(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares, without nominal value: ~~1,228,083,382~~1,228,504,232 (as of December 31, ~~2011)~~2014)**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board þ Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

~~The following tables reconcile our IFRS numbers to the respective and most comparable non-IFRS numbers~~ for each of ~~2011~~2014 and 2010. Our 2010 non-IFRS comparative amounts have been adjusted to conform to the amended non-IFRS definitions introduced in 2011 that also exclude expenses for share-based compensation and restructuring.2013. Due to rounding, the sum of the numbers presented in ~~these tables~~this table might not precisely equal the totals we provide.

Reconciliations of IFRS to Non-IFRS ~~Numbers~~Financial Measures for ~~2011 and 2010~~the Years Ended December 31

Limitations of ~~the discontinued TomorrowNow activities provides insight into the financial measures that SAP uses internally.~~

We include the revenue adjustments outlined above and exclude the expense adjustments outlined above when making decisions to allocate resources, both on a company level and at lower levels of the organization. In addition, we use these non-IFRS measures to gain a better understanding of SAP’s operating performance from period to period.Non-IFRS Measures

We believe that our non-IFRS financial measures described above have limitations, including but not limited to, the following:

Market disruption from aggressive competitive behavior, acquisitions, or business practices

~~Greater pressure on the prices of our~~Increased price competition and demand for cheaper products and services

~~Pressure on~~Any one or more of these might reduce our ~~operating margin~~

~~Economic, financial market, or political instability~~ability to sell and deliver our software and services which could have ~~a material negative impact~~an adverse effect on our business, financial position, profit, and cash ~~flows, and could also exacerbate the other risks we describe in this report.~~flows.

Our international business activities ~~subject~~expose us to numerous and ~~potentially~~sometimes even conflicting regulatory requirements, and ~~the associated~~to risks that could harm our business, financial position, profit, and cash flows.

We are a global company and currently market our products and services in more than ~~120~~180 countries and territories in the Americas ~~APJ,~~(including Latin America and ~~EMEA~~North America); Asia Pacific Japan (APJ); China, Hong Kong, Taiwan and Macau (Greater China); Europe, Middle East, and Africa (EMEA); and Middle and Eastern Europe (MEE) regions. ~~Sales~~Our business in these countries ~~are~~is subject to numerous risks inherent in international business operations. Among others, these risks include:

Conflict and overlap among ~~different~~ tax regimes

Possible tax constraints impeding business operations in certain countries

Expenses associated with the ~~customization~~localization of our products ~~on a local level~~ and ~~transacting business in~~ compliance with local regulatory requirements

Discriminatory or conflicting fiscal policies

Operational difficulties in countries with a high corruption ~~perception~~perceptions index

Protectionist trade policies and regulations for import and export

~~Demands of works~~Works councils, ~~and~~ labor unions, and immigration ~~law requirements,~~laws in different countries

Data protection and privacy ~~and~~in regard to access by ~~foreign~~government authorities to customer, partner, or employee data

Difficulties enforcing intellectual property and contractual rights in certain jurisdictions

Country-specific software certification requirements

As we expand further into new ~~regions~~countries and markets, these risks could intensify. The

application of these laws and regulations to our business is sometimes unclear, subject to change over time, and sometimes may conflict between different jurisdictions. Additionally these laws and governments’ approach to enforcement, as well as our products and services, are continuing to change and evolve. Compliance with these types of regulation may involve significant costs or require changes in products or business practices. Non-compliance could result in penalties being imposed on us or orders that we stop the alleged noncompliant activity. One or more of these factors could ~~negatively impact~~have an adverse effect on our operations globally or in one or more countries or ~~regions. This~~regions, which could ~~result in significant negative impact to our reputation and~~have an adverse effect on our business, financial position, profit, and cash flows.

Social and political instability caused ~~for example,~~ by state-based conflicts, terrorist attacks, civil unrest, war, or international hostilities, as well as pandemic disease outbreaks or natural disasters, ~~could have a significant negative impact on our business.~~may disrupt SAP’s business operations.

Terrorist attacks and other acts of violence or war, civil and political unrest (such as ~~that~~ in the Middle East, in Ukraine, Israel, Syria, Libya, and ~~North~~in other parts of Africa), ~~pandemic disease outbreaks, or~~ natural disasters (such as ~~the earthquakes in Japan)~~hurricanes, flooding, or similar events) or pandemic diseases (such as Ebola) could have a significant ~~negative impact~~adverse effect on the related economy or beyond. AnSuch an event ~~that results,~~could lead, for example, into the loss of a significant ~~numbers~~number of our employees, or into the disruption or disablement of operations at our ~~headquarters or other key~~ locations, and could affect our ability to provide ~~normal~~ business services and ~~to generate the expected income. That~~maintain effective business operations. Furthermore, this could ~~lead to~~have a significant ~~negative impact~~adverse effect on our partners as well as our customers and their investment ~~decisions. This~~decisions, which could ~~in turn lead to a significant negative impact~~have an adverse effect on our reputation, ~~and on our~~ business, financial position, profit, and cash flows.

~~Part I~~

~~Item 3~~

Market Risks

~~If our~~Our established customers domight not buy additional software ~~products,~~solutions, subscribe to our cloud offerings, renew maintenance agreements, or purchase additional professional services, ~~this could have a material adverse impact on our business, financial position, profit, and cash flows.~~or they might switch to other products or service offerings (including competitive products).

In ~~2011,~~2014, we ~~continued to offer~~offered a wide range of support ~~services.~~services including SAP MaxAttention, SAP Enterprise Support, and SAP Product Support for

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Large Enterprises. We continue 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. ~~If existing~~Despite the high quality and service level of our transformed and expanded service offering in the area of premium engagements, we may be unable to meet customer expectations. Existing customers might cancel or do not renew their maintenance contracts, ~~accept alternative offerings from other vendors, or~~ decide not to buy additional products and services, ~~this would~~not subscribe to our cloud offerings, or accept alternative offerings from other vendors. In addition, the increasing volume in our cloud business as well as the conversion of traditional on-premise licenses to cloud subscription licenses could have a ~~material~~potential negative impact on our software and maintenance revenue streams. This could have an adverse effect on our on-premise software and maintenance business, financial position, profit, and cash flows.

The success of our cloud computing strategy depends on market perception and an 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 have acquired cloud computing companies such as SuccessFactors, Ariba, Fieldglass and Concur. Due to ongoing contracts and previous substantial investments to integrate traditional on-premise enterprise software into their businesses, customers and partners might be reluctant or unwilling to migrate to the cloud.

Other factors that could affect the market acceptance of cloud solutions 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

The level of configurability or customizability of the software

Missing integration scenarios betweenon-premise products and cloud-to-cloud solutions

Failure in secure and successful delivery of cloud services by any cloud service provider could have a negative impact on customer trust in cloud solutions

Strategic alliances amongst our competitors in the cloud area could lead to significantly increased competition in the market

If organizations do not perceive the benefits of cloud computing, the market for cloud business might not develop further, or it may develop more slowly than we expect, either of which could have an adverse effect on our business, financial position, profit, reputation and cash flows.

Our market share and profit ~~may~~could decline due to ~~intense~~increased competition, market consolidation and technological innovation, and new business models in the software industry.

The software industry continues to evolve rapidly and is currently undergoing a significant shift due to ~~competition, consolidation, and technological innovation. As a result,~~innovations in the ~~market for our products and services is intensely competitive. Over~~areas of mobile, Big Data, connectivity, the last decade, we have diversified from our large enterprise resource planning (ERP) offerings to new products and services, like on-device, cloud, and in-memory computing, which exposes us to competitors varying in size, geographic location, and specialty. New development models and new delivery and licensing models, such as software as a service (SaaS), platform as a service (PaaS), business process outsourcing (BPO), andInternet of Things, digital, cloud computing, ~~enable competitors~~and social media. While smaller innovative companies tend to ~~offer integrated packaged solutions that compete with ours. SaaS providers and other participants~~create new markets continuously, large traditional IT vendors tend to enter such markets mostly through acquisitions. SAP faces increased competition in ~~the growing SaaS ecosystem for applications also compete with SAP for segment share. Cloud~~

~~computing is driving fast adoption of Web-based~~its business ~~models. As a result, it is easier for~~environment from traditional as well as new entrants to orchestrate or own end-to-end value chains and to impact our key growth markets. Aggressive tactics by mobile device platform providers and database providers could impact the market potential for our mobile apps and in-memory computing and could cut us off from potential revenue sources. In addition, competitors may gain market share because of acquisitions. Current and potential competitors are establishing or may in the future establish or extend cooperative relationships among themselves or with third parties to better address their customers’ needs.competitors. This ~~increased competition~~ could result in increased price pressure, cost increases, and loss of market share, ~~and therefore~~which could have ~~a significant negative impact~~an adverse effect on our business, financial position, profit, and cash flows.

~~Business Strategy Risks~~

~~Demand for our new products may not develop as planned and our strategy for new markets, new business models, and new consumption models may not be successful.~~

~~Our strategy centers on innovating~~Additionally, 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 ~~stable core products and services, and developing~~operating results. Furthermore, the trend in the market to invest more in cloud solutions might lead to an increased risk of the potential loss of existing on-premise cloud, and mobile solutions. We focus on continuous innovation through new business and consumption models, by enhancing our technology, by expanding our partner ecosystem, and by creating the infrastructure for volume business. The demand for, and customers’ acceptance of, new products, technologies, and services we introduce are subject to uncertainty. Despite our efforts, demand for our products, technologies, and servicescustomers. It may ~~fail to develop as planned, and this could~~also have a ~~material negative impact~~temporary adverse effect on our ~~business, financial position, profit, or cash flows. In addition, entering new market segments exposes us~~revenue due to ~~the risks associated with developing and launching new products and services. For more information, see the Product Risks section.~~an increased number of conversions from on-premise licenses to cloud subscriptions from existing SAP customers in our installed base.

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~~If we fail~~Business Strategy Risks

Demand for our new solutions may not develop as planned and our strategy on new business models and flexible consumption models may not be successful.

Our software business consists of new software licenses, software license updates, and support and maintenance fees, as well as of cloud subscriptions. Our customers are looking to ~~develop~~take advantage of technological breakthroughs from SAP without compromising their previous IT investments. However, the introduction of new ~~relationships~~SAP solutions, technologies, and ~~enhance existing relationships with channel partners, software suppliers, system integrators, value-added resellers,~~business models as well as delivery and ~~independent software vendors (ISVs)~~consumption models is subject to uncertainties as to whether customers will be able to perceive the additional value and realize the expected benefits. There is an increased risk that ~~contribute~~such uncertainties may lead customers to ~~the success~~wait for reference customers first, which might result in a lower level of adoption of our ~~products~~new solutions, technologies, business models and ~~services,~~flexible consumption models, or no adoption at all. This could have an adverse effect on our business, financial position, profit, and cash ~~flows~~flows.

We recognize cloud subscription and support revenue over the term of the respective service periods, and our business depends substantially on customers renewing their agreements and purchasing additional modules or user licenses from us. Although any downturns or upturns in cloud sales may not be ~~adversely impacted.~~immediately reflected in our operating results, any decline in our customer renewals would harm the future operating results of the cloud business.

AWe recognize cloud subscription and support revenue over the respective service provision, which typically range from one to three years with some up to five years. As a result, most of the respective revenue recognized in a given period originates from agreements entered into in earlier periods. Consequently, a shortfall in demand for our cloud portfolio in any period may not significantly impact our cloud subscription and support revenue for that quarter, but could have an adverse effect on targeted cloud subscription and support revenue in future periods.

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 users. 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 may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction with our cloud solution and services portfolio, the integration capabilities of our cloud solutions into their existing solution environment (including hybrid solutions combining both cloud andon-premise solutions), our customer support, concerns on stable, efficient and secure cloud operations and in compliance with legal and regulatory requirements, our pricing, the prices of competing products or services, mergers and acquisitions affecting our customer base, the effects of global economic conditions, or reductions in our customers’ spending levels.

If our customers do not renew their subscriptions, renew on less favorable terms, or fail to purchase additional modules or users, our revenue and billings may decline, and we may not realize significantly improved operating results from our customer base. This could have an adverse effect on our business, financial position, profit, and cash flows.

If we are unable to scale and enhance an effective partner ecosystem, increased revenue already included in our forecast might be endangered.

An open and vibrant partner ecosystem is a fundamental pillar of our success ~~is a solid partner ecosystem.~~and growth strategy. We have entered into ~~cooperation~~partnership agreements ~~with channel~~that drive co-innovation on our platforms, profitably expand all our routes-to-market to optimize market coverage, 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 ~~and leading software and hardware vendors. Most of these agreements are of relatively short duration and are nonexclusive. The parties concerned typically maintain similar arrangements with~~consider our ~~competitors, and some are~~products or services model less strategic and/or financially less attractive compared to our ~~competitors. Additionally, we maintain~~competition or if SAP fails to establish a network of ~~ISVs~~qualified partners that ~~develop their own business applications for~~meet our quality requirements and the ~~SAP NetWeaver technology platform. We are still exposed to risks related to~~

Part I

Item 3

requirements of our ~~third-party relationships, such as that the relevant counterparties~~customers, then, among other things, partners might not:

~~Devote~~Develop a sufficient number of new solutions and content on our platforms

Provide high-quality products and services to our customers

Drive growth of references by creating customer use cases and demo systems

Sufficiently embed our solutions to profitably drive product adoption, especially with new innovations such as SAP HANA

Enable and train sufficient resources to promote sell and support ~~and integrate their products within our portfolio~~to scale into targeted markets

Comply with applicable laws and regulations, 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 ~~at all~~ or enter into new agreements on terms acceptable to us

~~Provide high-quality products and services~~ or at all

If one or more of these risks materialize, this may have an adverse effect on the ~~marketing of and~~ demand for our products and ~~services may be adversely impacted, and~~services. As a result we may not be able to scale our business to compete successfully with other software ~~vendors. This~~vendors, which could ~~harm~~have an adverse effect on our reputation, ~~or adversely impact our~~ business, financial position, profit, and cash flows.

Human Capital Risks

If we do not effectively manage our geographically dispersed workforce, we may not be able to run our business ~~may not operate~~ efficiently and ~~this could have a negative impact on our business, financial position, profit, and cash flows.~~successfully.

Our success is dependent on appropriate alignment of our internal and external workforce planning ~~process~~processes and our location strategy with our general strategy. ~~Changes in headcount and infrastructure needs could result in a mismatch between our expenses and revenue.~~ It is critical that we manage our internationally dispersed workforce effectively, taking short and ~~long term~~long-term workforce and skill requirements into consideration. ~~Our failure~~This applies to ~~do so~~the management of our internal as well as our external workforce. Changes in headcount and infrastructure needs could result in a mismatch

between our expenses and revenue. Failure to manage our geographically dispersed workforce effectively could hinder our ability to ~~operate~~run our business efficiently ~~which~~and successfully and could have ~~a negative impact~~an adverse effect on our business, financial position, profit, and cash flows.

If we are unable to attract, develop, and retain ~~managers~~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 ~~products~~solutions and services.

Our highly qualified ~~employees and managers provide~~workforce is the foundation for our continued success. ~~Competition~~In certain regions and specific technology and solution areas, we continue to set very high growth targets, specifically in ~~our industry for~~countries and regions such as Africa, China, and Latin America. 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 ~~intense. In certain regions~~a key success factor for our transition to become the leading cloud company. The availability of such personnel is limited and ~~specific technology~~as a result competition in our industry is intense and ~~product areas, we have set ambitious growth targets (for example, in China).~~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 ~~our~~existing highly skilled and specialized personnel leave SAP and ~~good~~ready successors or adequate replacements are not available, we may 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 may not be able to develop, sell, or ~~develop~~implement successful new ~~products~~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. ~~Hiring such personnel may also expose us~~The lack of appropriate or inadequately executed benefit and compensation programs could limit SAP’s ability to ~~claims~~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 ~~other companies seeking to prevent their employees from working for a competitor.~~2017.

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Organizational and Governance-Related Risks

~~Corporate governance laws~~Laws and regulatory requirements in Germany, the United States, and elsewhere have become much more stringent.

As a ~~stock corporation~~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. ~~The regulatory~~Changes in laws and regulations and related interpretations, including changes in accounting standards and taxation requirements, and increased enforcement actions and penalties may 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 ~~rules are highly complex, and there can be no assurance that we will not be held in breach~~nature of ~~regulatory requirements if, for example, one or more employees behave fraudulently or negligently, or if we fail~~these markets presents a number of inherent risks. A failure by us to comply with ~~certain formal documentation requirements. Any~~applicable laws and regulations, or any related allegations of wrongdoing against us, whether merited or not, could have ~~a material negative impact~~an adverse effect on our ~~reputation~~business, financial position, profit, cash flows and reputation.

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.

As a global software and service provider, SAP is required to comply with the laws in the locations where SAP does business. SAP and its subsidiaries are facing a surge of data protection and privacy laws and regulations around the world, with further changes to be expected in the future, for example, by the European Data Protection Regulation proposed by the European Commission. 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 ~~trading price~~Company’s annual revenue), loss of customers, damage to our ~~ordinary shares~~reputation, and ~~American depositary receipts (ADRs).~~could have an adverse effect on our business, financial position, profit, and cash flows.

Failure ~~on our part~~ to ~~implement our sustainability strategy in a way that meets~~respond to meet customer, partner, or other stakeholder expectations or generally accepted ~~sustainability~~ standards on climate change, energy constraints, and our social investment strategy could ~~harm our reputation and have a negative~~negatively impact ~~on our~~SAP’s business, results of operations, and ~~our business.~~reputation.

~~For SAP, sustainability means the~~Energy and emissions management are an integral component of our holistic management of social, environmental, ~~social,~~ and economic risks and opportunities. We have identified ~~sustainability~~ risks in ~~three~~these major areas:

~~Functionality of our software~~

~~Sustainability in our~~Our solutions and green IT

~~Accessibility and security of our products~~

~~Privacy and data protection in connection with the use of SAP~~

~~products (For more information, see the Product Risks section.)~~

~~SAP’s~~Our own ~~sustainable~~ operations

~~Energy~~ – energy management and other environmental issues ~~like~~such as carbon management, water use, and waste

~~Business conduct~~

~~Human capital management, including health, safety, diversity, employee satisfaction, and talent attraction and retention (For more information, see the Human Capital Risks section.)~~

~~The ethical behavior of suppliers and partners~~

~~Customer satisfaction~~

~~Social investment~~

~~Education~~

~~Role models~~

~~Economic opportunity~~

~~If our sustainability strategy and operations, which are described in our Sustainability Report at www.sapsustainabilityreport.com, are not sufficient to meet the expectations of~~Because our customers, employees, and investors expect a reliable energy and ~~partners, or generally accepted sustainability standards, this~~carbon strategy, we have reemphasized our previously communicated targets, especially our 2020 target for greenhouse gas emissions. In addition, our customers might no longer recognize SAP for its environmental leadership and might buy other vendors’ products and services. Consequently, we could ~~harm~~fail to achieve our ~~reputation and~~revenue target. If we do not meet stakeholder expectations in the areas identified, our rating in sustainable investment indices might decrease, which could have an adverse ~~impact~~effect on our reputation, business, financial position, profit, and cash flows.

Unethical behavior and non-compliance with our integrity standards due to intentional and fraudulent behavior of employees could seriously harm our business, financial position, profit, and reputation.

SAP’s leadership position in the global market is founded on the long-term and sustainable trust of

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Item 3

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, put into words the already existing guidelines and expectations for the business behavior practiced at SAP.

However, we may 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. 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.

Principal shareholders may be able to exert control over our future direction and operations.

If SAP ~~AG’s~~SE’s principal shareholders and the holdings of entities controlled by them vote in the same manner, this could delay, prevent or facilitate a change in control of SAP or other significant changes to SAP AGSE or its capital structure. See “Item 7. Major Shareholders and Related-Party Transactions —– Major Shareholders” for further information.

~~Part I~~

~~Item 3~~

U.S. judgments may be difficult or impossible to enforce against us or our Board members.

Currently, except for Bill McDermott and ~~Vishal Sikka,~~Robert Enslin, all members of SAP ~~AG’s~~SE’s Executive Board and all members of the Supervisory Board are non-residents of the United States. A substantial portion of the assets of SAP and our Board members are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon non-U.S. resident persons or SAP or to enforce against non-U.S. resident persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the securities laws of the United States. In addition, awards of punitive damages in actions brought in the United States or elsewhere ~~may~~might be unenforceable in Germany.

Communication and Information Risks

~~We may not be able~~Our controls and efforts to prevent the unauthorized disclosure of confidential information might not always be effective.

Confidential or strictly confidential information and internal information that is ~~subject~~related to ~~regulatory requirements, or are trade secrets, and such disclosure may harm our business and reputation.~~

~~Confidential communications and information about sensitive subjects,~~topics such as our ~~future strategies,~~strategy, new technologies, ~~and products;~~ mergers and ~~acquisitions;~~acquisitions, unpublished financial ~~results;~~results, or ~~customer, employee, or other~~ personal data, could be prematurely or inadvertently ~~or prematurely disclosed. Such disclosure may~~disclosed and subsequently lead to misperception in the market. This could require ~~notification of~~us to notify multiple regulatory agencies and, where appropriate, the data owner, ~~where appropriate,~~ which ~~may damage~~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 decline in case of prematurely published financial results. This could have an adverse effect on our market position ~~reduce future revenue, or~~and lead to fines and ~~penalties, any of which~~penalties. In addition, this could have ~~a significant negative impact~~an adverse effect on our business, ~~reputation,~~ financial position, profit, and cash flows.

Financial Risks

Our sales are subject to quarterly fluctuations and our sales forecasts may not be ~~accurate, which could negatively impact our profit margin.~~accurate.

Our revenue and operating results can vary and have varied in the past, sometimes

substantially, from quarter to quarter. Our revenue in general, and in particular our software revenue, is difficult to forecast for a number of reasons, including:

The relatively long sales cycles for our products

The large size, complexity, and extended timing of individual license transactions

The introduction of new licensing and deployment models such as ~~on-demand and~~cloud subscription models

The timing of the introduction of new products or product enhancements by usSAP or our competitors

Changes in customer budgets

Decreased software sales that could have ~~a significant negative impact~~an adverse effect on related maintenance and services revenue

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The timing, size, and length of customers’ services projects

~~Licensing~~Deployment models that require the recognition of revenue over an extended period of time

Adoption of and conversion to new business models leading to changed or delayed payment terms

Seasonality of a customer’s technology purchases

Limited visibility ~~into~~during the ~~ability~~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

Other general economic, social, environmental, and market conditions, such as the global economic crisis and the current difficulties for countries with large debt

~~Because~~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 ~~the~~our fourth quarter, even a small delay in purchasing decisions for our on-premise software could have ~~a significant negative impact~~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 coupled with a decrease in deal size. However, the loss or delay of one or a few large ~~sales,~~opportunities, which are still characteristic of

~~Part I~~

~~Item 3~~

the large enterprise segment, could have ~~a significant negative impact~~an adverse effect on our ~~results.~~

~~We use a “pipeline” system to forecast 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. The reliability of our plans, budgets, and forecasts may therefore be compromised. Because our operating expenses are 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 results of operations 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, results of operationsfinancial position, profit, and cash flows to fall short of our expectations and public forecasts. That could have a significant negative impact on our stock price. To the extent any future expenditure fails to generate the anticipated increase in revenue, our quarterly or annual operating results may be subject to a significant negative impact and may vary significantly from preceding or subsequent periods.flows.

External factors ~~may~~could impact our liquidity and increase the default risk associated with, and the valuation of, our financial ~~assets and trade receivables.~~assets.

AnMacroeconomic factors such as an economic downturn could have ~~a significant negative impact~~an adverse effect on our future liquidity. We use ~~global~~a globally centralized financial management to control ~~liquid assets,~~financial risk, such as liquidity, exchange rate, interest rate, counterparty, and ~~currencies.~~equity price risks. The primary aim is to maintain liquidity in the SAP Group at a level that is adequate to meet our ~~obligations.~~obligations at any time. Our total ~~group~~Group liquidity ~~was €5.6 billion on December 31, 2011. This position~~ is supported by our strong operating cash flows, of which a large

part is recurring, and by credit facilities on which we can draw if necessary.

However, ~~an economic downturn~~adverse macroeconomic factors could increase the default risk associated with the investment of our total ~~group liquidity. That~~Group liquidity including possible liquidity shortages limiting SAP’s ability to repay financial debt. This could have ~~a significant negative~~an impact on the ~~valuation~~value of our financial ~~assets. SAP’s investment policy with regard to total Group liquidity is set out in our internal treasury guideline document,~~assets, which is a collection of uniform rules that apply globally to all companies in the Group. Among its stipulations, it requires that with limited exceptions we invest only in assets and funds rated A- or better. The weighted average rating of our total group liquidity is in the range A to A-. We continue to pursue a policy of cautious investment characterized by wide portfolio diversification with a variety of counterparties, predominantly short-term investments, and standard investment instruments.

~~There can be no assurance that the prescribed measures will be successful or that uncertainty in global economic conditions will not~~could have ~~a significant negative impact~~an adverse effect on our business, financial position, profit, and ~~profit.~~cash flows.

Management’s use of estimates could negatively affect our business, financial position, profit, and cash flows.

To comply with IFRS, management is required to make ~~many~~numerous judgments, estimates, and ~~assumptions.~~assumptions (among others for our major patent disputes) 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, may change from time to time and this could result in significant changes in the estimates ~~with a significant negative impact~~and judgments and consequently in the reported financials. Such changes could have an adverse effect on our business, financial position, profit orand cash flows. ~~For more information, see the Notes to the Consolidated Financial Statements section, Note (3c).~~

Current and future accounting pronouncements and other financial reporting standards, especially but not only concerning revenue recognition, may ~~have a significant negative~~negatively impact on the financial results we present.

We regularly monitor our compliance with ~~all of the~~applicable financial reporting standards ~~that are~~

~~Part I~~

~~Item 3~~

~~applicable to us~~ and ~~any~~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 likely need to adopt in 2017), and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, to alter our ~~business models~~operational policies so that ~~it reflects~~they reflect new or amended financial reporting standards, or to restate our published financial statements. ~~We cannot exclude the possibility that this~~Such changes may have ~~a significant negative impact~~an adverse effect on our reputation, business, financial position, and profit, or cause an adverse deviation from our revenue and ~~cash flows. For a summary of significant accounting policies, see the Notes to the Consolidated Financial Statements section, Note (3).~~operating profit target.

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Because we conduct operations throughout the world, our business, financial position, profit, and cash flows may be affected by currency and interest rate fluctuations.

Our SAP Group-wide management reporting and our external financial reporting are both in euros. Nevertheless, a significant portion of our business is conducted in currencies other than the euro. Approximately ~~69%~~71% of our revenue in ~~2011~~2014 was attributable to operations outside the euro area and was translated into euros. Consequently, period-over-period changes in the euro rates for particular currencies can significantly affect our reported revenue and income. In general, appreciation of the euro relative to another currency has ~~a negative~~an adverse effect while depreciation of the euro relative to another currency has a positive effect. ~~Variable-interest~~Variable interest balance-sheet items are also subject to changes in interest ~~rates, so there is a risk that these balance-sheet items~~rates. Such changes may ~~result in~~have an adverse ~~impact~~effect on our business, financial position, profit and cash ~~flows. For more information about~~flows or cause an adverse deviation from our ~~currency~~revenue and ~~interest-rate risks and our related hedging activity, see the Notes to the Consolidated Financial Statements section, Notes (25) and (26).~~operating profit target.

The cost of using derivative instruments to hedge share-based ~~payment plans~~payments may exceed the benefits of hedging them.

We use derivative instruments to reduce the impact of our share-based ~~payment plans~~payments on our income statement and to limit future expense

associated with those plans. We decide ~~case by case~~on a case-by-case basis whether and to what extent we should hedge this risk. The expense of hedging the share-based ~~payment plans~~payments could exceed the benefit achieved by hedging ~~them or that~~them. On the other hand, a decision to leave the plans materially unhedged ~~might~~could prove disadvantageous. This could have an adverse effect on our business, financial position, profit and cash flows or cause an adverse deviation from our revenue and operating profit target.

The market price for our ADRs and ordinary shares may be volatile.

The ~~trading~~market prices of our ADRs and ordinary shares have experienced and may continue to experience significant volatility in response to various factors including, but not limited to:

unauthorized or inadvertent premature disclosure of confidential information, including information concerning pending acquisition negotiations or acquisition rumors;

the announcement of new products or product enhancements by us or our competitors;

technological innovation by us or our competitors;

quarterly variations in our results or our competitors’ results of operations or results that fail to meet ~~our or our financial analysts’~~market expectations;

~~the announcement of new products or product enhancements by us or our competitors;~~

changes in revenue and revenue growth rates on a consolidated basis or for specific geographic areas, business units, products or product categories;

changes in our externally communicated ~~outlook or credit rating;~~outlook;

changes in our capital structure, for example due to the potential future issuance of ~~addition~~additional debt instruments;

general market conditions specific to particular industries;

litigation to which we are a party;

general and country specific economic or political conditions (particularly wars, terrorist attacks, etc.);

~~Part I~~

~~Item 3~~

proposed and completed acquisitions or other significant transactions by us or our competitors; and

general market conditions.

Many of these factors are beyond our control. In the past, companies that have experienced volatility in the market price of their stock have been subject to shareholder lawsuits, including securities class action litigation. Any such lawsuits against us, with or without merit, could result in substantial costs and the diversion of management’s attention and resources, resulting in a decline in our results of operations and our stock price.

Project Risks

Implementation of SAP software 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 solutions to enable

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our customers to make their business a best-run business. The implementation of SAP software 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 faces a number of different risks. For example, ~~trained~~functional requirement changes, delays in timeline, or deviation from recommended best practices may 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 ~~might not be immediately available to assist customers~~ in the implementation of our products, the features of the implemented software might not meet customers’ expectations or the software might not fit the business model of the customer, customer-specific factors may destabilize the implementation of the software, or customersa timely manner and ~~partners might not implement the measures offered by SAP to safeguard against functional and technical risks.~~could therefore prove challenging.

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. ~~Also, some~~Some customers’ implementations have taken longer than planned. We cannot guarantee that we can reduce or eliminate protracted installation or significant third-party consulting costs, that ~~shortages of~~ trained consultants will ~~not occur, or~~be readily available, that our costs will not exceed the ~~agreed-upon~~ fees onagreed in fixed-price ~~contracts.~~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 ~~cause a loss of future revenues.~~could have an adverse effect on our business, financial position, profit, and cash flows.

Product and Technology Risks

~~We use technologies under license from third parties. The loss of the right~~Undetected security vulnerabilities shipped and deployed within our software products might cause damage to ~~use technologies~~SAP and our customers, and partners.

Customer systems or systems operated by SAP itself to provide services could ~~delay implementation of our products or force us to pay higher license fees.~~

~~We have taken numerous third-party technologies under license and incorporated them into our products and we depend on those technologies in the aggregate. There can~~potentially be no assurance that the licenses for these third-party technologies will not be terminated, that the licenses will be available in the future on terms acceptable to us, or that we will be able to obtain third-party software licenses for future products. Changes to or the loss of third-party licensescompromised by vulnerabilities if they are exploited by hackers. This could lead to ~~a material increase~~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 ~~cost~~provision of ~~licensing, or that SAP software products may become unusable or materially reduced~~services, especially in ~~their functional scope. As a result, we~~case of exploitation, could ~~incur additional development or license costs~~prevent us from meeting our contractual obligations and subsequently might lead to ~~ensure the continued functionality of our products. The risks increase where we acquire a company or a company’s intellectual property assets that~~customer claims and

reputational damage, which might have ~~been subject to third-party technology licensing and product standards less rigorous than our own.~~

~~Part I~~

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~~If we are unable to keep up with rapid technological innovations and the expectations of our customers, we may not be able to compete as effectively as our competitors.~~

~~Our future success continues to depend~~an adverse effect on our ~~ability to enhance~~business, financial position, profit, and expand our existing products, technology, and services and keep pace with technological developments (including evolving cybersecurity threats). It also depends on our ability to introduce new products, technologies, and services that are accepted in the market and that satisfy changing customer requirements.

We might not be successful in bringing new solutions, solution enhancements, and services to market before our competitors, and we might not be able to generate enough revenue to offset the significant research and development costs we incur. Moreover, we might not anticipate and develop technological improvements or succeed in adapting our products to technological change, changing regulatory requirements, emerging industry standards, and changing customer requirements. Finally, we might not succeed in producing high-quality products, enhancements, and releases in a timely and cost-effective manner to compete with applications and other technologies offered by our competitors.cash flows.

Undetected defects ~~or delays~~ in the introduction of new products and product enhancements ~~may result in increased~~could increase our costs, ~~to us~~ and ~~reduced demand for our products.~~reduce customer demand.

To achieve market acceptance and high customer ~~acceptance,~~satisfaction, our new products and product enhancements often require long development and testing periods. Development work isand market introduction are subject to ~~various~~ risks. For example, ~~scheduled market launches could be delayed, or~~ products might not completely ~~satisfy~~meet our stringent ~~quality~~high-quality standards, ~~meet~~including security standards, might not fulfill market needs or ~~the~~customer expectations, ~~of customers,~~ or might not comply with local standards and requirements. ~~New~~Furthermore, this risk also exists with respect to acquired companies’ technologies and products ~~may~~where we might not be able to manage these as quickly and successfully as expected. Therefore, market launches, entering new markets, or the introduction of new innovations could be delayed or not be successful.

In addition, new products, including third-party technologies we have licensed and open source software components we use in those products, could contain undetected defects or they ~~may~~might not be mature enough from the customer’s point of view for business-critical solutions. The detection and correction of any defects especially after shipment could be expensive andtime-consuming and we might not be able to ~~process large volumes~~meet the expectations of ~~data.~~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.~~customers, specifically as we are expanding our product portfolio into additional markets. As a result, we might be faced with 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 ~~simultaneously.~~simultaneously at a higher innovation rate. Significant undetected defects or delays in introducing new products or product enhancements could affect market acceptance of SAP software products and ~~adversely impact~~could have an adverse effect on our reputation, business, financial position, profit, and cash flows.

The use of existing SAP software products by customers in business-critical ~~applications~~solutions and

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processes and the relative complexity and technical interdependency of our software products create a risk that customers or third parties may 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 may 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 may 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.

Changes in our rights to use software and technologies we license from third parties, which are an integral part of SAP’s products, 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 functional capabilities and therefore could jeopardize the stability of our solution portfolio offering.

The numerous third-party technologies we have licensed and certain open source software components we use have become an integral part of our product portfolio. We depend on those technologies for the functionality of our software or 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 functionality and/or usability of SAP’s software products. As a result, we might incur additional development or license costs to ensure the continued functionality of our products, which could have an adverse effect on our business, financial position, profit, and cash flows. This risk increases with each acquisition of a company or a company’s intellectual property assets that had been subject to third-party technology licensing, open source software, and product standards less rigorous than our own.

If we are unable to keep up with rapid technological innovations, new business models, and 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 shift our products and our go-to-market approach to a cloud-based delivery model to satisfy changing customer demand.

We might not be successful in bringing new business models, solutions, solution enhancements, and/or services to market before our competitors. We may also face increasing competition from open source software initiatives in which competitors may 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 andcost-effective manner to compete with products, solutions, and other technologies offered by our competitors, which could have an adverse effect on our reputation, business, financial position, profit, and cash flows.

Our technology and/or product strategy may not ~~succeed~~be successful or our customers ~~may~~and partners might not adopt our technology ~~platform offering.~~platforms and other innovations accordingly.

We offer customers a broad portfolio of products, solutions, and services. Our technology strategy ~~centers on the SAP NetWeaver technology platform, the Sybase Unwired Platform, and our on-demand platform. Its success depends on the convergence of our platforms and their~~

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~~integration~~centers on SAP HANA as a real-time in-memory computing platform for analytics and applications. The success of our technology strategy depends on the convergence of SAP HANA with our ~~in-memory database technology.~~mobile, cloud, and SAP NetWeaver platform. It also depends on the delivery of SAP solutions based on the SAP HANA platform as well as the success of our new framework to meet changing customer expectations regarding end-to-end user experience. Our technology strategy also relies on our ability to maintain a dynamic network of ~~ISVs~~partner organizations developing their own business applications using our technology platforms.

We might not be successful in integrating our platforms, enabling the complete product portfolio, harmonizing our user interface design and technology, integrating acquired technologies, or bringing new solutions based on the SAP HANA platform ~~technology.~~to the market as fast as expected. In addition, we may not be able to compete effectively in the area of managed cloud services. As ~~with any open~~a result, our partner organizations and customers might not adopt the SAP HANA platform ~~design, the greater flexibility provided to customers to use data generated by non-SAP software~~or our managed cloud services quickly enough or they might reduce customer demand to select and use certain SAP software products. If our technology platform strategy is not well received by customers, if competitors develop superior technology, or if our solutions have significant defects, thisconsider competitive solutions. This could have an adverse ~~impact~~effect on our reputation, business, financial position, profit, and cash flows.

~~Cybersecurity Risks~~Our cloud offerings might be subject to a security attack, become unavailable, or fail to perform properly.

~~Undetected security flaws~~The software used in our cloud portfolio is inherently complex and any defects in product functionality, system stability, or data center operations that cause interruptions in the availability of our application portfolio could result in the following:

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

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. Because of the large amount of data that we collect and manage, it is possible that hardware failures, defects in our software, or errors in our ~~proprietary~~ systems could result in data loss or ~~those~~corruption, or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. Furthermore, the availability of our ~~third-party service and software providers may~~cloud applications could be ~~exploited~~interrupted by ~~other persons, which could damage SAP or our customers and significantly impact our financial position, profit, cash flows, and reputation.~~

Our core processes, such as software development, sales and marketing, customer service, financial transactions, and cloud services rely on our IT infrastructure and applications. Malicious software, sabotage, cyber incidents, natural disasters, ora number of factors, including customers’ inability to access the Internet, the failure of ~~an underlying technology (such as the Internet) could cause an outage of~~ our ~~infrastructure, which could lead~~network or software systems due to ~~a substantial denial of service and ultimately to production downtime, recovery costs, and customer claims. This could have a significant negative impact on our business, financial position, profit,~~human or ~~cash flows.~~

~~We are to a substantial extent dependent on the exchange of a wide range of information over our publicly available infrastructure. Specifically, our products and services, including~~other error, security breaches, or variability in user traffic for our cloud ~~offerings, rely on this infrastructure and our~~ applications. ~~We have implemented a number of measures designed to ensure the security of our information, IT~~

resources, and other assets. Nonetheless, unauthorized users could gain access to our systems through cyber-attacks and steal, use without authorization, and sabotage our intellectual property and confidential data. Any breach of our IT security, misuse, or theft could lead toAdditionally, any loss of ~~production,~~the right to ~~recovery costs,~~use hardware purchased or ~~to litigation brought by customers or business partners, which~~leased from third parties could ~~have a significant negative impact on our business, financial position, profit, cash flows, and reputation.~~

~~There is a danger of industrial espionage, cyber-attacks, misuse, or theft of information or assets, or damage to assets by trespassers~~result in delays in our ~~facilities~~ability to provide our cloud applications until equivalent technology is either developed by us or, ~~by people who have gained authorized access~~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 ~~our facilities, systems, or information. Such cybersecurity breaches, misuse, or other disruptions could jeopardize~~additional risks in the area of security ~~of information stored in~~ and ~~transmitted through our computer systems~~data protection, as well as the ~~computer systems~~potential for breached service-level agreements by partners.

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 only use specific and/or local data centers. However, 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 may include personally identifiable information regarding users, our reputation could be damaged, our business may suffer, local data protection and privacy laws or regulations might be breached, and we could incur significant liability.

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 customers, service providers, or business partners. Such misuse could potentially lead to the leakage of confidential information, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes, and supply shortages. This could lead to significant claims for damages against us. Additionally, despite testing prior to their release, our products may contain security flaws, particularly when first introduced or when new versions are released. Because technologies used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Actual or alleged defects could expose us to product liability claims and warranty claims, and harmcloud applications, our reputation could be harmed and ~~that~~we could ~~impact our future sales of products and services.~~

Our products include security features that are intended to protect the privacy and integrity of our customers’ data. We devote significant resources to training our personnel and addressing security vulnerabilities throughlose customers.

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engineering more secure products, continuously enhancing security and reliability features in our products and systems, deploying security updates to address security vulnerabilities, and improving our incident response time. In addition, we have implemented a variety of defense mechanisms intended to safeguard our infrastructure. Examples are firewalls, antivirus software, intrusion detection systems, and high-availability landscapes — including our development and quality infrastructures. We adhere to several best practices, many of which are regularly certified. However, we cannot guarantee that these measures will be adequate to prevent serious impairment of our business operations.

~~A data security breach could have a significant negative impact on SAP and our customers.~~

SAP products and services, including those used by our customers on the Internet, rely on our IT infrastructure and applications. Unauthorized users could gain access to our systems through cyber-attacks and introduce backdoors or steal, use without authorization, and sabotage our intellectual property and confidential data. A breach of our IT security could lead to loss of production, to recovery costs, or to litigation brought by customers or business partners, which could have a significant negative impact on our business, financial position, reputation, profit, and cash flows.

We continuously employ IT security programs to manage identified risks and monitor whether these measures, including firewalls, intrusion detection and anti-virus applications are adequate to prevent serious impairment of our business operations as the method and variety of cyber-attacks are rapidly escalating and changing. Additionally, as noted in the description of the previous risk, we adhere to several certified best practices.

~~Other~~ Operational Risks

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 ~~utilize~~use certain technologies in the future.

We ~~continue to~~ believe that we will increasingly be subject to intellectual property infringement claims as the number of products in our industry segment grows, as we acquire companies with increased use of ~~third party~~third-party code including open source code, ~~and~~ as we expand into new industry segments with our products, resulting in greater overlap in the functional scope of ~~products.~~products, and as non-practicing entities that do not design, manufacture, or distribute products increasingly assert intellectual property infringement claims.

Any claims, with or without merit, and negotiations or litigation relating to such claims, could preclude us from utilizing certain 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.~~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.

Software includes many components or modules that provide different features and perform different functions. Some of these features or functions may 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.

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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 may 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 may require us to make freely accessible under open source terms ~~a product~~one of ~~ours~~our products or non-SAP software upon which we depend.

In addition to open source, SAP continues to expand its participation in standards organizations and increase the use of standards in its products. Participation in standards organizations may require licensing of SAP’s intellectual property to contributors to the standard or to all standards implementers, including competitors, on a nondiscriminatory 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. This could further reduce our ability to use intellectual property related to standards. Use of patents inadvertently licensed through standards could expose SAP to third-party claims. Consequently, compliance with open source or certain standards could have a material negative impact on our business, financial position, profit, and cash flows.

Claims and lawsuits against us could have ~~a material negative impact~~an adverse effect on our business, financial position, profit, cash flows, and reputation.

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 ~~negatively impact~~hinder our ability to conduct our ~~business.~~business and could have an adverse effect on our reputation, business, financial position, profit, and cash flows.

The outcome of litigation and other claims or lawsuits is intrinsically uncertain. Management’s view of the litigation may 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 ~~could result in a material negative impact on our business, financial position, profit, cash flows, and reputation.~~

~~For more information, see~~are the ~~discussion of our legal liability risks in~~basis for the ~~Notes~~lawsuit-related provisions we set up according to the ~~Consolidated Financial Statements section, Note (24).~~IFRS.

We might not acquire and integrate companies effectively or successfully and our strategic alliances might not be successful.

To expand our business, we have in the past made acquisitions of businesses, products, and technologies. WeSuch acquisitions have increased in size and in strategic importance for SAP, and we expect to continue to make ~~such~~ acquisitions in the future. Management’s negotiation of potential acquisitions and alliances and integration of acquired businesses, products, or technologies demands time, focus, and resources of management and of the workforce. Acquisitions ~~carry many additional~~of companies, businesses, and technology expose us to unpredictable operational difficulties, expenditures, and increased risks. These risks include, among others:

The selection of the wrong integration model for the acquired company

The failure to integrate the acquired business and its different business and licensing models

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Failure to successfully integrate acquired technologies or solutions into SAP’s solution portfolio and strategy in a timely and profitable manner

The failure to integrate the acquired ~~technologies or products with our current products~~company’s operations across SAP’s different cultures, languages, and ~~technologies~~local protocols, all within the constraints of applicable local laws

The failure to meet the needs of the acquired company’s customers and partners in the combined company

The diversion of management’s time and attention from daily operations

The loss of key personnel of the acquired business

Material unknown liabilities and contingent liabilities of acquired companies, including legal, tax, accounting intellectual property, or other significant liabilities that may not be detected bythrough the due diligence process

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~~Item 3~~

~~Debt incurrence or significant cash expenditures~~Legal and regulatory constraints (such as contract obligations, privacy frameworks and agreements)

Difficulties in implementing, restoring, or maintaining internal controls, procedures, and policies

~~Negative impact~~Practices or policies of the acquired company that may be incompatible with our compliance requirements

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, ~~human resource,~~HR, and other administrative systems and coordination of the acquired company’s research and development (R&D), sales, and marketing functions

~~Legal and regulatory constraints~~Debt incurrence or significant cash expenditures

~~Practices or policies of~~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 ~~that may be incompatible with our compliance requirements~~

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 may have ~~a significant negative impact~~an adverse effect on ~~operating margins~~our business, financial position, profit, and ~~profit.~~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 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 may not be successful in overcoming these risks and we may therefore not benefit as anticipated from acquisitions or alliances.

We may not be able to obtain adequate title to, or licenses in, or to enforce, intellectual property.

Protecting and defending our intellectual property is ~~key~~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, ~~and rights of authorship, taking certain action~~implementing measures to stop copyright and trademark infringement, entering into licensing, confidentiality, and ~~nondisclosure~~

non-disclosure agreements, and deploying protection technology. Despite our efforts, ~~there can~~we might not be ~~no assurance that we can~~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 ~~may~~might be vulnerable to disclosure or misappropriation by employees, partners, or other third parties. ~~There can also be no assurance that third~~Third parties ~~will not~~might independently develop technologies that are substantially equivalent or superior to our technology. ~~Also, it may be possible for~~Finally, third parties tomight 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 ~~a significant negative impact~~an adverse effect on our competitive ~~position~~ and ~~our~~ financial ~~position,~~positions, and result in reduced sales. Any legal action we bring to enforce our proprietary rights could be costly, distract management from day-to-day operations, and lead to claims against us, which could have a significant negative impact on our business, financial position, profit, and cash flows. Such actions by us could also involve enforcement against a partner or other third party, which may have ~~a significant negative~~an adverse effect on our ability, and our customers’ ability, to

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use that partner’s or other third parties’ products. In addition, the laws and courts of certain countries may not offer effective means to enforce our intellectual property rights. This 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.

The key cybersecurity risks currently applicable to SAP include state-driven economic espionage as well as competitor-driven industrial espionage, and criminal activities including, but not limited to, cyber-attacks and “ mega breaches” against on-premise software, hosted, and cloud services. This might result in, for example, leakage 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 expose our business operations and 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.

We may not be able to protect our critical information orand assets or to safeguard our business operations against disruption.

~~As a global software business, we are to a substantial extent~~SAP is highly dependent on the exchange of a wide range of information across our global operations and on the availability of ~~the infrastructure~~our infrastructure. With regard to our physical environment, we ~~use. In 2011, we implemented a number of additional measures designed to ensure the~~face several key security ~~of our~~

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~~information, IT resources,~~risks such as industrial and/or economic espionage, serious and organized crime, and other ~~assets. Nonetheless, there is still a danger of industrial espionage, cyber-attacks,~~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 ~~authorized~~unauthorized physical access to our facilities, systems, or information. ~~Any misuse, theft, or breach of security~~These could have an adverse effect on our business, financial profile, profit, and cash flows.

Our insurance coverage might not be sufficient and uninsured losses may occur.

We maintain insurance coverage to protect us against a ~~significant negative impact~~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 may incur losses that may be beyond the limits, or outside the scope, of coverage of our insurance and that may 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.

~~Our insurance coverage may not~~ Finally, there can be ~~sufficient to prevent claim settlements from adversely impacting our business,~~no assurance of the financial ~~position, profit, and cash flows.~~

We continue to maintain and manage insurance coverage against a diverse portfolio of risks. Our objective is to ensure that financial effects of occurrences are excluded or minimized to the extent practicable at reasonable cost. Despite these measures, certain categories of risks are still not currently insurable at reasonable cost. Even if we obtain insurance, our coverage may be subject to exclusions that limit or prevent our indemnification under the policies. Further, we cannot guarantee the ability of the insurance companies to meet their ~~liabilities from claims. If these risks materialize, it may have a negative impact on our business, financial position, profit, and cash flows.~~claim payment obligations.

We ~~may~~could incur significant losses in connection with venture capital investments.

WeThrough Sapphire Ventures (formerly SAP Ventures), our consolidated venture investment funds, we plan to continue investing in new and promising technology ~~businesses through our subsidiary SAP Ventures.~~businesses. Many ~~of these enterprises currently~~such investments initially generate net losses and require additional ~~capital outlay~~expenditures from their investors. Changes to planned business operations have, in the past affected, and ~~also~~ may in the future affect, the performance of companies in which ~~SAP~~Sapphire Ventures holds investments, and that could ~~negatively affect~~have an adverse effect on the value of our ~~investments. Moreover, for~~investments in Sapphire Ventures, which could have an adverse effect on our business, financial position, profit, and cash flows. Furthermore, tax ~~purposes, the use~~deductibility of capital losses and ~~impairments of~~impairment in connection with equity securities isare often restricted ~~which may adversely affect~~and could therefore have an adverse effect on our effective tax rate.

ITEM 4. INFORMATION ABOUT SAP

Our legal corporate name is SAP ~~AG.~~SE. SAP AGSE is translated in English to SAP ~~Corporation.~~European Company (Societas Europaea, or “SE”). SAP ~~AG, formerly known as SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in der Datenverarbeitung, was incorporated under the laws of the Federal Republic of Germany in 1972.~~SE changed its legal form from a German stock corporation (Aktiengesellschaft) to a European Company (SE), and its name from “SAP AG” to “SAP SE”, with effect from July 7, 2014. Where the context requires in the discussion below, SAP AG SE also

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refers to our ~~predecessors,~~predecessor or previous legal forms and names, as the case may be, i.e. Systemanalyse und Programmentwicklung GbR(1972-1976) ~~and~~, SAP Systeme, Anwendungen, Produkte in der Datenverarbeitung GmbH (1976-1988)~~. SAP AG became a stock corporation (Aktiengesellschaft)~~, “SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in ~~1988.~~der Datenverarbeitung” (1988 – 2005) and “SAP AG” (2005 – 2014). Our principal executive offices, headquarters and registered office are located at Dietmar-Hopp-Allee 16, 69190 Walldorf, Germany. Our telephone number is +49-6227-7-47474.

As part of our activities to reduce the number of legal entities in the SAP group, in ~~2011~~2014 we integrated certain subsidiaries into the following significant SAP subsidiaries: SAP (Schweiz) AG, SAP (UK) Limited, SAP France, SAP America, Inc., SuccessFactors, Inc., SAP Brasil Ltda, and SAP ~~(Schweiz) AG.~~Australia Pty Ltd.

For a (i) description of our principal capital expenditures and divestitures and the amount invested (including interests in other companies) since January 1, ~~2009~~2012 until the date of this report and (ii) information concerning our principal capital expenditures and divestitures currently in progress, including the distribution of these investments geographically and the method of financing, see “Item 4. Information About SAP —– Description of Property —– Capital Expenditures.”

OVERVIEW OF THE SAP GROUP ~~OF COMPANIES~~

~~Celebrating its 40th year~~Founded in ~~business~~1972, SAP today is the world’s leader in ~~2012,~~application and analytics software for enterprises in terms of market share and the market leader in mobile enterprise management. Further, SAP is the ~~world leader in~~ enterprise ~~applications in terms~~cloud company with the greatest number of ~~software and software-related service revenue,~~users and the ~~world’s third-largest independent software manufacturer based on market capitalization.~~fastest-growing major database company. Our continued growth over more than four decades is attributable to relentless innovation, a diverse portfolio, and our ability to anticipate ever-

changing customer requirements. With more than ~~183,000~~282,000 customers in over ~~130~~180 countries, the SAP Group includes subsidiaries in ~~every~~all major ~~country~~countries and employs more than ~~55,000~~74,400 people.

Our company’s culture puts our customers’ success at the center of everything we do. With Run Simple as our operating principle, we focus on helping our customers master complexity and run their businesses better, which is the most intractable challenge facing business today.

SAP is headquartered in Walldorf, Germany; our legal corporate name is SAP SE. The corporation is listed on the Frankfurt Stock Exchange as well as several regional stock exchanges in Germany and the New York Stock Exchange in the United States. At the end of 2014, our market capitalization was €71.6 billion. SAP is a member of Germany’s DAX, the Dow Jones EURO STOXX 50, and the Dow Jones Sustainability index.

We derive our revenue from fees charged to our customers for the use of our cloud solutions and for licensing of on-premise software products and solutions. Additional sources of revenue are support, professional services, development, training, and other services.

As of December 31, 2014, SAP SE controlled directly or indirectly a worldwide network of 287 subsidiaries in more than 180 countries to distribute our products, solutions, and services. Distributorship agreements are in place with independent resellers in many countries. For more information, see the Strategy and Business Model section.

Our subsidiaries perform tasks such as sales and marketing, consulting, research and development, cloud delivery, customer support, training, or administration. For a complete list of subsidiaries, associates, and other equity investments, see the Notes to the Consolidated Financial Statements section, Note (35).

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The following table illustrates our most significant subsidiaries based on total revenues as of December 31, 2014:


Name of Subsidiary	Ownership %		Country of Incorporation	Function
Germany
SAP Deutschland SE & Co. KG, Walldorf		100	Germany	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
Rest of EMEA
SAP (UK) Limited, Feltham		100	Great Britain	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
SAP (Schweiz) AG, Biel		100	Switzerland	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
SAP France, Paris		100	France	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
S.A.P. Nederland B.V., s-Hertogenbosch		100	The Netherlands	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
United States
SAP America, Inc., Newtown Square		100	USA	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
SAP Industries, Inc., Newtown Square		100	USA	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
SuccessFactors, Inc., San Mateo		100	USA	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
Ariba, Inc., Sunnyvale		100	USA	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
Concur Technologies, Inc., Bellevue¹⁾		100	USA	Sales & Marketing, Consulting, Research and Development and Administration
Rest of Americas
SAP Brasil Ltda, São Paulo		100	Brazil	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
Japan
SAP JAPAN Co., Ltd., Tokyo		100	Japan	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration
Rest of APJ
SAP Australia Pty Limited, Sydney		100	Australia	Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration

⁽¹⁾	The inclusion of Concur Technologies, Inc. is based on annual revenues including revenues predating its acquisition by SAP on December 4, 2014.

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STRATEGY AND BUSINESS MODEL

Our Vision and Mission

Our vision is to help the world run better and improve people’s lives. Our mission is to help our customers run at their best. To fulfill our mission, we apply our Run Simple operating principle to help customers run their businesses simpler and master complexity, which is the most intractable challenge businesses face today. We do this by delivering technology innovations that we believe address the challenges of today and tomorrow without disrupting our customers’ business operations.

For more than 40 years, we have managed highly advanced, mission-critical business processes that enable entire industries. We continue to deliver sophisticated solutions for 25 industries and 12 lines of business in a simple manner. It is our challenge to do the most sophisticated things for our customers, yet in simple ways.

Our Goals for Sustained Business Success

We have strong ambitions for sustainable business success, both for our company and for our customers. We believe the most important indicators to measure this success comprise both financial and non-financial indicators: growth, profitability, customer loyalty, and employee engagement.

Growth: SAP uses various revenue metrics to measure growth. We expect full-year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of €1.95 billion to €2.05 billion at constant currencies (2014: €1.10 billion). Further, we expect full-year 2015 non-IFRS cloud and software revenue to increase by 8% to 10% at constant currencies (2014: €14.33 billion). Looking beyond 2015, we have updated our 2017 ambition. By 2017, SAP’s rapidly growing cloud subscriptions and support revenue is expected to be close to software license revenue and is expected to exceed software license revenue in 2018. In 2017, we expect non-IFRS cloud subscriptions and support revenue to reach a range of €3.5 billion to €3.6 billion in 2017. Non-IFRS total revenue is expected to reach €21 billion to €22 billion in 2017. Further, we have also introduced high-level 2020 ambitions with 2020 non-IFRS cloud subscriptions and support revenue expected to reach €7.5 billion to

€8.0 billion and total revenue is expected to be in a range of €26 billion to €28 billion.

Profitability: SAP expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion to €5.9 billion at constant currencies (2014: €5.64 billion). We expect non-IFRS operating profit in a range of €6.3 billion to €7.0 billion in 2017 and in a range of €8 billion to €9 billion in 2020.

Customer loyalty: SAP has used Customer Net Promoter Score (NPS) as a key performance indicator to measure customer loyalty since 2012. As we gather experience with the metric and as our business evolves, we expanded our customer base when conducting the 2014 assessment to better reflect our business completely. In addition to our on-premise customers, in 2014, for the first time we included Ariba, SuccessFactors, and Sybase customers in the survey. Therefore, the 2014 Customer NPS score is not fully comparable to the prior year’s score.

In 2014, we achieved a global Customer NPS of 19.1% (2013: 12.1%). This very positive score exceeded our 2014 target of 16%. We aim to achieve a Customer NPS score of 24% in 2015.

Employee engagement: We use the employee engagement index to measure motivation and loyalty of our employees, how proud they are of our company, and how strongly they identify with SAP. We saw a solid increase in our score in 2014 (2014: 79%) compared to 2013 (2013: 77%) and remain committed to achieving a score of 82% in 2015.

These four goals affirm our commitment to innovation and sustainability, and help us deliver on our vision and mission.

In addition to primary key performance indicators (KPIs), which directly measure our performance on our four goals, we manage a number of secondary performance indicators, which influence the primary KPIs in a variety of ways. Our integrated report seeks to clarify some of those relationships, for example, the link between our energy consumption and our profitability.

Our main goals are presented with more detail throughout the report.

For more information on our strategic goals, see the Performance Management System; Expected Developments; Customers; and Employees sections.

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~~Business Activity~~Our Strategy: THE Cloud Company powered by SAP HANA

As described above, complexity has become a significant challenge to business. With our history and ~~Organizational Structure~~focus on software innovation, we believe SAP is uniquely positioned to tackle the challenge of complexity for our customers by enabling them to Run Simple. We are realizing the potential of Run Simple through our strategy to become “THE cloud company powered by SAP HANA.” Together, SAP HANA and SAP Cloud powered by SAP HANA equal Run Simple.

SAP HANA simplifies IT landscapes, technology, and business models. By moving most of our applications and analytics to the SAP HANA platform, we are simplifying the solutions we can offer our customers. We further simplify how customers consume our solutions by bringing them onto our cloud – SAP Cloud powered by SAP HANA. The cloud can offer a better user experience while radically simplifying business processes.

We will focus on three key initiatives to deliver on our commitment to Run Simple:

Simplify consumption: We continue to streamline and simplify consumption of our portfolio of products. Our focus will remain on solutions specific to 25 industries and 12 lines of business. We will support our customers with a mix of public cloud, managed cloud, and on-premise capabilities through a world-class platform based on SAP HANA.

Simplify business processes: At the foundation of our innovation and strategy is SAP HANA. With SAP HANA as the common platform, we help our customers dramatically accelerate the speed of their business by radically simplifying their IT stack and enabling smarter and faster business processes.

Simplify user experience: With SAP Fiori we provide a holistic and consistent consumer grade user experience based on modern design principles and across lines of business, tasks, and devices.

We see enormous potential to increase our share of our customers’ overall IT spend. Through simplification, customers can dramatically reduce their expenditures on hardware and services, shift the savings to innovation, transform their businesses, and create positive societal impact.

We aim to better innovate and grow by:

Building simple, yet sophisticated applications by lines of business and industries that deliver superior customer experience, coverage of end-to-end processes, and insights

Continuing to invest in SAP HANA as an industry-leading platform for innovation and promoting SAP HANA Cloud Platform as a world-class platform as a service (PaaS)

Continuing to be the world’s leading business network, connecting businesses, devices, and people to drive unparalleled collaboration and productivity

For example, by enhancing their efficiency, we help customers cope with resource scarcity and reduce their energy usage and emissions. By partnering with our banking customers, we help them bring banking services to the “unbanked,” thereby creating opportunity for people seeking to enter the modern economy. Through software focused on healthcare, education, and public services, we help create a positive social impact by enhancing people’s quality of life. In all of these ways, our solutions are advancing our vision to help the world run better and improve people’s lives.

Our Business ~~Activity~~Model

Our ~~core~~vision and mission also unlock our ability to create positive economic, environmental, and social impact. As we help our customers tackle complexity and run at their best, they contribute to the world’s economies, create jobs, and unleash the potential of their employees. As we help them become more efficient, they can mitigate their environmental footprint. And as we help them run their businesses simpler, they free up space for innovation, creating opportunities for people and communities.

To realize our vision, SAP provides business solutions to customers throughout the world based on our deep expertise in business processes across industries. Through our customers – which represent 98% of the top 100 most valued brands in the world, according to the annual ranking from Interbrand – we can increase our ability to create value.

Playing this role for our customers requires us to deploy several key types of capital. First, we rely on financial capital provided by our investors. But

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what truly enables our success is ~~selling licenses for software~~the intellectual and social capital of our employees. They are the gateway to our knowledge, expertise, and business relationships. For this reason, engaged, highly skilled, and agile employees are central to our business model and success.

Our direct sales organizations drive most business development. Sales go-to-market strategies are established at the global level, and then adapted and executed by regional subsidiaries. Our customer-facing employees, in close collaboration with sales support and marketing, drive demand, build pipeline, and enhance relationships with customers within our target industries. Our marketing efforts cover large enterprises as well as small and midsize enterprises. We believe our broad portfolio of solutions and ~~related~~ services enables us to ~~help companies~~meet the needs of customers of all sizes ~~better manage industry-specific~~ and ~~line-of-business processes.~~across industries. We will amplify our efforts in the digital channel through additional e-commerce and digitally native offerings that further enable a low-touch or no-touch customer journey.

Our extensive ecosystem provides scalability to meet the demand for SAP ~~core solutions, which cover standard business applications~~innovation and ~~technologies,~~ provide customers with a ~~stable, consistent solution suite~~wide selection of third-party competencies. We have developed an independent sales and support force through independent value-added resellers. We have also established partnerships with hardware and software suppliers, systems integrators, and third-party consultants. For more information, see the Partner Ecosystem section.

Historically, our sales model was focused on charging a one-time, upfront fee for a perpetual license to our software that ~~allows~~was typically installed at the customer site. In addition, the customer usually concluded a maintenance contract that covered support and software updates. As we have seen customer preferences evolve, we are increasingly delivering our solutions in the cloud, which we believe is a simple and efficient software consumption model. Our cloud solutions are offered through a subscription-based software-as-a-service (SaaS) model. Depending on the solutions offered, the customer pays either usage-based or periodic fees to use our software. This software is installed at an SAP or an SAP partner location, and the customer accesses the software over the Internet.

To help companies invest in SAP solutions and the associated services and hardware, the SAP Financing service offers customers payment plans optimized for maximum economic benefit. It can help preserve liquidity, provide an alternative to

credit from customers’ existing banking relationships, and balance their budgetary priorities – while giving them bethe flexibility to choose the best possible solution.

By executing on our strategy, SAP contributes to the creation of holistic, long-term value for society in a number of ways. SAP’s greatest strength in making environmental impact comes through the solutions we deliver. For example, our software enables our customers to have more efficient and ~~agile, make decisions~~sustainable supply chains or provide greater transparency of energy consumption and emissions.

We also apply our expertise in ~~real time,~~business processes across industries to direct our innovations to the world’s greatest challenges, such as the social and environmental strains posed by a rapidly expanding global middle class. Our goal is to create long-term value by providing solutions that not only address the current challenges faced by our customers, but also those of the future. In this way, we see our role moving beyond the creation of new ~~value~~and efficient solutions: We want to fundamentally help change how people use software, conduct business, and live their lives. This objective underscores how SAP can create its greatest impact through the use of our solutions by more than 282,000 customers worldwide.

At SAP and within our ecosystem, we support job creation and economic prosperity through demand for highly qualified workers to develop, sell, implement, and enhance our software for our customers. Our solutions also enable customers to provide greater learning and talent development opportunities for their ~~own~~employees. In addition, SAP solutions, such as those for manufacturing, are designed not only to ensure health and safety during the production process, but also to increase the quality of the resulting consumer products, which impact millions of people throughout the world.

SEASONALITY

Our business has historically experienced the highest revenue in the fourth quarter of each year, due primarily to year-end capital purchases by customers. Such factors have resulted in 2014, 2013, and 2012 first quarter revenue being lower than revenue in the prior year’s fourth quarter. We believe that this trend will continue in the future and that our total revenue will continue to peak in the fourth quarter of each year and decline from that level in the first quarter of the following year.

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Unlike our on-premise software revenues, our on-premise support revenues and cloud subscription and support revenues are less subject to seasonality.

PRODUCTS, RESEARCH & DEVELOPMENT, AND SERVICES

Steering Our Customers Through Unprecedented Change

The world is operating in a time of accelerated change that has created new complexity, challenges, and opportunities for both our customers and SAP. Digitalization represents more than a trend but a paradigm shift, one that is shaping whole industries, business models, and sources of competitive advantage.

Software is at the heart of this transformation – for many organizations, it is the new differentiator. We recognize that enterprise software today must do far more than run business processes. It is an enabler for navigating complexity and unlocking innovation. Throughout our history, we have helped our customers manage other major paradigm shifts impacting their business, from the massive expansion of the Internet to globalization. Today, we are supporting their transition to a cloud-based world, as increasingly complex business problems demand simple solutions.

We help customers Run Simple by innovating with the SAP ~~technologies — unwired by~~HANA platform as our foundation. This strategy combines ease of use and flexibility with sizeable computing power. Through the capabilities of SAP HANA, we can now enable a real-time enterprise; we can leverage Big Data to achieve deeper insight; and we can empower users through the ease of mobile apps, ~~simplified~~so that people can access what they need securely and flexibly.

These developments – similar to packaged software in the 1980s and client/server architecture in the 1990s – signal a new wave of innovation at SAP. Wherever they are on their journey, we are helping our customers reinvent how they do business while making the transition seamless and providing a holistic and consistent user experience. As we aim to become “THE cloud company powered by ~~cloud solutions,~~SAP HANA,” we are going far beyond incremental change to achieve radical

simplification – enabling our customers to stay ahead of trends, make better decisions faster, and ~~fueled by in-memory computing —~~propel innovation.

SAP HANA

Nothing signifies the changes we are ~~driving value~~making at SAP – and ~~growth~~ for our customers ~~partners,~~– more than SAP HANA. The platform holds the power to simplify both the user experience and ~~entire markets.~~the overall IT landscape, creating a smaller data footprint, increased system throughput, and easier data processing and operation. For this reason, we have evolved SAP HANA from a database to a full business platform that will act as the basis for our products going forward.

The SAP HANA platform combines database, data processing, and application platform capabilitiesin-memory. By providing advanced capabilities – such as predictive text analytics, spatial processing, and data virtualization – on the same architecture, it further simplifies application development and processing across Big Data sources and structures.

To ~~meet customers’ variety~~take our capabilities to the next level, we built the open SAP HANA Cloud Platform, which is the embodiment of ~~preferences~~our SAP Cloud powered by SAP HANA strategy. The cloud platform enables ease and flexibility in building, extending, and integrating business applications – available to all SAP partners, customers, and third-party developers.

Realizing that one size does not fit all, we are providing a bridge for ~~delivery~~our customers in the transition to the cloud. We also offer to manage mission-critical software such as SAP Business Suite and ~~adoption,~~ SAP ~~provides solutions from its portfolio on premise,~~Business Warehouse as well as custom SAP HANA applications in our cloud data centers.

Our overarching goal is to create the broadest integration offering in the industry where customers can connect SAP and third-party software across heterogeneous environments by leveraging application lifecycle management to reduce IT complexity. Our customers can enhance the power of an integrated landscape with a refreshing user experience across multiple devices and interfaces. At the same time, all core applications can be built and run in the cloud or on premise, giving developers a powerful tool to build applications with flexibility and ~~on device deployments — all underpinned by our SAP HANA. SAP solutions enable customers to orchestrate data and business processes across all operating environments.~~efficiency.

~~Organizational Structure~~

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~~Our legal corporate name is SAP AG. SAP is headquartered in Walldorf, Germany. Our company is structured along the following areas:~~

Item 4

~~Technology~~Applications

As the market leader in enterprise application software, we offer end-to-end solutions specific to

25 industries grouped in six industry sectors and ~~Innovation Platform~~12 lines of business, localized by country and for companies of any size.

