Introduction to SAP, History and Evolution of SAP

Any introduction to SAP other than ‘SAP is world’s leading business software company‘ will be unfair. SAP has been dominating the ERP software and business software domain for more than 40 years.

This German business software company was founded in the year 1972. SAP stands for Systems, Applications, and Products in Data Processing. Since its foundation, SAP has been the world leader in the ERP Software industry.

SAP is a dominant player in 25+ industries like Manufacturing, Retail, Financial Services, HR Services, Public Services, Life Sciences, Consumer Products, Energy, and Natural Resources, to name a few.

To handle the requirements of complex industries, SAP ERP solutions consolidate various Business processes and Operations. Most common Business Process and Operations are Sales & Distribution, Materials Management, Production Planning, Logistics Execution, and Quality Management), Financials (Financial Accounting, Management Accounting, Financial Supply Chain Management), Human Capital Management (Training, Payroll, e-Recruiting) and Corporate Services (Travel Management, Environment, Health and Safety, and Real-Estate Management).

The journey of SAP ERP from R/1 system to SAP S/4 HANA system.

SAP R/1 : 1972
SAP entered the ERP software domain with its SAP R/1 system. R1 stands for single tier architecture. All layers Presentation, Application and Database are placed in the same system.

SAP R/2: 1982
Based on mainframe architecture, SAP R/2 system was designed to manage large global enterprise. R/2 stands for 2 tier architecture.

SAP R/3 and SAP ECC : 1992
R/3 followed client-server architecture. R/3 systems could also take advantage of then evolving internet technology.
R/3 stands for 3-tier architecture with well defined separate Database layer, Application layer and Presentation layer. The three layers are connected to each other with networks.

ECC stands for Enterprise Central Component and is successor of SAP R/3 system. With ECC the popularity of SAP as a business software provider increased manifold. The underneath SAP Netweaver technology made ECC robust and scalable.

SAP S/4HANA: 2015
Launched in the year 2015, SAP S/4HANA is SAP’s next generation business suite designed to work in a truly connected digital world.
S in ‘S/4HANA’ stands for Simple and 4 represents 4th generation; the complete name is SAP Business Suite 4 for SAP HANA (S/4HANA).
This modern ERP business suite can utilize Artificial Intelligence, Machine Learning, IoT, Analytics to produce intelligent business in-site. It come with modern user experience of SAP Fiori.

History and Evolution of SAP


  • Founded in the year 1972 by five ex-IBM employees Dietmar Hopp, Hasso Plattner, Hans-Werner Hector, Klaus Tschira, and Claus Wellenreuther, SAP was headquartered in Weinheim, Germany.
  • At present, SAP is a multinational software corporation headquartered in Walldorf, Germany.
  • SAP is the abbreviation of Systems, Applications, and Products in Data Processing

1972- Developing Mainframe programs

  • The five engineers were working on developing mainframe programs for payroll and accounting.
  • SAP’s first customer was Imperial Chemical Industries in Östringen.
  • 1973, SAP releases its first product—a financial accounting system called RF. R over here stands for real-time.

1973 to 1979

  • Other systems were under development, and together they were called SAP R/1.
  • SAP achieved purchasing, inventory management, and invoice verification with SAP’s RM system
  • During this phase, SAP worked on IBM servers and DOS operating system.

1979, SAP launched SAP R/2

  • SAP R/2 was a mainframe software application capable of integrating all of an enterprise’s business functions, including material management and production planning, with real-time processing.
  • SAP now had 200 customers both inside as well as outside of Germany.

1992, SAP releases the new SAP R/3

  • SAP R/3 was built on the client-server concept, having a uniform graphical interface, dedicated use of relational databases, and support for servers from various manufacturers.
  • SAP sets on to tap a bigger market, including large as well as midsize companies.

1993, begins work with Microsoft

  • 1993 SAP begins working with Microsoft, the world’s largest software maker, to port SAP R/3 to the Windows NT operating system.
  • 1994 The SAP R/3 system is released for Windows NT.
  • 1996, SAP goes online with its Internet strategy with Microsoft. Through open interfaces, customers can now connect online applications to their SAP R/3 systems.


  • In May 1999, SAP announces a new strategy that completely realigns the company and its product portfolio:
  • combines e-commerce solutions with SAP’s existing ERP applications on the basis of cutting-edge Web technology.

2004- SAP NetWeaver

  • SAP becomes the third-largest independent software provider in the world and a paragon of the German economy. The SAP brand stands for high-quality business software. SAP has now more than 24000 customers spread in over 120 countries.
  • R/3 was replaced with the introduction of SAP ERP Central Component (ECC) 5.0 in 2004.
  • 2004, SAP launches SAP NetWeaver to market. SAP NetWeaver brings in a new integration and application platform and a service-oriented architecture on top of which several SAP applications were build SAP ERP, SAP CRM, SAP SRM, etc.

2009, SAP Business Suite 7

  • 2009, SAP introduces a new business suite, SAP Business Suite 7 software, designed to optimize business performance and reduce IT costs.

2011 on wards

  • SAP continues to innovate and invest in cloud computing, an in-memory database called as SAP HANA database
  • 2015, SAP launches its 4th Generation business suite, SAP S/4HANA, and SAP C/4HANA. This intelligent suite helps customers become Intelligent Enterprises.
  • SAP strives towards becoming a leader in cloud computing and e-commerce business networks.

Focus on cloud – 2012

  • To have a plethora of cloud-based products, since 2012, SAP has acquired several companies that sell cloud-based products. Acquisition of Concur Technologies, a provider of cloud-based
  • travel and expense management software in 2014 has been SAP’s one of the costliest acquisition. Other remarkable acquisitions are Success Factors, Ariba, Hybris, and FieldGlass. All these companies are providers of cloud-based products.
  • In 2014, IBM and SAP began a partnership to sell cloud-based services.
  • Likewise, in 2015, SAP also partnered with HPE to provide secure hybrid cloud-based services running the SAP platform. Both HPE and IBM provide infrastructure services to SAP, and SAP runs its SAP HANA cloud solution on top.

SAP S/4HANA- 2015

  • In 2015, SAP launched its 4th generation business suite SAP S/4HANA to leverage the features of the SAP HANA platform. Real-time analytics, on the fly-computation, completely re-defined data models supported by modern SAP Fiori UX are some of the features of SAP S/4HANA.

This article describes in detail about the history and evolution of SAP. It also explains what is SAP and why it world’s number one ERP software company.