+combined non-financial statement. They are responsible for its tenability. Due to the innate risk of
+diverging interpretations of vague legal concepts, the legal conformity of these interpretations is
+subject to uncertainty.
+Practitioner's Responsibility
+It is our responsibility to express a conclusion on the combined non-financial statement based on our
+work performed within a limited assurance engagement.
+We conducted our work in the form of a limited assurance engagement in accordance with the
+International Standard on Assurance Engagements (ISAE) 3000 (Revised): "Assurance Engagements
+other than Audits or Reviews of Historical Financial Information", published by IAASB.
+Accordingly, we have to plan and perform the assurance engagement in such a way that we obtain
+limited assurance as to whether any matters have come to our attention that cause us to believe that
+the combined non-financial statement of the Company for the period from January 1 to December 31,
+2021 has not been prepared, in all material respects, in accordance with §§ 315b and 315c in
+43/338
+The German Public Auditor responsible for the engagement is Bodo Rackwitz.
+44/338
+German Public Auditor Responsible for the Engagement
+Further Information on
+Sustainability
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB for the
+electronic reporting format.
+The Supervisory Board is responsible for overseeing the process of preparing the ESEF documents as
+part of the financial reporting process.
+Identify and assess the risks of material intentional or unintentional non-compliance with the
+requirements of Section 328 (1) HGB, design and perform assurance procedures responsive to
+those risks, and obtain assurance evidence that is sufficient and appropriate to provide a basis for
+our assurance opinion.
+Obtain an understanding of internal control relevant to the assurance on the ESEF documents in
+order to design assurance procedures that are appropriate in the circumstances, but not for the
+purpose of expressing an assurance opinion on the effectiveness of these controls.
+Evaluate the technical validity of the ESEF documents, i.e. whether the file made available
+containing the ESEF documents meets the requirements of the Delegated Regulation (EU)
+2019/815, as amended as at the reporting date, on the technical specification for this electronic file.
+Evaluate whether the ESEF documents provide an XHTML rendering with content equivalent to the
+audited consolidated financial statements and the audited group management report.
+Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in
+accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815,
+as amended as at the reporting date, enables an appropriate and complete machine-readable
+XBRL copy of the XHTML rendering.
+Further Information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor at the annual general meeting on May 12, 2021. We were engaged
+by the Chairman of the Audit and Compliance Committee of the Supervisory Board of SAP SE on May
+20, 2021, and this engagement was confirmed on October 6, 2021. We have been the group auditor
+of SAP SE without interruption since the financial year 2002.
+We declare that the opinions expressed in this auditor's report are consistent with the additional report
+to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
+In addition to the financial statement audit, we have provided to group entities the following services
+that are not disclosed in the consolidated financial statements or in the Group Management Report:
+We audited the financial statements of SAP SE and performed various financial statement audits at
+subsidiaries. Furthermore, other assurance services required by law or on a contractual basis were
+performed, including an assurance engagement on selected qualitative and quantitative sustainability
+disclosures of the Integrated Report 2021 and an EMIR assurance service pursuant to section 20 of
+German Securities Trading Act [WpHG] and service organization attestation procedures.
+Other matter - Use of the Auditor's Report
+Our auditor's report must always be read together with the audited consolidated financial statements
+and the audited group management report as well as the examined ESEF documents. The
+consolidated financial statements and group management report converted to the ESEF format –
+including the versions to be published in the German Federal Gazette [Bundesanzeiger] – are merely
+electronic renderings of the audited consolidated financial statements and the audited group
+management report and do not take their place. In particular, the ESEF report and our assurance
+opinion contained therein are to be used solely together with the examined ESEF documents made
+available in electronic form.
+41/338
+42/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Additional
+Information
+Forward-Looking Statements
+SAP
+To Our
+Stakeholders
+Further Information on
+Sustainability
+Additional
+Information
+Conclusion
+Based on the procedures performed and the evidence obtained, nothing has come to our attention
+that causes us to believe that the combined non-financial statement of SAP SE for the period from
+January 1 to December 31, 2021 has not been prepared, in all material respects, in accordance with
+§§ 315b and 315c in conjunction with 289b to 289e HGB and with the EU Taxonomy Regulation and
+the supplementing Delegated Acts as well as the interpretation disclosed in Section "Sustainable
+Finance: EU Taxonomy Disclosures" of the combined separate non-financial statement.
+Restriction of Use/General Engagement Terms
+This assurance report is issued for purposes of the Supervisory Board of SAP SE, Walldorf only. We
+assume no responsibility with regard to any third parties.
+Our assignment for the Supervisory Board of SAP SE, Walldorf, and professional liability as described
+above was governed by the General Engagement Terms for Wirtschaftsprüfer and
+Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedingungen für Wirtschaftsprüfer und
+Wirtschaftsprüfungsgesellschaften) in the version dated January 1, 2017
+(https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf). By reading and using the information
+contained in this assurance report, each recipient confirms notice of the provisions contained therein
+including the limitation of our liability as stipulated in No. 9 and accepts the validity of the General
+Engagement Terms with respect to us.
+Mannheim, February 23, 2022
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+Beyer
+Wirtschaftsprüfer
+[German Public Auditor]
+Wiegand
+Wirtschaftsprüfer
+[German Public Auditor]
+45/338
+46/338
+SAP
+SAP Integrated Report 2021
+To Our
+Combined Group
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Consolidated Financial
+Statements IFRS
+SAP Integrated Report 2021
+Combined Group
+Management Report
+To Our
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+conjunction with 289b to 289e HGB and with the EU Taxonomy Regulation and the supplementing
+Delegated Acts as well as the interpretation of the wordings and terms contained in the EU Taxonomy
+Regulation and in the supplementing Delegated Acts by the legal representatives as disclosed in
+Section "Sustainable Finance: EU Taxonomy Disclosures" of the combined non-financial statement.
+We do not, however, issue a separate conclusion for each disclosure. As the assurance procedures
+performed in a limited assurance engagement are less comprehensive than in a reasonable
+assurance engagement, the level of assurance obtained is substantially lower. The choice of
+assurance procedures is subject to the auditor's own judgement.
+Within the scope of our engagement we performed, amongst others, the following procedures:
+Interviewing employees responsible for the materiality analysis at group level in order to obtain an
+understanding on the approach for identifying key issues and related reporting limits of SAP.
+-
+Carry out a risk assessment, including media analysis, to identify relevant information on SAP's
+sustainability performance in the reporting period.
+- Assessing the design and implementation of systems and processes for identifying, handling and
+monitoring information on environmental, employee and social matters, respect for human rights
+and combatting corruption and bribery, including the consolidation of data.
+Inquiries of group level personnel, who are responsible for the disclosures on concepts, due
+diligence processes, results and risks, the performance of internal control activities and the
+consolidation of the disclosures.
+Inspecting selected internal and external documents.
+Analytical procedures for the evaluation of data and of the trends of quantitative information as
+reported at group level by all sites.
+Evaluation of local data collection, validation and reporting processes as well as the reliability of
+reported data based on a sample of three sites.
+Assessment of the overall presentation of the disclosures.
+Evaluation of the process for the identification of taxonomy-eligible economic activities and the
+corresponding disclosures in the combined non-financial statement by
+▪ Inquiries of responsible employees at Group level to obtain an understanding of the approach to
+identify relevant economic activities in accordance with EU taxonomy.
+Assessing the design and implementation of systems and procedures for identifying, processing
+and monitoring information of revenue, capital expenditures and operating expenditures for the
+taxonomy-relevant economic activities.
+Assessment of the overall presentation of the information.
+The legal representatives have to interpret vague legal concepts in order to be able to compile the
+relevant disclosures according to Article 8 of the EU Taxonomy Regulation. Due to the innate risk of
+diverging interpretations of vague legal concepts, the legal conformity of these interpretations and,
+correspondingly, our assurance thereof are subject to uncertainty.
+In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the
+assurance engagement.
+Independence and Quality Assurance on the Part of the Auditing
+Firm
+In performing this engagement, we applied the legal provisions and professional pronouncements
+regarding independence and quality assurance, in particular the Professional Code for German Public
+Auditors and Chartered Accountants (in Germany) and the quality assurance standard of the German
+Institute of Public Auditors (Institut der Wirtschaftsprüfer, IDW) regarding quality assurance
+requirements in audit practice (IDW QS 1).
+SAP
+SAP Integrated Report 2021
+Stakeholders
+This management report contains forward-looking statements and information based on the beliefs of,
+and assumptions made by, SAP management using information currently available to them. Any
+statements contained in this report that are not historical facts are forward-looking statements as
+defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-
+looking statements on our current expectations, assumptions, and projections about future conditions
+and events. As a result, our forward-looking statements and information are subject to uncertainties
+and risks, many of which are beyond our control. If one or more of these uncertainties or risks
+materializes, or if management's underlying assumptions prove incorrect, our actual results could
+differ materially from those described in or inferred from our forward-looking statements and
+information. We describe these risks and uncertainties in the Risk Management and Risks section.
+The words "aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “counting on," "is confident,”
+"development," "estimate,” “expect,” “forecast,” “future trends," "guidance,” “intend,” “may,” “might,"
+"outlook,” “plan,” “predict,” “project,” “seek,” “should,” “strategy,” “want,” “will,” “would,” and similar
+expressions as they relate to us are intended to identify such forward-looking statements. Such
+statements include, for example, those made in the Operating Results section, our quantitative and
+qualitative disclosures about market risk pursuant to the International Financial Reporting Standards
+(IFRS), namely IFRS 7 and related statements in our Notes to the Consolidated Financial Statements;
+SAP
+84% to 86%
+SAP SuccessFactors Human Experience Management (HXM) Suite provides cloud-based
+solutions, such as a human resources management system (HRMS) for core HR and payroll, talent
+management, employee experience management, and people analytics, by aiming to create
+differentiated employee experiences across the employee lifecycle.
+Our intelligent spend management applications aim to provide a more unified view of a customer's
+spending to reduce costs, mitigate risks, improve collaboration, and make sure every spend decision
+is aligned with the business strategy.
+10 An "intelligent enterprise" is an event-driven, real-time business powered by technology that includes machine learning, robotic process
+automation, Internet of Things, and analytics capabilities to help scale innovation.
+53/338
+54/338
+SAP
+SAP S/4HANA Cloud provides modular cloud ERP in the areas of finance, supply chain, and
+sustainability among others - and can enable customers to adjust and adopt business process and
+business models.
+SAP Integrated Report 2021
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+To Our
+Stakeholders
+The most prominent building blocks of our product portfolio are:
+While each of our line-of-business (LoB) solutions must be competitive in its own right, we believe the
+true value comes through the strength of our collective offerings, with SAP S/4HANA Cloud at the
+core. SAP has the technologies, products, footprint, and experience to combine four essential end-to-
+end business processes to create not just one intelligent enterprise, but a global ecosystem of
+intelligent enterprises. Those processes - Recruit to Retire, Source to Pay, Design to Operate, and
+Lead to Cash are supported by our products.
+Our Product Strategy
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Our Vision
+In 2020, SAP introduced our REINVENT strategy. The underlying vision of this strategy was extended
+in 2021 to "REINVENT how the world runs as a network of intelligent, 10 sustainable enterprises." In our
+pursuit of this vision, we focus on three areas:
+Helping Our Customers Become Intelligent and Sustainable Enterprises
+Intelligent enterprises use data with embedded artificial intelligence (AI) and experience management
+to remove friction across business processes and drive innovation, enabling people to work more
+flexibly.
+Creating a Network of Intelligent, Sustainable Enterprises
+We believe that businesses are playing an even greater role in their communities - forming a network
+that expands far beyond the walls of any one company. We deliver innovation and intelligent
+technologies across procurement, logistics, asset management, and industry-specific offerings to
+enable a global business network spanning entire industries and value chains. As companies face
+supply chain disruptions, this becomes even more important, as our software aims to enable
+stakeholders in the network to react to disruption in real time.
+Enabling a Sustainable World
+The traditional focus of businesses on productivity and profitability is expanding to include a new
+measurement for business success - how operations impact the environment, or the "green line." With
+the overview and transparency of business processes and ability to connect value chains end to end
+provided by SAP software, we help companies to measure and improve sustainability across entire
+networks, allowing them to effectively "chase zero" - zero emissions, zero waste, and zero inequality.
+Our REINVENT strategy is firmly rooted in our goal to be an innovative and trusted partner for our
+ecosystem, supporting them on their journey to reinvent how their businesses run. To achieve our
+overarching objectives of creating resilient, profitable, and sustainable business outcomes for our
+customers, we have honed our strategic priorities mentioned above, in which our product strategy
+plays a central role.
+Our SAP Customer Experience solutions deliver a personalized view across customers and
+business partners, connecting the front- and back office with solutions spanning from the point of
+sale, to manufacturing, to logistics, customer experience, and returns management.
+SAP Business Technology Platform (SAP BTP) is a business-centric and open platform that
+enables customers and partners to extend and customize SAP applications in a cloud-native way. It
+allows shared data and insights, Al-powered experiences, as well as partner solutions and customer-
+led customizations. Specifically, it provides capabilities in four key areas: database and data
+management; analytics and planning; application development and integration; and intelligent
+technologies such as Al, all bundled into one platform offering.
+SAP's Industry Cloud provides the opportunity for SAP and our partners to extend our core with
+modular solutions addressing industry-specific functions, built on SAP BTP.
+SAP Business Network is a network of enterprises. The interactive community helps enable
+companies to extend their ecosystem, react to supply chain disruptions, discover new trading
+partners, and find new opportunities, all through a unified, role-based experience.
+Our Business Model
+Our business model, through which we implement our vision and strategy, can be summarized as
+follows:
+We create value by identifying the business needs of our customers, then developing and delivering
+cloud solutions, services, and support addressing these needs. By proactively obtaining customer
+feedback on a quarterly basis, we strive to continuously improve our solutions, identify further
+business needs, and deliver enhanced value to our customers across the whole lifecycle thus
+increasing customer loyalty.
+We derive revenue from fees charged to our customers for use of our cloud subscription solutions as
+well as licensing software. Support, consulting, development, training, and other services also
+contribute significant revenue.
+For an overview of our product portfolio, see the Products, Research and Development, and Solutions
+section.