~~Products and Solutions~~
Industries Lines of Business
Industry Sector
Industry Portfolio
Asset Management
Commerce
Finance
~~Global Customer Operations~~
~~Chief Operations Office~~
~~Global Finance and Administration~~
Human Resources
Manufacturing
Marketing
R&D/Engineering
Sales
Service
Sourcing and Procurement
Supply Chain
Sustainability
Consumer
SAP ~~markets~~for Consumer Products
SAP for Life Sciences
SAP for Retail
SAP for Wholesale Distribution
Discrete manufacturing
SAP for Aerospace & Defense
SAP for Automotive
SAP for High Tech
SAP for Industrial Machinery & Components
Energy and ~~distributes its products and~~natural resources
SAP for Chemicals
SAP for Mill Products
SAP for Mining
SAP for Oil & Gas
SAP for Utilities
Financial services ~~primarily through a worldwide network of local subsidiaries, which are licensed to distribute~~
SAP ~~products to customers in defined territories. Under their respective license agreements, the subsidiaries pass on to the~~
~~licensor a certain percentage of the revenue generated by distributing the products. Distributorship agreements are in place with independent resellers in some countries.~~
~~For a complete list of subsidiaries, associates, and other equity investments, see the Notes to the Consolidated Financial Statements section, Note (34).~~
Our management reporting breaks our activities down into four segments: Product, Consulting, Training, and Sybase. For more information about our segments, see the Notes to the Consolidated Financial Statements section, Note (29).
~~Mission and Strategy~~
~~Market~~
~~With customers in more than 24 industries, from small businesses and midsize companies to large enterprises, in countries across the world,~~ for Banking
SAP ~~has traditionally served a global market~~ for ~~enterprise software and~~Insurance
Public services ~~that is subject to the same trends that drive the world economy. Despite ongoing macroeconomic uncertainty and volatility, numerous market forces are changing the business and technology landscape:~~
SAP for Defense & Security
SAP for Healthcare
SAP for Higher Education & Research
SAP for Public Sector
Services
• SAP for Engineering, Construction & Operations
SAP for Media
SAP for Professional Services
SAP for Sports & Entertainment
SAP for Telecommunications
SAP for Travel & Transportation
~~Globalization:~~    ~~Emerging economies that continue to experience fast growth, outpacing more established markets~~

•
~~“Internet of Things”:~~    ~~Increasing connectedness through mobile devices — both people-to-people connectivity and machine-to-machine connectivity~~
Today, we are delivering solutions that simplify how applications are built, consumed, and deployed. Our SAP Business Suite powered by SAP HANA software optimizes business-critical processes for companies from large enterprises to small businesses. Building on SAP HANA, we are
providing an innovative suite of business applications unifying analytics and transactions into a single in-memory platform, thereby helping customers to dramatically simplify their IT landscape.
•
~~Consumerization of IT:~~    ~~Increasing demand for enterprise IT to deliver the same user experience as consumer technology~~
•
~~“Big Data”:~~    ~~An increase in data produced and consumed in unprecedented volumes — doubling every 18 months according to International Data Corporation (IDC)~~
•
~~Business and social collaboration networks:~~    ~~Increasingly distributed, yet~~

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~~highly networked workforces connected through social network technologies~~
At the same time, we are building functional innovations that serve each line of business and industry to address the specific and evolving needs of our customers, for example:
Human capital management:    On-premise solutions from SAP, as well as cloud solutions for human resources from SuccessFactors, an SAP company, help HR organizations transform business strategies into measurable business outcomes by simplifying HR processes and helping increase employee engagement. We combine global and industry expertise with a unique combination of key HR enablers: a modern user experience, talent and core HR applications, embedded content, and analytics.
Customer engagement and commerce:     Solutions from SAP and software from hybris, an SAP company, serving the commerce, marketing, sales, and service lines of business, enable business-to-business (B2B) and business-to-consumer (B2C) companies everywhere to provide real-time, consistent, contextual, and relevant experiences to their customers regardless of channel or device. SAP solutions for customer engagement and commerce are a direct response to the fact that the traditional focus of customer relationship management (mostly sales force automation) is no longer enough to satisfy the demands of a customer-driven market.
Finance:    In 2014, we launched the SAP Simple Finance solution to address the critical need for flexibility in the most complex finance processes and IT landscapes. Created through close collaboration with our customers, SAP Simple Finance is a comprehensive solution of finance applications that decreases runtime for financial analysis, delivers instant insight, and is easy to use and consume. Continuing to leverage SAP HANA as a driver of simplicity, we launched SAP S/4HANA (SAP Business Suite 4 SAP HANA) in early 2015, a next-generation and innovative business suite that will redefine business processes and drive business value for our customers.
Freedom, Flexibility, and Elegant Design
As our customers adapt to shifting business conditions, we also provide them with the freedom and flexibility of our mobile solutions. These solutions enable companies to better serve customers and provide employees with secure
access to important tools and data anywhere, anytime – using their mobile devices. Mobile solutions from SAP allow our customers to:
Innovate rapidly to deliver user-centric capabilities for employees, consumers, and partners
Lower their total cost of ownership by streamlining operations and processes
Protect themselves against security risks and challenges at the device, app, and content levels
Regardless of how our customers consume our software, we are building applications using the SAP Fiori user experience (UX), which delivers a personalized, responsive, and simple UX. Applying modern and consistent design principles, SAP Fiori is the new face of SAP software. We also offer a portfolio of UX services, including design, rapid deployment, and custom development, to enhance customer engagement.
Business Network
The cloud has profoundly changed the way people interact, and this impact will only grow as enterprises connect and collaborate in new ways with their global networks of customers and partners. We believe these new networks are transforming how companies do business, and we are helping to lead this wave of innovation.
With our sourcing, procurement, and travel and expense management solutions from SAP; Ariba, an SAP company; Fieldglass; and Concur Technologies, we now run the world’s largest business network, connecting more than 1.7 million companies. SAP internal analysis shows that businesses conduct more than US$700 billion in commerce on the network annually, and it holds the potential to alter the B2B landscape. Procurement leaders can achieve cost savings, integrate sourcing and procurement operations, improve supplier collaboration, and realize purchasing compliance. Combining our innovations and core applications, the network is helping companies interact outside of silos and gain far greater visibility into different parts of their operations.
By digitizing business transactions and facilitating the sharing of information across global value
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chains, we are providing customers with a greater ability to connect with others and take action. As a result, we are facilitating far more than simple transactions but helping companies tap into information and insights, incorporate them into their business processes, and make better real-time decisions. Customers can easily identify and connect with high-quality suppliers, collaboratively enhance supplier performance, transact seamlessly with intelligent rules, and drive additional savings through dynamic discounting.
Our vision for the network extends to managing all of a company’s business expenditures. Therefore, we have moved from a procurement network to a business network to a network of networks that includes all types of parties: suppliers, B2B partners, logistics providers, financial service providers, and individuals, as well as travel agents.
Analytics
SAP HANA has increased the efficiency with which our customers can use analytics to drive business decisions. SAP HANA is able to bridge the historical divide between transactions and analytics that had hindered real-time decision making. Now transactions and analytics can be combined into a singlein-memory platform, allowing customers to access a “single source of truth” for real-time planning, execution, reporting, and analysis on very large volumes of data.
With the amount of data growing exponentially, our software is helping customers have access to immediate, actionable intelligence, thereby simplifying their business processes. They can retrieve available data in real time. Our analytics offerings deliver outstanding business value by providing insights to better manage every aspect of the enterprise – from integrated planning and metrics monitoring to risk and compliance.
Namely, analytics solutions from SAP comprise:
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~~To be successful in this climate, businesses must use technology~~Enterprise business intelligence:    Engaging companies more fully with information, with solutions that enable users to add new information and ~~real-time analytics to better conduct business~~see updates in real time ~~get closer~~
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Agile visualization:    Bringing data to ~~their customers, and innovate with more competitive and relevant products~~life in ~~each market and customer segment they serve.~~real time through intuitive visualizations
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~~Business and Technology Trends~~
Market dynamics require enterprises to evaluate their business models and opportunities for sustained growth and greater efficiency. SAP customer companies of all sizes continually evaluate, expanding into new geographies, approaches for engaging new customer segments in emerging markets and elsewhere, entering into adjacent vertical industries, and increasing networking at the enterprise level. Businesses and public sector organizations are also addressing customers’ and constituents’ needs for transparency and openness by empowering them with greater access to information.
Three major technology trends — in-memory computing, enterprise mobility, and the cloud — have triggered change in the world of IT and SAP is playing a crucial role in accelerating that change. Those trends are changing not only the way enterprises adopt and deploy business technology, but also fundamentally the way that work is done. The pervasiveness of the cloud and mobile devices, together withAdvanced analytics:    Combining the power of ~~in-memory computing, allow people to connect~~predictive processing with intuitive modeling and ~~collaborate wherever and whenever they choose. At the same time, they can access and analyze large amounts of~~advanced data visualization
Research and Development
From the earliest days of SAP, we have worked diligently to stay ahead of trends and develop new solutions to meet the challenges faced by our customers and those they serve. Our research and development (R&D) is a global effort that centers on bringing together the creative ideas and talents of our customers as well as valued partners from industry, technology, the public sector, and academia. Our focus on co-innovation ensures that we keep up with groundbreaking research and ultimately turn it into solutions that create a real-world impact.
In 2014, we made organizational changes to enhance collaboration between our R&D teams, thereby speeding up innovation. Rather than operating independently, research and development is now embedded in our development organization, so that the exploration and execution of ideas are happening side by side, with each informing the other.
Our product development organization is truly global, with the majority of our R&D teams located in 14 SAP Labs locations in 12 countries. Research teams are also based throughout the world and span a network across multiple locations.
We follow a dual and complementary research and innovation approach. First, topic-focused research teams within existing development units drive innovation projects. These teams focus on improving existing products as well as delivering short-term innovation with a time horizon of up to two years.
Second, we established a dedicated central unit that pursues both short-term and long-term strategic innovation. This unit supports projects with a time horizon of two to five years by providing a protected environment for business ideas and focusing on a limited number of new solutions. It also develops the future generation of high-growth opportunities in areas such as the Internet of Things or personalized medicine. With a time horizon of five to eight years, these projects focus on technologies, applications and new business models that do not fit the
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product portfolio but hold the potential to open up new opportunities, markets, and user groups for SAP.
SAP Innovation Center locations, based in Potsdam and Walldorf, are part of this organization. They combine the creativity and agility of a startup culture with the backbone of a world market leader in enterprise applications. As the future end users of our innovations, our customers and partners are involved during the entire runtime of projects and come from industries and companies of all sizes, from longstanding SAP customers to early stage startups with no current SAP footprint. With a focus on the SAP HANA platform and our cloud and mobile solutions, these innovation centers strive to open up new application areas for SAP software, ranging from personalized cancer therapy to smart services that leverage the connectivity of things with the Internet.
Regardless of the setting, SAP embeds methods such as design thinking into all projects and researches innovative approaches to generate and evaluate applications, technologies, and business ideas.
R&D Investment
SAP’s strong commitment to R&D is reflected in our expenditures: In 2014, we increased our R&D expense (IFRS) slightly by €49 million, to €2,331 million (2013: €2,282 million). We spent 13.3% of total revenue on R&D in 2014 (2013: 13.6%). Our non-IFRS R&D expense as a portion of total operating expenses declined slightly from 18.9% to 18.5% year-over-year.
At the end of 2014, our total full-time equivalent (FTE) count in development work was 18,908 (2013: 17,804). Measured in FTEs, our R&D headcount was 25% of total headcount (2013: 27%). Total R&D expense not only includes our own personnel costs but also the external cost of works and services from the providers and cooperation partners we work with to deliver and enhance our products. We also incur external costs for translating, localizing, and testing products, for obtaining certification for them in different markets, patent attorney services and fees, strategy consulting, and the professional development of our R&D workforce.
Patents
As a market leader in enterprise applications, SAP actively seeks intellectual property protection for innovations and proprietary information. Our software innovations continue to strengthen our market position in enterprise solutions and services. Our investment in R&D has resulted in numerous patents. SAP holds a total of more than 6,800 validated patents worldwide. Of these, 916 were granted and validated in 2014.
While our intellectual property is important to our success, we believe our business as a whole is not dependent on any particular patent.
Service and Support
Many of our customers are experiencing profound shifts in how they use technology and run their businesses. Our service and support professionals focus on helping them navigate these changes with greater speed, efficiency, and impact. A
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prime example is our recognition that customers have different needs and goals to innovate and make use of the cloud, while preserving their investment to date. Regardless of their path, we have a broad offering to chart their course. Our teams regularly partner with customers to create a road map, removing obstacles and building a business case for migration.
In 2014, we began a significant transformation of our professional consulting service and support teams, bringing them together into one organization called Global Service & Support. Our goal with the SAP ONE Support program is to provide customers with an integrated support experience regardless of whether their landscape is on premise, in the cloud, or a hybrid of the two. Customers also benefit from a simplified experience with SAP with the next generation of premium support engagements.
In addition, SAP ONE Support is designed to enhance SAP Enterprise Support services to simplify the customer experience. This includes a multitude of aspects, such as removing underlying complexity typically associated in managing end-to-end support across hybrid landscapes, helping customers choose how to migrate to the cloud, and driving innovation while building on existing on-premise investments. We simplify customer interactions with us through a single touch point for all services across the entire solution landscape, creating a unified experience across multiple channels as well as expanding opportunities for co-innovation.
Our new SAP ONE Service approach goes far beyond the traditional consulting model. We combine strong engineering skills with experienced program management and the domain capabilities of consulting. In a cloud-based environment, this framework is critical to support our customers in building and runningend-to-end solutions for the future, mapping their technology strategy to their business strategy, and prioritizing the steps to migrate to SAP HANA and the cloud.
An important element of our organization is education. Each year, more than 500,000 individuals are trained by SAP Education, making it one of the largest IT training organizations in the world. In 2014, we updated SAP Learning Hub, providing customers with an even easier-to-use, cloud-based platform that allows for flexible, individualized training. Winner of the prestigious Technology Services Industry Association (TSIA)
Star Award in the fall of 2014, this platform solution further simplifies the user experience of SAP software.
SAP has been a frontrunner in the adoption of Massive Open Online Courses (MOOCs) for use in an enterprise context. openSAP is SAP’s enterprise MOOC provider delivering 18 courses through the end of 2014 free of charge on topics such as SAP HANA, cloud, user experience, sustainability, and business innovation. openSAP has reached over 500,000 course enrollments with more than 170,000 individual learners.
In addition, the SAP University Alliances program brings SAP to over 2,000 universities in more than 80 countries, and aims to develop highly-qualified graduates with critical skills for the21st-century workforce. In partnership with SAP’s six University Competence Centers around the world, universities gain access to an ever-expanding range of SAP software and curriculums, enabling faculty to help students better connect business and IT concepts to practice.
ACQUISITIONS
SAP views acquisitions as strategic investments in people, technologies, and growth. In 2014, SAP focused on acquisitions that would enhance its position as a cloud and business network company and advance its mission of helping customers Run Simple.
New Acquisitions
In May, SAP acquired Fieldglass, a leading provider of cloud solutions for procuring and managing contingent labor and third-party services. Combined with the collaborative, network-based procurement capabilities of Ariba and the human resources expertise of SuccessFactors, the Fieldglass acquisition uniquely positions SAP to deliver a platform for businesses to manage their entire workforce – both temporary and permanent staff.
In June, SAP acquired SeeWhy, a leading provider of cloud-based behavioral target marketing solutions to help businesses increase customer engagement and drive revenues.
In December, SAP acquired Concur Technologies. With more than 23,000 customers and 25 million active users in over 150 countries, Concur is the leader in ~~seconds. We strongly believe that~~ the convergence of these technologies has the potential to create enormous business value and power new business models both in developed countries and emerging markets. We further believe this will change cultures — both within companies and externally among their customers, partners, and others across their business ecosystems.
~~Connectivity of people and devices through mobile technology is increasing at an~~
exponential rate. There are more than five billion mobile subscribers in the world today, and in the future, we will be able to connect hundreds of billions of objects — automobiles, household appliances, machines — in real time. This machine-to-machine connectivity or Internet of Things will drive enormous business value and we are already seeing examples of this in smart utility grids and smart buildings.
The explosion of Big Data in an increasingly connected world where people and devices exchange information continues at an unprecedented rate. Enterprise data volume is increasing by over 50% to 60% every year while IT budgets are growing at only 5%. Our customer businesses of all sizes and in all industries must increase their focus on analyzing volumes of data for new insights, greater customer intimacy, and competitive advantage. In this environment, in-memory computing delivers a dramatic change in computing, analytics, and data storage. It leverages advances in multicore processing and more affordable servers, storing information in the main memory rather than in relational databases, to greatly accelerate processing times. It will fundamentally disrupt the traditional IT stack comprised of hardware, middleware, and software, where the disk-based relational database is the bottleneck. We believe that advances in in-memory computing will become the new backbone of next-generation business applications and enterprise technology.
To increase efficiency and lower costs of ownership, enterprises are rapidly embracing cloud computing and virtualization, as well as changes in data storage through in-memory computing, to rethink the way they invest in information technology. These advances are simplifying and removing layers from the traditional technology stack. SAP is helping drive change as customers reduce the amount they spend on hardware and services in favor of investment in software-based innovation. Increasingly, customers are looking to embrace social networking and collaboration technologies as a part of their cloud road map. We are

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~~developing a new category of cloud applications with a people-centric approach to help customers speed up decisions, strengthen customer relationships,~~multibillion dollar travel and ~~drive growth.~~
Enterprise mobility continues to transform the way work is done and businesses are run. Smartphones already outsell PCs. By 2013, mobile devices will be the primary method of Internet access worldwide. A mobile workforce is seen as becoming more productive, since employees can now do their job any time, from any location, rather than being tethered to their office desktop. The pervasiveness of mobile technology, together with advances in the cloud and analytics, empower workforces and consumers in new ways, regardless of location. This way, people can respond quickly and intelligently to timely information about events and their surroundings.
expense management field. With the ~~continuing threat~~addition of ~~climate change and resource price instability, businesses are also paying close attention~~Concur’s corporate travel ecosystem to the ~~strategic importance of managing sustainability.~~
~~Vision~~Ariba and ~~Mission~~
~~Our vision is to help~~Fieldglass networks, our business network – the world run better and improve people’s lives. We have a great opportunity to reshape the IT industry and transform business networks. In the next decade, we see a major demographic shift that will drive an exponential demand for natural resources. Businesses and governments will need a new category of sustainable solutions to cope up with this demand and provide high value services to their consumers and citizens. With our vast experience in resource management and our new technology innovations, we can power these new types of solutions.
Our mission is to help every customer become a best-run business. We do this by delivering new technology innovations without disruptions: Enterprise mobility will transform consumption of IT; in-memory technology will simplify the IT stack and drive high value applications; and the cloud delivery of IT solutions will become mainstream. By
~~leveraging our strong base in applications and analytics as well as new technology innovations, we can offer solutions that make our customers run better.~~
In summary, we measure our success based on our customers’ success: When our customers win, we win. We are committed to optimizing the business value of our customers’ IT investments, lowering their total cost of ownership (TCO), and helping them innovate for the future. Our passion for growth and trusted partnerships with our customers, employees, shareholders, and members of our open ecosystem remains resolute.
~~Strategy for Growth~~
Our strategy for growth seeks to increase SAP’s market leadership in existing and new market categories. The market trends in mobile, big data, cloud computing, and social networking present a unique opportunity for SAP to deliver expanded business value through a concerted innovation strategy focused on these market trends that delivers these innovations without disruption to our customers’ business and further leverages their existing investments in SAP software. To that end, as the information technology industry undergoes a structural shift away from investments in hardware toward increased investments in new software-based innovation, particularly in the area of cloud, mobile, and in-memory technology, SAP wants to position itself at the forefront of accelerating that change.
~~As a result, compared to 2010, we are doubling our addressable market for 2015 by focusing on five market categories:~~
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~~Applications:~~    With SAP Business Suite software, SAP is already recognized as the undisputed market leader in business applications and enterprise resource planning (ERP). Customers can rapidly deploy standardized core business processes and functions with line-of-business and industry-specific applications across 24 industries and 11 lines of business.
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As SAP innovates and grows these industry-specific and line-of-business-focused core applications, we continue to improve the overall end-user experience for our customers and lower TCO. We are injecting in-memory computing innovation into SAP Business Suite, starting with the controlling profitability analysis accelerator “powered by SAP HANA.” The accelerator has been available since the fourth quarter of 2011 as a rapid-deployment solution that is installed and ready to use within twelve weeks. At the same time, we have extended maintenance for SAP Business Suite to 2020, an extraordinarily long commitment to our customers by industry standards.
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~~Analytics:~~    SAP is an acknowledged global market leader in analytics. We continue to augment our market-leading portfolio of analytics solutions, including our governance, risk, and compliance (GRC) solutions and our enterprise performance management (EPM) solutions, with the power of SAP in-memory technology. The first major effort was the SAP NetWeaver Business Warehouse component powered by SAP HANA introduced in the fourth quarter of 2011. Empowered with real-time business insight that can be delivered in milliseconds with SAP HANA — individuals, teams, and business networks can quickly anticipate or predict change, uncover new opportunities, and take immediate, bold, decisive action.
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~~Mobile:~~    As the global market leader in mobile solutions, SAP intends to continue to drive the unwiring of the enterprise and simplify the consumption of enterprise data and applications. Customers benefit by having the freedom to operate “anytime, anywhere, on any device” with mobile apps that
ease access to enterprise processes and information. IT units and partners can create new or mobilize existing apps with the Sybase Unwired Platform. We continue to enable our customers to manage mobile devices, and develop and deploy mobile applications to reach their employees and end consumers. SAP delivered 50 mobile apps by the end of 2011 with partners adding several hundred more. The company will continue to innovate in this important area of growth.
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~~Cloud:~~    Given the importance of the cloud for applications delivery, we strive to be a leading player in the cloud market. Acquiring SuccessFactors will help toward achieving that objective. We are aiming for innovations in the cloud that our customers can use in every line of business. We aim to redefine the cloud market beyond software-as-a-service (SaaS), including line-of-business solutions and ERP cloud solutions and platform-as-a-service (PaaS); targeting new areas such as collaboration services (including both people-centric applications and business network solutions); information services (including business intelligence in the cloud and data services); and mobile services (especially mobile device management in the cloud). Our strategy is aimed at ensuring that customer businesses of all sizes, subsidiaries, and lines-of-business can fulfill their unique requirements with cloud and virtualization tools and services and on-demand solutions, add-ons and industry-specific extensions from SAP, partners, or their own developers.
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~~Database and technology:~~    ~~SAP NetWeaver provides the technology foundation for SAP applications. In addition, it delivers a portfolio of enterprise technology to extend~~
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applications to reach more people and to adopt new processes, devices, and consumption models. We strive to be a leading player in the database market. While SAP will continue to offer customers a wide range of choice, the attractive Sybase database portfolio
including SAP Sybase Adaptive Enterprise Server (ASE) and SAP Sybase IQ, combined with the unprecedented power and potential of SAP HANA, presents significant opportunity to address the market for structured and unstructured data.
Our groundbreaking SAP HANA platform allows customers to take advantage of in-memory computing across all of these market categories. Installed on top of an existing infrastructure and working with available data, they can use it to query multiple types of data sources in real time, at speeds and volumes like never before. As a result, customers gain immediate business insight to transform
~~organizations and achieve fundamental performance improvement compared to existing systems in their IT landscape.~~
SAP’s momentum in the five market categories will be fueled by our strategy of innovation without disruption, co-innovation with our ecosystem, and ability to orchestrate technology consistently across the enterprise.
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~~Accelerate Innovation Without Disruption~~
While we focus on innovations in our five market categories, our strategy is to deliver innovation with minimum disruption. We will ensure this by reducing TCO for customers adopting our innovations in these areas through rapid-deployment solutions that draw on our years of experience implementing solutions acrossworld’s largest – already transacts more than 24 industries and application virtualization. SAP’s commitment to accelerated innovation cycles and extended maintenance for SAP Business Suite software offers consistency, predictability, and innovation without disruption to customers’ IT environments. SAP stands out among vendorsUS$700 billion in ~~its ability to enable enterprises to become more agile and efficient while freeing up resources to innovate, better connect with customers, and grow in today’s global market.~~
~~Expand Our Ecosystem~~
Through our open ecosystem, we offer customers maximum choice, value, and the best possible technology through the power of co-innovation from SAP and our partners. SAP continues to invest in our broad partner ecosystem to drive development and delivery of innovative software solutions that address industry-specific and local market needs. We will offer development toolkits on our solutions that will allow our partners to extend our current solutions as well as build new solutions.
~~Orchestration~~
Orchestration allows our customers to link on-premise, cloud, and mobile solutions in a cost-effective and consistent manner. Based on SAP’s strategic role in providing the technology backbone for our customers, we are uniquely positioned to define the blueprint and the architectural guidelines that bring together these various IT elements. Through orchestration, we provide master data management, business process management, and unified lifecycle management across all SAP solutions at low TCO.
~~Competition~~
SAP continues to be the world leader in applications, analytics, and mobile, and aims for leadership in the cloud and database and technology market categories. Our primary competitors in applications are IBM, Oracle, and Microsoft. Compared with SAP, those companies derive a much higher portion of their revenue from other segments of the IT market, such as hardware (Oracle, IBM); operating systems, and desktop applications (Microsoft); and IT services (IBM). Key competitors in analytics include IBM (Cognos), SAS Institute, and Oracle (Hyperion). The mobile market is still highly fragmented. Competitors with offerings that overlap with ours include Antenna and Spring Wireless (an SAP Ventures portfolio company). In the cloud market, we face line-of-business players such as Salesforce.com, Workday, and NetSuite. Oracle has also become a competitor in this market through its acquisition of RightNow and its planned acquisition of Taleo. Principal competitors in the database and technology business include IBM, Microsoft, and Oracle. Our offerings also compete with those of specialized vendors in various local markets and subsegments.
~~Sustainability~~
Sustainability is core to the overall business strategy at SAP and contributes to our vision to make the world run better and thus improve peoples’ lives. We approach sustainability as the holistic management of social, environmental, and economic risks and opportunities for increased near-term and long-term profitability — and as a responsibility to our stakeholders. We are committed to fully integrating sustainability into our strategy and business model and in this way we pursue a corporate strategy that is sustainable rather than a stand-alone sustainability strategy.
SAP software, including the SAP ERP application and other SAP Business Suite applications, has helped organizations become more profitable, resource-efficient, and accountable over the past 40 years. These
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applications can also help solve difficult sustainability business problems such as dynamic energy management. Our solutions are helping provide greater levels of collaboration for sustainability among stakeholders and greater access to enterprise-level computing for many of those previously excluded from market participation.
~~In addition, SAP provides a dedicated line of solutions for sustainability with the essential power to integrate at the center.~~
~~But to deliver our vision, we recognize there are important associated responsibilities and dependencies. The most relevant of these for sustainability efforts include:~~
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~~Human capital management~~ ~~— Ensuring that we have access to the very best talent within our company and throughout the ecosystem to develop, deliver, and use our technologies~~
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~~Intellectual capital management~~ — Ensuring that we organize the most effective research and development capability so we can deliver the highest quality pipeline of new products, solutions, and services while developing and safeguarding our corporate reputation and brand equity
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~~Security and privacy~~ ~~— Ensuring that we design and deliver our solutions to afford the very highest levels of data security and privacy control~~
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~~Business conduct~~ ~~— Ensuring that we conduct our business activities to the highest levels of ethical behavior, as set out in our Code of Business Conduct and other company policies~~
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~~Climate and energy~~ ~~— Ensuring that we reduce and minimize the environmental impact of our solutions, services, and corporate operations~~
~~Financial Management Strategy~~
~~The primary aim of our financial management is to maintain liquidity in the SAP~~
Group at a level that is adequate to meet our obligations at all times. Finance may be required to proactively sustain liquidity at that level. 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).
~~PORTFOLIO OF SOFTWARE AND SERVICES~~
Working closely with customers and partners worldwide, SAP is committed to a product and services strategy that enables customers to use enterprise application software wherever and whenever they need. Whether deployed on premise, in the cloud, or on a mobile device, SAP solutions work together as one, as “networked solutions” that orchestrate business processes and information meeting the unique needs of businesses and business networks of all sizes.
Our product portfolio builds on a scalable, powerful technology platform. We can use this base to accelerate product innovation and co-innovate with partners and customers to offer new and complementary solutions. We deliver a combination of innovation in analytics, cloud, and mobile — accelerated by transformational advances in in-memory computing — on a stable technology foundation and in rapidly deployable, easily adoptable, industry-specific packages. SAP solutions empower people everywhere with the freedom to work in real time, anytime and anywhere, enabling companies to shape innovation in their industries and lead their markets. In taking care to safeguard our customers’ technology investments, we also strive to enhance their business value. This way, customers can adopt innovation at their own pace, without disruption, for their specific industry needs.
Security is integral to our commitment to delivering high-quality software, and we endeavor to enhance security in the development of our products and services and by acquiring new technologies and expertise.
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~~Software Portfolio~~
~~Applications~~
~~As we innovate and grow our core applications and industry solutions, we continue to focus on improving the overall end-user experience for our customers.~~
~~SAP Business Suite~~
SAP Business Suite software enables companies to optimize their business and IT strategies with an integrated portfolio of business applications and solutions designed to work with other SAP and non-SAP software. The software increases visibility across departments and business silos, improving the ability to make clearer decisions while improving operational efficiency and increasing the flexibility needed to address change.
~~SAP Business Suite applications can be deployed on a modular basis to address particular business needs within specific timelines, targeting business processes with the highest potential impact.~~
~~Customers can incrementally enhance these applications through enhancement packages that they receive through our support offerings, alleviating the need for costly and time-consuming upgrades.~~
~~The core applications that make up SAP Business Suite are the following:~~
The SAP ERP application helps optimize business and IT by reducing IT complexity, increasing adaptability, and delivering more business value at a lower cost than traditional ERP solutions. It supports mission-critical business processes including finance, human capital management, asset management, sales, and procurement, and other essential corporate functions. SAP ERP enables industry-specific processes with functionality that can be activated selectively, keeping the application core stable for high performance.
The SAP Customer Relationship Management (SAP CRM) application manages and monitors sales, service, and marketing processes while supporting key back-office activities. SAP CRM enables multichannel customer interactions with, for example, smartphones, the Internet, and social media and also offers a dedicated communications infrastructure that helps connect all people anytime, anywhere.
The SAP Product Lifecycle Management (SAP PLM) application manages, tracks, and controls product-related information over the complete product and asset lifecycle and across the extended supply chain, while freeing the product innovation process from organizational constraints.
The SAP Supplier Relationship Management (SAP SRM) application supports key procurement activities including demand-driven sourcing, centralized contract management, and interaction with suppliers through multiple channels. SAP SRM helps accelerate and optimize the entire procure-to-pay cycle by enabling integrated processes and enforcing contract compliance.
The SAP Supply Chain Management (SAP SCM) application helps adapt company-specific supply-chain processes to the rapidly changing competitive environment and enables the transformation of traditional supply chains with linear, sequential processes into open, configurable, and responsive supply networks.
~~Industry Solutions~~
SAP supports companies in 24 industries with solution portfolios that enable best-practice industry processes. These portfolios are the result of decades of trustful co-innovation with industry-leading customers that have been
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sharing their best practices to help customers, suppliers, and partners in their business networks to optimize the joint network performance. We also provide IT value through orchestration across on-premise and cloud solutions and on any device, providing flexibility, security, and scalability on a single IT platform. The benefits of orchestration are:
~~Solutions that are more easily consumed through implementable steps~~
~~Quick ROI through rapid-deployment solutions~~
~~Secure, reliable operations tuned for the individual business~~
~~SAP Rapid Deployment Solutions~~
SAP Rapid Deployment solutions combine preconfigured software and predefined services with content such as SAP best practices, templates, tools, and business user enablement, to fulfill specific business requirements at significantly reduced service-to-software ratios. By providing predictable pricing, scope, timelines, and outcomes, as well as by leveraging proven best practices from an extensive ecosystem of customers and qualified partners, SAP Rapid Deployment solutions make it easier to adopt solutions and reduce the implementation risk. Ready to run in typically 12 weeks or less, these solutions help lower the total cost of implementation and give customers immediate and tangible value.
~~Solutions for Small Businesses and Midsize Companies~~
SAP offers a number of targeted solutions for small businesses and midsize companies including the SAP Business All-in-One solution, SAP Business One application, and SAP BusinessObjects Edge solutions, which combine business management and business intelligence software. For those who want the benefits of large-scale, integrated business management applications without a complex IT infrastructure, the SAP Business ByDesign solution not only provides a modern cloud solution, but also a platform that customers can use to build their
own solutions. Like large corporations, 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 Business All-in-One~~
SAP Business All-in-One solutions are designed for small businesses and midsize companies with 100 to 2,500 employees. SAP Business All-in-One solutions support integrated business processes that cover everything from financials, procurement, inventory, manufacturing, logistics, product development, human resources, sales, services, and marketing. At any time, these ERP applications can be extended with additional functionality to scale as business needs change. SAP Business All-in-One solutions are available from qualified partners that deliver more than 660 industry-specific solutions in 55 countries. SAP provides the deployment tools and methodologies that partners need to deliver fast, predictable implementation with low risk, low cost, and rapid time to value. Customers can choose between an on-premise deployment and hosted deployment purchased on a subscription basis.
~~SAP Business One~~
The SAP Business One application is designed for small businesses with fewer than 100 employees that have outgrown their accounting-only systems and are looking to streamline their operations with a single unified solution. The application supports virtually the entire business — with support for financials, sales, customer relationships, inventory, and operations to help small businesses boost efficiency and accelerate profitable growth. SAP Business One can be tailored and extended to meet specific business needs.
~~SAP Business ByDesign~~
~~See the Cloud section, below.~~
~~SAP BusinessObjects Edge~~
~~See the Analytics section, below.~~
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~~Solutions for Sustainability~~
With the continuing threat of climate change and resource price instability, businesses are paying close attention to the strategic importance of managing sustainability for both long-term and short-term profitability. Leaders taking a proactive and strategic approach can enjoy first-mover advantage in innovation for new lines of business as well as cost and risk reduction and improved reputation.
SAP is not only working to become a more sustainable company, but we also provide a broad range of solutions to help our customers pursue a sustainable business strategy. We have designed sustainability solutions that fall into five key business demand areas: sustainability reporting and analytics, energy management, operational risk management, sustainable supply chain and products, and sustainable workforce. These include:
The SAP BusinessObjects Sustainability Performance Management analytic application that helps organizations more easily set sustainability goals and objectives, measure and communicate performance, and reduce data collection costs and errors
~~The SAP Carbon Impact OnDemand (See the Cloud section, below)~~
The SAP Environment, Health, and Safety Management (SAP EHS Management) application that addresses regulatory compliance and helps companies identify, manage, and mitigate EHS risks by taking an integrated approach to all aspects of risk and compliance
~~The SAP Manufacturing Integration and Intelligence (SAP MII) application that provides the tools and content to help customers track and identify opportunities for energy reduction in manufacturing~~
~~The SAP Advanced Metering Infrastructure (AMI) Integration for~~
Utilities, which helps optimize revenues and demand, enable more cost-effective customer service, and improve market efficiency. It also automates data exchanges for energy suppliers and infrastructure operators.
~~Analytics~~
~~SAP BusinessObjects Portfolio~~
The SAP BusinessObjects portfolio includes business intelligence and enterprise information management solutions that enable companies to provide trusted information to every member of a business network, helping them respond faster and make better-informed decisions. The portfolio also includes enterprise performance management and governance, risk, and compliance solutions, which help customers maximize profitability, manage risk and compliance, and optimize systems and processes. It also includes analytic applications designed to help business users reach strategic goals, deliver predictable results, and make sound decisions. Reflecting SAP’s commitment to openness and interoperability in heterogeneous software landscapes, the solutions are designed to integrate with data sources and systems from other providers as well as SAP Business Suite applications and other SAP BusinessObjects solutions.
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~~SAP BusinessObjects business intelligence (BI)~~ solutions enable users to interact with business information and obtain answers to ad hoc questions without advanced knowledge of the underlying data sources. Available in cloud, on-premise, and mobile deployment options, the software allows users to access data across all sources and formats and then delivers it as useful, consumable information. BI tools also help customers uncover trends and patterns, solve business problems, anticipate changes, and reach organizational goals.
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~~SAP BusinessObjects enterprise information management (EIM)~~ solutions help customers manage and enhance data integration, data quality management, and metadata management. Augmenting and leveraging EIM functions in the SAP NetWeaver technology platform, the solutions allow companies to build a trustworthy data foundation that supports both business and IT initiatives. Customers can access, integrate, move, or cleanse data — structured and unstructured — to deliver timely, unified information.
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~~SAP BusinessObjects enterprise performance management (EPM)~~ solutions help companies improve their control performance, organization agility, and decision making. The solutions support processes across multiple lines of business including finance, supply chain, and procurement, and include applications for strategy management; planning, budgeting and forecasting; financial consolidation; profitability and cost management; and spend and supply chain performance management.
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~~SAP BusinessObjects governance, risk, and compliance (GRC) solutions~~ ~~provide organizations with a proactive, real-time approach to managing governance, risk, and compliance across heterogeneous environments.~~
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~~SAP BusinessObjects analytic~~ applications address challenges in specific industries and lines of business. Co-created with customers and designed to work in virtually any environment, the applications provide the insight and best-practice support companies need to better understand risk, uncover opportunities, and make the right decisions to optimize their business. The applications, which can be deployed
~~quickly, are designed to work in virtually any IT system and deliver value to customers rapidly.~~
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~~SAP BusinessObjects Edge~~ solutions help midsize companies streamline and enhance their budgeting, planning and consolidation, and strategy management processes. These versatile solutions support flexible ad hoc reporting and analysis, dashboard-based data visualization, data integration, and data quality management.
~~Mobile~~
Enterprise information is now accessed more and more on the move, as mobile workers use smartphones and other devices to stay connected and productive both in and out of the office. Our customers and partners are mobile too.
The strategy employed by Apple and Google to launch smartphones for consumers won people over with an incredible user experience, mobile apps delivered by their ecosystem, and unprecedented information access. The move has consequently generated intense demand outside the consumer sphere, from businesses and their employees, based on their experiences with consumer applications. No longer satisfied with limited device choices and a few mobile apps to help them stay in touch and be productive, employees are now putting intense pressure on IT for change in two respects: The flexibility to choose devices and easy-to-use mobile apps. As such, IT needs to focus on infrastructure and security issues as well as the user experience.
In 2010, we acquired Sybase to broaden our mobility product portfolio. By leveraging enterprise mobility technology from Sybase together with our existing mobile solutions, we are enhancing our infrastructure, tools, and applications to be able to access data stored in SAP software from anywhere and on any device. This mobile platform is based on open standards; it runs on all major mobile operating systems and manages and supports all major device types.
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Sybase Unwired Platform enables SAP, customers, and partners to build mobile apps to extend existing applications, such as SAP Business Suite software, beyond the desktop to mobile devices. This approach makes it possible for customers to unlock business value from existing SAP software investments and deliver value to people everywhere.
~~We intend to help our customers extend their reach by:~~
~~Enabling business users to consume SAP software data and processes from different devices everywhere (mobile apps for business and productivity)~~
~~Providing business users with information from both inside and outside the enterprise so that they can make decisions based on a broad array of data~~annual transaction volumes today, according to ~~their individual use cases (analytical capabilities)~~
~~Helping business users to cooperate and optimize performance across a dynamic business network of people (collaboration tools)~~
~~Enabling partners, customers, and business users to extend the functionality of SAP software and build their own user experiences~~
~~Helping our customers reach their consumers through mobile apps that deliver a great user experience~~
~~In 2011, we delivered a number of mobile apps to customers (for example, SAP Travel Expense Approval, SAP CRM Sales, and SAP Retail Execution).~~
~~Cloud~~
Driven by technology advances in cloud computing and a rapid value business model, on-demand delivery of business solutions continues to be a viable option for customers of all sizes. We have embraced this shift and are delivering on our commitment to offer the right portfolio of highly strategic and reliable cloud
~~solutions that will interact and work with existing SAP software investments.~~
Cloud solutions from SAP leverage technologies such as collaboration and content services to offer new people-centric approaches to solving business problems. Our solutions are designed to take advantage of the inherently networked nature of the cloud model to allow people and businesses to collaborate within and across enterprise boundaries. Built on a well-orchestrated set of platform features, these solutions offer fast time to value and a low-risk deployment option to help ensure business success. Customers can also consume the innovations instantly without the need for on-site IT to manage the infrastructure.
The SAP Business ByDesign solution delivers a complete enterprise solution for small businesses, midsize companies, and large enterprise subsidiaries. This approach enables customers to focus on developing and growing the business while minimizing the need to build and operate IT systems. For SAP Business ByDesign, two new feature packs were released successfully in 2011. Customers can find new solutions from SAP and partners that enhance the SAP Business ByDesign solution in SAP Store, including add-ons, mash-ups, and extensions from SAP and partners.
The SAP Information Interchange OnDemand solution by Crossgate is another cloud offering. The solution delivers prebuilt business partner profiles that connect trading partners, enabling fast, efficient business-to-business (B2B) commerce and invoicing that improves how a customer’s partners are integrated — and how they share data. After establishing a one-time connection with trading partners for all relevant processes, customers can then instantly exchange related electronic documents for all types of materials, goods, and
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~~services using existing SAP applications.~~
SAP StreamWork application is a cloud-based collaborative solution that brings together people, information, and structure, with enterprise applications and business processes to deliver faster business results. With SAP StreamWork businesspeople can work within and between companies to solve problems, develop strategies, brainstorm, collect feedback, or drive decisions.
In addition to the solutions above, several cloud solutions targeting specific functional usage are also available, for example, SAP Sales OnDemand, SAP Sourcing OnDemand, SAP Carbon Impact OnDemand, and SAP BusinessObjects BI OnDemand.
~~Database and Technology~~
For all these layers to fit together, an orchestration layer that works across all applications within a customer landscape is required. Therefore, we plan to continue to invest in the areas of lifecycle management, master data management, and process orchestration. The goal is to continuously reduce the cost of ownership and support data consistency and process management across multiple layers of applications. In addition, we will invest in our technology portfolio in order to provide a technology foundation which powers all current deployment scenarios for applications, in whatever mode they are deployed (on premise, in the cloud, or on a mobile device). For example, the SAP NetWeaver technology platform continues to provide a stable foundation for SAP Business Suite and other SAP software. It enables enterprises to extend and optimize business processes orchestrated across delivery models. SAP NetWeaver delivers a modular set of functions to help reduce IT complexity and increase business flexibility across heterogeneous IT landscapes through open interfaces, middleware, and process management tools.
~~With SAP Sybase Adaptive Server Enterprise, customers have another database choice as one single source for support, maintenance, and lifecycle management.~~
Another key innovation in the SAP technology portfolio is in-memory computing. The SAP HANA platform, comprising the SAP HANA database and other components, is based on this technology and enables real-time analysis on large quantities of detailed data. This breakthrough technology is intended to be installed in a nondisruptive way, as a side-by-side attachment to other technology and applications, such as analytics, the SAP NetWeaver Business Warehouse (SAP NetWeaver BW) component, and SAP Business Suite software.
SAP NetWeaver BW is available with SAP HANA as an underlying in-memory-based database. Remarkable simplification, reduction in TCO, improved performance, and breakthrough analytics are just some of the benefits that can be realized by column-based storage with high compression and query performance. It is also possible to natively combine SAP NetWeaver BW data with real-time sourced data in data marts in SAP HANA. We plan to deliver additional applications that will run on SAP NetWeaver BW powered by SAP HANA.
~~SAP Services Portfolio~~
~~The SAP Services portfolio exists to help our customers derive value from their SAP solutions in a fast, cost-effective and predictable way.~~
We provide a holistic approach to the entire application lifecycle, incorporating a broad array of methodologies, tools, and certified partner offerings to help our customers gain value from their SAP investment while meeting their business needs. Tightly integrated with our development organization, services contribute to a closed customer-feedback loop to the development organization and end-to-end risk and quality management throughout the
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entire customer lifecycle. The SAP Services portfolio includes industry- and solution-focused services, business and IT transformation services, custom development services, support services, program management, project management and quality assurance, and education and certification.
~~We have aligned our services portfolio around the following categories:~~
~~High value services: Typically people-centric services in areas such as business transformation, industry-specific (for example, banking), and architecture-focused projects~~
~~Innovation services: Service offerings that are helping lead the market adoption of SAP innovations such as SAP HANA, mobility, and cloud offerings~~
Engineered services: Service offerings that are assembled to order to provide faster time to value and lower TCO with greater predictability, including our extensive portfolio of services for SAP Rapid Deployment solutions
~~We continue to offer services to address traditional projects, but increasingly we will look to our ecosystem to provide such offerings to our customer base.~~
SAP Services has a local presence in more than 50 countries and runs more than 70 training centers, seven global support centers, and 10 custom development centers in the Americas, Asia, and Europe. With approximately 21,000 SAP Services professionals around the world, customers’ needs can be met around the clock to support SAP solutions.
Our custom development and support services and Sybase customer support and services are categorized as software-related services, while the remaining services areas, provided by SAP Consulting, the SAP Education organization, Sybase Messaging, Sybase Consulting, and Sybase Education, are categorized as professional services.
~~Software-Related Services~~
~~SAP Custom Development~~
The SAP Custom Development organization develops customer-specific solutions and business functions on SAP technology covering the lifecycle of services to develop and support custom solutions at every stage. With an extensive network of experts across 10 development centers worldwide, SAP Custom Development helps extend, enhance, and optimize existing solutions or build innovative new applications according to customer needs. SAP Custom Development also develops focused business solutions to support the specific needs of various industries.
~~Support Services~~
SAP offers several options to support our customers’ business solution landscapes and their respective needs. Our support units offer a range of customer support services before, during, and after implementation of our software solutions. We provide around-the-clock technical support in every region. We also offer proactive, preventive support services to protect and enhance our customers’ investments in SAP technology and software.
SAP offers a comprehensive, tiered support model to customers worldwide. The offering includes SAP Enterprise Support and SAP Standard Support. Customers choose the option that best meets their requirements. However, the vast majority of customers choose SAP Enterprise Support. The expanded maintenance and support portfolio helps deliver choice, predictable pricing, and value for customers.
SAP Standard Support delivers support services to enable continuous and effective IT operations. This baseline level of support provides our customers with the services and tools to minimize the cost and risk associated with keeping IT systems up and running, including updates. SAP Standard Support ensures that customers’ SAP solutions run
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~~efficiently by delivering improvements, quality management, knowledge transfer, and problem resolution.~~
SAP Enterprise Support is comprehensive, proactive support and maintenance extending beyond our SAP Standard Support offering. It provides our customers with an application lifecycle management approach that can help them manage IT complexity and integrate solutions across their IT landscapes. As well as updates, for mission-critical processes the service provides continuous quality checks to analyze technical risks. We deliver the quality management methodology, processes, and tools needed to perform advanced testing and implement solution deployment, operations, and continuous improvement initiatives using the SAP Solution Manager application management solution.
The SAP MaxAttention support option expands SAP Enterprise Support, covering the entire lifecycle of an SAP solution in a tailored format for customers with a full range of services that help organizations safeguard complex solutions, plan for new releases and upgrades, and improve productive solution operations. SAP MaxAttention is designed to provide customers with our highest level of customer support built on a dedicated engagement model with a technical support advisor and service-level agreements, supported by long-term commitments delivered by the SAP Active Global Support organization.
SAP Safeguarding services help our customers mitigate the technical risks of an implementation, integration, migration, or upgrade project. They smooth the process of going live and help customers prepare for live use of the software. An on-site technical quality manager helps ensure that
~~customers receive the support they need, that knowledge transfer takes place, and that our customers improve the performance, data consistency, and availability of their IT solution from SAP.~~
The Sybase Customer Service and Support organization offers technical support for the Sybase family of products. It maintains regional support centers in Asia, Europe, Latin America, and North America, providing uninterrupted technical services around the world. Sybase users and partners have access to software fixes, technical information sources, and newsgroups on the Sybase support Web site.
Sybase Standard Support services include updates and new version releases that become available during the maintenance period. They are designed for high-quality around-the-clock support for critical issues, access to new releases, and online support services.
Sybase Enterprise Support services offer personalized high-availability support for companies with mission-critical projects. Services include priority access to the Enterprise Technical Team, proactive services, and other specialized options. Sybase Enterprise Support provides the highest priority of response times.
~~In addition, Sybase also offers some support service options geared towards partners and users, primarily for designated workplace level and tools products, and certain iAnywhere Solutions.~~
~~Professional Services~~
~~We offer two broad categories of professional services — consulting and education.~~
~~Consulting Services~~
~~SAP Consulting offers planning, implementation, and optimization services for~~
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~~business solutions. We are able to provide our services with a strong industry focus, and can also deliver solutions at functional or departmental levels. Our consultants engage in:~~
Business transformation activities such as executive advisory services, value partnerships, and business process and platform services. These support our customers in responding to business challenges in a rapidly changing business environment and bridging the gap that can exist between IT and the wider business
~~IT transformation services, seeking to reduce customers’ TCO with tangible business value accompanied by reduced effort and costs~~
~~Performance and insight optimization services providing analysis and modeling of business challenges to introduce innovative business processes~~
~~Business applications services providing highly engineered solutions to our customers’ application and analytical needs~~
Project and program management and risk management as well as quality assurance services across the solution landscape, including optimizing solutions following merger and acquisitions activities or divestiture of business units
By delivering our portfolio of services based on proven business processes with clearly defined cost and scope, we deliver faster, cost-effective value and greater predictability to our customers while at the same time lowering the services-to-software ratio.
In addition, the Sybase Professional Services organization offers customers comprehensive consulting, education, and integration services designed to optimize their business solutions using Sybase and products from other providers.
~~Education Services~~
The offerings of SAP Education assist SAP customers and partners with knowledge transfer related to SAP products and services. SAP Education offerings include training-needs analysis, certification assessments, learning software, and tools. We provide a consistent curriculum for learners around the world and deliver these offerings through a number of delivery models, including online e-learning, virtual live classroom, learning on demand, and classroom training. Every year, more than 300,000 individuals in the market are trained by SAP Education, making it one of the largest IT training organizations in the world.
Sybase provides a broad education curriculum allowing customers and partners to increase their proficiency in Sybase products. Basic and advanced courses are offered at Sybase education centers, and specially tailored customer classes and self-paced training are also available. A number of Sybase distributors and authorized training providers also provide education in Sybase products.
~~Sybase Mobile Services~~
The comprehensive Sybase Mobile Services portfolio ranges from mobile messaging interoperability to mobile content delivery and mobile commerce services, for operators, content providers, enterprises, and financial institutions.
~~We deliver advanced mobile services to our customers by addressing the complexities of the wireless ecosystem: Incompatible networks, messaging protocols, handsets, and billing systems.~~
Sybase 365 addresses operator services focused on Short Message Service (SMS), Multimedia Message Service (MMS), GPRS Roaming Exchange (GRX), and Internet Protocol Exchange (IPX) messaging interoperability between mobile operators worldwide. Messages are delivered through a secure operator-grade messaging platform, with
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advanced protocol conversion, routing, queuing, and transcoding capabilities. The interoperability service greatly simplifies the deployment and delivery of interoperator messaging over incompatible networks, protocol stacks, and handsets. Services include traffic analysis and detailed reporting and statistics. Sybase 365 operates two network operations centers to monitor our messaging service infrastructure, direct and monitor global maintenance and repair activities, and provide direct technical support to Sybase customers around the clock.
Sybase Enterprise Services provide mobile services for enterprises, brands, and content providers, enabling customers to monetize premium mobile content and deliver interactive services, mobile CRM, mobile advertising, and mobile marketing campaigns globally. Services include global billing, settlement, reporting, and analysis.
mCommerce Services provide an end-to-end platform covering mBanking, mPayments, and mRemittance, to both developed and emerging markets. Coupling this with our messaging platform and global reach (SMS and MMS), we are well positioned to enable mobile operators, financial institutions, and enterprises to realize the potential of mobile commerce.
~~RESEARCH AND DEVELOPMENT~~
Research and development are at the heart of SAP’s customer-focused innovation strategy. Led by SAP Research and SAP Labs, SAP’s research and development efforts channel the Company’s deep expertise and diversity to investigate new technology and develop new applications for delivering business value to current and future SAP customers.
~~Research~~
SAP Research is the global technology research and innovation unit of SAP. By exploring emerging IT trends, the group drives applied research and the incubation of promising projects while focusing on the business impact and contribution to the SAP portfolio. The business model of SAP Research is based on co-innovation with customers, partners, and other third parties; activities span from large-scale collaborative research projects with academic and industrial partners to specific innovation projects with individual customers. The best-validated results and technologies are further developed into prototypes and potential business opportunities within SAP.
SAP’s global research network consists of 19 locations worldwide and involves more than 800 partners from industry, academia, and governments as well as SAP customers. The group demonstrates its approach to co-innovation and applied research, among others, with a network of living labs and co-innovation centers. These sites provide hands-on, real-life settings to expand on trends and drive new prototypes as well as dedicated customer solutions. Contributing to talent development at SAP, SAP Research runs its own doctoral program that is attracting top candidates who wish to work on their theses in a real business context.
~~Significant initiatives by SAP Research in 2011 include:~~
•
~~Business Web initiative:~~    The “business Web” is envisioned as a cloud platform and business environment that offers a one-stop shop for applications, services, and content, as well as tools for rapidly developing and operating applications in the cloud. It combines SAP’s strength in business process management with the benefits of cloud computing and enterprise mobility. The business Web platform is being shaped together with
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partners and early adopters by working on real-world B2B scenarios from various industries. The project will continue in 2012, and a team of 80 researchers is currently working on the first prototypes.
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~~Future fleet at SAP:~~    In a field test from February to September 2011, this project offered over 500 SAP employees the chance to get behind the wheel of 27 e-cars charged solely with renewable energy at four SAP locations around Walldorf. SAP Research developed a software prototype to administer the e-cars and demonstrated that IT plays a key role in enabling electric mobility.
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~~Successful conclusion of the THESEUS/TEXO research project:~~    Funded by the German Federal Ministry of Economics and Technology, this project focused on developing software for the evolving Web-based service economy with semantic technology. Project results include the creation of the Unified Service Description Language, a platform-neutral language for describing services, making it easier to compare and trade services online.
~~Development~~
The SAP Labs network leverages the business and IT acumen of SAP and includes a distributed network of locations in high-tech centers across the globe that deliver local market-oriented solutions optimized for customer value. Each SAP Labs location has the flexibility of a small company as an integral part of the global network and each has a clear focus topic and area of responsibility. SAP Labs engage closely with universities, offering leadership talks, engineering courses, and exchange programs. They take part in outreach and corporate social responsibility programs such as the FIRST LEGO Leagues and work with local charities. Allied with SAP’s strong brand, SAP Labs’ engagement ensures that within their local ecosystems, SAP continues to be recognized as an employer of choice and that SAP attracts the best talent.
In 2011, SAP continued to make strides in introducing leaner, faster, and more efficient development across the Company. While more agile methods of development have been associated with companies of smaller size, SAP is among the first companies of its size and scale to adopt short development cycles, small teams with greater empowerment, and closer customer alignment.
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~~Research and Development Expenditure~~
Our strong commitment to research and development (R&D) is also reflected in our expenditures: In 2011, we increased our R&D expense by €210 million, or 12%, to €1,939 million (2010: €1,729 million). We spent
13.6% of total revenue on R&D in 2011 (2010: 13.9%). Our non-IFRS R&D expense as a portion of total operating expenses declined slightly from 20.0% to 19.9% year over year — a fact that demonstrates an increase in our efficiency.
The importance of R&D was also reflected in the breakdown of employee profiles. At the end of 2011, our total full-time equivalent (FTE) count in development work was 15,861 (2010: 15,884). Measured in FTEs, our R&D headcount was 28% of total headcount (2010: 30%). Total R&D expense includes not only our own personnel costs but also the external cost of works and services from the providers and cooperation partners we work with to deliver and enhance our products. We also incur external costs for translating, localizing, and testing products, for obtaining certification for them in different markets, patent attorney services, strategy consulting, and the professional development of our R&D workforce.
~~New SAP Offerings~~
~~New Applications~~
~~Cross-Industry SAP Business Suite Software~~
~~Through our enhancement packages for our core applications as well as new versions of~~
industry-specific applications, we have provided updates and enhancements for various functional areas of our SAP Business Suite software. These include the latest enhancement packages for SAP ERP, SAP Product Lifecycle Management (SAP PLM), SAP Customer Relationship Management (SAP CRM), and SAP Supplier Relationship Management (SAP SRM), as well as applications supporting supply network collaboration, supplier lifecycle management, extended warehouse management, asset retirement obligation management, sourcing and contract lifecycle management, transportation management, and a manager self-services add-on.
In addition, we are currently working on products and solutions that address the priorities of lines of business across multiple industries. Other key initiatives and areas of development include master data governance, commodity management, the visual enterprise, extending the business network, multichannel support, transportation management, and sustainability enhancements.
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~~In 2011, we launched a number of core applications for different lines of business, designed to help companies work as efficiently as possible:~~
~~SAP Web Channel Experience Management~~
Addressing companies’ need to deliver an integrated and consistent customer experience over the Web, SAP developed the SAP Web Channel Experience Management application. Launched in July 2011, it allows organizations to deploy easy-to-use Web shops, fully integrated with their back-end order management and inventory systems.internal analyses. In addition, this ~~next generation e-commerce solution brings together e-marketing, sales, online self-service, and social customer conversations on a single platform~~acquisition provides an opportunity for us to ~~provide a one-stop, synchronized Web customer experience.~~
~~SAP Commodity Risk Management~~
Companies can use the SAP Commodity Risk Management application to take suitable steps for coping with fluctuating commodity prices and mitigating currency risks, thereby helping safeguard their profitability, control materials costs, and comply with applicable regulations.
~~SAP Commodity Procurement~~
The SAP Commodity Procurement application provides end-to-end support for commodity buying processes and knits them tightly with quality management, settlement, and, most importantly, with risk management.
~~SAP Commodity Sales~~
The SAP Commodity Sales application helps companies contract at market prices and streamline billing. It supports automated provisional, differential, and final invoicing. Each SAP commodity management application is designed to support enterprise servicespower transactions that ~~help integrate them with other vendor’s applications.~~
~~SAP Business Suite Industry Solutions~~
~~SAP Billing for Telecommunications~~
In January 2011, we launched the integrated SAP Billing for Telecommunications package, designed to cover the widespread demands and service portfolios of telecommunications service providers. With this package, individual SAP offerings for rating, charging, invoicing, and financial management are combined on a flexible billing platform, offered in conjunction with analytics and a broad-based value management program. Building on the Highdeal and Sybase acquisitions, this solution marks a new step in enabling these customers to launch and monetize next-generation service offerings.
~~SAP Collaborative E-Care Management~~
Launched in November 2011, the SAP Collaborative E-Care Management application connects patients, care providers, and their families through medical monitoring software and mobile devices to better manage patients’ health with individualized treatment plans and educational content in real time.
~~SAP Social Services Management for Public Sector~~
Launched in February 2011, the SAP for Public Sector solution portfolio continues its innovation for distinct industry demands with the introduction of a new solution to help improve disbursement processes for monetary social benefits. The SAP Social Services Management for Public Sector package is designed for government agencies at the federal, state, and local level that are tasked with administering and approving monetary benefits as they relate to social services.
~~SAP Trade Promotion Optimization~~
The SAP Trade Promotion Optimization application, released in May 2011, deploys advanced modeling and predictive analytics to enable marketing and sales teams to systematically predict and optimize promotion outcomes, including revenue and profit, for both manufacturers and retailers.
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~~Solutions for Small Businesses and Midsize Companies~~
~~Enhancements to SAP Business One~~
Building on strong market acceptance, the SAP Business One application reached the milestone of 30,000 customers. By September 2011, 32,000 small businesses and midsize companies in over 100 countries were running SAP Business One. The new application features improvements that include enhanced integration technologies and support for mobility and social networking. New delivery options offer SAP Business One fully hosted and managed by selected SAP partners. Alternatively, starter packages provide preconfigured software enabling customers to go live in three to ten days.
~~Sustainability Solutions~~
~~SAP EHS Management~~
In September 2011, we added new risk assessment and incident management features to SAP EHS Management software. Companies in asset-intensive industries can go beyond compliance by implementing a closed-loop process to proactively assess and control workplace safety risks, avoiding costly incidents and improving operational efficiency. The new incident management functionality helps organizations learn from accidents and “near-miss” events, and take preventive actions to keep people, assets, and the environment safe.
~~SAP Product Safety Management OnDemand~~
For manufacturers, ensuring material and product safety requires safe transportation, storage, and use as directed by key regulations such as the EU Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), the U.S. Toxic Substances Control Act (TSCA), and the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). The SAP Product Safety Management OnDemand solution, launched in October 2011, helps
integrate material and product safety. The solution is available on a usage-based subscription providing cloud access to an SAP-hosted platform that includes the SAP EHS Management and SAP EHS Regulatory Content packages. The solution is available today to chemical producers and retailers in Europe. The solution is fully integrated with SAP ERP and includes key functionality including substance master data, safety data sheets, dangerous goods management, global label management, standard operating procedures, and substance volume tracking.
~~New Analytics Solutions~~
~~Business Intelligence Solutions~~
The 4.0 release of SAP BusinessObjects BI solutions in February 2011 manifests the broad range of technology innovations that are shaping the future of analytics. These solutions enable real-time analysis, with in-memory computing, putting powerful BI in user’s hands through new mobile capabilities. They allow the combination of business and social data to provide new insights by bringing together structured and unstructured information, all delivered on a platform that provides various models for deployment on premise, in the cloud, embedded in business operations, or in a “hybrid” manner.
~~Enterprise Information Management Solutions~~
In February 2011, SAP made available the 4.0 release of SAP BusinessObjects EIM solutions, designed in conjunction with the 4.0 release of SAP BusinessObjects BI solutions, as well as SAP HANA appliance software to help customers perform real-time analytics on big data, integrate structured and unstructured data, and analyze information from social networks. In addition, with new offerings such as SAP BusinessObjects Information Steward software and SAP Master Data Governance application, business and IT can collaborate like never before to support information governance across the enterprise.
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~~Enterprise Performance Management Solutions~~
In May 2011, we shipped the 10.0 release of SAP BusinessObjects EPM solutions, designed to help organizations better execute on their business strategy. New in the 10.0 release are a unified Web and Microsoft Excel interface that can be used across multiple applications for a common look and feel and greater productivity, comprehensive applications designed for finance and other lines of business, and support for new technologies such as mobile devices.
~~Governance, Risk, and Compliance Solutions~~
In March 2011, SAP made available the 10.0 release of SAP BusinessObjects GRC solutions. These solutions help reduce the cost and effort required to manage risk and compliance programs; more confidently protect revenue streams, shareholder value and reputation; and contribute to optimized organizational performance and results. The 10.0 release introduces a common look and feel across all applications in the GRC suite; embeds BI reports and dashboards; and includes a graphical tool to define and depict risks.
~~Analytic Applications for Industries and Lines of Business~~
In 2011, we launched a number of analytic applications in the SAP BusinessObjects portfolio tailored to address challenges in specific industries and lines of business. Co-created with customers and designed to work in any environment, the applications provide the insight and best-practice support that companies need to better understand risk, uncover opportunities, and make the right decisions to optimize their business.
~~Analytics Applications for Sustainability~~
~~To help companies ensure product safety, comply with environmental regulations, and better protect their employees, in 2011 we~~
released SAP Best Practices packages for sustainability. These include the SAP Best Practices for Analytics in Health and Safety, SAP Best Practices for Analytics in Product Safety and Stewardship, and SAP Best Practices for Analytics in Environment Compliance packages. The new packages feature operational analytics designed to give line-of-business managers in environment, health and safety and product areas improved insight into core processes and information.
~~New Mobile Solutions~~
~~Mobile Apps for SAP BusinessObjects~~
In February 2011, SAP launched the 4.0 release of SAP BusinessObjects BI and EIM solutions to bring business analytics to mobile devices, as well as mobile apps for SAP BusinessObjects and SAP Business Explorer software. Leveraging Sybase Unwired Platform, our mobile BI suite can process content from SAP and business applications from other providers.
~~Mobile Platform~~
In September 2011, SAP launched the next-generation Sybase Unwired Platform with release 2.1. The platform is an expansive enterprise mobility solution for developing and managing the entire lifecycle of native and Web apps across key mobile device platforms. We also announced an enhanced version of our software development kit (SDK) for ecosystem partners and customers, enabling them to develop complementary applications to help run their business better. The SDK includes a wide variety of mobile apps that can run on a broad selection of mobile devices.
~~Mobile Apps for Industry and Lines of Business~~
In November 2011, SAP and Sybase announced a series of new mobile apps built on Sybase Unwired Platform aimed at making business processes and business information mobile across key industries including
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~~manufacturing, consumer products, utilities, high tech, oil and gas, and retail:~~
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~~The SAP Field Service mobile app~~ provides full online and offline access to assignments, service orders, and service confirmation. Functions for mobilizing and customizing SAP CRM applications give field service engineers more mobile application features.
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~~The SAP Retail Execution mobile app~~ ~~provides online and offline access to accounts, contacts, visits, surveys, and products and fully integrates with native device functionality.~~
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~~The SAP EAM Work Order mobile~~~~app~~ ~~addresses the requirements for plant maintenance operations staff for work order management, notifications, technical object management, inventory, and business partner management.~~
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~~Mobile apps for employee productivity~~ are simple single-purpose mobile apps, built on Sybase Unwired Platform. Designed similar to consumer apps, they can be used by employees with zero training. These productivity apps allow users to act on workflows and access critical business information stored in SAP ERP Human Capital Management solution, SAP CRM, SAP SRM, and other applications from their mobile devices.
~~Mobile Device Management~~
In November 2011, we added some critical capabilities for Afaria mobile management software, including end-user self-service portal and application enablement. In addition, the new telecommunication expense management capabilities provide administrators with a powerful tool for easily managing employee mobile costs such as voice and data roaming. Application on-boarding for iOS, Android, and BlackBerry devices enables IT organizations to create and preload libraries of mobile apps for simplified access by authorized employees.
~~New Cloud Solutions~~
~~SAP Business ByDesign — Feature Pack 2.6~~
In February 2011, SAP launched a new release for the SAP Business ByDesign solution, which serves as an open platform on which a broad ecosystem of partners can further customize the software. Enhancements included usability, support for additional mobile devices, and on-demand integration of subsidiary operations into on-premise installations at headquarters. With this release, SAP Business ByDesign was also made available in Austria, Canada, and Switzerland.
~~SAP Business ByDesign — Feature Pack 3.0~~
Based on strong co-innovation with customers and partners, SAP announced general availability of the second release of the SAP Business ByDesign solution in August 2011. SAP Business ByDesign was made available for Australia and Mexico, with language support in Spanish. In addition, mobile support was extended to include the Microsoft Windows Phone 7 mobile platform.
~~SAP Product Safety Management OnDemand~~
~~See the New Applications section.~~
~~SAP Sales OnDemand~~
In March 2011, SAP introduced the SAP Sales OnDemand solution, SAP’s first user-centric cloud-based application for sales professionals with designed-in social collaboration. The solution, which complements the on-premise SAP CRM, offers enterprises running SAP Business Suite software a preintegrated cloud solution that embraces the way sales representatives collaborate and improves their productivity. We launched SAP Sales OnDemand at the SAPPHIRE NOW conference in 2011 and made it generally available in a number of countries at the end of the second quarter.
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~~SAP Sourcing OnDemand~~
The latest version of the Sourcing OnDemand solution was made available in March 2011. The solution was designed for sourcing professionals to obtain rapid and sustainable savings through best-practice management, real-time visibility, and greater control within strategic sourcing, contract lifecycle management, and supplier management.
~~New Database and Technology Solutions~~
~~SAP HANA Platform~~
In June 2011, SAP announced the general availability of the SAP HANA platform, bringing to customers high-speed analytics, new business applications, renewed existing SAP solutions, and IT simplification with SAP in-memory computing technology.
~~Applications for SAP HANA~~
~~In 2011, SAP delivered the following applications based on the SAP HANA platform:~~
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~~SAP Electronic Medical Record~~:    Doctors in the neurology department at the Charité hospital in Berlin are using this new mobile app to access patient health records while on the wards. Doctors can use the app to call up lab results and images, the patient’s home address, and various facets of a patient’s medical record. Instant access to patient data and images helps healthcare professionals collaborate and take better decisions.
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~~Charitable Transformation (ChariTra~~)    online network, launched in November 2011, is built on the SAP HANA platform and helps connect volunteers, nonprofit organizations, and corporations work together toward social causes and make a difference in their communities.
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~~SAP Smart Meter Analytics~~    ~~software~~, launched in September 2011, enables utility companies to turn massive volumes of data into powerful insights. With the new solution powered by SAP HANA, utility companies can help customers adopt more sustainable energy-use practices.
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~~SAP BusinessObjects Strategic Workforce Planning~~~~application, launched in December 2010, is powered by SAP HANA to support advanced capabilities that manage and optimize a company’s workforce planning processes.~~
~~Accelerators for SAP HANA~~
In September 2011, SAP released the SAP CO-PA Accelerator software for cost and profitability analysis, improving the speed and depth of working with large volumes of financial data. This solution can be implemented with the wider SAP BusinessObjects EPM solutions portfolio to help organizations create a complete picture of their cost and profit drivers. Deployed either by SAP Consulting as a rapid-deployment solution, or by an experienced SAP partner, the SAP CO-PA Accelerator helps companies engage in faster and more efficient profitability cycles and month-end closing processes.
We also released SAP Customer Segmentation Accelerator software, designed to help marketing departments analyze and segment in new ways. The solution helps organizations build highly specific segmentation on high volumes of customer data and at unparalleled speed. Marketers can now work with massive populations of granular data to better understand customer demand, behavior and preferences — targeting the right customers with the right offers across every segment, tactic, and channel. The accelerator is also delivered as a rapid-deployment solution to ensure a quicker time to value.
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~~Patents~~
As a leader in enterprise applications, SAP actively seeks intellectual property protection for innovations and proprietary information. Our software innovations continue to strengthen our market position inenterprise solutions and services. Our investment in R&D has resulted in numerous patents. In 2011, we obtained 756 granted and validated patents worldwide. Our portfolio includes patent families covering, for example, SAP Business Suite software, SAP BusinessObjects products, SAP Business ByDesign, and Sybase products.
~~While our intellectual property is important to our success, we believe our business as a whole is not entirely dependent on any particular patent.~~
~~PARTNER ECOSYSTEM~~
SAP customers want choice when it comes to partnering with companies best suited to their needs — choice in the solutions they implement and choice in their source for purchasing, implementing, and supporting those solutions. Our ecosystem and channels strategy delivers open choices to customers through a collaborative, innovative, and interactive network of partners, customers, and individuals. Tapping into this ecosystem, customers are connected with a diverse set of providers and resources to help them succeed and become best-run businesses. By teaming with our partners, we can offer customers more innovation, more flexibility, and more variety in the solutions we offer than we could alone. Customers, in turn, can rapidly experience benefits of the best software available from the world’s leading software, services and technology companies, including emerging technologies, such as in-memory computing, cloud computing, and mobility, as well as analytics and line-of-business solutions.
~~A key factor for the success of our ecosystem strategy is the SAP PartnerEdge program, which promotes productive partnerships and consistent service quality for a~~
variety of SAP partner types. Since a thriving partner ecosystem is central to our success, we have expanded the program to better serve our partners by providing more functional enhancements, operational improvements, and increased program benefits.
In 2011, we continued to expand our ecosystem in ways that deliver timely innovations to the market to help create a technology landscape for customers today, as well as for the future. We ended 2011 withdrive more than ~~11,000 partners~~US$10 trillion of ~~various types from services, technology, software, original equipment manufacturers (OEMs), and value-added resellers (VARs) and distributors. As a result of these local, regional and~~ global ~~partnerships, SAP continues to fuel innovation with customers and partners worldwide in its five market categories, as detailed by some examples in 2011:~~spend annually.
Organic growth remains the primary driver of our strategy. We will continue to invest in our own product development and technology innovation, improving the speed, number of projects, and innovations brought to market. We will also continue to acquire targeted, strategic, and “fill-in” technology and software to add to our broad solution offerings and improve coverage in key strategic markets. By doing so, we will strive to best support our customers’ needs for simplified operations.
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~~Applications:~~    SAP now offers SAP Application Visualization software by iRise, which accelerates solution design by improving communication between business users and IT departments. The SAP Social Media Analytics application by NetBase delivers marketers more accurate real-time analytics for understanding their markets and customers through the social Web. SAP Intelligence Analysis for Public Sector by Palantir helps public safety and security agencies run better, so that communities will run safer. And the SAP Defense Command and Control application by Systematic helps advance frontline logistics.
For more information about our acquisitions, see the Notes to the Consolidated Financial Statements section, Note (4).
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~~Analytics:~~    SAP Crystal Server 2011 software and the 4.0 release of SAP BusinessObjects Edge BI software are now being resold by channel partners. The software is designed to enable small and midsize enterprises, as well as lines of business, to better understand all facets of their businesses and make confident, data-driven decisions as events unfold, in real time. SAP is
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building on its collaboration with Google to help customers manage large data volumes in intuitive, visual displays and facilitate faster, better-informed decisions. SAP will enhance its business analytics software with location-based data capabilities, allowing people to interact with real-time information on Google Maps.
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~~Mobile:~~    SAP and Accenture announced a relationship to develop and deploy new mobility solutions, which leverage Sybase Unwired Platform to tap new growth opportunities in the market for enterprise mobility. SAP also has opened up mobile solutions from the Sybase portfolio to partners within our global ecosystem, enabling SAP value-added resellers the opportunity to sell Sybase-branded enterprise mobility apps and solutions for application development, device management, and security. In addition, SAP expanded its relationship with Verizon to jointly market and sell key components of Verizon’s Managed Mobility portfolio so that customers can easily access their on-premise and cloud-based SAP applications virtually anytime and anywhere.
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~~Cloud:~~    SAP partnered with Amazon, Dell, IBM, Microsoft, and Verizon to deliver enterprise solutions in the cloud as part of our commitment to provide customers with flexibility in software deployment options and innovations in cloud computing. SAP announced it is working in a three-way strategic collaboration with EMC and VMware to develop tools and services that make it easier for customers to adopt cloud and run SAP systems in cloud infrastructures with increasing levels of automation. We also expanded our solution reseller program for SAP Business ByDesign to 11 countries.
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~~Database and Technology:~~    SAP expanded its relationship with OpenText, announcing two new applications for SAP NetWeaver Portal developed by SAP and OpenText: SAP Portal Content Management, an enterprise solution for managing document-related content, and SAP Portal Site Management, a solution helping a broad number of users easily manage Web content.
~~Collaboration and Structure~~
Best-run businesses require best-in-class technologies to enable and drive success. For this to be possible, customers need choice in solutions and partners, and access to rapid innovation and a speedy time to value from their investments. SAP offers a number of partner programs to enhance co-innovation and help partners to grow their business in new ways, while reaching customers through creative new channels. SAP also fosters a number of different communities – interactive networks of developers, customers and partners – that come together to collaborate on a broad range of topics.
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~~SAP Community Network:~~    With over two million members in more than 200 countries, SAP Community Network is where customers, partners, employees, and experts go to exchange news and work together. It comprises the SAP Developer Network community, the Business Process Expert community, the Business Analytics community, the SAP University Alliances community, and SAP EcoHub online marketplace.
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~~SAP Store:~~    The online or “e-channel” for enterprise solutions and services from SAP and partners, SAP Store, offers quick, easy to implement solutions that are built and suited for the online environment, including business analytics, mobile apps, cloud solutions, and other business process software and services. SAP Store offers over 1,200
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~~solutions from both SAP and over 600 solution partners. SAP Store offers customers access to information, insights and ability to trial applications before purchase for truly informed decision making.~~
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~~SAP solution extensions:~~    Developed by independent partners, solution extensions integrate easily with SAP software, offering customers cross-solution and cross-industry functions that complement SAP solution offerings. Solution extensions are sold by SAP as SAP-branded offerings. A number of new solution extensions were introduced in 2011, including from partners IBM, iRise, Systematic, and Palantir.
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~~SAP OEM partner program:~~    Through this program, more than 800 partner participants embed SAP technology into their products for end-user benefit. A dedicated team of SAP integration experts works closely with our OEMs — from onboarding to enablement — to ensure that they have the tools and products they need to embed or integrate SAP technology with their solutions or service offerings to meet their customers’ needs most efficiently. In doing so, they also expand the reach of SAP offerings, including the SAP BusinessObjects portfolio, SAP Business Suite, SAP HANA, and solutions from Sybase, into new and different markets.
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~~SAP Co-Innovation Lab:~~    The global SAP Co-Innovation Lab network is aimed at driving and facilitating innovative projects between SAP and its partners, both globally and in the regions. Lab facilities are located in Bangalore, India; Palo Alto, California (United States); São Paulo, Brazil; and Tokyo. Additional expert teams are located in Walldorf, Germany, and Seoul, Korea. Since the inception of SAP Co-Innovation Lab in 2007, SAP
and its partners participating in lab projects have strived to create innovative solutions; accelerate technology adoption and enablement; provide a global, shared project infrastructure; and showcase joint achievements. The formation of SAP Co-Innovation Lab is made possible through the support of sponsoring partners Cisco, F5, HP, Intel, NetApp, and VMWare.
~~Finance Plan for SAP Solutions~~
To help companies invest in SAP solutions and the associated services and hardware, we work with leading global financiers that specialize in IT financing to deliver the SAP Financing service, a financing structure for customers. Since its inception, it has become a firmly established SAP Services offering, having helped arrange more than 3,200 finance deals for SAP customers in all segments — small businesses, midsize companies, and large enterprises. To give customers flexibility to choose among potential economic benefits, the plan offers all of the popular financing models with their different advantages: It can help conserve liquidity and it provides an alternative to credit from their existing banking relationships.
~~ACQUISITIONS AND DISPOSALS~~
~~Strategic Acquisitions~~
SAP’s acquisition strategy complements existing applications and solutions with innovative technologies and capabilities while maintaining its track record of organic growth. We made the following acquisitions in 2011:
In February, we acquired security software, identity and access management software, and development and consulting resources from SECUDE, a Swiss company. The acquisition enables us to provide secure client-server communications to customers without the need for third-party offerings. It underscores our
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~~commitment to investing in product security for our customers and users, and fulfills a key customer requirement by shipping SAP solutions with default security software.~~
In September, we acquired Right Hemisphere, a leading provider of visual enterprise solutions. The 3-D model-based visualization and communications technologies from Right Hemisphere enable visual navigation and interrogation of an entire product or asset and all of its associated data in one unified environment. The addition of visualization capabilities to our core product offerings will help customers across diverse industries accelerate time to market, increase people and asset productivity and improve information quality and processes across all lines of businesses.
In November, we acquired Crossgate, a leading provider of hosted B2B integration services. Crossgate enables companies to fully integrate and network with trading partners, clients and suppliers, allowing electronic data exchange with any business partner regardless of its technical capability. As a result of this acquisition, we can provide an easy way for trading partners to collaborate, share data, and automate processes that link customers and suppliers for streamlined B2B e-commerce.
In December, we announced our intention to acquire SuccessFactors, the market-leading provider of cloud-based human capital management (HCM) solutions. Our cash tender offer was successfully completed on February 21, 2012. We have acquired more than 90% of the SuccessFactors ordinary shares. The acquisition will add SuccessFactors’ team and technology to SAP’s cloud assets, significantly boosting our momentum as a provider of cloud
~~applications, platforms, and infrastructure. In combination, SAP and SuccessFactors will offer a full range of advanced end-to-end cloud and on-premise solutions for all key business processes.~~
~~Disposals~~
In November, we sold 100% of our shareholding in Steeb Anwendungssysteme, Abstatt, to All for One Midmarket. Steeb Anwendungssysteme is one of the leading SAP system resellers in Germany, with approximately 1,000 customers — almost all in Germany.
Venture Activities
~~Over the past 15 years, we have partnered with outstanding~~Through Sapphire Ventures (formerly called SAP Ventures), which comprises our consolidated venture investment funds, SAP supports investments in renowned entrepreneurs worldwide to build industry-leading businesses. ~~We seek to invest~~Sapphire Ventures has invested in ~~innovative, fast-growing~~more than 125 companies ~~with a proven product~~on five continents for more than 18 years. Some of these companies have been acquired or have become publicly listed companies.
Sapphire Ventures invests in the next generation of global category leaders as well as early-stage venture capital funds in enterprise and ~~business model, and provide our portfolio companies with the~~consumer technology. Specifically, Sapphire Ventures pursues opportunities in which it can help fuel growth by adding expertise, relationships, geographic reach, and ~~capital to help them grow their business and scale their revenues. We invest~~capital. It invests globally with a particular focus on emerging companies in Europe, ~~India,~~Israel, and the United States, as well as in Brazil, China, and ~~China~~India.
SAP’s total commitment to Sapphire Ventures is US$1.4 billion for use over the lifetime of its respective funds. Investments through the funds are currently ongoing.
For more information about our consolidated investment funds, see the Notes to the Consolidated Financial Statements section, Note (35).
PARTNER ECOSYSTEM
Helping Partners Run Simple
We engage with an extensive partner ecosystem to help customers around the world overcome complexity, create value, innovate, and thrive. Our partners help expand our reach to thousands more companies and millions more users. With more than 12,800 partners at the end of 2014, our partner ecosystem remains an important element in ~~the future.~~our success and we continue to create innovative ways for partners of all kinds to collaborate with us for mutual success.
~~In 2011, we made new investments~~Partners operate independently of SAP, yet complement our business in one or more of the following ~~companies:~~
Control4, based in Salt Lake City, Utah (United States), provides operating systems for the smart home, delivering intelligent control over consumer electronics products, appliances, and networking systems through an easy-to-use and intuitive software interface.
Alteryx, based in Irvine, California (United States), provides an integrated, location business intelligence applications platform for delivering fast, extensible, and spatially-enabled business analytics tools and services.
~~OpenX, based in Pasadena, California (United States), is a leading independent~~
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~~provider of digital advertising technology that enables businesses to manage and grow their online advertising revenue.~~
JustDial, based in Mumbai, India, is the leading local search engine in India focused on providing consumers with immediate access to fast, reliable, and comprehensive information on businesses, products, and services across India.
~~SAVO Group, based in Chicago, Illinois (United States), is a leading provider of cloud-based collaborative sales enablement solutions.~~
One97 Communications, based in New Delhi, India, provides mobile value-added services to mobile operators, consumers, and enterprises in India including mobile content, advertising, and commerce services.
~~Box.net, based in Palo Alto, California (United States), provides a secure content sharing and collaboration platform in the cloud.~~
~~Lithium, based in Emeryville, California (United States), is a leading provider of cloud solutions that accelerate business through social customer experience for both customers and employees.~~
~~ENERGY AND EMISSIONS~~
Serving our customers, pursuing our strategy of innovation, and driving toward sustainable success all demand that we address our environmental impact. We recognize the need to do our part to reduce the emissions that contribute to climate change and to become more energy efficient. These efforts bring tangible benefits not just to the environment, but to our business. New efficiencies drive significant savings that directly impact our financial performance. These savings also enable us to invest further in innovation, as well as sustainability initiatives such as our increased purchase of renewable energy.
By working to improve our efficiency, we have learned what it takes to do so. We are better positioned to design solutions to help our customers thrive in a resource-constrained world. We have been challenged to solve problems in new ways, making us more innovative and driving financial success for our Company, employees, investors, and other stakeholders. In addition, our focus on becoming more sustainable has engaged our employees, who overwhelmingly indicate in the employee survey that these efforts are important to SAP.
We assess our progress on energy and greenhouse gas emissions through four key performance indicators that reveal not just how well we are addressing our environmental impact, but also our broader performance in terms of forging new solutions and executing on our strategy.ways:

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~~Carbon footprint:~~    Reselling SAP software and cloud services:    Our partners help companies of all sizes identify, purchase, and deploy the ideal solutions for their businesses. Our value-added resellers (VARs) and multitier distribution channels offer local market and industry expertise that simplifies the customer’s journey to the right solution. We ~~recognize~~closely align our ~~responsibility~~sales efforts with those of our partners through well-defined rules of engagement that outline each organization’s roles and responsibilities. In most markets, partners are the primary sales channel to ~~protect~~address the ~~environment~~needs of small and midsize enterprises (SMEs). Our company also sells selected products through our own online channel, SAP Store, which includes complementary solutions developed by ~~lowering emissions contributing to climate change. SAP’s goal~~our partners. In addition, we resell applicable partner solutions as part of our solution extensions portfolio. These partner-developed solutions are tested, validated, and approved by our development organizations, and supported by SAP.
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Developing solutions that complement SAP software:    SAP has a vibrant community of partners that develop software on SAP platforms and create complementary products that integrate with our applications. This community is ~~to reduce total greenhouse gas emissions to levels of the year 2000 by 2020. For the fifth consecutive year, we increased our carbon efficiency, from 36.3 grams per euro~~vital in 2010 to 34.4 grams per euro in 2011 (measured in emissions caused per euro revenue). In parallel with the increase in our revenue, some activities required to support our business, such as travel to serveproviding our customers ~~also increased, which ultimately led~~with a broad portfolio of industry-specific solutions that allow customers to an increase in our total greenhouse gas emissions. SAP’s greenhouse gas emissions increased 8% worldwide to 490 kilotonnes (2010: 455 kilotonnes, including Sybase). Our focused sustainability initiatives have led to a cumulative cost avoidance of €190 million since 2008 in comparison to a business-as-usual extrapolation based on 2007. The experience we gain from our own initiatives helps us develop software to help our customersmeet the

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demands of their markets. At the same time, we maintain strategic relationships with ~~their energy efficiency programs,~~industry-leading technology, software, and ~~so contributes~~services firms. For example, we engage with the partner community in the development of new and simpler products. Our SAP PartnerEdge program for Application Development, with more than 850 active members, enables partners to ~~the success~~build complementary solutions on top of our ~~business.~~technology platforms – and quickly monetize those solutions. Partners can also embed SAP technology within their offerings under an original equipment manufacturer (OEM) licensing agreement. We work actively with partners to enable new and innovative delivery and go-to-market approaches to support customer needs and preferences. Aside from these formal partnerships, companies within our ecosystem can also certify their integration with SAP technology through the SAP Integration and Certification Center.

