SAP Investment Thesis

SAP SE, together with its subsidiaries, provides applications, technology, and services worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; SAP's industry cloud solutions that provides modular solutions addressing industry-specific functions; Taulia solutions for working capital management to help enable customers mitigate the effects of inflation by providing visibility into working capital and access to liquidity; and sustainability solutions and services. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

SAP (SAP): The German Cloud Transformation

1. Executive Summary

SAP is the heartbeat of the global economy; 87% of total global commerce touches an SAP system. The thesis is not about buying a legacy ERP vendor, but about the "RISE with SAP" migration cycle. As SAP forces customers to move from on-premise servers to the Cloud (S/4HANA), they unlock higher lifetime value and AI-driven pricing tiers.

Key Thesis Points

Forced Migration: Support for legacy ECC systems ends in 2027/2030. This creates an artificial "event horizon" where massive global enterprises must upgrade their core systems.
Cloud Backlog: Current Cloud backlog is growing at 25%+ YoY. This reliable future revenue stream warrants a higher valuation multiple (re-rating from 20x to 30x PE).
Business AI: SAP "Joule" (AI assistant) is embedded directly into finance and supply chain workflows, making it one of the few practical AI applications that CFOs are willing to pay for immediately.

2. Business Overview

ERP (S/4HANA): The core ledger.
BTP (Business Technology Platform): The integration layer where developers build custom apps.
Concur/SuccessFactors: Travel and HR SaaS acquisitions.

3. Risks

Implementation Failure: SAP upgrades are notoriously painful. If customers like BMW or Adidas face operational meltdowns during migration, the brand takes a hit.
ServiceNow: As mentioned in the NOW thesis, ServiceNow is attempting to eat the user-interface layer of ERP, relegating SAP to a backend database.

SAP Investment Thesis

SAP (SAP): The German Cloud Transformation

1. Executive Summary

Key Thesis Points

2. Business Overview

3. Risks

SAP Valuation Model

SAP SE (SAP)

Investment Idea: SAP SE (SAP)

SAP (SAP): The ERP Giants Cloud Transformation – Is it Priced In?

Investment Idea: SAP SE (SAP)

SAP (SAP): The ERP Giant's Cloud Transformation – Is it Priced In?