+Subsidiaries, Acquisitions, and Joint Ventures
+Subsidiaries
+SAP SE is the parent company of the SAP Group. As at December 31, 2021, the SAP Group
+comprised 290 companies.
+For a list of our subsidiaries, associates, and other equity investments, see the Notes to the
+Consolidated Financial Statements, Note (G.9), Scope of Consolidation, Subsidiaries and Other Equity
+Investments.
+Qualtrics IPO
+On January 28, 2021, Qualtrics International Inc. issued 12% of its shares on the Nasdaq Stock
+Market (NASDAQ). The IPO-related cash inflow amounted to €1,847 million and the initial value of
+non-controlling interests in net assets was €909 million.
+On November 11, 2021, Qualtrics announced the closing of its public offering and issued an
+additional 4% of its shares, which reduced SAP's ownership in Qualtrics to 74%. The offering-related
+cash inflow amounted to €1.0 billion and the corresponding value of non-controlling interests in net
+assets was €0.3 billion.
+For more information about the Qualtrics acquisition and Qualtrics IPO, see Note (D.1), Business
+Combinations and Divestitures and Note (E.2) Total Equity.
+Acquisitions
+We continue to focus on organic investments in technology and innovations that ensure sustainable
+growth of our solution portfolio to drive our short-term, mid-term, and long-term ambitions.
+Additionally, we may make targeted acquisitions to complement our solution offerings and improve
+coverage in key strategic markets.
+Information
+SAP Integrated Report 2021
+Additional
+Consolidated Financial
+Statements IFRS
+Our business process intelligence (BPI) application portfolio, which has been significantly
+expanded with the integration of Signavio solutions, helps our customers enable their business
+transformations. We support analysis of current processes, benchmarking against best practices, and
+reconfiguring current processes towards future processes.
+Our sustainability management solutions empower customers to integrate sustainability into their
+business processes. ― from ethical sourcing and inclusive hiring to visibility into and management of a
+company's overall ecological footprint. The solutions aim to help our customers minimize carbon
+emissions, reduce waste through responsible supply chain management, and enable diversity across
+all business practices.
+For more information about the products and solutions offered as part of our strategy framework, see
+the Products, Research & Development, and Services section.
+Compelling Value Propositions and Customer Centricity
+Business Transformation: To achieve our strategy and deliver the best value to our stakeholders, we
+must execute against our goals with strong alignment across the company. To that end, we have
+established a Corporate Transformation Office to drive the end-to-end execution of our REINVENT
+strategy. This office unites experts with strong program management skills, deep content knowledge
+around major areas of SAP's transformation, as well as change and communications management.
+Value Proposition: As we implement our strategy, we have introduced new initiatives and offerings
+including, for example, RISE with SAP. Launched in early 2021, RISE with SAP is our business
+transformation-as-a-service offering. We have also redesigned our ecosystem engagement model to
+create an attractive proposition for our partners in the cloud. A dedicated operating model
+demonstrates the integrated value of our solution areas across development, marketing and solution
+management, and go-to-market functions.
+Customer Centricity: Achieving our growth ambitions requires us to put an unwavering focus on our
+customers. Therefore, we aim to provide the maximum Customer Lifetime Value, that is, the
+cumulative value that SAP provides to customers over the course of our relationship. To do so, SAP
+aims to deliver differentiated value across the customer relationship, from the first interaction to
+deployment and beyond.
+Our People
+We are working to ensure our people have the skills and resources they need to deliver on our
+strategy and overall ambitions. SAP's global workforce of over 100,000 employees is key to the
+successful execution of our strategy.
+For more information, see the Employees and Social Investments section.
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Further Information on
+Sustainability
+The acquisition of Signavio GmbH ("Signavio"), closed on March 5, 2021, and deepens SAP's
+business process intelligence capabilities, which represent the process layer within the SAP portfolio.
+Solutions from Signavio augment the spectrum of business process management solutions offered by
+SAP by adding process modeling, process mining, and process management capabilities.
+SAP
+8 IDC, Worldwide Travel and Expense Management Software Market Shares, 2020: Travel Down But New Opportunities Emerge, Doc
+#US47980421, July 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+SAP
+Cloud gross margin (non-IFRS): We use our cloud gross margin (non-IFRS) to measure our process
+efficiency in our cloud business. Cloud gross margin (non-IFRS) is the ratio of our cloud gross profit
+(non-IFRS) to cloud revenue (non-IFRS), expressed as a percentage.
+Measures to Manage Our Non-Operating Financial Performance
+We use the following measures to manage our non-operating financial performance:
+Financial income, net: This measure provides insight into the return on liquid assets and capital
+investments and the cost of borrowed funds. To manage our financial income, net, we focus on cash
+flow, the composition of our liquid assets and capital investment portfolio, and the average rate of
+interest at which assets are invested. We also monitor average outstanding borrowings and associated
+finance costs.
+Measures to Manage Overall Financial Performance
+We use the following measures to manage our overall financial performance:
+Earnings per share (EPS) (IFRS and non-IFRS): EPS (basic and diluted) measures our overall
+performance because it captures all operating and non-operating elements of profit as well as income
+tax expense. It represents the portion of profit after tax attributable to equity holders of SAP SE
+allocable to each SAP share outstanding. EPS is influenced not only by our operating and non-
+operating business and income taxes but also by the number of shares outstanding.
+Operating margin (non-IFRS): We use operating margin to measure our overall operational
+efficiency. Operating margin (non-IFRS) is the ratio of our operating profit (non-IFRS) to total revenue
+(non-IFRS), expressed as a percentage.
+SAP Integrated Report 2021
+60/338
+59/338
+Measures to Manage Our Operating Financial Performance
+In 2021, we used the following key measures to manage our operating financial performance:
+Cloud revenue: This revenue driver comprises the main revenues of our fast-growing cloud business.
+Revenue from cloud is derived from fees earned from providing customers with any of the following:
+-
+Software as a service (SaaS)
+Platform as a service (PaaS)
+Infrastructure as a service (laaS)
+Premium cloud support beyond regular support embedded in cloud offerings
+For more information regarding the composition of cloud revenue and a description of these services,
+see the Notes to the Consolidated Financial Statements, Note (A.1).
+We use the cloud revenue measure at both actual currencies and constant currencies.
+Cloud and software revenue: We use cloud and software revenue expressed in both actual
+currencies and constant currencies to measure our revenue growth. Our cloud and software revenue
+includes cloud revenue plus software licenses and support revenue. Cloud revenue and software
+revenue are our key revenue drivers because they tend to affect our other revenue streams. Generally,
+customers that buy software licenses also enter into related support contracts, and these generate
+recurring support revenue after the software sale. Support contracts cover standardized support
+services and unspecified future software updates and enhancements. Cloud and software revenue
+also tends to stimulate services revenue, which is earned by providing customers with professional
+services, premium engagement services, training services, and payment services.
+Total revenue: We use total revenue to measure our growth at both actual currencies and constant
+currencies. The total of cloud revenue and support revenue divided by total revenue is the share of
+more predictable revenue. This measure provides additional insight into our sustained business
+success.
+Current cloud backlog (CCB): We use CCB both in actual and at constant currencies, to manage
+our operating financial performance. The CCB measures our overall go-to-market success in
+committed cloud business. The CCB is the contractually committed cloud revenue we expect to
+recognize over the upcoming 12 months as of a specific key date. Thus, it is a subcomponent of our
+overall remaining performance obligations following IFRS 15.120. For our committed cloud business,
+we believe the CCB is a valuable indicator of our go-to-market success, as it reflects both new
+contracts closed as well as existing contracts renewed.
+Operating profit (non-IFRS): We use operating profit (non-IFRS) expressed in both actual currencies
+and constant currencies to measure our overall operational process efficiency and overall business
+performance.
+Effective tax rate (IFRS and non-IFRS): We define our effective tax rate as the ratio of income tax
+expense to profit before tax, expressed as a percentage.
+Operating, investing, and financing cash flows and free cash flow: Our consolidated statement
+of cash flows provides insight into how we generate and use cash and cash equivalents. When
+applied in conjunction with the other primary financial statements, it provides information that helps
+us evaluate the changes in our net assets, our financial structure (including our liquidity and solvency),
+and our ability to affect the amounts and timing of cash flows to adapt to changing circumstances and
+opportunities. We use our free cash flow measure to determine the cash flow remaining after all
+expenditures required to maintain or expand our organic business have been paid off. This measure
+provides management with supplemental information to assess our liquidity needs. We calculate free
+cash flow as net cash from operating activities minus purchases (other than purchases made in
+connection with business combinations) of intangible assets and property, plant, and equipment, as
+well as payments for lease liabilities.
+110 kt
+In 2021, we used the following key measures to manage our non-financial performance in the areas of
+customer loyalty, employee engagement, leadership trust, and carbon emissions:
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Strategy
+Overview of SAP
+Founded in 1972, SAP is a global company headquartered in Walldorf, Germany. Our legal corporate
+name is SAP SE. SAP has been named a market share leader in the following areas worldwide:
+enterprise applications software, 4 enterprise resource management applications, 5 supply chain
+management applications, 6 procurement applications software, travel and expense management
+software, and enterprise resource planning software, 9 among others. The SAP Group has a global
+presence and employs more than 100,000 people.
+Our ordinary shares are listed on the Frankfurt Stock Exchange. American Depositary Receipts (ADRs)
+representing SAP SE ordinary shares are listed on the New York Stock Exchange (NYSE). SAP is a
+member of Germany's DAX and TecDAX as well as the Dow Jones EURO STOXX 50, the Dow Jones
+Sustainability Index World, and the Dow Jones Sustainability Index Europe. As at December 31, 2021,
+SAP was the second most valuable company in the DAX based on market capitalization. SAP was
+ranked as the most sustainable software company in the Dow Jones Sustainability Indices for the
+fifteenth consecutive year.
+Our Purpose
+Our purpose at SAP is to "help the world run better and improve people's lives." We strive to achieve
+this as both an enabler and an exemplar of sustainable business. Our products and services aim to
+help our customers both meet the challenges and take advantage of the opportunities presented by
+today's rapidly changing world.
+In addition, we want our own business operations and practices to be intelligent, sustainable, and
+inclusive. SAP is committed to the goal set by the Paris Agreement of limiting global warming to
+1.5 degrees Celsius in comparison to pre-industrial levels. In March 2021, SAP announced the
+intention to become carbon neutral in our own operations by the end of 2023 – two years earlier than
+previously stated. Further, in January 2022, SAP announced its commitment to achieve net-zero along
+their value chain in 2030; 20 years earlier than originally targeted. SAP also supports the United
+Nations Sustainable Development Goals (UN SDGs). Together with our customers and partners, we
+are engaged in initiatives across the UN SDGs.
+4 IDC, Worldwide Enterprise Applications Market Shares, 2020: Next-Generation Applications Shaping the Market, Doc #US47983821,
+Sept. 2021
+5 IDC, Worldwide Enterprise Resource Management Applications Market Shares, 2020: Digital Makes Strides, Doc #US47984121, Sept.
+2021
+6 IDC, Worldwide Supply Chain Management Applications Market Shares, 2020: Disruption Managed, Doc #US46435921, Dec. 2021
+7 IDC, Worldwide Procurement Applications Software Market Shares, 2020: Digital Became New Normal, Doc #US47984421, Aug. 2021
+Stakeholders
+9 IDC, Worldwide Enterprise Resource Planning Software Market Shares, 2020: The Advance of Modular and Intelligent ERP Systems, Doc
+#US46441121, June 2021
+To Our
+SAP
+Customer Net Promoter Score (Customer NPS): In 2021, we continued to harmonize the
+Customer Loyalty Survey program where Customer NPS is measured. Specifically, to enable better
+standardization and comparability, we now ask about SAP across all entities and product lines. The
+annual assessment of customer loyalty is based on a survey that includes the Net Promoter Score
+(NPS) metric. The Customer NPS score is calculated based on the NPS Likelihood to Recommend
+question with its proprietary scoring, identified on a scale of 0–10. We introduced this measure in
+2012 as we are convinced that we can achieve our financial goals only when our customers are loyal
+to, and satisfied with, SAP and our solutions. To derive the Customer NPS, we start with the
+percentage of "promoters" of SAP, that is, those giving us a score of 9 or 10 on a scale of 0-10. We
+then subtract the percentage of “detractors,” that is, those giving us a score of 0-6. The method
+ignores "passives," that is, those giving us a score of 7 or 8. Consequently, the range of achievable
+SAP Integrated Report 2021
+SAP
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Expected Developments and Opportunities and Risk Management and Risks sections; and other
+forward-looking information appearing in other parts of this report.
+To fully consider the factors that could affect our future financial results, both this report and our
+Annual Report on Form 20-F should be considered, as well as all of our other filings with the U.S.
+Securities and Exchange Commission (SEC). Readers are cautioned not to place undue reliance on
+these forward-looking statements, which speak only as of the date specified or the date of this report.
+We undertake no obligation to publicly update or revise any forward-looking statements as a result of
+new information that we receive about conditions that existed upon issuance of this report, future
+events, or otherwise unless we are required to do so by law.
+This report includes statistical data about the IT industry and global economic trends that comes from
+information published by sources including International Data Corporation (IDC), Gartner, the
+European Central Bank (ECB), and the International Monetary Fund (IMF). This type of data
+represents only the estimates of IDC, Gartner, the ECB, the IMF, and other sources of industry data.
+SAP does not adopt or endorse any of the statistical information provided by sources such as IDC,
+Gartner, the ECB, the IMF, or other similar sources that is contained in this report. The data from these
+sources is subject to risks and uncertainties, and subject to change based on various factors, including
+those described above, in the Risk Management and Risks section, and elsewhere in this report.
+These and other factors could cause our results to differ materially from those expressed in the
+estimates made by third parties and SAP. We caution readers not to place undue reliance on this data.
+51/338
+52/338
+SAP Integrated Report 2021
+For more information about Signavio, see Note (D.1), Business Combinations and Divestitures.
+Measures to Manage Our Non-Financial Performance
+For more information about Clarabridge, see Note (D.1), Business Combinations and Divestitures.
+Net carbon emissions
+Measures to Manage Our Financial Performance
+We use various performance measures to manage our performance with regard to our primary
+financial objectives, which are growth and profitability, and our primary non-financial objectives, which
+are customer loyalty, employee engagement, and carbon impact. We view growth and profitability as
+indicators of our current performance, while we see customer loyalty, employee engagement, and
+carbon impact as indicators of our future performance.