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~~Total energy consumption:~~Providing implementation and other services:    ~~Our total energy consumption includes all energy produced or purchased by~~SAP has strong partnerships with a broad network of IT professional services firms that provide consulting, system integration, hosting, education, and more. These companies are critical to helping our ~~organization. Reducing our energy consumption positions us~~mutual customers simplify the implementation and deployment of SAP solutions. In response to ~~weather anticipated increases in energy prices,~~growing customer demand for flexible deployment and ~~enables us~~purchase options, we work closely with the partner ecosystem to ~~better serve customers that are increasingly focused on exercising energy-~~offer innovative cloud-based offerings and ~~emission-aware purchasing strategies. Our total energy consumption increased 2% from approximately 845 gigawatt hours in 2010~~services to 860 gigawatt hours in 2011 due to the growth of our business. Specifically, we can trace this increase to our data centers and corporate cars. While our total consumption went up, however, our efficiency also improved. For example, while the number of cars in our fleet increased to accommodate growth, the energy consumed per car decreased. In 2011, we implemented a range of efficiency projects in such areas of oursupport different business ~~as our buildings and data centers.~~models.
To help our partner ecosystem Run Simple and achieve its business goals, we provide an extensive array of business support offerings. For example, our flagship partner program, SAP PartnerEdge, offers a tiered engagement model that provides marketing, sales, and technical enablement, as well as education, deal support, and other resources. In addition, we provide selected global partners with dedicated teams that work closely with them to proactively engage in specialized business development and technical initiatives. Many of our partners participate in SAP Community Network, an online community that facilitates networking and information sharing. In addition, many also participate in the SAP Listens program, which surveys partners for feedback and addresses partner issues.
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~~Data center energy:~~    ~~We focus~~
Our partner ecosystem is rapidly embracing our cloud, mobile, and in-memory computing offerings, including SAP HANA, with more than 3,200 partners or startups already building on ~~making data centers more energy efficient by measuring and managing the data center energy consumption per employee. These efforts are part of~~ our larger green IT strategy, which also includes working with customers and hardware providers to forge new sustainable solutions. Despite our continuous efforts, the growth in our business has led to an increase of data center energy intensity from 2,746 kilowatt hours per FTE (2010) to 2,824 kilowatt hours per FTE in 2011.
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~~Renewable energy:~~    ~~SAP continues to expand its use of electricity from renewable sources, both to decrease our reliance on fossil fuels and nuclear power and to support an emerging~~
market that is crucial for a sustainable future. We purchase some of this green electricity from local utility companies and produce some using solar panels on our facilities. At the end of 2011, approximately 47% of our total electricity consumption stemmed from renewable sources, up from 45% in 2010.
~~For more information about how SAP solutions help companies run better from environmental, social,~~platform. This ecosystem remains a key component in our efforts to simplify our customers’ technology landscapes and ~~economic perspectives, see~~improve the ~~Portfolio~~lives of ~~Software and Services section.~~people everywhere.
~~SEASONALITY~~CUSTOMERS
~~Our~~When our customers reduce complexity and Run Simple, they can create more sustainable business ~~has historically experienced~~models – which, in turn, helps us ensure our own long-term viability. That is why we strive to provide more than just software. We continually engage with our customers at every stage – not only during the ~~highest revenue~~sales and implementation phases, but also through the ongoing sharing of best practices and innovations.
One example of this strategy is our Customer Engagement Initiative. This program offers customers early insight into certain aspects of potential future products and product enhancements so they can provide early input and feedback in the ~~fourth quarter~~development cycle. In addition, it offers customers the opportunity to network on topics of ~~each year, due primarily~~mutual interest. These networking opportunities take place at a variety of global events, including the SAPPHIRE NOW and SAP TechEd conferences, as well as virtual events.
Customer Loyalty
We gauge customer loyalty through an annual survey that measures our Customer Net Promoter Score (NPS). Customer loyalty is one of our four enterprise-wide strategic goals, along with growth, profitability, and employee engagement.
SAP has used Customer NPS as a key performance indicator since 2012. As we gather experience with the metric and as our business evolves, we expanded our customer base when conducting the 2014 assessment to ~~year-end capital purchases by customers. Such factors have resulted~~better reflect our business completely. In addition to our on-premise customers, in ~~2011, 2010,~~2014 for the first time we included Ariba, SuccessFactors, and ~~2009 first quarter revenue being lower than revenue~~Sybase customers in the survey. Therefore, the 2014 Customer NPS score is not fully comparable to the prior year’s ~~fourth quarter.~~score.
In 2014, we achieved a global Customer NPS of 19.1%. This very positive score exceeded our 2014 target of 16%. We ~~believe that this trend will continue~~aim to achieve a Customer NPS score of 24% in ~~the future~~2015.
Our increased NPS reflects our continued commitment to listening to our customers and ~~that our revenue will continue to peak in the fourth quarter of each year and decline from that level in the first quarter of the following year.~~
~~SALES, MARKETING AND DISTRIBUTION~~
SAP primarily uses its worldwide network of subsidiaries to market and distribute SAP’s products and services locally. These subsidiaries have entered into license or commissionaire agreements with the SAP entity owning the underlying intellectual property (generally SAP AG) pursuant to which the subsidiary acquired the right to sublicense or sale SAP’s products to customers within a specific territory. Under these agreements, the subsidiaries retain a certain percentage of the revenue generated by the sublicensing activity. We began operating in the United States in 1988 through SAP America, Inc., a wholly owned subsidiary of SAP AG. Since then, the United States has become one of our most important markets.

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responding to their needs. Our goal is to best support both their success and the success of SAP. For example, we conducted global in-person and online focus groups with customers to gain additional insights into “business benefits” themes identified through the surveys. These sessions have enabled us to identify the underlying reasons behind issues and focus more precisely on where we need to make improvements.
For more information on the Customer NPS, see the Performance Management System.
Strong Customer Demand
In 2014, we saw customers embrace our strategy by licensing or subscribing to the full range of the SAP portfolio – from comprehensive solutions for large enterprises to the latest mobile apps.
Some examples by region include the following customers:
Americas Region
Antofagasta Minerals, a Chilean-based copper mining group, selected SAP solutions – including SAP HANA and SuccessFactors HR solutions – to manage its operations on a single platform and help support innovation through Big Data analytics as well as cloud and mobile solutions.
Bombardier Recreational Products, a Canadian-based global leader in motorized recreational vehicles and powersports engines, selected SAP solutions, including SuccessFactors Employee Central, to optimize its HR solutions and delivery.
The National Hockey League(NHL), composed of 30 member clubs in the United States and Canada, plans to use the power of SAP HANA to create new statistics that increase fan engagement. This content is expected to be served to fans through a variety of online, television, and mobile media channels.
Banco Central de Costa Ricaselected SAP ERP, SuccessFactors, and other software to obtain an integrated business platform for all administrative, financial, and accounting functions. The Central Bank of Costa Rica plans to create a centralized and integrated business information warehouse for efficient reporting and decision making.
Ralph Lauren, one of the world’s most successful fashion brands, has chosen solutions from hybris and Ariba, both SAP companies, to pursue its growth objectives. Ralph Lauren will use hybris solutions to improve the consumer shopping experience through better omnichannel capabilities and Ariba’s global procurement network to reduce costs and enhance service quality.
Asia Pacific Japan (APJ) Region
AGL Corporate Services Pty, one of Australia’s leading renewable energy companies, recently went live with SAP Fiori apps for purchase order approval and leave request approval. SAP Fiori helps AGL simplify business processes through an improved user interface and external access to workflow tasks.
Infosys, a global leader in technology, consulting, outsourcing, and next-generation services has gone live with SAP Business Suite powered by SAP HANA. With SAP HANA, Infosys expects to accelerate its financial closing processes and progressively move more and more batch activities into a real-time environment.
Singapore Health Services, one of the largest healthcare groups in Singapore, has selected Ariba solutions to replace its existing procurement platforms. Singapore Health Services expects to improve collaboration with vendors and standardize purchasing practices across its network.
Tatung Group, a major computer and electronic home appliance company in Taiwan, has chosen SAP as its strategic partner for co-innovation and simplification of all business processes on SAP HANA. Over a five-year period, Tatung plans to implement multiple SAP solutions to transform its business, simplify operations, and become a leader in the “smart energy” industry.
Mitsui Knowledge Industry(MKI), an IT services provider in Japan, selected the SAP HANA Enterprise Cloud service. In addition to its own professional data analysis service, MKI now aims to provide a market forecasting service for various commodities through a highly available and efficient enterprise cloud infrastructure.
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Europe, Middle East, and Africa (EMEA) Region
TheDepartment of Zakat and Income Tax(DZIT), reporting to the Ministry of Finance of the Kingdom of Saudi Arabia, selected the SAP Fraud Management analytic application powered by SAP HANA with the goal of reducing fraud exposure. With the help of SAP, DZIT looks to replace manual processes and increase the revenue for the Kingdom of Saudi Arabia.
The Kenya Electricity Transmission Company has selected the SAP HANA platform for innovation and the SAP Fiori user experience to simplify its user interface. With these solutions, Ketraco expects to increase its capacity to provide a premium customer experience based on real-time data and analysis.
Spire Healthcare, a provider of private healthcare in the United Kingdom, selected SAP HANA with the aim of improving its patient overall experience.
Telefónica, an international telecommunications company based in Spain, with more than 120,000 employees selected SuccessFactors HCM Suite as its solution to provide employees with an optimal workplace, demonstrate a commitment to talent, and ensure the best opportunities for professional development.
Euromaster, a leading integrated tire service and car maintenance network in Europe, chose SAP Business Suite powered by SAP HANA to help handle its finance and supply chain processes. The company hopes to improve efficiency, optimize network coverage and make its business processes more efficient. Euromaster chose SAP software as SAP was the only company offering a concrete industry-specific solution for retail and wholesale using the power of SAP HANA.
ENVIRONMENTAL PERFORMANCE: ENERGY AND EMISSIONS
One of the primary ways that we can help both our customers and SAP tackle the challenge of complexity is by increasing efficiency. Simplification and efficiency go hand in hand, and we have worked to enhance both by taking responsibility for our energy usage and carbon emissions including IT-related impact of our customers consuming our cloud offerings.
As we accelerate our shift to the cloud, we have tied our business strategy to our environmental strategy by creating a completely green cloud at SAP, referring to carbon neutrality by purchasing 100% renewable electricity certificates and compensation by offsets. This change – which we implemented in 2014 – does more than mitigate our own impacts. It also means that we can better serve our customers, as we simplify their IT landscape through our cloud offerings and help them increase their own efficiency. Our green cloud strategy is complemented by 100% renewable energy for facilities and electric company cars charged at SAP locations.
The evolution of our green cloud reflects the critical links we see between our environmental and business performance. We bring equal rigor to addressing and measuring both of these areas. In assessing our environmental impact, we focus on energy usage throughout SAP, as well as greenhouse gas emissions across our value chain. Since the beginning of 2008, our energy efficiency measures have generated a cumulative cost avoidance of €310 million, compared to a business-as-usual scenario, with €45 million of that amount created in 2014.
Total Energy Consumed
Because our energy usage drives our emissions, one of the most important measures we look at is our total energy consumed. This includes all energy that SAP generates or purchases to run our facilities, data centers, company cars, and corporate jets. Our total energy consumption increased to 920 gigawatt hours (GWh) in 2014, compared to 910 GWh in 2013.
This increase is due to significant growth in our business. In addition, as software usage shifts to the cloud, we are operating more of our customers’ systems in our data centers, as well as other locations where we are supplementing our servers. This additional cloud operation, along with the accompanying servers and facilities, consumes more energy. At the same time, we believe this shift has the opposite effect for our customers, who can simplify their technology and which save energy through our shared infrastructure, reducing the overall IT-related energy consumption through our highly energy-efficient cloud provisioning.
As our business grows, we have maintained the efficiency gains we have made over the past several years. For example, our total corporate car
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fleet is not consuming more fuel despite the fact that a significant number of company cars have been added, since the average company car has become more fuel-efficient. So, while our car fleet grew by 5%, we had efficiency gains of 3% across the entire fleet. As a result, our total energy consumption decreased slightly to 13,400 kilowatt hours (kWh) per employee in 2014 (2013: 13,900 kWh).
Greenhouse Gas Emissions
Our goal is to reduce the net greenhouse gas emissions from our operations to levels of the year 2000 by 2020. This target includes all direct and indirect emissions from running our business (Scopes 1 and 2), as well as a selected subset of other indirect (Scope 3) emissions. We do not include all of our Scope 3 emissions in our target because we chose to focus first on those emissions over which we have control or capability to influence. However, we are increasingly addressing both our upstream and downstream emissions to support a comprehensive carbon strategy for SAP.
Specifically, we are working to reduce our emissions through three primary approaches: increasing our operational efficiency combined with innovative approaches to the way we do things; purchasing high-quality renewable electricity certificates; and investing in high-quality carbon credits.
In addition to our ~~subsidiaries’ sales forces,~~long-term goal for 2020, we have ~~developed an independent sales~~set annual targets. Despite integrating new acquisitions in 2014, our total net emissions decreased to 500 kilotons CO₂ (2013: 545 kilotons). This decrease stems primarily from our shift to powering all of our data centers and ~~support force through value-added resellers unrelated~~facilities with 100% renewable electricity. We are effectively compensating the emissions caused by our customers’ systems that have moved into our green cloud. Given the large size of our customers’ footprints and our growth strategy in the cloud, we see significant potential to ~~SAP who assume responsibility~~reduce both our own and our customers’ environmental impact.
Nonetheless, we missed our annual target to reduce our emissions to 440 kilotons. The reason is that our business has continued to grow, and more of our overall emissions are caused by business travel. In other words, our shift to green energy – while critical to our long-term reduction strategy – could not fully compensate for the ~~licensing,~~business travel enabling our growth. At the same
time, this shift did enhance our efficiency. Our greenhouse gas emissions decreased from 32.4 grams CO₂ per euro of total revenue in 2013 to 28.4 grams CO₂ per euro in 2014. Our carbon emissions per employee also decreased by about 12% in 2014.
In addition to greater efficiency, we have achieved an overall absolute reduction of 16% since our peak year 2007, when we set our long-term carbon target. This reduction has occurred even as the average number of employees at SAP has increased by almost 32%.
Environmental Innovations
The ongoing tension between growth in our business and our goal to reduce our emissions has led us to pursue new approaches. To further decrease our car-related emissions, in 2014, we committed to increase the portion of electric vehicles (or alternatives) in our company car fleet from currently less than 1% to 20% by 2020. This initiative addresses a dilemma that has grown in recent years. Namely, along with our business expansion, the number of SAP employees who are eligible for a company car has increased annually. We aim to ensure that we do not undo our efficiency gains with our growing car fleet.
In keeping with our existing policy for office buildings and data centers, we continue to power our electric company cars with 100% renewable sources. In Germany, for example, we are incentivizing employees to make the switch by offering a battery subsidy that offsets the cost of using an electric vehicle. We are also developing a management solution that will address “range anxiety,” helping drivers intelligently plan out their trips, their maximum range and the availability of charging stations. We believe that our electric car initiative will play a critical role in helping us achieve our 2020 carbon reduction goal.
Our shift to a green cloud will also bring us closer to our carbon emission goal while extending our reach beyond SAP. In addition to reducing our own emissions, this change enables us to create a far greater impact through our customers. In 2014 alone, the emissions caused by SAP products in use at the sites of our more than 282,000 customers were at least 10 times larger than SAP’s own footprint, meaning they caused more than 6,200 kilotons of CO2. By using 100% renewable energy, we dramatically broaden our sustainability efforts and align them with our cloud strategy. We believe this move not only helps the
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world run better, but significantly reduces the carbon produced both inside and outside SAP.
In 2014, we also began realizing the benefits of another key sustainability initiative, our investment in the Livelihoods Fund, a unique investment fund whose returns consist of high-quality carbon credits. Several years ago, we made an initial investment of €3 million covering a 20-year participation in the fund, which supports the sustainability of agricultural and rural communities worldwide.
Projects of this fund focus on ecosystem restoration, agriculture, agro-forestry, and rural energy. In eastern India, for example, the fund has helped communities plant fruit trees to diversify food sources and address overcultivation of soil. As opposed to a charitable donation, we have made a long-term investment that brings benefits to society, the environment and SAP. In 2014, we received our first carbon credits from the fund, which helped us reduce our carbon footprint by another 11.2 kilotons.
Another important piece of progress in 2014 was the further implementation of ISO 14001 in SAP locations throughout the world. This well accepted environmental management system is now in place in 23 of our locations worldwide, including our SAP North America headquarters in Newtown Square, Pennsylvania, in the United States, as well as in such diverse countries as Austria, Brazil, Canada (Vancouver), the Czech Republic, Germany, Israel, Italy, and ~~some initial level~~South Africa. To act faster and achieve consistency, we have created a template for rolling out to new sites, enabling us to efficiently build a large global network in which different sites interact and share best practices.
Data Center Energy
Data centers are at the heart of ~~support~~how SAP provides solutions to our customers. The energy consumption in data centers is closely related to technology innovation and customer adoption of our solutions. ~~We have also entered into partnerships~~At the same time, with ~~major system integration firms, telecommunication firms and computer hardware providers to offer certain SAP Business Suite applications.~~
~~We establish partnerships with hardware and software suppliers, systems integrators and third-party consultants with the goal~~our energy consumption rising as more of ~~providing customers with a wide selection of third-party competencies. The role of the partner ranges from pre-sales consulting for~~our business ~~solutions~~moves to the ~~implementation~~cloud, data centers have become a primary focus of our ~~software products~~carbon reduction efforts.
As noted earlier, in 2014 we addressed our data center electricity consumption by shifting entirely to ~~project management~~a green cloud at SAP. This means that 100% of our energy usage to provide internal and ~~end-user training for customers and, in~~external computation power now comes from renewable sources. At the case of certain hardware and software suppliers, to technology support. Beyond these partnerships, a significant amount of consulting and training regarding SAP products is handled by third-party organizations that have no formal relationship or partnership with SAP.
Traditionally, our sales model has been to charge a one-time, up front license fee for a perpetual license to our software (without any rights to future products) which is typically installed at the customer site. We now offer our solutions in a variety of ways which include in the cloud, hosted solutions, and subscription-based models that provide the customer with a right to unspecified future software products. Although revenues from these new types of models currently are not material,same time, we ~~expect the revenues from most of these models to increase in the future.~~began utilizing
~~Our marketing efforts cover large, multinational groups of companies as well as small and midsize enterprises. We believe our broad portfolio of solutions and services enables us~~external data centers to meet the growing needs of our cloud customers. For this reason, our total data center electricity consumption – at both our internal and external sites – increased from 173 to 179 GWh. To reflect our strategic shift towards a cloud delivery model based on internal and external data centers, we decided to normalize total data center electricity consumption against revenue instead of per SAP employee. On a per million euro basis, this consumption stayed flat at 10.2 megawatt hours (MWh) per million euro revenue between 2013 and 2014.
Renewable Energy
Our investment in renewable energy plays a critical role in mitigating our environmental impact, helping us better serve our customers and support a more sustainable energy market. We are committed to buying from renewable sources – in 2014 we focused on solar, wind, and hydro. Our shift in 2014 to 100% renewable energy in all of ~~all sizes~~our data centers and ~~across industries.~~facilities is one of our most significant actions to date to make our operations more sustainable.
~~Capitalizing~~In 2014, renewable energy accounted for 100% of our total electricity, compared with 43% in 2013. While we produce a small amount of renewable energy through solar panels in some locations, we mainly rely on the ~~possibilities~~purchase of Renewable Electricity Certificates (RECs) to increase the ~~Internet,~~renewable electricity in our energy mix. We procure RECs that add value and drive change in the electricity market, adopting a set of key criteria to establish high-quality standards, which were aligned with two NGOs. For example, we ~~actively make use~~will consider renewable electricity from biomass only if it is disconnected from coal or other fossil power plants and if the biomass itself is not related to deforestation. In addition, we require that power plants must be no more than 10 years old, as we aim to foster new innovation and production of ~~online marketing. Some of our solutions can be tested online via the Internet demonstration and~~
~~evaluation system, which also offers special services to introduce customers and prospects to new solutions and services.~~renewable energy.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSES
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. For further details on risks related to SAP’s
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intellectual property rights, see “Item 3 Key Information —– Risk Factors ~~— Other~~– Operational Risks.”
We may be dependent in the aggregate on technology that we license from third parties that is embedded into 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 are a party to certain patent cross-license agreements with certain third parties.
We are named as a defendant or plaintiff in various legal proceedings for alleged intellectual property infringements. See Note (24) to our Consolidated Financial Statements for a more detailed discussion relating to certain of these legal proceedings.
~~ORGANIZATIONAL STRUCTURE~~
As of December 31, 2011, SAP AG controlled directly or indirectly 199 subsidiaries. Our subsidiaries perform various tasks such as the distribution of SAP’s products and providing SAP services on a local basis, research and development, customer support, marketing, and administration. Our primary research and development facilities, the overall group strategy and the corporate administration functions are concentrated at our headquarters in Walldorf, Germany.
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~~The following table illustrates our most significant subsidiaries based on revenues as of December 31, 2011:~~
~~Name of Subsidiary~~
~~Ownership~~
% ~~Country of~~
~~Incorporation~~
~~Function~~
~~Germany~~
~~SAP Deutschland AG & Co. KG, Walldorf~~
~~100~~
~~Germany~~
~~Sales & Marketing, Consulting,~~
~~Training and Administration~~
~~Rest of EMEA~~
~~SAP (UK) Limited, Feltham~~
~~100~~ ~~Great Britain~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~SAP (Schweiz) AG, Biel~~
~~100~~ ~~Switzerland~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~SAP France S.A., Paris~~
~~100~~ ~~France~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~United States~~
~~SAP America, Inc., Newtown Square~~
~~100~~ ~~USA~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~Rest of Americas~~
~~SAP Canada Inc., Toronto~~
~~100~~ ~~Canada~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~Japan~~
~~SAP JAPAN Co., Ltd., Tokyo~~
~~100~~ ~~Japan~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
~~Rest of APJ~~
~~SAP Australia Pty Limited, Sydney~~
~~100~~ ~~Australia~~ ~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
DESCRIPTION OF PROPERTY
Our principal office is located in Walldorf, Germany, where we own and occupy approximately ~~425,000~~430,000 square meters of office and datacenter space including our facilities in neighboring St. Leon-Rot. We also own and lease office space in various other locations in Germany, totaling approximately ~~115,000~~120,000 square meters. In approximately 6570 countries worldwide, we occupy roughly ~~1,360,000~~1,585,000 square meters. The space in most locations other than our principal office in Germany is leased. We also own certain real properties in Newtown Square and Palo Alto (United States); Bangalore
(India); Sao Leopoldo (Brazil),; London (UK) and a few other locations in and outside of Germany.
The office and datacenter space we occupy includes approximately ~~260,000~~300,000 square meters in the EMEA region, excluding Germany, approximately ~~325,000~~410,000 square meters in the region North and Latin America, and approximately ~~235,000~~325,000 square meters in the APJ Region.
With the acquisition of Concur in 2014, we added approximately 46,000 square meters to our real estate portfolio. This portfolio is included in the group portfolio disclosed above.
The space is being utilized for various corporate functions including research and development, our
data centers, customer support, sales and marketing, consulting, training, administration
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and messaging. Substantially all our facilities are being fully ~~used.~~used or sublet. For a discussion on our non-current assets by geographic region see Note (29) to our Consolidated Financial Statements. Also see, “Item 6. Directors, Senior Management and Employees —– Employees,” which discusses the numbers of our employees, in FTE’s, by business area and by geographic region, which may be used to approximate the productive capacity of our workspace in each region.
We believe that our facilities are in good operating condition and adequate for our present usage. We do not have any significant encumbrances on our properties. We do not believe we are subject to any environmental issues that may affect our utilization of any of our material assets. We are currently undertaking construction activities in various locations to increase our capacity for future expansion of our business. Our significant construction activities are described below, under the heading “Principal Capital Expenditures and Divestitures Currently in Progress.”
Capital Expenditures
Principal Capital Expenditures and Divestitures Currently in Progress
In ~~Japan,~~2014, we started construction activities in several locations. We aim to extend our office space to be able to cover future growth. We plan to cover all of these projects in full from operating cash flow. The most important projects are:
In Bangalore, India, we want to add additional capacity of roughly 2,500 employees. We estimate the total cost to be approximately €49 million, of which we had paid approximately €3 million as of December 31, 2014. We expect to complete the construction of this office building in 2016.
In Ra’anana, Israel, we commenced ~~an office relocation project in the first half~~construction of ~~2012 to consolidate three of our current Tokyo offices into one office with the capacity of 1,200 seats. This project aims to increase work efficiency and working space.~~a new building. We estimate the total cost of this project to be approximately ~~€24~~€54 million, of which we ~~will fully incur in 2012. The relocation project will be finalised at~~had paid approximately €15 million as of December 31, 2014. We expect to complete the ~~end of April 2012.~~
~~In 2012 we commenced~~ construction of ~~our~~this office building in ~~Palo Alto, US.~~2016.
In our research center in Potsdam, Germany, we started with a second construction phase in order to realize additional capacity for
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approximately 150 employees. With the extension of our research center we aim to create the general conditions for further teams contributing innovations to SAP products in miscellaneous fields. We estimate the total cost to be approximately €15 million, of which we had paid approximately €4 million as of December 31, 2014. We expect to complete the construction of this office building in 2016.
In New York City, New York, United States, we started planning the leasehold improvements for our new office space. The ~~construction aims at optimizing work space conditions to support line~~project includes the consolidation of ~~business requirements and the improvement of general building conditions.~~our New York City offices for approximately 450 employees. We estimate the total ~~cost of~~capital expenditures for this project to be approximately ~~€12~~€31 million, of which we had paid approximately €1 million as of December 31, ~~2011. The construction of our office building will be finalised at~~2014. We expect to complete the ~~end of 2012.~~leasehold improvements in 2016.
In Paris, France, we started an office consolidation project. The project aims to consolidate three office spaces in Paris into one office space. We estimate the second half of 2011 we began construction of a new building for a research center in Potsdam, Germany. The new research center will collaborate closely with universities in the Berlin/Brandenburg area in Germany, creating a total ~~of 100 new jobs. Focus will be on the deployment~~cost of the ~~new in-memory computing technology introduced by SAP,~~leasehold improvements to be approximately €32 million. We expect to complete the leasehold improvements in 2015.
In Dubai, United Arab Emirates, we started an office consolidation project including ~~SAP HANA software. SAP estimates~~an expansion of office space adding additional capacity for 100 employees. We estimate the total cost to ~~invest for~~be approximately €11 million. We expect to complete the ~~construction of~~leasehold improvements in 2016.
For more information about planned capital expenditures, see the ~~building approximately €17 million, of which we had paid approximately €1 million as of December 31, 2011. The construction of our new research center will be finalised in~~Investment Goals section. There were no material divestitures within the ~~second half of 2013.~~reporting period.
Principal Capital Expenditures and Divestitures for the Last Three Years
Our principal capital expenditures for property, plant, and equipment amounted to ~~€372~~€666 million for ~~2011 (2010: €287~~2014 (2013: €553 million; ~~2009: €207~~2012: €508 million). Principal capital expenditures in ~~2011~~2014 for property, plant, and equipment increased compared to ~~2010~~2013 mainly due to ~~an increase~~the replacement and purchase of computer hardware and vehicles acquired in ~~spending on IT hardware.~~the normal course of business and investments in data centers. The increase from ~~2009~~2012 to ~~2010~~2013 was mainly due to ~~an increase in spending on IT~~
purchases of computer hardware ~~and cars.~~including data center infrastructure. Principal capital expenditures for property, plant and equipment for the period from January 1, ~~2012~~2015 to the date of this report were ~~€100~~€82 million. For a ~~related discussion~~further information on our property, plant, and equipment see Note (17) to our Consolidated Financial Statements.
Our capital expenditures for intangible assets such as ~~software licenses,~~ acquired technologies and customer ~~contracts~~relationships amounted to ~~€114~~€1,956 million in ~~2011~~2014 from ~~€1,814~~€419 million in ~~2010 (2009: €51~~2013 (2012: €1,794 million). ~~This decrease~~The increase from 2013 to 2014 was due to the acquisition of Concur in 2014, while in 2013 we only executed a few smaller business combinations. Our investments allocated to goodwill amounted to €6,012 million in 2014 from €842 million in 2013 (2012: €4,557 million). The significant increase from 2013 to 2014 was again due to the acquisition of Concur in 2014 compared to the few smaller business combinations in 2013. The decrease from 2012 to 2013 in the addition to goodwill and intangible assets was primarily attributable to executing only a few small business combinations in 2011 while in 2010 we acquired Sybase. Our investments allocated to goodwill amounted to €170 million in 2011 from €3,398 million in 2010 (2009: €41 million). This decrease was again due to the few small acquisitions we closed in 2011 as2013 compared ~~to 2010. The significant increase from 2009 to 2010 (in the addition to goodwill and intangible~~
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~~assets) was primarily attributable~~ to the acquisition of ~~Sybase~~SuccessFactors and Ariba in ~~2010, whereas in 2009 we only had some small acquisitions.~~2012. For further details on acquisitions and related capital expenditures, see Note (4) and Note (16) to our Consolidated Financial Statements.
For further information regarding the principal markets in which SAP ~~competes,~~conducts business, including a breakdown of total revenues by category of activity and geographic market for each of the last three years, see “Item 5. Operating and Financial Review and Prospects —– Operating ~~Results”~~Results (IFRS)” of this report.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
OVERVIEW
~~Our principal sources~~We derive our revenue from fees charged to our customers for (a) the use of ~~revenue are sales of~~our cloud offerings, (b) licenses to our on-premise software products and ~~related~~(c) support, consulting, customer-specific on-premise software development arrangements, training, and other services. ~~Software revenue is primarily derived from software license fees that customers pay to use~~
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Depending on the product or service provided we classify our products. Support revenue is derived from support services which provide the customer with unspecified upgrades, updates and enhancements and software support. Our software and support revenue is included withinrevenues either as (a) software and software-related services ~~on our income statement. In addition to those~~ revenue ~~streams, our software and software-related service revenue includes subscription and other software-related service revenue.~~
Subscription revenues flow from contracts that have both a software element and a support element. Subscription contracts typically give our customers the use of current software and the right to unspecified future products. We typically charge a fixed monthly or quarterly fee for a definite term up to five years. Software rental revenue flows from software rental contracts, which include software and support service elements. These contracts provide the customer with current software products and
support but do not provide the right to receive unspecified future software products. Customers pay a periodic fee over the rental term and we recognize fees from software rental contracts ratably over the term of the arrangement. Our revenue from other software-related services includes revenue from our in the cloud offerings, from hosting contracts that do not entitle the customer to readily exit the arrangement, and from software-related revenue-sharing arrangements.
~~We also earn revenue from our professional services, which are included within~~(b) professional services and other service ~~revenue~~revenue.
For more information on our income statement. This revenue consists of consulting and other service revenue; consulting revenue is primarily derived from the services rendered with respect to implementation of our software products and other service revenue results primarily from our training and hosting activities; and the messaging services business that we acquired as a part of the Sybase acquisition in 2010. Our training revenue results from rendering training for customer project teams and end-users, as well as training third-party consultants with respect to SAP software products. Our messaging revenue primarily results from per message transaction fees. Hosting revenue results from non-mandatory hosting services and application management services. Non-mandatory hosting services revenue consistsprincipal sources of revenue ~~from hosting contracts from which~~and how the ~~customer can readily exit if it wishes~~different types of revenue are classified in our income statement refer to ~~run the software on its own systems.~~Note (3b) to our Consolidated Financial Statements, section Revenue Recognition.
See “Item 4. Information about SAP ~~— Portfolio of Software~~– Products, Research & Development, and Services” for a more detailed description of the products and services we offer.
The following discussion is provided to enable a better understanding of our operating results for the periods covered, including:

the factors that we believe impacted our performance in ~~2011;~~2014;

our outlook for ~~2011~~2014 compared to our actual performance (non-IFRS);
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a discussion of our operating results (IFRS) for ~~2011~~2014 compared to ~~2010~~2013 and for ~~2010~~2013 compared to ~~2009;~~2012;

the factors that we believe will impact our performance in ~~2012;~~2015; and

our operational targets for ~~2012~~2015 (non-IFRS).
The preceding overview should be read in conjunction with the more detailed discussion and analysis of our financial condition and results of operations in this Item 5, “Item 3. Key Information —– Risk Factors” and “Item 18. Financial Statements.”
~~ECONOMIC CONDITIONS~~ECONOMY AND THE MARKET
Global Economic Trends
The ~~growth of the~~ global economy ~~became steadily more sluggish in 2011. At~~recovered during the ~~same time, heightened uncertainty~~course of 2014, although slowly and ~~growing tensions on the financial markets had led to a worldwide decrease of confidence in financial systems among companies and consumers by the end of the year,~~heterogeneously, according to ~~the latest report by~~ the European Central Bank (ECB). The ~~International Monetary Fund (IMF) paints~~ECB reports that progress in some advanced economies was restrained early in the year, gained momentum in the second and third quarters, but then weakened slightly in the fourth quarter. In the emerging economies, in contrast, the ECB says, structural problems and a ~~similar picture of~~tight credit environment impeded growth throughout the year.
On the other hand, geopolitical crises, such as those in Ukraine and the Middle East, had little impact on the global economy in ~~2011, and it remarks that it had not expected developments~~2014, according to ~~take that course after~~ the ~~upturn in 2010. The Organisation for Economic Co-operation and Development (OECD) notes that~~ECB.
Year-over-year growth ~~was especially slow in the advanced economies in 2011, whereas the emerging markets grew vigorously, though not as rapidly as the year before.~~
~~The ECB reports that the economic situation~~ in the Europe, Middle East, and Africa (EMEA) region ~~in 2011~~ was ~~held back by~~significantly slower than the ~~tensions on the financial markets~~global average. The ECB reports that growth in the euro ~~area. In particular,~~area lost momentum throughout 2014; it ~~expected economic activity to grow weaker~~was particularly weak in the ~~euro countries~~fourth quarter given unexpectedly low investment and exports. The ECB estimates that euro-area gross domestic product (GDP) increased 0.8% year-over-year. It notes that overall growth was robust in Central and Eastern Europe in the ~~final quarter~~first half of 2014 but that in some countries growth slowed in the second half of the year. ~~A key factor was declining demand on European financial markets, which made financing generally more difficult.~~ The ~~OECD even talks of a “mild recession,” caused by decreasing domestic~~intensifying conflict in Ukraine, the international sanctions, and ~~export demand. On~~
~~the other hand, for countries~~falling oil prices all hampered growth in the ~~Middle East and Africa that did not experience serious civil unrest, high energy prices and strong demand from~~Russian economy, especially in the ~~emerging markets boosted economic~~second half of the year.
Year-over-year growth ~~the ECB says.~~
Inin the Americas region ~~throughout 2011~~was also slower than the global average, the ECB reports. Strong domestic demand underpinned substantial growth ~~was slowest~~ in the ~~United States, although the ECB did report a short-lived remission there~~U.S. economy, especially in the second and third quarter. According to the IMF, the reason for the slow growth was that government stimulus programs proved inadequate to generate sufficient consumer or business demand. For the rest of the region, only South America enjoyed strongquarters. In contrast, economic growth in ~~2011, says~~Latin America weakened and the ~~IMF.~~disparity between countries’ growth increased in 2014. For example, the ECB reports that the Brazilian economy grew little – indeed, it contracted in the first six months – while experiencing steep inflation. In contrast, the Mexican economy regained traction in 2014 after suffering a marked reversal the previous year, according to the ECB.
InEconomic trends in the Asia Pacific Japan (APJ) region ~~different circumstances gave rise to different economic outcomes in 2011.~~were again mixed. In Japan, economic growth slowed again. In the ~~determining factors were~~second and third quarters, Japan’s economy even contracted; the ~~earthquake~~ECB links this development with the increase in ~~March followed by~~consumption tax on April 1, 2014. Japan returned to growth in the ~~associated tsunami and nuclear disaster, from which the Japanese economy made a surprisingly quick recovery during the remainder~~last quarter of the year, according to both the ECB and the OECD. While growth in Japan decreased in the first half of the year, not least because of the preceding economic crisis, it turned around in the second half of the year as a result of increased domestic demand and strong export sales. In contrast, the emerging markets in Asia sawyear. Year-over-year, economic growth in ~~the high single-digit percentages~~China decelerated – primarily because of a decline in ~~2011. However, the rate of growth did decrease due~~investments. National and local stimulus programs brought a return to ~~slower export growth, explains the ECB. The most rapidly growing economy, China, was also affected, but China’s economy lost only a little momentum~~greater stability in the ~~second half of~~fourth quarter. According to the ~~year and still achieved~~ECB, the outcome was full-year economic growth in China at a ~~growth~~ rate ~~that almost reached double digits.~~in the upper single-digit percentage range.
The IT Market
~~Unlike the overall economy, which was increasingly weighed down by sovereign debt problems in many industrialized nations,~~According to U.S. market research firm International Data Corporation (IDC), the global IT market ~~was generally stable~~expanded 4.1% in ~~2011 — aside from certain segments and regions discussed below. That~~2014, which is ~~the view expressed by International Data Corporation (IDC), a market research firm based~~ in the ~~United States. IDC~~

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~~notes that~~lower end of the range IDC expected in its earlier quarterly projections. Drivers were a decrease in production and a decline of average prices for tablets and smartphones in a saturated market, according to IDC. These effects had not been foreseen at the beginning of the year. On the other hand, PC-related sales revenue shrank less than IDC had forecasted in its projections earlier in the ~~BRIC countries (Brazil, Russia, India, and China) IT market growth was well into double-digit percentages.~~
~~The software segment~~year. Indeed, in the advanced economies PC spending rose for the first time since 2010, although it continued to ~~grow steadily in 2011, IDC reports. Growth was strongest~~decline in the emerging economies. IDC’s expectations for the software and related services markets remained broadly constant all year. IDC expected that the software market grew 6.1% and the ~~BRICs. By contrast, economic uncertainty slowed growth~~services market grew 3.3% in 2014. According to IDC companies continue to invest in software; increasingly so in solutions for the cloud, mobile, and Big Data. Such investment is targeted at cost reduction, more efficient operation, and optimized hardware utilization.
Each segment ~~especially in the second half~~ of the year. Companies in particular held back investment in new hardware toward the end of the year. However, mobile devices such as smartphones and tablets, along with the apps that run on them, were among the growth markets in 2011.
~~In the Europe, Middle East, and Africa (EMEA) region, the sovereign debt crisis not only impacted economic development as a whole in several euro area countries, it also weakened~~ the IT market in the ~~second half of year, especially~~EMEA region expanded less than the global average. IDC states that, in Western ~~Europe. For these~~Europe, a resurgent PC market (8.2% growth) drove an increase in total IT spending. Nonetheless, overall growth in the IT market in Western Europe market was 1.8% (Germany: 3.6%), which was negatively influenced by political tensions with Russia. The impact of the Ukraine crisis was more noticeable in Central and Eastern Europe, where the IT market nearly stagnated with 0.1% growth (Russia 0.1%). The IT market in the Africa and the Middle East grew by a percentage well into double digits.
In the Americas region, IDC estimates the U.S. IT market as relatively stable and calculated growth of 3.8% in 2014. Progress was slowest in the first quarter, similar to what was seen in the U.S. economy. IT demand grew most rapidly for cloud products, and that growth was at the expense of traditional software products. The markets in Latin America grew more slowly than previously. IDC estimates that the IT market in Latin America grew only 6.2% year-over-year (Brazil: 7.1%; Mexico: 2.8%) after double-digit growth in the previous year and despite a projection of 8% growth for 2014 made at the beginning of the year.
The two largest economies in the APJ region, China and Japan, experienced some difficulty in 2014, and in both countries the IDC sees IT sales growth floundering in the lower single-digit percentages, and therefore once again reduces its expectations compared to its previous report. However, the major casualty was the hardware segment. The market for software and services was less severely affected.
~~The Americas region~~ IT market was ~~also stronger~~affected, IDC reports. In Japan, where IT spending had grown 4.0% in 2013, IDC estimates that it increased only 0.6% in 2014, held back by the ~~first half~~weakness of ~~2011 than~~the overall economy. For China, IDC
projected 13.3% growth in 2014 at the ~~second, according to IDC. More than once in~~beginning of the ~~course~~year, but by the end of the year it ~~revised~~had trimmed its ~~projections~~expectation to 9.8%.
Impact on SAP
Once again, growth in the overall global economy and in the IT industry was relatively slow in 2014, and it became increasingly volatile as the year progressed. This confronted SAP with considerable challenges. However, thanks to our innovation strategy, extended product portfolio, and strong diversification, we once again succeeded in significantly expanding our business and outperformed the overall global economy and IT industry in all regions in 2014 with regards to revenue growth.
Our non-IFRS software and software-related services revenue increased 7% at constant currencies in 2014. Both our core business and our cloud business contributed substantially to the increase. In our core business, non-IFRS software and support revenue increased 5% at constant currencies, although software revenue growth was affected by difficult economic conditions in almost all of the most important emerging economies for us, notably in Latin America, Russia and Ukraine, and Japan. That led to a 3% year-over-year decline in our non-IFRS software revenue at constant currencies, while our constant currency non-IFRS support revenue grew 8%. Support revenue is a robust feature of our core business model because a maintenance contract generally continues for as long as the ~~United States downward in response to gathering economic gloom. But IDC still expects a midrange single-digit~~customer uses the software. Our cloud business growth ~~percentage~~was strong. Non-IFRS cloud subscription and support revenue grew 45% over the year at constant currencies. That growth was 32% even after eliminating the results from the ~~U.S.~~acquired cloud companies.
In the EMEA region, we were again highly successful, attaining 7% growth in non-IFRS software ~~market. With the exception of the PC segment, in 2011 the overall IT market was relatively stable~~and software-related services revenue at constant currencies, while our performance in the United ~~States compared~~Kingdom was especially noteworthy. A 57% year-over-year increase in non-IFRS cloud subscription and support revenue at constant currencies is an indication that the cloud business is also of growing importance in the EMEA region.
In the Americas region, we achieved 7% growth in non-IFRS software and software-related services revenue at constant currencies despite the difficulties of weak economic progress, particularly in Latin America. Non-IFRS cloud subscription and support revenue grew 39% in the full year at constant currencies.
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In the APJ region, the economic environment remained weak in 2014 and was also reflected in our modest revenue growth. However, our strong growth in cloud and a solid performance in India are worth highlighting. In the APJ region, our non-IFRS software and software-related services revenue grew 7% year-over-year at constant currencies, considerably supported by a 60% increase in constant currency non-IFRS cloud subscription and support revenue.
In 2014, 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.
SEGMENT INFORMATION
In the first quarter of 2014, we took significant steps to drive forward our strategy and our ambition to become THE cloud company powered by SAP HANA. To execute this strategy, we merged certain areas of the company that performed similar tasks (for example, the on-premise sales forces with ~~Western Europe.~~
~~The defining moment in 2011 for~~ the ~~Asia Pacific Japan (APJ) region was the earthquake off the coast of Japan in March, with its far-reaching consequences for the environment, the people,~~cloud sales force, and the ~~economy~~on-premise support units with the cloud support units) to achieve the seamless organization of ~~Japan. Although the Japanese IT market has already regained lost impetus, growth was slightly slower over 2011 than~~SAP.
Since this integration and in the entire year ~~before as~~2014, our cloud-related activities were no longer handled by separate components in our Company. Our Executive Board assesses the ~~country struggled against~~financial performance of our Company on an integrated basis only. Consequently, SAP had one single operating segment in 2014.
For more information about the ~~economic headwinds.~~changes to our segment reporting, see the Notes to the Consolidated Financial Statements section, Note (29).
PERFORMANCE AGAINST OUTLOOK FOR ~~2011~~2014 (NON-IFRS)
~~Performance Against Outlook for 2011 (Non-IFRS)~~
Our ~~2011~~2014 operating profit-related internal management goals and published outlook ~~guidance~~ were based on our non-IFRS ~~numbers.~~financial measures. For this reason, in this section we discuss performance against our outlook ~~exclusively and expressly in terms of~~referring solely to these non-IFRS ~~numbers derived from IFRS~~financial measures. All discussion in the Operating Results (IFRS) section, however, is in terms of ~~IFRS~~ measures in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IASB), and the numbers in that section are not explicitly identified as IFRS measures.
Starting in the second quarter of 2014, we additionally adjusted our non-IFRS operating expense by excluding the expenses resulting from the Versata litigation. (For more information about this litigation, see the Notes to the Consolidated Financial Statements section, Note (24)). Prior-year amounts have been adjusted accordingly. We exclude the Versata litigation expenses to provide additional insight into the comparability of our ongoing operating performance across periods and to continue the alignment of our non-IFRS measures with our internal performance measures.
~~Outlook~~Guidance for ~~2011~~2014 (Non-IFRS)
At the beginning of ~~2011,~~2014, we ~~forecast~~gave the guidance that our cloud subscription and support revenue (non-IFRS) will increase to between €950 million and €1 billion (2013: €757 million) at constant currencies. For our software and software-related service revenue (non-IFRS) ~~would~~for 2014, we forecasted an increase of between ~~10%~~6% and ~~14% in 2011 on a~~8% at constant ~~currency basis (2010: €9,868~~currencies (2013: €14,032 million). We expected that software revenue would grow more quickly than software and software-related service revenue. We forecast that all regions would contribute to this growth, although we expected more rapid growth in the Americas and APJ regions than in the EMEA region.
~~We also expected that~~ our full-year operating profit (non-IFRS) for ~~2011 would~~2014 to be between ~~€4.45~~€5.8 billion and ~~€4.65~~€6.0 billion ~~on a~~(2013: €5.48 billion) at constant ~~currency basis (2010: €4.01 billion). Based on this forecast, we expected operating margin (non-IFRS) to widen 0.5 to 1.0 percentage points on a constant currency basis (2010: 32.0%).~~
currencies. We anticipated an ~~IFRS~~ effective tax rate (IFRS) of between 26.0% and 27.0% ~~and 28.0% in 2011 (2010: 22.5%~~(2013: 24.4%) and ~~a non-IFRS~~an effective tax rate (non-IFRS) of between 27.5% and 28.5% ~~(2010: 27.2%~~(2013: 25.9%).
In April, we confirmed the ~~forecast~~guidance for ~~2011~~2014 that we had published in ~~January. However, owing~~January 2014. In July, we increased our outlook for cloud subscription and support revenue (non-IFRS) to between €1,000 million and €1,050 million (2013: €757 million) at constant currencies.
Based on the strong momentum in SAP’s cloud business, we raised our ~~positive performance~~cloud outlook again in October and expected non-IFRS cloud subscriptions and support revenue to be in a range of €1,040 million to €1,070 million at constant currencies (2013: €757 million). With the ~~first half,~~customer-driven mix shift from upfront to cloud subscription revenue we ~~reported in July that growth for both~~expected full-year 2014 non-IFRS operating profit ~~and non-IFRS~~to be in a range of €5.6 billion to €5.8 billion (previously €5.8 billion to €6.0 billion) at constant currencies (2013: €5.48 billion). We confirmed our predictions for software and software-related service revenue ~~was expected to reach~~(non-IFRS at constant currencies) and for the ~~upper end of the range we forecast at the start of the year.~~anticipated effective tax rates.

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In October, we adjusted the outlook guidance for the IFRS effective tax rate to between 28.5% and 29.5% (2010: 22.5%) due to the effects of the reduction in the provision recorded for the TomorrowNow litigation.
To assist in understanding our ~~2011~~2014 performance as compared to our ~~2011~~2014 outlook a reconciliation from our IFRS financial measures to our non-IFRS financial measures is provided below. These IFRS financial measures reconcile to the nearest non-IFRS equivalents as follows:

€ millions, except
operating margin
IFRS
Financial
Measure Support
Revenue Not
Recorded
Under
IFRS Acquisition-
Related
Charges Share-
based
compensation Restruc-
turing Discon-
tinued
Activities Non-IFRS
Financial
Measure Currency
Effect on the
Non-IFRS
Financial
Measure Non-IFRS
Financial
Measure at
Constant
Currency IFRS
Financial
Measure Recurring
Revenue
not
Recorded
Under
IFRS Acquisition-
Related
Charges Share-
Based
Payments Restruc-
turing Tomorrow
Now and
Versata
Litigation Non-IFRS
Financial
Measure Currency
Effect
on the
Non-IFRS
Financial
Measure Non-IFRS
Financial
Measure at
Constant
Currency
Software and software-related service revenue
11,319    27    n/a    n/a    n/a    n/a    11,346    153    11,499    14,855    19    NA    NA    NA    NA    14,874    110    14,984
Total revenue⁽¹⁾
14,233    27    n/a    n/a    n/a    n/a    14,260    196    14,456    17,560    19    NA    NA    NA    NA    17,580    142    17,722
Operating profit⁽¹⁾
4,881    27    447    68    4    –717    4,710    69    4,779    4,331    19    562    290    126    309    5,638    –9    5,628
Operating margin in %
34.3    0.1    3.1    0.5    0    –5.0    33.0    0    33.1    24.7    0.1    3.2    1.7    0.7    1.8    32.1    –0.3    31.8

⁽¹⁾
Operating profit is the numerator and total revenue is the denominator in the calculation of our IFRS operating margin and the comparable non-IFRS operating margin, and ~~are~~is included in this table for the convenience of the reader.
Actual Performance in 2014 Compared to Guidance (Non-IFRS)
We achieved or exceeded the amended outlook guidance for revenue and operating profit we published in October.
Comparison of Forecast and Results for 2014
Forecast for 2014
Results for 2014
Cloud subscription and support revenue (non-IFRS, at constant currencies)¹⁾
€ 1,040 million to € 1,070 million
€ 1,098 million
Software and software-related service revenue (non-IFRS, at constant currencies)
+6% to +8% +7%
Operating profit (non-IFRS, at constant currencies)¹⁾
€5.6 billion to €5.8 billion
€5.63 billion
Effective tax rate (IFRS)
26.0% to 27.0% 24.7%
Effective tax rate (non-IFRS)
27.5% to 28.5% 26.1%
¹⁾
Revised forecast (October 2014).

~~2011 Actual Performance Compared~~Despite ongoing economic uncertainty throughout 2014, our new and existing customers continued to ~~Outlook (Non-IFRS)~~show a strong willingness to invest in our solutions. We saw a strong impetus toward growth in the cloud business.
At constant currencies, non-IFRS cloud subscription and support revenue grew from €757 million in 2013 to €1,098 million in 2014. That represents an increase of 45% at constant currencies. The increase includes effects relating to acquisitions not included, or not included in full, in the 2013 amount. These acquisition-related effects account for 13 percentage points in the increase. The increase in our cloud subscription
and support revenue led to an increase in our annual cloud revenue run rate to €1,716 million (2013: €1,016 million), with Concur and Fieldglass having together contributed €0.3 billion to the 2014 run rate. In ~~2011,~~2014, we ~~increased~~began to use the sum of non-IFRS fourth-quarter cloud subscription and support revenue (€360 million) and fourth-quarter non-IFRS cloud-related professional services and other service revenue (€69 million), multiplied by four, to calculate our annual cloud revenue run rate.
Our non-IFRS software and software-related service revenue (non-IFRS) by 17% to €11,499 million on a constant currency basis (2010: €9,868 million), clearly exceeding our expectation of 10% to 14% growth announced in January 2011, as well as our revised forecast in July, in which we expected to achieve the upper end of that range. Despite the partially uncertain economic situation in 2011, our new and established customers continued to invest strongly in our products. As a result, softwareservices revenue grew more strongly than software and software-related revenue. All regions contributed to the growth, with software revenue growing more rapidly in the Americas and APJ regions than in the EMEA region on a constant currency basis.
~~In 2011, we achieved an operating profit (non-IFRS) of €4,779 million on a constant currency basis. Thus, we not only clearly surpassed the target of €4,450 million to~~
€4,650 million announced in January, but also our July adjusted forecast, in which we anticipated reaching the upper limit of this range. The non-IFRS operating margin widened 1.1 percentage points to 33.1% on a constant currency basis, which was better than the expected 0.5 to 1.0 percentage point improvement.
We achieved an effective tax rate of 27.9% (IFRS) and 26.6% (non-IFRS), which is lower than the effective tax rate of 28.5% to 29.5% (IFRS) and 27.5% to 28.5% (non-IFRS) projected for 2011. This decrease in comparison to the outlook mainly resulted from the development of profit before taxes7% at constant ~~currency especially in North America and Europe, and from taxes for prior years.~~
~~Operating Results (IFRS)~~
~~This~~~~Operating Results (IFRS)~~~~section discusses results exclusively in terms of IFRS measures, so the IFRS numbers are not explicitly identified as such.~~currencies to €14,984 million (2013: €14,032 million).

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Despite adverse economic conditions weighing on business in Russia and Ukraine, our performance in the Europe, Middle East, and Africa (EMEA) region was again sound. Non-IFRS software and software-related service revenue grew 6% (7% at constant currencies) and non-IFRS cloud subscription and support revenue increased 58% (57% at constant currencies) in the EMEA region. In the Americas region, non-IFRS software and software-related service revenue increased 6% (7% at constant currencies), with strong growth in the United States. The economic and political environment in Latin America remained difficult. Our non-IFRS cloud subscription and support revenue increased 39% (39% at constant currencies) in the Americas region. In the Asia Pacific Japan (APJ) region, our non-IFRS software and software-related service revenue increased 4% (7% at constant currencies). Non-IFRS cloud subscription and support revenue increased 59% (60% at constant currencies) in the APJ region.
In 2014, we achieved a non-IFRS operating profit of €5,628 million at constant currencies. Thus, constant currency non-IFRS operating profit was within the range (€5.6 billion to €5.8 billion) we had expected in our updated outlook.
We achieved an effective tax rate (IFRS) of 24.7% and an effective tax rate (non-IFRS) of 26.1%, which is below the outlook of 26.0% to 27.0% (IFRS) and 27.5% to 28.5% (non-IFRS). The reduction mainly results from the regional allocation of income, from tax effects on changes in foreign currency exchange rates, and from taxes for prior years.
OPERATING RESULTS (IFRS)
This section on operating results (IFRS) discusses results only in terms of IFRS measures, so the IFRS numbers are not expressly identified as such.
We acquired Concur Technologies in December 2014, so Concur results are incorporated in our 2014 results only for December. We acquired Fieldglass in May 2014, so Fieldglass results are incorporated in our 2014 results only for May to December. Similarly, because we acquired hybris in August 2013, hybris results are incorporated in our 2013 results only for August to December.
Our ~~2011~~2014 Results Compared to Our ~~2010~~2013 Results (IFRS)
Revenue
Revenue

€ millions
   2011    2010    Change in %
2011 vs 2010
Software revenue
   3,971       3,265       22 %
Support revenue
   6,967       6,133       14 %
Subscription and other software-related service revenue
   381       396       –4 %
Software and software-related service revenue
   11,319       9,794       16 %
Consulting revenue
   2,341       2,197       7 %
Other service revenue
   573       473       21 %
Professional services and other service revenue
   2,914       2,670       9 %
Total revenue
   14,233       12,464       14 %
€ millions
   2014    2013    Change in %
2014 vs 2013
Cloud subscriptions and support
   1,087       696       56 %
Software
   4,399       4,516       –3 %
Support
   9,368       8,738       7 %
Software and support
   13,767       13,254       4 %
Software and software-related service revenue
   14,855       13,950       6 %
Professional services and other service revenue
   2,706       2,865       –6 %
Total revenue
   17,560       16,815       4 %

Total Revenue
Total revenue increased from ~~€12,464~~€16,815 million in ~~2010~~2013 to ~~€14,233~~€17,560 million in ~~2011,~~2014, representing an increase of ~~€1,769~~€746 million, or ~~14%~~4%. This ~~total revenue~~ growth reflects a ~~16%~~5% increase from changes in volumes and prices and a 2%1% decrease from currency effects. The growth in revenue ~~growth is due~~resulted primarily ~~to an~~from a €391 million increase in cloud subscription and support revenue and a €631 million rise in
support revenue. Consulting revenue declined €147 million and software revenue ~~of €706 million and an increase in support revenue of €834~~declined €117 million. ~~In 2011, software~~Software and software-related service revenue ~~totaled €11,319~~climbed to €14,855 million ~~as a result~~in 2014, an increase of ~~this increase.~~6%. Software and software-related service revenue represented ~~80%~~85% of ~~all~~total revenue in ~~2011 compared with 79% in 2010. In 2011, professional~~2014 (2013: 83%). Professional services and other service revenue ~~contributed €2,914~~declined 6% from €2,865 million in 2013 to ~~our~~€2,706 million, which was 15% of total revenue, ~~representing an increase of 9% compared to 2010.~~in 2014.
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For ~~an analysis~~more information about the breakdown of ~~our~~ total revenue by region and industry, see the Revenue by Region and ~~Revenue by~~ Industry ~~sections.~~section below.
Software and Software-Related Service Revenue
Software revenue ~~represents~~results from the fees earned from ~~the sale~~selling or ~~license of~~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 SAP. Support revenue represents fees earned from providing ~~customers with~~ technical support services and unspecified software upgrades, updates, and ~~enhancements. Subscription~~enhancements to customers.
Cloud subscription and ~~other software-related service~~support revenue ~~represents fees earned~~increased from €696 million in 2013 to €1,087 million in 2014. Deferred cloud subscription and support revenue totaled €690 million on December 31, 2014, an increase of 56% (December 31, 2013: €443 million).
The revenue share from more predictable cloud subscription and support revenue together with support revenue increased to 60% (2013: 56%) of total revenue.
A combination of a challenging macroeconomic and political environment in Russia, Ukraine, and some Latin American markets and the accelerating industry shift to the cloud resulted in a €117 million decline in software ~~subscriptions, on-demand~~revenue. That decline, from €4,516 million in 2013 to €4,399 million in 2014, reflects a 3% decrease from changes in volumes and prices.
Our customer base continued to expand in 2014. Based on the number of contracts concluded, 12% of the orders we received for software in 2014 were from new customers (2013: 16%). The total value of software orders received declined 3% year-over-year. The total number of contracts signed for new software decreased 3% to 54,120 (2013: 55,909 contracts), while the average order value increased by 1%. Of all our software orders received in 2014, 22% were attributed to deals worth more than €5 million (2013: 24%), while 44% were attributed to deals worth less than €1 million (2013: 44%).
Our stable customer base, continued investment in software by customers throughout 2014 and the previous year, and the continued success of
our premium support offerings ~~software rentals,~~resulted in an increase in support revenue from €8,738 million in 2013 to €9,368 million in 2014. The SAP Enterprise Support services offering was the largest contributor to our support revenue. The €631 million, or 7%, growth in support revenue reflects a 9% increase from changes in volumes and ~~other types of software-related service contracts.~~prices and a 1% decrease from currency effects. This growth is primarily attributable to SAP Product Support for Large Enterprises, SAP Enterprise Support, and our premium offerings. The acceptance rate for SAP Enterprise Support among new customers remained high at 98% in 2014.
Software and ~~software-related service~~support revenue ~~increased~~rose €514 million, or 4%, from ~~€9,794~~€13,254 million in ~~2010~~2013 to ~~€11,319~~€13,767 million in ~~2011, representing an increase of 16%. The software and software-related service revenue~~2014. This growth ~~reflects~~breaks down into a ~~17%~~5% increase from changes in volumes and prices and a 1% decrease from currency effects.
Software and software-related service revenue ~~increased~~grew from ~~€3,265~~€13,950 million in ~~2010~~2013 to ~~€3,971~~€14,855 million in ~~2011, representing~~2014, an increase of ~~€706 million or 22%~~6%. This ~~increase~~ reflects ~~growth of 25% from changes in volumes and prices and~~ a ~~3% decrease from currency effects.~~
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~~SAP Business Suite software contributed the greatest share of growth in software revenue, followed by SAP HANA and mobile solutions.~~
In 2011, our customer base again expanded. Based on the number of contracts concluded, 20% of the orders we received for software in 2011 were from new customers (2010: 23%). The value of orders received for software grew 16% year over year. The total number of contracts signed for new software increased 17% to 59,059 contracts (2010: 50,439 contracts).
~~Our stable customer base and the continued investment in software by new and existing customers throughout 2011 and the previous year resulted in an~~7% increase in support revenue from €6,133 million in 2010 to €6,967 million in 2011. Our SAP Enterprise Support offering generated most of the support revenue. The €834 million or 14% increase in support revenue reflects growth of 15% from changes in volumes and prices and a 1% decrease from currency effects. ~~Our premium offerings and strong growth in revenue from SAP Enterprise Support were among the factors accounting for the increase in support revenue.~~
Subscriptions and other software-related service revenue declined €15 million or 4% to €381 million (2010: €396 million). This reduction reflects changes in volume and prices only, and results mainly from the fact that global enterprise agreements and other similar long-term license agreements have become less popular among our customers as a contract model. Increasingly, our customers prefer instead to invest in the purchase of software licenses. Consequently, our subscriptions revenue decreased year over year, as expected. We do not expect subscription revenue from long-term license agreements, such as global
~~enterprise agreements and flexible license agreements, in itself to rise significantly in the future.~~
Professional Services and Other Service Revenue
Professional services and other service revenue consists primarily of consulting and other service revenue. We generate most of our consulting revenue from the implementation of our software products. Other service revenue consists mainly of revenue from messaging services and of training revenue from ~~providing~~ educational services supplied to customers and partners on the use of our software products and related ~~topics, and revenue from the messaging services business acquired from Sybase.~~subjects.
Professional services and other service revenue ~~increased~~decreased €159 million, or 6%, from ~~€2,670~~€2,865 million in ~~2010~~2013 to ~~€2,914~~€2,706 million in ~~2011, representing an increase of €244 million or 9%.~~2014. This ~~growth~~decline reflects ~~an 11% increase~~a 4% decrease from changes in volumes and prices and a 2%1% decrease from currency effects.
~~Consulting~~Customers’ cautious buying behavior toward large services projects led to a decline in consulting revenue ~~increased~~ from ~~€2,197~~€2,242 million in ~~2010~~2013 to ~~€2,341~~€2,095 million in ~~2011, representing 8% growth~~2014, a decrease of €147 million, or 7%. This decline reflects a 5% decrease from changes in volumes and prices and a 1% decrease from currency effects. Consulting ~~revenue contributed 80% of professional services and other service revenue (2010: 82%). Consulting revenue contributed 16% of total revenue in 2011 (2010: 18%).~~
Other service revenue increased from €473 million in 2010 to €573 million in 2011, representing an increase of 21%. This growth reflects a 23% increase from changes in volumes and prices and a 2% decrease from currency effects. The increase is due mainly to revenues from messaging services and training revenue.

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revenue contributed 77% of the total professional services and other service revenue (2013: 78%). Consulting revenue contributed 12% of total revenue in 2014 (2013: 13%).
Revenue from other services decreased €12 million, or 2%, to €611 million in 2014 (2013: €623 million). This reflects a 1% decrease from changes in volumes and prices and a 1% decrease from currency changes.
Revenue by Region and Industry
Revenue by Region

€ millions
   2011    2010    Change in %
2011 vs 2010    2014    2013    Change in %
2014 vs 2013
Germany
   2,347       2,195       7 %    2,570       2,513       2 %
Rest of EMEA
   4,644       4,068       14 %    5,813       5,462       6 %
Total EMEA
   6,991       6,263       12 %
EMEA
   8,383       7,975       5 %
United States
   3,699       3,243       14 %    4,898       4,487       9 %
Rest of Americas
   1,392       1,192       17 %    1,591       1,746       –9 %
Total Americas
   5,091       4,435       15 %
Americas
   6,489       6,233       4 %
Japan
   652       513       27 %    600       631       –5 %
Rest of Asia Pacific Japan
   1,499       1,253       20 %
Total Asia Pacific Japan
   2,151       1,766       22 %
Rest of APJ
   2,088       1,975       6 %
APJ
   2,688       2,606       3 %
SAP Group
   14,233       12,464       14 %    17,560       16,815       4 %
Revenue by Industry

€ millions
   2011    2010    Change in %
2011 vs 2010    2014    2013    Change in %
2014 vs 2013
Manufacturing Discrete
   2,617       2,190       19 %
Manufacturing Process
   1,461       1,255       16 %
Consumer Products
   1,433       1,243       15 %
Energy & Natural Resources
   2,001       1,796       11 %    4,158       4,077       2 %
Discrete Manufacturing
   3,051       2,987       2 %
Consumer
   4,045       3,778       7 %
Public Services
   1,786       1,691       6 %
Financial Services
   1,697       1,633       4 %
Services
   2,190       1,959       12 %    2,824       2,649       7 %
Financial Services
   1,196       1,058       13 %
Public Services
   1,399       1,246       12 %
Retail & Wholesale
   1,300       1,124       16 %
Healthcare & Life Sciences
   636       593       7 %
Total revenue
   14,233       12,464       14 %    17,560       16,815       4 %

Revenue by Region
We break our operations down into three regions: the Europe, Middle East, and Africa (EMEA) ~~region;~~region, the Americas region, ~~which comprises North and Latin America;~~ and the Asia Pacific Japan (APJ) ~~region, which includes Japan, Australia, and other parts of Asia.~~region. We allocate revenue amounts to each region based on ~~customers’ locations.~~where the customer is located. For more information about revenue by geographic region, see the Notes to the Consolidated Financial Statements section, Note (29).
~~The~~ EMEA Region
In ~~2011,~~2014, the EMEA region generated ~~€6,991~~€8,383 million in revenue, ~~(2010: €6,263 million) or 49%~~which was 48% of total revenue ~~(2010: 50%~~(2013: €7,975; 47%). This represents a
year-over-year increase of ~~12%~~5%. ~~Total revenue~~Revenue in Germany increased 7%2% to ~~€2,347~~€2,570 million in ~~2011 (2010: €2,195~~2014 (2013: €2,513 million). Germany contributed ~~34%~~31% (2013: 32%) of all EMEA region ~~revenue (2010: 35%).~~revenue. The remaining revenue in the EMEA region was primarily generated in ~~the UK,~~ France, ~~Switzerland,~~Italy, the Netherlands, Russia, Switzerland, and ~~Italy.~~the United Kingdom. Software and software-related service revenue generated in the EMEA region in 2014 totaled €7,028 million (2013: €6,616 million). Software and software-related service revenue represented 84% of all revenue in the region in 2014 (2013: 83%). Cloud subscription revenue rose 58% to €277 million in 2014 (2013: €176 million). This growth reflects a 57% increase from changes in volumes and prices and a 1% increase from currency effects. Software and support revenue rose 5% to

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~~service revenue generated~~€6,751 million in ~~the EMEA region~~2014 (2013: €6,440 million). This growth reflects a 6% increase from changes in ~~2011 totaled €5,529 million (2010: €4,883 million). Software~~volumes and ~~software-related service revenue represented 79% of all revenue in 2011 compared with 78% in 2010.~~prices and a 1% decrease from currency effects.
~~The~~ Americas Region
In ~~2011, 36%~~2014, 37% of our total revenue was generated in the Americas region ~~(2010: 36%~~(2013: 37%). Total revenue in the Americas region increased ~~15%~~4% to ~~€5,091 million. Revenue~~€6,489 million; revenue generated in the United States increased ~~14%~~9% to ~~€3,699~~€4,898 million. This growth reflects ~~a 20%~~an 8% increase from changes in volumes and prices and a ~~6% decrease~~1% increase from currency effects. The United States contributed ~~73%~~75% (2013: 72%) of all revenue generated in the Americas ~~region revenue (2010: 73%). Revenue increased 17% to €1,392 million in~~region. In the remaining countries of the Americas ~~region.~~region, revenue declined 9% to €1,591 million. This ~~growth~~ reflects a ~~20% increase~~5% decrease from changes in volumes and prices and a 3%4% decrease from currency effects. This revenue was principally generated in Brazil, Canada, ~~Brazil,~~ and Mexico. Software and software-related service revenue generated in the Americas region in ~~2011~~2014 totaled ~~€3,958~~€5,489 million ~~(2010: €3,427~~(2013: €5,097 million). Software and software-related service revenue represented ~~78%~~85% of all revenue ~~(2010: 77%~~in the Americas region in 2014 (2013: 82%). Cloud subscription revenue rose by 55% to €709 million in 2014 (2013: €457 million); currency effects were 0%. Software and support revenue rose 3% to €4,780 million in 2014 (2013: €4,641 million). This growth reflects a 3% increase from changes in volumes and prices; currency effects were 0%.
~~The~~ APJ Region
In ~~2011,~~2014, 15% (2013: 15%) of our total revenue was generated in the APJ region, ~~(2010: 14%); most of~~with the strongest revenue ~~was from Japan.~~growth being achieved in Australia. Total revenue in the APJ region
increased ~~22%~~3% to ~~€2,151~~€2,688 million. In Japan, ~~total~~ revenue ~~increased 27%~~decreased 5% to ~~€652 million in 2011, representing a 30% contribution to~~€600 million. Revenue from Japan was 22% (2013: 24%) of all revenue generated ~~across~~in the APJ ~~region (2010: 29%). This growth~~region. The decline in revenue ~~reflects~~from Japan was attributable to a ~~22%~~2% increase from changes in volumes and prices and a ~~5% increase~~7% decrease from currency effects. ~~Revenue increased 20% in~~In the remaining countries of the APJ ~~region.~~region, revenue increased 6%. Revenue in the remaining countries of the APJ region was generated primarily in Australia, ~~India~~China, and ~~China.~~India. Software and software-related service revenue ~~generated~~ in the APJ region totaled €2,337 million in ~~2011 totaled €1,832 million (2010: €1,484~~2014 (2013: €2,237 million).
~~Software and software-related service revenue represented 85%~~ That was 87% of all revenue from the region (2013: 86%). Cloud subscription revenue grew 59% to €101 million in ~~2011 compared with 84%~~2014 (2013: €64 million). This growth reflects a 60% increase from changes in ~~2010.~~volumes and prices and a 1% decrease from currency effects. Software and support revenue increased 3% to €2,236 million in 2014 (2013: €2,173 million). This increase reflects a 5% increase from changes in volumes and prices and a 2% decrease from currency effects.
Revenue by Industry
~~To help us better meet the requirements of existing and potential customers, we restructured our industry groups in 2011, and now serve nine sectors rather than six as in 2010.~~
The first of our three new sectors, healthcare and life sciences, incorporates healthcare, medicine, and pharmaceuticals, which were previously distributed across our public services and manufacturing process industry groups. The new energy and natural resources sector combines our oil and gas, mining, utilities, and waste management segments. These were previously in our manufacturing process and services industry segments. We have defined our new retail and wholesale sector to focus more strongly on two areas that we had previously included in our consumer products industry sector. We restructured two further sub-areas to reflect changing customer needs. Engineering, construction, and operations, which previously belonged to our manufacturing discrete industry sector, is now included in our services sector. The postal industry has been assigned to the public services industry sector.
We allocate our customers to ~~an industry sector~~one of our industries at the outset of an initial arrangement. All subsequent revenue from a particular customer is recorded under that industry sector.
In ~~2011,~~2014 we achieved above-average growth in the following industry sectors, measured by changes in total revenue: Services (€2,824 million, at a growth rate of 7%); Consumer (€4,045 million, at a growth rate of 7%); Public Services (€1,786 million, at a growth rate of 6%); and Financial Services (€1,697 million, at a growth rate of 4%). Revenue from the other industry sectors: Energy and Natural Resources (€4,158 million, at a growth rate of 2%); and Discrete Manufacturing (€3,051 million, at a growth rate of 2%).
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Operating Profit and Margin
Total Operating Expenses
€ millions
2014 % of total
revenue⁽¹⁾ 2013 % of total
revenue⁽²⁾ Change in %
2014 vs 2013
Cost of software and software-related services
–2,894    16%    –2,629    16%    10%
Cost of professional services and other services
–2,379    14%    –2,402    14%    –1%
Research and development –2,331    13%    –2,282    14%    2%
Sales and marketing –4,304    25%    –4,131    25%    4%
General and administration –892    5%    –866    5%    3%
Restructuring –126    1%    –70    0%    80%
TomorrowNow and Versata litigation –309    2%    31    0%    <-100
Other operating income/expense, net 4    0    12    0%    –65%
Total operating expenses –13,230    75%    –12,336    73%    7%
⁽¹⁾
Total revenue for 2014: € 17,560 million.
⁽²⁾
Total revenue for 2013: € 16,815 million.
Operating Profit and Operating Margin
€ millions, except for operating margin
2014    2013    Change in %
2014 vs 2013
Operating profit
4,331       4,479       –3%
Operating margin (in %)
24.7%       26.6%       –2.0pp
In 2014, SAP continued to invest in innovation and made substantial advances in the cloud business. In addition and among other influences, negative currency effects and the difficult economic situation in Latin America and Russia affected our profitability. As a result, our operating profit in 2014 was €4,331 million, a little less than in the previous year (2013: €4,479 million).
In 2014, our operating expenses increased €894 million or 7% to €13,230 million (2013: €12,336 million). The increase relates primarily to an expense in connection with the TomorrowNow and Versata litigation, restructuring costs, continuing investment in our sales organization, and a rise in personnel and infrastructure costs, especially for our cloud business.
The effect of acquisition-related expenses, which were €562 million (2013: €555 million), of restructuring expenses, which were €126 million (2013: €70 million), and of a €309 million expense relating to the TomorrowNow and Versata litigation weighed more heavily on operating profit than in the previous year. Continuing investment in sales activities around the world and in the cloud also affected operating profit. Our employee headcount (measured in full-time equivalents, or
FTEs) increased 7,834 year-over-year. Acquisitions accounted for more than 5,500 of the added FTEs.
Those negative effects on operating profit were in part offset by the reduced cost of share-based compensation programs totaling €290 million (2013: €327 million) resulting from the declining year-over-year performance of the stock and by savings in general administration costs.
The overall result of these effects on operating profit was a 2.0 percentage point narrowing of our operating margin in 2014 to 24.7% (2013: 26.6%).
Changes to the individual elements in our cost of revenue were as follows:
Cost of Software and Software-Related Services
Cost of software and software-related services 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
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license fees and commissions paid to third parties for databases and the other complementary third-party products sublicensed by us to our customers.
In 2014, the cost of software and software-related services increased 10% to €2,894 million (2013: €2,629 million).
Significant costs included an additional €180 million to extend our cloud business, especially outside the United States, with an associated increase in the expense of delivering and operating cloud applications, and a €112 million rise in the cost of providing customer support. They both represent investments that contributed to revenue growth. Our margin on cloud subscriptions and support widened 0.9 percentage points to 55.8% (2013: 54.8%). This improvement in margin was achieved primarily through strong growth in our cloud subscription and support revenue and despite the increased expense we incurred to extend our cloud infrastructure. At the same time, the license fees we pay to third parties decreased by €49 million.
The gross margin on our software and software-related services, defined as software and software-related services profit as a percentage of software and software-related services revenue, remained constant year-over-year at 81% in 2014 (2013: 81%).
Cost of Professional Services and Other Services
Cost of professional services and other services consists primarily of the cost of consulting and training personnel and the cost of bought-in third-party consulting and training resources. This item also includes sales and marketing expenses for our professional services and other services resulting from sales and marketing efforts where those efforts cannot be clearly distinguished from providing the professional services and other services.
Our consulting business is being greatly affected as we trend away from classic software licensing and consulting revenue toward more subscription revenue from cloud solutions. As a result, both our professional and other services revenue and our professional and other services expense decreased. We reduced costs for professional and other services 1% from €2,402 million in 2013 to €2,379 million in 2014. Our gross margin on
professional and other services, defined as professional and other services profit as a percentage of professional and other services revenue, narrowed to 12% (2013: 16%).
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 R&D activities, and amortization of the computer hardware and software we use for our R&D activities.
Although our personnel costs grew because of the 6% increase in our headcount by the end of the year, our R&D expense increased only 2% to €2,331 million in 2014 from €2,282 million in 2013. R&D expense as a percentage of total revenue was slightly less year-over-year at 13.3% (2013: 13.6%). For more information, see the Products, Research & Development, and Services section.
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.
Our sales and marketing expense rose 4% from €4,131 million in 2013 to €4,304 million in 2014. The increase was mainly the result of greater personnel costs as we expanded our global sales force and of the reallocation and re-tasking of employees to sales-related work. By increasing our sales force we accelerated our revenue growth. The ratio of sales and marketing expense to total revenue, expressed as a percentage, decreased slightly to 24.5% year-over-year (2013: 24.6%) because costs grew less rapidly than revenue.
General and Administration Expense
Our general and administration expense consists mainly of personnel costs to support our finance and administration functions.
General and administration expense increased 3% from €866 million in 2013 to €892 million in 2014. That this increase was modest compared to the growth in our revenue is primarily the result of careful cost management. The ratio of general and administration expense to total revenue was unchanged in 2014 at 5% (2013: 5%).
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Financial Income, Net
Financial income, net, changed to –€25 million (2013: –€66 million). Our finance income was €127 million (2013: €115 million) and our finance costs were €152 million (2013: €181 million).
Finance income mainly consists of interest income from loans, financial assets (cash, cash equivalents, and current investments) and income of derivatives. This increase is attributable to a higher average liquidity and slightly higher interest rates than in 2013.
Finance costs mainly consist of interest expense on financial liabilities (€93 million in 2014
compared to €131 million in 2013). The decrease year-over-year is mainly due to positive effects from interest rate derivatives and due to lower average indebtedness. For more information about these financing instruments, see the Notes to the Consolidated Financial Statements section, Note (18b).
Income Tax
Our effective tax rate increased slightly to 24.7% in 2014 (2013: 24.4%). For more information, see the Notes to the Consolidated Financial Statements section, Note (11).
Our 2013 Results Compared to Our 2012 Results (IFRS)
Revenue
Revenue
€ millions
   2013    2012    Change in %
2013 vs 2012
Cloud subscriptions and support
   696       270       >100
Software
   4,516       4,658       –3%
Support
   8,738       8,237       6%
Software and support
   13,254       12,895       3%
Software and software-related service revenue
   13,950       13,165       6%
Professional services and other service revenue
   2,865       3,058       –6%
Total revenue
   16,815       16,223       4%
Total Revenue
Total revenue increased from €16,223 million in 2012 to €16,815 million in 2013, representing an increase of €592 million, or 4%. This growth reflects an 8% increase from changes in volumes and prices and a 5% decrease from currency effects. The growing revenue resulted primarily from a €426 million increase in cloud subscription and support revenue and a €501 million rise in support revenue. Consulting revenue declined by €200 million and software revenue by €142 million. Software and software-related service revenue climbed to €13,950 million in 2013, an increase of 6%. Software and software-related service revenue represented 83% of total revenue in 2013 (2012: 81%). In 2013, professional and other service revenue contributed €2,865 million to our total revenue, representing a drop of 6% compared to 2012.
For more information about the breakdown of total revenue by region and industry, see the Revenue by Region and Industry section below.
Software and Software-Related Service Revenue
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 SAP. Software revenue results from the fees earned from the sale or license of software to customers. Support revenue represents fees earned from providing customers with technical support services and unspecified software upgrades, updates, and enhancements.
Cloud subscriptions and support revenue increased from €270 million in 2012 to
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€696 million in 2013. This increase is largely due to the acquisition of Ariba on October 1, 2012, and due to continuing strong growth at SuccessFactors and Ariba in 2013.
A combination of a challenging macroeconomic environment in key markets and the accelerating industry shift to the cloud resulted in a 2% software revenue increase from changes in volumes and prices. There was also a 5% decrease from currency effects. Overall, software revenue declined €142 million or 3% from €4,658 million in 2012 to €4,516 million in 2013. In 2013, SAP HANA contributed €633 million to total software revenue.
Software and support revenue rose from €12,895 million in 2012 to €13,254 million in 2013, representing an increase of €359 million, or 3%. This growth consists of an 7% increase from changes in volumes and prices and a 5% decrease from currency effects.
In 2013, software and software-related service revenue grew from €13,165 million in 2012 to €13,950 million, representing an increase of 6%. This software and software-related service revenue growth reflects an 11% increase from changes in volumes and prices and a 5% decrease from currency effects.
Our customer base continued to expand in 2013. Based on the number of contracts concluded, 16% of the orders we received for software in 2013 were from new customers (2012: 19%). The total value of software orders received fell 7% year over year. The total number of contracts signed for new software decreased 6% to 55,909 (2012: 59,289 contracts), while the average order value decreased by 1%.
Our stable customer base, continued investment in software by new and existing customers throughout 2013 and the previous year, and the continued success of our premium support offerings resulted in an increase in support revenue from €8,237 million in 2012 to €8,738 million in 2013. The SAP Enterprise Support services offering was the largest contributor to our support revenue. The
€501 million, or 6%, growth in support revenue reflects an 11% increase from changes in volumes and prices and a 5% decrease from currency effects. This growth is primarily attributable to SAP Product Support for Large Enterprises, SAP Enterprise Support, and our premium offerings. Accordingly, the acceptance rate for SAP Enterprise Support among new customers rose from 96% in 2012 to 98% in 2013.
Professional Services and Other Service Revenue
Professional services and other service revenue consists primarily of consulting and other service revenue. We generate most of our consulting revenue from the implementation of our software products. Other service revenue consists mainly of revenue from the messaging services acquired from Sybase and of training revenue from educational services supplied to customers and partners on the use of our software products and related topics.
Professional services and other service revenue decreased from €3,058 million in 2012 to €2,865 million in 2013, representing a decline of €193 million, or 6%. This decline reflects a 3% decrease from changes in volumes and prices and a 4% decrease from currency effects.
Customers’ cautious buying behavior toward large services projects led to a decline in consulting revenue from €2,442 million in 2012 to €2,242 million in 2013, representing a decrease of €200 million, or 8%. This decline reflects a 5% decrease from changes in volumes and prices and a 4% decrease from currency effects. Consulting revenue contributed 78% of the total professional and other service revenue (2012: 80%). Consulting revenue contributed 13% of total revenue (2012: 15%).
Revenue from other services increased €7 million, or 1%, to €623 million in 2013 (2012: €616 million). This reflects a 5% increase from changes in volumes and prices and a 4% decrease from currency changes.
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Revenue by Region and Industry
Revenue by Region
€ millions
   2013    2012    Change in %
2013 vs 2012
Germany
   2,513       2,382       5 %
Rest of EMEA
   5,462       5,130       6 %
Total EMEA
   7,975       7,512       6 %
United States
   4,487       4,413       2 %
Rest of Americas
   1,746       1,647       6 %
Total Americas
   6,233       6,060       3 %
Japan
   631       791       –20 %
Rest of APJ
   1,975       1,860       6 %
APJ
   2,606       2,650       –2 %
SAP Group
   16,815       16,223       4 %
Revenue by Industry
€ millions
   2013    2012    Change in %
2013 vs 2012
Energy & Natural Resources
   4,077       3,926       4 %
Discrete Manufacturing
   2,987       3,109       –4 %
Consumer
   3,778       3,646       4 %
Public Services
   1,691       1,614       5 %
Financial Services
   1,633       1,444       13 %
Services
   2,649       2,485       7 %
Total revenue
   16,815       16,223       4 %
Revenue by Region
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 (29).
The EMEA Region
In 2013, the EMEA region generated €7,975 million in revenue, which was 47% of total revenue (2012: €7,512; 46%). This represents a year-over-year increase of 6%. Total revenue in Germany increased 5% to €2,513 million in 2013 (2012: €2,382 million). Germany contributed 32% (2012: 32%) of all EMEA region revenue. The remaining revenue in the EMEA region was primarily generated in the United Kingdom, France, Switzerland, the Netherlands, Russia, and
Italy. Software and software-related service revenue generated in the EMEA region in 2013 totaled €6,616 million (2012: €6,126 million). Software and software-related service revenue represented 83% of total revenue in 2013 (2012: 82%). Software & Support revenue rose by 7% to €6,440 million in 2013 (2012: €6,043 million). This growth reflects an 8% increase from changes in volumes and prices and a 2% decrease from currency effects. Cloud subscription and support revenue grew 113% to €176 million (2012: €82 million).
The Americas Region
In 2013, 37% of our total revenue was generated in the Americas region (2012: 37%). Total revenue in the Americas region increased 3% to €6,233 million; revenue generated in the United States increased 2% to €4,487 million. This growth reflects an 5% increase from changes in volumes and prices and a 4% decrease from currency effects. The United States contributed 72% (2012: 73%) of all revenue generated in the
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Americas region. In the remaining countries of the Americas region, revenue climbed 6% to reach €1,746 million. This growth reflects a 15% increase from changes in volumes and prices and a 9% decrease from currency effects. This revenue was principally generated in Brazil, Canada, and Mexico. Software and software-related service revenue generated in the Americas region in 2013 totaled €5,097 million (2012: €4,789 million). Total software and software-related service revenue represented 82% of all revenue in the Americas region in 2013 (2012: 79%). Software and support revenue remained flat as a 5% increase in volume and prices was offset by a 5% decrease from currency effects. Cloud subscription and support revenue grew by 184% to €457 million (2012: €161 million), representing 66% of worldwide cloud subscription and support revenues.
The APJ Region
In 2013, 15% (2012: 16%) of our total revenue was generated in the APJ region, with the strongest revenue growth being achieved in China. Total revenue in the APJ region decreased by 2% to €2,606 million. In Japan, revenue fell by 20% to €631 million, which represents 24% (2012: 30%) of the total revenue generated in the APJ region. This drop in revenue is attributable, in full, to currency effects. In the remaining countries of the APJ region, revenue increased by 6%. Revenue in the remaining countries of the APJ region was generated primarily in Australia, China, and India. Software and software-related service revenue generated in the APJ region in 2013 totaled €2,237 million (2012: €2,250 million). That was 86% of total revenue (2012: 85%). Software and support revenue decreased by 2% to €2,173 million (2012: €2,224). This decline reflects an 9% increase from changes in volume and prices and a 11% decrease from currency
effects. Cloud subscription and support revenue grew by 139% to €64 million (2012: €27 million).
Revenue by Industry
With effect from January 2013, we rearranged our industry sectors from nine groups into six so that we could focus better on the requirements of existing and potential customers.
We merged one of our existing industry sectors, process manufacturing – which covers the chemicals and mill products industries – with the energy and natural resources industry sector. We combined our former consumer products and the retail and wholesale distribution industry sector into the consumer sector. The healthcare and life sciences (medical and pharmaceutical) industries, which were previously grouped together under the healthcare sector, now belong to the public services or consumer industry sectors, respectively. To address the changing needs of our customers, a new industry subgroup was established, sports and entertainment, which is part of the professional services sector.
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.
In 2013, we achieved above-average growth in the following sectors, measured by changes in total revenue: ~~Manufacturing discrete~~Financial Services (€~~2,617~~1,633 million, at a growth rate of ~~19%~~13%), ~~manufacturing process~~Services (€~~1,461~~2,649 million, at a growth rate of ~~16%~~7%), ~~retail and wholesale~~Public Services (€~~1,300~~1,691 million, at a growth rate of ~~16%~~5%), and ~~consumer products~~Energy and Natural Resources (€~~1,433~~4,077 million, at a growth rate of ~~15%~~4%).
~~Results~~ The revenue from the other ~~sectors were as follows: Financial services: €1,196~~industry sectors: Consumer €3,778 million, atwhich was a 4% improvement on the prior year; Discrete Manufacturing €2,987 million, which was a 4% decline mainly related to APJ and the Americas.

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~~growth rate of 13%; public services: €1,399 million, at a growth rate of 12%; services: €2,190 million, at a growth rate of 12%; energy and natural resources:~~
~~€2,001 million, at a growth rate of 11%; and healthcare and life sciences: €636 million, at a growth rate of 7%.~~
~~Operating Profit and Margin~~
~~Total Operating Expenses~~

€ millions
   2011    % of
total
revenue    2010    % of total
revenue    Change in
% 2011 vs
2010
Cost of software and software-related services
   –2,107       –15%       –1,823       –15%       16 %
Cost of professional services and other services
   –2,248       –16%       –2,071       –17%       9 %
Research and development
   –1,939       –14%       –1,729       –14%       12 %
Sales and marketing
   –3,081       –22%       –2,645       –21%       16 %
General and administration
   –715       –5%       –636       –5%       12 %
Restructuring
   –4       –0%       3       0%       <–100 %
TomorrowNow litigation
   717       5%       –981       –8%       <–100 %
Other operating income/expense, net
   25       0%       9       0%       178 %
Total operating expenses
   –9,352       –66%       –9,873       –79%       –5 %
~~Operating Profit and Operating Margin~~

€ millions, except for operating margin
   2011    2010    Change in %
2011 vs 2010
Operating profit
   4,881       2,591       88%
Operating margin in %
   34.3%       20.8%       13.5pp
Operating Profit and Operating Margin
Total Operating Expenses
€ millions
   2013    % of total
revenue⁽¹⁾    2012    % of total
revenue⁽²⁾    Change in %
2013 vs 2012
Cost of software and software-related services
   –2,629       16%       –2,553       16%       3%
Cost of professional services and other services
   –2,402       14%       –2,520       16%       –5%
Research and development
   –2,282       14%       –2,261       14%       1%
Sales and marketing
   –4,131       25%       –3,912       24%       6%
General and administration
   –866       5%       –949       6%       –9%
Restructuring
   –70       0%       –8       0%       >100
TomorrowNow and Versata litigation
   31       0%       –2       0%       <-100
Other operating income/expense, net
   12       0%       23       0%       –46%
Total operating expenses
   –12,336       73%       –12,181       75%       1%
⁽¹⁾
Total revenue for 2013: €16,815 million.
⁽²⁾
Total revenue for 2012: €16,223 million.
Operating Profit and Operating Margin
€ millions, except for operating margin
   2013    2012    Change in %
2013 vs 2012
Operating profit
   4,479       4,041       11%
Operating margin (in %)
   26.6%       24.9%       1.7pp
In ~~2011,~~2013, our operating profit totaled ~~€4,881~~€4,479 million ~~(2010: €2,591~~(2012: €4,041 million), a significant year-over-year ~~improvement. A contributor~~increase despite adverse currency effects. We invested in innovations and made substantial advances in our cloud business in 2013.
In 2013, operating expenses increased €155 million or 1% to €12,336 million (2012: €12,181 million). The main contributors to that increase were our greater acquisition-related and restructuring expenses, continued investment in sales activities and the ~~increased operating profit in 2011 was a €717~~cloud, and higher personnel and infrastructure expenses related to acquisitions.
The effect of acquisition-related expenses, which were €555 million ~~reduction of the TomorrowNow litigation provision. We had increased this provision in 2010,~~(2012: €537 million), and restructuring expenses, which ~~resulted in a €981~~were €70 million ~~negative impact~~(2012: €8 million), on operating profit was greater than in ~~that~~the prior year. ~~For~~The operating profit for 2013 was also affected by continued investments in global sales activities and cloud computing. The number of SAP employees (expressed in full-time equivalents – FTEs) rose year over year by 2,150 persons, including more ~~information about~~than 1,100 employees from acquired businesses.
Those negative effects on operating profit were in part offset by a reduced expense for share-based payments, which totaled €327 million in 2013 (2012: €522 million) owing to a less steep increase in the ~~TomorrowNow litigation, see the Notes to the Consolidated Financial Statements section, Note (24). Overall, revenue increased~~SAP stock price, and a reduction in ~~2011 while~~our general and administration expense.
As an overall result of these effects on operating ~~expenses decreased.~~
~~Our~~profit, our operating margin widened ~~13.5~~1.7 percentage points to ~~34.3%~~26.6% in ~~2011 (2010: 20.8%~~2013 (2012: 24.9%). ~~The reduction of the TomorrowNow litigation provision had a 5.0 percentage point positive effect on operating margin in 2011; in~~
~~2010, we had significantly increased the provision, which had a negative impact of 7.9 percentage points on operating margin.~~
In 2011, operating expenses decreased €521 million or 5% to €9,352 million (2010: €9,873 million). This reduction is due primarily to the reduction of the TomorrowNow litigation provision, which we had significantly increased in the previous year.
The sections that follow discuss our costs by line item.
Cost of Software and Software-Related Services
Cost of software and software-related services consists primarily of ~~various~~ customer support costs, ~~the~~ cost of developing custom solutions tothat address ~~individual~~ customers’ specific business requirements, costs for deploying and operating cloud solutions, amortization expenses relating to intangibles, and license fees and commissions ~~we pay~~paid to third parties for ~~database software~~databases and the other complementary third-party products ~~that we sublicense~~sublicensed by us to our customers.

Part I

Item 5

In ~~2011, costs for~~2013, the cost of software and software-related services ~~rose 16%~~increased a modest 3% to ~~€2,107~~€2,629 million ~~(2010: €1,823~~(2012: €2,553 million). The main ~~cost driver was an~~factors were a €95 million acquisition-related increase in ~~personnel~~the cost of providing and operating our cloud solutions and a €13 million increase in customer support costs. They both represent investments that contributed to ~~cover~~revenue growth. At the ~~growing demand for SAP Enterprise Support in 2011, which in turn had a positive effect on support revenue. The~~same time, the license fees ~~and the commissions that~~ we pay to third parties ~~for database software also rose in parallel with the increase in software revenue.~~decreased by €29 million. The gross margin on our software and software-related services, defined as software and software-related services profit as a percentage of software and software-related services revenue, remained constant year over year in ~~2011~~2013 at 81% ~~(2010:~~(2012: 81%).
Cost of Professional Services and Other Services
Cost of professional services and other services consists primarily of the cost of consulting and training personnel and the cost of bought-in third-party consulting and training resources. This item also includes sales and marketing expenses for our professional services and other services resulting from sales and marketing efforts where those efforts cannot be clearly distinguished from providing the professional services and other services.
~~Costs~~The growth of our cloud business and increased demand for pre-bundled offerings led to a reduction in our professional and other services revenue as well as in our professional and other services expense. We reduced costs for professional and other services ~~rose 9%~~5% from ~~€2,071~~€2,520 million in ~~2010~~2012 to ~~€2,248~~€2,402 million in ~~2011. The~~2013. Our gross margin on ~~our~~ professional and other services, defined as professional and other services profit as a percentage of professional and other services revenue, ~~widened~~narrowed to ~~23% in 2011 (2010: 22%~~16% (2012: 18%). ~~The increase in profitability is due mainly to the positive trend in consulting.~~
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 R&D activities, and ~~amortization~~depreciation of the computer hardware and software we use for our R&D activities.
We acquired Ariba and SuccessFactors in the course of 2012, so in 2012 our R&D expense did not include a full year’s Ariba and SuccessFactors
~~In 2011,~~R&D. Moreover, the depreciation expense for R&D ~~costs rose 12%~~servers and computer systems was greater in 2013 than in 2012. Nonetheless, our total R&D expense increased only slightly, by 1% to ~~€1,939 million. This~~€2,282 million (2012: €2,261 million). Therefore, while we continue to increase ~~primarily results from the increase in personnel costs.~~
~~In 2011,~~our innovative capacity our R&D expense as a percentage of total revenue was ~~unchanged at 14% because R&D costs increased~~slightly less year over year at 13.6% (2012: 13.9%). For more information, see the ~~same rate as sales.~~Research and Development section.
Sales and Marketing Expense
Sales and marketing expense consists mainly of personnel costs and direct sales expense ~~incurred~~ to support our sales and marketing teams in selling and marketing our products and services.
~~Sales~~Our sales and marketing ~~costs~~expense rose ~~16%~~6% from ~~€2,645~~€3,912 million in ~~2010~~2012 to ~~€3,081~~€4,131 million in ~~2011.~~2013. The increase was ~~due primarily to~~mainly the ~~increased~~result of greater personnel costs as we expanded our global sales force, notably for cloud business, and of ~~our expanded sales teams in new growth markets among others~~the reallocation and ~~to increased variable remuneration as a result of surpassing our corporate goals. Travel and marketing costs rose as a result of increased business operations. The increase in the number~~re-tasking of employees into sales-related work. By increasing our sales ~~and marketing led to~~force we accelerated our revenue growth. ~~At the same time, the~~The ratio of sales and marketing ~~costs~~expense to total revenue, expressed as a percentage, increased ~~22% year over year (2010: 21%~~slightly to 24.6% (2012: 24.1%)~~. This was~~ because ~~expenses~~costs grew ~~disproportionately to~~more rapidly than revenue.
General and Administration Expense
Our general and administration expense consists mainly of ~~the cost of~~ personnel ~~working in~~costs to support our finance and administration functions.
~~Our general~~General and administration expense ~~rose~~decreased 9% from ~~€636~~€949 million in ~~2010~~2012 to ~~€715~~€866 million in ~~2011, representing~~2013. This resulted mainly from a ~~12% increase. This was due mainly to~~reduced expense for share-based payment and efficient cost management. Consequently, the ~~increase in personnel costs. The~~ ratio of general and administration ~~costs~~expense to total revenue decreased in ~~2011 remained constant year over year at~~2013 to 5% (2012: 6%).
Financial Income, Net
Financial income, net, changed to –€66 million (2012: –€72 million). Our finance income was €115 million (2012: €103 million) and our finance costs were €181 million (2012: €175 million).
Finance income mainly consists of interest income from loans and financial assets (cash, cash equivalents, and current investments), which was

Part I

Item 5

~~Segment Results~~
~~We have four reportable operating segments: Product, Consulting, Training, and Sybase.~~
~~Total revenue and profit figures for each of our operating segments differ from the respective revenue and profit figures classified~~€37 million in ~~our~~
Consolidated Statements of Income because of several differences between our internal management reporting and our external IFRS reporting. For further details of our segment reporting and a reconciliation from our internal management reporting to our external IFRS reporting, see the Notes to the Consolidated Financial Statements section, Note (29).
~~Segment Profitability~~

€ millions, unless otherwise stated
   2011    2010    Change in % 2011
vs. 2010
Product Segment

External revenue
   10,025       9,020       11
Segment expenses
   –4,085       –3,625       13
Segment contribution
   5,940       5,395       10
Segment profitability
   59%       60%       –1pp
Consulting Segment

External revenue
   2,955       2,714       9
Segment expenses
   –2,091       –1,968       6
Segment contribution
   864       746       16
Segment profitability
   29%       27%       2pp
Training Segment

External revenue
   376       362       4
Segment expenses
   –229       –226       1
Segment contribution
   147       136       8
Segment profitability
   39%       38%       1pp
Sybase Segment

External revenue
   873       387       >100
Segment expenses
   –647       –260       >100
Segment contribution
   226       127       78
Segment profitability
   26%       33%       –7pp
~~Product Segment~~
The Product segment is primarily engaged in marketing and licensing our software products and providing support for them. Support includes technical support for our products, assistance in resolving problems, providing user documentation, unspecified software upgrades, updates, and enhancements. The Product segment also performs certain custom development projects. The Product segment includes our sales, marketing, and service and support lines of business.
~~In 2011, revenue in the Product segment increased 11% to €10,025 million (2010: €9,020~~2013 (2012: €45 million). This ~~growth reflects a 13% increase from changes in volumes and prices and a 2%~~ decrease ~~from currency effects. The reason for this growth was the rise in software license sales, which in turn led to an increase in support revenue. Software revenue, which~~ is added to revenues in the Product segment, rose by 19% to €3,282 million (2010: €2,766 million). This growth reflects a 22% increase from changes in volumes and prices and a 3% decrease from currency effects. Support revenue increased by
~~Part I~~
~~Item 5~~
9% to €6,302 million (2010: €5,776 million). This growth reflects a 10% increase from changes in volumes and prices and a 1% decrease from currency effects. Subscription and other software-related service revenue declined 3% to €377 million (2010: €387 million). All regions contributed to the increased revenue in the Product segment.
In 2011, expenses in the Product segment increased 13% to €4,085 million (2010: €3,625 million). Expenses from software sales account for approximately 56% of total expenses in the Product segment, whereas approximately 16% of total expenses in the Product segment are attributable to ~~marketing and approximately 28% to support services. The increased expenses in the Product segment are the result of increased business operations following the rise in demand in 2011.~~
~~The contribution of the Product segment rose by 10% to €5,940 million (2010: €5,395 million), representing segment profitability of 59% (2010: 60%).~~
~~Consulting Segment~~
~~The Consulting segment is primarily engaged in the implementation of our software products.~~
~~In 2011, revenue in the Consulting segment increased 9% to €2,955 million (2010: €2,714 million). This growth reflects~~ a 10% increase from changes in volumes and prices and a 1% decrease from currency effects. Geographically, all regions contributed to this segment revenue increase, with the Americas and APJ regions contributing most significantly.
Expenses in the Consulting segment rose by 6% to €2,091 million (2010: €1,968 million). The increased expenses in the Consulting segment are the result of increased business operations following the rise in demand in 2011.
~~The contribution of the Consulting segment rose 16% to €864 million (2010: €746 million), representing segment profitability of 29% (2010: 27%).~~
~~Training Segment~~
The Training segment is primarily engaged in providing educational services on the use of our software products and related topics for customers and partners. Training services include traditional classroom training at SAP training facilities, customer and partner training, user training, and e-learning.
In 2011, revenue in the Training segment increased 4% to €376 million (2010: €362 million). This growth reflects a 6% increase from changes in volumes and prices and a 2% decrease from currency effects. The EMEA and Americas regions were the primary contributors to this growth in revenue. With an increase of 19%, growth was particularly high in Latin America. The APJ region recorded a decline of 2%.
Expenses in the Training segment rose 2% to €230 million (2010: €226 million). The increased expenses in the Training segment are the result of increased business operations following the rise in demand in 2011.
~~The contribution of the Training segment rose 8% to €147 million (2010: €136 million), representing segment profitability of 39% (2010: 38%).~~
~~Sybase Segment~~
The Sybase segment is primarily engaged in implementing our vision of a wireless enterprise for customers and partners. To this end, we supply enterprise software and mobile software solutions for information management, development, and integration.
The contribution of the Sybase segment to overall segment results is determined using a different approach than that used for the other segments. The Sybase segment includes development, administration, and other costs that do not apply to the other segments.
~~Sybase was acquired in 2010, so 2010 revenue and expenses for the Sybase segment are for five months only.~~
~~Part I~~
~~Item 5~~
In 2011, revenue in the Sybase segment increased 126% to €873 million (2010: €387 million). This growth reflects a 130% increase in volume and price changes (taking into account that revenue figures were only available for five months in the previous year), and a 5% decrease from currency effects.
~~Expenses in the Sybase segment rose 149% to €646 million (2010: €260 million).~~
~~The contribution of the Sybase segment rose 78% to €226 million (2010: €127 million), representing segment profitability of 26% (2010: 33%).~~
~~Financial Income~~
In 2011, financial income improved to €–38 million (2010: €–67 million). Our finance income was €123 million (2010: €73 million) and our finance costs were €161 million (2010: €140 million).
Finance income mainly consists of interest income from loans and receivables (cash, cash equivalents, and current investments), which was €64 million in 2011 (2010: €34 million). This increase is attributable mainly to the higherlower average liquidity and lower interest rates than in ~~2010.~~2012.
Finance costs mainly consist of interest expense on financial liabilities (€~~123~~131 million in ~~2011~~2013 compared to ~~€77~~€130 million in ~~2010). This year-over-year increase resulted mainly from the~~
~~financial debt incurred in connection with the Sybase acquisition. We used bank loans, bonds,~~2012) and ~~private placements to finance this acquisition.~~remained virtually stable year over year. For more information about these financing instruments, see the Notes to the Consolidated Financial Statements section, Note (18b).
Another factor in financial income, net, in ~~2011~~2013 was the derivatives we utilize to execute our financial risk management strategy. The associated ~~fair~~time value effects from derivatives were reflected in interest income of ~~€37~~€32 million ~~(2010: €25~~(2012: €27 million) and interest expenses of ~~€37~~€23 million ~~(2010: €31~~(2012: €28 million).
Income Tax
Our effective tax rate ~~increased~~decreased to ~~27.9%~~24.4% in ~~2011 (2010: 22.5%~~2013 (2012: 26.2%). The ~~main~~ reason for ~~this significant~~the year-over-year difference is the change in the measurement of the TomorrowNow litigation provision. While 2010 saw a tax rate reduction of almost 5 percentage points as a result of the significant increase of the TomorrowNow litigation provision, in 2011 we experienced an effective tax rate increase resulting from the reduction of the same provision. However, this increase was offset by tax effects related to intercompany financing. For more information, see the Notes to the Consolidated Financial Statements section, Note (11).
~~Our 2010 Results Compared to Our 2009 Results (IFRS)~~
~~Revenue~~
~~Revenue~~

€ millions
   2010    2009    Change in %
2010 vs 2009
Software revenue
   3,265       2,607       25 %
Support revenue
   6,133       5,285       16 %
Subscription and other software-related service revenue
   396       306       29 %
Software and software-related service revenue
   9,794       8,198       19 %
Consulting revenue
   2,197       2,074       6 %
Other service revenue
   473       400       18 %
Professional services and other service revenue
   2,670       2,474       8 %
Total revenue
   12,464       10,672       17 %
~~Part I~~
~~Item 5~~
~~Total Revenue~~
Total revenue increased from €10,672 million in 2009 to €12,464 million in 2010, representing an increase of €1,792 million or 17%. SAP’s business without the Sybase results contributed 14% to this growth. This total revenue growth reflects a 10% increase from changes in volumes and prices and a 7% increase from currency effects. Specifically, our software revenue increased by €658 million as compared to 2009 and our support revenue increased by €848 million as compared to 2009. Additionally, our SSRS revenue increased, resulting in software and software-related service revenue of €9,794 million in 2010. Software and software-related service revenue represented 79% of our total revenue in 2010 compared to 77% in 2009. Professional services and other service revenue contributed €2,670 million to our total revenue in 2010. This represents an increase of 8% compared to 2009. Professional services and other service revenue accounted for 21% of our total revenue in 2010 compared to 23% in 2009.
~~For an analysis of our total revenue by region and industry, see the Revenue by Region and Revenue by Industry sections.~~
~~Software and Software-Related Service Revenue~~
Software revenue represents fees earned from the sale or license of software to customers. Support revenue represents fees earned from providing customers with technical support services and unspecified software upgrades, updates, and enhancements. Subscription and other software-related service revenue represents fees earned from software subscriptions, in the cloud offerings, rentals, and other types of software-related service contracts.
In 2010, software and software-related service revenue increased from €8,198 million in 2009 to €9,794 million, representing an increase of 19%. The software and software-related service revenue growth reflects a 13% increase from changes in volumes and prices and a 6%
~~increase from currency effects. SAP’s business without the Sybase results contributed 16% to this growth.~~
Software revenue increased from €2,607 million in 2009 to €3,265 million in 2010, representing an increase of €658 million or 25%. The software revenue growth consists of a 16% increase from changes in volumes and prices and a 9% increase from currency effects.
~~SAP Business Suite revenue contributed most to the overall organic increase in software revenue, followed by SAP BusinessObjects solutions as well as our products based on our SAP NetWeaver platform.~~
Our customer base increased again in 2010. Based on the value of software orders received, excluding Sybase, 18% of our software orders received in 2010 were attributable to deals with new customers (2009: 17%). The value of software orders received, excluding Sybase, increased 21% year over year. The total number of new software deals closed, excluding Sybase, increased by 5% to 44,875 (2009: 42,639).
Support revenue increased from €5,285 million in 2009 to €6,133 million in 2010, representing an increase of €848 million or 16%. This support revenue growth reflects a 10% increase from changes in volumes and prices and a 6% increase from currency effects. The SAP Enterprise Support maintenance service was the largest contributor to our support revenue. Our increased support revenuedecrease mainly resulted from ~~our stable customer base and the continued sale of software to existing and new customers throughout 2010.~~
Subscription and other software-related service revenue increased €90 million or 29% to €396 million compared to €306 million in 2009. The increase in revenue reflects a 25% increase from volumes and prices and a 4% increase from currency effects. It derives primarily from subscription contracts concluded in 2009 and 2010.
~~Part I~~
~~Item 5~~
~~Professional Services and Other Service Revenue~~
Professional services and other service revenue consists primarily of consulting and other service revenue. We generate most of our consulting revenue from the implementation of our software products. Other service revenue consists mainly of training revenue from providing educational services to customers and partners on the use of our software products and related topics, such as revenue from the Sybase acquired messaging services business.
Professional services and other service revenue increased €196 million or 8% from €2,474 million in 2009 to €2,670 million in 2010. The rise consists of a 2% increase from changes in volumes and prices and a 6% increase from currency effects.
~~Consulting revenue increased 6% from €2,074 million in 2009 to €2,197 million in~~
2010. The increase was derived from currency effects. In 2010, consulting contributed 82% of professional services and other service revenue (2009: 84%). Consulting revenue contributed 18% of total revenue (2009: 19%). A substantial portion of consulting revenue follows on from software license sales. Software license sales were relatively weak in 2009. In this context, the growth in consulting revenue in 2010 is unremarkable.
Other service revenue increased 18% from €400 million in 2009 to €473 million in 2010. The other service revenue increase consists of a 13% increase from changes in volumes and prices and a 5% increase from currency effects. This increase resulted primarily from training revenue, hosting revenue that the SAP IT organization generates by operating, managing, and maintaining SAP solutions and messaging revenue from Sybase, which we acquired in July 2010.
~~Revenue by Region and Industry~~
~~Revenue by Region~~

€ millions
   2010    2009    Change
in %
2010 vs
2009
Germany
   2,195       2,029       8 %
Rest of EMEA
   4,068       3,614       13 %
Total EMEA
   6,263       5,643       11 %
United States
   3,243       2,695       20 %
Rest of Americas
   1,192       925       29 %
Total Americas
   4,435       3,620       23 %
Japan
   513       476       8 %
Rest of APJ
   1,253       933       34 %
Total APJ
   1,766       1,409       25 %
Total revenue
   12,464       10,672       17 %
~~Part I~~
~~Item 5~~
~~Revenue by Industry~~

€ millions
   2010    2009    Change in %
2010 vs 2009
Manufacturing Discrete
   2,190       1,910       15 %
Manufacturing Process
   1,255       1,038       21 %
Consumer Products
   1,243       1,056       18 %
Energy & Natural Resources
   1,796       1,457       23 %
Services
   1,959       1,776       10 %
Financial Services
   1,058       909       16 %
Public Services
   1,246       1,086       15 %
Retail & Wholesale
   1,124       921       22 %
Healthcare & Life Sciences
   593       519       14 %
Total revenue
   12,464       10,672       17 %
~~Revenue by Region~~
~~The EMEA Region~~
In 2010, 50% of our total revenue was derived from the EMEA region (2009: 53%). Our revenue from the EMEA region grew 11% in 2010 to €6,263 million (2009: €5,643 million). This growth reflects an 8% increase from changes in volumes and prices and a 3% increase from currency effects. Total revenue in Germany increased 8% to €2,195 million in 2010 (2009: €2,029 million). Germany contributed 35% to our total revenue from the EMEA region, which is a decrease of 1 percentage point compared to 2009. Other EMEA revenue in 2010 originated primarily from the United Kingdom, France, Switzerland, the Netherlands, Italy, and Russia. Software and software-related service revenue generated in the EMEA region in 2010 totaled €4,883 million (2009: €4,336 million). Software and software-related service revenue accounted for 78% of all revenue in the EMEA region in 2010 (2009: 77%).
~~The Americas Region~~
Of our 2010 total revenue, 36% (2009: 34%) was recognized in the Americas region. Revenue in the region increased 23% to €4,435 million in 2010. Revenue from the United States rose 20% to €3,243 in 2010, which represents an increase of 13% from changes in volumes and prices and a 7% increase from
currency effects. The United States contributed 73% (2009: 74%) of the Americas region revenue. Revenue from the rest of the Americas region increased 29% to €1,192 million, which represents an increase of 15% from changes in volumes and prices and a 14% increase from currency effects. This revenue was principally generated in Canada, Brazil, and Mexico. In 2010, software and software-related service revenue from our Americas region grew 26% to €3,427 million (2009: €2,718 million). This growth included a 9% increase from currency effects. Software and software-related service revenue represented 77% of all revenue in the Americas region in 2010 (2009: 75%).
~~The APJ Region~~
In 2010, the APJ region contributed 14% (2009: 13%) to our total revenue, with most of this revenue being derived from Japan. In the APJ region, revenue rose by 25% to €1,766 million in 2010. Revenue from Japan increased 8% to €513 million, which represents 29% (2009: 34%) of our revenue from the APJ region. The revenue rise in Japan reflects a 5% decrease due to changes in volumes and prices and a 13% increase from currency effects. Together, the other countries in the APJ region — principally Australia, India, and China — saw a 34% increase in revenue, reflecting a 16% increase in volumes and prices and an 18% increase from currency effects. In 2010, our APJ
~~Part I~~
~~Item 5~~
region achieved software and software-related service revenue growth of 30% (including 17% from currency effects) to reach €1,485 million (2009: €1,144 million). Software and software-related service revenue represented 84% of all revenue in the APJ region in 2010 (2009: 81%).
~~Revenue by Industry~~
To help us better meet the requirements of existing and potential customers, we restructured our industry groups in 2011, and now serve nine sectors rather than six as in 2010. Accordingly we have adjusted our 2010 to 2009 comparison to nine industry sectors.
~~Based on the new nine industry sector structure and in comparison with our total revenue change in 2010, we outperformed in the~~
energy & natural resources industry sector with revenue of €1,796 million, which represents a growth rate of 23%, in retail & wholesale with an increase of 22% to €1,124 million, in manufacturing process with revenue of €1,255 million and an increase of 21% and in consumer products, where our total revenue amounted to €1,243 million, representing an increase of 18% compared to 2009. Financial services industries revenue grew 16% to €1,058 million. Healthcare & lifesciences achieved €593 million revenue and a year-over-year growth rate of 14%. Public services achieved €1,246 million revenue at a growth rate of 15%; discrete manufacturing industries revenue was €2,190 million, an increase of 15%, and service industries revenue grew 10% to €1,959 million.
~~Operating Profit and Margin~~
~~Total Operating Expenses~~

€ millions
   2010    % of total
revenue    2009    % of total
revenue    Change in %
2010 vs 2009
Cost of software and software-related services
   –1,823       –15%       –1,658       –16%       10%
Cost of professional services and other services
   –2,071       –17%       –1,851       –17%       12%
Research and development
   –1,729       –14%       –1,591       –15%       9%
Sales and marketing
   –2,645       –21%       –2,199       –21%       20%
General and administration
   –636       –5%       –564       –5%       13%
Restructuring
   3       0%       –198       –2%       <–100%
TomorrowNow litigation
   –981       –8%       –56       –1%       >100%
Other operating income/expense, net
   9       0%       33       0%       –73%
Total operating expenses
   –9,873       –79%       –8,084       –76%       22%
~~Operating Profit and Operating Margin~~

€ millions, except for operating margin
   2010    2009    Change in %
2010 vs 2009
Operating profit
   2,591       2,588       0%
Operating margin in %
   20.8%       24.3%       –3.5pp
~~Part I~~
~~Item 5~~
~~Operating Profit and Operating Margin~~
~~In 2010, our operating profit was almost unchanged~~prior year over year at €2,591 million (2009: €2,588 million) despite costs totaling €981 million (2009: €56 million) that negatively impacted our operating profit. These costs resulted from an increase in the provision we recorded for the TomorrowNow litigation. For more information about the TomorrowNow litigation, see the Notes to the Consolidated Financial Statements section, Note (24). Acquisition-related charges of €300 million (2009: €271 million) also had a greater effect on operating profit than in the previous year.
Our operating margin was 20.8% (2009: 24.3%), a decrease of 3.5 percentage points. Acquisition-related charges and effects from discontinued TomorrowNow activities negatively impacted our operating margin by 10.3 percentage points in 2010 (2009: 3.1 percentage points). In 2009, restructuring charges of €198 million impacted the operating margin by 1.9 percentage points, whereas in 2010 restructuring expenses did not materially impact our operating margin.
Our total operating expenses increased €1,789 million or 22% to €9,873 million compared with €8,084 million in 2009, primarily as a result of the greater expense from discontinued TomorrowNow activities and the acquisition of Sybase.
~~The sections that follow discuss our costs by line item. All cost line items below were impacted by the inclusion of Sybase for the months August to December 2010.~~
~~Cost of Software and Software-Related Services~~
Cost of software and software-related services consists primarily of various customer support costs, cost of developing custom solutions that address customers’ unique business requirements, and license fees and commissions paid to third parties for databases and the other complementary third-party products sublicensed by us to our customers.
Cost of software and software-related services increased 10% from €1,658 million in 2009 to €1,823 million in 2010. The principal reason for this increase was an increase in headcount to cover growing demand for SAP Enterprise Support in 2010, demand that was also reflected in growing software-related service revenue. The margin on our software and software-related services, defined as the ratio of the gross software and software-related services result to software and software-related service revenue, expressed as a percentage, was 81% in 2010 (2009: 80%).
~~Cost of Professional Services and Other Services~~
Cost of professional services and other services consists primarily of the cost of consulting and training personnel and the cost of bought-in third-party consulting and training resources. This item also includes sales and marketing expenses for our professional services and other services resulting from sales and marketing efforts where those efforts cannot be clearly distinguished from providing the professional services and other services.
Cost of professional services and other services rose 12% from €1,851 million in 2009 to €2,071 million in 2010. The margin on our professional services and other services, defined as the ratio of the gross professional services and other services result to professional services and other services revenue, expressed as a percentage, was 22% in 2010 (2009: 25%).
The reasons for the decline in the profitability of our professional services and other services were investments we made to prepare for growing demand in 2010 after the downturn in 2009 and costs incurred on unprofitable consulting contracts.
~~Research and Development~~
~~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 R&D~~
~~Part I~~
~~Item 5~~
~~activities, and amortization of the computer hardware and software we use for our R&D activities.~~
~~Our total R&D expense rose 9% to €1,729 million in 2010. The increase was mainly due to the inclusion of Sybase and to unfavorable currency effects.~~
~~Our R&D expense as a percentage of total revenue declined to 14% (2009: 15%). Total revenue increased more steeply than R&D expense, resulting in a reduction in the R&D ratio.~~
~~Sales and Marketing~~
~~Sales and marketing expense consists mainly of personnel costs and direct sales costs to support our sales and marketing lines of business in selling and marketing our products and services.~~
Sales and marketing expenses increased 20% to €2,645 million in 2010 compared to €2,199 million in 2009. The increase was mainly due to increased travel and marketing expenses driven by an increase in our business activity, and unfavorable currency effects. By increasing our sales force we accelerated our revenue growth. Sales and marketing expense as a percentage of total revenue was 21% in 2010, little changed since 2009.
~~General and Administration~~
~~Our general and administration (G&A) expense consists mainly of personnel costs to support our finance and administration functions.~~
Our G&A expense rose from €564 million in 2009 to €636 million in 2010, representing an increase of 13%. The increase in cost was mainly driven by the inclusion of Sybase and by unfavorable currency effects. G&A expenses as a percentage of total revenue in 2010 were consistent with the 2009 level of 5%.
~~Segment Discussions~~
The acquisition of Sybase, Inc. affected our internal reporting to management. In addition to our previously reported segments, Product, Consulting, and Training, we added a new reportable segment: Sybase. While this new segment is named Sybase, it is not identical to the acquired Sybase business since parts of the acquired business are now integrated with and thus reported in other segments, and certain SAP activities are now in our Sybase segment.
Total revenue and profit figures for each of our operating segments differ from the respective revenue and profit figures classified in our Consolidated Statements of Income because of several differences between our internal management reporting and our external IFRS reporting. For further details of our segment reporting and a reconciliation from our internal management reporting to our external IFRS reporting, see the Notes to the Consolidated Financial Statements section, Note (29).
~~Part I~~
~~Item 5~~
~~Segment Profitability~~

€ millions, unless otherwise stated
   2010    2009    Change in %
2010 vs. 2009
Product Segment

External revenue
   9,020       7,846       15
Segment expenses
   –3,625       –3,115       16
Segment contribution
   5,395       4,731       14
Segment profitability
   60%       60%       0pp
Consulting Segment

External revenue
   2,714       2,498       9
Segment expenses
   –1,968       –1,717       15
Segment contribution
   746       781       –4
Segment profitability
   27%       31%       –4pp
Training Segment

External revenue
   362       332       9
Segment expenses
   –226       –217       4
Segment contribution
   136       115       18
Segment profitability
   38%       35%       3pp
Sybase Segment

External revenue
   387       0       N/A
Segment expenses
   –260 ��    0       N/A
Segment contribution
   127       0       N/A
Segment profitability
   33%       N/A       N/A
~~Product Segment~~
The Product segment is primarily engaged in marketing and licensing our software products and providing support for them. Support includes technical support for our products, assistance in resolving problems, providing user documentation, unspecified software upgrades, updates, and enhancements.
~~The Product segment also performs certain custom development projects. The Product segment includes the sales, marketing, and service and support lines of business.~~
Product segment revenue increased 15% from €7,846 million in 2009 to €9,020 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 7% increase from currency effects. The increase was driven by an increase in customer licensing of our software, which in turn contributed to an increase in support revenue. Software revenue as part of the total Product segment revenue
increased 17% from €2,373 million in 2009 to €2,766 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 9% increase from currency effects. Support revenue increased 14% from €5,076 million in 2009 to €5,776 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 6% increase from currency effects. Subscription and other software-related service revenue increased 28% from €304 million in 2009 to €387 million in 2010.
Product segment expenses increased 16% from €3,115 million in 2009 to €3,625 million in 2010. Expenses from the sales line of business account for roughly 54% of the entire Product segment expenses, while expenses from the marketing line of business account for roughly 17% and expenses from the service and support line of business account for roughly 29% of overall Product segment expenses. The increase in Product segment expenses is related to accelerated business activities due to incipient economic recovery in 2010.
~~Part I~~
~~Item 5~~
~~Product segment contribution increased 14% from €4,731 million in 2009 to €5,395 million in 2010. Product segment profitability remained at 60% in 2010.~~
~~Consulting Segment~~
~~The Consulting segment is primarily engaged in the implementation of our software products.~~
Consulting segment revenue increased 9% from €2,498 million in 2009 to €2,714 million in 2010. This growth reflects a 3% increase from changes in volumes and prices and a 6% increase from currency effects. Geographically all regions contributed to this segment revenue increase, predominantly in North America and our APJ region.
Consulting segment expenses increased 15% from €1,717 million in 2009 to €1,968 million in 2010. This expense growth was primarily the result of investments to prepare for the increased demand in 2010 after the downturn in 2009.
~~Consulting segment contribution decreased 5% from €781 million in 2009 to €746 million in 2010. Consulting segment profitability was 27% in 2010 compared to 31% in 2009.~~
~~Training Segment~~
The Training segment is primarily engaged in providing educational services on the use of our software products and related topics for customers and partners. Training services include traditional classroom training at SAP training facilities, customer and partner-specific training and end-user training, as well as e-learning.
Training segment revenue was €362 million in 2010, which represents an increase of 9% from €332 million in 2009. This growth reflects a 2% increase from changes in volumes and prices and a 7% increase from currency effects. Geographically, the Americas and APJ regions were the primary contributors to our 2010 Training segment revenue increase.
~~In 2010, our Training segment revenue growth was especially high in North America, with a 29% increase, whereas Training segment revenue decreased 3% in the EMEA region.~~
~~Our Training segment expenses increased 4% from €217 million in 2009 to €226 million in 2010. Costs increased to support the growing business activities in 2010 after the downturn in 2009.~~
~~The Training segment contribution increased 18% from €115 million in 2009 to €136 million in 2010. Training segment profitability was 38% in 2010 compared to 35% in 2009.~~
~~Sybase Segment~~
The Sybase segment is primarily engaged in enabling the unwired enterprise for customers and partners by delivering enterprise and mobile software solutions for information management, development, and integration. The measurement of the result for the Sybase segment differs from the measurements for the other segments, as the Sybase segment result includes development, administration, and other corporate expenses while these expenses are excluded from the measurement of the results of the other segments.
~~Sybase segment revenue was €387 million, mainly driven by sales of databases, mobility solutions, and messaging services. Sybase segment expenses were €260 million in 2010.~~
~~The Sybase segment contribution was €127 million in 2010, resulting in a Sybase segment profitability of 33%.~~
~~Finance Income, Net~~
Finance income, net, improved to -€67 million (2009: -€80 million). Our finance income in 2010 was €73 million (2009: €37 million) and our finance costs were €140 million (2009: €117 million).
~~Finance income mainly consists of interest income from loans and receivables (e.g. cash,~~
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~~Item 5~~
cash equivalents, and current investments; €34 million in 2010 compared to €35 million in 2009). The decrease was mainly due to interest rate reductions which were partly offset by an increase in average liquidity in 2010 compared to 2009.
Finance cost mainly consists of interest expense on financial liabilities (€77 million in 2010 compared to €63 million in 2009). The increase compared to 2009 resulted mainly from the financial debt incurred in connection with the Sybase acquisition. We used bank loans, bonds, and private placements to finance this acquisition. For more information about these financing instruments, see the Notes to the Consolidated Financial Statements section, Note (18b). In addition, the pending TomorrowNow litigation caused interest expenses of €12 million in 2010 (2009: €0 million).
Another significant contribution to the finance income, net in 2010 came from the derivatives that we utilize to execute our financial risk management strategy. These derivatives caused time value effects that were reflected in interest income with an amount of €25 million (2009: €0 million) and in interest expense with an amount of €31 million (2009: €38 million).
~~Income Tax~~
~~The 2010 effective tax rate was 22.5% compared to 28.1% in 2009. Approximately 5 percentage points of this decrease resulted from the increase in provision recorded for the TomorrowNow litigation.~~taxes. For more information, see the Notes to the Consolidated Financial Statements section, Note (11).
FOREIGN CURRENCY EXCHANGE RATE EXPOSURE
Although our reporting currency is the euro, a significant portion of our business is conducted in currencies other than the euro. Since the Group’s entities usually conduct their business in their respective functional
currencies, our risk of exchange rate fluctuations from ongoing ordinary operations is not considered significant. However, occasionally we 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 (26) to our Consolidated Financial Statements. Also see Notes (3) and (25) for additional information on foreign currencies.
~~Approximately 69% and 67%~~In 2014, as in 2013, approximately 71% of our total revenue ~~2011 and 2010, respectively,~~ was attributable to operations in non-euro ~~participating~~ countries. ~~As a result, those revenues~~That revenue had to be translated into euros for financial reporting purposes. Fluctuations in the exchange value of
the euro had an unfavorable impact of €143 million on our total revenue for 2014, an unfavorable impact of ~~€195~~€734 million ~~profit before tax of €147 million and profit after tax of €123 million for 2011, and had favorable impacts~~ on our total revenue for 2013, and a favorable impact of ~~€705~~€548 million ~~profit before tax of €68 million and profit after tax of €72 million for 2010. For 2009 the euro had favorable impacts~~ on our total revenue of €18 million and our profit after tax of €1 million, whereas the euro had unfavorable impacts on our profit before tax of €12 million. In addition, we held foreign currency options as of December 31, 2011 to partially hedge the cash flow risk from the consideration expected to be paid in U.S. Dollar for ~~the acquisition of SuccessFactors, Inc. For more information see Note (4).~~2012.
The impact of foreign currency exchange rate fluctuations discussed in the preceding paragraph is calculated by translating current period figures in local currency to euros at the monthly average exchange rate for the corresponding month in the prior year. Our revenue analysis, included within the “Operating Results (IFRS)” section of ~~this~~ Item 5, discusses at times ~~increases and decreases due to~~the effect of currency ~~effects,~~movements which are calculated in the same manner.
LIQUIDITY AND CAPITAL RESOURCES
Overview
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 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 a corresponding underlying transaction. The rules for the use of derivatives and other rules and processes concerning the management of financial risks are collected in our treasury guideline document, 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 (25) to (27).