+System
+Performance Management
+Additional
+Information
+Carbon Impact
+Further Information on
+Sustainability
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+Consolidated Financial
+Statements IFRS
+83%
+Employee Engagement Index
+Engagement
+Cloud and software revenue
+€24.08 billion
+€25.0 billion to €25.5 billion²
+Profitability
+Operating profit
+€8.23 billion¹
+€7.8 billion to €8.25 billion 1,2
+Free cash flow
+€5.05 billion
+More than €4.5 billion
+Customer Loyalty
+Customer Net Promoter Score
+10
+11 to 15
+Employee
+Note: A reconciliation of non-IFRS results to IFRS equivalents is available in the Performance Management System section.
+Additional
+Information
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Employee
+Engagement
+Customer Loyalty
+Profitability
+More than €22 billion
+2025 Ambition
+Cloud revenue
+Growth
+KPI
+Strategic Objective
+Ambitions for 2025
+Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management System section.
+2 at constant currencies
+1 Non-IFRS
+70 kt
+On October 1, 2021 (after receipt of required regulatory approvals and satisfaction or waiver of other
+customary closing conditions), Qualtrics completed its previously announced acquisition of
+Clarabridge, Inc., a customer experience management software company headquartered in Reston,
+Virginia, in the United States.
+Total revenue
+Growth
+Operating profit¹
+Employee Engagement Index
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+58/338
+57/338
+¹Non-IFRS
+O kt (from 2023 onward; net
+zero along our value chain
+by 2030)
+84% to 86%
+Steady increase
+Approximately €8 billion
+More than €11.5 billion
+More than €36 billion
+Net carbon emissions
+Carbon Impact
+Free cash flow
+€11.55 billion to €11.85
+billion²
+Customer Net Promoter Score
+Cloud revenue
+- Profitability
+-
+-
+Customer loyalty
+Employee engagement
+Carbon impact
+SAP Integrated Report 2021
+Growth
+SAP
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+To Our
+Stakeholders
+-
+We use the following financial and non-financial objectives to steer our company:
+Measuring Our Success
+55/338
+€9.42 billion
+56/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+Joint Ventures
+To better support our customers in the financial services industry (FSI), SAP created a joint venture
+called SAP Fioneer, with German investment company Dediq GmbH. The aim of this joint venture is
+to build agile solutions for FSI using SAP technologies as a basis. SAP has contributed certain FSI-
+centric software solutions to SAP Fioneer in exchange for a minority share in the new entity. Some
+SAP employees transferred to the new entity. The transaction closed in September 2021.
+For more information, see Note (D.1), Business Combinations and Divestitures.
+Sapphire Ventures
+In addition to our investments in organic growth and acquisitions, SAP also supports entrepreneurs
+that aspire to build industry-leading businesses through venture capital funds managed by Sapphire
+Ventures. Sapphire Ventures manages over US$8.8 billion (€7.8 billion) and has invested in more
+than 200 companies. Sapphire Ventures pursues opportunities in which it can help fuel enterprise
+growth by adding expertise, relationships, geographic reach, and capital. It places a particular focus
+on companies in Europe, Israel, and the United States. In the second quarter of 2021, the Executive
+Board proposed, and the Supervisory Board consented to, the financing of a new Sapphire Ventures
+fund ("SAPPHIRE Ventures Fund VI"). SAP's total volume committed for SAPPHIRE Ventures Fund VI
+is US$1.75 billion (€1.5 billion).
+The table below provides an overview of the specific key performance indicators (KPIs) used to
+measure performance within these objectives and compares this performance with our goals.
+Outlook and Results for 2021
+On January 27, 2022, SAP announced its intent to acquire a majority stake of Taulia, a leading
+provider of working capital management solutions. The acquisition is expected to close in
+March 2022, following completion of customary closing conditions and regulatory approvals.
+For more information about Taulia, see Note (G.8), Events After the Reporting Period.
+ΚΡΙ
+Carbon Impact
+Employee Engagement Index
+84% to 86%
+Net carbon emissions
+83%
+90 kt to 110 kt
+* The 2021 outlook was communicated in January 2021 and was updated in April, July, and October 2021. The 2021 outlook numbers
+above reflect the updated outlook from October 2021.
+** Non-IFRS, at constant currencies
+Note: A reconciliation of non-IFRS results to IFRS equivalents is available in the Performance Management System section.
+Outlook for 2022
+Strategic Objective
+ΚΡΙ
+Strategic Objective
+2022 Outlook
+2021 Results
+Engagement
+Employee
+110 kt
+10
+2021 Outlook*
+€9.4 billion to €9.6 billion
+€9.59 billion
+Growth
+Profitability
+Cloud revenue**
+Operating profit**
+€23.8 billion to €24.2 billion
+Cloud and software revenue**
+5 to 10
+€24.41 billion
+Customer Net Promoter Score
+Customer Loyalty
+€8.41 billion
+2021 Results
+€8.1 billion to €8.3 billion
+-2,630
+0
+20
+-2,916
+Cost of services
+support
+-1,911
+0
+55
+42
+266
+-1,925
+-1,822
+0
+70
+33
+-2,876
+Cost of software licenses and
+-2,451
+0
+-3,178
+40
+208
+-2,699
+-2,008
+3
+-7,505
+0
+-2,431
+General and administration
+0
+-6,371
+0
+360
+375
+-7,106
+-6,479
+0
+655
+370
+Sales and marketing
+-4,151
+0
+296
+7
+-4,454
+-4,667
+0
+513
+10
+-5,190
+Research and development
+-3,000
+175
+59
+30.3
+-3,105
+5.41
+4.35
+26.5
+26.8
+24.2
+29.8
+66/338
+Due to rounding, the sum of the numbers presented in the table above might not precisely equal the totals we provide.
+6.73
+20.0
+29.6
+4.46
+21.5
+16.7
+Earnings per share, basic (in €)
+Effective tax rate (in %)
+Operating margin (in %)
+Key ratios
+138
+0
+138
+394
+121
+273
+20
+SAP
+169
+SAP Integrated Report 2021
+Stakeholders
+Cost of cloud
+Related
+Related
+Non-IFRS
+Restruc-
+turing
+SBP1
+sition-
+IFRS
+Non-IFRS
+Restruc-
+turing
+SBP1
+sition-
+IFRS
+Acqui-
+Acqui-
+€ millions
+2020
+Information
+Additional
+2021
+Non-IFRS Adjustments by Functional Areas
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+1,230
+Further Information on
+Sustainability
+-1,181
+This platform aims to help our customers, partners, and internal development teams to store and
+manage data, derive insights, build, extend, and integrate applications, as well as optimize and
+automate business processes in and beyond SAP landscapes. Across technologies, SAP provides
+customers actionable use cases with prebuilt support and executable code that is ready to deploy.
+As part of our multi-cloud strategy, we increased our global footprint of SAP BTP by adding to our
+regional presence in APJ and Europe. New points of presence include Microsoft Azure in Sydney as
+well as Amazon Web Services (EU Access) and Google Cloud Platform (GCP) in Frankfurt.
+SAP Business Network
+SAP Business Technology Platform (SAP BTP) spans a comprehensive set of on-premise and
+cloud-native technologies and services that support SAP applications across four areas: database and
+data management; analytics; application development and integration; and Al and robotic process
+automation.
+SAP Business Technology Platform
+Our SAP Customer Experience solutions bring together customer data, machine learning
+technology, and microservices to support customer engagements across end-to-end processes in the
+areas of marketing, commerce, sales, and service. The focus for 2021 was maintaining leadership
+positions in various "magic quadrants" such as Gartner's Magic Quadrant for Sales Force Automation
+with SAP Sales Cloud; Forrester Wave for Customer Identity and Access Management (CIAM) with
+SAP Customer Data Cloud (formerly Gigya); and Gartner Magic Quadrant for Personalization Engines
+for SAP Emarsys Customer Data platform.
+Customer Experience
+At SAPPHIRE NOW, we introduced Verify, a new SAP Concur service that uses Al and machine
+learning to evaluate companies' expense reports and identify anomalies.
+SAP provides a comprehensive set of solutions for customers to better navigate spend management
+decisions aligned with corporate strategies. It brings together SAP's intelligent spend management
+solutions including products branded under SAP Ariba, SAP Concur, and SAP Fieldglass as well
+as SAP Business Network. Our intelligent spend management solutions aim to address our
+customers' end-to-end procurement, travel and expense, and external workforce needs with visibility
+across the entire supply chain.
+Intelligent Spend Management
+In 2021, we maintained a leadership position in the Gartner Magic Quadrant for Cloud HCM Suites for
+1,000+ Employee Enterprises that we have been awarded for six consecutive years; the 2021 IDC
+MarketScape Reports for Talent Management for nine consecutive years; and the inaugural The
+Forrester Wave: Learning Management Systems and Experience Platforms report.
+Information
+Additional
+-
+Consolidated Financial
+Statements IFRS
+Combined Group
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+SAP solutions for human experience management (HXM) under the SAP SuccessFactors brand aim
+to increase the value of a workforce by developing, managing, engaging, and empowering people.
+SAP SuccessFactors HXM Suite was designed to provide decision-makers with tools to identify and
+reduce unconscious bias from key people decisions such as hiring, calibration, and compensation.
+With embedded analytics throughout the suite, SAP SuccessFactors HXM solutions aim to enable
+organizations to visualize and forecast diversity trends, as well as track and measure progress against
+diversity, equity, and inclusion goals through custom reports, dashboards, and scorecards.
+Human Experience Management
+At SAPPHIRE NOW in 2021, we announced the availability of RISE with SAP transformation
+packages for specific industries that provide business transformation-as-a-service with five
+industry-tailored cloud solutions for retail, consumer products, automotive, utilities, and industrial
+machinery and components. RISE with SAP for Modular Cloud ERP, which includes ERP
+capabilities in different domains and lines of business (LoBs), namely procurement, human
+experience management (HXM), analytics, and governance, was also announced at our annual event.
+Around 2,800 SAP S/4HANA customers were added in 2021, bringing the number of customers to
+approximately 18,800, up 18% year over year.
+SAP offers a choice of SAP S/4HANA deployments - in the public cloud via software as a service
+(SaaS), in a private cloud or on premise as well as a combination in a hybrid deployment.
+Launched in January 2021, RISE with SAP is our business-transformation-as-a-service offering that
+aims to support and accelerate customers in their transformation to an intelligent enterprise. It is a
+package of products and tools and includes SAP S/4HANA Cloud - either public or private
+deployment options; business process intelligence (BPI) solutions; migration tools and services
+including the SAP Readiness Check tool and the Custom Code Migration app; infrastructure
+provided by any hyperscaler or SAP data center; SAP Business Technology Platform (SAP BTP);
+and an SAP Business Network Starter Pack.
+SAP S/4HANA is our ERP suite with intelligent technologies such as artificial intelligence (AI),
+machine learning, and advanced analytics. Running on SAP HANA, the suite combines automation
+and integrated business processes analytics and a role-based user experience. The suite provides
+software capabilities for finance, sales, service, procurement, manufacturing, and asset management,
+as well as research and development (R&D).
+SAP S/4HANA Cloud
+For an overview of our strategy, see the Strategy section.
+Management Report
+SAP officially launched SAP Business Network in June 2021, bringing together Ariba Network,
+SAP Logistics Network, and SAP Asset Intelligence Network with the aim to unify the points of
+interaction and integration across trading partners – from supplier collaboration to logistics
+coordination and traceability, to equipment usage and maintenance. The trading partner directory in
+SAP Business Network aims to provide trading partners with a view of their customer relationships
+and transactions on the network.
+As part of our strategy to make SAP Business Network more open, SAP announced a partnership with
+Amazon Business in Q3/2021. This partnership aims to enable users to tap into millions of items listed
+on Amazon Business directly from within SAP Ariba solutions, as well as assist with compliance with
+corporate purchasing policies. With this partnership and technology integration, Amazon Business
+becomes a source of supply for Spot Buy, a capability within SAP Ariba solutions for users to
+purchase items from trusted suppliers.
+69/338
+Attributable to non-controlling interests
+5
+Industry cloud solutions are built by SAP and partners in the cloud, giving our customers access to the
+innovation power of an entire ecosystem. The solutions are built on SAP BTP and can use its full
+spectrum of intelligent technologies and business services. We have an expanding portfolio and a
+growing ecosystem across all industries.
+SAP's industry cloud is an open innovation space for SAP and our partners to build solutions that
+make a difference to the core business of our customers. Industry cloud solutions extend the end-to-
+end processes of SAP S/4HANA, LoB cloud solutions, and SAP Business Network to enable our
+customers optimize and transform their core business.
+Industry Cloud
+Experience Management (XM) refers to both Qualtrics technology as well as the discipline of seeking
+out and closing the experience gaps across the four core areas of businesses - customer, product,
+employee, and brand. In 2021, Qualtrics acquired Clarabridge, adding omnichannel conversational
+analytics to Qualtrics XM Platform. The combination of SAP and Qualtrics' respective offerings, as
+well as integration into our suite solutions aim to help organizations and governments bring real-time
+customer and employee sentiment to their travel and expense programs, vaccination efforts, and
+business and office reopening.
+Experience Management
+For more information, see Sustainable Solutions and Products in Use in the Energy and Emissions
+section.
+As a key strategic pillar, sustainability is a topic that is covered across the various SAP product areas
+along emerging and maturing environmental, social, and governance (ESG) standards from
+organizations such as the World Economic Forum (WEF), the International Sustainability Standards
+Board (ISSB), the European Union (EU), and others. The goal of our sustainability management
+solutions is to enable customers to include sustainability as a new dimension into their business
+processes and operations. SAP offers solutions focusing on ESG reporting, climate change, circular
+economy, and social responsibility.
+Sustainable Business Solutions, Services, and Partnerships
+With the SAP-wide initiative One Process Acceleration Layer (OPAL), we aim to create a primary
+resource for process repository, process simulation, process mining and analytics, process
+collaboration, and enterprise-wide dissemination.
+Released in September 2021, SAP Process Insights aims to help companies foster continuous
+improvements with performance views and process drilldowns, as well as recommendations and
+improvement actions.