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~~OUTLOOK~~Liquidity Management
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, 2014, 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. We rarely invest in the financial assets of issuers with a credit rating lower than BBB, and such investments were not material in 2014.
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 the 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.
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 doing so, ensure a high level of independence, confidence, and financial flexibility.
After undergoing an external credit rating process, on September 19, 2014, SAP SE was assigned a first-time long-term issuer credit rating of “A2” by Moody’s and “A” by Standard & Poor’s, both with the outlook “Stable.”
Our general intention is to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and potentially repurchasing shares. The amount of future dividends and the extent of future repurchases of shares will be balanced with our effort to continue to maintain an adequate liquidity position.
Capital Structure
      2014    2013    Change (in %)
      € millions    % of Total
equity and
liabilities    € millions    % of Total
equity and
liabilities
Equity
   19,598       51       16,048       59       22
Current liabilities
   8,544       22       6,347       23       35
Non-current liabilities
   10,366       27       4,695       17       121
Liabilities
   18,909       49       11,043       41       71










Total equity and liabilities
   38,507       100       27,091       100       42
In 2014, we took out a two-tranche bank loan of €4,270 million in total and issued a three-tranche Eurobond of €2,750 million in total with
maturities of four to 12 years to finance the acquisition of Concur. In addition a €500 million short-term bank loan was taken for the acquisition
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of Fieldglass and was repaid in the same year. We also repaid a €500 million Eurobond and the last tranche of the promissory notes amounting to €86 million. Thus, the ratio of total financial debt to total equity and liabilities increased by 13 percentage points to 29% at the end of 2014 (16% as at December 31, 2013).
Total financial debt consists of current and non-current bank loans, bonds and private placements. For more information about our financial debt, see the Notes to the Consolidated Financial Statements section, Note (18).
As part of our financing activities, in 2015, the Company intends to repay a €550 million Eurobond as well as a US$300 million U.S. private placement tranche when they mature. Furthermore, we are planning to repay a substantial portion of our outstanding bank loans.
Total liabilities on December 31, 2014, mainly comprised financial liabilities of €11,542 million (of which €8,980 million are non-current). Financial liabilities on December 31, 2014, consisted largely of financial debt, which included amounts in euros (€8,799 million) and U.S. dollars (€2,276 million). On December 31, 2014, approximately 70% of financial debt was held at variable interest rates, partially swapped from fixed into variable using interest rate swaps. Total liabilities on December 31, 2014, also comprised non-financial liabilities. Most of these non-financial liabilities result from employee-related obligations.
For more information about financial and non-financial liabilities, see the Notes to the Consolidated Financial Statements section, Note (18).
Cash Flows and Liquidity
Group liquidity on December 31, 2014, primarily comprised amounts in euros and U.S. dollars. Current investments are included in other financial assets in the statement of financial position. Financial debts are included within financial liabilities in the statement of financial position.
Group Liquidity of the SAP Group
€ millions
   2014    2013    Change
Cash and cash equivalents
   3,328       2,748       580
Current investments
   95       93       2






Group liquidity
   3,423       2,841       582
Current financial debt
   –2,157       –586       –1,571






Net liquidity 1
   1,266       2,255       –989
Non-current financial debt
   –8,936       –3,722       –5,214






Net liquidity 2
   –7,670       –1,467       –6,203






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) as reported in our Consolidated Financial Statements.
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LOGO
Net liquidity is Group liquidity less total financial debt as defined above.
The increase in Group liquidity compared to 2013 was mainly financing activities in issuing bonds. They were partly offset by cash outflows for acquisitions (such as Concur and Fieldglass), dividend payments, and loan repayments.
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.
Analysis of Consolidated Statements of Cash Flows
Years ended December 31, Change in %
2014 vs. 2013 Change in %
2013 vs. 2012
€ millions
2014 2013 2012
Net cash flows from operating activities
3,499    3,832    3,822    –9    0
Net cash flows from investing activities
–7,240    –1,781    –5,964    >100    –70
Net cash flows from financing activities
4,298    –1,589    –194    <-100    >100
Analysis of Consolidated Statements of Cash Flows: 2014 compared to 2013
Net cash provided by operating activities decreased 9% year-over-year to €3,499 million in 2014 (2013: €3,832 million). Payments in connection with the TomorrowNow and Versata litigation had a €555 million negative effect on net cash provided by operating activities. A €61 million increase to €1,356 million in our income tax payments also negatively affected net cash provided by operating activities. In 2014, 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 65 days (2013: 62 days).
Cash outflows from investment activities increased significantly to €7,240 million in 2014 (2013: €1,781 million). The increase resulted principally from the Concur, Fieldglass, and SeeWhy acquisitions. For more information about current and planned capital expenditures, see the Investment Goals section.
Net cash inflows from financing activities were €4,298 million in 2014, compared to net cash outflows of €1,589 million in 2013. Cash inflows in 2014 were the result of issuing a €2,750 bond and drawing two tranches (of €1,270 million and €3,000 million) of a loan. Cash outflows arose chiefly from repayments of borrowings (€1,086 million) and the repayment of convertible bonds that we assumed in connection with our acquisition of Concur (US$1,160 million). The
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2013 cash outflows had resulted chiefly from dividends paid and the repayment of a €600 million bond.
The dividend payment of €1,194 million made in 2014 was greater than that of €1,013 million in the prior year because the dividend paid per share increased from €0.85 to €1.00.
Analysis of Consolidated Statements of Cash Flows: 2013 Compared to 2012
Net cash provided by operating activities remained stable in 2013 (€3,832 million) compared to the prior year (2012: €3,822 million). Increased income tax payments of €193 million to €1,295 million in 2013 burdened net cash flows from operating activities. In addition, days’ sales outstanding (DSO) for receivables, defined as average number of days from the raised invoice to cash receipt from the customer, was 62 days, a three-day increase compared to 2012 (59 days).
Cash outflows from investment activities totaled €1,781 million in 2013, much decreased from the 2012 figure of €5,964 million that were attributed mainly to business combinations of SuccessFactors and Ariba. In 2013, cash outflows were mainly driven by the acquisitions of consolidated companies (especially hybris) as well, for which we paid €1,160 million in total.
Cash outflows from financing activities totaled €1,589 million in 2013, compared to €194 million in 2012. In 2013, cash outflows were mainly driven by dividends paid and a repayment of an issued €600 million Eurobond. In addition, we took out a short-term bank loan in the amount of €1,000 million to finance the acquisition of hybris that was fully offset by repayments in the same amount and year. In the previous year, cash outflows from financing activities were mainly driven by repayments of a Eurobond tranche (€600 million) and several tranches (€611 million) of the promissory notes we issued in 2009 and dividends paid. This was almost fully compensated by a successfully placed Eurobond transaction totaling €1.3 billion and a U.S. private placement transaction of US$1.4 billion.
The decrease of total dividends paid in 2013 to €1,013 million (2012: €1,310 million) was due to
a decrease in dividend paid to €0.85 per share compared to €1.10 per share in the previous year, of which €0.35 per share was an extraordinary payout to celebrate our 40th anniversary in 2012.
Credit Facilities
Other sources of capital are available to us through various credit facilities, if required.
We are party to a revolving €2.0 billion credit facility contract with a current tenor of five years plus one extension option for an additional year. The credit line may be used for general corporate purposes. A possible future withdrawal is not bound to any financial covenants. Borrowings under the facility bear interest at the Euro Interbank Offered Rate (EURIBOR) or London Interbank Offered Rate (LIBOR) for the respective optional currency plus a margin ranging from 0.3% to 0.525%. We pay a commitment fee of 0.079% per annum on unused amounts of the available credit facility. So far, we have not used and do not currently foresee any need to use this credit facility.
As at December 31, 2014, SAP SE had additional available credit facilities totaling €471 million. Several of our foreign subsidiaries have credit facilities available that allow them to borrow funds in their local currencies at prevailing interest rates, generally to the extent SAP SE has guaranteed such amounts. As at December 31, 2014, approximately €54 million was available through such arrangements. There were immaterial borrowings outstanding under these credit facilities from our foreign subsidiaries as at December 31, 2014.
OFF-BALANCE SHEET ARRANGEMENTS
Several SAP entities have entered into operating leases for office space, hardware, cars and certain other equipment. These arrangements are sometimes referred to as a form of off-balance sheet financing. Rental expenses under these operating leases are set forth below under “Contractual Obligations.” We do not believe we have forms of material off-balance sheet arrangements that would require disclosure other than those already disclosed.
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CONTRACTUAL OBLIGATIONS
The table below presents our on- and off-balance sheet contractual obligations as of December 31, 2014:
Contractual obligations
      Payments due by period
€ millions
   Total    Less
than
1 year    1-3 years    3-5 years    More
than
5 years
Financial liabilities⁽¹⁾
   12,025       2,377       4,601       1,785       3,262
Derivative financial liabilities⁽¹⁾
   344       295       22       19       8
Operating lease obligations⁽³⁾
   1,332       262       374       355       341
Purchase obligations⁽³⁾
   859       479       236       81       62
Capital contribution commitments⁽³⁾
   77       77       0       0       0
Other non-current non-financial liabilities⁽²⁾
   219       0       93       24       101










Total
   14,856       3,490       5,326       2,265       3,775










⁽¹⁾
For more information on financial liabilities and derivative financial liabilities see Note (25) to our Consolidated Financial Statements.
⁽²⁾
For more information on other non-current non-financial liabilities see Note (18c) to our Consolidated Financial Statements.
⁽³⁾
See Note (23) to our Consolidated Financial Statements for additional information about operating lease obligations, purchase obligations, and capital contribution commitments. Our expected contributions to our pension and other post-employment benefit plans are not included in the table above. For more information on these contributions see Note (19a) to our Consolidated Financial Statements.
We expect to meet these contractual obligations with our existing cash, our cash flows from operations and our financing activities. The timing of payments for the above contractual obligations is based on payment schedules for those obligations where set payments exist. For other obligations with no set payment schedules, estimates as to the most likely timing of cash payments have been made. The ultimate timing of these future cash flows may differ from these estimates.
Obligations under Indemnifications and Guarantees
Our software license agreements and our cloud subscription agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third party’s intellectual property rights. In addition, we occasionally provide function or performance guarantees in routine consulting contracts and development arrangements. We also generally provide a six to twelve month warranty on our software. Our warranty liability is included in other provisions. For more information on other provisions see Note (19b) to our Consolidated Financial Statements. For more information on obligations and contingent liabilities refer to Note (3) and Note (23) in our Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
For information on our R&D activities see “Item 4. Information about SAP – Products, Research & Development, and Services.” For information on our R&D costs see “Item 5. Operating and Financial Review and Prospects – Operating Results (IFRS)” and for information related to our R&D employees see “Item 6. Directors, Senior Management and Employees – Employees.”
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements are prepared based on the accounting policies described in Note (3) to our Consolidated Financial Statements in this report. The application of such policies requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, revenues and expenses in our Consolidated Financial Statements. We base our judgments, estimates and assumptions on historical and forecast information, as well as 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
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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 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:
revenue recognition;
valuation of trade receivables;
accounting for share-based payment;
accounting for income tax;
accounting for business combinations;
subsequent accounting for other intangibles;
determination of operating segments;
accounting for legal contingencies; and
recognition of internally generated intangible assets from development.
Our management periodically discusses these critical accounting policies with the Audit Committee of the Supervisory Board. See Note (3c) to our Consolidated Financial Statements for further discussion on our critical accounting estimates and critical accounting policies.
NEW ACCOUNTING STANDARDS NOT YET ADOPTED
See Note (3e) to our Consolidated Financial Statements for our discussion on new accounting standards not yet adopted.
EXPECTED DEVELOPMENTS
Future Trends in the Global Economy
The European Central Bank (ECB) ~~expects serious structural problems~~forecasts that global economic activity will continue to ~~continue in~~regain
strength gradually but that the ~~advanced economies in 2012.~~recovery will remain modest. Economic prospects for the various countries and regions are becoming increasingly mixed: The ECB believes ~~tension on the international financial markets will persist, and hamper recovery. It expects the resilient emerging markets will drive the growth~~key advanced economies should do well in the ~~global economy. The International Monetary Fund (IMF) projects global economic growth in the middle of the single-digit percentage range in 2012, that is~~years to ~~say, slightly slower than in 2011. It forecasts that the growth rate in the advanced economies~~come; while structural problems will ~~be in the low single-digits, but trending upward. It projects growth in the upper single-digit percentages~~grow more severe and credit will become tighter in the emerging ~~markets.~~
~~In the Europe, Middle East, and Africa (EMEA) region, the ECB expects that the economy of the euro area will gradually recover~~economies. Developments in 2012. The recovery will, it suggests, be supported by solid global demand, very low short-term interest rates, and steps to stabilize the functionality of the financial sector. However, the real economy will be held back somewhat by problematic financial markets and government bond markets in the euro area. In contrast, the Organisationcurrent geopolitical flashpoints, for Economic Co-operation and Development (OECD) expects a mild recession in the euro countries in the first half of 2012. It expects some recovery in the second half, encouraged by government confidence-building measures. According to the ECB, the slow pace of political reform, continuing social unrest, and an uncertain global economy will impede growth and affect overall economic stability in some countriesexample in the Middle East and ~~North Africa in 2012.~~Ukraine, could also be a crucial factor, the ECB says.
In the Europe, Middle-East, and Africa (EMEA) region, economic growth may be slower than the worldwide average in 2015. Notably, growth in the euro area may remain weak. In the euro area, the ECB now expects annual growth of a little more than 1% in 2015 and 2016, which is a downward correction of its earlier forecasts. However, the ECB believes various monetary interventions could bear fruit in 2015, encouraging company investment. The ECB projects relatively robust growth in Central and Eastern Europe, rooted in a gradual increase in domestic demand. On the other hand, it expects export trade will be hampered by the geopolitical tensions between Russia and Ukraine.
Growth may also be slower than the global average in the Americas region in 2015, says the ECB. The ECB ~~foresees a slowing of~~predicts strong economic ~~recovery~~growth in ~~early 2012. The reasons for this include: Slow progress on~~ the ~~U.S. labor market and adverse~~United States in the future. Better conditions on the ~~financial markets.~~labor and housing markets and continuing easier finance should have a positive influence. However, the ECB believes that in Latin America growth will stay on a low level as commodity prices continue to fall and production costs increase. Clear differences in countries’ performance may remain. The ECB ~~also expects changes~~observes constraining factors in ~~U.S. public spending and finances~~Brazil in particular, whereas it notes that in Mexico growth may accelerate in years to ~~hold back growth even further~~come as ~~temporary~~
reductions in taxes and support for unemployment programs come to an end, although the unemployment situation eased unexpectedly in early 2012. The OECD does not expect the U.S. economy to regain momentum until after 2012.a result of that country’s far-reaching structural reforms.
InGrowth prospects remain mixed in the Asia Pacific Japan (APJ) region ~~divergent trends in Japan and~~for the ~~emerging markets will continue in 2012, says~~coming years, according to the ECB. ~~The Japanese~~In light of encouraging signs from housing and industrial output, the ECB expects positive numbers from Japan in 2015. It estimates that in 2015, the Chinese economy will ~~benefit from growing domestic demand generated by continued reconstruction~~grow slightly slower than in 2014. Consumer spending and more government stimulus programs, but will be held back by easing global demand, the ECB forecasts. The OECD also expects the Japanese economy could already see a slowdown in growth by the second half of the year if government reconstruction measurestrade are ~~not continued. According to the ECB, the emerging markets of Asia will see economic growth losing some momentum in 2012, but growth is still~~ expected to ~~be strong. This is because~~make the largest contributions to growth in China.
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Economic Trends – Year-Over-Year GDP Growth
%
   2013e 2014p    2015p
World
   3.3    3.3       3.5
Advanced economies
   1.3    1.8       2.4
Developing and emerging economies
   4.7    4.4       4.3
Europe, the Middle East, and Africa (EMEA)

Euro area
   –0.5    0.8       1.2
Germany
   0.2    1.5       1.3
Central and Eastern Europe
   2.8    2.7       2.9
Middle East and North Africa
   2.2    2.8       3.3
Sub-Saharan Africa
   5.2    4.8       4.9
Americas

United States
   2.2    2.4       3.6
Canada
   2.0    2.4       2.3
Central and South America, Caribbean
   2.8    1.2       1.3
Asia-Pacific-Japan (APJ)

Japan
   1.6    0.1       0.6
Asian developing economies
   6.6    6.5       6.4
China
   7.8    7.4       6.8
e = estimate; p = projection
Source: International Monetary Fund (IMF), World Economic Outlook Update January 2015, Cross Currents, as of ~~the expected turbulence on the financial markets worldwide and weak economies in some of the leading advanced countries, it explains.~~January 20, 2015, p.3
The various institutions still expect that their forecasts will be affected by high uncertainty and significant risks. The ECB believes the tensions on the financial markets may become even more problematic. The OECD predicts the sovereign debt crisis in the euro area and fiscal policy issues in the United States may affect global economic growth.
IT Market: The Outlook for ~~2012~~2015
~~The global~~Expansion of the worldwide IT market year-over-year will ~~continue~~slow slightly to ~~expand~~3.7% (software: 6.5%) in ~~2012, and it will do so more quickly than the global economy as a whole,~~2015, according to International Data Corporation (IDC), a market research firm based in the United States. It believes that across the advanced, emerging, and developing economies, there will be stable demand for IT in the coming years. However, it expects prices to come under increasing pressure as competing segments, such as cloud offerings and classic software products, react to one another. In IDC’s view, moreover, the future expansion of the IT market depends on the resilience of the global economy in the face of many risk factors, for example the Ebola epidemic, the activities of Islamic State in the Middle East, the troubles in Ukraine, and the political tension in Southeast Asia.
~~The rate of~~In the EMEA region, IDC expects overall IT market growth to decelerate to 3.0% in 2015. Nonetheless, it predicts growth in the ~~industrialized~~software and ~~emerging economies~~services segments of 5.3% and 3.3% respectively; both higher than in 2014. According
to IDC, IT spending in Western Europe will possibly grow 1.2% in 2015 – considerably more slowly than in 2014. The German IT market may grow only slightly more quickly than that, at 1.5%. In Central and Eastern Europe, IT spending growth could again ~~be mixed,~~increase, to 7.1% (Russia: 5.9%) in 2015, but in the Middle East and Africa it might slow to single-digit growth of 8.6%, IDC ~~expects.~~says.
In the Americas region, IDC ~~believes~~projects that in ~~2012~~2015 the IT market will continue to expand ~~only minimally~~at 3.9% – a similar rate to that in 2014. It forecasts 7.3% growth in the ~~industrialized economies~~software segment, as in 2014, and 2.7% growth in the services segment, somewhat slower than in 2014. IDC forecasts that IT spending may grow 3.5% in the United States and 5.7% in Latin America (Brazil: 3.2%; Mexico 6.3%) in 2015.
Expansion of overall IT spending in the APJ region may be sustained at 4.4% in 2015, according to IDC. That could include accelerated growth of 6.2% in the software segment. IDC expects IT market growth to slow by 0.2% in Japan and 4.4% in China in 2015.
Part I
Item 5
Trends in the IT Market – Increased IT Spending Year-Over-Year
%
   2013e 2014p    2015p
World

Total IT
   4.6    4.1       3.7
Hardware
   4.9    3.8       2.8
Packaged software
   7.4    6.1       6.5
Applications
   7.3    6.0       6.2
IT services
   2.6    3.3       3.5
Europe, Middle East, and Africa (EMEA)

Total IT
   3.1    3.6       3.0
Packaged software
   4.5    4.1       5.2
Applications
   4.5    4.2       5.0
IT services
   1.5    2.6       3.3
Americas

Total IT
   5.2    4.3       3.9
Packaged software
   8.9    7.3       7.3
Applications
   8.9    7.1       7.0
IT services
   2.8    3.1       2.7
Asia-Pacific-Japan (APJ)

Total IT
   5.7    4.4       4.4
Packaged software
   8.2    5.8       6.2
Applications
   7.8    6.0       5.9
IT services
   4.3    5.5       5.8
e = estimate, p = projection
Source: IDC Worldwide Black Book Q3 2014 Update
Impact on SAP
SAP expects to outperform the global economy and the IT industry again in 2015 in terms of revenue growth. The last years of growth momentum underscore our leadership in the transformation of the industry.
In 2014, we delivered on our Run Simple strategy to help our customers transform their businesses. SAP’s strong growth is driven by the SAP HANA platform, the broadest cloud portfolio, and the largest business network in the world. SAP powers the clear path to growth for businesses in the 21st century: run real time, run networked, Run Simple. We will continue to push relentlessly toward a much more predictable business model, in parallel we will further expand our core business and at the same time we will continue to expand our operating profit.
We are well-positioned and therefore confident we can achieve our medium-term targets for 2017 and 2020, assuming that the economic
environment and IT industry develop as currently forecasted. Balanced in terms of regions as well as industries, we are well-positioned with our product offering to offset smaller individual fluctuations in the global economy and IT market.
The significantly more volatile market environment challenges also SAP to reach its ambitious targets. Our market and the demands of our customers are changing rapidly. We anticipated these changes early and positioned ourselves strategically. 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 will further strengthen our position as the market leader of enterprise application software.
We plan to continue to invest in countries in which we expect significant growth. Such countries include Brazil, China, India, Russia, as well as countries in the Middle East and Africa. We therefore expect to see further future growth potential not only regionally but ~~quite substantially in the~~also with our

Part I

Item 5

~~emerging economies — some of which could see double-digit percentage growth. Investment bank Goldman Sachs is more circumspect than IDC~~broad product offering helping us reach our ambitious 2015 outlook targets and medium-term aspirations for 2017 and 2020.
Operational Targets for 2015(Non-IFRS)
Changes to Income Statement Structure
As outlined in the Service and Support section in this ~~regard. It predicts that global IT spending will grow much more slowly~~report, we have started to combine several of our services under our SAP ONE Service approach. In aligning our financial reporting with this change, starting in ~~2012 than it did~~2015, we are combining the revenue from premium support services with the revenue from professional services and other services in ~~2011.~~
~~In 2012, analysts identify~~a new services revenue line item in our income statement. Until 2014, revenues from premium support services were classified as support revenues. Simultaneously with this change, we are simplifying and clarifying the ~~greatest market potential~~labeling of several line items in ~~five areas. Cloud computing~~our income statement. This includes renaming the previous revenue subtotal labeled software and support (which included premium support revenues) to software licenses and support (which no longer includes premium support revenues). The previous revenue subtotal labeled software and software-related service revenue is ~~expected to move beyond Software as a Service (SaaS). Mobile~~renamed cloud and ~~mobile apps~~software and accordingly no longer includes premium support revenue, which is now reclassified under the new services revenue line item. The two revenue line items, cloud subscriptions and support and total revenue are ~~flourishing and becoming more important for enterprises. The analytics market is expected to expand, driven~~not affected by the increasing need for simulations, predictions, and optimization. Databases that can handle high data volumes are becoming strategic and are renewing the relationship between business and information technology. And in the slipstreamany of these ~~trends, applications will be surging ahead~~changes and remain unaltered.
Our outlook for 2015 and beyond as ~~well.~~outlined below is based on this modified income statement.
~~For its current EMEA region outlook IDC has revised its predictions for 2012 especially for Western Europe. It believes~~Revenue and Operating Profit Outlook
We are providing the ongoing debt crisis in the euro area will increasingly impact the economy and that companies will respond by investing less. Consequently, IT market growth in Western Europe will not exceed the low to middle single digit percentages in 2012, IDC forecasts.
~~Similarly, IDC has revised its~~following outlook for the ~~Americas region,~~full year 2015:
SAP expects full-year 2015 non-IFRS cloud subscriptions and support revenue to be in ~~particular~~a range of €1.95 billion to €2.05 billion at constant currencies (2014: €1.10 billion). The upper end of this range represents a growth rate of 86% at constant currencies. Concur and Fieldglass are expected to contribute approximately 50 percentage points to this growth.
SAP expects full year 2015 non-IFRS cloud and software revenue to increase by 8% to 10% at constant currencies (2014: €14.33 billion).
SAP expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion to €5.9 billion at constant currencies (2014: €5.64 billion).
While our full-year 2015 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by currency exchange rate fluctuations. In January 2015, we disclosed that if exchange rates remain at the December 2014 closing rates for the ~~United States compared with previous calculations. It~~rest of the year 2015, the Company expects the ~~U.S. IT market~~non-IFRS cloud and software revenue growth rate to ~~expand~~experience a currency benefit of approximately two percentage points and thenon-IFRS operating profit growth rate at actual currencies to experience a currency benefit of approximately one percentage point for thefull-year 2015. In March 2015, we updated this estimate by ~~a percentage in the middle of the single-digit range: Growth will be slightly slower in the hardware segment, but there will be constant single-digit growth in the software segment, it believes.~~
~~Looking~~disclosing if exchange rates remain at the ~~Asia Pacific Japan region, IDC predicts~~closing rates of March 6, 2015, the Company expects non-IFRS cloud and software revenue and non-IFRS operating profit growth rates at actual currency to experience a positive currency impact of approximately 12 percentage points and 17 percentage points respectively for the first quarter of 2015 and a positive currency effect of approximately 11 percentage points and 14 percentage points respectively for the full year 2015.
We expect that ~~IT sales in Japan~~non-IFRS total revenue will continue to ~~recuperate~~depend largely on the revenue from the impact of the March 2011 earthquake and tsunami. It expects the segment to grow several percent in 2012 with the help of publicly financed reconstruction programs. In the emerging economies of Asia, IDC expects double-digit IT sales growth.
In other words, IDC’s worries about the growth of the IT market in 2012 apply chiefly to Western Europe and the United States. IDC believes the risk to be greater there than elsewhere that IT spending might decline. The analysts remain optimistic in their projections and risk analyses for other countries. UBS, a major Swiss bank, views the market prospects and risks for North America in a rather more positive light than those for Western Europe. It believes that the public sector and the financial services industry in those countries may buy fewer IT services than before.
~~Forecast for SAP~~
~~Strategy for Profitable Growth~~
SAP seeks profitable growth across its portfolio of products and services. Our goal is to double our addressable market to US$230 billion and increase the number of people who use and benefit from SAP solutions to one billion by 2015. Our ability to deliver software-based innovation and value in target growth areas of applications, analytics, mobile, cloud and ~~database~~software. However, the revenue growth we expect from this is below the outlook provided for non-IFRS cloud subscriptions and technology, positions us favorably in segments of the enterprise market with higher growth than expected global GDP rates. SAP continues to invest and increase its presence and market share in countries experiencing high growth, such as Brazil, China, India, and Russia. At the same time, SAP’s combination of a stable, consistent core, together with breakthrough innovations, continues to expand our business in all operating regions, with double-digit growth in each region in 2011.
SAP’s ongoing growth depends on our ability to deliver innovative solutions to market and drive ongoing value for our customers. We continue to improve our research and development effectiveness, working in leaner teams to accelerate innovation cycles and engage more closely with our customers. We also are investing in our go-to-market channels to expand capacity and drive greater volume sales, while expanding our technology partner ecosystem to foster co-innovation as a force multiplier in creating new business value for our customers.support revenue.

Part I

Item 5

The following table shows the estimates of the items that represent the differences between our non-IFRS financial measures and our IFRS financial measures.
~~Go-to-Market Investment Delivers Customer Value~~Non-IFRS Measures
~~SAP goes to market by region, customer segment, and industry.~~
€ millions
Estimated
Amounts for 2015 Actual Amounts
for 2014
Revenue adjustments
< 20 19
Share-based payment expenses
520 to 560 290
Acquisition-related charges
670 to 720 562
Restructuring
150 to 250 126
In ~~each region,~~2014, we ~~concentrate our sales efforts on the fastest-growing markets~~incurred an expense of €309 million in connection with the ~~most business potential. We evolve~~TomorrowNow und Versata lawsuits. Versata and ~~invest~~SAP have entered into a patent license and settlement agreement in our go-to-market coverage model to effectively sell industry-specific solutions while increasing our engagement with customers in line-of-business functions (for example, human resources, sales, and marketing) and users of business analytics. We continue to provide companies of any size — small, midsize, and large — with new software purchasing options that align to their specific budgetary, resource and deployment preferences. In 2011, we reached a milestone of more than 1,000 companies running SAP Business ByDesign, which small businesses and midsize companies can use as a cloud-based platform. In addition, we introduced new cloud-solutions for large enterprises built on SAP Business ByDesign.Q3 2014.
~~Greater Volume and Co-Innovation Through an Open Ecosystem~~
SAP continues to engage an expanding partner ecosystem to increase market coverage, enhance our solutions portfolio, and spur innovation. SAP and its vibrant partner ecosystem offer greater choice and business value through the power of co-innovation, appealing to customers that want to avoid being “locked in” to a single vendor. SAP channel partners offer customers knowledgeable local delivery of solutions across industries and geographies. In 2011, SAP continued to substantially increase the share of our software revenue that we generate through indirect channels. SAP technology partners continue to drive our research agenda, enhance the SAP solution portfolio, and monetize new technology breakthroughs.
~~Organic Growth and Targeted Acquisitions~~
Organic growth remains the primary driver of SAP’s strategy. We continue to invest in our own product development and technology innovation, improving the speed, number of projects, and innovations brought to market. Our open ecosystem strategy enables us to leverage the innovative potential of our partners to drive customer value. We also will continue to acquire targeted, strategic, and “fill-in” technology to add to our broad solution offerings and improve our coverage in key strategic markets to best support our customers’ needs. On that front, we will be concentrating on the SuccessFactors acquisition and thus expanding our cloud business in 2012.
~~Operational Targets for 2012 (Non-IFRS)~~
~~Revenue and Operating Profit Outlook~~
In light of our continuing focus on the cloud business and considering our recent acquisition of SuccessFactors, we are widening the range of revenues for which acquisition-related deferred revenue write downs are adjusted for in determining our non-IFRS revenue and profit numbers. We continue to adjust for deferred revenue write downs, i.e. for revenues that would have been recognized had the acquired entities remained stand-alone entities but that we are not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. However, in the definitions of our non-IFRS measures used through 2011, such adjustments for deferred revenue write downs were limited to support revenue. From 2012 onwards, we will additionally make such deferred revenue write down adjustments for cloud subscription revenue and other similarly recurring revenues. All other non-IFRS measures will remain unchanged. As the deferred revenue write-down adjustments for recurring revenues other than support revenue from acquisitions that were executed through 2011 were immaterial, we do not restate prior period non-IFRS measures to align with the new definition.
~~Part I~~
~~Item 5~~
The ~~Executive Board is providing the following outlook for the full-year 2012 from today’s perspective:~~
We expect full-year 2012 non-IFRS software and software-related service revenue to increase in a range of 10% to 12% at constant currencies (2011: €11.35 billion). This includes a contribution of up to 2 percentage points from SuccessFactors’ business.
We expect full-year 2012 non-IFRS operating profit to be in a range of €5.05 billion to €5.25 billion at constant currencies (2011: €4.71 billion). Full-year 2012 non-IFRS operating profit excluding SuccessFactors is expected to be in a similar range.
~~We project~~company expects a full-year ~~2012 IFRS~~2015 effective tax rate (IFRS) of 25.0% to 26.0% (2014: 24.7%) and an effective tax rate (non-IFRS) of 26.5% to 27.5% ~~(2011: 27.9%) and a non-IFRS effective tax rate of 27.0% to 28.0% (2011: 26.6%~~(2014: 26.1%).
The growth we expect in software and software-related service revenue (non-IFRS) is based on our expectation of double-digit growth, at constant currencies, in our software revenue. The increase we expect in non-IFRS operating profit is based on the expectation that the operating margin, not including the SuccessFactors acquisition, will increase by 50 basis points due to increased total revenue and efficiency gains.
We present the following reconciliation from our 2011 IFRS software and software-related service revenue, IFRS total revenue, IFRS operating profit, and IFRS operating margin to the non-IFRS equivalents to facilitate comparison between IFRS numbers and the non-IFRS numbers in our 2012 outlook:
~~Reconciliations of IFRS to Non-IFRS Numbers for 2011~~

€ millions, unless otherwise stated
   IFRS Financial
Measure    Support
Revenue Not
Recorded
Under IFRS    Operating
Expenses¹⁾    Discontinued
Activities³⁾    Non-IFRS
Financial
Measure
Software and software-related service revenue
   11,319       27       N/A       N/A       11,346
Total revenue²⁾
   14,233       27       N/A       N/A       14,260
Operating profit²⁾
   4,881       27       519       –717       4,710
Operating margin in %
   34.3       0.1       3.6       –5.0       33.0
¹⁾
~~Included in operating expenses are acquisition-related charges, share-based payment expenses, and restructuring charges.~~
²⁾
~~These financial measures are the numerator or the denominator in the calculation of our IFRS and non-IFRS operating margin, and are included in this table for transparency.~~
³⁾
~~The discontinued activities include the results of our discontinued TomorrowNow business.~~
Goals for Liquidity and Finance
On December 31, 2014, we had a negative net liquidity. We ~~seek~~believe that our liquid assets combined with our undrawn credit facilities are sufficient to ~~maintain a positive net liquidity position at~~meet our present operating financing needs also in 2015 and, together with expected cash flows from operations, will support debt repayments and our currently planned capital expenditure requirements over the ~~end of 2012.~~near term and medium term. We intend to ~~reduce~~repay a US$300 million U.S. private placement and a €550 million Eurobond when they mature in October and November 2015, respectively. Furthermore, we are planning to repay a substantial amount of our ~~financial debt as~~outstanding bank loans and ~~when~~refinance another part through the debt ~~falls due. We will consider issuing new debt, such as~~
~~bonds or U.S. private placements, only if market conditions are advantageous. Depending on~~capital markets. By the ~~level~~time of ~~net liquidity~~this report, we ~~seek to achieve, we intend to continue to consider repurchasing shares~~have no concrete plans for ~~treasury in the~~ future ~~but not before the fourth quarter of 2012.~~
~~Part I~~
~~Item 5~~
share buybacks.
Investment Goals
~~Excepting acquisitions, our~~Our planned capital expenditures for ~~2012 will~~2015 and 2016, other than from business combinations, mainly comprise the construction activities described in Item 4. Information About SAP – Description of Property – Capital Expenditures. We expect investments from these activities of approximately €170 million during the next two years. These investments can be covered in full by operating cash ~~flow and will chiefly be spent~~flow.
Proposed Dividend
Until now, our policy has been to distribute more than 30% of profit after tax in dividend. In practice however, the payout has been greater than 35% of profit after tax in all recent years. We are therefore amending our policy, which from now on ~~new information technology.~~
As part of our growth and innovation strategy, we plan to invest around US$2 billion in China by 2015. This demonstrates our long-term strategic commitment to China, the world’s second largest economy. We have successfully grown our business in China over the past 20 years and now want to scale our operations to fully meet the needs of both enterprises and our ecosystem. Our SAP Labs and SAP Research facilities there will continue to drive innovation for our Chinese customer base. We will also create more research and development facilities, and hire the best people to work for us. Our objective is to help drive sustainable growth in China through informatization.
SAP continues to invest and increase its presence and market share in countries experiencing high growth. For example, at the end of 2011 we increased our sales forces in such countries. We have also opened a nearshore delivery center in Romania, and are looking to hire 400 consultants in that country by 2014. We intend to invest between €30 million and €40 million into the center, which is the overall investment that will go into training programs for employees and the cost of the headquarters. Further, we have decided to set up a new nearshore services center in Portugal, which we expect to be operational in the first half of 2012. The new services center will create 100 new jobs in 2012. These nearshore centers will be ~~SAP’s first units of this kind, working with clients across Europe, the Middle East, and Africa (EMEA).~~
~~Proposed Dividend~~
~~We plan~~ to ~~continue our dividend policy, which is that the payout ratio should be approximately 30% excluding the TomorrowNow litigation effect in the calculation. This results in~~pay a dividend of
~~€0.75 per share representing a payout ratio~~totaling more than 35% of ~~30% excluding the TomorrowNow litigation effect from the calculation.~~
~~In addition, we propose to reward our shareholders with a special dividend of €0.35 per share due to the 40th anniversary of SAP.~~
~~If the Annual General Meeting of Shareholders so resolves, we will therefore increase the dividend from €0.60 to €1.10 per share in 2012.~~profit after tax.
Premises on Which ~~our~~Our Outlook isIs Based
In preparing our outlook guidance, 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 ~~our expectation~~the assumption that wethere will ~~not benefit from any~~be no effects ~~in 2012~~ from a major ~~acquisition, without regard to the acquisition of SuccessFactors.~~acquisition.
~~Medium-Term Prospects~~Credit Facilities
Other sources of capital are available to us through various credit facilities, if required.
We ~~expect~~are party to a revolving €2.0 billion credit facility contract with a current tenor of five years plus one extension option for an additional year. The credit line may be used for general corporate purposes. A possible future withdrawal is not bound to any financial covenants. Borrowings under the facility bear interest at the Euro Interbank Offered Rate (EURIBOR) or London Interbank Offered Rate (LIBOR) for the respective optional currency plus a margin ranging from 0.3% to 0.525%. We pay a commitment fee of 0.079% per annum on unused amounts of the available credit facility. So far, we have not used and do not currently foresee any need to use this credit facility.
As at December 31, 2014, SAP SE had additional available credit facilities totaling €471 million. Several of our ~~business,~~foreign subsidiaries have credit facilities available that allow them to borrow funds in their local currencies at prevailing interest rates, generally to the extent SAP SE has guaranteed such amounts. As at December 31, 2014, approximately €54 million was available through such arrangements. There were immaterial borrowings outstanding under these credit facilities from our ~~revenue,~~foreign subsidiaries as at December 31, 2014.
OFF-BALANCE SHEET ARRANGEMENTS
Several SAP entities have entered into operating leases for office space, hardware, cars and certain other equipment. These arrangements are sometimes referred to as a form of off-balance sheet financing. Rental expenses under these operating leases are set forth below under “Contractual Obligations.” We do not believe we have forms of material off-balance sheet arrangements that would require disclosure other than those already disclosed.
Part I
Item 5
CONTRACTUAL OBLIGATIONS
The table below presents our ~~profit to grow, assuming there is a sustained recovery in the global economy. Our strategy is to increase software~~on- and ~~software-related service revenue and our operating margin through greater efficiency across all sales channels, services, our support infrastructure, and research and development.~~off-balance sheet contractual obligations as of December 31, 2014:
~~From today’s perspective we are aiming to increase our revenue to more than €20 billion by 2015. In the same period, we aim to widen our non-IFRS operating margin to 35%.~~
Contractual obligations
      Payments due by period
€ millions
   Total    Less
than
1 year    1-3 years    3-5 years    More
than
5 years
Financial liabilities⁽¹⁾
   12,025       2,377       4,601       1,785       3,262
Derivative financial liabilities⁽¹⁾
   344       295       22       19       8
Operating lease obligations⁽³⁾
   1,332       262       374       355       341
Purchase obligations⁽³⁾
   859       479       236       81       62
Capital contribution commitments⁽³⁾
   77       77       0       0       0
Other non-current non-financial liabilities⁽²⁾
   219       0       93       24       101










Total
   14,856       3,490       5,326       2,265       3,775










~~To achieve these goals, we want to further strengthen our position in our five market categories and have one billion users by 2015.~~
⁽¹⁾
For more information on financial liabilities and derivative financial liabilities see Note (25) to our Consolidated Financial Statements.
⁽²⁾
For more information on other non-current non-financial liabilities see Note (18c) to our Consolidated Financial Statements.
⁽³⁾
See Note (23) to our Consolidated Financial Statements for additional information about operating lease obligations, purchase obligations, and capital contribution commitments. Our expected contributions to our pension and other post-employment benefit plans are not included in the table above. For more information on these contributions see Note (19a) to our Consolidated Financial Statements.

We ~~want~~expect to ~~extend~~meet these contractual obligations with our ~~leadership~~existing cash, our cash flows from operations and our financing activities. The timing of payments for the above contractual obligations is based on payment schedules for those obligations where set payments exist. For other obligations with no set payment schedules, estimates as to the most likely timing of cash payments have been made. The ultimate timing of these future cash flows may differ from these estimates.
Obligations under Indemnifications and Guarantees
Our software license agreements and our cloud subscription agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third party’s intellectual property rights. In addition, we occasionally provide function or performance guarantees in routine consulting contracts and development arrangements. We also generally provide a six to twelve month warranty on our software. Our warranty liability is included in other provisions. For more information on other provisions see Note (19b) to our Consolidated Financial Statements. For more information on obligations and contingent liabilities refer to Note (3) and Note (23) in our Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
For information on our R&D activities see “Item 4. Information about SAP – Products, Research & Development, and Services.” For information on our R&D costs see “Item 5. Operating and Financial Review and Prospects – Operating Results (IFRS)” and for information related to our R&D employees see “Item 6. Directors, Senior Management and Employees – Employees.”
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements are prepared based on the ~~applications segment.~~
accounting policies described in Note (3) to our Consolidated Financial Statements in this report. The application of such policies requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, revenues and expenses in our Consolidated Financial Statements. We ~~want~~base our judgments, estimates and assumptions on historical and forecast information, as well as regional and industry economic conditions in which we or our customers operate, changes to ~~extend~~which could adversely affect our ~~market share in analytics.~~estimates. Although we believe we have made reasonable estimates about the ultimate resolution of the underlying uncertainties, no assurance can be

Part I

Item 5

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 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 want~~revenue recognition;
valuation of trade receivables;
accounting for share-based payment;
accounting for income tax;
accounting for business combinations;
subsequent accounting for other intangibles;
determination of operating segments;
accounting for legal contingencies; and
recognition of internally generated intangible assets from development.
Our management periodically discusses these critical accounting policies with the Audit Committee of the Supervisory Board. See Note (3c) to ~~extend~~our Consolidated Financial Statements for further discussion on our critical accounting estimates and critical accounting policies.
NEW ACCOUNTING STANDARDS NOT YET ADOPTED
See Note (3e) to our Consolidated Financial Statements for our discussion on new accounting standards not yet adopted.
EXPECTED DEVELOPMENTS
Future Trends in the Global Economy
The European Central Bank (ECB) forecasts that global economic activity will continue to regain
strength gradually but that the recovery will remain modest. Economic prospects for the various countries and regions are becoming increasingly mixed: The ECB believes key advanced economies should do well in the years to come; while structural problems will grow more severe and credit will become tighter in the emerging economies. Developments in current geopolitical flashpoints, for example in the Middle East and Ukraine, could also be a crucial factor, the ECB says.
In the Europe, Middle-East, and Africa (EMEA) region, economic growth may be slower than the worldwide average in 2015. Notably, growth in the euro area may remain weak. In the euro area, the ECB now expects annual growth of a little more than 1% in 2015 and 2016, which is a downward correction of its earlier forecasts. However, the ECB believes various monetary interventions could bear fruit in 2015, encouraging company investment. The ECB projects relatively robust growth in Central and Eastern Europe, rooted in a gradual increase in domestic demand. On the other hand, it expects export trade will be hampered by the geopolitical tensions between Russia and Ukraine.
Growth may also be slower than the global average in the Americas region in 2015, says the ECB. The ECB predicts strong economic growth in the United States in the future. Better conditions on the labor and housing markets and continuing easier finance should have a positive influence. However, the ECB believes that in Latin America growth will stay on a low level as commodity prices continue to fall and production costs increase. Clear differences in countries’ performance may remain. The ECB observes constraining factors in Brazil in particular, whereas it notes that in Mexico growth may accelerate in years to come as a result of that country’s far-reaching structural reforms.
Growth prospects remain mixed in the Asia Pacific Japan (APJ) region for the coming years, according to the ECB. In light of encouraging signs from housing and industrial output, the ECB expects positive numbers from Japan in 2015. It estimates that in 2015, the Chinese economy will grow slightly slower than in 2014. Consumer spending and trade are expected to make the largest contributions to growth in China.
Part I
Item 5
Economic Trends – Year-Over-Year GDP Growth
%
   2013e 2014p    2015p
World
   3.3    3.3       3.5
Advanced economies
   1.3    1.8       2.4
Developing and emerging economies
   4.7    4.4       4.3
Europe, the Middle East, and Africa (EMEA)

Euro area
   –0.5    0.8       1.2
Germany
   0.2    1.5       1.3
Central and Eastern Europe
   2.8    2.7       2.9
Middle East and North Africa
   2.2    2.8       3.3
Sub-Saharan Africa
   5.2    4.8       4.9
Americas

United States
   2.2    2.4       3.6
Canada
   2.0    2.4       2.3
Central and South America, Caribbean
   2.8    1.2       1.3
Asia-Pacific-Japan (APJ)

Japan
   1.6    0.1       0.6
Asian developing economies
   6.6    6.5       6.4
China
   7.8    7.4       6.8
e = estimate; p = projection
Source: International Monetary Fund (IMF), World Economic Outlook Update January 2015, Cross Currents, as of January 20, 2015, p.3
IT Market: The Outlook for 2015
Expansion of the worldwide IT market year-over-year will slow slightly to 3.7% (software: 6.5%) in 2015, according to International Data Corporation (IDC), a market research firm based in the United States. It believes that across the advanced, emerging, and developing economies, there will be stable demand for IT in the coming years. However, it expects prices to come under increasing pressure as competing segments, such as cloud offerings and classic software products, react to one another. In IDC’s view, moreover, the future expansion of the IT market depends on the resilience of the global economy in the face of many risk factors, for example the Ebola epidemic, the activities of Islamic State in the Middle East, the troubles in Ukraine, and the political tension in Southeast Asia.
In the EMEA region, IDC expects overall IT market growth to decelerate to 3.0% in 2015. Nonetheless, it predicts growth in the software and services segments of 5.3% and 3.3% respectively; both higher than in 2014. According
to IDC, IT spending in Western Europe will possibly grow 1.2% in 2015 – considerably more slowly than in 2014. The German IT market may grow only slightly more quickly than that, at 1.5%. In Central and Eastern Europe, IT spending growth could again increase, to 7.1% (Russia: 5.9%) in 2015, but in the Middle East and Africa it might slow to single-digit growth of 8.6%, IDC says.
In the Americas region, IDC projects that in 2015 the IT market will continue to expand at 3.9% – a similar rate to that in 2014. It forecasts 7.3% growth in the software segment, as in 2014, and 2.7% growth in the services segment, somewhat slower than in 2014. IDC forecasts that IT spending may grow 3.5% in the United States and 5.7% in Latin America (Brazil: 3.2%; Mexico 6.3%) in 2015.
Expansion of overall IT spending in the APJ region may be sustained at 4.4% in 2015, according to IDC. That could include accelerated growth of 6.2% in the software segment. IDC expects IT market growth to slow by 0.2% in Japan and 4.4% in China in 2015.
Part I
Item 5
Trends in the IT Market – Increased IT Spending Year-Over-Year
%
   2013e 2014p    2015p
World

Total IT
   4.6    4.1       3.7
Hardware
   4.9    3.8       2.8
Packaged software
   7.4    6.1       6.5
Applications
   7.3    6.0       6.2
IT services
   2.6    3.3       3.5
Europe, Middle East, and Africa (EMEA)

Total IT
   3.1    3.6       3.0
Packaged software
   4.5    4.1       5.2
Applications
   4.5    4.2       5.0
IT services
   1.5    2.6       3.3
Americas

Total IT
   5.2    4.3       3.9
Packaged software
   8.9    7.3       7.3
Applications
   8.9    7.1       7.0
IT services
   2.8    3.1       2.7
Asia-Pacific-Japan (APJ)

Total IT
   5.7    4.4       4.4
Packaged software
   8.2    5.8       6.2
Applications
   7.8    6.0       5.9
IT services
   4.3    5.5       5.8
e = estimate, p = projection
Source: IDC Worldwide Black Book Q3 2014 Update
Impact on SAP
SAP expects to outperform the global economy and the IT industry again in 2015 in terms of revenue growth. The last years of growth momentum underscore our leadership in ~~mobile computing.~~
~~We want to become a profitable market leader in cloud computing, generating €2 billion revenue in this segment by 2015.~~
~~We want to become~~ the ~~fastest-growing provider~~transformation of ~~databases and technology.~~
~~Our plan is for indirect sales to be contributing up to 40% of total revenue by 2015.~~the industry.
~~SAP’s vision~~In 2014, we delivered on our Run Simple strategy to help our customers transform their businesses. SAP’s strong growth is driven by the ~~world run better comes to life in product innovation that drives~~SAP HANA platform, the broadest cloud portfolio, and the largest business value for our customers. By delivering on our product road map, SAP is powering a market-wide transformation in how people and organizations work together and run better. Building on a track record of innovation, SAP is again at the forefront of a major shiftnetwork in the ~~IT sector, away from commoditized hardware~~world. SAP powers the clear path to growth for businesses in the 21st century: run real time, run networked, Run Simple. We will continue to push relentlessly toward a much more predictable business model, in parallel we will further expand our core business and ~~toward renewed investment in differentiating IT: business software that drives efficiency, agility, and growth.~~
The stability and consistency of SAP’s core suite of applications is a competitive advantage for SAP and our customers. In 2011, SAP committed to faster cycles of innovation with minimum disruption to customer operations, and extended maintenance for core applications until 2020. This long-term planning security differentiates SAP within the software industry and demonstrates our commitment to our customers’ success. Our customer-focused innovation strategy also concentrates on three areas that will transform the way business is done – mobile computing, in-memory computing, and cloud computing. This combination of nondisruptive innovation at the core and breakthrough innovation helps our customers lower total cost of ownership, increase productivity, and accelerate their own business innovation at the same ~~time. It~~time we will ~~enable us~~continue to ~~provide business value~~expand our operating profit.
We are well-positioned and ~~grow~~therefore confident we can achieve our medium-term targets for 2017 and 2020, assuming that the economic
environment and IT industry develop as currently forecasted. Balanced in terms of regions as well as industries, we are well-positioned with our product offering to offset smaller individual fluctuations in the global economy and IT market.
The significantly more volatile market environment challenges also SAP to reach its ambitious targets. Our market and the demands of our customers are changing rapidly. We anticipated these changes early and positioned ourselves strategically. 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 will further strengthen our position as the market leader of enterprise application software.
We plan to continue to invest in countries in which we expect significant growth. Such countries include Brazil, China, India, Russia, as well as countries in the ~~five market categories on which we focus: applications; analytics; mobile; cloud;~~Middle East and ~~database and technology.~~
~~LIQUIDITY AND CAPITAL RESOURCES~~
~~Overview~~
~~Centralized Financial Management~~
Africa. We ~~use global centralized financial management~~therefore expect 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 by the Group, so that liquid assets across the Group can be consolidated, monitored, and invested in accordancesee further future growth potential not only regionally but also with Group policy. High levels of liquid assets provide a strategic reserve, helping to 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 a corresponding underlying transaction. The rules for the use of derivatives and other rules and processes concerning the management of financial risks are collected in our treasury guideline document, 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 (25) to (27).
~~Liquidity Management~~
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

Part I

Item 5

broad product offering helping us reach our ambitious 2015 outlook targets and medium-term aspirations for 2017 and 2020.
Operational Targets for 2015(Non-IFRS)
Changes to Income Statement Structure
As outlined in the Service and Support section in this report, we have started to combine several of our services under our SAP ONE Service approach. In aligning our financial reporting with this change, starting in 2015, we are combining the revenue from premium support services with the revenue from professional services and other services in a new services revenue line item in our income statement. Until 2014, revenues from premium support services were classified as support revenues. Simultaneously with this change, we are simplifying and clarifying the labeling of several line items in our income statement. This includes renaming the previous revenue subtotal labeled software and support (which included premium support revenues) to software licenses and support (which no longer includes premium support revenues). The previous revenue subtotal labeled software and software-related service revenue is renamed cloud and software and accordingly no longer includes premium support revenue, which is now reclassified under the new services revenue line item. The two revenue line items, cloud subscriptions and support and total revenue are not affected by any of these changes and remain unaltered.
Our outlook for 2015 and beyond as outlined below is based on this modified income statement.
Revenue and Operating Profit Outlook
We are providing the following outlook for the full year 2015:
SAP expects full-year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of €1.95 billion to €2.05 billion at constant currencies (2014: €1.10 billion). The upper end of this range represents a growth rate of 86% at constant currencies. Concur and Fieldglass are expected to ~~acquire businesses,~~contribute approximately 50 percentage points to ~~pay dividends on~~this growth.
SAP expects full year 2015 non-IFRS cloud and software revenue to increase by 8% to 10% at constant currencies (2014: €14.33 billion).
SAP expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion to €5.9 billion at constant currencies (2014: €5.64 billion).
While our ~~shares,~~full-year 2015 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by currency exchange rate fluctuations. In January 2015, we disclosed that if exchange rates remain at the December 2014 closing rates for the rest of the year 2015, the Company expects thenon-IFRS cloud and software revenue growth rate to ~~buy back SAP shares~~experience a currency benefit of approximately two percentage points and thenon-IFRS operating profit growth rate at actual currencies to experience a currency benefit of approximately one percentage point for thefull-year 2015. In March 2015, we updated this estimate by disclosing if exchange rates remain at the closing rates of March 6, 2015, the Company expects non-IFRS cloud and software revenue and non-IFRS operating profit growth rates at actual currency to experience a positive currency impact of approximately 12 percentage points and 17 percentage points respectively for the first quarter of 2015 and a positive currency effect of approximately 11 percentage points and 14 percentage points respectively for the full year 2015.
We expect that non-IFRS total revenue will continue to depend largely on the ~~open market.~~ 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.
Part I
Item 5
The following table shows the estimates of the items that represent the differences between our non-IFRS financial measures and our IFRS financial measures.
Non-IFRS Measures
€ millions
Estimated
Amounts for 2015 Actual Amounts
for 2014
Revenue adjustments
< 20 19
Share-based payment expenses
520 to 560 290
Acquisition-related charges
670 to 720 562
Restructuring
150 to 250 126
In 2014, we incurred an expense of €309 million in connection with the TomorrowNow und Versata lawsuits. Versata and SAP have entered into a patent license and settlement agreement in Q3 2014.
The company expects a full-year 2015 effective tax rate (IFRS) of 25.0% to 26.0% (2014: 24.7%) and an effective tax rate (non-IFRS) of 26.5% to 27.5% (2014: 26.1%).
Goals for Liquidity and Finance
On December 31, ~~2011, 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~~2014, we had a minimum credit rating of A-, 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. We rarely invest in the financial assets of issuers with a credit rating lower than A-, and such investments were not material in 2011.
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 2015 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.
~~To expand~~ We intend to repay a US$300 million U.S. private placement and a €550 million Eurobond when they mature in October and November 2015, respectively. Furthermore, we are planning to repay a substantial amount of our ~~business,~~outstanding bank loans and refinance another part through the debt capital markets. By the time of this report, we have ~~made~~no concrete plans for future share buybacks.
Investment Goals
Our planned capital expenditures for 2015 and 2016, other than from business combinations, mainly comprise the construction activities described in Item 4. Information About SAP – Description of Property – Capital Expenditures. We expect ~~to continue making acquisitions~~investments from these activities of ~~businesses, products, and technologies. For more information about~~approximately €170 million during the ~~financial debt incurred~~next two years. These investments can be covered in ~~2010 for that purpose, mainly in connection with the acquisition of Sybase, see the Cash Flows and Liquidity section. Depending on our future~~full by operating 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.
~~Capital Structure Management~~
~~The primary objective of our capital structure management is to maintain a strong~~flow.
~~financial profile for investor, creditor, and customer confidence and~~Proposed Dividend
Until now, our policy has been to ~~support~~distribute more than 30% of profit after tax in dividend. In practice however, the ~~growth~~payout has been greater than 35% of profit after tax in all recent years. We are therefore amending our ~~business. We seek~~policy, which from now on will be to ~~maintain~~pay a ~~capital structure~~dividend totaling more than 35% of profit after tax.
Premises on Which Our Outlook Is Based
In preparing our outlook guidance, we have taken into account all events known to us at the time we prepared this report that ~~will allow us to cover our funding requirements through~~could influence SAP’s business going forward.
Among the ~~capital markets at reasonable conditions, and in so doing, ensure a high level of independence, confidence, and financial flexibility.~~
~~We currently do not have a credit rating with any agency. We do not believe that a rating would have a substantial effect~~premises on ~~our current or future borrowing conditions and financing options.~~
~~Our goal~~which this outlook is ~~to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and repurchasing shares. The amount of future dividends~~based are those presented concerning economic development and the ~~extent of future repurchases of shares~~assumption that there will be balanced with our effort to continue to maintain an adequate liquidity position. For more information about dividends and share repurchases and about our current capital structure ratios, see the Notes to the Consolidated Financial Statements section, Note (22).
~~Cash Flows and Liquidity~~
Total Group liquidity on December 31, 2011, primarily comprised amounts in euros (€3,737 million) and U.S. dollars (€833 million). Current investments are included in other financial assets on the statement of financial position. Bank loans, private placement transactions, and bonds are included within financial liabilities on the statement of financial position. Financial debt on December 31, 2011, primarily comprised amounts in euros (€2,999 million) and U.S. dollars (€966 million). Around 3% of our financial debt is held at variable interest rates and is not hedged.
~~Part I~~
~~Item 5~~
~~Analysis of Net Liquidity~~

€ millions
   2011    2010    Change
Cash and cash equivalents
   4,965       3,518       1,447
Current investments
   636       10       626






Total Group liquidity
   5,601       3,528       2,073






Current bank loans
   101       1       100
Current private placement transaction
   423       0       423
Current bond
   600       0       600






Net liquidity 1
   4,477       3,527       950






Non-current bank loans
   1       1,106       –1,105
Non-current private placement transaction
   1,240       1,071       169
Non-current bond
   1,600       2,200       –600






Net liquidity 2
   1,636       –850       2,486






Total 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) as reported in our IFRS Consolidated Financial Statements.~~
Total financial debt consists of current financial liabilities (for example, overdrafts, current bank loans, bonds or private placements) and non-current financial liabilities (for example, non-current bank loans, bonds, or private placements) as reported in our IFRS Consolidated Financial Statements. For more information about our financial debt, see the Notes to the Consolidated Financial Statements section, Note (18).
~~Net liquidity is total Group liquidity less total financial debt as defined above. Net liquidity should be considered in addition to, and not as~~no effects from a ~~substitute for, cash and cash equivalents, other financial assets, and financial liabilities included in our IFRS Consolidated Financial Statements.~~major acquisition.
~~The increase in total Group liquidity from 2010 was mainly due to the positive cash inflows from our operations.~~
~~Part I~~
~~Item 5~~
~~For information about the impact of cash, cash equivalents, current investments, and our financial liabilities on our income statements, see~~
~~the analysis of our finance income, net, in the Operating Results (IFRS) section.~~
~~Analysis of Consolidated Statements of Cash Flows~~

   Years ended December 31,
€ millions
   2011    2010    2009    Change in % 2011
vs. 2010    Change in % 2010
vs. 2009
Net cash flows from operating activities
   3,775       2,922       3,019       29       –3
Net cash flows from investing activities
   –1,226       –3,994       –299       –69       >100
Net cash flows from financing activities
   –1,176       2,520       –2,170       <–100       <–100
~~Analysis of Consolidated Statements of Cash Flow: 2011 compared to 2010~~
Net cash provided by operating activities improved €853 million or 29% to €3,775 million in 2011 (2010: €2,922 million). The year’s good sales figures were the factor with the greatest effect on operating cash flow in 2011. By effective management of working capital, we were again able to reduce the days’ sales outstanding (DSO) for receivables, defined as average number of days from revenue recognition to cash receipt from the customer. In 2011, we reduced DSO by five days to 60 days (2010: 65 days).
Cash outflows from investment activities totaled €1,226 million in 2011, much reduced from the 2010 figure of €3,994 million. In 2011, cash outflows were mainly driven by investments in time deposits and German government bonds, and also by our business and infrastructure following the acquisition of tangible and intangible assets. In 2011, we paid €188 million for the acquisition of consolidated companies compared to €4,194 million in 2010. Much of the 2010 outflow was attributable to the purchase price paid for the acquisition of Sybase.
Cash outflows from financing activities totaled €1,176 million in 2011, compared to cash inflows of €2,520 million in 2010. Our 2011 cash outflows were mainly due to the repayment of a credit facility we entered into in connection
with our acquisition of Sybase. This was partly offset by a private placement completed in the United States on June 1, 2011, which led to a cash inflow of US$750 million. In the previous year, cash inflows were driven mainly by the incoming payments from our financing activities related to the acquisition of Sybase.
The increase in total dividend to €713 million was due to an increase in the dividend paid from €0.50 per share in the previous year to €0.60 in the reporting year (total dividend payout in 2010: €594 million). In 2011, we repurchased shares for treasury in the amount of €246 million (2010: €220 million).
~~Analysis of Consolidated Statements of Cash Flow: 2010 Compared to 2009~~
Net cash provided by operating activities decreased €97 million or 3% to €2,922 million in 2010 (2009: €3,019 million). The comparative operating cash inflows in 2009 had, however, been supported by payments from customers on trade receivables for which payment was deferred in 2008 in the context of that year’s financial crisis. The €102 million we paid out in connection with the TomorrowNow litigation had a negative effect on 2010 operating cash flows. This was partly offset by the effective management of our working capital as evidenced by a decrease of our average collection period, which is measured in days sales outstanding, or DSO (defined as average number of days from
~~Part I~~
~~Item 5~~
~~revenue recognition to cash receipt from the customer) by 14 days from 79 days in 2009 to 65 days in 2010.~~
Net cash used in investing activities increased significantly from €299 million in 2009 to €3,994 million in 2010 mainly due to our acquisition of Sybase in 2010. In 2010, we invested €334 million in our technology and business infrastructure by purchasing intangible assets and property, plant, and equipment, a significant portion of which represented the purchase of patents, vehicles, IT hardware, and the cost of constructing office buildings (2009: €225 million).
Net cash inflows from financing activities were €2,520 million in 2010 compared to net cash outflows of €2,170 million in 2009. The net cash inflows in 2010 were mainly due to the proceeds from our financing transactions conducted in connection with the Sybase acquisition. In total, the financing transactions conducted in 2010 led to cash inflows in the amount of €5,380 million of which €2,196 million were used to partly repay the acquisition-related term loan and assumed outstanding convertible bonds from Sybase. The net cash outflows in 2009 were mainly due to the repayment of the credit facility we entered into in connection with our acquisition of Business Objects. The dividend distributed in 2010 was €594 million, unchanged from the previous year (2009: €594 million). We repurchased shares for treasury in the amount of €220 million in 2010 (2009: €0 million).
Credit Facilities
Other sources of capital are available to us through various credit facilities, if required.
We are party to a revolving ~~€1.5~~€2.0 billion ~~syndicated~~ credit facility ~~agreement~~contract with ~~an initial term~~a current tenor of five years ~~ending in December~~
~~2015.~~plus one extension option for an additional year. The ~~use of the facility is not restricted by any financial covenants. Potential proceeds are~~credit line may be used for general corporate purposes. A possible future withdrawal is not bound to any financial covenants. Borrowings under the facility bear interest at the ~~euro interbank offered rate~~Euro Interbank Offered Rate (EURIBOR) or London ~~interbank offered rate~~Interbank Offered Rate (LIBOR) for the respective optional currency plus a margin ranging from 450.3% to ~~75 basis points that depends on the amount drawn.~~0.525%. We pay a commitment fee of ~~15.75 basis points~~0.079% per annum on unused amounts of the available credit facility. So far, we have not used and do not currently foresee any need to use this credit facility. ~~Consequently, there were no borrowings outstanding under the facility as at December 31, 2011.~~
As at December 31, ~~2011,~~2014, SAP AGSE had additional available credit facilities totaling ~~approximately €490~~€471 million. ~~As at December 31, 2011, there were no borrowings outstanding under these credit facilities.~~ Several of our foreign subsidiaries have credit facilities available that allow them to borrow funds in their local currencies at prevailing interest rates, generally to the extent SAP AGSE has guaranteed such amounts. As at December 31, ~~2011,~~2014, approximately €54 million was available through such arrangements. ~~Total aggregate~~There were immaterial borrowings outstanding under these ~~lines of~~ credit ~~amounted to €1 million~~facilities from our foreign subsidiaries as at December 31, ~~2011.~~2014.
OFF-BALANCE SHEET ARRANGEMENTS
Several SAP entities have entered into operating leases for office space, hardware, cars and certain other equipment. These arrangements are sometimes referred to as a form of off-balance sheet financing. Rental expenses under these operating leases are set forth below under “Contractual Obligations.” We do not believe we ~~do not~~ have forms of material off-balance sheet arrangements that would require disclosure other than those already disclosed.

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Item 5

CONTRACTUAL OBLIGATIONS
The table below presents our on- and off-balance sheet contractual obligations as of December 31, ~~2011:~~2014:

Contractual obligations
      Payments due by period       Payments due by period
€ millions
   Total    Less
than
1 year    1-3 years    3-5 years    More
than
5 years    Total    Less
than
1 year    1-3 years    3-5 years    More
than
5 years
Debt obligations⁽¹⁾
   –4,567       –1,392       –1,552       –791       –832
Other non-current obligations on the statement of financial position⁽²⁾
   92       1       7       3       81
Financial liabilities⁽¹⁾
   12,025       2,377       4,601       1,785       3,262
Derivative financial liabilities⁽¹⁾
   344       295       22       19       8
Operating lease obligations⁽³⁾
   878       212       345       190       131       1,332       262       374       355       341
Purchase obligations⁽³⁾
   572       371       122       48       31       859       479       236       81       62
Capital contribution commitments⁽³⁾
   77       77       0       0       0
Other non-current non-financial liabilities⁽²⁾
   219       0       93       24       101




















Total
   –3,025       –808       –1,078       –550       –589       14,856       3,490       5,326       2,265       3,775




















⁽¹⁾
~~This represents bank loans, private placement transactions, bonds, other~~For more information on financial liabilities and ~~interest thereon.~~derivative financial liabilities see Note (25) to our Consolidated Financial Statements.

⁽²⁾
~~Amounts mainly consist of employee-related liabilities. Not included in the table are~~For more information on other non-current ~~tax~~non-financial liabilities ~~of €408 million, which include provisions for uncertainties in income taxes.~~see Note (18c) to our Consolidated Financial Statements.

⁽³⁾
See Note (23) to our Consolidated Financial Statements for additional information about operating lease obligations, purchase obligations, and ~~purchase obligations.~~capital contribution commitments. Our expected contributions to our pension and other ~~post employment~~post-employment benefit plans are not included in the table above. ~~We expect to contribute in 2012 statutory minimum and discretionary amounts of €1 million~~For more information on these contributions see Note (19a) to our German defined benefit plans and €47 million to our foreign defined benefit plans, all of which are expected to be paid as cash contributions. Our contributions to our German and foreign defined contribution plans have ranged from €132 million to €151 million in 2009 through 2011; we expect similar contributions to be made in 2012.Consolidated Financial Statements.

We expect to meet these contractual obligations with our existing cash, our cash flows from operations and our financing activities. The timing of payments for the above contractual obligations is based on payment schedules for those obligations where set payments exist. For other obligations with no set payment schedules, estimates as to the most likely timing of cash payments have been made. The ultimate timing of these future cash flows may differ from these estimates.
Obligations under Indemnifications and Guarantees
Our software license agreements and our cloud subscription agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third party’s intellectual property rights. In addition, we occasionally provide function or performance guarantees in
routine consulting contracts and development arrangements. We also generally provide a six to twelve month warranty on our software. Our warranty liability is included in other provisions. For more information on other provisions see Note (19b) to our Consolidated Financial Statements. For more information on obligations and contingent liabilities refer to Note (3) and Note (23) in our Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
For information on our R&D activities see “Item 4. Information about SAP —– Products, Research & Development, and ~~Development.~~Services.” For information on our R&D costs see “Item 5. Operating and Financial Review and Prospects —– Operating ~~Results”~~Results (IFRS)” and for information related to our R&D employees see “Item 6. Directors, Senior Management and Employees —– Employees.”
~~Part I~~
~~Item 5~~
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements are prepared based on the accounting policies described in Note (3) to our Consolidated Financial Statements in this report. The application of such policies requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, revenues and expenses in our Consolidated Financial Statements. We base our judgments, estimates and assumptions on historical and forecast information, as well as 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
Part I
Item 5
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 accounting policies that most frequently require us to make judgments, estimates, and assumptions, and therefore are critical to understanding our results of operations, ~~are:~~include the following:
revenue recognition;

valuation of trade receivables;

accounting for share-based ~~compensation;~~payment;

accounting for income tax;

accounting for business combinations;

subsequent accounting for ~~goodwill and~~ other intangibles;
determination of operating segments;

accounting for legal contingencies; and

recognition of internally generated intangible assets from development.
Our management periodically discusses these critical accounting policies with the Audit Committee of the Supervisory Board. See Note (3c) to our Consolidated Financial Statements for further discussion on our critical accounting estimates and critical accounting policies.
NEW ACCOUNTING STANDARDS NOT YET ADOPTED
See Note (3e) to our Consolidated Financial Statements for our discussion on new accounting standards not yet adopted.
EXPECTED DEVELOPMENTS
Future Trends in the Global Economy
The European Central Bank (ECB) forecasts that global economic activity will continue to regain
strength gradually but that the recovery will remain modest. Economic prospects for the various countries and regions are becoming increasingly mixed: The ECB believes key advanced economies should do well in the years to come; while structural problems will grow more severe and credit will become tighter in the emerging economies. Developments in current geopolitical flashpoints, for example in the Middle East and Ukraine, could also be a crucial factor, the ECB says.
In the Europe, Middle-East, and Africa (EMEA) region, economic growth may be slower than the worldwide average in 2015. Notably, growth in the euro area may remain weak. In the euro area, the ECB now expects annual growth of a little more than 1% in 2015 and 2016, which is a downward correction of its earlier forecasts. However, the ECB believes various monetary interventions could bear fruit in 2015, encouraging company investment. The ECB projects relatively robust growth in Central and Eastern Europe, rooted in a gradual increase in domestic demand. On the other hand, it expects export trade will be hampered by the geopolitical tensions between Russia and Ukraine.
Growth may also be slower than the global average in the Americas region in 2015, says the ECB. The ECB predicts strong economic growth in the United States in the future. Better conditions on the labor and housing markets and continuing easier finance should have a positive influence. However, the ECB believes that in Latin America growth will stay on a low level as commodity prices continue to fall and production costs increase. Clear differences in countries’ performance may remain. The ECB observes constraining factors in Brazil in particular, whereas it notes that in Mexico growth may accelerate in years to come as a result of that country’s far-reaching structural reforms.
Growth prospects remain mixed in the Asia Pacific Japan (APJ) region for the coming years, according to the ECB. In light of encouraging signs from housing and industrial output, the ECB expects positive numbers from Japan in 2015. It estimates that in 2015, the Chinese economy will grow slightly slower than in 2014. Consumer spending and trade are expected to make the largest contributions to growth in China.
Part I
Item 5
Economic Trends – Year-Over-Year GDP Growth
%
   2013e 2014p    2015p
World
   3.3    3.3       3.5
Advanced economies
   1.3    1.8       2.4
Developing and emerging economies
   4.7    4.4       4.3
Europe, the Middle East, and Africa (EMEA)

Euro area
   –0.5    0.8       1.2
Germany
   0.2    1.5       1.3
Central and Eastern Europe
   2.8    2.7       2.9
Middle East and North Africa
   2.2    2.8       3.3
Sub-Saharan Africa
   5.2    4.8       4.9
Americas

United States
   2.2    2.4       3.6
Canada
   2.0    2.4       2.3
Central and South America, Caribbean
   2.8    1.2       1.3
Asia-Pacific-Japan (APJ)

Japan
   1.6    0.1       0.6
Asian developing economies
   6.6    6.5       6.4
China
   7.8    7.4       6.8
e = estimate; p = projection
Source: International Monetary Fund (IMF), World Economic Outlook Update January 2015, Cross Currents, as of January 20, 2015, p.3
IT Market: The Outlook for 2015
Expansion of the worldwide IT market year-over-year will slow slightly to 3.7% (software: 6.5%) in 2015, according to International Data Corporation (IDC), a market research firm based in the United States. It believes that across the advanced, emerging, and developing economies, there will be stable demand for IT in the coming years. However, it expects prices to come under increasing pressure as competing segments, such as cloud offerings and classic software products, react to one another. In IDC’s view, moreover, the future expansion of the IT market depends on the resilience of the global economy in the face of many risk factors, for example the Ebola epidemic, the activities of Islamic State in the Middle East, the troubles in Ukraine, and the political tension in Southeast Asia.
In the EMEA region, IDC expects overall IT market growth to decelerate to 3.0% in 2015. Nonetheless, it predicts growth in the software and services segments of 5.3% and 3.3% respectively; both higher than in 2014. According
to IDC, IT spending in Western Europe will possibly grow 1.2% in 2015 – considerably more slowly than in 2014. The German IT market may grow only slightly more quickly than that, at 1.5%. In Central and Eastern Europe, IT spending growth could again increase, to 7.1% (Russia: 5.9%) in 2015, but in the Middle East and Africa it might slow to single-digit growth of 8.6%, IDC says.
In the Americas region, IDC projects that in 2015 the IT market will continue to expand at 3.9% – a similar rate to that in 2014. It forecasts 7.3% growth in the software segment, as in 2014, and 2.7% growth in the services segment, somewhat slower than in 2014. IDC forecasts that IT spending may grow 3.5% in the United States and 5.7% in Latin America (Brazil: 3.2%; Mexico 6.3%) in 2015.
Expansion of overall IT spending in the APJ region may be sustained at 4.4% in 2015, according to IDC. That could include accelerated growth of 6.2% in the software segment. IDC expects IT market growth to slow by 0.2% in Japan and 4.4% in China in 2015.
Part I
Item 5
Trends in the IT Market – Increased IT Spending Year-Over-Year
%
   2013e 2014p    2015p
World

Total IT
   4.6    4.1       3.7
Hardware
   4.9    3.8       2.8
Packaged software
   7.4    6.1       6.5
Applications
   7.3    6.0       6.2
IT services
   2.6    3.3       3.5
Europe, Middle East, and Africa (EMEA)

Total IT
   3.1    3.6       3.0
Packaged software
   4.5    4.1       5.2
Applications
   4.5    4.2       5.0
IT services
   1.5    2.6       3.3
Americas

Total IT
   5.2    4.3       3.9
Packaged software
   8.9    7.3       7.3
Applications
   8.9    7.1       7.0
IT services
   2.8    3.1       2.7
Asia-Pacific-Japan (APJ)

Total IT
   5.7    4.4       4.4
Packaged software
   8.2    5.8       6.2
Applications
   7.8    6.0       5.9
IT services
   4.3    5.5       5.8
e = estimate, p = projection
Source: IDC Worldwide Black Book Q3 2014 Update
Impact on SAP
SAP expects to outperform the global economy and the IT industry again in 2015 in terms of revenue growth. The last years of growth momentum underscore our leadership in the transformation of the industry.
In 2014, we delivered on our Run Simple strategy to help our customers transform their businesses. SAP’s strong growth is driven by the SAP HANA platform, the broadest cloud portfolio, and the largest business network in the world. SAP powers the clear path to growth for businesses in the 21st century: run real time, run networked, Run Simple. We will continue to push relentlessly toward a much more predictable business model, in parallel we will further expand our core business and at the same time we will continue to expand our operating profit.
We are well-positioned and therefore confident we can achieve our medium-term targets for 2017 and 2020, assuming that the economic
environment and IT industry develop as currently forecasted. Balanced in terms of regions as well as industries, we are well-positioned with our product offering to offset smaller individual fluctuations in the global economy and IT market.
The significantly more volatile market environment challenges also SAP to reach its ambitious targets. Our market and the demands of our customers are changing rapidly. We anticipated these changes early and positioned ourselves strategically. 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 will further strengthen our position as the market leader of enterprise application software.
We plan to continue to invest in countries in which we expect significant growth. Such countries include Brazil, China, India, Russia, as well as countries in the Middle East and Africa. We therefore expect to see further future growth potential not only regionally but also with our
Part I
Item 5
broad product offering helping us reach our ambitious 2015 outlook targets and medium-term aspirations for 2017 and 2020.
Operational Targets for 2015(Non-IFRS)
Changes to Income Statement Structure
As outlined in the Service and Support section in this report, we have started to combine several of our services under our SAP ONE Service approach. In aligning our financial reporting with this change, starting in 2015, we are combining the revenue from premium support services with the revenue from professional services and other services in a new services revenue line item in our income statement. Until 2014, revenues from premium support services were classified as support revenues. Simultaneously with this change, we are simplifying and clarifying the labeling of several line items in our income statement. This includes renaming the previous revenue subtotal labeled software and support (which included premium support revenues) to software licenses and support (which no longer includes premium support revenues). The previous revenue subtotal labeled software and software-related service revenue is renamed cloud and software and accordingly no longer includes premium support revenue, which is now reclassified under the new services revenue line item. The two revenue line items, cloud subscriptions and support and total revenue are not affected by any of these changes and remain unaltered.
Our outlook for 2015 and beyond as outlined below is based on this modified income statement.
Revenue and Operating Profit Outlook
We are providing the following outlook for the full year 2015:
SAP expects full-year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of €1.95 billion to €2.05 billion at constant currencies (2014: €1.10 billion). The upper end of this range represents a growth rate of 86% at constant currencies. Concur and Fieldglass are expected to contribute approximately 50 percentage points to this growth.
SAP expects full year 2015 non-IFRS cloud and software revenue to increase by 8% to 10% at constant currencies (2014: €14.33 billion).
SAP expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion to €5.9 billion at constant currencies (2014: €5.64 billion).
While our full-year 2015 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by currency exchange rate fluctuations. In January 2015, we disclosed that if exchange rates remain at the December 2014 closing rates for the rest of the year 2015, the Company expects thenon-IFRS cloud and software revenue growth rate to experience a currency benefit of approximately two percentage points and thenon-IFRS operating profit growth rate at actual currencies to experience a currency benefit of approximately one percentage point for thefull-year 2015. In March 2015, we updated this estimate by disclosing if exchange rates remain at the closing rates of March 6, 2015, the Company expects non-IFRS cloud and software revenue and non-IFRS operating profit growth rates at actual currency to experience a positive currency impact of approximately 12 percentage points and 17 percentage points respectively for the first quarter of 2015 and a positive currency effect of approximately 11 percentage points and 14 percentage points respectively for the full year 2015.
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.
Part I
Item 5
The following table shows the estimates of the items that represent the differences between our non-IFRS financial measures and our IFRS financial measures.
Non-IFRS Measures
€ millions
Estimated
Amounts for 2015 Actual Amounts
for 2014
Revenue adjustments
< 20 19
Share-based payment expenses
520 to 560 290
Acquisition-related charges
670 to 720 562
Restructuring
150 to 250 126
In 2014, we incurred an expense of €309 million in connection with the TomorrowNow und Versata lawsuits. Versata and SAP have entered into a patent license and settlement agreement in Q3 2014.
The company expects a full-year 2015 effective tax rate (IFRS) of 25.0% to 26.0% (2014: 24.7%) and an effective tax rate (non-IFRS) of 26.5% to 27.5% (2014: 26.1%).
Goals for Liquidity and Finance
On December 31, 2014, 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 2015 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. We intend to repay a US$300 million U.S. private placement and a €550 million Eurobond when they mature in October and November 2015, respectively. Furthermore, we are planning to repay a substantial amount of our outstanding bank loans and refinance another part through the debt capital markets. By the time of this report, we have no concrete plans for future share buybacks.
Investment Goals
Our planned capital expenditures for 2015 and 2016, other than from business combinations, mainly comprise the construction activities described in Item 4. Information About SAP – Description of Property – Capital Expenditures. We expect investments from these activities of approximately €170 million during the next two years. These investments can be covered in full by operating cash flow.
Proposed Dividend
Until now, our policy has been to distribute more than 30% of profit after tax in dividend. In practice however, the payout has been greater than 35% of profit after tax in all recent years. We are therefore amending our policy, which from now on will be to pay a dividend totaling more than 35% of profit after tax.
Premises on Which Our Outlook Is Based
In preparing our outlook guidance, 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 a major acquisition.
Medium-Term Prospects
In this section, all discussion of the medium-term prospects is based exclusively on non-IFRS measures.
SAP expects to grow its 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.
Looking beyond 2015, SAP updated its ambition for 2017. We continue to expect fast growth in our cloud business, with cloud subscriptions and support revenue reaching a range between €3.5 billion to €3.6 billion in 2017. Total revenue is expected to reach €21 billion to €22 billion and operating profit is expected to be between €6.3 billion and €7.0 billion in 2017.
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The changes to the 2017 goals reflect the impact of the Concur acquisition and anticipated faster customer adoption of SAP’s managed cloud offering. SAP also anticipates that its fast-growing cloud business along with growth in support revenue will drive a higher share of more predictable revenue, with the total of cloud subscriptions and support revenue and software support revenue reaching 65% to 70% of total revenue in 2017 (2014: 57%).
By 2017, SAP’s rapidly growing cloud subscriptions and support revenue is expected to be close to software license revenue – and is expected to exceed software licenses revenue in 2018. At that time, SAP expects to reach a scale in its cloud business that will clear the way for accelerated operating profit expansion.
SAP also has high-level ambitions for 2020, with 2020 cloud subscriptions and support revenue expected to reach €7.5 billion to €8.0 billion. Total revenue is expected to be between €26 billion and €28 billion and operating profit is expected to be in a range of €8 billion to €9 billion in 2020. We expect the share of more predictable revenue to grow further, with the total of cloud subscriptions and support revenue and software support revenue reaching between 70% and 75% of total revenue in 2020. To realize the expected increase in operating profit, until 2020 SAP aims to grow gross profit from cloud subscriptions and support (defined as the difference between cloud subscription and support revenue and the respective cost of revenue) by a compound annual growth rate of approximately 40% on the 2014 figure. This growth is expected to result in a cloud subscription and support gross margin; in other words, the gross margin derived from the cloud subscription and support gross profit that is approximately 9 percentage points higher in 2020 than in 2014 (2014: 64%). In the same period, our target is to grow gross profit from software licenses and support by a compound annual growth rate of approximately 3%, leading to an improvement in the software licenses and support gross margin of approximately 2 percentage points (2014: 86%).
SAP anticipates that the gross margins of the various cloud business models will continue to differ significantly in the long term. While the gross margin from public cloud subscriptions and from the business network are both expected to reach approximately 80% long term, we anticipate that in the long-term, gross margin on managed cloud offerings will be about 40%. In addition,
based on subscription bookings, we expect, once our cloud business has achieved a mature state, approximately 80% of the cloud subscription business will be generated from existing contracts and their renewals (2014: approximately 60%) and approximately 20% from new business (2014: approximately 40%).
Non-Financial Goals 2015
In addition to our financial goals, we also focus on two non-financial targets: customer loyalty and employee engagement.
We believe it is essential that our employees are engaged, drive our success, and support our strategy. Therefore, we remain committed to increasing our employee engagement index score to 82% by 2015 (2014: 79%).
Further, our customers’ satisfaction with the solutions we offer is very important to us. We want our customers to not only be satisfied, but also see us as a trusted partner for innovation. We measure this customer loyalty metric using the Customer Net Promoter Score (NPS). For 2015, we aim to achieve a combined (on-premise and cloud) NPS score of 24%.
Our financial and non-financial goals affirm our commitment to innovation and sustainability, and will help us deliver on our vision to help the world run better and improve people’s lives. Our mission is to help our customers run at their best. To fulfill our mission, we apply our Run Simple operating principle to help our customers run their businesses better and master complexity, which is the most intractable challenge businesses face today. We do this by delivering technology innovations that we believe address the challenges of today and tomorrow without disrupting our customers’ business operations.