+Our goal is to offer one integrated BPI portfolio, the SAP Signavio Business Process Management
+(BPM) Suite. The suite consists of branded SAP Signavio solutions and the SAP Process Insights
+solution with integration into application lifecycle management solutions SAP Solution Manager and
+SAP Cloud ALM. The suite aims to deliver business transformation capabilities for our customers and
+partners with quick time to insights and time to deploy. This portfolio is powered by SAP BTP
+capabilities such as workflow management, citizen automation, low-code/no-code, and intelligent
+robotic process automation. Acquisitions such as Signavio and the no-code platform SAP AppGyver
+contributed to this comprehensive business process transformation solution.
+Business process intelligence (BPI) solutions aim to help our customers analyze their operations,
+understand their process bottlenecks, and improve their business process landscape.
+Business Process Intelligence
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+70/338
+The goal of our product and services portfolio is to deliver on this expanded vision.
+Enabling a sustainable world
+Creating a network of intelligent, sustainable enterprises
+Helping customers become intelligent and sustainable enterprises
+0
+-66
+84
+43
+0
+0
+0
+43
+Other operating income/expense,
+0
+-3
+0
+0
+3
+0
+157
+0
+0
+-157
+Restructuring
+-1,190
+0
+157
+9
+-1,356
+0
+0
+18
+Total operating expenses
+of intelligent, sustainable enterprises." Our strategy was built on the following focus areas:
+In 2021, we expanded on 2020's REINVENT strategy to “REINVENT how the world runs as a network
+Products, Research &
+Development, and Services
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Stakeholders
+Combined Group
+To Our
+SAP Integrated Report 2021
+SAP
+68/338
+67/338
+1 Share-based payments
+-19,056
+-3
+1,084
+577
+-20,715
+-19,613
+157
+2,794
+623
+-23,186
+net
+6,396
+27,338
+5,145
+-13
+7,194
+6,223
+Net cash flows from operating activities
+A in %
+2020
+2021
+€ millions
+Among other measures, we use free cash flow to manage our overall financial performance.
+Free Cash Flow
+Purchase of intangible assets and property, plant, and
+We believe it is important for investors to have information that provides insight into the development
+of our sales. Revenue measures determined under IFRS provide information that is useful in this
+regard. However, both sales volume and currency effects impact period-over-period changes in sales
+revenue. We do not sell standardized units of products and services, so we cannot provide relevant
+information on sales volume by providing data on the changes in product and service units sold. To
+provide additional information that may be useful to investors in breaking down and evaluating
+changes in sales volume, we present information about our revenue and various values and
+components relating to operating profit that are adjusted for foreign currency effects. We calculate
+constant currencies measures by translating foreign currencies using the average exchange rates from
+the comparative period instead of the current period. Constant currency measures on current cloud
+backlog use the closing exchange rate from the previous year's corresponding key date instead of the
+average exchange rate.
+Operating Profit (Non-IFRS), Cloud Gross Margin (Non-IFRS), Operating Margin
+(Non-IFRS), Effective Tax Rate (Non-IFRS), and Earnings per Share (Non-IFRS)
+Operating profit, cloud gross margin, operating margin, effective tax rate, and earnings per share
+denominated as operating profit (non-IFRS), cloud gross margin (non-IFRS), operating margin (non-
+IFRS), effective tax rate (non-IFRS), and earnings per share (non-IFRS) have been adjusted from the
+respective IFRS measures by adjusting for the aforementioned operating expenses (non-IFRS) and
+the income tax effects thereon.
+We exclude certain acquisition-related expenses for the purpose of calculating operating profit (non-
+IFRS), operating margin (non-IFRS), and earnings per share (non-IFRS) when evaluating SAP's
+continuing operational performance because these expenses generally cannot be changed or
+influenced by management after the relevant acquisition other than by disposing of the acquired
+assets. Since management at levels below the Executive Board does not influence these expenses,
+we generally do not consider these expenses for the purpose of evaluating the performance of
+management units. For similar reasons, we eliminate share-based payment expenses as these costs
+are impacted by share price developments and other factors outside our control. We also eliminate
+restructuring expenses because they are volatile and mostly cannot be influenced by management at
+levels below the Executive Board.
+1,251
+Share-based payment expenses
+Acquisition-related third-party expenses
+■
+■ Settlements of preexisting business relationships in connection with a business combination
+Information
+Additional
+Further Information on
+Sustainability
+Constant Currencies Information
+Consolidated Financial
+Statements IFRS
+-800
+-2
+We believe that our non-IFRS measures are useful to investors for the following reasons:
+Our expense (non-IFRS), and profit (non-IFRS) measures, along with the current cloud backlog
+(CCB) measure (see above), provide investors with insight into management's decision-making
+because management uses these measures to run our business and make financial, strategic, and
+operating decisions. We exclude the expense adjustments outlined above when making decisions
+to allocate resources. In addition, we use these non-IFRS measures to facilitate comparisons of
+SAP's operating performance from period to period.
+-
+Usefulness of Non-IFRS Measures
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Combined Group
+Management Report
+Stakeholders
+To Our
+SAP Integrated Report 2021
+-816
+SAP
+63/338
+-16
+6,000
+5,049
+Free cash flow
+-1
+-378
+-374
+Payments of lease liabilities
+equipment (without acquisitions)
+64/338
+Management Report
+Combined Group
+To Our
+Stakeholders
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+62/338
+61/338
+Based on our detailed annual plans, we determine the budget for the respective fiscal year. We also
+have processes in place to forecast revenue and profit on a quarterly basis, to quantify whether we
+expect to realize our financial goals, and to identify any deviations from plan. We continuously monitor
+the affected operating segments and Board areas in the SAP Group to analyze their developments
+SAP's long-term strategic plans are the point of reference for our short-term and mid-term planning
+and controlling processes. We initially identify future growth and profitability drivers at a highly
+aggregated level for the entire SAP Group. In a first step, the resulting financial plan is broken down
+into (i) product portfolio grouped into solution areas and deployment models “On Premise," "Software
+as a Service/Platform as a Service," "Infrastructure as a Service," and "Intelligent Spend Management";
+and (ii) functions such as development, delivery, sales, and administration. In a second step, the
+planned total revenues and total expenses are generally allocated to the operating segments and the
+areas of functional responsibility of the individual members of the Executive Board ("Board area”). If a
+Board area represents not only a functional department but also has a responsibility for operating
+segments within this Board area, the allocation is done at the lower segment level. Budget
+adjustments may be applied during the year to reflect changes in priorities, to achieve efficiency
+targets, and to reflect endogenous and exogenous factors. Such budget adjustments, as well as the
+assessment of the performance, are handled at the Board area level if the Board area is part of a
+segment, or at the segment level if the Board area comprises several segments. It is then the
+individual Executive Board member's responsibility to break down the allocated budget adjustments
+within the segment budget boundary. Based on an integrated portfolio process running in parallel to
+the budgeting process, we ensure aligned investment behavior across Board areas with regards to
+specific solution and/or subsolution areas. In a final step, customer-facing revenue targets and cost-
+of-sales and marketing targets are broken down into sales regions and market units.
+Our holistic view of the performance measures described above, together with our associated
+analyses, comprises the information we use for value-based management. We use planning and
+control processes to manage the compilation of these key measures and their availability to our
+decision-makers across various management levels.
+Value-Based Management
+Management Report
+Carbon emissions: We use carbon emissions to manage our non-financial performance. It is used as
+a metric to strengthen our ambitious short-term and long-term carbon reduction targets. We measure
+our net carbon emissions according to the Greenhouse Gas (GHG) Protocol. The net carbon
+emissions are calculated by deducting emission savings such as self-produced renewable energy,
+renewable energy certificates, and carbon offsets from our gross carbon emissions.
+We measure both the Employee Engagement Index as well as Leadership Trust Score to get insights
+on the following:
+Since this year, we determine the Employee Engagement Index and the Leadership Trust Score
+as the average of the scores retrieved in each of the surveys we run within a fiscal year. Adopting the
+Experience Management (XM) philosophy of Qualtrics, we changed our engagement survey concept
+to a continuous listening approach that includes multiple data collections throughout the year. This
+new average score provides a more valid evaluation of the full-year engagement and trust level of our
+employees.
+scores is -100 to +100, with the latter being the best achievable score for customer loyalty as
+measured by the Customer NPS methodology.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+Employee Engagement Index: We use this index to measure the satisfaction and commitment of
+our employees, how proud they are of our company, and how strongly they identify with SAP.
+Applying this measure is recognition that our growth strategy depends on engaged employees.
+Leadership Trust Score: We use this score to further enhance accountability and to measure our
+collective effort to foster a work environment based on trust. It is derived from a question in our
+surveys that gauges employees' trust in our leaders. We measure leadership trust by using the
+same NPS methodology that we use to compute the Customer NPS.
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Additional
+Information
+and define any appropriate actions. Our entire network of planning, control, and reporting processes is
+implemented in integrated planning and information systems, based on SAP software, across all
+organizational units so that we can conduct the evaluations and analyses needed to make informed
+decisions.
+SAP Integrated Report 2021
+SAP
+Amortization expense/impairment charges for intangibles acquired in business combinations
+and certain stand-alone acquisitions of intellectual property (including purchased in-process
+research and development) as well as sale/disposal gains and losses for these intangibles
+■
+Acquisition-related charges
+Operating expense numbers that are identified as operating expenses (non-IFRS) have been adjusted
+by excluding the following expenses:
+Operating Expense (Non-IFRS)
+Thus, SAP's IFRS revenue equals the non-IFRS revenue at actual currencies starting with the annual
+reporting period 2021. Due to immateriality, prior-year numbers are further based on our previous
+non-IFRS definition as described in our SAP Integrated Report 2020.
+Starting in 2021, we no longer adjust our IFRS revenue measures by including the full amount of
+recurring revenue that is not recognized under IFRS due to fair value accounting for the contracts in
+effect at the time of the respective acquisitions.
+Revenue (Non-IFRS)
+Our non-IFRS financial measures reflect adjustments based on the items below, as well as
+adjustments for the related income tax effects.
+measures.
+Both our internal performance targets and the guidance we provide to the capital markets are
+based on revenue and profit (non-IFRS) measures rather than the respective IFRS financial
+All forecast and performance reviews with all senior managers globally are based on these non-
+IFRS measures, rather than the respective IFRS financial measures.
+The annual budgeting process for all management units is based on operating profit (non-IFRS)
+numbers rather than the respective IFRS financial measures.
+The variable components of our Executive Board members' and employees' remuneration are
+based on non-IFRS numbers such as operating profit (non-IFRS), operating margin (non-IFRS), as
+well as current cloud backlog (CCB) measures rather than the respective IFRS measures.
+Our management primarily uses these non-IFRS measures rather than IFRS measures as the basis
+for making financial, strategic, and operating decisions.
+-
+We use these non-IFRS measures consistently in our internal planning and forecasting, reporting, and
+compensation, as well as in our external communications, as follows:
+We believe that the disclosed supplemental historical and prospective non-IFRS financial information
+provides useful information to investors because management uses this information, in addition to
+financial data prepared in accordance with IFRS, to attain a more transparent understanding of our
+past performance and our anticipated future results.
+We disclose certain financial measures that are not prepared in accordance with IFRS and are
+therefore considered non-IFRS financial measures. Our non-IFRS financial measures may not
+correspond to non-IFRS financial measures that other companies report. The non-IFRS financial
+measures that we report should only be considered in addition to, and not as substitutes for, or
+superior to, our IFRS financial measures.
+Explanation of Non-IFRS Measures
+Non-IFRS Financial Measures Cited in This Report
+The non-IFRS measures provide investors with additional information that enables a comparison of
+year-over-year operating performance by eliminating certain direct effects of acquisitions, share-
+based compensation plans, and restructuring plans.
+Non-IFRS and non-GAAP (Generally Accepted Accounting Principles) measures are widely used in
+the software industry. In many cases, inclusion of our non-IFRS measures may facilitate
+comparison with our competitors' corresponding non-IFRS and non-GAAP measures.
+Limitations of Non-IFRS Measures
+Without being analyzed in conjunction with the corresponding IFRS measures, the non-IFRS
+measures are not indicative of our present and future performance, foremost, but not limited, for the
+following reasons:
+14,818
+158
+14,660
+0
+14,660
+Software licenses and support
+11,506
+0
+11,506
+11,577
+15,148
+166
+0
+11,412
+Software support
+3,642
+0
+3,642
+3,240
+-8
+3,248
+0
+11,412
+0
+15,148
+Cloud and software
+28,232
+390
+27,842
+0
+27,842
+Total revenue
+4,110
+0
+4,110
+3,823
+58
+3,764
+0
+3,764
+Services
+23,233
+5
+23,228
+24,410
+332
+24,078
+0
+24,078
+3,248
+SAP
+Software licenses
+5
+SAP Integrated Report 2021
+SAP
+65/338
+Despite these limitations, we believe that the presentation of our non-IFRS measures and the
+corresponding IFRS measures, together with the relevant reconciliations, provide useful information to
+management and investors regarding present and future business trends relating to our financial
+condition and results of operations.
+revenue, operating expenses, operating profit, or other measures of financial performance prepared in
+accordance with IFRS on the other. We caution the readers of our financial reports to follow a similar
+approach by considering nominal and constant currencies non-IFRS measures only in addition to, and
+not as a substitute for or superior to, changes in revenue, operating expenses, operating profit, or
+other measures of financial performance prepared in accordance with IFRS.
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+To Our
+Combined Group
+SAP Integrated Report 2021
+SAP
+We believe that constant currencies measures have limitations, particularly as the currency effects that
+are eliminated constitute a significant element of our revenue and expenses and could materially
+impact our performance. Therefore, we limit our use of constant currencies measures to the analysis
+of changes in volume as one element of the full change in a financial measure. We do not evaluate
+our results and performance without considering both constant currencies and nominal measures of
+revenue (non-IFRS) and operating profit (non-IFRS) measures on the one hand, and changes in
+In the past, we have issued share-based payment awards to our employees every year and we
+intend to continue doing so in the future. Thus, our share-based payment expenses are recurring,
+although the amounts usually change from period to period.
+The valuation of our cash-settled share-based payments could vary significantly from period to
+period due to the fluctuation of our share price and other parameters used in the valuation of these
+plans. In the future, we plan to move more of our awards to equity settlement.