Part I

Item 6

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
SUPERVISORY BOARD
The current members of the Supervisory Board of SAP ~~AG,~~SE, each member’s principal occupation, the year in which each was first elected and the year in which the term of each expires, respectively, are as follows:

Name
Age
Principal Occupation
Year
First
Elected Year
Term
Expires
Prof. Dr. h.c. mult. Hasso Plattner, Chairman^{(1)(2)(5)(6)(7)(10)}

68


Chairman of the Supervisory Board

2003


2012

Pekka Ala-Pietilä^{(1)(6)(7)(10)}
55    Co-founder and CEO Blyk Ltd. 2002    2012
Prof. Dr. Wilhelm Haarmann^{(1)(2)(4)(10)}
61    Attorney at Law, Certified Public Auditor and Certified Tax Advisor; HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer 1988    2012
Bernard Liautaud^(6)(11)
49    General Partner, Balderton Capital 2008    2012
Dr. h.c. Hartmut Mehdorn^(1)(4)(5)
69    Chief Executive Officer, Air Berlin PLC, Rickmansworth, UK 1998    2012
Prof. Dr.-Ing. Dr. h.c. mult. Dr.-Ing. E.h. mult. Joachim Milberg^{(1)(2)(3)(6)(7)}

68


Chairman of the Supervisory Board of BMW AG

2007


2012

Dr. Erhard Schipporeit^{(1)(3)(9)(10)}
63    Management Consultant 2005    2012
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer⁽¹⁾⁽⁶⁾

67


Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH

2007


2012

Lars Lamadé, Vice Chairman^{(2)(5)(8)(10)}
40    Employee, Project Manager Service & Support 2002    2012
Thomas Bamberger⁽³⁾⁽⁸⁾
44    Employee, Chief Operating Officer Global Service & Support 2007    2012
Panagiotis Bissiritsas^(2)(4)(6)(8)
43    Employee, Support Expert 2007    2012
Peter Koop⁽⁶⁾⁽⁸⁾
45    Employee, Industry Business Development Expert 2007    2012
Christiane Kuntz-Mayr⁽⁶⁾
49    Employee, Deputy Chairperson of the Works Council of SAP AG 2009    2012
Dr. Gerhard Maier^(2)(3)(8)
58    Employee, Development Project Manager 1989    2012
Dr. Hans-Bernd Meier⁽¹²⁾
60    Retiree, independent Consultant for SAP Project 2011    2012
Stefan Schulz^{(4)(5)(6)(8)(10)}
42    Employee, Development Project Manager 2002    2012
Name
Age
Principal Occupation
Year
First
Elected Year
Term
Expires
Prof. Dr. h.c. mult. Hasso Plattner, Chairman^{(1)(2)(5)(6)(9)(10)}
71    Chairman of the Supervisory Board 2003    2019
Pekka Ala-Pietilä^(1)(5)(6)(9)
58    Chairman of the Board of Directors, SolidiumOy 2002    2019
Prof. Anja Feldmann^(1)(5)(10)
49    Professor at the Electrical Engineering and Computer Science Faculty at the Technische Universität Berlin 2012    2019
Prof. Dr. Wilhelm Haarmann^{(1)(2)(4)(9)(10)}
64    Attorney at Law, Certified Public Auditor and Certified Tax Advisor; Linklaters LLP, Rechtsanwälte, Notare, Steuerberater 1988    2019
Bernard Liautaud^(1)(2)(5)(6)
52    General Partner, Balderton Capital 2008    2019
Dr. h.c. Hartmut Mehdorn^(1)(4)(10)
72    CEO of FBB, Flughafen Berlin-Brandenburg GmbH 1998    2019
Dr. Erhard Schipporeit^(1)(3)(8)(9)
66    Independent Management Consultant 2005    2019
Jim Hagemann Snabe^(1)(2)(4)
48    Managing Director of Snabe ApS 2014    2019
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer⁽¹⁾⁽³⁾

70


Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH
2007    2019
Christiane Kuntz-Mayr, Vice Chairperson^(2)(7)(10)
52    Employee, Development Manager 2009    2015
Panagiotis Bissiritsas^(2)(4)(7)
46    Employee, Support Expert 2007    2015
Catherine Bordelon^(7)(10)
54    Deputy Secretary of the French Works Council 2014    2015
Margret Klein-Magar^(2)(5)(7)(9)
50    Employee, Vice President Head of People Principles 2012    2015
Lars Lamadé^{(2)(7)(9)(10)}
43    Employee, Project Manager OPD COO 2002    2015
Steffen Leskovar^(3)(5)(7)
43    Resource Manager 2014    2015
Dr. Kurt Reiner^(4)(5)(7)
56    Employee, Development Expert 2012    2015
Mario Rosa-Bian^(4)(7)(10)
58    Employee, Project Principal Consultant 2012    2015
Stefan Schulz^(3)(5)(7)
45    Employee, Vice President, IP at HANA Enterprise Cloud 2002    2015

⁽¹⁾
Elected by SAP ~~AG’s~~SE’s shareholders on May ~~10, 2007.~~21, 2014.

⁽²⁾
Member of the General and Compensation Committee.

⁽³⁾
Member of the Audit Committee.
~~Part I~~
~~Item 6~~

⁽⁴⁾
Member of the Finance and Investment Committee.

⁽⁵⁾
Member of the ~~Mediation~~Technology and Strategy Committee.

⁽⁶⁾
~~Member of the Technology and Strategy Committee.~~
⁽⁷⁾
Member of the Nomination Committee.

⁽⁸⁾⁽⁷⁾
Temporarily, until the close of the 2015 annual General Meeting of Shareholders, the first employees’ representatives on the first Supervisory Board of SAP SE have been appointed under the SAP Agreement on Employee Involvement.
⁽⁸⁾~~Elected by SAP AG’s employees on April 23, 2007.~~
Audit Committee financial expert.

⁽⁹⁾
~~Member of the Audit Committee and determined to be the Audit Committee financial expert.~~
⁽¹⁰⁾
Member of the Special Committee.

^(11)(10)
~~Elected by SAP AG’s shareholders on June 3, 2008, replaced August-Wilhelm Scheer who resigned from~~Member of the ~~Supervisory Board on the same day.~~People and Organization Committee.
Part I
⁽¹²⁾
~~Replaced Willi Burbach who left the Supervisory Board on August 7, 2011~~
Item 6

For detailed information on the Supervisory Board committees and their tasks, including the Audit Committee and the General and Compensation Committee, please refer to “Item 10 Additional Information —– Corporate Governance.”
Pursuant to the ~~German Co-determination Act~~Articles of ~~1976 (Mitbestimmungsgesetz),~~Incorporation of SAP SE and the Agreement on the Involvement of Employees in SAP SE, members of the Supervisory Board of SAP AGSE consist of ~~eight~~nine representatives of the shareholders and ~~eight~~nine representatives of the European employees. ~~Of the eight employee~~The current nine employees’ representatives ~~two must be nominated by the trade unions. The elected employees must be at least 18 years of age and must have been~~were appointed in the ~~employment~~Agreement on the Involvement of Employees in SAP AGSE (“Employee Involvement Agreement”, or one of its German subsidiaries for at least one year. They must also fulfill the other qualifications for election codified in Section 8 of the German Works Council Constitution Act. These qualifications include, among other things, not having been declared ineligible or debarred from holding public office by a court.“EIA”).
Certain current members of the Supervisory Board of SAP AGSE were members of supervisory boards and comparable governing bodies of enterprises other than SAP AGSE in Germany and other countries as of December 31, ~~2011.~~2014. See Note (30) to our Consolidated Financial Statements for more detail. Apart from pension obligations ~~towards~~for employees, SAP AGSE has not entered into contracts with any member of the Supervisory Board that provide for benefits upon a termination of the employment or service of the member.
EXECUTIVE BOARD
The current members of the Executive Board, the year in which each member was first appointed and the year in which the term of each expires, respectively, are as follows:

Name
   Year First
Appointed    Year Current
Term Expires
Bill McDermott, Co-CEO
   2008       2017
Jim Hagemann Snabe, Co-CEO
   2008       2017
Dr. Werner Brandt
   2001       2013
Gerhard Oswald
   1996       2014
Vishal Sikka
   2010       2017
Name
   Year First
Appointed    Year Current
Term Expires
Bill McDermott, CEO
   2008       2017
Robert Enslin
   2014       2017
Bernd Leukert
   2014       2017
Luka Mucic
   2014       2017
Gerhard Oswald
   1996       2016
The following changes occurred in the Executive Board in ~~2011:~~2014:

~~In July 2011, Angelika Dammann resigned as a member of~~On May 4, 2014, the SAP Supervisory Board appointed Robert Enslin and Bernd Leukert to the SAP Executive Board, with immediate effect.
On May 4, 2014, Vishal Sikka stepped down from the Executive Board. ~~Following Angelika’s resignation,~~
On May 21, 2014, Jim Hagemann Snabe stepped down from the Executive Board.
On July 1, 2014, Luka Mucic succeeded Werner Brandt ~~CFO of SAP, started to act~~ as ~~interim head of Global HR and interim labor relations director.~~Chief Financial Officer, who withdrew, as planned, from the Executive Board.
A description of the management responsibilities and backgrounds of the current members of the Executive Board are as follows:
Bill McDermott, CEO,~~Co-CEO~~(Vorstandssprecher), 5053 years old, holds a master’s degree in business administration. He joined SAP in 2002 and became a member of its Executive Board on July 1, 2008. On February 7, 2010 he became Co-CEO alongside Jim Hagemann ~~Snabe.~~Snabe and when Jim Hagemann Snabe concluded his current role as Co-CEO in May 2014, Bill McDermott became sole CEO. Besides the duties as CEO, he is responsible for strategy, governance, business development, corporate development, communications, and marketing. In addition he assumed responsibility for human resources and is the Labor Relations Director. With the acquisition of Concur, he is also responsible for SAP’s Business Network. Prior to joining SAP, he served as a global executive in several technology companies.
Robert Enslin, 52 years old, holds diplomas in data science as well as computer science and data management. He joined SAP in 1992 and became a member of the Executive Board in May, 2014. He is president of Global Customer Operations and is responsible for global go-to-market efforts, cloud and line of business sales, regional sales and operations, specialized industry sales, ecosystem and channels as well as end-to-end customer experience. Before joining SAP, Robert Enslin spent 11 years in various roles in the IT industry.
Bernd Leukert, 47 years old, holds a master’s degree in business administration. He joined SAP in 1994 and became a member of the Executive Board in May 2014. He is responsible for the global development organization including analytics, applications, cloud, database & technology, quality governance & production, and mobile as well as joint leadership of SAP Labs Network with Gerhard Oswald.
Luka Mucic, 43 years old, holds master’s degrees in law and business administration. He joined SAP in 1996 and became Chief Financial Officer (CFO), Chief Operating Officer (COO) and a member of the Executive Board in July 2014. He is

Part I

Item 6

~~Besides the duties as Co-CEO, he is responsible for strategy, governance, corporate development, innovation, sales, field services, consulting, ecosystem activities, communications, and marketing.~~
~~Jim Hagemann Snabe, Co-CEO~~ (Vorstandssprecher), 46 years old, holds a master degree in operational research. He joined SAP in 1990 and became a member of its Executive Board on July 1, 2008. On February 7, 2010 he became Co-CEO alongside Bill McDermott. Besides the duties as Co-CEO, he is responsible for strategy, governance, corporate development, innovation, products and solutions development, communications, and marketing.
~~Werner Brandt~~~~, 58 years old, business administration graduate. Werner Brandt joined SAP in early 2001 as the Chief Financial Officer and member of the Executive Board. He is~~ responsible for finance and administration including investor relations and data protection and privacy. HeIn addition, as the company’s COO, Luka Mucic is ~~also~~ responsible for ~~Global Human Resources and is SAP’s Labor Relations Director (acting). Prior to joining SAP, Werner Brandt was CFO and member~~the Process Office of the Executive Board of Fresenius Medical Care AG since 1999. In this role, he was also responsible for labor relations. Before joining Fresenius Medical Care AG, Werner Brandt headed the finance function of the European operations of Baxter International Inc.company.
Gerhard Oswald, 5861 years old, economics graduate. Gerhard Oswald joined SAP in 1981 and became a member of the Executive Board in 1996. He ~~became Chief Operating Officer on February 11, 2010. In this position he~~ is responsible for the Board Area Global Service & Support covering SAP ~~active global support, installed base maintenance~~Active Global Support, Professional Services, Solution & ~~support, global IT, globalization services, quality governance & production, COO operations, university alliances, global user groups organization, chief process office, and~~Knowledge Packaging, as well as joint leadership of SAP Labs ~~network.~~Network with Bernd Leukert. In addition Gerhard Oswald is responsible for Cloud Delivery and Services, and operations of the new SAP Cloud powered by HANA.
~~Vishal Sikka~~~~, 44 years old, holds a PH. D. degree in computer science from Stanford University. He joined SAP in 2002 and became a~~
member of its Executive Board on February 7, 2010 leading technology and innovation. His responsibilities include the SAP technology platform and products, including database, application platform and middleware, collaboration, business analytics, and search. He is also responsible for the development of new products and new business areas, including the SAP research, incubation, and new products organizations. Before joining the Executive Board, he was the first Chief Technology Officer at SAP, and prior to that was SAP’s Chief Software Architect. Before joining SAP, he was area vice president for platform technologies at Peregrine Systems, and prior to that he founded and led two start-up’s — Bodha, Inc. and IBrain Software.
The members of the Executive Board of SAP AGSE as of December 31, ~~2011~~2014 that are members on other supervisory boards and comparable governing bodies of enterprises, other than SAP, in Germany and other countries, are set forth in Note (30) to our Consolidated Financial Statements. SAP AGSE has not entered into contracts with any member of the Executive Board that provide for benefits upon a termination of the employment of service of the member, apart from pensions, benefits payable in the event of an early termination of service, and abstention compensation for the postcontractual ~~noncompete~~non-compete period.
To our knowledge, there are no family relationships among the Supervisory Board and Executive Board members.
COMPENSATION REPORT
Compensation for Executive and Supervisory Board Members
This compensation report outlines the criteria that we applied for the year ~~2011~~2014 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 aboutshare-based payment plans for Executive Board ~~members’ share-based payment plans,~~members, shares held by
~~Part I~~
~~Item 6~~
Executive Board and Supervisory Board members, and the directors’ dealings required to be disclosed in accordance with the German Securities Trading Act.
Compensation for Executive Board Members
Compensation System for ~~2011~~2014
The compensation for 2014 for Executive Board ~~members’ compensation for 2011~~members is intended to reflect SAP’s 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.
The Executive Board compensation package is performance-based. ~~In 2011, it had four~~It has three elements:

A fixed annual salary element

A variable short-term incentive (STI) ~~plan~~element to reward performance in the plan year

A variable ~~medium-term incentive (MTI) plan to reward performance in the plan year and the two subsequent years~~
~~A share-based~~ long-term incentive (LTI) ~~plan~~element tied to the price of SAP shares to reward performance over multiple years
The Supervisory Board set a compensation target for the sum of the fixed ~~element~~ 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 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.
The following criteria apply to the elements of Executive Board compensation for ~~2011:~~2014:

The fixed annual salary element is paid as a monthly salary.
The variable ~~compensation~~STI element was determined under the STI 2014 plan. Under this plan, the STI compensation depends on the SAP Group’s performance against the ~~KPI~~predefined target values for three KPIs: non-IFRS constant currency software and software-related ~~service revenue~~services growth, non-IFRS constant currency operating margin increase, and non-IFRS constant currency ~~operating profit.~~new and upsell bookings. In addition, the STI ~~element has~~2014 plan provides for a discretionary component that allows the Supervisory Board, at the end of the period in question, 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, and attractiveness as an employer. 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. On February 16, 2012, the Supervisory Board assessed SAP’s performance against the agreed targets and determined the amount of STI payable. The STI pays out after the Annual General Meeting of Shareholders in May 2012.
The variable compensation under the MTI plan depends on the SAP Group’s performance over the three years 2011 to 2013 against the KPI target values for software and software-related service revenue growth and earnings per share (both of which are non-IFRS, constant currency values). In addition, the MTI element has a discretionary component that allows the Supervisory Board, at the end of the period in question, to address not only an Executive Board member’s individual performance, but also SAP’s performance over the three years 2011 to 2013 in terms of market position, innovative power, customer satisfaction, employee satisfaction, and attractiveness as an employer. The MTI pays out after the Annual General Meeting of Shareholders in 2014.

Part I

Item 6

element that allows the Supervisory Board, after the end of the fiscal year 2014, 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, and attractiveness as an employer. 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. On February 12, 2015, the Supervisory Board assessed SAP’s performance against the agreed targets and determined the amount of compensation payable under the STI 2014 plan. The STI 2014 plan pays out after the Annual General Meeting of Shareholders in May 2015.
The variable LTI ~~component consists of the issue of virtual share options~~element was determined under the terms of the 2011 share option (SAP SOP 2010) plan. For the terms and detail of the SAP SOP 2010 plan, see the Notes to Consolidated Financial Statements section, Note (28). The number of virtual share options to be issued to each member of the Executive Board in 2011 by way of long-term incentive was decided by the Supervisory Board on March 18, 2011, with effect from June 9, 2011, and reflects the fair value of the virtual share options awarded.
~~The contracts of Executive Board members Bill McDermott and Vishal Sikka include clauses that determine the exchange rates for the translation of euro-denominated compensation into U.S. dollars.~~
~~Executive Board Compensation System for 2012~~
There is a new compensation system for Executive Board members with effect from January 1, 2012, replacing the arrangements in place in 2011. It is more competitive, and more strongly aligned to the goals in our strategy for 2015.
In place of the four elements in the discontinued package (the fixed annual salary and the short-term, medium-term, and long-term incentive elements), future packages will have only three elements. Executive Board members will still receive a fixed salary, as they did in 2011. Their compensation will also still have a variable short-term incentive (STI) element, which will, as in the past, reward performance from year to year. However, the long-term incentive (LTI) element has been completely redesigned. The annual medium-term incentive (MTI) plans will be discontinued, although MTI allocations already made on or before December 31, 2011, will not be affected. The STI element will be scaled so that, assuming 100% target achievement and assuming the SAP share price is the same when any variable element pays out as it was when it was granted, the STI to LTI weighting will be approximately
~~30% to 70% for the co-CEOs and 42% to 58% for other members of the Executive Board.~~
~~The new long-term incentive element, the LTI Plan 2015, is called~~ the RSU Milestone Plan 2015. It“RSU” stands for “restricted share unit.” This originally four-year plan was established in 2012 and focuses on the SAP share price and on certain objectives derived from our Company strategy for the years through 2015. ~~“RSU” stands~~For each of the four years, the members of the Executive Board are allocated a certain number of RSUs for ~~“restricted share unit.” We established~~ the ~~LTI Plan 2015 at the beginning~~respective year based on a budget amount that was granted to each Executive Board member in 2012 already for each of ~~2012 as a standard LTI element in compensation packages for~~ the years 2012 through 2015. It will pay out in the years 2016 through 2019, so the first payout will not be until after the end of 2015. In February 2012, each member of the Executive Board was allocated a certain number of SAP restricted share unit “virtual shares” for 2012. At the beginning of 2013, 2014, and 2015, the virtual share allocation process will be repeated for each of those years respectively. The number of ~~restricted share units~~RSUs allocated to each member for a given year is his or her ~~“milestone award”~~target amount (an amount in euros) for that year divided by the SAP share price over a reference period (defined in the ~~LTI~~RSU Milestone Plan 2015 terms) at the beginning of the ~~year in question.~~respective year.
The number of RSUs an Executive Board member actually earns in respect of a given year ~~could be greater or smaller than the initial allocation. It~~ depends on the Company performance against the objectives for that year (a year is a “performance period” in the ~~Plan)~~plan). The objectives derive from SAP’s strategy for the period to 2015. The ~~Plan~~plan objectives relate to two ~~key performance indicators (KPIs): our~~KPIs: non-IFRS total revenue and ~~our~~ non-IFRS operating profit. The KPI targets have already been set for the entire life of the ~~LTI~~RSU Milestone Plan 2015 for the years 2012 to 2015. The original terms and conditions of the plan only allowed discretion to adjust those KPIs for predefined extraordinary events. In December 2014, the Supervisory Board adjusted the terms and conditions of the plan to allow more discretion to adjust the KPIs and/or the minimum performance levels embedded in the plan. The plan amendment may only be
exercised to preserve the fair and equitable nature of the plan in consideration of business developments that were not foreseeable when the LTI was implemented in 2012. In February 2014, the Supervisory Board modified the RSU Milestone Plan 2015 prospectively for 2014 and 2015 by eliminating the effects of exchange rate fluctuation on the underlying KPI targets. In February 2015, the Supervisory Board modified the RSU Milestone Plan 2015 and reduced the minimum performance level of the financial KPIs defined in the plan from 80% to 60%. In addition, the Supervisory Board also resolved to set new target values for those two financial KPIs for 2015 regarding this plan.
After the end of each ~~performance period (which is a Plan year),~~fiscal year, the Supervisory Board assesses the Company’s performance against the objectives set for that year and determines the number of RSUs to be finally allocated to (and which then vest in) each Executive Board member. ~~There~~No RSUs vest if minimum performance levels predefined for each of the two KPIs are ~~objective-based performance hurdles to clear each year before any RSUs can vest.~~not achieved. There is also a cap: Normally, the quantity
~~Part I~~
~~Item 6~~
of vested RSUs a member can attain in respect of a ~~Plan~~plan year is capped at 150% of his or her initial RSU allocation for that year.
The Company strategy underlying the ~~LTI~~RSU Milestone Plan 2015 focuses on where SAP aims to be by the end of 2015, so the ~~Plan~~plan gives greater weight to performance against the KPI targets for 2015 (the final year of the ~~Plan)~~plan) than against the targets for 2012 through 2014. After the end of 2015, the number of vested RSUs a member of the Executive Board actually receives for that year is revised. In circumstances where the targets for the individual years ~~are~~2012 to 2014 were not achieved but the 2015 targets are achieved, the outcome of this revision would be that a member would receive as many vested RSUs for 2015 as would make up for any that he or she did not receive in the earlier years by reason of ~~failures~~failure to achieve targets. On the other hand, if the Company underachieves against the 2015 objectives, Executive Board members may, in ~~the worst case~~a worst-case scenario, lose all of the vested RSUs allocated to them for 2015.
All vested RSUs are subject to a three-year holding period. The holding period commences at the end of the year ~~(performance period)~~ for which the ~~RSU was~~RSUs were allocated. The amount an RSU eventually pays out depends on the SAP share price at the end of the holding period. A member who leaves the Executive Board before the end of the ~~Plan~~ plan
Part I
Item 6
retains his or her vested RSUs for completed ~~Plan~~plan years but does not retain any allocated but unvested RSUs for the year during which he or she leaves. If a member leaves the Executive Board before the beginning of the subsequent year, no RSUs are finally allocated.
Each vested RSU entitles its holder to a (gross) payout corresponding to the price of one SAP share after the end of the three-year holding period. The applicable share price is measured over a reference period defined in the RSU Milestone Plan 2015 terms.
~~Subject~~For the terms and details of the RSU Milestone Plan 2015, see the Notes to Consolidated Financial Statements section, Note (28). The number of RSUs initially issued to each member of the ~~requirements in~~Executive Board under the ~~German Stock Corporation Act, section 87 (1),~~RSU Milestone Plan 2015 for 2014 was decided by the Supervisory Board ~~is entitled~~on February 13, 2014. The number of RSUs finally allocated to ~~revise~~each member of the ~~STI~~Executive Board under the RSU Milestone Plan 2015 for 2014 was decided by the Supervisory Board on February 12, 2015.
The contracts of Executive Board members Bill McDermott and Robert Enslin require that
compensation payments are made in U.S. dollars. The contracts include clauses that determine the ~~LTI~~exchange rates for the translation of euro-denominated compensation into U.S. dollars.
Amount of Compensation for 2014
We present separately Executive Board compensation disclosures under three different compensation disclosure approaches:
•
Compensation disclosures under a management view that follows the requirements of sections 314 and 315 of the German Commercial Code (Handelsgesetzbuch, or“HGB”) as specified in the German Accounting Standards (“GAS 17”) except that it allocates share-based compensation to the periods to which this compensation economically belongs
Compensation disclosures fully in ~~extraordinary~~accordance the requirements of sections 314 and ~~unforeseeable circumstances.~~315 of the HGB as specified in GAS 17
Compensation disclosures in accordance with the recommendations of the German Corporate Governance Code (“Code”)

I. Executive Board Members’ Compensation ~~in 2011~~– Management View
Executive Board Members’ Compensation for 2014 – Management View

€ thousands
Fixed Elements Performance-
Related Element Long-Term
Incentive
Elements Total
   Salary Other¹⁾ Short-Term
Incentive (STI) Share-Based
Payment
(SAP SOP 2010)²⁾
Bill McDermott (co-CEO)³⁾
1,279.9    408.0    3,935.5    950.0    6,573.4
Jim Hagemann Snabe (co-CEO)
1,150.0    107.6    3,271.2    950.0    5,478.8
Dr. Werner Brandt
700.0    29.7    1,979.6    577.0    3,286.3
Gerhard Oswald
700.0    34.5    1,979.6    577.0    3,291.1
Vishal Sikka⁴⁾
700.0    120.5    2,103.7    577.0    3,501.2
Dr. Angelika Dammann
(member until July 8, 2011)⁵⁾
466.7    45.9    1,163.1    384.7    2,060.4

Total
4,996.6    746.2    14,432.7    4,015.7    24,191.2

€ thousands
Fixed Elements Performance-
Related Element Compensation
for 2014⁽¹⁾
   Short-Term
Incentive Element Long-Term
Incentive
Element
   Salary Other⁽¹⁾ STI Share-Based
Payment
(RSU Milestone
Plan 2015)⁽²⁾
Bill McDermott (CEO)
1,150.0    861.4    2,036.7    4,040.5    8,088.6
Jim Hagemann Snabe (co-CEO and member until May 21, 2014)
448.8    2,647.1    –    –    3,095.9
Dr. Werner Brandt (until June 30, 2014)
350.0    1,418.8    –    –    1,768.8
Robert Enslin (from May 4, 2014)
462.9    121.0    817.3    939.4    2,340.6
Bernd Leukert (from May 4, 2014)
462.9    12.2    817.3    939.4    2,231.8
Luka Mucic (from July 1, 2014)
350.0    4.3    621.4    729.0    1,704.7
Gerhard Oswald
700.0    22.0    1,232.7    1,449.4    3,404.1
Dr. Vishal Sikka (until May 4, 2014)
291.7    1,367.5    –    –    1,659.2

Total
4,216.3    6,454.3    5,525.4    8,097.7    24,293.7

Part I
Item 6
Executive Board Members’ Compensation for 2013 – Management View
€ thousands
Fixed Elements Performance-
Related Element Compensation
for 2013⁽¹⁾
   Short-Term and
Medium-Term
Incentive Elements Long-Term
Incentive
Element
   Salary Other⁽¹⁾ STI MTI 2011 Share-Based
Payment
(RSU Milestone
Plan 2015)⁽²⁾
Bill McDermott (co-CEO)
1,150.0    1,570.5    1,737.2    1,011.1    4,143.5    9,612.3
Jim Hagemann Snabe (co-CEO)
1,150.0    6,082.9    1,737.2    1,011.1    –    9,981.2
Dr. Werner Brandt
700.0    29.0    1,051.5    611.0    1,486.4    3,877.9
Lars Dalgaard (until May 31, 2013)⁽³⁾
291.7    203.3    469.1    –    –    964.1
Luisa Deplazes Delgado (until June 30, 2013)⁽³⁾
350.0    26.1    421.0    –    –    797.1
Gerhard Oswald
700.0    17.0    1,051.5    611.0    1,486.4    3,865.9
Dr. Vishal Sikka
700.0    383.6    1,051.5    611.0    1,486.4    4,232.5

Total
5,041.7    8,312.4    7,519.0    3,855.2    8,602.7    33,331.0

¹⁾⁽¹⁾
Insurance contributions, benefits in kind, expenses for maintenance of two households, ~~due to work abroad, reimbursement of legal and tax advice fees, nonrecurring~~relocation costs (in 2013 only), non-recurring payments, use of aircraft, tax,
²⁾
~~Fair value at the time~~ cash disbursement of ~~grant~~
³⁾
~~Includes~~short- and long-term incentive elements, and discrete payments arising through application of the fixed exchange-rate clause. The effects from the application of the fixed exchange-rate clause are disclosed under “Other.” The amount for Jim Hagemann Snabe under “Other” (2013 respectively 2014) includes the fixed payments for the 2012 and 2013 RSUs respectively 2014 RSUs according to the ~~following items: salary for 2011: €129,900; profit-sharing bonus for 2011: €664,300~~description below.

⁴⁾⁽²⁾
~~Includes a discrete payment arising through application~~Compensation attributable to Executive Board members for the respective year, including the respective year’s plan tranche of LTI 2015 based on the ~~fixed exchange-rate clause to the following item: profit-sharing bonus for 2011: €124,100~~grant value at time of grant.
~~Part I~~
~~Item 6~~

⁵⁾⁽³⁾
~~Angelika Dammann’s appointment as member of the Executive Board ended on July 8, 2011. Her contract with SAP AG ended on August 31, 2011. Due to~~Salary and STI for 2013 arepro rata temporis amounts until the end of ~~her contract on August 31, 2011~~ the ~~number~~respective term. The RSUs allocated for 2013 were forfeited at the end of virtual options issued to her in 2011 was reduced. The amount of the Short-Term Incentive includes pro rata temporis amounts of the STI 2011 (€585,000), the MTI 2011 (€330,300) and the MTI 2010 (€247,800).their contracts.
~~Assuming 100% target achievement,~~
In 2012, the Executive Board members acting at that time already received all grants for the years 2012 to 2015 under the RSU Milestone Plan 2015. The Executive Board members appointed in 2014 received respective grants for the years 2014 and 2015 after their appointment. These grants, which are dependent on recipients’ uninterrupted tenure as Executive Board members in the respective years, are tied to the respective years and thus – from an economic perspective – represent compensation for the Executive Board members in the respective years. Accordingly, the share-based payment amounts in the ~~MTI 2011~~tables above include in the 2014 and 2013 compensation the ~~MTI 2010 will pay out~~grants under the RSU Milestone Plan 2015 for the years 2014 and 2013 respectively although they were already granted in 2012. For the Executive Board members appointed in 2014, the 2014 compensation includes the RSU Milestone Plan 2015 awards granted for 2014 but excludes the awards granted in 2014 for 2015. Except for this allocation of share-based compensation awards to the fiscal years, the disclosures above comply with the sections 314 and 315 of HGB as specified in GAS 17.
Jim Hagemann Snabe resigned from the Executive Board with effect from May 21, 2014 (Annual General Meeting of Shareholders). To replace the payout for the RSUs granted to him in 2012 under the RSU Milestone Plan he was paid €6,485,800. Of that amount, the grant value at time of grant amounting to €4,318,400 was already included in his 2012 compensation. The remaining €2,167,400 was included in his 2013 compensation (see below) as it was granted to him in 2013. The RSUs granted to Mr. Snabe in 2013 ~~and~~were converted into a fixed payment of €3,768,300 which was included in 2013 compensation. To compensate for his 2014 ~~are as follows.~~RSUs, Mr. Snabe received a prorated payment of €1,700,000 in respect of the period he served in 2014 which is included in 2014 compensation. Both amounts were paid out after the close of the Annual General Meeting of Shareholders in May 2014.
~~MTI Target Payouts~~

€ thousands
   MTI 2011 Target
Payouts 2014    MTI 2010 Target
Payouts 2013
Bill McDermott (co-CEO)
   820.0       820.0
Jim Hagemann Snabe (co-CEO)
   820.0       820.0
Dr. Werner Brandt
   495.5       495.5
Gerhard Oswald
   495.5       495.5
Vishal Sikka
   495.5       443.9




Total
   3,126.5       3,074.9




The share-based payment amounts included in ~~2011~~the 2014 and 2013 compensation result from the following ~~virtual share option grants~~RSUs under the ~~SAP SOP 2010.~~RSU Milestone Plan 2015.
~~Share-Based Payment Under SAP SOP 2010 (2011 Grants)~~

   2011 Grants
   Quantity    Fair Value per
Right at Time
of Grant    Total Fair
Value at Time
of Grant    Fair Value per
Right on Dec.
31, 2011    Total Fair
Value on Dec.
31, 2011
      €    € thousands    €    € thousands
Bill McDermott (co-CEO)
   112,426       8.45       950.0       7.13       801.6
Jim Hagemann Snabe (co-CEO)
   112,426       8.45       950.0       7.13       801.6
Dr. Werner Brandt
   68,284       8.45       577.0       7.13       486.9
Gerhard Oswald
   68,284       8.45       577.0       7.13       486.9
Vishal Sikka
   68,284       8.45       577.0       7.13       486.9
Dr. Angelika Dammann (member until July 8, 2011)
   45,523       8.45       384.7       7.13       324.6






Total
   475,227          4,015.7          3,388.5






Part I

Item 6

~~Total Executive Board~~Share-Based Payment ~~in 2010, Including SAP SOP 2010 Share Options Granted~~Under RSU Milestone Plan 2015 (Grants for 2014)

€ thousands
Fixed Elements Performance-
Related
Element Long-Term
Incentive Elements Total
Salary Other¹⁾ Short-Term
Incentive (STI) Share-Based
Payment (SAP SOP
2010)²⁾
Bill McDermott (co-CEO)³⁾
1,355.2    196.4    1,920.6    950.0    4,422.2
Jim Hagemann Snabe (co-CEO)
1,150.0    114.5    1,648.7    950.0    3,863.2
Dr. Werner Brandt
700.0    18.4    997.7    577.0    2,293.1
Gerhard Oswald
700.0    97.6    997.7    577.0    2,372.3
Vishal Sikka⁴⁾
697.3    215.4    969.9    577.0    2,459.6
Dr. Angelika Dammann (member until July 8, 2011)
350.0    106.4    498.9    288.5    1,243.8

Total
4,952.5    748.7    7,033.5    3,919.5    16,654.2

   Grants for 2014
   Quantity    Grant Value per
Unit at Time of
Grant    Total Grant Value
at Time of Grant
      €    € thousands
Bill McDermott (CEO)
   76,374       52.90       4,040.5
Dr. Werner Brandt (until June 30, 2014)⁽¹⁾
   –       –       –
Robert Enslin (from May 4, 2014)
   18,164       51.72       939.4
Bernd Leukert (from May 4, 2014)
   18,164       51.72       939.4
Luka Mucic (from July 1, 2014)
   13,811       52.78       729.0
Gerhard Oswald
   27,396       52.90       1,449.4
Dr. Vishal Sikka (until May 4, 2014)⁽¹⁾
   –       –       –




Total
   153,909          8,097.7




¹⁾⁽¹⁾
The allocations for Werner Brandt (27,396 RSUs), and Vishal Sikka (27,396 RSUs) were forfeited at the end of their contracts. Consequently, they are not disclosed in the table above.
Share-Based Payment Under RSU Milestone Plan 2015 (Grants for 2013)
   Grants for 2013
   Quantity    Total Grant Value
at Time of Grant⁽¹⁾
      € thousands
Bill McDermott (co-CEO)
   73,289       4,143.5
Jim Hagemann Snabe (co-CEO)⁽²⁾
   –       –
Dr. Werner Brandt
   26,290       1,486.4
Lars Dalgaard (until May 31, 2013)⁽²⁾
   –       –
Luisa Deplazes Delgado (until June 30, 2013)⁽²⁾
   –       –
Gerhard Oswald
   26,290       1,486.4
Dr. Vishal Sikka
   26,290       1,486.4




Total
   152,159       8,602.7




⁽¹⁾
The grant value of each RSU allocated in 2013 was €56.54.
⁽²⁾
The allocations for Jim Hagemann Snabe (73,289 RSUs) were converted into a fixed payment. The allocations for Lars Dalgaard (26,290 RSUs) and Luisa Deplazes Delgado (21,562 RSUs) were forfeited at the end of their contracts. Consequently, they are not disclosed in the table above.
II. Executive Board Members’ Compensation According to HGB and GAS 17
Under the compensation disclosure rules of the German HGB and GAS 17, share-based compensation awards are to be included in the compensation of the year of grant, even if the awards are tied to future years. Accordingly, and in contrast to, the compensation amounts disclosed under the management view above, the Executive Board compensation
amounts determined under HGB and GAS 17 for 2013 and 2014;
Exclude the share-based compensation awards granted to Executive Board members in 2012 for the years 2013 and 2014 as these were already included in the 2012 compensation
Include in full the grants for 2014 and 2015 made to Executive Board members appointed in 2014, that is, also including the grant for 2015
Part I
Item 6
Including RSU Milestone Plan 2015 awards for 2014 and 2015 granted in 2014 to Robert Enslin (€1,574,800 for each of the two years), Bernd Leukert (2014: €1,280,000; 2015: €1,574,800), and Luka Mucic (2014: €1,141,000; 2015: €1,574,800) upon their appointment to the Executive Board, the total Executive Board compensation for 2014 calculated as required under section 314 of the German Commercial Code amounts to €23,216,200, thereof: Bill McDermott €4,048,100; Jim Hagemann Snabe €1,395,900; Werner Brandt €1,768,800; Robert Enslin €4,550,800; Bernd Leukert €4,147,200; Luka Mucic €3,691,500; Gerhard Oswald €1,954,700; and Vishal Sikka €1,659,200.
Including RSU Milestone Plan 2015 awards for 2014 and 2015 granted in 2013 to Gerhard Oswald (€1,574,800 for each of the two years) upon the extension of his Executive Board contract, the total Executive Board compensation for 2013 calculated as required under section 314 of the German Commercial Code amounts to €24,109,600, thereof: Bill McDermott €5,468,800; Jim Hagemann Snabe €6,212,900; Werner Brandt €2,391,500; Lars Dalgaard €964,100; Luisa Deplazes Delgado €797,100; Gerhard Oswald €5,529,100; and Vishal Sikka €2,746,100.
All amounts as determined under HGB and GAS 17, other than share-based compensation, are identical to the amounts disclosed under the management view above.
III. Executive Board Members’ Compensation According to the Code
Pursuant to the recommendations of the Code dated June 24, 2014, 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 Code.
In contrast to the disclosure rules stipulated in the German HGB and GAS 17, the Code 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. However, due to the payouts under the RSU Milestone Plan 2015 not being capped, there is no disclosure to be made for the maximum variable compensation amount achievable (marked as “NA” in the table below).
German Corporate Governance Code (Benefits Granted in 2013 and 2014)
Benefits granted
€ thousands
Bill McDermott
CEO Jim Hagemann Snabe
Co-CEO and Member of the Executive
Board (until May 21, 2014) Dr. Werner Brandt
Member of the Executive Board
(until June 30, 2014)
   2014⁽¹⁾ 2014 (Min) 2014 (Max) 2013⁽¹⁾ 2014⁽²⁾ 2014 (Min) 2014 (Max) 2013 2014⁽²⁾ 2014 (Min) 2014 (Max) 2013
Fixed compensation
1,150.0    1,150.0    1,150.0    1,150.0    2,148.8    2,148.8    2,148.8    1,150.0    1,138.0    1,138.0    1,138.0    700.0
Fringe benefits⁽³⁾
861.4    861.4    861.4    1,570.5    228.6    228.6    228.6    147.2    68.0    68.0    68.0    29.0

Total
2,011.4    2,011.4    2,011.4    2,720.5    2,377.4    2,377.4    2,377.4    1,297.2    1,206.0    1,206.0    1,206.0    729.0

One-year variable compensation
1,860.0    0    3,371.3    1,860.0    1,860.0    0    3,371.3    1,860.0    1,125.8    0    2,040.5    2,040.5
Multi-year variable compensation

LTI HANA
–    –    –    –    –    –    –    –    –    –    –    –
RSU Milestone Plan 2015
–    –    NA    –    –    –    NA    –    –    –    NA    –

Total
3,871.4    2,011.4    NA    4,580.5    4,237.4    2,377.4    NA    3,157.2    2,331.8    1,206.0    NA    2,769.5

Service cost
646.8    646.8    646.8    698.4    117.9    117.9    117.9    282.9    0    0    0    0

Total
4,518.2    2,658.2    NA    5,278.9    4,355.3    2,495.3    NA    3,440.1    2,331.8    1,206.0    NA    2,769.5

Part I
Item 6
Benefits granted
€ thousands
Robert Enslin
Member of the Executive Board
(from May 4, 2014) Bernd Leukert
Member of the Executive Board
(from May 4, 2014) Luka Mucic
Member of the Executive Board
(from July 1, 2014)
   2014⁽¹⁾ 2014 (Min) 2014 (Max) 2013⁽¹⁾ 2014 2014 (Min) 2014 (Max) 2013 2014 2014 (Min) 2014 (Max) 2013
Fixed compensation
462.9    462.9    462.9        –    462.9    462.9    462.9        –    350.0    350.0    350.0        –
Fringe benefits⁽³⁾
121.0    121.0    121.0    –    12.2    12.2    12.2    –    4.3    4.3    4.3    –

Total
583.9    583.9    583.9    –    475.1    475.1    475.1    –    354.3    354.3    354.3    –

One-year variable compensation
746.4    0    1,352.9    –    746.4    0    1,352.9    –    567.5    0    1,028.6    –
Multi-year variable compensation

LTI HANA
–    –    –    –    –    –    –    –    –    –    –    –
RSU Milestone Plan 2015
939.4    0    NA    –    939.4    0    NA    –    729.0    0    NA    –

Total
2,269.7    583.9    NA    –    2,160.9    475.1    NA    –    1,650.8    354.3    NA    –

Service cost
148.1    148.1    148.1    –    0    0    0    –    0    0    0    –

Total
2,417.8    732.0    NA    –    2,160.9    475.1    NA    –    1,650.8    354.3    NA    –

Benefits granted
€ thousands
Gerhard Oswald
Member of the Executive Board Dr. Vishal Sikka
Member of the Executive Board
(until May 4, 2014)
   2014 2014 (Min) 2014 (Max) 2013 2014⁽¹⁾ 2014 (Min) 2014 (Max) 2013⁽¹⁾
Fixed compensation
700.0    700.0    700.0    700.0    291.7    291.7    291.7    700.0
Fringe benefits⁽³⁾
22.0    22.0    22.0    17.0    92.8    92.8    92.8    383.6

Total
722.0    722.0    722.0    717.0    384.5    384.5    384.5    1,083.6

One-year variable compensation
1,125.8    0    2,040.5    1,125.8    1,125.8    0    2,040.5    1,125.8
Multi-year variable compensation

LTI HANA
–    –    –    –    1,000.0    0    2,000.0    586.3
RSU Milestone Plan 2015
1,449.4    0    NA    –    –    –    NA    –

Total
3,297.2    722.0    NA    1,842.8    2,510.3    384.5    NA    2,795.7

Service cost
0    0    0    0    59.9    59.9    59.9    153.9

Total
3,297.2    722.0    NA    1,842.8    2,570.2    444.4    NA    2,949.6

⁽¹⁾
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.
⁽²⁾
The fixed compensation includes a settlement of the RSU tranche 2014 (Jim Hagemann Snabe: €1,700,000) and a retention bonus (Werner Brandt: €788,000).
⁽³⁾
Insurance contributions, benefits in kind, expenses for maintenance of two households, ~~due to work abroad, reimbursement legal~~use of aircraft, tax and ~~tax advice fees, nonrecurring payments, security services, tax~~
²⁾
~~Fair value at the time of grant~~
³⁾
~~Includes~~ discrete payments arising through application of the fixed exchange-rate ~~clause to the following items: salary for 2010: €205,200; profit-sharing bonus for 2010: €271,900~~clause.
The total Executive Board compensation granted according to the Code amounted to €23,302,200 (2013: €16,280,900).
⁴⁾
~~Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: salary for 2010: €70,100; profit-sharing bonus for 2010: €76,100~~
~~Share-Based Payment Under SAP SOP 2010 (2010 Grants)~~German Corporate Governance Code (Allocation)

   2010 Grants
   Quantity    Fair Value per
Right at Time
of Grant    Total Fair
Value at Time
of Grant    Fair Value per
Right on
Dec. 31, 2010    Total Fair
Value on Dec. 31,
2010
      €    € thousands    €    € thousands
Bill McDermott (co-CEO)
   135,714       7.00       950.0       8.19       1,111.5
Jim Hagemann Snabe (co-CEO)
   135,714       7.00       950.0       8.19       1,111.5
Dr. Werner Brandt
   82,428       7.00       577.0       8.19       675.1
Gerhard Oswald
   82,428       7.00       577.0       8.19       675.1
Vishal Sikka
   82,428       7.00       577.0       8.19       675.1
Dr. Angelika Dammann (member until July 8, 2011)
   41,214       7.00       288.5       8.19       337.5






Total
   559,926          3,919.5          4,585.8






Allocation
€ thousands
Bill McDermott
CEO Jim Hagemann Snabe
Co-CEO and
Member of the
Executive Board
(until May 21, 2014) Dr. Werner Brandt
Member of the
Executive Board
(until June 30, 2014) Robert Enslin
Member of the
Executive Board
(from May 4, 2014)
   2014 2013 2014 2013 2014 2013 2014 2013
Fixed compensation
1,150.0    1,150.0    2,148.8    1,150.0    1,138.0    700.0    462.9        –
Fringe benefits⁽¹⁾
861.4    1,570.5    228.6    147.2    68.0    29.0    121.0    –

Total
2,011.4    2,720.5    2,377.4    1,297.2    1,206.0    729.0    583.9    –

One-year variable compensation
1,737.2    1,545.7    1,737.2    1,545.7    1,051.5    935.5    –    –
Multi-year variable compensation

RSU Milestone Plan 2015
–    –    10,254.1    –    –    –    –    –
LTI HANA
–    –    –    –    –    –    –    –
MTI
1,011.1    1,067.6    1,011.1    1,067.6    611.0    645.1    –    –
SAP SOP 2010
–    –    –    –    –    –    –    –
SAP SOP 2009
378.7    –    –    –    –    –    –    –
Other
–    –    –    –    –    –    –    –

Total
5,138.4    5,333.8    15,379.8    3,910.5    2,868.5    2,309.6    583.9    –

Service cost
646.9    698.4    117.9    282.9    0    0    148.1    –

Total
5,785.3    6,032.2    15,497.7    4,193.4    2,868.5    2,309.6    732.0    –

Part I

Item 6

Allocation
€ thousands
   Bernd Leukert
Member of the
Executive Board
(from May 4, 2014)    Luka Mucic
Member of the
Executive Board
(from July 1, 2014)    Gerhard Oswald
Member of the
Executive Board    Dr. Vishal Sikka
Member of the
Executive Board
(until May 4, 2014)
      2014    2013    2014    2013    2014    2013    2014    2013
Fixed compensation
   462.9       –       350.0       –       700.0       700.0       291.7       700.0
Fringe benefits⁽¹⁾
   12.2       –       4.3       –       22.0       17.0       92.8       383.0
















Total
   475.1       –       354.3       –       722.0       717.0       384.5       1,083.0
















One-year variable compensation
   –       –       –       –       1,051.5       935.5       1,051.5       935.5
Multi-year variable compensation

RSU Milestone Plan 2015
   –       –       –       –       –       –       –       –
LTI HANA
   –       –       –       –       –       –       892.2       –
MTI
   –       –       –       –       611.0       645.1       611.0       577.9
SAP SOP 2010
   –       –       –       –       1,590.9       –       –       –
SAP SOP 2009
   –       –       –       –       –       –       –       –
Other
   –       –       –       –       –       –       –       –
















Total
   475.1       –       354.3       –       3,975.4       2,297.6       2,939.2       2,596.4
















Service cost
   0       –       0       –       0       0       59.9       153.9
















Total
   475.1       –       354.3           –       3,975.4       2,297.6       2,999.1       2,750.3
















⁽¹⁾
Insurance contributions, benefits in kind, expenses for maintenance of two households, use of aircraft, tax and discrete payments arising through application of the fixed exchange-rate clause.
The total Executive Board compensation allocated according to the Code amounted to €32,687,400 (2013: €17,583,100).
End-of-Service Benefits
Regular End-of-Service Undertakings
Retirement Pension Plan
~~Members~~The following retirement pension agreements apply to the individual members of the Executive ~~Board~~Board:
Werner Brandt (who retired as of June 30, 2014), Bernd Leukert, Luka Mucic, and Gerhard Oswald receive a retirement pension when they reach the retirement age of 60 (62 for Board Members appointed after January 1, 2012) and ~~vacate~~retire from their Executive Board seat, or a disability pension if, before reaching the regular retirement age, they become subject to occupational disability or permanent incapacity. A surviving ~~dependant’s~~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 ~~dependant’s~~dependent’s pension is 60% of the retirement pension or vested disability pension entitlement at death. ~~Entitlements are enforceable against SAP AG.~~
~~If service is ended before the retirement age of 60 is reached,~~
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 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.
~~Exceptional~~Originally, Gerhard Oswald was under a performance-based retirement ~~pension agreements apply to the following Executive Board members:~~
~~Bill McDermott and Vishal Sikka have rights to future benefits under the pension plan of SAP America. The pension plan of SAP America is a cash~~
balance plan that on retirement provides either monthly pension payments or a lump sum. The pension becomes available from the beneficiary’s 65th birthday. Subject to certain conditions, the plan also provides earlier payment or invalidity benefits. The SAP America pension plan closed with effect from January 1, 2009. Interest continues to be paid on the earned rights to benefits.
~~SAP also made contributions to a third-party pension plan for Bill McDermott and Vishal Sikka. SAP’s contributions are based on Bill McDermott’s and Vishal Sikka’s payments into this pension~~ plan. Additionally in view of the close of the SAP America pension plan, SAP adjusted its payments to this non-SAP pension plan. In 2011, SAP paid contributions for Bill McDermott totaling €470,800 (2010: €765,700) and for Vishal Sikka totaling €95,700 (2010: €153,200).
Instead of paying for entitlements under the pension plan for Executive Board members, SAP pays equivalent amounts to a non-SAP pension plan for Jim Hagemann Snabe. In 2011, SAP paid contributions totaling €283,800 (2010: €283,100).
~~Gerhard Oswald’s performance-based retirement~~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
Part I
Item 6
will increase by further annual contributions because he ~~will remain~~remains a member of the Executive Board after his 60th birthday until his scheduled retirement on December 31, 2016.
Werner Brandt’s rights to retirement pension benefits increased by further contributions after his 60th birthday until he retired from the Executive Board on June 30, 2014.
Instead of paying for entitlements under the pension plan for Executive Board members, SAP paid an equivalent amount to a third-party pension plan for Jim Hagemann Snabe (2014: €117,900; 2013: €282,900).
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 on retirement provides either monthly pension payments or a lump sum. 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.
SAP made contributions to a third-party pension plan for Bill McDermott (2014: €646,800; 2013: €698,400), Robert Enslin (2014: €148,100), and Vishal Sikka (2014: €59,900; 2013: €153,900). SAP’s contributions are based on payments by Bill McDermott, Robert Enslin, and Vishal Sikka into this pension plan.

~~Part I~~
~~Item 6~~

Total ~~Projected~~Defined Benefit Obligation ~~(PBO)~~(DBO) and the Total Accruals for Pension Obligations to Executive Board Members

€ thousands
Bill Mc
Dermott
(co-CEO) Dr. Werner
Brandt Gerhard
Oswald Vishal
Sikka Dr. Angelika
Dammann
(Member
until July 8,
2011) Total
PBO January 1, 2010
958.1    902.8    3,626.2    0    0    5,487.1
Less plan assets market value January 1, 2010
42.5    655.1    2,874.2    0    0    3,571.8
Accrued January 1, 2010
915.6    247.7    752.0    0    0    1,915.3
Accrued January 1, 2010 (new Board members)
0    0    0    0.2    0    0.2
PBO change in 2010
115.1    381.5    501.2    13.3    62.9    1,074.0
Plan assets change in 2010
10.1    266.6    500.7    11.8    78.7    867.9
PBO December 31, 2010
1,073.2    1,284.3    4,127.4    46.7    62.9    6,594.5
Less plan assets market value December 31, 2010
52.6    921.7    3,374.9    45.0    78.7    4,472.9
Accrued December 31, 2010
1,020.6    362.6    752.5    1.7    –15.8    2,121.6
PBO change in 2011
66.3    215.4    358.1    6.4    50.0    696.2
Plan assets change in 2011
4.0    209.3    436.3    3.5    98.5    751.6
PBO December 31, 2011
1,139.5    1,499.7    4,485.5    53.1    112.9    7,290.7
Less plan assets market value December 31, 2011
56.6    1,131.0    3,811.2    48.5    177.2    5,224.5
Accrued December 31, 2011
1,082.9    368.7    674.3    4.6    –64.3    2,066.2
€ thousands
Bill
McDermott
(CEO) Dr. Werner
Brandt
(until June 30,
2014) Bernd Leukert
(from May 4,
2014)⁽¹⁾ Luka Mucic
(from July 1,
2014)⁽¹⁾ Gerhard
Oswald Total
DBO January 1, 2013
1,075.1    2,041.5    –    –    5,716.8    8,833.4
Less plan assets market value January 1, 2013
0    1,348.0    –    –    4,194.5    5,542.5
Accrued January 1, 2013
1,075.1    693.5    –    –    1,522.3    3,290.9
DBO change in 2013
–32.4    96.0    –    –    99.7    163.3
Plan assets change in 2013
0    226.2    –    –    456.8    683.0
DBO December 31, 2013
1,042.7    2,137.5    –    –    5,816.5    8,996.7
Less plan assets market value December 31, 2013
0    1,574.2    –    –    4,651.3    6,225.5
Accrued December 31, 2013
1,042.7    563.3    –    –    1,165.2    2,771.2
DBO change in 2014
169.8    475.1    123.2    102.8    1,404.9    2,275.8
Plan assets change in 2014
0    176.0    94.6    67.8    341.1    679.5
DBO December 31, 2014
1,212.5    2,612.6    123.2    102.8    7,221.4    11,272.5
Less plan assets market value December 31, 2014
0    1,750.2    94.6    67.8    4,992.4    6,905.0
Accrued December 31, 2014
1,212.5    862.4    28.6    35.0    2,229.0    4,367.5
⁽¹⁾
The values shown here only reflect the pension entitlements that Bernd Leukert and Luka Mucic will receive from the retirement pension plan for Executive Board members.
Part I
Item 6
The table below shows the annual pension entitlement of each member of the Executive Board on reaching the scheduled retirement age 60(60 for Executive Board members initially appointed before 2014 and 62 for Executive Board members initially appointed in 2014) based on entitlements from SAP under performance-based and salary-linked plans vested on December 31, ~~2011.~~2014.
Annual Pension Entitlement

€ thousands
   Vested on
December 31,
2011 Vested on
December 31,
2010
Bill McDermott (co-CEO)¹⁾
   98.3    101.1
Dr. Werner Brandt
   80.6    72.9
Gerhard Oswald
   243.7 ²⁾ 228.1
Vishal Sikka¹⁾
   6.5    6.3
Dr. Angelika Dammann (member until July 8, 2011)
   8.2    3.5
€ thousands
   Vested on
December 31,
2014 Vested on
December 31,
2013
Bill McDermott (CEO)⁽¹⁾
   94.0    88.4
Dr. Werner Brandt (until June 30, 2014)
   95.7 ⁽³⁾ 89.8 ⁽²⁾
Bernd Leukert (from May 4, 2014)
   3.5    –
Luka Mucic (from July 1, 2014)
   2.6    –
Gerhard Oswald⁽⁴⁾
   279.4    267.9

¹⁾⁽¹⁾
The rights shown here for Bill McDermott ~~and Vishal Sikka~~ refer solely to rights under the pension plan for SAP ~~America pension plan.~~America.

²⁾⁽²⁾
Due to the extension of Werner Brandt’s contract beyond his 60th birthday, this value represents the retirement pension entitlement that he would have received based on the entitlements vested on December 31, 2013.
⁽³⁾
This value represents the retirement pension that Werner Brandt receives after his Executive Board contract expired.
⁽⁴⁾
Due to the extension of Gerhard Oswald’s contract beyond ~~his 60th birthday, this value represents~~June 30, 2014, these values represent the retirement pension entitlement that he would receive after his current Executive Board contract expires on ~~June 30, 2014,~~December 31, 2016, based on the entitlements vested on December 31, ~~2011.~~2014 (December 31, 2013).
~~Part I~~
~~Item 6~~

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 ~~of 60~~ will be higher than the amounts shown in the table.
Postcontractual ~~Noncompete~~Non-Compete Provisions
During the agreed 12-month postcontractual ~~noncompete~~non-compete period, each Executive Board ~~members receive~~member receives abstention payments corresponding to 50% of ~~their~~his or her final average contractual compensation as ~~members.~~agreed in the respective contract on an individual basis. Any other occupational income generated by the Executive Board member
will be deducted from his compensation in accordance with section 74c of the German Commercial Code.
The following table presents the net present values of the postcontractual ~~noncompete~~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 ~~2011.~~2014. Actual postcontractual ~~noncompete~~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.
Net Present Values of the Postcontractual ~~Noncompete~~Non-Compete Abstention Payments

€ thousands

Contract Term
Expires
   Net Present
Value of
Postcontractual
~~Noncompete~~Non-Compete
Abstention
Payment⁽¹⁾
Bill McDermott ~~(co-CEO)~~(CEO)
   June 30, 2017    ~~5,545.2~~3,999.7
~~Jim Hagemann Snabe (co-CEO)~~Robert Enslin (from May 4, 2014)
   June 30, 2017    ~~4,621.8~~1,157.4
~~Dr. Werner Brandt~~Bernd Leukert (from May 4, 2014)
June 30, 2017    ~~December 31, 2013~~1,103.6
Luka Mucic (from July 1, 2014)
June 30, 2017    ~~3,154.4~~842.9
Gerhard Oswald
   ~~June 30, 2014~~December 31, 2016    ~~3,118.8~~
~~Vishal Sikka~~
~~December 31, 2017~~ ~~2,878.1~~1,689.2


Total
      ~~19,318.3~~8,792.8


Part I
Item 6
⁽¹⁾
For the purpose of this calculation, the following discount rates have been applied: Bill McDermott 0.46% (2013: 1.72%); Robert Enslin 0.46%; Bernd Leukert 0.46%; Luka Mucic 0.46%: Gerhard Oswald 0.38% (2013: 1.54%).

Early End-of-Service Undertakings
Severance Payments
The standard contract for all Executive Board members ~~since January 1, 2006,~~ 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 AGSE 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 he or she has not served SAP as a member of the Executive Board for at least one year or if he or she leaves SAP AGSE for reasons for which he or she is responsible.
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 AGSE 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 AGSE under the German Securities Acquisition and Takeover Act, when SAP AGSE merges with another company and becomes the subsumed entity, or when a control or profit transfer agreement is concluded with SAP AGSE as the dependent company. An Executive Board member’s contract can also be terminated before full term if his or her appointment as an ~~SAP AG~~ Executive Board member of SAP SE is revoked in connection with a change of control.
~~Part I~~
~~Item 6~~
Postcontractual ~~Noncompete~~Non-Compete Provisions
Abstention compensation for the postcontractual ~~noncompete~~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 ~~twelve~~12 months starting from the date the permanent disability is determined.
Payments to Executive Board Members Resigning or Retiring in ~~2011~~2014
~~Angelika Dammann~~Vishal Sikka resigned from ~~her~~his position as Executive Board member with effect from ~~July 8, 2011,~~May 4, 2014, with the approval of the Supervisory Board. ~~She~~He received the following payments in connection with ~~her~~his retirement with effect from ~~August~~May 31, ~~2011:~~2014:

~~Angelika Dammann~~Vishal Sikka received monthly abstention compensation for a ~~payment~~period of ~~€3,658,503~~24 months for the postcontractual non-compete period totaling €3,663,400.
The unforfeitable rights allocated to him under the RSU Milestone Plan 2015 for the tranches 2012 and 2013 with the value of €2,420,800 (2012) and €1,434,500 (2013) remain available to him until their cash settlement in ~~relation~~2016 and 2017.
Werner Brandt retired from his position as Executive Board member upon the end of his current term on June 30, 2014. He received the following payments in connection with his retirement:
For a period of twelve months he receives monthly abstention compensation for the postcontractual non-compete period totaling €1,841,500.
The unforfeitable rights allocated to him under the ~~early termination of her contract.~~RSU Milestone Plan 2015 for the tranches 2012 and 2013 remain available to him until their cash settlement in 2016 and 2017.

In ~~July 2011, we waived the postcontractual noncompete provisions in her contract. The postcontractual noncompete provisions were subject to~~2014 he receives for six months a ~~termination notice of six months. As she retired at the end of August 2011, she received monthly abstention~~retirement pension totaling €47,840.
~~compensation of €103,650 corresponding to 50% of her final average contractual compensation for the remaining noncompete period of 4.5 months.~~
Part I
Item 6

The rights that had been allocated to her under LTI 2010 and LTI 2011 did not lapse on her retirement but remain available to her without restriction until their expiration which in all cases is five years after grant.
Payments to Former Executive Board Members
In ~~2011,~~2014, we paid pension benefits of ~~€1,346,000~~€1,425,000 to Executive Board members who had retired before January 1, ~~2011 (2010: €1,290,000)~~2014 (2013: €1,387,000). At the end of the year, the ~~PBO~~DBO for former Executive Board members was ~~€25,267,000 (2010: €24,878,000)~~€33,764,000 (2013: €29,181,000). Plan assets of ~~€25,788,000~~€25,584,000 are available to ~~service~~meet these obligations ~~(2010: €25,120,000)~~(2013: €26,015,000).
Executive Board Members’ Holdings of Long-Term Incentives
Members of the Executive Board hold or held share-based payment rights throughout the year ~~share-based payment rights~~ under the RSU Milestone Plan 2015 and the SAP SOP 2010 ~~SOP Performance Plan 2009, SAP SOP 2007, SAP SOP 2002, and LTI Plan 2000, which~~(which were granted ~~to them~~ in previous ~~years.~~years). For information about the terms and details of ~~SAP SOP 2010, SOP Performance Plan 2009, and SAP SOP 2007,~~these programs, see the Notes to the Consolidated Financial Statements section, Note (28).

~~Part I~~
~~Item 6~~

~~SAP SOP 2010~~RSU Milestone Plan 2015
The table below shows Executive Board members’ holdings, on December 31, ~~2011,~~2014, of restricted share units 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.
RSU Milestone Plan 2015 (2014 Tranche)
Quantity of RSUs
Holding on
January 1,
2014 Grants in
2014 Performance-
Related
Adjustment Exercised
Units Forfeited
Units Holding on
December 31,
2014
Bill McDermott (CEO)
195,562    76,374    –16,886    –    –    255,050
Dr. Werner Brandt
(until June 30, 2014)
70,151    27,396    –    –    27,396    70,151
Gerhard Oswald
70,151    27,396    –6,057    –    –    91,490
Dr. Vishal Sikka
(until May 4, 2014)⁽¹⁾
70,151    27,396    –    70,151    27,396    –
Robert Enslin
(from May 4, 2014)
0    18,164    –4,016    –    –    14,148
Bernd Leukert
(from May 4, 2014)
0    18,164    –4,016    –    –    14,148
Luka Mucic
(from July 1, 2014)
0    13,811    –3,054    –    –    10,757

Total
406,014    208,701    –34,029    70,151    54,792    455,743

⁽¹⁾
According to the termination agreement with Vishal Sikka, the 2012 grants will be 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.
Part I
Item 6
The holding of RSUs on December 31, 2014, which were issued and not forfeited in 2014, reflects the number of RSUs multiplied by the 77,89% target achievement. The RSUs allocated in 2012 have a remaining term of 1.08 years; the RSUs allocated in 2013 have a remaining term of 2.08 years; and the RSUs allocated in 2014 have a remaining term of 3.08 years.
RSU Milestone Plan 2015 (2013 Tranche)
Quantity of RSUs
Holding on
January 1,
2013 Grants in
2013 Performance-
Related
Adjustment Exercised
Units Forfeited
Units Holding on
December 31,
2013
Bill McDermott (co-CEO)
127,425    73,289    –5,152    –    –    195,562
Jim Hagemann Snabe
(co-CEO)⁽¹⁾
127,425    73,289    –5,152    195,562    –    –
Dr. Werner Brandt
45,709    26,290    –1,848    –    –    70,151
Gerhard Oswald
45,709    26,290    –1,848    –    –    70,151
Dr. Vishal Sikka
45,709    26,290    –1,848    –    –    70,151

Total
391,977    225,448    –15,849    195,562        –    406,014

⁽¹⁾
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 holding of RSUs on December 31, 2013, which were issued and not forfeited in 2013, reflects the number of RSUs multiplied by the 92.97% target achievement.
RSU Milestone Plan 2015 (2012 Tranche)
Quantity of RSUs
   Holding on
January 1,
2012    Grants in
2012    Performance-
Related
Adjustment    Exercised
Units    Forfeited
Units    Holding on
December 31,
2012
Bill McDermott (co-CEO)
   –       95,414       32,011       –       –       127,425
Jim Hagemann Snabe
(co-CEO)
   –       95,414       32,011       –       –       127,425
Dr. Werner Brandt
   –       34,226       11,483       –       –       45,709
Gerhard Oswald
   –       34,226       11,483       –       –       45,709
Dr. Vishal Sikka
   –       34,226       11,483       –       –       45,709












Total
   –       293,506       98,471           –           –       391,977












The holding on December 31, 2012, reflects the number of RSUs issued in 2012 multiplied by the 133.55% target achievement.
Part I
Item 6
SAP SOP 2010
The table below shows Executive Board members’ holdings, on December 31, 2014, 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 ~~are~~were exercisable beginning in September 2014 and the options issued in 2011 are exercisable beginning in June 2015.
SAP SOP 2010 Virtual Share Options

Year
Granted Strike Price
per Share Holding on
January 1, 2011 Rights
Exercised
in 2011 Price on
Exercise
Date Exercisable
Rights of
Retired
Members of
the Executive
Board Forfeited
Rights Holding on
December 31, 2011
€ Quantity
of
Options Remaining
Term in
Years Quantity of
Options Quantity of
Options Quantity of
Options Quantity
of
Options Remaining
Term in
Years
Bill McDermott (co-CEO)
2010    40.80    135,714    6.69    —    —    —    —    135,714    5.69
2011    48.33    112,426    7.44    —    —    —    —    112,426    6.44
Jim Hagemann Snabe (co-CEO)
2010    40.80    135,714    6.69    —    —    —    —    135,714    5.69
2011    48.33    112,426    7.44    —    —    —    —    112,426    6.44
Dr. Werner Brandt
2010    40.80    82,428    6.69    —    —    —    —    82,428    5.69
2011    48.33    68,284    7.44    —    —    —    —    68,284    6.44
Gerhard Oswald
2010    40.80    82,428    6.69    —    —    —    —    82,428    5.69
2011    48.33    68,284    7.44    —    —    —    —    68,284    6.44
Vishal Sikka
2010    40.80    82,428    6.69    —    —    —    —    82,428    5.69
2011    48.33    68,284    7.44    —    —    —    —    68,284    6.44
Dr. Angelika Dammann (member until July 8, 2011)
2010    40.80    41,214    6.69    —    —    —    —    41,214    5.69
2011    48.33    68,284    7.44    —    —    —    22,761    45,523    6.44

Total
1,057,914    22,761    1,035,153

~~SOP Performance Plan 2009~~
~~The table below shows the current Executive Board members’ holdings, on December 31, 2011, of virtual share options issued under the SOP Performance Plan 2009.~~
~~The strike price for an option varies with the performance of SAP shares over time against~~
~~the TechPGI index. The gross profit per option is limited to €30.80, corresponding to 110% of the SAP share price on the date of issue.~~
~~The issued options have a term of five years and can only be exercised on specified dates after the two-year vesting period. In this case the options have been exercisable since May 2011.~~
~~Part I~~
~~Item 6~~
Year
Granted Holding on
January 1, 2014 Strike
Price
per
Option Rights
Exercised
in 2014 Price on
Exercise
Date Exercisable
Rights of
Retired
Members
of the
Executive
Board Forfeited
Rights Holding on
December 31, 2014
Quantity
of
Options Remaining
Term in
Years € Quantity
of
Options € Quantity
of Options Quantity
of
Options Quantity
of
Options Remaining
Term in
Years
Bill McDermott
(co-CEO)
2010    135,714    3.69    40.80    –    –    –    –    135,714    2.69
2011    112,426    4.44    48.33    –    –    –    –    112,426    3.44
Jim Hagemann Snabe (co-CEO and member until May 21, 2014)
2010    135,714    3.69    40.80    135,714    60.10    –    –    –    –
2011    112,426    4.44    48.33    –    –    –    –    112,426    3.44
Dr. Werner Brandt (until June 30, 2014)
2010    82,428    3.69    40.80    82,428    60.10    –    –    –    –
2011    68,284    4.44    48.33    –    –    –    –    68,284    3.44
Gerhard Oswald
2010    82,428    3.69    40.80    82,428    60.10    –    –    –    –
2011    68,284    4.44    48.33    –    –    –    –    68,284    3.44
Dr. Vishal Sikka
(until May 4, 2014)
2010    82,428    3.69    40.80    82,428    60.10    –    –    –    –
2011    68,284    4.44    48.33    –    –    –    –    68,284    3.44

Total
948,416    382,998        –        –    565,418

~~SOP Performance Plan 2009 Virtual Share Options~~

Year
Granted Strike
Price
per Share Holding on
January 1, 2011 Rights
Exercised
in 2011 Price on
Exercise
Date Exercisable
Rights of
Retired
Members
of the Execu-
tive Board Forfeited
Rights Holding on
December 31, 2011
€ Quantity
of
Options Remaining
Term in
Years Quantity
of
Options

Quantity of
Options Quantity
of Options Quantity
of
Options Remaining
Term in
Years
Bill McDermott (co-CEO)
2009    variable    102,670    3.35    —    —    —    —    102,670    2.35
Jim Hagemann Snabe (co-CEO)
2009    variable    102,670    3.35    —    —    —    —    102,670    2.35
Dr. Werner Brandt
2009    variable    102,670    3.35    —    —    —    —    102,670    2.35
Gerhard Oswald
2009    variable    102,670    3.35    —    —    —    —    102,670    2.35
Vishal Sikka ¹⁾
2009    variable    35,588    3.35    —    —    —    —    35,588    2.35

Total
446,268    446,268

¹⁾
~~The holding was allocated before appointment to the Executive Board in 2010.~~
~~SAP SOP 2007~~
The table below shows Executive Board members’ holdings, on December 31, 2011, of virtual share options issued to them under the SAP SOP 2007 plan since its inception, including virtual share options issued to them both during and before their respective membership of the Executive Board.
The strike price for an option is 110% of the base price. The issued options have a term of five years and can only be exercised on specified dates after the two-year vesting period. The options issued in 2007 could be exercised with effect from June 2009, following expiration of the two-year vesting period. The options issued in 2008 have been exercisable since March 2010, following expiration of the two-year vesting period.
~~Part I~~
~~Item 6~~
~~SAP SOP 2007 Virtual Share Options~~

Year
Granted Strike
Price
per
Option Holding on
January 1, 2011 Rights
Exercised
in 2011 Price on
Exercise
Date Exercisable
Rights of
Retired
Members
of the
Executive
Board Forfeited
Rights Holding on
December 31, 2011
€ Quantity
of
Options Remaining
Term in
Years Quantity
of
Options Quantity of
Options Quantity
of
Options Quantity
of
Options Remaining
Term in
Years
Bill McDermott (co-CEO)¹⁾
2007    39.28    62,508    1.23    62,508    44.67    —    —    —    0.23
2008    35.96    70,284    2.18    70,284    44.67    —    —    —    1.18
Jim Hagemann Snabe (co-CEO)¹⁾
2007    39.28    37,505    1.23    37,505    43.92    —    —    —    0.23
2008    35.96    56,228    2.18    56,228    43.92    —    —    —    1.18
Dr. Werner Brandt
2007    39.28    72,216    1.23    72,216    43.92    —    —    —    0.23
2008    35.96    81,200    2.18    81,200    44.67    —    —    —    1.18
Gerhard Oswald
2007    39.28    72,216    1.23    72,216    43.92    —    —    —    0.23
2008    35.96    81,200    2.18    81,200    43.92    —    —    —    1.18
Vishal Sikka¹⁾
2007    39.28    12,502    1.23    12,502    43.92    —    —    —    0.23
2008    35.96    17,571    2.18    —    —    —    —    17,571    1.18

Total
563,430    545,859    17,571

¹⁾
~~The holding was allocated before appointment to the Executive Board in 2010.~~
~~SAP SOP 2002~~
The table below shows Executive Board members’ December 31, 2011, holdings of share options issued in previous years under the SAP SOP 2002 plan since its inception. The strike price for an SAP SOP 2002 share option is 110% of the base price of one SAP share. The base price is the arithmetic mean closing auction price for SAP shares in the Xetra trading system (or its successor system) over the five business days immediately before the issue date of that share option.
~~The strike price cannot be less than the closing auction price on the day before the issue date. The issued options have a term of five years and can only be exercised on specified~~
dates after the two-year vesting period. As a result of the issue on December 21, 2006, of bonus shares at a one-to-three ratio under a capital increase from corporate funds, on exercise each share option now entitles its beneficiary to four shares. For better comparability with the price of SAP shares since implementation of the capital increase, the following table shows not the number (quantity) of options but the number (quantity) of shares to which they entitle the holder. Consequently, the strike prices shown are prices per share and not per option. The number of shares shown in the table is four times the number of options, and the strike price for an option is four times the strike price per share shown in the table. The right to exercise options issued in 2006 expired in February 2011.
~~Part I~~
~~Item 6~~
~~SAP SOP 2002 Share Options~~

Year
Granted Strike
Price
per
Share Holding on
January 1, 2011 Rights
Exercised
in 2011 Price on
Exercise
Date Exercisable
Rights of
Retired
Members
of the Executive
Board Forfeited
Rights Holding on
December 31, 2011
€ Quantity
of Shares Remaining
Term in
Years Quantity
of Shares € Quantity of
Shares Quantity
of Shares Quantity
of
Shares Remaining
Term in
Years
Bill McDermott (co-CEO)¹⁾
2006    46.48    77,296    0.10    —    —    —    77,296    —    —
Jim Hagemann Snabe (co-CEO)¹⁾
2006    46.48    37,164    0.10    —    —    —    37,164    —    —
Dr. Werner Brandt
2006    46.48    87,292    0.10    —    —    —    87,292    —    —
Gerhard Oswald
2006    46.48    87,292    0.10    —    —    —    87,292    —    —
Vishal Sikka¹⁾
2006    46.48    7,436    0.10    —    —    —    7,436    —    —

Total
296,480    296,480

¹⁾
~~The holding was allocated before appointment to the Executive Board in 2010.~~
~~LTI Plan 2000~~
Beneficiaries under the LTI Plan 2000 could choose between convertible bonds and share options. The chief difference was in the way the exercise or conversion price was determined. The bond conversion price depends on the closing price of SAP shares the day before the bond was issued, while the option strike price varies with the performance of SAP shares over time against the S&P North Software-Software Index (the successor of the GSTI Software index). The issued options have a term of ten years and could only be exercised in portions of one-third each on specified dates after two-year, three-year, or four-year vesting periods respectively.
The strike prices for LTI Plan 2000 convertible bonds reflect the prices payable by an Executive Board member for one SAP share on conversion of the bond. The strike prices are fixed and correspond to the quoted price of one SAP share on the business day immediately
preceding the grant of the convertible bond. As a result of the issue on December 21, 2006, of bonus shares at a one-to-three ratio under a capital increase from corporate funds, on conversion each bond now entitles its beneficiary to four shares. For better comparability with the price of SAP shares since implementation of the capital increase, the following table shows not the number (quantity) of convertible bonds but the number (quantity) of shares to which they entitle the holder. Consequently, the strike prices shown are prices per share and not per bond. The number of shares shown in the table is four times the number of bonds, and the strike price for a bond is four times the strike price per share shown in the table.
The right to exercise share options and convertible bonds issued in 2001 expired in February 2011. On December 31, 2011, no current member of the Executive Board held share options or convertible bonds under the LTI Plan 2000.
~~Part I~~
~~Item 6~~
~~LTI Plan 2000 Convertible Bonds~~

Year
Granted Strike
Price per
Share Holding on
January 1, 2011 Rights
Exercised
in 2011 Price on
Exercise
Date Exercisable
Rights of
Retired
Members
of the
Executive
Board Forfeited
Rights Holding on
December 31, 2011
€ Quantity
of Shares Remaining
Term in
Years Quantity
of Shares € Quantity of
Shares Quantity
of Shares Quantity
of Shares Remaining
Term in
Years
Dr. Werner Brandt
2001    47.81    20,000    0.14    —    —    —    20,000    —    0
2002    37.88    120,000    1.14    120,000    43.75    —    —    —    0.14
Gerhard Oswald
2001    47.81    88,000    0.14    —    —    —    88,000    —    0

Total
228,000    120,000    108,000

Total Expense for Share-Based Payment
~~In the report year and the prior year, total~~Total expense for the share-based payment plans of Executive Board members was ~~recorded~~recognized as follows.
Total Expense for Share-Based Payment

€ thousands    2011    2010    2014    2013
Bill McDermott (co-CEO)
   1,053.5       382.9       5,063.8       – 1,529.7
Jim Hagemann Snabe (co-CEO)
   1,052.9       373.8
Dr. Werner Brandt
   621.9       355.2
Jim Hagemann Snabe (co-CEO and member until May 21, 2014)
   –201.0       – 2,967.0
Dr. Werner Brandt (until June 30, 2014)
   –330.8       1,042.9
Robert Enslin (from May 4, 2014)
   1,833.5       –
Bernd Leukert (from May 4, 2014)
   1,759.7       –
Luka Mucic (from July 1, 2014)
   1,577.2       –
Gerhard Oswald
   621.9       355.2       1,891.1       –376.0
Vishal Sikka
   652.8       151.8
Dr. Angelika Dammann (member until July 8, 2011)
   417.3       28.1
Dr. Vishal Sikka (until May 4, 2014)
   –460.7       –376.0








Total
   4,420.3       1,647.0       11,132.8       – 4,205.8








Part I

Item 6

The expense is recognized in accordance with IFRS 2 “Share-Based Payments.” Because the RSU Milestone Plan 2015 tranche for 2015 was allocated at the respective grant date of each Executive Board member, we are required to recognize the respective expense in part in 2014 even though this future tranche depends on the achievement of specific financial targets in future periods. Share-based payment expenses were affected by a decrease in fair values of SOP 2010. Negative expenses also arose out of the lapsing of rights under the RSU Milestone Plan 2015 in connection with the departures from the company of Werner Brandt and Vishal Sikka before the end of the year.
Shareholdings and Transactions of Executive Board Members
No member of the Executive Board holds more than 1% of the ordinary shares of SAP ~~AG.~~SE. Members of the Executive Board held a total of ~~20,560~~36,426 SAP shares on December 31, ~~2011 (2010: 13,747~~2014 (2013: 30,201 shares).
The table below shows transactions by Executive Board members and persons closely associated with them notified to SAP pursuant to the German Securities Trading Act, section 15a, in ~~2011.~~2014.

Transactions in SAP Shares

   Transaction Date    Transaction Quantity    Unit
Price in €
Dr. Werner Brandt
   February 15, 2011       Share purchase¹⁾ 120,000       37.8750
   February 15, 2011       Share sale¹⁾ 120,000       44.0854
   June 6, 2011       Share purchase 1,200       41.99
Dr. Angelika Dammann (member until July 8, 2011)
   May 30, 2011       Share purchase 600       42.3750
Gerhard Oswald
   May 31, 2011       Share purchase 1,163       42.9848
Bill McDermott (co-CEO)
   June 9, 2011       Purchase of ADRs 1,960       41,897 ²⁾
Jim Hagemann Snabe (co-CEO)
   June 9, 2011       Share purchase 2,410       41.5965
Vishal Sikka
   August 18, 2011       Purchase of ADRs 1,500       34,322 ³⁾

¹⁾Transaction Date Transaction Quantity Unit Price
~~Sale and~~Dr. Werner Brandt
(until June 30, 2014)
April 17, 2014 Share purchase 950 €56.8290
Robert Enslin (from May 4, 2014)
June 6, 2014 Share sale 1,665 €55.1703
July 23, 2014 Purchase of ~~shares in line with the LTI Plan 2000~~ADRs 875 US$82.4600
October 21, 2014 Purchase of ADRs 1,850 US$65.2900
Gerhard Oswald
June 10, 2014 Share purchase 950 €55.6690
²⁾ October 21, 2014 Share purchase 1,950 €51.3000
~~Original purchase price was US$61.229 per unit~~Bernd Leukert (from May 4, 2014)
August 7, 2014 Share purchase 210 €57.8490
³⁾ September 5, 2014 Share sale 1,315 €59.7547
October 21, 2014 Share purchase 1,200 €51.3227
~~Original~~Bill McDermott (CEO)
August 20, 2014 Purchase of ADRs 2,000 US$76.8200
October 20, 2014 Purchase of ADRs 10,000 US$65.2486
Luka Mucic (from July 1, 2014)
October 20, 2014 Share purchase ~~price was US$49.317 per unit~~
1,900 €51.5340

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 ~~2011~~2014 or the previous year.
As far as the law permits, SAP AGSE and its affiliated companies in Germany and elsewhere indemnify and hold harmless their respective directors and officers against and from the claims of 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 AGSE as required by section 93 (2) of the German Stock Corporation Act.
Compensation for Supervisory Board Members
Compensation System
Supervisory Board members’ compensation is governed by our Articles of Incorporation, section 16. Each member of the Supervisory Board receives, in addition to the reimbursement of his or her expenses, compensation composed of fixed elements and a variable element. The variable element depends on the dividend paid by SAP on its shares.
The fixed element is €100,000 for the chairperson, €70,000 for ~~the~~a deputy chairperson, and €50,000 for other members. For membership of the Audit Committee, Supervisory Board members receive additional fixed annual remuneration of €15,000, and for membership of any other Supervisory Board committee ~~€10,000, provided that the committee concerned has met~~

Part I

Item 6

€10,000, provided that the committee concerned has met in the year. The chairperson of the ~~audit committee~~Audit Committee receives €25,000, and the chairpersons of the other committees receive €20,000. The fixed remuneration is payable after the end of the year.
The variable compensation element is €10,000 for the chairperson, €8,000 for ~~the~~a deputy chairperson, and €6,000 for the other members of the Supervisory Board for each €0.01 by which the dividend distributed per share exceeds €0.40. The variable remuneration is payable after the end of the Annual General Meeting of Shareholders that resolves on the dividend for the relevant year.
However, the aggregate compensation excluding compensation for committee memberships must not exceed €250,000 for the chairperson, €200,000 for ~~the~~a deputy chairperson, and €150,000 for other members of the Supervisory Board.
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~~chairperson(s) and to the remuneration for the chairperson and the members of a committee.

Amount of Compensation
Subject to the resolution on the appropriation of retained earnings by the Annual General Meeting of Shareholders on May ~~23, 2012,~~20, 2015, the compensation paid to Supervisory Board members in respect of ~~2011~~2014 will be as set out in the table ~~below:~~below.
Supervisory Board Members’ Compensation in 2014

2011 2010
€(000) Fixed
Compensation Compensation
for Committee
Work Variable
Compensation Total Fixed
Compensation Compensation
for Committee
Work Variable
Compensation Total
Prof. Dr. h.c. mult. Hasso Plattner (chairperson)
100.0    100.0    150.0    350.0    100.0    60.0    150.0    310.0
Lars Lamadé (deputy chairperson)
70.0    28.3    130.0    228.3    70.0    1.7    130.0    201.7
Pekka Ala-Pietilä
50.0    30.0    100.0    180.0    50.0    20.0    100.0    170.0
Thomas Bamberger
50.0    15.0    100.0    165.0    50.0    15.0    100.0    165.0
Panagiotis Bissiritsas
50.0    20.0    100.0    170.0    50.0    20.0    100.0    170.0
Willi Burbach (until August 7, 2011)
33.3    16.7    66.7    116.7    50.0    10.0    100.0    160.0
Prof. Dr. Wilhelm Haarmann
50.0    50.0    100.0    200.0    50.0    31.7    100.0    181.7
Peter Koop
50.0    20.0    100.0    170.0    50.0    10.0    100.0    160.0
Christiane Kuntz-Mayr
50.0    10.0    100.0    160.0    50.0    10.0    100.0    160.0
Bernard Liautaud
50.0    10.0    100.0    160.0    50.0    10.0    100.0    160.0
Dr. Gerhard Maier
50.0    25.0    100.0    175.0    50.0    25.0    100.0    175.0
Dr. Hans-Bernd Meier (from August 8, 2011)
20.8    0    41.7    62.5    —    —    —    —
Dr. h.c. Hartmut Mehdorn
50.0    10.0    100.0    160.0    50.0    10.0    100.0    160.0
Prof. Dr.-Ing. Dr. h.c. Dr.-Ing. E.h. Joachim Milberg
50.0    55.0    100.0    205.0    50.0    35.0    100.0    185.0
Dr. Erhard Schipporeit
50.0    35.0    100.0    185.0    50.0    35.0    100.0    185.0
Stefan Schulz
50.0    30.0    100.0    180.0    50.0    21.7    100.0    171.7
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
50.0    10.0    100.0    160.0    50.0    10.0    100.0    160.0

Total
874.1    465.0    1,688.3    3,027.5    870.0    325.0    1,680.0    2,875.0

2014 2013
€ thousands
Fixed
Compensation Compensation
for
Committee
Work Variable
Compensation Total Fixed
Compensation Compensation
for
Committee
Work Variable
Compensation Total
Prof. Dr. h.c. mult. Hasso Plattner (chairperson)
100.0    100.0    150.0    350.0    100.0    81.7    150.0    331.7
Christiane Kuntz-Mayr (deputy chairperson)
70.0    20.8    130.0    220.8    70.0    10.8    130.0    210.8
Pekka Ala-Pietilä
50.0    30.0    100.0    180.0    50.0    30.0    100.0    180.0
Catherine Bordelon (from July 7, 2014)
25.0    5.0    50.0    80.0    NA    NA    NA    NA
Panagiotis Bissiritsas
50.0    20.0    100.0    170.0    50.0    20.0    100.0    170.0
Prof. Anja Feldmann
50.0    20.0    100.0    170.0    50.0    10.8    100.0    160.8
Prof. Dr. Wilhelm Haarmann
50.0    50.0    100.0    200.0    50.0    40.8    100.0    190.8
Margret Klein-Magar
50.0    30.0    100.0    180.0    50.0    20.0    100.0    170.0
Lars Lamadé
50.0    30.0    100.0    180.0    50.0    20.8    100.0    170.8
Steffen Leskovar (from July 7, 2014)
25.0    12.5    50.0    87.5    NA    NA    NA    NA
Bernard Liautaud
50.0    30.0    100.0    180.0    50.0    30.0    100.0    180.0
Dr. h. c. Hartmut Mehdorn
50.0    20.0    100.0    170.0    50.0    10.8    100.0    160.8
Dr. Kurt Reiner
50.0    20.0    100.0    170.0    50.0    20.0    100.0    170.0
Mario Rosa-Bian
50.0    15.0    100.0    165.0    50.0    9.2    100.0    159.2
Dr. Erhard Schipporeit
50.0    35.0    100.0    185.0    50.0    35.0    100.0    185.0
Stefan Schulz
50.0    30.8    100.0    180.8    50.0    25.8    100.0    175.8
Jim Hagemann Snabe (from July 7, 2014)
25.0    10.0    50.0    85.0    NA    NA    NA    NA
Inga Wiele (until July 6, 2014)
29.2    14.6    58.3    102.1    50.0    25.0    100.0    175.0
Prof. Dr.-Ing.Dr.-Ing. E.h. Klaus Wucherer
50.0    20.8    100.0    170.8    50.0    25.0    100.0    175.0

Total
924.2    514.5    1,788.3    3,227.0    870.0    415.7    1,680.0    2,965.7

Part I

Item 6

In addition, we reimburse to members of the Supervisory Board for their expenses and the value-added tax payable on their compensation.
~~The~~In total, ~~compensation~~we received services from members of ~~all~~the Supervisory Board members in 2011 for work for SAP excluding compensation relating to the office of Supervisory Board member was €1,688,300 (2010: €995,000). Those amounts are composed entirely of remuneration received by(including services from employee representatives on the Supervisory Board ~~relating~~in their capacity as employees of SAP) in the amount of €2,295,000 (2013: €1,503,600). This amount includes fees paid to ~~their position as SAP employees~~Linklaters LLP in ~~2010 and 2011 respectively.~~
Frankfurt am Main, Germany (which Supervisory Board member Wilhelm Haarmann is ~~an attorney at the German bar and~~ a partner at HAARMANN Partnerschaftsgesellschaft in Frankfurt am Main, Germany. Wilhelm Haarmann and HAARMANN Partnerschaftsgesellschaft occasionally advise SAP on particular projects, tax matters, and questionsof) of ~~law. In 2011, the fees for such services totaled €358,800 (2010: €73,000)~~€1,001,700 (2013: €327,500).
Long-Term Incentives for the Supervisory Board
We do not offer members share options or other share-based payment for their Supervisory Board
work. Any share options or other share-based payment received by employee-elected members relate to their position as SAP employees and not to their work on the Supervisory Board.
Shareholdings and Transactions of Supervisory Board Members
Supervisory Board chairperson Hasso Plattner and the companies he controlled held ~~121,515,102~~107,442,743 SAP shares on December 31, ~~2011~~2014 (December 31, ~~2010: 122,148,302~~2013: 119,300,882 SAP shares), representing ~~9.895% (2010: 9.956%~~8.746% (2013: 9.711%) of SAP’s share capital. No other member of the Supervisory Board held more than 1% of the SAP AGSE share capital at the end of ~~2011~~2014 or of the previous year. Members of the Supervisory Board held a total of ~~121,524,139~~107,467,372 SAP shares on December 31, ~~2011~~2014 (December 31, ~~2010: 122,156,130~~2013: 119,316,444 SAP shares).

The table below shows transactions by Supervisory Board members and persons closely associated with them notified to SAP pursuant to the German Securities Trading Act, section 15a, in ~~2011:~~2014:
Transactions in SAP Shares

   Transaction Date    Transaction Quantity    Unit Price in
€
Christiane Kuntz-Mayr
   February 15, 2011    Share purchase ¹⁾ 3,128       32.3128
   February 15, 2011    Share sale ¹⁾ 3,037       44.0854
Dr. Gerhard Maier
   November 15, 2011    Share sale ¹⁾ 12,600       43.8294
   Transaction Date    Transaction    Quantity Unit Price
Hasso Plattner
   May 5, 2014    Sale of ADRs       24,100    US$ 77.9873
Mario Rosa-Bian
   June 2, 2014    Share sale       118    € 56.1100
Hasso Plattner GmbH & Co. Beteiligungs-KG

August 29, 2014


Compensation
in kind
(granting party)





9,567,786


⁽¹⁾
   November 21, 2014    Share sale       ⁽²⁾ ⁽²⁾
Sabine Plattner GmbH & Co. Beteiligungs-KG

August 29, 2014


Compensation
in kind
(receiving party)





4,783,893


⁽³⁾
   November 20, 2014    Share sale       ⁽⁴⁾ ⁽⁴⁾

¹⁾⁽¹⁾
~~Sale and purchase~~Compensation in kind of 9,567,786 shares, ~~in line with~~hypothetical volume of the ~~LTI Plan 2000~~transaction: €566,412,931.20.
⁽²⁾
The notifying party (Hasso Plattner GmbH & Co. Beteiligungs-KG) concluded a contract with a bank acting as commission agent for the monthly sale of SAP shares with a fair value of €20,000,000 per month. The sale will be carried out at the bank’s own discretion in the stock market or over the counter in the months December 2014 through November 2015.
⁽³⁾
Compensation in kind of 4,783,893 shares, hypothetical volume of the transaction: €283,206,465.60.
⁽⁴⁾
The notifying party (Sabine Plattner GmbH & Co. Beteiligungs-KG) concluded a contract with a bank acting as commission agent for the sale of 40,000 SAP shares per month. The sale will be carried out at the bank’s own discretion in the stock market or over the counter in the months December 2014 through November 2015.
Part I
Item 6

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 ~~2011~~2014 or the previous year.
Hasso Plattner, the chairperson of the Supervisory Board, entered into a consulting contract with SAP after he joined 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.
~~Part I~~
~~Item 6~~
EMPLOYEES
Headcount
~~The following tables set forth~~Note (8) to our Consolidated Financial Statements presents the number of employees, measured infull-time equivalents by functional area and by geographic ~~region:~~

December 31, 2011 December 31, 2010 December 31, 2009
Full-time
equivalents
EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total
Software and software-related services
4,068    2,079    2,816    8,963    3,804    1,827    2,254    7,885    3,227    1,276    1,919    6,422
Professional services and other services
6,808    3,963    2,497    13,268    6,787    3,955    2,410    13,152    6,635    3,473    2,240    12,348
Research and development
8,713    3,028    4,120    15,861    8,617    3,154    4,113    15,884    8,525    2,534    3,755    14,814
Sales and marketing
4,856    4,581    2,343    11,780    4,593    4,214    2,180    10,987    4,202    3,559    1,752    9,513
General and administration
2,073    1,120    542    3,735    2,053    1,005    518    3,576    1,919    724    408    3,051
Infrastructure
1,182    702    274    2,158    1,135    628    266    2,029    854    408    174    1,436
SAP Group (December 31)
27,700    15,473    12,592    55,765    26,989    14,783    11,741    53,513    25,362    11,974    10,248    47,584
Thereof Acquisitions
264    49    90    403    1,174    1,975    1,084    4,233    158    73    0    231
SAP Group (months’ end average)
27,296    15,010    12,040    54,346    25,929    13,164    10,877    49,970    25,927    12,288    10,554    48,769
¹⁾
~~Europe, Middle East, Africa~~region.
On December 31, ~~2011, our total~~2014, we had 74,406 full-time equivalent (FTE) employees worldwide ~~headcount expressed in FTEs was 55,765~~ (December 31, ~~2010: 53,513 FTEs)~~2013: 66,572). This represents an increase in headcount of ~~2,252~~7,834 FTEs in comparison to ~~2010.~~2013. Of the overall headcount increase in ~~2011, 403~~2014, 5,535 resulted from acquisitions. The average number of employees in ~~2011~~2014 was ~~54,346 (2010: 49,970)~~68,343 (2013: 65,409).
We define the FTE headcount as the number of people we would employ if we only employed people on full-time employment contracts. Students employed ~~part time~~part-time and certain ~~people~~individuals who are employed by SAP but who, for various reasons, are not currently working, are excluded from our figures. Also, ~~certain~~ temporary employees are not included in ~~our~~the above figures. The number of such temporary employees is not material.
On December 31, ~~2011,~~2014, the largest number of SAP employees ~~(50%~~(45%) were employed in the
EMEA region (including ~~29%~~24% in Germany), while ~~28%~~30% were employed in the Americas region (including ~~19%~~21% in the United States) and ~~22%~~26% in the ~~Asia Pacific Japan (APJ)~~APJ region.
~~Because we invested in support in 2011, our support~~Unless otherwise stated, the main driver for the following headcount ~~increased in all regions.~~increases were SAP’s acquisition activities (mainly Concur). Our worldwide headcount in the field of software and software-related services grew ~~14%~~34% to ~~8,963 (2010: 7,885)~~15,074 FTEs (2013: 11,261). Cloud operations and support accounted for most of the increase. Professional services and other services counted ~~13,268 employees~~14,639 FTEs at the end of ~~2011~~2014 – ~~a slight~~an increase of less than 1% ~~(2010: 13,152)~~(2013: 14,629). Our R&D headcount ~~remained relatively stable~~saw a year-over-year increase of 6% to 18,908 FTEs (2013: 17,804). This growth stemmed from an increase in ~~comparison to~~headcount in the ~~prior year at 15,861 FTEs (2010: 15,884).~~area of Products & Innovation. Sales and marketing headcount grew 7%by 14% to ~~11,780~~17,969 FTEs at the end of the year (2010: 10,987), because we also invested in the sales and marketing of our products and services in 2011 and employed more sales staff in all regions with a strong focus on the emerging markets. Our general(2013: 15,824). General and administration headcount ~~increased 4%~~rose 10% to ~~3,735 full-time employees~~5,023 FTEs at the end of the year ~~(2010: 3,576)~~(2013: 4,566). Our infrastructure employees ~~who provide IT and facility management services,~~ numbered ~~2,158,~~2,794 FTEs – an increase of ~~6% (2010: 2,029).~~12% (2013: 2,488) driven primarily by our investments in IT.
In the Americas region, headcount (FTEs) increased by ~~690,~~2,503, or 5%13%; in the EMEA region, the increase was ~~711~~2,347, or 3%8%; and in the APJ region, it was ~~851~~2,985, or 7%19%.
~~Part I~~
~~Item 6~~
Our personnel expense per employee ~~was~~stayed essentially flat at approximately ~~€108,000~~€115,000 in ~~2011 (2010:~~2014 (2013: approximately ~~€105,000)~~€114,000). The personnel expense per employee is defined as the personnel expense divided by the average number of employees. For more information about employee compensation and a detailed overview of the number of people weSAP employed, see the Notes to the Consolidated Financial Statements section, Note (8).
Employee ~~Relations~~ and Labor ~~Unions~~Relations
On a worldwide basis, we believe that our employee and labor relations are excellent. ~~Employees~~
On a corporate level, employees of SAP ~~France S.A.~~in Europe are represented by the SAP SE Works Council (WoC) (Europe). By law and agreement with SAP ~~Labs France S.A. are subject~~the SAP SE WoC (Europe) is entitled to receive information on transnational matters and to consult with the Executive Board or a ~~collective bargaining agreement.~~representative thereof. The SAP SE WoC (Europe) was established in November 2014 as a result of the legal transformation of SAP AG into SAP SE. The SAP SE WoC (Europe) replaced the European Works Council which was dissolved following the conversion.
Part I
Item 6, 7
On the legal entity level, the SAP AGSE works council (Germany) represents the employees of SAP AGSE with 39 members; the employees of SAP Deutschland AGSE & Co. KG (SAP Germany) are represented by a works council with 31 members. For different areas of co-determination the entity-level works councils have elected committees. By law the works councils are entitled to consultation and, in some areas, toco-determination rights concerning labor conditions at SAP AGSE and SAP Germany. Other employee representatives include the group works council currently having seven members (members of the works councils of SAP AGSE and SAP Germany), the representatives of severely disabled persons in all entities and on group level (Germany) and the spokespersons committee as the representation of the executives.
~~Each~~Employees of SAP France S.A., SAP France Holding and SAP Labs France S.A. are subject to a collective bargaining agreement. Each of SAP France S.A. & SAP France Holding, SAP Labs France S.A. and ~~Sybase~~b-process France ~~SARL~~ are represented by a French works council. A French works council is responsible for protecting the employees’ collective interests by ensuring that management considers the interests of employees in making decisions on behalf of the company. A French works council iscouncils are entitled to certain company information and to consult with management on matters that are expected to
have an impact on company structure or on the employees it represents. The union negotiates agreements with SAP France S.A. and SAP Labs France S.A. Some negotiations are compulsory under law. The staff representatives are obligated to present all individual or collective complaints regarding salary, policies or agreements between the employees and the company in question.
In addition, the employees of ~~our subsidiaries~~ SAP Espana S.A., SAP Belgium N.V., SAP Nederland B.V., SAP Italia S.p.A. and ~~Sybase Nederland B.V.~~Concur France are ~~also~~each represented by separate works councils. Each of SAP (UK) Limited and SAP Ireland Limited has an employee consultation forum which represents the employees’ interests. There are workers representatives in Slovenia at SAP Systems, Applications and Products for Data Processing Ltd. and in Romania at SC SAP Romania SRL. Furthermore, union stewards as well as a corresponding cooperation agreement exist for SAP Sweden.
InEmployees of SAP Brazil and SAP Labs Brazil are represented by a specific union related to technology companies and subject to a collective bargaining agreement.
For Argentina, all employees are legally required to be affiliated with the ~~second half~~particular union specified by the government. However, for the IT Industry, as of ~~2012 SAP AG will have~~2014, no union had completed all registration procedures with the Ministry of Labor
and the IT Chamber, to be recognized by the government as an European Works Council (EWC). The EWC will represent all SAP persons employed by SAP’s European entities. By law, the EWC will be entitled to consult with employees regarding transnational matters in Europe.Industry Union.
SHARE OWNERSHIP
Beneficial Ownership of Shares
The ordinary shares beneficially owned by the persons listed in Item 6. Directors, Senior Management and Employees — Compensation Report” isare disclosed in “Item 7. Major Shareholders and Related-Party Transactions — Major Shareholders.”
SHARE-BASED COMPENSATION PLANS
Share-Based Compensation
We maintain certain share-based compensation plans. The share-based compensation from these plans result from cash-settled and equity-settled awards issued to employees. For more information on our share-based compensation plans refer to “Item 6. ~~Directory,~~Directors, Senior Management and Employees — Compensation Report” and Note (28) to our Consolidated Financial Statements.
~~Part I~~
~~Item 7~~
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS
MAJOR SHAREHOLDERS
The share capital of SAP AGSE consists of ordinary shares, which are issued only in bearer form. Accordingly, SAP AGSE generally ~~has no way~~cannot determine the identity of ~~determining who~~ its shareholders ~~are~~ or how many shares a particular shareholder owns. SAP’s ordinary shares are traded in the United States by means of ADRs. Each ADR currently represents one SAP AGSE ordinary share. On March ~~8, 2012,~~6, 2015, based on information provided by the Depositary there were ~~44,018,856~~48,469,927 ADRs held of record by ~~1,167~~970 registered holders. The ordinary shares underlying such ADRs represented ~~3.58%~~3.95% of the then-outstanding ordinary shares (including treasury stock). Because SAP’s ordinary shares are issued in bearer form only, we are unable to determine the number of ordinary shares directly held by persons with U.S. addresses.
Part I
Item 7, 8
The following table sets forth certain information regarding the beneficial ownership of the ordinary shares to the extent known to SAP as of March ~~8, 2012~~6, 2015 of: (i) each person or group known by SAP AGSE to own beneficially 5% or more of the outstanding ordinary shares; and (ii) the beneficial ownership of all members of the Supervisory Board and all members of the Executive Board,
individually and as a group, in each case as reported to SAP AGSE by such persons. There was, as far as we are able to tell given the nature of our shares, no significant change in the percentage ownership held by any major shareholder during the past three years. None of the major shareholders have special voting rights. ~~On August 8, 2011, BlackRock, Inc., New York, USA, informed us that on August 2, 2011 its percentage of voting rights exceeded 5% and was then 5.02%.~~

   Ordinary Shares
Beneficially Owned    Ordinary Shares
Beneficially Owned
Major Shareholders
   Number    % of
Outstanding    Number    % of
Outstanding
Dietmar Hopp, collectively⁽¹⁾
   75,273,200       6.128 %    65,273,200       5.313 %
Hasso Plattner, Chairperson Supervisory Board, collectively⁽²⁾
   121,515,102       9.893 %    106,259,972       8.650 %
Klaus Tschira, collectively⁽³⁾
   93,079,595       7.578 %    92,079,595       7.495 %
Executive Board Members as a group (5 persons)
   20,560       0.002 %    36,426       0.003 %
Supervisory Board Members as a group (16 persons)
   121,524,206       9.893 %
Supervisory Board Members as a group (18 persons)
   106,284,601       8.652 %
Executive Board Members and Supervisory Board Members as a group (21 persons)⁽⁴⁾
   121,544,766       9.895 %    106,321,027       8.655 %
Options and convertible bonds that are vested and exercisable within 60 days of March 8, 2012, held by Executive Board Members and Supervisory Board Members, collectively
   0       N/A
Options and convertible bonds that are vested and exercisable within 60 days of March 6, 2015, held by Executive Board Members and Supervisory Board Members, collectively
   0       NA

⁽¹⁾
Represents ~~75,273,200~~65,273,200 ordinary shares beneficially owned by Dietmar Hopp, including 3,404,000 ordinary shares owned by DH Besitzgesellschaft mbH & Co. KG (formerly known as Golf Club St. Leon-Rot GmbH & Co. Betriebs-oHG) of which DH Verwaltungs-GmbH is the general partner and ~~71,869,200~~61,869,200 ordinary shares owned by Dietmar Hopp Stiftung, GmbH. Mr. Hopp exercises voting and dispositive powers of the ordinary shares held by such entities. The foregoing information is based solely on a Schedule 13G filed by Dietmar Hopp and Dietmar Hopp Stiftung, GmbH on February ~~14, 2012.~~13, 2015.

⁽²⁾
Includes Hasso Plattner Förderstiftung GmbH and Hasso Plattner GmbH & Co. Beteiligungs-KG in which Hasso Plattner exercises sole voting and dispositive power.

⁽³⁾
Includes Klaus Tschira Stiftung gGmbH and Dr. h. c. Tschira Beteiligungs GmbH & Co. KG in which Klaus Tschira exercises sole voting and dispositive power.

⁽⁴⁾
We believe each of the other members of the Supervisory Board and the Executive Board beneficially owns less than 1% of SAP ~~AG’s~~SE’s ordinary shares as of March ~~8, 2012.~~6, 2015.
~~Part I~~
~~Item 7, 8~~
We at present have no knowledge about any arrangements, the operation of which may at a subsequent date result in a change in control of the company.
RELATED-PARTY TRANSACTIONS
For further information on related-party transactions see Note (31) to our Consolidated Financial Statements.
ITEM 8. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
See “Item 18. Financial Statements” and pagesF-1 through ~~F-108.~~F-93.
OTHER FINANCIAL INFORMATION
Legal Proceedings
We are subject to a variety of legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including claims and lawsuits involving businesses we have acquired. In 2010, we recorded a provision of US$ 1.3billion for the TomorrowNow litigation. When the trial judge set aside the 2010 verdict and offered Oracle a remittitur of US$272 million, we subsequently reduced the provision
Refer to US$272 million. Although the outcome of such proceedings and claims cannot be predicted with certainty, management does not believe that the outcome of all other matters currently pending against us has had or will have a material adverse effect on our business, financial position, profit or cash flows. Any litigation, however, involves potential risk and potentially significant litigation costs, and therefore there can be no assurance that any litigation which is now pending or which may arise in the future will not have such a material adverse effect on our business, financial position, profit, cash flows or reputation.
~~See a detailed discussion of our legal proceedings in~~ Note (24) to our Consolidated Financial ~~Statements.~~Statements for a detailed discussion of our material legal proceedings.
Dividend Policy
For more information on dividend policy see the disclosure in “Item 3. Key Information ~~—Dividends —Dividend Distribution Policy.”~~
~~Significant Changes~~
~~Business Combinations~~
In February 2012, SAP acquired SuccessFactors, the market-leading provider of cloud-based human capital management solutions. Our cash tender offer was successfully completed on February 21, 2012. We have acquired more than 90% of the SuccessFactors ordinary shares. The acquisition has added SuccessFactors’ team and technology to SAP’s cloud assets, significantly boosting SAP’s momentum as a provider of cloud applications, platforms, and infrastructure. In combination, SAP and SuccessFactors will offer a full range of advanced end-to-end cloud and on-premise solutions for all key business processes. For more information, see the Notes to the Consolidated Financial Statements section, Note (4)— Dividends”.
In connection with the acquisition of SuccessFactors we used the syndicated term loan facility to partially finance the purchase price. For more information, see the Notes to the Consolidated Financial Statements section, Note (26).
SAP has acquired software and related assets from datango, a provider of workforce performance support software. The transaction will broaden the SAP software portfolio in the education space. Headquartered in Berlin, datango was founded in 1999 and has a long-standing relationship with SAP. In recent years, datango software has been successfully deployed in the SAP Business ByDesign solution. Together, SAP and datango will capitalize on a trend in education software toward creating applications that contain tools for authors, such as e-collaboration, along with self-help scenarios and auto-teaching functions.

Part I

Item 8, 9

~~New Share-Based Compensation Plans~~Significant Changes
~~In January 2012, our Supervisory Board implemented a new share-based payment plan (the LTI Plan 2015) for Executive Board members.~~
The Plan is designed to award members restricted share units (RSUs) each year from 2012 through 2015, with a budget of RSUs already awarded for each year at the beginning of the Plan. The number of RSUs that actually vest with the member after each year depends on our performance against objectives, defined at the beginning of the Plan, in terms of non-IFRS total revenue and non-IFRS operating profit. These objectives are derived from our Company strategy for the years through 2015. Each year, if SAP outperforms or underachieves against the objectives, the number of RSUs awarded is adjusted up or down to an actual number in the range between 80% and 150% of the initial target number. If the actual level of target achievement for a given year is below 80%, none of the initially allocated RSUs for that year vests. Each RSU that does vest entitles the beneficiary Executive Board member to a payout corresponding to the SAP share price after the end of a three-year holding period. For more information, see the Compensation Report section.
~~Also in January 2012, the Executive Board announced a new share-based payment plan for employees. The plan for employees, like the LTI~~
Plan 2015 for Executive Board members, is designed to award restricted share units (RSUs). The number of RSUs that actually vest after the end of a year depends on the same objectives as are defined for the LTI Plan 2015 for Executive Board members. The Executive Board decided in December 2011 on the size of the 2012 tranche.
The total budget so far allocated for the LTI Plan 2015 and the employee plan is €179 million. The eventual financial effect cannot be estimated as it will depend on the number of vested RSUs that actually pay out and on the SAP share price, and thus the final amount paid may be above or below the budgeted amounts. All of the expense will be recorded in the period 2012 through 2015, most of it in 2012.Not applicable.
ITEM 9. THE OFFER AND LISTING
GENERAL
Our ordinary shares are officially listed on the Frankfurt Stock Exchange, the Berlin Stock
Exchange and the Stuttgart Stock Exchange. The principal trading market for the ordinary shares is Xetra, the electronic dealing platform of Deutsche Boerse AG. ~~The ordinary shares are issued only in bearer form.~~
ADRs representing SAP AGSE ordinary shares are listed on the New York Stock Exchange (NYSE) under the symbol “SAP,” and currently each ADR represents one ordinary share.

~~Part I~~
~~Item 9~~

TRADING ON THE FRANKFURT STOCK EXCHANGE AND THE NYSE
The table below sets forth, for the periods indicated, the high and low closing sales prices for the ordinary shares on the Xetra trading System of the Frankfurt Stock Exchange together with the closing highs and lows of the DAX, and the high and low closing sales prices for the ADRs on the NYSE (information is provided by Reuters):

   Price per
Ordinary Share
in €    DAX⁽¹⁾
in points    Price per ADR
in US$    Price per
Ordinary Share
in €    DAX⁽¹⁾
in points    Price per ADR
in US$
   High    Low    High    Low    High    Low    High    Low    High    Low    High    Low
Annual Highs and Lows

2007
   42.27    33.37    8,105.69    6,447.70    59.86    44.45
2008
   39.93    23.45    7,949.11    4,127.41    58.98    29.70
2009
   35.26    25.00    6,011.55    3,666.41    52.37    31.69
2010
   38.40    31.12    7,077.99    5,434.34    54.08    41.59    38.40       31.12       7,077.99       5,434.34       54.08       41.59
2011
   45.90    34.26    7,527.64    5,072.33    68.31    48.43    45.90       34.26       7,527.64       5,072.33       68.31       48.39
2012
   61.43       41.45       7,672.10       5,969.40       81.21       53.25
2013
   64.80       52.20       9,589.39       7,459.96       87.14       70.27
2014
   62.55       50.90       10,087.12       8,571.95       85.45       64.14
Quarterly Highs and Lows

2010

2013

First Quarter
   35.86    31.12    6,156.85    5,434.34    50.64    42.81    64.80       57.82       8,058.37       7,581.18       84.58       77.38
Second Quarter
   37.68    33.97    6,332.10    5,670.04    49.93    41.59    64.05       54.42       8,530.89       7,459.96       83.11       71.45
Third Quarter
   37.86    34.46    6,351.60    5,816.20    49.84    43.54    57.80       53.42       8,694.18       7,806.00       76.94       70.27
Fourth Quarter
   38.40    35.84    7,077.99    6,134.21    54.08    46.93    62.31       52.20       9,589.39       8,516.69       87.14       70.94
2011

2014

First Quarter
   44.67    37.45    7,426.81    6,513.84    61.67    48.76    62.55       54.31       9,742.96       9,017.79       85.45       74.87
Second Quarter
   45.90    41.07    7,527.64    7,026.85    68.31    58.19    59.15       54.41       10,028.80       9,173.71       81.77       74.21
Third Quarter
   44.02    34.26    7,471.44    5,072.33    64.50    48.71    61.12       56.53       10,029.43       9,009.32       82.30       72.16
Fourth Quarter
   44.72    36.87    6,346.19    5,216.71    62.74    48.43    58.73       50.90       10,087.12       8,571.95       71.70       64.14
Monthly Highs and Lows

2011

2014

July
   44.02    40.38    7,471.44    7,107.92    64.50    57.21    61.12       56.53       10,029.43       9,407.48       82.30       77.40
August
   42.77    34.26    6,953.98    5,473.78    61.41    48.72    59.92       56.60       9,588.15       9,009.32       79.19       76.32
September
   38.53    35.44    5,730.63    5,072.33    53.76    48.71    60.66       56.77       9,799.26       9,422.91       78.54       72.16
October
   43.92    36.87    6,346.19    5,216.71    62.74    48.43    56.60       50.90       9,382.03       8,571.95       71.41       64.14
November
   44.39    41.70    6,133.18    5,428.11    62.02    55.16    56.90       52.96       9,980.85       9,166.47       71.12       66.45
December
   44.72    39.92    6,106.09    5,670.71    59.97    52.21    58.73       53.96       10,087.12       9,334.01       71.70       67.20
2012

2015

January
   46.19    41.45    6,539.85    6,017.23    60.48    53.25    58.26       54.53       10,798.33       9,469.66       70.04       63.56
February
   50.65    46.81    6,948.25    6,616.64    68.15    61.45    62.84       58.70       11,401.66       10,663.51       70.19       66.31
March (through March 8, 2012)
   51.80    50.75    6,941.77    6,633.11    68.80    66.38
March (through March 6, 2015)
   63.59       62.79       11,550.97       11,280.36       71.11       68.48

⁽¹⁾
The DAX is a continuously updated, capital-weighted performance index of 30 German blue chip companies. In principle, the shares included in the DAX are selected on the basis of their stock exchange turnover and the issuer’s free-float market capitalization. Adjustments to the DAX are made for capital changes, subscription rights and dividends.
Part I
Item 9, 10
On March ~~8, 2012,~~6, 2015, the closing sales price per ordinary share on the Frankfurt Stock Exchange (Xetra Trading System) was ~~€51.80~~€63.47 and the closing sales price per ADR on the NYSE was US ~~$68.80,~~$68.48, as reported by Reuters.
~~Part I~~
~~Item 10~~
ITEM 10. ADDITIONAL INFORMATION
ARTICLES OF INCORPORATION
Organization and Register
SAP AGSE is a ~~stock corporation~~European Company (Societas Europaea, or “SE”) organized in the Federal Republic of Germany under German and European law, including Council Regulation (EC) No. 2157/2001 on the Statute for a European Company (the “SE Regulation”), the German Act on the Implementation of Council Regulation No. 2157/2001 of October 8, 2001 on the Statute for a European Company (Gesetz zur Ausführung der Verordnung (EG) Nr. 2157/2001 des Rates vom 8. Oktober 2001 über das Statut der Europäischen Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”) of December 22, 2004, and the German Stock Corporation Act (Aktiengesetz). SAP AGSE is registered in the Commercial Register (Handelsregister) at the Lower Court of Mannheim, Germany, under the entry number “HRB ~~350269.~~719915.” SAP AGSE publishes its official notices in the ~~Internet version of the~~ Federal Gazette ~~(www.ebundesanzeiger.de)~~(www.bundesanzeiger.de).
Objects and Purposes
SAP’s Articles of Incorporation state that our objects involve, directly or indirectly, the development, production and marketing of products and the provision of services in the field of information technology, including:

developing and marketing integrated product and service solutions for e-commerce;

developing software for information technology and the licensing of its use to others;

organization and deployment consulting, as well as user training, for e-commerce and other software solutions;

selling, leasing, renting and arranging the procurement and provision of all other forms of use of information technology systems and related equipment; and
making capital investments in enterprises active in the field of information technology to promote the opening and advancement of international markets in the field of information technology.
SAP is authorized to act in all the business areas listed above and to delegate such activities to affiliated entities within the meaning of the German Stock Corporation Act; in particular SAP is authorized to delegate its business in
whole or in part to such entities. SAP AGSE is authorized to establish branch offices in Germany and other countries, as well as to form, acquire or invest in other companies of the same or related kind and to enter into collaboration and joint venture agreements. SAP is further authorized to invest in enterprises of all kinds principally for ~~the purpose of placing financial resources.~~investment purposes. SAP is authorized to dispose of investments, to consolidate the management of enterprises in which it participates, to enter into affiliation agreements with such entities, or to limit its activities to manage its shareholdings.
CORPORATE GOVERNANCE
Introduction
SAP ~~AG,~~SE, as a ~~German stock corporation,~~European Company with a two-tier board system, is governed by three separate bodies: the Supervisory Board, the Executive Board and the Annual General Meeting of Shareholders. Their rules are defined by European and German law, by the Agreement on the Involvement of Employees in SAP SE (“Employee Involvement Agreement”, or “EIA”), by the German Corporate Governance Code and by SAP’s Articles of Incorporation (Satzung) and are summarized below. See “Item 16G. Differences in Corporate Governance Practices” for additional information on our corporate governance practices.
The Supervisory Board
The Supervisory Board appoints and removes the members of the Executive Board and oversees and advises the management of the corporation. At regular intervals it meets to discuss current business as well as business development and planning. The SAP Executive Board must consult with the Supervisory Board concerning the corporate strategy, which is developed by the Executive Board. ~~The Supervisory Board maintains a list~~Types of transactions for which the Executive Board requires the Supervisory Board’s consent are listed in the Articles of
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Incorporation; in addition, the Supervisory Board has specified further types of transactions that require its consent. Accordingly, the Supervisory Board must also approve the annual budget of SAP upon submission by the Executive Board and certain subsequent deviations from the approved budget.
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The Supervisory Board is also responsible for representing SAP AGSE in transactions between SAP AGSE and Executive Board members.
The Supervisory Board, based on a recommendation by its Audit Committee, provides its proposal for the election of the external independent ~~public accountant~~auditor to the Annual General Meeting of Shareholders. The Supervisory Board is also responsible for monitoring the auditor’s independence, a task it has delegated to its audit committee.
~~The German Co-determination Act~~Pursuant to Article 40 (3) sentence 1 of ~~1976 (Mitbestimmungsgesetz) requires~~the SE Regulation, the number of members of the supervisory board and the rules for determining this number are to be laid down in the articles of incorporation. Furthermore, pursuant to Section 17 (1) SE-AG, the size of supervisory boards of ~~corporations with more than 2,000 employees~~companies which, like SAP SE, have a capital stock exceeding € 10,000,000, is limited to consist of an equal number of representatives of the shareholders and representatives of the employees. The minimum total number of supervisory board members, and thus the minimum number of shareholder representatives and employee representatives, is legally fixed and depends on21 members. Moreover, the number of ~~employees employed~~members must be divisible by three. In line with these provisions as well as the ~~corporation and its German subsidiaries. Our~~EIA, the Articles of Incorporation of SAP SE provide that the Supervisory Board ~~currently~~shall be composed of 18 members. Furthermore, it is provided in the EIA that the shareholders of SAP SE have the possibility to reduce the size of the Supervisory Board in the future (i.e. at the earliest in the Annual General Meeting of Shareholders in 2018, with effect from the Annual General Meeting of Shareholders in 2019) to 12 members.
The current and first Supervisory Board of SAP SE consists of ~~sixteen~~eighteen members, of which ~~eight~~nine members ~~have been~~were elected by SAP ~~AG’s~~SE’s shareholders at the Annual General Meeting of Shareholders in 2014 for the period until the close of the Annual General Meeting of Shareholders in 2019, and ~~eight~~nine members ~~which have been elected~~were appointed in the EIA for the period until the conclusion of the Annual General Meeting of Shareholders in 2015. Pursuant to the EIA and the Articles of Incorporation, the term of office of the succeeding employees’ representatives on the first Supervisory Board of SAP SE appointed subsequent to this term of office shall end at the same time as the term of office of the shareholders’ representatives on the first Supervisory Board (i.e. at the close of the Annual General Meeting of Shareholders in 2019).
The procedure for the appointment of the employees’ representatives on the Supervisory Board of SAP SE is governed by the EIA. The employees’ representatives succeeding the current members in 2015 will be appointed by the SE Works Council. Pursuant to the EIA, the nine seats on the first Supervisory Board reserved for employees’ representatives are allocated as follows: The first six seats are allocated to Germany, the seventh seat is allocated to France, the eighth seat is also allocated to Germany, and the ninth seat is allocated to a European country not represented by the first eight seats, as determined by the SE Works Council. The employees’ representatives for the first six seats allocated to Germany will be determined by direct vote by all SAP employees with their principal place of employment in Germany. The employees’ representative for the seventh seat allocated to France will be determined according to the applicable provisions of French law on the election or appointment of employees’ representatives on a supervisory board. With regard to the eighth and ninth seat, members of the ~~German SAP entities (i.e. entities of~~SE Works Council from the ~~SAP Group having their registered office in Germany).~~relevant countries to which those seats are allocated shall be appointed by the SE Works Council as employees’ representatives.
Any Supervisory Board member elected by the shareholders at the Annual General Meeting of Shareholders may be removed by three-quarters of the votes cast at the Annual General Meeting of Shareholders. Any Supervisory Board member ~~elected by~~appointed in accordance with the ~~employees~~EIA may be removed by ~~three quarters~~the SE Works Council upon application by the body that nominated the respective employees’ representative for appointment by the SE Works Council or, in case the employees’ representative was directly elected, the majority of the ~~votes cast by the~~ employees ~~of the German SAP entities.~~entitled to vote.
The Supervisory Board elects a chairperson and aone or two deputy ~~chairperson~~chairperson(s) among its members by a majority of ~~vote~~the votes cast. Only a shareholders’ representative may be elected as chairperson of ~~its members. If such majority is not reached~~the Supervisory Board. When electing the chairperson of the Supervisory Board, the oldest member in terms of age of the shareholders’ representatives on the ~~first~~Supervisory Board will chair the meeting and, in the event of a tied vote, will have the casting vote.
Unless otherwise mandatorily prescribed by law or the Articles of Incorporation, resolutions of the Supervisory Board are adopted by simple majority of the votes cast. In the event of a tie, the vote of
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the chairperson ~~will be chosen solely by~~and, in the ~~members elected by~~event that the ~~shareholders and~~chairperson does not participate in passing the resolution, the vote of the deputy chairperson, provided that he or she is a shareholders’ representative, will be ~~chosen solely by the~~
~~members elected by the employees. Unless otherwise provided by law, the Supervisory Board acts by simple majority. In the case of any deadlock the chairperson has the deciding vote.~~decisive (casting vote).
The members of the Supervisory Board cannot be elected or appointed, as the case may be, for a term longer than ~~approximately five~~six years. ~~The~~Other than for the employees’ representatives on the first Supervisory Board of SAP SE, the term expires at the close of the Annual General Meeting of Shareholders giving its formal approval of the acts of the Supervisory Board ~~and the Executive Board in~~for the fourth fiscal year following the year in which the ~~Supervisory Board was elected unless the Annual General Meeting of Shareholders specifies a shorter~~ term of office ~~when electing individual members~~ of the Supervisory Board ~~or the entire Supervisory Board.~~ members commenced.Re-election is possible. Our Supervisory Board normally meets four times a year. The ~~remuneration~~compensation of the members of the Supervisory Board is ~~determined by~~set in the Articles of Incorporation.
As stipulated in the German Corporate Governance Code (GCGC), an adequate number of our Supervisory Board members are independent. To be considered for appointment to the Supervisory Board and for as long as they serve, members must comply with certain criteria concerning independence, conflicts of interest and multiple memberships of management, supervisory and other governing bodies. They must be loyal to SAP in their conduct and must not accept any position in companies that are in competition with SAP. Members are subject to insider trading prohibitions and the respective directors’ dealing rules of the German Securities Trading Act. A member of the Supervisory Board may not vote on matters relating to certain contractual agreements between such member and SAP ~~AG.~~SE. Further, as the compensation of the Supervisory Board members is ~~laid down~~set in the Articles of Incorporation, Supervisory Board members are unable to vote on their own compensation, with the exception that they are able to exercise voting rights in a General Meeting of Shareholders in connection with a resolution amending the Articles of Incorporation.
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Pursuant to the German Stock Corporation Act publicly traded stock corporations like SAP must have at least one independent member of the supervisory board with expertise in the fields of financial reporting or auditing. The Supervisory Board may appoint committees from among its members and may, to the extent permitted by law, entrust such committees with the authority to make decisions on behalf of the Supervisory Board. Currently the Supervisory Board maintains the following committees:
The Audit Committee
The focus of the Audit Committee (Prüfungsausschuss) is the oversight of SAP’s
external financial reporting as well as SAP’s risk management, internal controls (including internal controls over the effectiveness of the financial reporting process), ~~internal~~corporate audit and compliance matters. According to German Law SAP’s Audit Committee includes at least one independent member with specialist expertise in the fields of financial reporting or auditing. Among the tasks of the Audit Committee are the discussion of SAP’s quarterly and year end financial reporting prepared under German and U.S. regulations, including this report. The Audit Committee proposes the appointment of the external independent auditor to the Supervisory Board, determines focus audit areas, discusses critical accounting policies and estimates with and reviews the audit reports issued and audit issues identified by the auditor. The audit committee also negotiates the audit fees with the auditor and monitors the auditor’s ~~independence.~~independence and quality. SAP’s ~~Global Internal~~Corporate Audit, ~~Services (GIAS),~~ SAP’s ~~Global~~Office of Legal Compliance ~~Office (GCO)~~and Integrity and SAP’s Risk Management Office ~~(RMO)~~ report upon request or at the occurrence of certain findings, but in any case at least once a year ~~(GCO~~(Office of Legal Compliance and ~~RMO)~~Integrity and Risk Management Office) or twice a year ~~(GIAS)~~(Corporate Audit), directly to the Audit Committee.
The Audit Committee has established procedures regarding the prior approval of all audit and non-audit services provided by our external independent auditor. See “Item 16C. Principal Accountant Fees and Services” for details.
Furthermore the Audit Committee monitors the effectiveness of our internal risk management and other monitoring processes that are or need to be established.
The Supervisory Board has determined Erhard Schipporeit to be an audit committee financial expert as defined by the regulations of the SEC issued under Section 407 of the Sarbanes-Oxley Act as well as an independent financial expert as defined by the German Stock Corporation Act. See “Item 16A. Audit Committee Financial Expert” for details. He is also the chairperson of the Audit Committee.
The General and Compensation Committee
The General and Compensation Committee (Prä~~sidial~~sidial- und Personalausschuss) coordinates the work of the Supervisory Board, prepares its meetings and deals with corporate governance issues. In addition, it carries out the preparatory
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work necessary for the personnel decisions made by the Supervisory Board, notably those concerning compensation for the Executive Board members and the conclusion, amendment and termination of the Executive Board members’ contracts of appointment.
The German Stock Corporation Act prohibits the Compensation Committee from deciding on the ~~remuneration~~compensation of the Executive Board members on behalf of the Supervisory Board and requires that such decision is made by the entire Supervisory Board. This Act also provides the General Meeting of Shareholders with the right to vote on the system for the ~~remuneration~~compensation of Executive Board members, such vote not being legally binding for the Supervisory Board.
The Finance and Investment Committee
The Finance and Investment Committee (Finanz- und Investitionsausschuss) addresses general financing issues. Furthermore, it regularly discusses acquisitions of intellectual property and companies, venture capital investments and other investments with the Executive Board and reports to the Supervisory Board on such investments. It is also responsible for the approval of such investments if the individual investment amount exceeds certain specified limits.
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~~Required by the German Co-determination Act of 1976 (Mitbestimmungsgesetz), the Mediation~~The Technology and Strategy Committee (Vermittlungsausschuss) convenes only if the two-thirds majority required for appointing/revoking the appointment of Executive Board members is not attained. This committee has never held a meeting in SAP AG’s history.
The Technology and Strategy ~~and Technology~~ Committee ~~(Strategie- und Technologieausschuss)~~(Technologie-und Strategieausschuss) monitors technology transactions and provides the Supervisory Board with in-depth technical advice.
The Nomination Committee
The Nomination Committee (Nominierungsausschuss) is exclusively composed of shareholder representatives and is responsible for identifying suitable candidates for membership of the Supervisory Board for recommendation to the Annual General Meeting of Shareholders.
The Special Committee
The Special Committee (Sonderausschuss) ~~is tasked with coordinating~~deliberates on matters arising out of substantial exceptional risks, such as major litigations.
The People and ~~managing~~Organization Committee
The People and Organization Committee (Ausschuss für Mitarbeiter- und Organisationsangelegenheiten) deliberates and advises the Executive and Supervisory ~~Board’s external legal advisors concerned with~~Board on key personnel matters and major organizational changes below the ~~investigation~~Executive Board and ~~analysis of the facts in connection with the legal action brought by Oracle Corporation.~~Global Managing Board level as well as equal opportunities for women at SAP.
The duties ~~procedures~~ and ~~committees~~procedures of the Supervisory Board and its committees are specified in their respective ~~bylaws,~~rules of procedure, if any, which reflect the requirements of European and German law, including the SE Regulation and the German Stock Corporation Act, the Articles of Incorporation and the recommendations of the GCGC.
According to the provisions of the Sarbanes-Oxley Act, SAP does not grant loans to the members of the Executive Board or the Supervisory Board.
The Executive Board
The Executive Board manages the Company’s business, is responsible for preparing its strategy and represents it in dealings with third parties. The Executive Board reports regularly to the Supervisory Board about SAP operations and business strategies and prepares special reports upon request. A person may not serve on the Executive Board and on the Supervisory Board at the same time.
The Executive Board and the Supervisory Board must cooperate closely for the benefit of the Company. Without being asked, the Executive Board must provide to the Supervisory Board regular, prompt and comprehensive information about all of the essential issues affecting the SAP Group’s business progress and its potential business risks. Furthermore, the Executive Board must maintain regular contact with the chairperson of the Supervisory ~~Board.~~Board and vice versa. The Executive Board must inform the chairperson of the Supervisory Board promptly about exceptional events that are of significance to SAP’s business. The Supervisory Board chairperson must inform the Supervisory Board ~~accordingly.~~accordingly and shall, if required, convene an extraordinary meeting of the Supervisory Board.
Pursuant to the Articles of Incorporation, the Executive Board must consist of at least two members. ~~Currently,~~ SAP ~~AG’s~~SE’s Executive Board is currently
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comprised of five members. Any two members of the Executive Board jointly or one member of the Executive Board and the holder of a special power of attorney (Prokurist) jointly may legally represent SAP ~~AG.~~SE. The Supervisory Board appoints each member of the Executive Board for a maximum term of five years, with the possibility of re-appointment. Under certain circumstances, a member of the Executive Board may be removed by the Supervisory Board prior to the expiration of that member’s term. A member of the Executive Board may not vote on matters relating to certain contractual agreements between such member and SAP ~~AG,~~SE, and may be liable to SAP AGSE if such member has a material interest in any contractual agreement between SAP and a third party which was not previously disclosed to and approved by the Supervisory Board. Further, as the compensation of the Executive Board members is set by the Supervisory Board, Executive Board members are unable to vote on their own compensation, with the exception that they are able to exercise voting rights in a General Meeting of Shareholders resolving a non-binding vote on the system for the ~~remuneration~~compensation of Executive Board members.
Under German law SAP ~~AG’s~~SE’s Supervisory Board members and Executive Board members
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have a duty of loyalty and care towards SAP ~~AG.~~SE. They must exercise the standard of care of a prudent and diligent businessman and bear the burden of proving they did so if their actions are contested. Both bodies must consider the interest of SAP AGSE shareholders and our employees and, to some extent, the common good. Those who violate their duties may be held jointly and severally liable for any resulting damages, unless they acted pursuant to a lawful resolution of the Annual General Meeting of Shareholders.
SAP has implemented a Code of Business Conduct for employees (see “Item 16B. Code of Ethics” for details). The employee code is equally applicable to managers and members of the Executive Board. Its rules are observed as well by members of the Supervisory board as applicable.
Under German law the Executive Board of SAP AGSE has to assess all major risks for the SAP Group. In addition, all measures taken by management to reduce and handle the risks have to be documented. Therefore, SAP’s management has adopted suitable measures such as implementing an enterprise-wide risk monitoring system to ensure that adverse developments endangering the corporate standing are recognized at a reasonably early point in time.
The ~~Global~~Office of Legal Compliance ~~Office (GCO), an extension of SAP’s Global Legal Department,~~and Integrity was created by the SAP Executive Board in 2006 to oversee and coordinate legal and regulatory policy compliance at SAP. ~~Effective March 1, 2007, the Company appointed a~~The Chief Global Compliance Officer ~~who~~heading the Office of Legal Compliance and Integrity directly reports to the ~~General Counsel,~~CFO of SAP SE and also has direct communication channels and reporting obligations to the ~~Executive Board and the~~ Audit Committee of the Supervisory Board. The ~~GCO~~Office of Legal Compliance and Integrity manages a network of more than 100 local subsidiary Compliance Officers who act as the point of contact for local questions or issues under the SAP Code of Business Conduct for employees. The ~~GCO~~Office of Legal Compliance and Integrity provides training and communication to SAP employees to raise awareness and understanding of legal and regulatory compliance policies. Employee help lines are also supported in each region where questions
can be raised or questionable conduct can be reported without fear of retaliation.
Pursuant to Sec. 289a of the German Commercial Code (Handelsgesetzbuch) the Executive ~~Board~~Boards of publicly listed companies like SAP AGSE are required to issue a corporate governance ~~declaration~~statement (Erklärung zur Unternehmensführung) every year together with ~~its~~their annual financial statements. Companies are free to include the corporate governance ~~declaration~~statement in their ~~annual~~management report ~~to shareholders~~ or publish the ~~declaration~~statement on their website. SAP has chosen to publish the ~~declaration~~statement on its website under ~~(http:/~~(//www.sap.com/~~about/~~corporate-en/investors/governance/~~statement/~~index.epx). As stipulated by law the ~~declaration~~statement comprises the declaration of ~~compliance with~~implementation of the recommendations of the GCGC pursuant to Sec. 161 of the German Stock Corporation Act, relevant disclosures of the company’s corporate governance practices such as ethical, work and welfare standards, and a description of the Executive Board and Supervisory Board’s rules of procedure as well as information on the composition and rules of procedure of their sub-committees.
The Global Managing Board
In May 2012, SAP created a Global Managing Board in addition to the SAP Executive Board, which retains ultimate responsibility for overseeing and deciding on the activities of the company. The Global Managing Board allows SAP to appoint a broader range of global leaders to help steer the organization. The Global Managing Board has advisory and decision-supporting functions for the Executive Board and comprises all Executive
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Board members as well as Helen Arnold, Stefan Ries, Michael Kleinemeier, and Steve Singh.
The Annual General Meeting of Shareholders
Shareholders of the Company exercise their voting rights at shareholders’ meetings. The Executive Board calls the Annual General Meeting of Shareholders, which must take place within the first ~~eight~~six months of each fiscal year. The Supervisory Board or the Executive Board may call an extraordinary meeting of the shareholders if the interests of the stock corporation so require. Additionally, shareholders of SAP AGSE holding in the aggregate a minimum of 5% of SAP ~~AG’s~~SE’s issued share capital may call an extraordinary meeting of the shareholders. Shareholders as of the record date are entitled to attend and participate in shareholders’ meetings if they have provided timely notice of their intention to attend the meeting.
At the Annual General Meeting of Shareholders, the shareholders are asked, among
~~Part I~~
~~Item 10~~
other things, to formally approve the actions taken by the Executive Board and the Supervisory Board in the preceding fiscal year, to approve the appropriation of the corporation’s distributable profits and to appoint an external independent auditor. Shareholder representatives of the Supervisory Board are generally elected at the Annual General Meeting of Shareholders for a term of approximately five years. Shareholders may also be asked to grant authorization to repurchase treasury shares, to resolve on measures to raise or reduce the capital of the Company or to ratify amendments of our Articles of Incorporation. The Annual General Meeting of Shareholders can make management decisions only if requested to do so by the Executive Board.
CHANGE IN CONTROL
There are no provisions in the Articles of Incorporation of SAP AGSE that would have an effect of delaying, deferring or preventing a change in control of SAP AGSE and that would only operate with respect to a merger, acquisition or corporate restructuring involving it or any of its subsidiaries.
According to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) a bidder seeking control of a company with its corporate seat in Germany or another state of the European Economic Area
(EEA) and its shares being traded on ~~a European Union~~an EEA stock exchange must publish an advance notice of its decision to make a tender offer, submit ~~a draft~~an offer statement to the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) for review, and obtain certification from a qualified financial institution that adequate financing is in place to complete the offer. The offer statement must be published upon approval by the Federal Financial Supervisory Authority or expiry of a certain time period without such publication being prohibited by the Federal Financial Supervisory Authority. Once a ~~bidder~~shareholder has acquired shares representing at least 30% of the voting ~~power of the target~~rights in an EEA-listed company, it must make an offer for all remaining shares. The Securities Acquisition and Takeover Act requires the executive board of the target company to refrain from taking any measures that may frustrate the success of the takeover offer. However, the target executive board is permitted to take any action that a
prudent and diligent management of a company that is not the target of a takeover bid would also take. Moreover, the target executive board may search for other bidders and, with the prior approval of the supervisory board, may take other defensive measures, provided that both boards act within the parameters of their general authority under the German Stock Corporation Act. An executive board may also adopt specific defensive measures if such measures have been approved by the supervisory board and were specifically authorized by the ~~shareholders~~general shareholders’ meeting no ~~later~~earlier than 18 months in advance of such measures by a ~~takeover bid by~~ resolution of at least 75% of the ~~votes cast.~~shares represented.
Under the European Takeover Directive of 2004 member states had to choose whether EU restrictions on defensive measures apply to companies that are registered in their territory. Germany decided to opt out and to retain its current restrictions on a board implementing defensive measures (as described above). As required by the Directive if a country decides to opt out the German Securities Acquisition and Takeover Act grants companies the option of voluntarily applying the European standard by a change of the Articles of Incorporation (opt-in). SAP AGSE has not made use of this option.
CHANGE IN SHARE CAPITAL
Under German law, the capital stock may be increased in consideration of contributions in cash or in kind, or by establishing authorized capital or
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contingent capital or by an increase of the company’s capital reserves. Authorized capital provides the Executive Board with the flexibility to issue new shares for a period of up to five years. The Executive Board must obtain the approval of the Supervisory Board before issuing new shares with regard to the authorized capital. Contingent capital allows the issuance of new shares for specified purposes, including stock option plans for Executive Board members or employees and the issuance of shares upon conversion of convertible bonds and exercise of stock options. By law, the Executive Board may only issue new shares with regard to the contingent capital for the specified purposes.
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Capital increases require an approval by at least 75% of the valid votes cast at the General Meeting of Shareholders in which the increase is proposed, and requires an amendment to the Articles of Incorporation.
The share capital may be reduced by an amendment to the Articles of Incorporation approved by at least 75% of the valid votes cast at the General Meeting of Shareholders. In addition, the Executive Board of SAP AGSE is allowed to authorize a reduction of the company’s capital stock by canceling a defined number of repurchased treasury shares if this repurchasing and the subsequent reduction have already been approved by the General Meeting of Shareholders.
The Articles of Incorporation do not contain conditions regarding changes in the share capital that are more stringent than those provided by German law.
RIGHTS ACCOMPANYING OUR SHARES
There are no limitations imposed by German law or the Articles of Incorporation of SAP AGSE on the rights to own securities, including the rights of non-residents or foreign holders to hold the ADRs or ordinary shares, to exercise voting rights or to receive dividends or other payments on such shares.
According to the German stock corporation law, the rights of shareholders cannot be amended without shareholders’ consent. The Articles of Incorporation do not provide more stringent conditions regarding changes of the rights of shareholders than those provided by applicable European and German law.
Voting Rights
Each ordinary SAP AGSE share represents one vote. Cumulative voting is not permitted under applicable European and German law. A corporation’s articles of incorporation may stipulate a majority necessary to pass a shareholders’ resolution differing from the majority provided by law, unless the law ~~does not~~ mandatorily ~~require~~requires a certain majority.
Section 21 (1) of SAP ~~AG’s~~SE’s Articles of Incorporation provides that resolutions may be passed at the General Meeting of Shareholders ~~by the majority as provided by law. This means that resolutions may be passed by~~with a majority of ~~50% plus one vote of~~valid votes cast, ~~(simple majority),~~ unless a larger majority is prescribed by law or the ~~law provides or requires a higher majority.~~Articles of Incorporation. SAP SE’s Articles of Incorporation as well as applicable European and German law ~~requires~~require that the following matters, among others, be approved by at least 75% of the valid votes cast at the General Meeting of Shareholders in which the matter is proposed:

changing the corporate purpose of the company set out in the ~~articles~~Articles of ~~incorporation;~~Incorporation;

capital increases and capital decreases;

excluding preemptive rights of shareholders to subscribe for new shares or for treasury shares;

dissolution;

a merger into, or a consolidation with, another company;

a transfer of all or virtually all of the assets;
a change of corporate form, includingre-conversion into a German stock corporation;
a transfer of the registered seat to another EU member state; and