+Our restructuring charges resulted in significant cash outflows in the past and could do so in the
+future. The same applies to our share-based payment expense because most of our share-based
+payments are settled in cash rather than shares.
+The expense adjustment for acquisition-related charges does not arise from a common conceptual
+basis. This is because the expense adjustment aims to improve the comparability between post-
+acquisition periods and pre-acquisition periods. This should particularly be considered when
+evaluating our operating profit (non-IFRS) and operating margin (non-IFRS) numbers, as these
+combine our revenue and expenses (non-IFRS) despite the absence of a common conceptual
+basis.
+The acquisition-related amortization expense that we eliminate in deriving our profit (non-IFRS)
+numbers is a recurring expense that will impact our financial performance in future years.
+The remaining acquisition-related charges that we eliminate in deriving our profit (non-IFRS)
+numbers are likely to recur should SAP enter into material business combinations in the future.
+Similarly, the restructuring expenses that we eliminate in deriving our profit (non-IFRS) numbers are
+likely to recur should SAP perform restructurings in the future.
+While our profit (non-IFRS) numbers reflect the elimination of certain acquisition-related expenses,
+no eliminations are made for the additional revenue or other income that results from the
+acquisitions.
+-
+To Our
+Stakeholders
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+8,080
+9,592
+174
+9,418
+0
+9,418
+Cloud
+Non-IFRS
+Adj.
+IFRS
+Constant
+Currency
+Impact
+Adj. Non-IFRS
+IFRS
+Currency
+Non-IFRS
+2020
+2021
+Revenue measures
+€ millions, unless otherwise stated
+Reconciliations of IFRS to Non-IFRS Financial Measures for the Years 2021 and 2020
+Additional
+Information
+Further Information on
+Sustainability
+8,085
+SAP Integrated Report 2021
+· Restructuring expenses, that is, expenses resulting from measures which comply with the definition
+of restructuring according to IFRS
+1,473
+3,573
+-23,186
+Total operating expenses
+18
+84
+43
+0
+43
+Other operating income/expense, net
+0
+-3
+-19,613
+3
+157
+-157
+Restructuring
+-1,190
+166
+-1,356
+-1,181
+1,250
+-2,431
+General and administration
+-6,371
+0
+735
+-212
+-20,715
+0
+3,123
+0
+3,123
+Finance income
+-179
+0
+-179
+17
+0
+17
+-19,824
+Other non-operating income/expense, net
+1,664
+6,623
+8,408
+178
+8,230
+3,573
+4,656
+Operating profit
+Profit numbers
+-19,056
+1,659
+8,287
+-7,106
+-6,479
+1,025
+Cost of services
+-4,362
+345
+-4,707
+-4,698
+332
+-5,030
+Cost of cloud and software
+-1,911
+97
+-2,008
+-2,916
+-1,822
+-1,925
+Cost of software licenses and support
+-2,451
+248
+-2,699
+-2,876
+229
+-3,105
+Cost of cloud
+Operating expense measures
+27,343
+103
+286
+-2,630
+-3,178
+-7,505
+Sales and marketing
+-4,151
+303
+-4,454
+-4,667
+524
+-5,190
+Research and development
+19,981
+528
+19,453
+20,514
+617
+19,897
+Gross profit
+-7,362
+523
+-7,886
+-7,328
+617
+-7,946
+Total cost of revenue
+-3,000
+178
+1,473
+Finance costs
+-66
+2,960
+Income tax expense
+8,884
+1,664
+7,220
+10,421
+3,573
+6,847
+Profit before tax
+0
+-1,471
+776
+0
+2,174
+Financial income, net
+-697
+0
+-697
+-949
+0
+-949
+2,174
+-613
+776
+-1,938
+-2,084
+7,943
+5,256
+Attributable to owners of parent
+6,534
+1,251
+2,687
+8,337
+5,376
+Profit after tax
+-2,350
+-413
+5,283
+This section on operating results (IFRS) discusses results only in terms of IFRS measures, so the IFRS
+numbers are not expressly identified as such.
+Operating Results (IFRS)
+We achieved an effective tax rate (IFRS) of 21.5% and an effective tax rate (non-IFRS) of 20.0%, which
+is in the middle of the adjusted outlook of 21.0% to 22.0% (IFRS) and at the lower end of the range of
+20.0% to 21.0% (non-IFRS) we announced in October 2021.
+Non-IFRS operating profit in 2021 was €8.41 billion on a constant currency basis (2020: €8.29 billion),
+reflecting an increase of 1%. As a result, we were able to surpass our excellent results from 2019 and
+2020, despite our continued investment in our business transformation during the reporting year. The
+development of our operating profit was largely influenced by investment decisions in our innovation
+areas and growth markets. This, among other things, resulted in an increase of our overall headcount
+by 4,984 full-time equivalents or FTEs (4,071 thereof organically), primarily in research and
+development as well as in sales and marketing. Thus, non-IFRS operating profit on a constant
+currency basis amounting to €8.41 billion exceeded the top end of the target range (€8.1 billion to
+€8.3 billion).
+Profitability in our software as a service/platform as a service (SaaS/PaaS) excluding intelligent spend
+cloud offerings was 70% at constant currencies (non-IFRS) for 2021. Due to ongoing investments in
+the further development and harmonization in the operation of our various SaaS/PaaS offerings on a
+single platform, the gross margin declined 0.5pp.
+Combined Group
+Management Report
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+To Our
+Stakeholders
+SAP Integrated Report 2021
+We break our operations down into three regions: the Europe, Middle East, and Africa (EMEA) region,
+the Americas region, and the Asia Pacific Japan (APJ) region. We allocate revenue amounts to each
+region based on where the customer is located. For more information about revenue by geographic
+region, see the Notes to the Consolidated Financial Statements, Note (A.1).
+SAP
+78/338
+Additional
+Information
+Revenue
+Total revenue increased from €27,338 million in 2020 to €27,842 million in 2021, representing an
+increase of €504 million, or 2%.
+23,461
+Total Revenue
+€ millions | change since previous year
+27,553
+6%
+2%
+27,842
+27,338
+2019
+2018
+2017
+12%
+77/338
+5%
+24,708
+Cloud and software revenue represented 86% of total revenue in 2021 (2020: 85%). Service revenue
+decreased 8% from €4,110 million in 2020 to €3,764 million in 2021, which was 14% of total revenue
+(2020: 15%).
+The cloud gross margin (non-IFRS) on our infrastructure as a service (laaS) cloud offerings saw a
+decline of 0.8pp for 2021 on a constant currency basis to achieve a cloud gross margin (non-IFRS) of
+34% for the full year.
+Our expense base in 2021 was impacted by our transformation to a fast-growing cloud business. The
+cloud gross margin (non-IFRS) for 2021 was 69%, declining slightly in comparison with the previous
+year, despite the increase in cloud revenue. This decline was predominantly due to investments into
+our cloud delivery program.
+€23.23 billion
+Cloud and software revenue
+(non-IFRS, at constant currencies)
+€8.09 billion
+(non-IFRS, at constant currencies)
+Cloud revenue
+Revised Outlook
+€24.41 billion
+€9.59 billion
+€23.8 billion
+to €24.2 billion
+€9.4 billion
+to €9.6 billion
+for 2021
+(Q3 Quarterly
+Statement)
+Revised Outlook
+€9.3 billion
+to €9.5 billion
+Results
+for 2021
+Outlook for 2021
+(Integrated Report
+2020)
+Results
+for 2020
+Comparison of Outlook and Results for 2021
+The initial outlook for 2021, updated on April 13, 2021 (for more information, see the table
+"Comparison of Outlook and Results for 2021"), reflected the strong new cloud business performance,
+which was expected to reaccelerate cloud revenue growth, while software licenses revenue was
+expected to decline for the full year as more customers turned to the RISE with SAP subscription
+offering. This outlook also continued to assume that the COVID-19 pandemic would begin to recede
+as vaccine programs rolled out globally, leading to a gradually improving global demand environment
+in the second half of 2021. In this context, we predicted cloud revenue to range between €9.2 billion
+and €9.5 billion, and cloud and software revenue to range between €23.4 billion and €23.8 billion, with
+more predictable revenue anticipated to make up 75% of this result. Furthermore, we expected
+operating profit (non-IFRS) to range between €7.8 billion and €8.2 billion. We expected a full-year
+2021 effective tax rate (IFRS) of 27.5% to 28.5% (2020: 26.8%) and an effective tax rate (non-IFRS) of
+24.5% to 25.5% (2020: 26.5%). In April 2021, we adjusted our outlook for the effective tax rate (IFRS)
+to between 26.0% and 27.0% and for the effective tax rate (non-IFRS) to between 22.5% and 23.5%.
+The decrease in comparison to the previous outlook mainly resulted from changes in taxes for prior
+years and tax-exempt income. Under IFRS, these positive tax effects were partly compensated by
+changes in non-deductible expenses.
+In July 2021, we adjusted our outlook for cloud revenue at constant currencies to range between
+€9.3 billion and €9.5 billion and for cloud and software revenue to range between €23.6 billion and
+€24.0 billion, resulting in a new projected non-IFRS operating profit of between €7.95 billion and
+€8.25 billion. We adjusted our outlook for the effective tax rate (IFRS) to between 21.5% and 23.0%
+and for the effective tax rate (non-IFRS) to between 20.0% and 21.5%. The decrease in comparison to
+the previous outlook mainly resulted from changes in tax-exempt income.
+In our quarterly statement published on October 21, 2021, we raised our outlook again to further
+reflect the strong business performance. This outlook likewise continued to assume that the COVID-19
+pandemic would continue to recede as vaccine programs rolled out globally.
+We adjusted our projection for cloud revenue upward to range between €9.4 billion and €9.6 billion,
+which represented a growth rate of 16% to 19% at constant currencies. In addition, the Company then
+anticipated cloud and software revenue of between €23.8 billion and €24.2 billion. This range
+represented a growth rate of 2% to 4% at constant currencies. Furthermore, we projected the share of
+more predictable revenue to reach approximately 75%. We also set a target range of €8.1 billion to
+€8.3 billion for our operating profit, which represented a decrease of 2% to flat at constant currencies.
+We expected a full-year 2021 effective tax rate (IFRS) of 21.0% to 22.0% and an effective tax rate
+(non-IFRS) of 20.0% to 21.0%. The decrease in comparison to the previous outlook mainly resulted
+from changes in tax-exempt income.
+SAP Integrated Report 2021
+SAP
+€9.1 billion
+to €9.5 billion
+€23.3 billion
+to €23.8 billion
+To Our
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+2021 Actual Revenue and Profit Performance Compared to Outlook (Non-IFRS)
+On the cloud revenue side, we reached the upper end of the guidance, while our cloud and software
+revenue and our operating profit both exceeded the outlook adjusted in October 2021.
+Combined Group
+The cloud gross margin (non-IFRS) on our intelligent spend management offerings improved 0.6pp on
+a constant currency basis, resulting in 80% for 2021 (2020: 79%).
+Operating profit
+(non-IFRS, at constant currencies)
+Operating expenses (non-IFRS) in 2021 on a constant currency basis increased 4% to €19.82 billion
+(2020: €19.06 billion).
+Total revenue (non-IFRS) on a constant currency basis grew 3% in 2021 to €28.23 billion
+(2020: €27.34 billion).
+Thanks to the strong increase in cloud business described above, we were able to increase the share
+of more predictable revenue 3.3pp to 75% (2020: 72%). As such, our total revenue (non-IFRS)
+increased slightly despite a decline in the software license business, which is in line with our cloud
+transformation.
+Cloud and software revenue (non-IFRS) grew 5% at constant currencies to €24.41 billion
+(2020: €23.23 billion), and thus ended above our range forecasted for 2021 of €23.8 billion to
+€24.2 billion.
+At constant currencies, the resulting non-IFRS cloud revenue grew from €8.09 billion in 2020 to
+€9.59 billion in 2021, hitting the high end of our guidance range of €9.4 billion to €9.6 billion. That
+represented an increase of 19% at constant currencies.
+Our current cloud backlog (contractually committed cloud revenue that we expect to recognize over
+the upcoming 12 months) reached €9.01 billion at constant currencies (€9.45 billion at actual
+currencies; 2020: €7.15 billion). This was an increase of 26% (2020: 14%) on a constant currency
+basis.
+In a global economic situation that keeps being shaken by the COVID-19 pandemic, the demand for
+our solutions and services was higher than assumed in 2021, reflecting the strong business
+performance which is expected to continue to accelerate cloud revenue growth.
+20.0%
+21.5%
+21.0% to 22.0%
+20.0% to 21.0%
+20.0% to 21.5%
+22.5% to 23.5%
+24.5% to 25.5%
+26.5%
+21.5% to 23.0%
+26.0% to 27.0%
+27.5% to 28.5%
+€7.8 billion
+to €8.2 billion
+Share of predictable revenue
+72%
+75%
+for 2021
+(Q1 Quarterly
+Statement)
+€9.2 billion
+to €9.5 billion
+€23.4 billion
+to €23.8 billion
+€7.8 billion
+to €8.2 billion
+75%
+Revised Outlook
+for 2021
+(Half-Year Report)
+€8.29 billion
+€23.6 billion
+to €24.0 billion
+€7.95 billion
+to €8.25 billion
+€8.1 billion
+to €8.3 billion
+75%
+€8.41 billion
+75%
+Effective tax rate (IFRS)
+Effective tax rate (non-IFRS)
+26.8%
+75%
+SAP
+Software Support Cloud
+To Our
+(2020: €702 million), which was mainly caused by the divestiture of the SAP Digital Interconnect
+business.
+For more information about the development of our Services segment, see the Segment Information
+section.
+More Predictable Revenue
+Software licenses and software support revenue decreased €488 million, or 3%, from €15,148 million
+in 2020 to €14,660 million in 2021.
+(2020: €11,506 million), the slight decline being driven by an accelerated transition to the cloud and
+unfavorable currency exchange rates. SAP Enterprise Support was the largest contributor to our
+software support revenue.
+-1%
+The continued demand for SAP software helped us maintain a stable maintenance customer base for
+software support, resulting in software support revenue of €11,412 million in 2021
+Our software licenses revenue declined €393 million from €3,642 million in 2020 to €3,248 million in
+2021.
+Cloud revenue increased €1,337 million, or 17%, from €8,080 million in 2020 to €9,418 million in 2021.
+With continued lower transactional revenue, SAP Concur and SAP Fieldglass supplier business grew
+moderately, having an unfavorable impact on the cloud revenue growth. The current cloud backlog
+increased 32% to €9,447 million in 2021 (2020: €7,155 million).
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+80/338
+79/338
+2021
+2020
+Revenue from other services decreased €231 million, or 33%, to €471 million in 2021
+of the total services revenue (2020: 83%) and 12% of total revenue (2020: 12%).
+Consulting revenue and premium support revenue decreased €114 million, or 3%, from €3,408 million
+in 2020 to €3,294 million in 2021. In 2021, consulting and premium support revenue contributed 87%
+Services revenue decreased €345 million, or 8%, from €4,110 million in 2020 to €3,764 million in 2021.
+The services revenue decline was predominantly caused by the divestiture of the SAP Digital
+Interconnect business in 2020. For more information, see Note (D.1). At the same time, the year-over-
+year revenue development continued to be negatively impacted by the lower consulting order entry
+generated in 2020 in the wake of COVID-19 pandemic uncertainties.
+18,480
+20,829
+19,586
+15,975
+14,677
+6,933
+8,080
+9,418
+3,769
+4,993
+2019
+10,908
+11,547
+11,506
+11,412
+2017
+2018
+2019
+2020
+2021
+We define more predictable revenue as the sum of our cloud revenue and our software support
+revenue. Our more predictable revenue increased from €19,586 million in 2020 to €20,829 million in
+2021. This reflects a rise of 6%. More predictable revenue accounted for 75% of our total revenue in
+2021 (2020: 72%), following the upward trend from prior years.
+Services revenue combines revenue from consulting services, premium support services, and other
+services such as training services. Consulting services primarily relate to the implementation of our
+cloud and on-premise software products. Our premium support offering consists of high-end support
+services tailored to customer requirements.
+10,981
+2018
+2017
+17%
+19,549
+20,622
+€ millions | change since previous year
+Cloud and Software Revenue
+For more information about our regional performance, see the Revenue by Region section.
+Cloud revenue refers to the income earned from contracts that permit the customer to access specific
+software solutions hosted by SAP or third parties engaged by SAP during the term of its contract with
+SAP. Software licenses revenue results from the fees earned from selling or licensing software to
+customers. Support revenue represents fees earned from providing customers with technical support
+services and unspecified software upgrades, updates, and enhancements. For more information
+about our revenue types, see the Notes to the Consolidated Financial Statements, Note (A.1).
+11,412
+9,418
+3,764
+Services
+Software Support
+6%
+3,248
+€ millions
+€ millions
+Revenue by Revenue Type
+Cloud
+Additional
+Information
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+Software Licenses
+SAP Integrated Report 2021
+5%
+2018
+17%
+8,080
+9,418
+26%
+32%
+39%
+3,769
+4,993
+6,933
+€ millions | change since previous year
+2017
+Cloud Revenue
+Outlook for 2021 (Non-IFRS)
+2021
+2020
+1%
+4%
+24,078
+23,228
+2019
+12%
+23,012
+Cloud and software revenue grew from €23,228 million in 2020 to €24,078 million in 2021, an increase
+of 4%.
+As in previous years, our 2021 operating profit-related goals and published outlook were based on our
+non-IFRS financial measures at constant currencies. For this reason, in the following section we
+discuss performance against our outlook only in terms of non-IFRS numbers (at constant currencies)
+derived from IFRS measures. The subsequent section about IFRS operating results discusses
+numbers only in terms of the International Financial Reporting Standards (IFRS), so the numbers in
+that section are not expressly identified as IFRS numbers.
+(c) IDC FutureScape: Worldwide Future of Digital Innovation 2022 Predictions, Doc #US47148621, October 2021
+commitment to sustainability is also reflected in our target to reach CO2-neutrality in our own
+operations by 2023 and our announcement to achieve net-zero along our value chain in 2030.
+We are confident that we will continue our growth path in 2022 and will deliver on both our financial
+and non-financial outlook for 2022 and on our 2025 mid-term ambition.
+Expanding Our Support Offerings
+SAP continued to expand and scale the capabilities of our customers' support experience, including
+the following ways:
+A new version of Built-In Support, a product-embedded digital support assistant, was released.
+SAP Cloud ALM has provided implementation and operation capabilities for cloud solutions
+which now includes solution monitoring, partner delivery content, and APIs, for a number of SAP
+solutions.
+An engagement model was established where customers, through their Customer Success team at
+SAP, now have access to domain experts through newly formed Success Centers.
+SAP Preferred Success now covers SAP S/4HANA Cloud, private edition and is available through
+the RISE with SAP offering.
+SAP Learning System Access (previously called SAP Live Access) is now available as an
+integrated platform within SAP Learning Hub, edition for Preferred Success, providing access to
+live, preconfigured instances of SAP software to carry out class exercises, cross-train, and gain
+hands-on experience.
+Simplifying Business Journeys
+To accelerate the implementation of specific business scenarios, premium engagement services
+have been bundled into out-of-the box service plans, providing a prescribed implementation approach
+and road map broken down into phases with individual steps and timelines. Over 25 business
+scenarios are available.
+Enhancing the SAP MaxAttention Program
+The SAP MaxAttention program was expanded to enhance collaboration with customers. This
+includes continuing the launch of the Intelligent Enterprise institute to help customers explore the
+full potential of SAP products and solutions through thought leadership, think tanks, and unique
+events. Chapters have now been established in Berlin, London, and New York.
+Investment in R&D
+SAP's strong commitment to R&D is reflected in our expenditures (see graphic below).
+Research & Development (IFRS)
+€ millions | change since previous year
+4,292
+3,624
+3,352
+SAP Integrated Report 2021
+In 2021, our IFRS R&D ratio, reflecting R&D expenses as a portion of total operating expenses,
+increased by 0.9 percentage points (pp) to 22.4% (2020: 21.5%). Our non-IFRS R&D ratio increased
+2021
+17%
+2020
+4%
+processes with pre-defined templates and accelerators. These industry cloud-based services also
+include quick-start services to speed functional implementation and technical readiness.
+4,454
+2019
+2018
+2017
+8%
+10%
+18%
+5,190
+SAP
+Additional
+Information
+Management Report
+Performance Against Our Outlook for 2021 (Non-IFRS)
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Ecosystem
+SAP's ecosystem consists of more than 22,500 partners worldwide in over 140 countries that build,
+sell, service, and run SAP solutions and technology. The introduction of SAP PartnerEdge Cloud
+Choice, flex model in 2021 offers greater flexibility for customers, partners, and SAP to support cloud
+adoption. Through emphasis on landing customers as well as fostering engagement, SAP and our
+partners have new opportunities in the midmarket and large enterprise segments. Our 2025 ambition
+is to develop a radically partner-centric approach in line with the wider SAP strategy.
+Simplifying Partner and Customer Engagement Through RISE with SAP
+From a services perspective, the RISE with SAP offering simplifies the engagement between SAP,
+ecosystem partners, and our customers. Aiming to support small and midsize business (SMB)
+partners, partner services for RISE with SAP are available for the enablement of their teams and
+offered in partner-led customer engagements. In line with this, SAP Learning Hub aims to support
+enabling and certificating SMB partners.
+Services and Support
+Complementing our software and technology offerings, SAP provides services and support to help
+customers continually realize business value from their SAP investment. Throughout the customer
+lifetime partnership, we aim to help customers as they implement and adopt new solutions in the
+cloud, move legacy solutions to the cloud, or transform their business.
+Speeding Up the Adoption of SAP Solutions
+The standardization and automation of our remote service delivery on the Intelligent Service
+Delivery Hub aims to assist customers with their adoption and improve delivery efficiency and
+quality. This is a new cloud-based service delivery and collaboration platform for customers, partners,
+and SAP to use throughout the customer engagement lifecycle. Embedded automation capabilities
+aim to enable automated quality checks, performance issue detection, and customer notification to
+mitigate potential issues that may arise.
+Scaling RISE with SAP
+Combined Group
+To Our
+Stakeholders
+SAP Integrated Report 2021
+SAP
+72/338
+71/338
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Industry cloud-based services are now available. These services include industry-specific advisory
+services that aim to help discover and prioritize innovation opportunities and reimagine business
+To scale the delivery of the value of SAP BTP to our customers, all relevant service offerings and
+methods were adjusted to ensure the ability to use the platform in all service-related projects. To
+ensure easy integration across different solutions, a program was initiated to make integration-related
+content available to all customers and the developer community on SAP API Business Hub, the
+central catalog for integrations and extensions.
+Enabling Use of SAP BTP
+design the business transformation based on our BPI portfolio.
+To support our customers in getting started quickly and realizing their desired business transformation,
+a series of low-touch, fixed scope services were introduced to help customers detail, model, and
+Supporting Business Transformation
+To scale the RISE with SAP offering, the SAP Services and Support organization focused on the
+development of a comprehensive, full-lifecycle adoption methodology. The methodology goal is to
+drive successful customer adoption and provide clearly outlined deliverables throughout the
+engagement of each RISE journey in 30/60/90/120-day sprints. The activities during these sprints are
+closely aligned with the SAP Integrated Delivery Framework, which allows for seamless partner
+collaboration.
+Starting Fast with Industry Cloud Solutions
+To Our
+Stakeholders
+2020
+Management Report
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+counter supply chain disruptions. Organizations are preparing for the return to office, the return to
+travel, new consumer spending patterns, the challenges of finding (higher-cost) talent, and the
+possible return of inflation in an environment of continued economic uncertainty. Innovation and
+digital resiliency become key to navigating ongoing disruption. During the pandemic, changes in
+behavior, consumption, and supply forced companies to adopt digital-led business and operating
+models that endure lockdowns, movement restrictions, social distancing, and more. Work from
+anywhere, connectivity, scalability, security, throughput, resiliency, and redefining internal processes
+for remote access will define the next normal."(C)
+IDC observed in addition that “companies that traditionally weren't technology centric are now digitally
+transforming and adopting technology to run and support their businesses. As part of that
+transformation, many are rethinking their business models so they can offer differentiated and
+recurring services, which are harder to commoditize. Where companies once sold physical items, they
+are now reimaging their businesses to provide outcome-based recurring services."(C)
+Monitoring decarbonization initiatives turned out to be a key component of digital transformation in
+the reporting year. "Beyond just cost take out, organizations will increasingly be disrupting themselves
+by using lower carbon power sources and creating more sustainable operations to adhere to the
+numerous sustainability standards that fall under the environmental, social, and governance (ESG)
+umbrella. More than 40% of organizations surveyed by IDC worldwide have declared an intent to
+reduce CO2 in their products/services, while about 30% have implemented a CO2 monitoring solution
+and another 20% are currently developing a CO2 monitoring solution," observed IDC. (B)
+Sources:
+(A) European Central Bank, Economic Bulletin, Issue 8/2021, Publication Date: January 13, 2022
+(https://www.ecb.europa.eu/pub/pdf/ecbu/eb202108.en.pdf)
+(B) IDC FutureScape: Worldwide Digital Transformation 2022 Predictions, Doc #US47115521, October 2021
+2021
+Impact on SAP
+Businesses around the world increasingly used digital technologies and the cloud to transform the
+way they do business. Companies expressed the need for flexibility and adaptability as a response to
+supply chain disruptions and new regulatory restrictions. The strength and the execution of our
+strategy showed up on multiple fronts, for instance with strong growth in current cloud backlog and
+cloud revenues in particular that exceeded our expectations. High customer adoption was
+underpinned by strong demand for our cloud offerings. Furthermore, Customer NPS continued to
+increase, echoing our efforts toward stronger customer focus.
+Overall Financial Position
+Combined Group
+Information
+Additional
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Management Report
+Combined Group
+SAP
+To Our
+Stakeholders
+SAP
+76/338
+75/338
+SAP's non-financial performance developed as follows: the Customer Net Promoter Score was 10,
+hitting the upper end of our 2021 guidance (5 to 10). Employee Engagement decreased slightly to
+83% (-3pp compared to 2020 and remaining below our outlook for 2021 (84% to 86%)). Our net
+carbon emissions continued to decrease by 18.5% to 110 kt (outlook for 2021: 90 kt to 110 kt). SAP's
+Full-year cloud revenue was up 17% to €9.42 billion and up 19% to €9.59 billion at constant
+currencies, hitting the high end of the revised full year outlook (€9.4 billion to €9.6 billion at constant
+currencies). Cloud and software revenue was up 4% year over year to €24.08 billion and up 5% to
+€24.41 billion at constant currencies, exceeding the high end of the revised full-year outlook
+(€23.8 billion to €24.2 billion at constant currencies). IFRS operating profit decreased 30% year over
+year to €4.66 billion. Non-IFRS operating profit was down 1% to €8.23 billion and up 1% to
+€8.41 billion at constant currencies, exceeding the high end of the revised full-year outlook
+(€8.1 billion to €8.3 billion non-IFRS at constant currencies).
+Executive Board's Assessment
+SAP Integrated Report 2021
+SAP Integrated Report 2021
+Looking at most of our financial and non-financial KPIs, the course of business was favorable for SAP
+in 2021:
+"2021 represented times of uncertainty due to the global health crisis and the upending of traditional
+business practices, but it also fueled further growth in digital technology pivots and digital
+transformation." This is how International Data Corporation (IDC), a U.S.-based market research firm,
+summarizes the reporting year. (B) "One notable impact of the COVID-19 pandemic is that many
+enterprises now recognize that their ability to build innovative digital products and services will
+determine whether they succeed or fail in the market. The imperative to develop innovative digital
+offerings is influencing an array of strategic decision making in the enterprise, including significant
+changes to business models, organizational models, distribution models, and revenue streams, says
+IDC. (C)
+Consolidated Financial
+Statements IFRS
+According to IDC, “adaptations and lessons learned from the COVID-19 pandemic are becoming
+permanent, requiring revised global business and operating models. Digital resilience approaches
+Additional
+Information
+by 2.0pp to 23.8% year over year (2020: 21.8%). At the end of 2021, our total full-time equivalent
+(FTE) headcount in development work was 32,244 (2020: 29,580). Measured in FTEs, our R&D
+headcount was 30% of total headcount (2020: 29%).
+Total R&D expense not only includes our own personnel costs but also the external costs of work and
+services from the providers and cooperation partners we work with to deliver and enhance our
+products. We also incur external costs for the following:
+Translating, localizing, and testing products
+Patent attorney services and fees
+Consulting related to our product strategy
+Professional development of our R&D workforce.
+Patents
+SAP actively seeks intellectual property protection for innovations and proprietary information. Our
+software innovations continue to strengthen our market position as a leader in business solutions and
+services. Our investment in R&D has resulted in numerous patents. As at December 31, 2021, SAP
+held a total of more than 11,605 (2020: 10,931) validated patents worldwide. Of these, 793
+(2020: 897) were granted and validated in 2021.
+While our intellectual property is important to our success, we believe our business as a whole is not
+dependent on any particular patent or a combination of patents.
+73/338
+74/338
+Obtaining certification for products in different markets
+SAP Integrated Report 2021
+The IT Market
+In the EMEA region, after a technical recession at the start of the year, the euro area economy
+recovered moderately in 2021 thanks to robust domestic demand, and nearly reached its pre-
+pandemic level of output in the third quarter. However, economic activity in the euro area waned
+again over the final quarter of the year as some countries reintroduced tighter containment measures
+to cope with new pandemic waves. In central and eastern Europe, economic activity stabilized until
+the third quarter but slackened in the fourth, reflecting a significant deterioration of the
+epidemiological situation, persistent supply bottlenecks, and high energy prices. In Russia, rising
+global demand for oil and gas supported economic activity throughout 2021, while sharply increasing
+numbers of pandemic infections led to tighter containment measures toward the end of the year.
+As for the Americas region, economic activity recovered in the United States, with subdued growth in
+the third quarter caused by a resurgence of pandemic infections. Over the year, consumer demand in
+the United States rotated toward services, which were not subject to supply bottlenecks. In Brazil, a
+tighter policy stance and limited fiscal space constrained economic activity in 2021, reports the ECB.
+Concerning the APJ region, the ECB finds that the Japanese economy slowed until the third quarter in
+the face of supply bottlenecks and the pandemic resurgence. However, it rebounded in the fourth
+quarter when containment measures were eased, vaccinations progressed, and policy support
+continued. In China, on the other hand, economic activity decelerated in the second half of the year
+because of energy shortages, turmoil in the residential property sector, and renewed pandemic
+outbreaks.
+SAP
+Throughout 2021, rising commodity prices led to a buildup of inflationary pressures across the globe,
+reports the ECB. While the services sector benefitted from large economies reopening, supply
+bottlenecks interfered with the manufacturing sector in particular. In addition to pandemic
+uncertainties, these factors weighed on global economic activity, with the recovery lagging behind
+especially in emerging market economies.
+According to the European Central Bank (ECB), (A) the global economy was on the road to recovery in
+2021, with some advanced economies even returning to their pre-pandemic trajectories by year end.
+Overall, however, the recovery turned out to be less smooth than expected. Toward the end of the
+year, the ECB even revised its previous projections downward when the emergence of the Omicron
+variant of the coronavirus threatened to intensify the pandemic on a global scale.
+Economy and the Market
+Financial Performance:
+Review and Analysis
+Additional
+Information
+Further Information on
+Sustainability
+Sustainability
+Further Information on
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+7,973
+7,666
+9,348
+9,239
+9,172
+Software & Support Cloud
+€ millions
+Cloud and Software Revene (Americas)
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+3,945
+Combined Group
+Management Report
+Stakeholders
+To Our
+81/338
+SAP
+82/338
+Additional
+Information
+SAP Integrated Report 2021
+APJ Region
+2,321
+In 2021, 39% of our total revenue was generated in the Americas region (2020: 41%). Total revenue in
+the Americas region decreased 1% to €10,969 million (2020: €11,106 million). Revenue in the United
+States decreased to €8,870 million (2020: €9,110 million), primarily driven by unfavorable changes in
+currency exchange rates. The United States contributed 81% (2020: 82%) of all revenue generated in
+the Americas region. In the remaining countries of the Americas region, revenue increased 5% to
+€2,099 million. Revenue in the remaining countries of the Americas region was generated primarily in
+Brazil, Canada, and Mexico.
+3,798
+Software & Support ■Cloud
+€ millions
+Cloud and Software Revenue (APJ)
+In 2021, 15% of our total revenue was generated in the APJ region (2020: 15%). Total revenue in the
+APJ region increased 3% to €4,285 million (2020: €4,165 million). Despite the unfavorable currency
+development in Japan, revenue reached €1,301 million, nearly matching the previous year's level of
+€1,305 million. Revenue from Japan accounted for 30% of all revenue generated in the APJ region
+(2020: 31%). In the remaining countries of the APJ region, revenue increased 4%. Revenue in the
+remaining countries of the APJ region was generated primarily in Australia, China, and India.
+Cloud and software revenue generated in the Americas region totaled €9,348 million
+(2020: €9,239 million). That was 85% of all revenue from the region (2020: 83%). Cloud revenue in the
+Americas region rose 10% to €4,894 million in 2021 (2020: €4,439 million). The United States, SAP's
+largest market, contributed 83% of cloud revenue generated in the Americas region. Software licenses
+and software support revenue amounted to €4,455 million in 2021 (2020: €4,800 million).
+2021
+2020
+2019
+2018
+2017
+4,455
+4,800
+5,227
+5,032
+5,345
+2,941
+4,894
+4,439
+Americas Region
+SAP Integrated Report 2021
+Cloud and software revenue generated in the EMEA region totaled €10,931 million
+(2020: €4,015 million). Germany contributed 34% (2020: 33%) of all EMEA region revenue. The
+remaining revenue in the EMEA region was primarily generated in France, Italy, the Netherlands,
+Switzerland, and the United Kingdom.
+In 2021, the EMEA region generated €12,589 million in revenue (2020: €12,067 million), which was
+45% of total revenue (2020: 44%). Revenue in Germany increased 8% to €4,343 million
+EMEA Region
+12,589
+10,969
+4,285
+SAP
+3,629
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Revenue by Region
+Revenue by Region (Based on Customer Location)
+€ millions
+APJ
+Cloud and Software Revenue (EMEA)
+(2020: €10,364 million). That was 87% of all revenue from the region (2020: 86%). Cloud revenue in
+the EMEA region rose 27% to €3,308 million in 2021 (2020: €2,608 million). Software licenses and
+software support revenue decreased 2% to €7,624 million in 2021 (2020: €7,756 million).
+€ millions
+10,211
+2021
+2020
+2019
+2018
+2017
+7,624
+7,756
+8,096
+7,898
+7,730
+3,308
+2,608
+10,364
+10,931
+1,029
+1,441
+2,115
+8,759
+9,339
+Software & Support ■ Cloud
+3,625
+€ millions | change since previous year
+3,124
+419
+2021
+2020
+-7.5pp
+2019
+-6.9pp
+16.2
+16.7
+8.pp
+Changes to the individual elements in our cost of revenue were as follows:
+24.2
+Operating Margin
+2018
+2.3pp
+2017
+-2.5pp
+20.8
+23.1
+2021
+Percent | change since previous year
+Cost of Cloud and Software
+In 2021, the cost of cloud and software increased to €5,030 million (2020: €4,707 million) and our
+cloud margin widened 0.4pp from 66.6% in 2020 to 67.0% in 2021.
+Our software licenses and software support margin was 86.9%, slightly above the prior year level
+(2020: 86.7%). Software licenses and software support revenue decreased 3% to €14,660 million
+(2020: €15,148 million), primarily arising from an 11% decline in software revenue. Software licenses
+and software support costs decreased correspondingly by 4% to €1,925 million (2020: €2,008 million).
+Due to growing personnel costs driven by a 9% year-over-year increase in our R&D headcount, and
+due to continued strategic investments, our R&D expense rose 17% to €5,190 million in 2021 from
+€4,454 million in 2020. R&D expense as a percentage of total revenue thus increased to 18.6% in
+2021 (2020: 16.3%). For more information, see the Products, Research & Development, and Services
+section.
+Our research and development (R&D) expense consists primarily of the personnel cost of our R&D
+employees, costs incurred for independent contractors whom we retain to assist in our R&D activities,
+and amortization of the computer hardware and software we use for our R&D activities.
+Research and Development
+(2020: €4,110 million). The cost of services declined 8% to €2,916 million (2020: €3,178 million). Our
+gross margin on services, defined as services profit as a percentage of services revenue, decreased
+slightly to 22.5% (2020: 22.7%). As our services business trends away from traditional software
+licensing and consulting revenue toward more subscription revenue from cloud solutions, we adjusted
+our service delivery resources correspondingly. The expenses are impacted by COVID-19-related
+limitations in personal customer contacts and a correspondingly high remote delivery share of the
+consulting services.
+The services revenue decreased by 8% year over year to €3,764 million in 2021
+Cost of services consists primarily of the cost of consulting, premium services and training courses,
+and the cost of bought-in consulting and training resources.
+Cost of Services
+Information
+Additional
+Further Information on
+Sustainability
+Consolidated Financial
+Statements IFRS
+Management Report
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+84/338
+83/338
+2020
+2019
+2018
+2017
+To Our
+Stakeholders
+SAP
+SAP Integrated Report 2021
+€1,217 million in 2021 (2020: €1,033 million). Software licenses and software support revenue
+decreased from €2,592 million in 2020 to €2,582 million in 2021.
+Cloud and software revenue in the APJ region totaled €3,798 million (2020: €3,625 million). That was
+89% of all revenue from the region (2020: 87%). Cloud revenue in the APJ region rose 18% to
+2021
+2020
+2019
+2018
+2017
+2,582
+2,592
+2,757
+2,699
+2,705
+1,217
+1,033
+611
+872
+Combined Group
+3,310
+Management Report
+Further Information on
+Sustainability
+-22%
+-30%
+48%
+4,473
+4,656
+6,623
+-5%
+17%
+5,703
+4,877
+Operating Profit
+(2020: €6,623 million) and our operating margin decreased 7.5pp to 16.7% (2020: 24.2%).
+As a result of these effects, our operating profit decreased 30% to €4,656 million
+(2020: €20,715 million). The main contributor to the increase were share-based payments, mainly
+caused by newly granted equity-settled Qualtrics RSUs. Our employee headcount (measured in full-
+time equivalents, or FTEs) grew 4,984 FTEs year over year to 107,415.
+In 2021, our operating expenses increased €2,471 million, or 12%, to €23,186 million
+SAP continued to increase its cloud revenue in 2021. Total revenue increased significantly by 2% to
+€27,842 million (2020: €27,338 million), representing an increase of €504 million.
+Operating Profit and Operating Margin
+Information
+Additional
+Consolidated Financial
+Statements IFRS
+Cost of cloud and software consists primarily of costs for deploying and operating cloud solutions, the
+cost of developing custom solutions that address customers' specific business requirements, and
+customer support costs.
+5
+Sales and Marketing Expense
+80.6
+-1.0pp
+-1.1pp
+Segment profit
+9,567
+9,718
+9,722
+-2
+0
+Segment margin (in %)
+40.7
+79.5
+40.8
+-1.6pp
+-1.5pp
+The Applications, Technology & Support segment recorded a strong increase in cloud revenue of
+12.8% in 2021 (14.8% at constant currencies). At the same time, cost of cloud increased 16.0%
+(18.3% at constant currencies), which led to a reduction in the cloud gross margin of 0.9pp (0.9pp at
+constant currencies) to 68.4%. Software support revenue remained flat compared to the prior year
+and ended 2021 at €11,410 million, which indicated a growth of 0.6% at constant currencies. Together
+with software licenses revenue, which decreased 10.8% (11.0% at constant currencies) mainly due to
+the shift toward cloud revenue, the segment achieved a total software licenses and support revenue
+of €14,654 million. However, total segment revenue rose slightly, by 2.3% (3.7% at constant
+currencies), and ended 2021 at €23,502 million.
+Overall, the share of more predictable revenue increased 1.8pp from 82.9% in 2020 to 84.8% in 2021.
+Cost of revenue increased 7.7% (9.3% at constant currencies) compared to the prior year, ending
+2021 at €4,808 million. This development was mainly driven by a strong increase in cost of cloud.
+85/338
+86/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+42.3
+79.5
+Segment gross margin (in %)
+4
+2021
+2020
+A in %
+A in %
+€ millions, unless otherwise stated
+(non-IFRS)
+Actual
+Currency
+Constant
+Currency
+Cloud revenue
+8,509
+8,661
+Cloud gross margin (in %)
+68.4
+68.4
+Actual
+Currency
+7,541
+69.3
+Actual
+Currency
+Constant
+Currency
+13
+15
+-0.9pp
+-0.9pp
+Segment revenue
+23,502
+23,816
+22,965
+2
+Consolidated Financial Further Information on
+Statements IFRS
+Sustainability
+Applications, Technology & Support
+Additional
+Information
+Qualtrics
+41
+Segment gross margin (in %)
+79.6
+79.7
+77.6
+1.9pp
+2.1pp
+Segment profit
+44
+44
+-4
+37
+<-100
+Segment margin (in %)
+4.7
+4.6
+-0.6
+5.4pp
+5.2pp
+The Qualtrics segment, which comprises SAP's experience management solutions, closed 2021 with a
+strong cloud revenue growth of 46.2% (50.4% at constant currencies). The associated cost of cloud
+rose 54.5% at constant currencies, which led to a slight drop in the segment's cloud gross margin of
+0.3pp (0.2pp at constant currencies). Including services revenue, the total segment revenue increased
+36.6% (40.6% at constant currencies) to €929 million. Overall, the Qualtrics segment profit increased
+to €44 million in 2021. The corresponding segment margin rose 5.4pp (5.2pp at constant currencies)
+to 4.7%.
+Services
+2021
+2020
+A in %
+<-100
+681
+957
+929
+2021
+2020
+A in %
+A in %
+€ millions, unless otherwise stated
+(non-IFRS)
+Actual
+Constant
+Currency
+Currency
+Actual
+Currency
+Actual
+Currency
+Constant
+Currency
+Cloud revenue
+757
+780
+518
+46
+50
+Cloud gross margin (in %)
+91.5
+91.5
+91.8
+-0.3pp
+-0.2pp
+Segment revenue
+Segment profit remained at prior year level and ended 2021 at €9,567 million. This is mainly explained
+by an increase of total segment cost of 6.5% at constant currencies. Consequently, both the segment
+gross margin and the segment margin decreased slightly by 1.1pp and 1.5pp at constant currencies.
+At the end of 2021, SAP had three reportable segments: Applications, Technology & Support;
+Qualtrics; and Services. For more information about our segment reporting and the changes in the
+composition of our reportable segments in 2021, see the Notes to the Consolidated Financial
+Statements, Notes (C.1) and (C.2), and the Performance Management System section.
+Segment Information
+3 Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS numbers of the previous
+year's respective period.
+1,250
+600
+1,100
+1,000
+1,000
+800
+500
+88
+265
+2022
+2023
+500
+2024
+2026
+2027
+2028
+2029
+2030
+2031
+Nominal volume of financial debt on December 31, 2021, included amounts in euros (€12,058 million)
+and U.S. dollars (€1,036 million). On December 31, 2021, approximately 50% of the financial debt was
+held at variable interest rates, partially swapped from fixed into variable using interest rate swaps.
+For information about the intended repayments, see the goals for liquidity and finance in the Financial
+Targets and Prospects section.
+Financial Debt by Instrument
+Bonds
+Private Placement
+766
+2025
+1,047
+1,600
+1,730
+7,244
+17
+17
+19
+Cloud revenue - laaS²
+Cloud revenue
+918
+918
+21
+939 841
+0
+841
+9
+9
+12
+■ Variable Fixed
+1,600
+1,250
+1,135
+1,100
+1,088
+1,000
+865
+88
+800
+Commercial Paper
+930
+Bank Loan
+1,533
+70.7
+1.2pp -0.4pp
+-0.5pp
+Total
+70.8
+73.3
+73.3 70.4
+73.8
+0.3pp -0.5pp
+-0.5pp
+32.5
+33.6
+33.5 33.6
+34.3
+-1.1pp -0.7pp
+-0.8pp
+67.0
+69.5
+69.4
+66.6
+69.7
+0.4pp -0.2pp
+-0.3pp
+1 Software as a service/platform as a service
+2 Infrastructure as a service
+65.5
+A in %
+70.2
+Other
+Financial Debt
+€ millions
+9,865
+For more information about our financial debt, see the Notes to the Consolidated Financial
+Statements, Note (E.3).
+9,418 9,418
+174
+9,592 8,080
+5
+8,085
+17
+16
+19
+EMEA
+Intelligent Spend
+78.9
+79.5
+79.5 78.6
+78.9
+0.3pp 0.6pp
+0.6pp
+Cloud gross margin-
+SaaS/PaaS¹ (in %)
+Cloud gross margin -
+laas² (in %)
+Cloud gross margin (in %)
+66.7 70.3
+8,653 7,239
+€ millions, unless otherwise stated
+(non-IFRS)
+Currency
+We believe that our liquid assets combined with our undrawn credit facilities are sufficient to meet our
+operating financing needs in 2022 and, together with expected cash flows from operations, will
+support debt repayments, currently planned capital expenditure requirements, and capital returns to
+our shareholders over the near term and medium term. It may also be necessary to enter into
+financing transactions when additional funds are required that cannot be wholly sourced from free
+cash flow, to maintain flexibility, and/or limit repayment risk.
+Therefore, we continuously monitor funding options available in the capital markets and trends in the
+availability of funds, as well as the cost of such funding. In recent years, we were able to repay
+additional debt within a short period of time due to our persistently strong free cash flow. For more
+information about the financial debt, see the Cash Flows and Liquidity section.
+Credit Facilities
+Other sources of liquidity are available to us through various credit facilities, if required.
+To retain high financial flexibility, we have available a €2.5 billion syndicated revolving credit facility
+with an end date in November 2024. A possible future utilization is not subject to any financial
+covenants. Borrowings under the facility bear interest of EURIBOR or LIBOR for the respective
+currency plus a margin of 0.17%. We are also required to pay a commitment fee of 0.0595% per
+annum on the unused available credit. So far, we have not used, and do not currently foresee any
+need to use this credit facility.
+As at December 31, 2021, SAP SE had additional available credit facilities totaling €335 million.
+Several other SAP entities have credit facilities available that allow them to borrow funds at prevailing
+interest rates.
+89/338
+90/338
+SAP
+SAP Integrated Report 2021
+To Our
+Our primary source of cash, cash equivalents, and current investments is funds generated from our
+business operations. Over the past several years, our principal use of cash has been to support
+operations and our capital expenditure requirements resulting from our growth, to quickly repay
+financial debt, to acquire businesses, to pay dividends on our shares, and to buy back SAP shares on
+the open market. On December 31, 2021, our cash, cash equivalents, and current investments were
+primarily held in euros and U.S. dollars. We generally invest only in the financial assets of issuers or
+funds with a minimum credit rating of BBB, and pursue a policy of cautious investment characterized
+by wide portfolio diversification with a variety of counterparties, predominantly short-term investments,
+and standard investment instruments. Our investments in financial assets of issuers with a credit
+rating lower than BBB were not material in 2021.
+Stakeholders
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+On December 31, 2021, two bilateral term loans with a total amount of €1.45 billion were outstanding.
+The amount can be flexibly repaid until maturity of the loan on September 30, 2022.
+Financial Debts
+Financial debt is defined as the nominal volume of bank loans, commercial papers, private
+placements, and bonds.
+3,756
+2,026
+Maturity Profile of Financial Debts
+€ millions
+Combined Group
+Liquidity Management
+The Company plans to repurchase shares with a volume of up to €1.0 billion in the period between
+February 1, 2022, and December 31, 2022. Repurchased shares will primarily be used to service
+future awards granted under the 'Move SAP' share-based compensation plan which will start to be
+predominantly equity-settled in 2022. The share buyback will be in addition to SAP's regular dividend
+policy. Further capital returns in subsequent years will be decided on an annual basis in line with
+SAP's capital allocation priorities.
+The long-term credit rating for SAP SE is "A2" by Moody's and "A" by Standard & Poor's, both with a
+stable outlook.
+7%
+12%
+5%
+2017
+Finances (IFRS)
+Overview
+32%
+2.45
+2018
+2019
+2020
+2021
+Global Financial Management
+We use global centralized financial management to control liquid assets and monitor exposure to
+interest rates and currencies. The primary aim of our financial management is to maintain liquidity in
+the Group at a level that is adequate to meet our financial obligations at all times. Most SAP entities
+have their liquidity managed centrally by the Group, so that liquid assets across the Group can be
+consolidated, monitored, and invested in accordance with Group policy. High levels of liquid assets
+help keep SAP flexible, sound, and independent. In addition, various credit facilities are currently
+available for additional liquidity, if required. For more information about these facilities, see the Credit
+Facilities section.
+We manage credit, liquidity, interest rate, equity price, and foreign exchange rate risks on a Group-
+wide basis. We use selected derivatives exclusively for this purpose and not for speculation, which is
+defined as entering into a derivative instrument for which we do not have corresponding underlying
+transactions. The rules for the use of derivatives and other rules and processes concerning the
+management of financial risks are documented in our Treasury Guideline, which applies globally to all
+companies in the Group. For more information about the management of each financial risk and
+about our risk exposure, see the Notes to the Consolidated Financial Statements, Notes (F.1)
+and (F.2).
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Capital Structure Management
+The primary objective of our capital structure management is to maintain a strong financial profile for
+investor, creditor, and customer confidence, and to support the growth of our business. We seek to
+maintain a capital structure that will allow us to cover our funding requirements through the capital
+markets at reasonable conditions, and in so doing, ensure a high level of independence, confidence,
+and financial flexibility. For more information about the capital structure and its analysis, see the
+Analysis of Consolidated Statement of Financial Position section and the Notes to the Consolidated
+Financial Statements, Note (E.1).
+154
+17%
+8,500 8,500
+27
+Currency
+Non-
+€ millions, unless otherwise stated
+Non-IFRS
+Non-IFRS
+A in %
+Q1-Q4 2020
+Q1-Q4 2021
+Reconciliation of Cloud Revenues and Margins
+Additional
+Information
+Further Information on
+Sustainability
+Non-
+Consolidated Financial
+Statements IFRS
+Combined Group
+Stakeholders
+To Our
+SAP Integrated Report 2021
+SAP
+General and administration expense increased 79% from €1,356 million in 2020 to €2,431 million in
+2021. This increase is primarily due to expenses from share-based payments, with a major effect
+coming from Qualtrics equity-settled plans. The ratio of general and administration expense to total
+revenue grew 3.8pp year over year to 8.7% (2020: 5.0%).
+Our general and administration expense consists mainly of personnel costs to support our finance
+and administration, human resource, and corporate functions.
+General and Administration Expense
+Accordingly, the ratio of sales and marketing expense to total revenue, expressed as a percentage,
+increased 1.0pp in 2021 to 27.0% (2020: 26.0%).
+Our sales and marketing expense grew 6% from €7,106 million in 2020 to €7,505 million in 2021. This
+increase is mainly attributable to the expansion of the global sales force and to greater expenditure
+on bonus payments prompted by strong revenue growth and share-based payments.
+Sales and marketing expense consists mainly of personnel costs, direct sales costs, and the cost of
+marketing our products and services.
+Management Report
+Non-
+IFRS
+IFRS
+25
+25
+4,522
+5
+5,755 4,517
+86
+5,669 5,669
+6
+4
+4
+0 2,722
+2,899 2,722
+67
+2,831
+2,831
+Intelligent Spend
+Other
+Cloud revenue - SaaS/PaaS¹
+Currency³
+IFRS
+IFRS
+Constant
+IFRS
+Adj.
+Constant IFRS
+Currency
+Impact
+Total
+1.40
+1.50
+1.58
+743
+645
+13
+15
+Segment margin (in %)
+22.5
+22.6
+19.1
+3.4pp
+3.5pp
+The Services segment, comprising major parts of SAP's services business, recorded revenue of
+€3,234 million, which represents a decline of 4.2% (2.7% at constant currencies). Cost of services
+decreased 7.9% (6.7% at constant currencies) to €2,035 million. As a result, the services gross margin
+increased 2.6pp (2.7pp at constant currencies) to 34.1% in 2021. This gross margin improvement was
+primarily attributable to the positive development of SAP's consulting and premium engagement
+business, and a higher remote delivery share of the consulting services.
+728
+Overall, the segment profit and the segment margin benefitted from this development and ended the
+year with a segment profit of €728 million and a segment margin of 22.5%, which indicates a growth
+of 3.4pp (3.5pp at constant currencies).
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Financial Income, Net
+Financial income, net, changed to €2,174 million (2020: €776 million). Our finance income was
+€3,123 million (2020: €1,473 million) and our finance costs were €949 million (2020: €697 million).
+Finance income mainly consists of gains from IFRS 9-related fair value adjustments, mainly of
+Sapphire Ventures investments, and the disposal of equity securities totaling €3,067 million
+(2020: €1,360 million).
+Finance costs mainly consist of interest expense on financial liabilities amounting to €160 million
+(2020: €179 million), and IFRS 9-related fair value adjustments or losses from disposal of Sapphire
+Ventures investments totaling €654 million (2020: €345 million). For more information about financing
+instruments, see the Notes to the Consolidated Financial Statements, Note (E.3).
+SAP
+Segment profit
+2.7pp
+2.6pp
+Constant
+Currency
+Services revenue
+3,234
+3,282
+Actual
+Currency
+3,374
+Actual
+Currency
+Constant
+Currency
+-4
+-3
+Services gross margin (in %)
+37.1
+37.2
+34.5
+2.6pp
+2.7pp
+Segment revenue
+3,234
+3,283
+3,379
+-4
+-3
+Segment gross margin (in %)
+34.1
+34.2
+31.5
+Income Taxes
+The effective tax rate in 2021 was 21.5% (2020: 26.8%). The year-over-year decrease mainly resulted
+from changes in tax-exempt income and a one-time change of taxable temporary differences
+associated with investments in subsidiaries, which were partly compensated by changes in non-
+deductible expenses. For more information about income taxes, see the Notes to the Consolidated
+Financial Statements, Note (C.5).
+Profit After Tax and Earnings per Share
+Profit after tax increased to €5,376 million in 2021 (2020: €5,283 million).
+56%
+2%
+2017
+2018
+2019
+2020
+2021
+87/338
+88/338
+SAP
+SAP Integrated Report 2021
+To Our
+Stakeholders
+Combined Group
+Management Report
+Consolidated Financial
+Statements IFRS
+Further Information on
+Sustainability
+Additional
+Information
+Dividend
+We believe our shareholders should benefit appropriately from the profit the Company made in 2021.
+Our dividend policy is to pay a dividend totaling 40% or more of profit after tax.
+The Executive Board and the Supervisory Board of SAP SE will recommend to the Annual General
+Meeting of Shareholders in May 2022 that the total dividend for 2021 be increased 32% to €2.45 per
+share (2020: €1.85). This payment includes a special dividend of €0.50 to celebrate SAP's 50th
+anniversary. Based on this recommendation, the overall dividend payout ratio (which means the total
+distributed dividend as a percentage of profit after tax) would be 54% (2020: 41%). Excluding the
+special dividend, the ratio would be 43%.
+If the shareholders approve this recommendation, and based on the number of treasury shares as at
+December 31, 2021, the total amount distributed in dividends will be €2,890 million. The actual
+amount distributed can be different from this total amount, because the number of shares held as
+treasury stock will change before the Annual General Meeting of Shareholders due to the share
+buyback SAP will execute in 2022. In 2021, we distributed €2,182 million in dividends.
+Dividend per Share
+€ | change since previous year
+1.85
+4.35
+Actual
+4.46
+26
+Profit After Tax
+€ millions | change since previous year
+4,046
+4,088
+3,370
+12%
+1%
+-18%
+2017
+2018
+2019
+5,283
+5,376
+57%
+2020
+2%
+2021
+Basic earnings per share increased to €4.46 (2020: to €4.35). The number of shares outstanding
+decreased slightly to 1,180 million in 2021 (2020: 1,182 million).
+Earnings per Share
+€ | change since previous year
+3.35
+3.42
+2.78
+10%
+2%
+-19%
+Americas