any other amendment to the Articles of Incorporation (pursuant to section 21 (2) sentence 1 of the Articles of Incorporation). For any amendments of the Articles of Incorporation which require a ~~change of corporate form.~~
~~Section~~simple majority for stock corporations established under German law, however, section 21 ~~(3)~~(2) sentence 2 of SAP ~~AG’s~~SE’s Articles of Incorporation provides that ~~if at an election no candidate receives a~~the simple majority of the valid votes ~~during~~cast is sufficient if at least half of the ~~first ballot~~subscribed capital is represented or, in ~~an election, a second, deciding ballot shall be conducted between~~ the ~~candidates who received~~absence of such quorum, the ~~largest number~~majority prescribed by law (i.e. two thirds of ~~votes. If~~ the ~~second ballot~~votes cast, pursuant to sec. 59 of the SE Regulation) is ~~tied, the election shall be determined by drawing lots.~~sufficient.
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Dividend Rights
See “Item 3. Key Information —�� Dividends.”
Preemptive Rights
Shareholders have preemptive rights to subscribe (Bezugsrecht) for any issue of additional shares in proportion to their shareholdings in the issued capital. The
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preemptive rights may be excluded under certain circumstances by a shareholders’ resolution (approved by at least 75% of the valid votes cast at the General Meeting of Shareholders) or by the Executive Board authorized by such shareholders’ resolutions and subject to the consent of the Supervisory Board.
Liquidation
If SAP AGSE were to be liquidated, any liquidation proceeds remaining after all of our liabilities were paid would be distributed to our shareholders in proportion to their shareholdings.
Disclosure of Shareholdings
SAP ~~AG’s~~SE’s Articles of Incorporation do not require shareholders to disclose their share holdings. The German Securities Trading Act (Wertpapierhandelsgesetz), however, requires holders of voting securities of SAP AGSE to notify SAP AGSE and the Federal Financial Supervisory Authority of the number orof shares they hold if that number reaches, exceeds or falls below specified thresholds. These thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of the corporation’s outstanding voting rights. In respect of certificates representing shares, the notification requirement shall apply exclusively to the holder of the certificates. In addition, the German Securities Trading Act also obliges anyone who holds, directly or indirectly, financial instruments that ~~result in~~convey an unconditional entitlement to acquire ~~on one’s initiative alone and~~ under a legally binding agreement, shares in SAP ~~AG,~~SE, to notify SAP AGSE and the Federal Financial Supervisory Authority if the thresholds mentioned above have been reached, exceeded or fallen below, with the exception of the 3% threshold. This notification obligation also exists for the holder of a financial instrument which merely de facto enables its holder or a third party to acquire shares in SAP SE, subject to the thresholds mentioned in the preceding sentence. In connection with this notification obligation positions in voting rights and other financial instruments have to be aggregated.
Exchange Controls and Other Limitations Affecting Security Holders
The euro is a fully convertible currency. At the present time, Germany does not restrict the export or import of capital, except for
investments in certain areas in accordance with applicable resolutions adopted by the United Nations and the European Union. However, for statistical purposes only, every individual or corporation residing in Germany (“Resident”) must report to the German Central Bank (Deutsche Bundesbank), subject only to certain immaterial exceptions, any payment received from or made to an individual or a corporation residing outside of Germany (“Non-Resident”) if such payment exceeds €12,500 (or the equivalent in a foreign currency). In addition, German Residents (except for individuals and certain financial institutions) must report any ~~claims against~~accounts payable to or ~~any liabilities payable to~~receivable from Non-Residents if such ~~claims~~payables or ~~liabilities,~~receivables, in the aggregate, exceed €5 million (or the equivalent in a foreign currency) at the end of any calendar month. Furthermore, companies resident in Germany with accounts payable to or receivable from Non-Residents in excess of €500 million have to report any payables or receivables to/from Non-Residents arising from derivative instruments at the end of each calendar quarter. Residents are also required to report annually to the German Central Bank any shares or voting rights of 10% or more which they hold directly or indirectly in non-resident corporations with total assets of more than €3 million. Corporations residing in Germany with assets in excess of €3 million must report annually to the German Central Bank any shares or voting rights of 10% or more held directly or indirectly by a Non-Resident.
TAXATION
General
The following discussion is a summary of certain material German tax and U.S. federal income tax consequences of the acquisition, ownership and disposition of our ADRs or ordinary shares to a U.S. Holder. In general, a U.S. Holder (as hereinafter defined) is any beneficial owner of our ADRs or ordinary shares that (i) is a citizen or resident of the U.S. or a corporation organized under the laws of the U.S. or any political subdivision thereof, an estate whose income is subject to U.S. federal income tax regardless of its source or a trust, if a U.S. court can exercise
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primary supervision over its administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; (ii) is not a resident of Germany for purposes of the income tax treaty between the
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U.S. and Germany (Convention between the Federal Republic of Germany and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and to certain other Taxes, as amended by the Protocol of June 1, 2006 and as published in the German Federal Law Gazette 2008 vol. II pp. 611/851; the “Treaty”); (iii) owns the ADRs or ordinary shares as capital assets; (iv) does not hold the ADRs or ordinary shares as part of the business property of a permanent establishment or a fixed base in Germany; and (v) is fully entitled to the benefits under the Treaty with respect to income and gain derived in connection with the ADRs or ordinary shares.
THE FOLLOWING IS NOT A COMPREHENSIVE DISCUSSION OF ALL GERMAN TAX AND U.S. FEDERAL INCOME TAX CONSEQUENCES THAT MAY BE RELEVANT FOR U.S. HOLDERS OF OUR ADRs OR ORDINARY SHARES. THEREFORE, U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE OVERALL GERMAN TAX AND U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR ADRs OR ORDINARY SHARES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE EFFECT OF ANY STATE, LOCAL OR OTHER FOREIGN OR DOMESTIC LAWS.
German Taxation
The summary set out below is based on German tax laws, interpretations thereof and applicable tax treaties to which Germany is a party and that are in force at the date of this report; it is subject to any changes in such authority occurring after that date, potentially with retroactive effect, that could result in German tax consequences different from those discussed below. This discussion is also based, in part, on representations of the Depositary and assumes that each obligation of the Deposit
Agreement and any related agreements will be performed in accordance with its terms. For additional information on the Depository and the fees associated with SAP’s ADR program see “Item 12. Description of Securities Other Than Equity Securities —– American Depository Shares.”
For purposes of applying German tax law and the applicable tax treaties to which Germany is a party, a holder of ADRs will generally be treated as owning the ordinary shares represented thereby.
German Taxation of Dividends
Under German income tax law, the full amount of dividends distributed by aan incorporated company is generally subject to German withholding tax at a domestic rate of 25% plus a solidarity surtax of 5.5% thereon (effectively 1.375% of dividends before withholding tax), resulting in an aggregate withholding tax rate from dividends of 26.375%. Non-resident corporate shareholders will generally be entitled to a refund in the amount of ~~two fifths~~two-fifths of the withholding tax (including solidarity surtax). This does not preclude a further reduction or refund of withholding tax, if any, available under a relevant tax treaty.
Generally, for many non-resident shareholders the withholding tax rate is currently reduced under applicable income tax treaties. Rates and refund procedures may vary according to the applicable treaty. To reduce the withholding tax to the applicable treaty tax rate a non-resident shareholder must apply for a refund of withholding taxes paid. Claims for refund, if any, are made on a special German claim for refund form, which must be filed with the German Federal Tax Office (Bundeszentralamt für Steuern, D-53221 Bonn, Germany; http://www.bzst.de). The relevant forms can be obtained from the German Federal Tax Office or from German embassies and consulates. For details, such non-resident shareholders are urged to consult their own tax advisors. Special rules apply for the refund to U.S. Holders (we refer to the below section “Refund Procedures for U.S. Holders”).
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Refund Procedures for U.S. Holders
Under the Treaty, a partial refund of the 25% withholding tax equal to 10% of the gross amount of the dividend and a full refund of the solidarity surtax can be obtained by a U.S. Holder. Thus, for each US$100 of gross dividends paid by SAP AGSE to a U.S. Holder, the dividends (which are dependent on the euro/dollar exchange rate at the time of payment) will be initially subject to a German withholding tax of US$26.375, of which US$11.375 may be refunded under the Treaty. As a result, a U.S. Holder effectively would receive a
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total dividend of US$85 (provided the euro/dollar exchange rate at the time of payment of the dividend is the same as at the time of refund, otherwise the effective dividend may be higher or lower). Further relief of German withholding tax under the Treaty may be available for corporate U.S. Holders owning at least 10% of the voting stock of SAP or U.S. Holders qualifying as pension fund within the meaning of the Treaty, subject to further requirements being met.
To claim the refund of amounts withheld in excess of the Treaty rate, a U.S. Holder must submit (either directly or, as described below, through the Data Medium Procedure participant) a claim for refund to the German tax authorities, with, in the case of a direct claim, the original bank voucher (or certified copy thereof) issued by the paying entity documenting the tax withheld, within four years from the end of the calendar year in which the dividend is received. Claims for refund are made on a special German claim for refund form, which must be filed with the German Federal Tax Office (Bundeszentralamt für Steuern,D-53221 Bonn, Germany). The German claim for refund form may be obtained from the German tax authorities at the same address where applications are filed, from the Embassy of the Federal Republic of Germany, ~~2300 M Street~~4645 Reservoir Road NW, Washington, DC ~~20037,~~20007, or can be downloaded from the homepage of the German Federal Tax Office (http://www.bzst.de).
U.S. Holders must also submit to the German tax authorities a certification of their U.S. residency status (IRS Form 6166). This certification can be obtained from the Internal Revenue Service by filing a request for certification (generally on an IRS Form 8802, which will not be processed unless a user fee is paid) with the Internal Revenue Service,
P.O. Box 71052, Philadelphia, PA 19176-6052. U.S. Holders should consult their own tax advisors regarding how to obtain an IRS Form 6166.
An IT-supported quick-refund procedure is available for dividends received (the “Data Medium Procedure —– DMP”). If the U.S. Holder’s bank or broker elects to participate in the DMP, it will perform administrative functions necessary to claim the Treaty refund for the beneficiaries. The refund beneficiaries must confirm to the DMP participant that they meet the conditions of the Treaty provisions and that they authorize the DMP participant to file applications and receive notices and payments on their behalf. Further each refund beneficiary must confirm that (i) it is the beneficial
owner of the dividends received; (ii) it is resident in the U.S. in the meaning of the Treaty; (iii) it does not have its domicile, residence or place of management in Germany; (iv) the dividends received do not form part of a permanent establishment or fixed base in Germany; and (v) it commits, due to its participation in the DMP, not to claim separately for refund.
The beneficiaries also must provide an IRS Form 6166 certification with the DMP participant. The DMP participant is required to keep these documents in its files and prepare and file a combined claim for refund with the German tax authorities by electronic media. The combined claim provides evidence of a U.S. Holder’s personal data including its U.S. Tax Identification Number.
The German tax authorities reserve the right to audit the entitlement to tax refunds for several years following their payment pursuant to the Treaty in individual cases. The DMP participant must assist with the audit by providing the necessary details or by forwarding the queries to the respective refund beneficiaries.
The German tax authorities will issue refunds denominated in euros. In the case of shares held through banks or brokers participating in the Depository, the refunds will be issued to the Depository, which will convert
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the refunds to dollars. The resulting amounts will be paid to banks or brokers for the account of the U.S. Holders.
German Taxation of Capital Gains
Under German income tax law, a capital gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident shareholder is subject to income tax in Germany only if such non-resident shareholder has held, directly or indirectly, ADRs or ordinary shares representing 1% or more of the registered share capital of a company at any time during the five-year period immediately preceding the sale or other disposition.
Generally, a capital gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident corporate shareholder is, in principle, exempt from corporate income tax. However, a portion of 5% of a capital gain derived is treated as non-deductible business expenses. Therefore, effectively a portion of 95% of a capital gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident corporate shareholder is exempt and a portion of 5% of a capital gain derived is subject to corporate income tax.
However, a U.S. Holder of ADRs or ordinary shares that qualifies for benefits under the Treaty is not subject to German income or corporate income tax on the capital gain derived from the sale or other disposition of ADRs or ordinary shares.
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German Gift and Inheritance Tax
Generally, a transfer of ADRs or ordinary shares by a shareholder at death or by way of gift will be subject to German gift or inheritance tax, respectively, if (i) the decedent or donor, or the heir, donee or other transferee is resident in Germany at the time of the transfer, or with respect to German citizens who are not resident in Germany, if the decedent or donor, or the heir, donee or other transferee has not been continuously outside of Germany for a period of more than five years; (ii) the ADRs or ordinary
shares are part of the business property of a permanent establishment or a fixed base in Germany; or (iii) the ADRs or ordinary shares subject to such transfer form part of a portfolio that represents 10% or more of the registered share capital of the Company and has been held, directly or indirectly, by the decedent or donor, respectively, at the time of the transfer, actually or constructively together with related parties.
However, the right of the German government to impose gift or inheritance tax on a non-resident shareholder may be limited by an applicable estate tax treaty. In the case of a U.S. Holder, a transfer of ADRs or ordinary shares by a U.S. Holder at death or by way of gift generally will not be subject to German gift or inheritance tax by reason of the estate tax treaty between the U.S. and Germany (Convention between the Federal Republic of Germany and the United States of America for the Avoidance of Double Taxation with respect to Estate, Gift and Inheritance Taxes, German Federal Law Gazette 1982 vol. II page 847, as amended by the Protocol of December 14, 1998 and as published on December 21, 2000, German Federal Law Gazette 2001 vol. II, page 65; the “Estate Tax Treaty”) so long as the decedent or donor, or the heir, donee or other transferee was not domiciled in Germany for purposes of the Estate Tax Treaty at the time the gift was made, or at the time of the decedent’s death, and the ADRs or ordinary shares were not held in connection with a permanent establishment or a fixed base in Germany. In general, the Estate Tax Treaty provides a credit against the U.S. federal gift or estate tax liability for the amount of gift or inheritance tax paid in Germany, subject to certain limitations, in a case where the ADRs or ordinary shares are subject to German gift or inheritance tax and U.S. federal gift or estate tax.
Other German Taxes
There are currently no German net worth, transfer, stamp or other similar taxes that would apply to a U.S. Holder on the acquisition, ownership, sale or other disposition of our ADRs or ordinary shares.
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U.S. Taxation
The following discussion applies to U.S. Holders only if the ADRs and ordinary shares are held as capital assets for tax purposes. It does not address tax considerations applicable to U.S. Holders that may be subject to special tax rules, such as dealers or traders in securities, financial institutions, insurance companies, tax-exempt entities, regulated investment companies, U.S. Holders that hold ordinary shares or ADRs as a part of a straddle, conversion transaction or other arrangement involving more than one position, U.S. Holders that own (or are deemed for U.S. tax purposes to own) 10% or more of the total combined voting power of all classes of voting stock of SAP ~~AG,~~SE, U.S. Holders that have a principal place of business or “tax home” outside the United States or U.S. Holders whose “functional currency” is not the dollar and U.S. Holders that hold ADRs or ordinary shares through partnerships or other pass-through entities.
The summary set out below is based upon the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the Treaty and regulations, rulings and judicial decisions thereunder at the date of this report. Any such authority may be repealed, revoked or modified, potentially with retroactive effect, so as to result in U.S. federal income tax consequences different from those discussed below. No assurance can be given that the conclusions set out below would be sustained by a court if challenged by the IRS. The discussion below is based, in part, on representations of the Depositary, and assumes that each obligation in the Deposit Agreement and any related agreements will be performed in accordance with its terms.
For U.S. federal income tax purposes, a U.S. Holder of ADRs will be considered to own the ordinary shares represented thereby. Accordingly, unless the context otherwise requires, all references in this section to ordinary shares are deemed to refer likewise to ADRs representing an ownership interest in ordinary shares.
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U.S. Taxation of Dividends
Subject to the discussion below under “Passive Foreign Investment Company Considerations”, distributions made by SAP AGSE with respect to ordinary shares (other than distributions in liquidation and certain distributions in redemption of stock), including the amount of German tax deemed to have been withheld in respect of such distributions, will generally be taxed to U.S. Holders as ordinary dividend income.
As discussed above, a U.S. Holder may obtain a refund of German withholding tax under the Treaty to the extent that the German withholding tax exceeds 15% of the dividend distributed. Thus, for each US$100 of gross dividends paid by SAP AGSE to a U.S. Holder, the dividends (which are dependent on the euro/dollar exchange rate at the time of payment) will be initially subject to German withholding tax of US$25 plus US$1.375 solidarity surtax, and the U.S. Holder will receive US$73.625. A U.S. Holder who obtains the Treaty refund will receive from the German tax authorities an additional amount in euro that would be equal to US$11.375. For U.S. tax purposes, such U.S. Holder will be considered to have received a total distribution of US$100, which will be deemed to have been subject to German withholding tax of US$15 (15% of US$100) resulting in the net receipt of US$85 (provided the euro/dollar exchange rate at the time of payment of the dividend is the same as at the time of refund, otherwise the effective dividend may be higher or lower).
In the case of a distribution in euro, the amount of the distribution generally will equal the dollar value of the euro distributed (determined by reference to the spot currency exchange rate on the date of receipt of the distribution, or receipt by the Depositary in the case of a distribution on ADRs), regardless of whether the holder in fact converts the euro into dollars, and the U.S. Holder will not realize any separate foreign currency gain or loss (except to the extent that such gain or loss arises on the actual disposition of foreign currency received).
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However, a U.S. Holder may be required to recognize foreign currency gain or loss on the receipt of a refund in respect of German withholding tax to the extent the U.S. dollar value of the refund differs from the U.S. dollar equivalent of that amount on the date of receipt of the underlying dividend.
Dividends paid by SAP AGSE generally will constitute “portfolio income” for purposes of the limitations on the use of passive activity losses (and,
therefore, generally may not be offset by passive activity losses) and as “investment income” for purposes of the limitation on the deduction of investment interest expense. Dividends paid by SAP AGSE will not be eligible for the dividends received deduction generally allowed to U.S. corporations under Section 243 of the Code. Dividends paid by SAP AGSE to an individual ~~after December 31, 2002 and received prior to January 1, 2013~~ are treated as “qualified dividends” subject to capital gains rates, i.e. at a maximum rate of ~~15%~~20%, if SAP AGSE was not in the prior year and, is not in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income taxes with respect to our ~~2011~~2014 tax year. In addition, based on our audited financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for the ~~2012~~2015 tax year. With the enactment of The Health Care and Education Reconciliation Act of 2010, certain US holders who are individuals, trusts, or estates, must pay a Medicare tax at a rate of 3.8% on the lesser of (i) net investment income such as dividends and (ii) the excess of modified adjusted gross income over the statutory thresholds.
U.S. Taxation of Capital Gains
In general, assuming that SAP AGSE at no time is a PFIC, upon a sale or exchange of ordinary shares to a person other than SAP ~~AG,~~SE, a U.S. Holder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and the U.S. Holder’s adjusted tax basis in the ordinary shares. Such gain or loss will be a capital gain or loss and will be considered a long-term capital gain (taxable at a reduced rate for individuals) if
the ordinary shares were held for more than one year. Capital gains may also be subject to the Medicare tax at a rate of 3.8%. The deductibility of capital losses is subject to significant limitations. Upon a sale of ordinary shares to SAP ~~AG,~~SE, a U.S. Holder may recognize a capital gain or loss or, alternatively, may be considered to have received a distribution with respect to the ordinary shares, in each case depending upon the application to such sale of the rules of Section 302 of the Code.
Deposit and withdrawal of ordinary shares in exchange for ADRs by a U.S. Holder will not result in its realization of gain or loss for U.S. federal income tax purposes.
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U.S. Information Reporting and Backup Withholding
Dividend payments made to holders and proceeds paid from the sale of shares or ADRs are subject to information reporting to the Internal Revenue Service and will be subject to backup withholding taxes (currently imposed at a 28% rate) unless the holder (i) is a corporation or other exempt recipient or (ii) provides a taxpayer identification number on a properly completed IRS Form W-9 and certifies that no loss of exemption from backup withholding has occurred. Holders that are not U.S. persons are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.
Backup withholding is not an additional tax and any amounts withheld as backup withholding may be credited against a holder’s U.S. federal income tax liability. A holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the Internal Revenue Service and furnishing any required information.
Shareholders may be subject to other U.S. information reporting requirements and should consult their own tax advisors for application of these reporting requirements to their own facts and circumstances.
U.S. Foreign Tax Credit
In general, in computing its U.S. federal income tax liability, a U.S. Holder may elect for each taxable year to claim a deduction or, subject to the limitations on foreign tax credits generally, a credit for foreign income taxes paid or accrued by it. For U.S. foreign tax credit purposes, subject to the applicable limitations under the foreign tax credit rules, German tax withheld from dividends paid to a U.S. Holder, up to the 15% provided under the Treaty, will be eligible for credit against the U.S. Holder’s federal income tax liability or, if the U.S. Holder has elected to deduct such taxes, may be deducted in computing taxable income.
For U.S. foreign tax credit purposes, dividends paid by SAP AGSE generally will be treated as foreign-source income and as “passive category income” (or in the case of certain holders, as “general category income”). Gains or losses
realized by a U.S. Holder on the sale or exchange of ordinary shares generally will be treated as U.S.-source gain or loss.
Passive Foreign Investment Company Considerations
Special and adverse U.S. tax rules apply to a U.S. Holder that holds an interest in a passive foreign investment company (PFIC). Based on current projections concerning the composition of SAP ~~AG’s~~SE’s income and assets, SAP AGSE does not believe that it will be treated as a PFIC for its
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current or future taxable years. However, because this conclusion is based on our current projections and expectations as to its future business activity, SAP AGSE can provide no assurance that it will not be treated as a PFIC in respect of its current or any future taxable years.
MATERIAL CONTRACTS
~~SuccessFactors,~~Concur Technologies, Inc.
Pursuant to the Agreement and Plan of Merger dated as of ~~December 3, 2011~~September 18, 2014 by and among Concur Technologies, Inc., SAP America, Inc. and Congress Acquisition Corp., ~~a wholly owned subsidiary of SAP AG (SAP America), Saturn Expansion Corporation, a wholly owned subsidiary of~~on December 4, 2014 SAP America ~~(Saturn)~~acquired Concur, the leader in the multi-billion travel and ~~SuccessFactors, Inc. (SuccessFactors), Saturn commenced a cash tender offer~~expense management software industry, for ~~all of the outstanding shares of the common stock of SuccessFactors, par value~~ US$~~0.001~~129.00 per share ~~(each a share), at a price of US$40.00 per share, representing~~which represents an enterprise value of approximately US$~~3.6~~8.3 billion. On February 21, 2012, SAP acquired more than 90% of the outstanding ordinary shares of SuccessFactors. Subsequent to the acceptance of the shares for payment under the tender offer, SAP effected a short-form merger under Delaware and acquired the remaining shares for the same US$40.00 per share price that was paid in the tender offer. The transaction was funded primarily from ~~SAP’s cash on hand and~~ a €1EUR 7.0 billion credit facility.
~~The preceding description is a summary of the Agreement~~See “Item 5. Operating and ~~Plan of Merger~~Financial Review and ~~is qualified in its entirety by the Agreement~~Prospects – Liquidity and ~~Plan of Merger which is incorporated by reference as Exhibit 2.1 to the Current Report~~Capital Disclosures”, for information on ~~Form 8-K filed with the SEC by SuccessFactors on December 5, 2011.~~
~~Sybase, Inc.~~
Pursuant to the Merger Agreement dated May 12, 2010 by and among Sybase, Inc., SAP America, Inc., and Sheffield Acquisition Corp., a wholly owned subsidiary of SAP America, Inc., Sheffield Acquisition Corp. commenced a cash tender offer for all of the outstanding shares of Sybase common stock at US$65.00 per share,
representing an enterprise value of approximately US$5.9 billion. The transaction closed on July 26, 2010 after receipt of the majority of the outstanding shares of Sybase’s common stock and clearance by the relevant antitrust authorities. Subsequently, SAP acquired the remaining common shares and the combination was completed on July 29, 2010. The transaction was funded from SAP’s cash on hand and a euro 2.64 billion acquisition term loan facility.
~~The preceding description is a summary of the Merger Agreement and is qualified in its entirety by the Merger Agreement which is incorporated by reference as Exhibit 4.7 to~~ our ~~2010 Annual Report on Form 20-F filed with the Commission on March 18, 2011.~~credit facilities.
DOCUMENTS ON DISPLAY
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and furnish other information as a foreign private issuer with the SEC. These materials, including this report and the exhibits thereto, may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The SEC also maintains a Web site at www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC. This report as well as some of the other information submitted by us to the SEC may be
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accessed through this Web site. In addition, information about us is available at our Web site: ~~www.sap.com.~~www.sap.com.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various financial risks, such as market risks, including changes in foreign currency exchange rates, interest rates and equity prices, as well as credit risk and liquidity risk. We manage these risks on a Group-wide basis. Selected derivatives are exclusively used for this purpose and not for
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speculation, which is defined as entering into derivative instruments without a corresponding underlying transaction. Financial risk management is done centrally. See Notes (25), (26) and (27) to our Consolidated Financial Statements for our quantitative and qualitative disclosures about market risk.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
AMERICAN DEPOSITARY SHARES
Fees and Charges Payable by ADR Holders
Deutsche Bank Trust Company Americas is the Depositary for SAP ~~AG’s~~SE’s ADR program. ADR holders may be required to pay the following charges:

taxes and other governmental charges;

registration fees as may be in effect from time to time for the registration of transfers of SAP ordinary shares on any applicable register to the Depositary or its nominee or the custodian or its nominee in connection with deposits or withdrawals under the Deposit Agreement;

applicable air courier, cable, telex and facsimile expenses of the Depositary;

expenses incurred by the Depositary in the conversion of foreign currency;

$5.00 or less per 100 ADSs (or portion thereof) to the Depositary for the execution and delivery of ADRs (including in connection with the ~~depositing of SAP ordinary shares or the exercising of rights) and the surrender of ADRs as well as for the distribution of other securities;~~
depositing of SAP ordinary shares or the exercising of rights) and the surrender of ADRs as well as for the distribution of other securities;

a maximum aggregate service fee of U.S. $2.00 per 100 ADSs (or portion thereof) per calendar year to the Depositary for the services performed by the Depositary in administering the ADR program, including for processing any cash dividends and other cash distributions; and
$5.00 or less per 100 ADSs (or portion thereof) to the Depositary for distribution of securities other than SAP ordinary shares or rights.
These charges are described more fully in Section 5.9 of the Amended and Restated Deposit Agreement dated November 25, 2009, incorporated by reference as Exhibit 4.1.2 to our 2010 Annual Report on Form 20-F filed with the Commission on March 18, 2011.
Applicable service fees are either deducted from any cash dividends or other cash distributions or charged separately to holders in a manner determined by the Depositary, depending on whether ADSs are registered in the name of investors (whether certificated or in book-entry form) or held in brokerage and custodian accounts (via DTC). In the case of distributions of securities other than SAP ordinary shares or rights, the Depositary charges the applicable ADS record date holder concurrent with the distribution. In the case of ADSs registered in the name of the investor, whether certificated or in book entry form, the Depositary sends invoices to the applicable record date ADS holders. For ADSs held in brokerage and custodian accounts via DTC, the Depositary may, if permitted by the settlement systems provided by DTC, collect the fees through those settlement systems from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in such case may in turn charge their clients’ accounts the amount of the service fees paid to the Depositary.
In the event of a refusal to pay applicable fees, the Depositary may refuse the requested services until payment is received or may set off the amount of the service from any distribution to be made to the ADR holder, all in accordance with the Deposit Agreement.
If any taxes or other governmental charges are payable by the holders and/or beneficial owners ~~of ADSs to the Depositary, the Depositary, the custodian or SAP may withhold~~

Part I

Item 12

of ADSs to the Depositary, the Depositary, the custodian or SAP may withhold or deduct from any distributions made in respect of the deposited SAP ordinary share and may sell for the account of the holder and/or beneficial owner any or all of the deposited ordinary shares and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges, with the holder and the beneficial owner thereof remaining fully liable for any deficiency.
Fees and Other Payments Payable by the Depositary to SAP
The Depositary has agreed to make certain payments to SAP as reimbursement for expenses
incurred by SAP in connection with its ADR
program and in support of SAP’s ongoing investor relations activities related to the ADR program. For the year ended December 31, ~~2011,~~2014, the Depositary has made direct and indirect payments to SAP in an aggregate amount of US ~~$2,494,566~~$526,103 for investor relations activities related to the ADR program, including the production of annual reports and Form 20-F filings, ~~2011~~2014 NYSE listing fees, road shows, production of investor targeting, peer analysis, shareholder identification reports and perception studies, postage for mailing annual and interim reports and other communications to ADR holders and participation in retail investor activities, broker conferences, SAP sponsored analyst events and capital markets days.

Part II

Item 13, 14, 15, 16, 16A

PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures of SAP that are designed to ensure that information required to be disclosed by SAP in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by SAP in the reports that it files or submits under the Exchange Act is accumulated and communicated to SAP management, including SAP’s principal executive and financial officers (i.e. SAP’s ~~co-chief~~chief executive ~~officers (Co-CEOs)~~officer (CEO) and chief financial officer (CFO)), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. SAP’s management evaluated, with the participation of SAP’s ~~Co-CEOs~~CEO and CFO the effectiveness of SAP’s disclosure controls and procedures as of December 31, ~~2011.~~2014. The evaluation was led by SAP’s Global Governance Risk & Compliance function, including dedicated “SOX Champions” in all of SAP’s major entities and business units with the participation of process owners, SAP’s key corporate senior management, senior management of each business group, and as indicated above under the supervision of SAP’s ~~Co-CEOs~~CEO and CFO. Based on the foregoing, SAP’s management, including SAP’s ~~Co-CEOs~~
CEO and CFO, concluded that as of December 31, ~~2011,~~2014, SAP’s disclosure controls and procedures were effective.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
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 Securities Exchange Act of 1934. SAP’s internal control over financial reporting is a process designed under the supervision of SAP’s ~~Co-CEOs~~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 of December 31, ~~2011.~~2014. 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.~~Framework (2013)”.
Based on the assessment under these criteria, SAP management has concluded that, as of December 31, ~~2011,~~2014, the Company’s internal control over financial reporting was effective.
KPMG, our independent registered public accounting firm, has issued its attestation report on the effectiveness of SAP’s internal control over financial reporting, which is included in Item 18. Financial Statements,” “Report of Independent Registered Public Accounting Firm.”
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in our internal control over financial reporting during the period covered by this report that has materially
~~Part II~~
~~Item 15, 16, 16A, 16B, 16C~~
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Supervisory Board has determined that Erhard Schipporeit is an “audit committee
Part II
Item 16A, 16B, 16C
financial ~~expert,”~~expert”, as defined by the regulations of the Commission issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002 and meeting the requirements of Item 16A. He is ~~“independent,”~~“independent”, as such term is defined in Rule 10A-3 under the Exchange Act.
ITEM 16B. CODE OF ETHICS
In 2003, SAP adopted a Code of Business Conduct that applies to all employees (including all personnel in the accounting and controlling departments), managers and the members of SAP’s Executive Board (including our ~~CEOs~~CEO and CFO). Our Code of Business Conduct constitutes a “code of ethics” as defined in Item 16.B of Form 20-F. Our Code of Business Conduct sets standards for all dealings with customers, partners, competitors and suppliers and includes, among others, regulations with regard to confidentiality, loyalty, preventing conflicts of interest, preventing bribery, and avoiding anti-competitive practices. International differences in culture, language, and legal and social systems make the adoption of uniform Codes of Business Conduct across an entire global company challenging. As a result, SAP has set forth a master code containing minimum standards. In turn, each company within the SAP Group has been required to adopt a similar code that meets at least these minimum standards, but may also include additional or more stringent rules of conduct. Newly acquired companies also are required to meet the minimum standards set forth in the Code of Business Conduct. Effective February 2012, SAP amended its Code of Business Conduct to address certain changes in bribery laws, and to update the intellectual
property and non-retaliation provisions. We have made our amended Code of Business Conduct publicly available by posting the full text on our Web site underhttp://www.sap.com/corporate-en/investors/governance/~~statutes/codeofconduct.epx~~.policies-statutes.epx.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES, AUDIT RELATED FEES, TAX FEES AND ALL OTHER FEES
Refer to Note (32) to our Consolidated Financial Statements for information on fees ~~paid to~~billed by our independent registered public accounting firm, KPMG, for audit services and other professional services.
AUDIT COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES
As required under German law, our shareholders appoint our external independent auditors to audit our financial statements, based on a proposal that is legally required to be submitted by the Supervisory Board. The Supervisory Board’s proposal is based on a proposal by the Audit Committee. See also the description in “Item 10. Additional Information —– Corporate Governance.”
In 2002 our Audit Committee adopted a policy with regard to the pre-approval of audit and non-audit services to be provided by our external independent auditors. This policy, which is designed to assure that such engagements do not impair the independence of our auditors, was amended and expanded in 2003, 2007 and 2009 (changes in 2009 only related to information requirements). The policy requires prior approval of the Audit Committee for all services to be provided by our external independent auditors for any entity of the SAP Group. With regard to non-audit services the policy distinguishes among three categories of services:

(i) “Prohibited services:” This category includes services that our external independent auditors must not be engaged to perform. These are services that are not permitted by applicable law or that would be inconsistent with maintaining the auditors’ independence.
~~Part II~~
~~Item 16C, 16D, 16E~~
~~would be inconsistent with maintaining the auditors’ independence.~~

(ii) “Services requiring universal approval:” Services of this category may be provided by our external independent auditors up to a certain aggregate amount in fees per year that is determined by the Audit Committee.

(iii) “Services requiring individual approval:” Services of this category may only be provided by our external independent auditors if they have been individually (specifically) pre-approved by the Audit Committee or an Audit Committee member who is authorized by the Audit Committee to make such approvals.
Our Chief Accounting Officer or individuals empowered by him review all individual requests to engage our external independent auditors as a service provider in accordance with this policy and determines the category to which the requested service belongs. All requests for engagements with expected fees over a specified limit are additionally reviewed by our CFO. Based on the
Part II
Item 16C, 16D, 16E, 16F, 16G
determination of the category the request is (i) declined if it is a “prohibited service,” (ii) approved if it is a “service requiring universal approval” and the maximum aggregate amount fixed by the Audit Committee has not been reached or (iii) forwarded to the Audit Committee for individual approval if the “service requires individual approval” or is a “service requiring universal approval” and the maximum aggregate amount fixed by the Audit Committee has been exceeded.
Our Audit Committee’s pre-approval policies also include information requirements to ensure the Audit Committee is kept aware of the volume of engagements involving our external independent auditors that were not individually pre-approved by the Audit Committee itself.
Substantially all of the work performed to audit our Consolidated Financial Statements was performed by our principal accountant’s full-time, permanent employees.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Rule 10A-3 of the Exchange Act requires that all members of our audit committee be independent, subject to certain exceptions. In accordance with German law, the Audit Committee consists of both employee and shareholder elected members. Rule 10A-3 provides an exception for an employee of a foreign private issuer such as SAP who is not an executive officer of that issuer and who is elected to the supervisory board or audit committee of that issuer pursuant to the issuer’s governing law. In this case, the employee is exempt from the independence requirements of Rule 10A-3 and is permitted to sit on the audit committee.
We rely on this exemption. Our Audit Committee includes two ~~members who are non-executive~~ employees ~~of SAP AG, Thomas Bamberger~~representatives, Steffen Leskovar and ~~Gerhard Maier,~~Stefan Schulz, who were ~~named~~appointed to our Supervisory Board pursuant to the ~~German Co-determination Act~~Agreement on the Involvement of Employees in SAP SE (see “Item 6. Directors, Senior Management and Employees.” for details). We believe that the reliance on this exemption does not materially adversely affect the ability of our Audit Committee to act independently and to satisfy the other requirements of Rule 10A-3.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
~~We did not purchase any ADRs in 2011.~~In 2014 there were no purchases made by us or on our behalf or on behalf of affiliates of SAP of SAP shares or SAP ADRs. The following table sets out information concerning repurchases of our ordinary shares, which we mainly use to serve our employee discount stock purchase programs, Long-Term Incentive Plans, Stock Option Plans and other such plans. The maximumtotal number of SAP shares that ~~may yet be purchased~~SAP could purchase under ~~these plans and~~existing repurchase programs was 89,575,571 as of December 31, ~~2011 was 85,042,489.~~
~~Part II~~
~~Item 16E, 16F, 16G~~
2014.

Period
(a)Total Number
of Shares
Purchased (b)Average Price
Paid per Share
(in €) (c)Total Number of Shares
Purchased as Part of Publicly
Announced Plans and
Programs (d)Maximum Number of Shares
that May Yet Be Purchased
Under these Plans and
Programs
January 1/1/11 — 1/31/11
0    —    0    83,559,544
February 2/1/11 — 2/28/11
2,770,000    44.10    2,770,000    83,664,603
March 3/1/11 — 3/31/11
835,000    42.96    835,000    83,758,905
April 4/1/11 — 4/30/11
0    —    0    83,793,112
May 5/1/11 — 5/31/11
0    —    0    83,824,592
June 6/1/11 — 6/30/11
0    —    0    84,659,971
July 7/1/11 — 7/31/11
0    —    0    84,695,541
August 8/1/11 — 8/31/11
0    —    0    84,774,390
September 9/1/11 — 9/30/11
0    —    0    84,832,133
October 10/1/11 — 10/31/11
0    —    0    84,878,750
November 11/1/11 — 11/30/11
1,200,000    43.89    1,200,000    84,983,252
December 12/1/11 — 12/31/11
810,000    43.56    810,000    85,042,489

Total
5,615,000    43.81    5,615,000

~~Purchases between January 1, 2011 and December 31, 2011 were made in accordance with the authorization to acquire and use treasury shares granted at~~At the Annual General Meeting of Shareholders on June ~~8 2010, pursuant to which~~4, 2013, the Executive Board was authorized to acquire, on or before June ~~30, 2013,~~3, 2018, up to 120 million shares of SAP. The authorization from June ~~8, 2010~~4, 2013 replaced the authorization from ~~May 19, 2009.~~June 8, 2010.
Both authorizations were subject to the provision that the shares to be purchased, together with any other shares already acquired and held by SAP, do not account for more than 10% of SAP’s capital stock.
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
The following summarizes the principal ways in which our corporate governance practices differ from the New York Stock Exchange (NYSE) corporate governance rules applicable to U.S. domestic issuers (the NYSE Rules).
INTRODUCTION
SAP is incorporated under the laws of the European Union and Germany, with securities publicly traded on markets in Germany, including the Frankfurt Exchange and in the United States on the NYSE.
The NYSE Rules permit foreign private issuers to follow applicable home country corporate governance practices in lieu of the NYSE corporate governance standards, subject to certain exceptions. Foreign private issuers electing
Part II
Item 16G
to follow home country corporate governance rules are required to disclose the principal differences in their corporate governance practices from those required under the NYSE Rules. This Item 16G summarizes the principal ways in which SAP’s corporate governance practices differ from the NYSE Rules applicable to domestic issuers.
LEGAL FRAMEWORK
The primary ~~source~~sources of law relating to the corporate governance of a European Company are the Council Regulation (EC) No. 2157/2001 on the Statute for a European Company (the “SE Regulation”), the German ~~stock corporation is~~Act on the Implementation of Council Regulation No. 2157/2001 of October 8, 2001 on the Statute for a European Company (Gesetz zur Ausführung der Verordnung (EG) Nr. 2157/2001 des Rates vom 8. Oktober 2001 über das Statut der Europäischen Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”) of December 22, 2004, and the German Stock Corporation Act (Aktiengesetz). Additionally, the Securities Trading Act (Wertpapierhandelsgesetz), the German Securities Purchase and Take Over Act (Wertpapiererwerbs- und Übernahmegesetz), the Stock Exchange Admission Regulations, the
~~Part II~~
~~Item 16G~~
German Commercial Code (Handelsgesetzbuch) and certain other German statutes contain corporate governance rules applicable to SAP. In addition to these mandatory rules, the German Corporate Governance Code (“GCGC”) summarizes the mandatory statutory corporate governance principles found in the German Stock Corporation Act and other provisions of German law. Further, the GCGC contains supplemental recommendations and suggestions for standards on responsible corporate governance intended to reflect generally accepted best practices.
The German Stock Corporation Act requires the executive and the supervisory board of publicly listed companies like SAP to declare annually that the recommendations set forth in the GCGC have been and are being complied with or which of the recommendations have not been or are not being complied with and why not. SAP has disclosed and reasoned deviations from a few of the GCGC recommendations in its Declaration of ~~Compliance~~Implementation on a yearly basis since 2003. Declarations ~~from 2006 forward~~for the past five years are available on the SAP website (http://www.sap.com/corporate-en/investors/governance/~~statutes/declarationof implementation.epx)~~policies-statutes.epx).
SIGNIFICANT DIFFERENCES
We believe the following to be the significant differences between applicable European and German corporate governance practices, as SAP has implemented them, and those applicable to domestic companies under the NYSE Rules.
~~GERMAN STOCK CORPORATIONS ARE REQUIRED TO HAVE~~SAP SE IS A EUROPEAN COMPANY WITH A TWO-TIER BOARD SYSTEM
SAP is governed by three separate bodies: (i) the Supervisory Board, which counsels, supervises and controls the Executive Board; (ii) the Executive Board, which is responsible for the management of SAP; and (iii) the General Meeting of Shareholders. The rules applicable to these governing bodies are defined by European and German law and by SAP’s Articles of Incorporation. This corporate structure differs from the unitary board
of directors established by the relevant laws of all U.S. states and the NYSE Rules. Under the SE Regulation and the German Stock Corporation Act, the Supervisory Board and Executive Board are separate and no individual may be a member of both boards. See “Item 10. Additional Information —– Corporate Governance” for additional information on the corporate structure.
DIRECTOR INDEPENDENCE RULES
The NYSE Rules require that a majority of the members of the board of directors of a listed issuer and each member of its nominating, corporate governance, compensation and audit committee be “independent.” As a foreign private issuer, SAP is not subject to the NYSE board, compensation committee and corporate governance committee independence requirements but instead can elect to follow its home country rules. With respect to the audit committee, SAP is required to satisfy Rule 10A-3 of the Exchange Act, which provides certain exemptions from the audit committee independence requirements in the case of employee board representatives. The NYSE Rules stipulate that no director qualifies as “independent” unless the board of directors has made an affirmative determination that the director has no material direct or indirect relationship with the listed company. However, under the NYSE Rules a director may still be deemed independent even if the director or a member of a director’s immediate family has
Part II
Item 16G
received during a 12 month period within the prior three years up to $120,000 in direct compensation. In addition, a director may also be deemed independent even if a member of the director’s immediate family works for the company’s auditor in a non-partner capacity and not on the company’s audit. By contrast, the GCGC requires that the Supervisory Board ensure that proposed candidates are persons with the necessary knowledge, competencies and applicable ~~experience, and that~~experience. Additionally, the Supervisory Board ~~includes what it considers an adequate~~is required to implement and adhere to concrete director independence criteria, including a consideration of the total number of independent ~~members. A~~Supervisory Board members as defined in Section 5.4.2 of the Code. According to this definition, a Supervisory Board member iswill not be considered independent in particular if s/he has personal or ~~she has no~~ business ~~or personal~~ relations with ~~SAP~~the company, its executive bodies, a controlling shareholder or ~~its Executive Board that~~an enterprise associated with any of the preceding persons and entities which could ~~give rise to~~cause a substantial and sustained conflict of interest. The members of the Supervisory Board must have enough time to perform their board duties and must carry out their duties carefully and in good faith. For as long as they serve, they must comply with the criteria that are enumerated in relation to the selection of candidates for the Supervisory Board concerning independence, conflict of interest and multiple memberships of
~~Part II~~
~~Item 16G~~
management, supervisory and other governing bodies. They must be loyal to SAP in their conduct and they must not accept appointment in companies that are in competition with SAP. Supervisory Board members must disclose any planned non-ordinary course business transactions with SAP to the Supervisory Board promptly. The Supervisory Board members cannot carry out such transactions before the Supervisory Board has given its permission. The Supervisory Board may grant its permission for any such transaction only if the transaction is based on terms and conditions that are standard for the type of transaction in question and if the transaction is not contrary to SAP’s interest. SAP complies with these GCGC director independence requirements.
Applicable European and German corporate law requires that for publicly listed stock corporations at least one member of the Supervisory Board who has expert knowledge in the areas of financial accounting and audit of financial statements must be independent. Mr. Erhard Schipporeit who is the Chairman of SAP’s Audit Committee meets these requirements. However, applicable European and
German corporate law and the GCGC do not require the Supervisory Board to make an affirmative determination for each individual member that is independent or that a majority of Supervisory Board members or the members of a specific committee are independent.
The NYSE independence requirements are closely linked with risks specific to unitary boards of directors that are customary for U.S. companies. In contrast, the two-tier board structure requires a strict separation of the executive board and supervisory board. In addition, the supervisory board of a European Company formed by conversion from a large German stock ~~corporations is~~corporation which was subject to the principle of employee codetermination as outlined in the GermanCo-Determination Act of 1976 (Mitbestimmungsgesetz). is subject to at least the same level of employee participation which formerly existed in the German stock corporation that was converted to an SE. The terms of employee participation with regard to the Supervisory Board of SAP SE are, among others, set out in the Agreement on the Involvement of Employees in SAP SE. As a result, the Supervisory Board of SAP AGSE consists of 1618 members, of which ~~eight have been~~nine are representatives of SAP SE��s shareholders elected ~~by SAP AG’s shareholders~~ at the Annual General Meeting and ~~eight~~nine members ~~have been~~are representatives of the European employees. Only a shareholders’ representative may be elected ~~by employees of SAP AG and its German~~
~~subsidiaries. Typically, the~~as chairperson of the ~~supervisory board is a shareholder representative.~~Supervisory Board. In case of a ~~tie~~tied vote, the ~~supervisory board~~vote of the chairperson ~~may cast~~and, in the event that the chairperson does not participate in passing the resolution, the vote of the deputy chairperson, provided that he or she is a shareholders’ representative, will be decisive ~~tie-breaking vote.~~(casting vote). This board structure creates a different system of checks and balances, including employee participation, and cannot be directly compared with a unitary board system.
AUDIT COMMITTEE INDEPENDENCE
As a foreign private issuer, the NYSE Rules require SAP to establish an Audit Committee that satisfies the requirements of Rule 10A-3 of the Exchange Act with respect to audit committee independence. SAP is in compliance with these requirements. The Chairman of SAP’s Audit Committee and ~~Mr. Joachim Milberg~~Prof. Dr. Klaus Wucherer meet the independence requirements of Rule 10A-3 of the Exchange Act. The other two Audit Committee members, ~~Messrs. Thomas Bamberger~~Steffen Leskovar and ~~Gerhard Maier,~~ Stefan Schulz,
Part II
Item 16G
are employee representatives who are eligible for the exemption provided by Rule ~~10 A-3~~10A-3 (b) (1) (iv) (C) (see “Item 16D Exemptions from the listing standards for audit committees” for details).
The Audit Committee independence requirements are similar to the Board independence requirements under applicable European and German corporate law and the GCGC. See the section above under “Director Independence Rules.” Nonetheless, SAP meets the NYSE Rules on audit committee independence applicable to foreign private issuers.
RULES ON NON-MANAGEMENT BOARD MEETINGS ARE DIFFERENT
Section 303 A.03 of the NYSE Rules stipulates that the non-management board of each listed issuer must meet at regularly scheduled executive sessions without the management. Under applicable European and German corporate law and the GCGC the Supervisory Board is entitled but not required to exclude Executive Board members from its meetings. The Supervisory Board exercises this right ~~temporarily~~generally during its ~~meetings, for example when it discusses or decides Executive Board member affairs like the appointment of new Executive Board members.~~
~~Part II~~
~~Item 16G~~
meetings.
RULES ON ESTABLISHING COMMITTEES DIFFER
Pursuant to Section 303 A.04 and 303 A.05 of the NYSE Rules listed companies are required to set up a Nominating/Corporate Governance Committee and a Compensation Committee, each composed entirely of independent directors and having a written charter specifying the committee’s purpose and responsibilities. In addition, each committee’s performance must be reviewed annually. ~~With one exception,~~Applicable European and German corporate law does not mandate the creation of specific supervisory board committees. Required by the German Co-Determination Act of 1976 (Mitbestimmungsgesetz), the Mediation Committee (Vermittlungsausschuss) convenes only if the 2/3 majority required for appointing/revoking the appointment of Executive Board Members is not attained. This committee has never been convened in SAP’s history. In addition, theThe GCGC recommends that the Supervisory Board establish an Audit Committee and a Nomination Committee. ~~In addition to the legally required Mediation Committee,~~ SAP has the following committees, which are in compliance with the GCGC: General and Compensation Committee, Audit Committee, Strategy and Technology Committee, Finance and Investment Committee, Nomination Committee, Special Committee and ~~Special~~People and Organization Committee (See “Item 10. Additional Information —– Corporate Governance” for more information).
RULES ON SHAREHOLDERS’ COMPULSORY APPROVAL ARE DIFFERENT
Section 312 of the NYSE Rules requires U.S. companies to seek shareholder approval of all equity-compensation plans, including certain material revisions thereto (subject to certain exemptions as described in the rules), issuances of common stock, including convertible stock, if the common stock has, or will have upon issuance, voting power of or in excess of 20% of the then outstanding common stock, and issuances of common stock if they trigger a change of control.
According to applicable European law, the German Stock Corporation Act and other applicable German laws, shareholder approval is required for a broad range of matters, such as amendments to the articles of association, certain significant corporate transactions (including inter-company agreements and material restructurings), the offering of stock options and similar equity compensation to its Executive Board members or its employees by a way of a conditional capital increase or by using treasury shares (including significant aspects of such an equity compensation plan as well as the exercise thresholds), the issuance of new shares, the authorization to purchase the corporation’s own shares, and other essential issues, such as transfers of all, or substantially all, of the assets of the stock corporation, including shareholdings in subsidiaries.
SPECIFIC PRINCIPLES OF CORPORATE GOVERNANCE
Under the NYSE Rules Section 303A.09 listed companies must adopt and disclose corporate guidelines. Since October 2007, SAP has applied, with few exceptions, the recommended corporate governance standards of the GCGC rather than company-specific principles of corporate governance. The GCGC recommendations differ from the NYSE Standards primarily as outlined in this Item 16G.
SPECIFIC CODE OF BUSINESS CONDUCT
NYSE Rules Section 303 A.10 requires listed companies to adopt and disclose a code of business conduct and ethics for directors, officers
Part II
Item 16G
and employees, and to disclose promptly any waivers of the code for directors or executive officers. Although not required under applicable European and German law, SAP has adopted a Code of Business Conduct, which is equally applicable to employees, managers and members
of the Executive Board. SAP complies with the requirement to disclose the Code of Business Conduct and any waivers of the code with respect to directors and executive officers. See “Item 16B. Code of Ethics” for details.

Part III

Item 17, 18, 19

PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
The ~~Consolidate~~Consolidated Financial Statements are included herein on pages F-1 through ~~F-105.~~F-93.
The following are filed as part of this report:

Report of Independent Registered Public Accounting Firm.

Consolidated Financial Statements

Consolidated Income Statements for the years ended ~~2011, 2010~~December 31, 2014, 2013, and ~~2009.~~2012.
Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009.~~2012.

Consolidated Statements of Financial Position as of December 31, ~~2011~~2014 and ~~2010.~~2013.

Consolidated Statements of Changes in Equity for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009.~~2012.

Consolidated Statements of Cash Flows for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009.~~2012.

Notes to the Consolidated Financial Statements.

ITEM 19. EXHIBITS
The following documents are filed as exhibits to this report:

1    Articles of Incorporation (Satzung) of SAP ~~AG,~~SE, effective as ~~amended effective October 13, 2011~~of May 21, 2014 (English translation).
2.1    Form of global share certificate for ordinary shares (English translation).⁽¹⁾
   Certain instruments which define rights of holders of long-term debt of SAP AGSE and its subsidiaries are not being filed because the total amount of securities authorized under each such instrument does not exceed 10% of the total consolidated assets of SAP AGSE and its subsidiaries. SAP AGSE and its subsidiaries hereby agree to furnish a copy of each such instrument to the Securities and Exchange Commission upon request.
4.1.2    Amended and Restated Deposit Agreement dated as of November 25, 2009 among SAP ~~AG,~~SE (formerly SAP AG), Deutsche Bank Trust Company Americas as Depositary, and all owners and holders from time to time of American Depositary Receipts issued thereunder, including the form of American Depositary Receipts.⁽²⁾⁽¹⁾
~~4.7~~ ~~Merger Agreement dated May 12, 2010 by and among SAP America, Inc., Sheffield Acquisition Corp. and Sybase, Inc.~~⁽³⁾
~~4.8~~4.9    Agreement and Plan of Merger dated ~~December 3, 2011~~as of September 18, 2014 by and among Concur Technologies, Inc., SAP America, Inc.~~, Saturn Expansion Corporation, SAP AG~~ and ~~SuccessFactors, Inc.~~Congress Acquisition Corp.⁽⁴⁾⁽²⁾
8    For a list of our subsidiaries see Note (34) to our Consolidated Financial Statements in “Item 18. Financial Statements”.
12.1    Certification of Bill McDermott, ~~Co-Chief~~Chief Executive Officer, required by Rule 13a-14(a) or
Rule 15d-14(a).
~~Part III~~
~~Item 19~~
12.2    Certification of ~~Jim Hagemann Snabe, Co-Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a).~~
~~12.3~~ ~~Certification of Werner Brandt,~~Luka Mucic, Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
13.1    Certification of Bill McDermott, ~~Co-Chief~~Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2    Certification of ~~Jim Hagemann Snabe, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~13.3~~ ~~Certification of Werner Brandt,~~Luka Mucic, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15    Consent of Independent Registered Public Accounting Firm.

⁽¹⁾
~~Incorporated by reference to Exhibit 2.1 of SAP AG’s Annual Report on Form 20-F filed on March 22, 2006.~~
⁽²⁾
Incorporated by reference to Exhibit 99(A) of Post Effective Amendment #1 to SAP ~~AG’s~~SE’s Registration Statement on Form F-6 filed on November 25, 2009.

⁽³⁾⁽²⁾
Incorporated by reference to Exhibit 2.1 to ~~Sybase,~~Concur Technologies, Inc.’s Current Report on Form 8-K filed on ~~May 13, 2010.~~
⁽⁴⁾
~~Incorporated by reference to Exhibit 2.1 to SuccessFactors, Inc.’s Current Report on Form 8-K filed on December 5, 2011.~~September 19, 2014.
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this report on its behalf.

SAP AGSE
(Registrant)
By: /s/  BILL MCDERMOTT
Name: Bill McDermott
Title: ~~Co-Chief~~Chief Executive Officer
Dated: March ~~22, 2012~~19, 2015

By: /s/  ~~JIM HAGEMANN SNABE~~LUKA MUCIC
Name: ~~Jim Hagemann Snabe~~
~~Title: Co-Chief Executive Officer~~
~~Dated: March 22, 2012~~
~~By: /s/  WERNER BRANDT~~
~~Name: Dr. Werner Brandt~~Luka Mucic
Title: Chief Financial Officer
~~Dated~~Dated: March ~~22, 2012~~19, 2015
SAP AGSE AND SUBSIDIARIES
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

   Page
Report of Independent Registered Public Accounting Firm
   F-2
Consolidated Financial Statements:

Consolidated Income Statements for the years ended ~~2011, 2010~~2014, 2013 and ~~2009~~2012
   F-3
Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009~~2012
   F-4
Consolidated Statements of Financial Position as of December 31, ~~2011~~2014 and ~~2010~~2013
   F-5
Consolidated Statements of Changes in Equity for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009~~2012
   F-6
Consolidated Statements of Cash Flows for the years ended December 31, ~~2011, 2010~~2014, 2013 and ~~2009~~2012
   F-7
Notes to the Consolidated Financial Statements
   F-8 to ~~F-108~~F-93
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Supervisory Board of SAP ~~AG:~~SE:
We have audited the accompanying consolidated statements of financial position of SAP AGSE and subsidiaries (“SAP” or “the Company”) as of December 31, ~~2011~~2014 and ~~2010,~~2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, ~~2011.~~2014. We also have audited SAP’s internal control over financial reporting as of December 31, ~~2011,~~2014, based on criteria established in Internal Control —– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). SAP’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.
We conducted our audits 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 the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect 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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SAP AGSE and subsidiaries as of December 31, ~~2011~~2014 and ~~2010,~~2013, and the ~~consolidated~~ results of their operations and their cash flows for each of the years in the three-year period ended December 31, ~~2011,~~2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). Also in our opinion, SAP AGSE maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2011,~~2014, based on criteria established in Internal Control —– Integrated Framework (2013) issued by the COSO.

/s/  KPMG AG
Wirtschaftsprüfungsgesellschaft
Mannheim, Germany
February ~~23, 2012~~19, 2015
SAP AGSE AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENTS OF SAP GROUP
for the years ended December 31,

      Note (Unaudited)
2011⁽¹⁾    2011    2010    2009
   US$    €    €    €
   millions, unless otherwise stated
Software revenue
   5,152       3,971       3,265       2,607
Support revenue
   9,038       6,967       6,133       5,285
Subscription and other software-related service revenue
   494       381       396       306
Software and software-related service revenue
   14,684       11,319       9,794       8,198
Consulting revenue
   3,037       2,341       2,197       2,074
Other service revenue
   743       573       473       400
Professional services and other service revenue
   3,780       2,914       2,670       2,474
Total revenue
   (5 ) 18,464       14,233       12,464       10,672
Cost of software and software-related services
   –2,733       –2,107       –1,823       –1,658
Cost of professional services and other services
   –2,916       –2,248       –2,071       –1,851
Research and development
   –2,515       –1,939       –1,729       –1,591
Sales and marketing
   –3,997       –3,081       –2,645       –2,199
General and administration
   –928       –715       –636       –564
Restructuring
   (6 ) –5       –4       3       –198
TomorrowNow litigation
   (24 ) 930       717       –981       –56
Other operating income/expense, net
   (7 ) 32       25       9       33
Total operating expenses
   –12,132       –9,352       –9,873       –8,084
Operating profit
   6,332       4,881       2,591       2,588
Other non-operating income/expense, net
   (9 ) –97       –75       –186       –73
Finance income
   160       123       73       37
Finance costs TomorrowNow litigation
   10       8       –12       0
Other finance costs
   –219       –169       –128       –117
Finance costs
   –209       –161       –140       –117
Financial income, net
   (10 ) –49       –38       –67       –80
Profit before tax
   6,186       4,768       2,338       2,435
Income tax TomorrowNow litigation
   –365       –281       377       20
Other income tax expense
   –1,360       –1,048       –902       –705
Income tax expense
   (11 ) –1,724       –1,329       –525       –685
Profit after tax
   4,461       3,439       1,813       1,750
— Profit attributable to owners of parent
   4,460       3,438       1,811       1,748
— Profit attributable to non-controlling interests
   1       1       2       2
Basic earnings per share, in €
   (12 ) 3.75       2.89       1.52       1.47
Diluted earnings per share, in €
   (12 ) 3.75       2.89       1.52       1.47
   Notes (Unaudited)
2014⁽¹⁾ 2014 2013 2012
US$ € € €
millions, unless otherwise stated
Cloud subscriptions and support
1,316    1,087    696    270
Software
5,323    4,399    4,516    4,658
Support
11,337    9,368    8,738    8,237
Software and support
16,660    13,767    13,254    12,895
Software and software-related service revenue
17,975    14,855    13,950    13,165
Professional services and other service revenue
3,274    2,706    2,865    3,058
Total revenue
(5 ) 21,250    17,560    16,815    16,223
Cost of software and software-related services
(6 ) –3,502    –2,894    –2,629    –2,553
Cost of professional services and other services
–2,878    –2,379    –2,402    –2,520
Total cost of revenue
–6,380    –5,272    –5,031    –5,073
Gross profit
14,870    12,288    11,784    11,149
Research and development
–2,821    –2,331    –2,282    –2,261
Sales and marketing
–5,208    –4,304    –4,131    –3,912
General and administration
–1,079    –892    –866    –949
Restructuring
(7 ) –153    –126    –70    –8
TomorrowNow and Versata litigation
(24 ) –374    –309    31    –2
Other operating income/expense, net
5    4    12    23
Total operating expenses
–16,009    –13,230    –12,336    –12,181
Operating profit
5,240    4,331    4,479    4,041
Other non-operating income/expense, net
(9 ) 59    49    –17    –173
Finance income
154    127    115    103
Finance costs
–184    –152    –181    –175
Financial income, net
(10 ) –30    –25    –66    –72
Profit before tax
5,270    4,355    4,396    3,796
Income tax TomorrowNow and Versata litigation
105    86    –8    0
Other income tax expense
–1,405    –1,161    –1,063    –993
Income tax expense
(11 ) –1,300    –1,075    –1,071    –993
Profit after tax
3,969    3,280    3,325    2,803
attributable to owners of parent
3,969    3,280    3,326    2,803
attributable to non-controlling interests
0    0    –1    0
Earnings per share, basic (in €)
(12 ) 3.32    2.75    2.79    2.35
Earnings per share, diluted (in €)
(12 ) 3.32    2.74    2.78    2.35

⁽¹⁾
The ~~2011~~2014 figures have been translated solely for the convenience of the reader at an exchange rate of US$~~1.2973~~1.2101 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December ~~30, 2011.~~31, 2014.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
SAP AGSE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP
for the years ended December 31,

   Notes    2011    2010    2009    Notes    2014    2013    2012
   € millions    € millions
Profit after tax
      3,439       1,813       1,750          3,280       3,325       2,803
Items that will not be reclassified to profit or loss

Actuarial gains (losses) on defined benefit pension plans
   (19 )    –12       –39       –6
Remeasurements on defined benefit pension plans
   (19 )    –30       16       –12
Income tax relating to items that will not be reclassified
   (11 )    5       18       0       (11 )    7       –3       4
Other comprehensive income after tax for items that will not be reclassified to profit or loss
      –7       –21       –6          –23       13       –8
Items that will be reclassified subsequently to profit or loss
   (21 )             (21 )
Exchange differences on translations
      106       193       74
Exchange differences
      1,165       –576       –214
Available-for-sale financial assets
   (27 )    –7       3       15       (27 )    128       60       13
Cash flow hedges
   (26 )    –1       –21       43       (26 )    –38       0       63
Income tax relating to items that will be reclassified
   (11 )    7       0       –12       (11 )    31       –8       –20
Other comprehensive income after tax for items that will be reclassified to profit or loss
      105       175       120          1,286       –524       –157
Other comprehensive income net of tax
      98       154       114          1,263       –511       –165
TOTAL COMPREHENSIVE INCOME
      3,537       1,967       1,864
— attributable to owners of parent
      3,536       1,965       1,862
— attributable to non-controlling interests
      1       2       2
Total comprehensive income
      4,543       2,814       2,638
attributable to owners of parent
      4,543       2,815       2,638
attributable to non-controlling interests
      0       –1       0

The accompanying Notes are an integral part of these Consolidated Financial Statements.
SAP AGSE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP
as at December 31,

   Note (Unaudited)
2011⁽¹⁾    2011    2010
   US$    €    €
   millions
Cash and cash equivalents
   6,441       4,965       3,518
Other financial assets
   (13 ) 1,060       817       158
Trade and other receivables
   (14 ) 4,531       3,493       3,099
Other non-financial assets
   (15 ) 243       187       181
Tax assets
   269       207       187
Total current assets
   12,544       9,669       7,143
Goodwill
   (16 ) 11,298       8,709       8,428
Intangible assets
   (16 ) 2,626       2,024       2,376
Property, plant, and equipment
   (17 ) 2,012       1,551       1,449
Other financial assets
   (13 ) 698       538       475
Trade and other receivables
   (14 ) 109       84       78
Other non-financial assets
   (15 ) 51       39       31
Tax assets
   189       146       122
Deferred tax assets
   (11 ) 603       465       737
Total non-current assets
   17,586       13,556       13,696
Total assets
   30,130       23,225       20,839
Trade and other payables
   (18 ) 1,216       937       923
Tax liabilities
   531       409       164
Financial liabilities
   (18 ) 1,727       1,331       142
Other non-financial liabilities
   (18 ) 2,570       1,981       1,726
Provision TomorrowNow litigation
   (24 ) 300       231       997
Other provisions
   429       331       290
Provisions
   (19 ) 729       562       1,287
Deferred income
   (20 ) 1,357       1,046       911
Total current liabilities
   8,129       6,266       5,153
Trade and other payables
   (18 ) 56       43       30
Tax liabilities
   529       408       369
Financial liabilities
   (18 ) 3,795       2,925       4,449
Other non-financial liabilities
   (18 ) 119       92       85
Provisions
   (19 ) 345       266       292
Deferred tax liabilities
   (11 ) 615       474       574
Deferred income
   (20 ) 57       44       63
Total non-current liabilities
   5,516       4,252       5,862
Total liabilities
   13,645       10,518       11,015
Issued capital
   1,593       1,228       1,227
Share premium
   544       419       337
Retained earnings
   16,172       12,466       9,767
Other components of equity
   –48       –37       –142
Treasury shares
   –1,786       –1,377       –1,382
Equity attributable to owners of parent
   16,474       12,699       9,807
Non-controlling interests
   10       8       17
Total equity
   (21 ) 16,485       12,707       9,824
Equity and liabilities
   30,130       23,225       20,839
   Notes    (Unaudited)
2014⁽¹⁾    2014    2013
      US$    €    €
   millions
Cash and cash equivalents
      4,027       3,328       2,748
Other financial assets
   (13 )    821       678       251
Trade and other receivables
   (14 )    5,239       4,330       3,864
Other non-financial assets
   (15 )    521       431       346
Tax assets
      259       214       142
Total current assets
      10,867       8,980       7,351
Goodwill
   (16 )    25,346       20,945       13,690
Intangible assets
   (16 )    5,576       4,608       2,954
Property, plant, and equipment
   (17 )    2,544       2,102       1,820
Other financial assets
   (13 )    1,235       1,021       607
Trade and other receivables
   (14 )    121       100       98
Other non-financial assets
   (15 )    199       164       107
Tax assets
      280       231       172
Deferred tax assets
   (11 )    430       355       292
Total non-current assets
      35,731       29,527       19,739
Total assets
      46,597       38,507       27,091
Trade and other payables
   (18 )    1,218       1,007       850
Tax liabilities
      410       339       433
Financial liabilities
   (18 )    3,099       2,561       748
Other non-financial liabilities
   (18 )    3,397       2,807       2,562
Provision TomorrowNow and Versata litigation
   (24 )    1       1       223
Other provisions
      180       149       123
Provisions
   (19 )    181       150       346
Deferred income
   (20 )    2,034       1,681       1,408
Total current liabilities
      10,339       8,544       6,347
Trade and other payables
   (18 )    66       55       45
Tax liabilities
      449       371       319
Financial liabilities
   (18 )    10,867       8,980       3,758
Other non-financial liabilities
   (18 )    265       219       257
Provisions
   (19 )    181       149       132
Deferred tax liabilities
   (11 )    621       513       110
Deferred income
   (20 )    94       78       74
Total non-current liabilities
      12,543       10,366       4,695
Total liabilities
      22,882       18,909       11,043
Issued capital
      1,487       1,229       1,229
Share premium
      744       614       551
Retained earnings
      22,165       18,317       16,258
Other components of equity
      688       568       –718
Treasury shares
      –1,482       –1,224       –1,280
Equity attributable to owners of parent
      23,602       19,504       16,040
Non-controlling interests
      114       94       8
Total equity
      23,715       19,598       16,048
Total equity and liabilities
   (21 )    46,597       38,507       27,091

⁽¹⁾
The ~~2011~~2014 figures have been translated solely for the convenience of the reader at an exchange rate of US$~~1.2973~~1.2101 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December ~~30, 2011.~~31, 2014.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
SAP AGSE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP
as at December 31,

Equity Attributable to Owners of Parent Equity Attributable to Owners of Parent
Issued
Capital Share
Premium Retained
Earnings Other Components of Equity Treasury
Shares Total Non-
Controlling
Interests Total
Equity Issued
Capital Share
Premium Retained
Earnings Other Components of Equity Treasury
Shares Total
Exchange
Differences Available-
for-Sale
Financial
Assets Cash
Flow
Hedges Exchange
Differences Available-
for-Sale
Financial
Assets Cash
Flow
Hedges Non-
Controlling
Interests Total
Equity
€ millions € millions
Note Reference
(21 ) (21 ) (21 )
Statement of
comprehensive income
   (21 )
January 1, 2009
1,226    320    7,422    –393    –1    –43    –1,362    7,169    2    7,171
Profit after tax
1,748    1,748    2    1,750
Other comprehensive income
–6    74    14    32    114    114
Comprehensive income
0    0    1,742    74    14    32    0    1,862    2    1,864
Dividends
–594    –594    –594
Issuance of shares under share-based payments programs
5    5    5
Reissuance of treasury shares under share-based payments programs
–8    42    34    34
Addition of non-controlling interests
0    10    10
Other
1    1    1

December 31, 2009
1,226    317    8,571    –319    13    –11    –1,320    8,477    14    8,491
Note reference
(21 ) (21 ) (21 )
Statement of
Comprehensive Income
   (21 ) (4 )
January 1, 2012
1,228    419    12,448    –19    9    –27    –1,377    12,681    8    12,689
Profit after tax
1,811    1,811    2    1,813    2,803    2,803    2,803
Other comprehensive income
–21    188    3    –16    154    154    –8    –217    13    47    –165    –165
Comprehensive income
0    0    1,790    188    3    –16    0    1,965    2    1,967    2,795    –217    13    47    2,638    2,638
Share-based payments
2    2    2    41    41    41
Dividends
–594    –594    –594    –1,310    –1,310    –1,310
Issuance of shares under share-based payments programs
1    23    24    24
Issuance of shares under share-based payments
1    14    15    15
Purchase of treasury shares
–220    –220    –220    –53    –53    –53
Reissuance of treasury shares under share-based payments programs
–5    158    153    153
Other
0    1    1
Reissuance of treasury shares under share-based payments
18    93    111    111
Other changes
2    2    2

December 31, 2010
1,227    337    9,767    –131    16    –27    –1,382    9,807    17    9,824
December 31, 2012
1,229    492    13,934    –236    22    20    –1,337    14,125    8    14,133
Profit after tax
3,438    3,438    1    3,439    3,326    3,326    –1    3,325
Other comprehensive income
–7    112    –7    0    98    98    13    –584    60    0    –511    –511
Comprehensive income
0    0    3,431    112    –7    0    0    3,536    1    3,537    3,339    –584    60    0    2,815    –1    2,814
Share-based payments
9    9    9    30    30    30
Dividends
–713    –713    –713    –1,013    –1,013    –1,013
Issuance of shares under share-based payments programs
1    46    47    47
Purchase of treasury shares
–246    –246    –246
Reissuance of treasury shares under share-based payments programs
27    251    278    278
Change in non-controlling interests
–19    –19    –10    –29
Reissuance of treasury shares under share-based payments
29    57    86    86

December 31, 2011
1,228    419    12,466    –19    9    –27    –1,377    12,699    8    12,707
December 31, 2013
1,229    551    16,258    –820    82    20    –1,280    16,040    8    16,048
Profit after tax
3,280    3,280    0    3,280
Other comprehensive income
–23    1,186    128    –28    1,263    1,263
Comprehensive income
3,257    1,186    128    –28    4,543    0    4,543
Share-based payments
34    34    34
Dividends
–1,194    –1,194    –1,194
Reissuance of treasury shares under share-based payments
29    56    85    85
Additions from business combinations
0    86    86
Other changes
–4    –4    0    –4

December 31, 2014
1,229    �� 614    18,317    366    210    –8    –1,224    19,504    94    19,598
The accompanying Notes are an integral part of these Consolidated Financial Statements.
SAP AGSE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP
~~as at~~for the years ended December 31,

Note (Unaudited)
2011⁽¹⁾ 2011 2010 2009
US$ € € €
millions

Profit after tax
4,461    3,439    1,813    1,750
Adjustments to reconcile profit after tax to net cash provided by operating activities:

Depreciation and amortization
(16),(17 ) 939    724    534    499
Income tax expense
(11 ) 1,724    1,329    525    685
Financial income, net
(10 ) 49    38    67    80
Decrease/increase in sales and bad debt allowances on trade receivables
–23    –18    –49    64
Other adjustments for non-cash items
18    14    29    3
Decrease/increase in trade receivables
–553    –426    –123    593
Decrease/increase in other assets
–77    –59    –122    209
Decrease/increase in trade payables, provisions and other liabilities
–493    –380    1,116    –124
Decrease/increase in deferred income
157    121    66    48
Cash outflows due to TomorrowNow litigation
(24 ) –67    –52    –102    –19
Interest paid
–180    –139    –66    –69
Interest received
119    92    52    22
Income taxes paid, net of refunds
–1,178    –908    –818    –722
Net cash flows from operating activities
4,897    3,775    2,922    3,019
Business combinations, net of cash and cash equivalents acquired
(4 ) –244    –188    –4,194    –73
Purchase of intangible assets and property, plant, and equipment
–577    –445    –334    –225
Proceeds from sales of intangible assets or property, plant and equipment
71    55    44    45
Purchase of equity or debt instruments of other entities
–2,654    –2,046    –842    –1,073
Proceeds from sales of equity or debt instruments of other entities
1,814    1,398    1,332    1,027
Net cash flows from investing activities
–1,590    –1,226    –3,994    –299
Purchase of non-controlling interests
–36    –28    0    0
Dividends paid
(22 ) –925    –713    –594    –594
Purchase of treasury shares
(22 ) –319    –246    –220    0
Proceeds from reissuance of treasury shares
326    251    127    24
Proceeds from issuing shares (share-based compensation)
60    46    23    6
Proceeds from borrowings
673    519    5,380    697
Repayments of borrowings
–1,304    –1,005    –2,196    –2,303
Net cash flows from financing activities
–1,526    –1,176    2,520    –2,170
Effect of foreign currency exchange rates on cash and cash equivalents
96    74    186    54
Net decrease/increase in cash and cash equivalents
1,877    1,447    1,634    604
Cash and cash equivalents at the beginning of the period
(22 ) 4,564    3,518    1,884    1,280
Cash and cash equivalents at the end of the period
(22 ) 6,441    4,965    3,518    1,884
Notes (Unaudited)
2014⁽¹⁾ 2014 2013 2012
US$ € € €
millions
Profit after tax
3,969    3,280    3,325    2,803
Adjustments to reconcile profit after tax to net cash flows provided by operating activities:

Depreciation and amortization
(16), (17 ) 1,222    1,010    951    863
Income tax expense
(11 ) 1,301    1,075    1,071    993
Financial income, net
(10 ) 30    25    66    72
Decrease/increase in sales and bad debt allowances on trade receivables
57    47    42    –25
Other adjustments for non-cash items
103    85    57    31
Decrease/increase in trade and other receivables
–346    –286    –110    –298
Decrease/increase in other assets
–416    –344    –131    –23
Decrease/increase in trade payables, provisions, and other liabilities
693    573    –176    420
Decrease/increase in deferred income
19    16    125    154
Cash outflows due to TomorrowNow and Versata litigation
(24 ) –672    –555    –1    7
Interest paid
–157    –130    –159    –165
Interest received
71    59    67    92
Income taxes paid, net of refunds
–1,641    –1,356    –1,295    –1,102
Net cash flows from operating activities
4,234    3,499    3,832    3,822
Business combinations, net of cash and cash equivalents acquired
–7,697    –6,360    –1,160    –6,068
Cash payments for derivative financial instruments related to business combinations
–135    –111    0    –26
Total cash outflows for business combinations, net of cash and cash equivalents acquired
(4 ) –7,832    –6,472    –1,160    –6,094
Purchase of intangible assets and property, plant, and equipment
–892    –737    –566    –541
Proceeds from sales of intangible assets or property, plant, and equipment
56    46    55    39
Purchase of equity or debt instruments of other entities
–1,101    –910    –1,531    –1,022
Proceeds from sales of equity or debt instruments of other entities
1,008    833    1,421    1,654
Net cash flows from investing activities
–8,761    –7,240    –1,781    –5,964
Dividends paid
(22 ) –1,445    –1,194    –1,013    –1,310
Purchase of treasury shares
(22 ) 0    0    0    –53
Proceeds from reissuance of treasury shares
62    51    49    90
Proceeds from issuing shares (share-based payments)
0    0    0    15
Proceeds from borrowings
9,079    7,503    1,000    5,778
Repayments of borrowings
–2,495    –2,062    –1,625    –4,714
Net cash flows from financing activities
5,201    4,298    –1,589    –194
Effect of foreign currency rates on cash and cash equivalents
28    23    –191    –152
Net decrease/increase in cash and cash equivalents
702    580    271    –2,488
Cash and cash equivalents at the beginning of the period
(22 ) 3,325    2,748    2,477    4,965
Cash and cash equivalents at the end of the period
(22 ) 4,027    3,328    2,748    2,477

⁽¹⁾
The ~~2011~~2014 figures have been translated solely for the convenience of the reader at an exchange rate of US$~~1.2973~~1.2101 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December ~~30, 2011.~~31, 2014.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
SAP AGSE AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) ~~GENERAL INFORMATION ABOUT CONSOLIDATED FINANCIAL STATEMENTS~~General Information about Consolidated Financial Statements
The accompanying Consolidated Financial Statements of SAP AGSE and its subsidiaries (collectively, “we,” “us,” “our,” “SAP,” “Group,” and “Company”) have been prepared in accordance with International Financial Reporting Standards (IFRS). The designation “IFRS” includes all standards issued by the International Accounting Standards Board (IASB) and related interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).
We have applied all standards and interpretations that were effective on and endorsed by the European Union (EU) as at December 31, ~~2011.~~2014. There were no standards or interpretations impacting our Consolidated Financial Statements for the years ended December 31, ~~2011, 2010,~~2014, 2013, and ~~2009,~~2012, that were effective but not yet endorsed. Therefore our Consolidated Financial
Statements comply with both IFRS as issued by the ~~IASB~~International Accounting Standards Board (IASB) and with IFRS as endorsed by the EU.
With effect from July 7, 2014, SAP AG was converted to a European Company (Societas Europaea, SE), and since this date, that company’s legal name is SAP SE.
Our Executive Board approved the Consolidated Financial Statements on
February ~~23, 2012,~~19, 2015, 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~~Scope of Consolidation
~~The Consolidated Financial Statements include SAP AG and all subsidiaries of SAP AG. Subsidiaries are all entities that are controlled directly or indirectly by SAP AG.~~
The financial statements of SAP AG and its subsidiaries used in the preparation of the Consolidated Financial Statements have December 31 as their reporting date. All financial statements were prepared applying the same IFRS Group accounting policies. Intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the SAP Group are eliminated in full.

The following table summarizes the changes in the number of entities included in the Consolidated Financial Statements.
Entities Consolidated in the Financial Statements

   German    Foreign      Total    German    Foreign      Total
December 31, 2009
   19       144         163
December 31, 2012
   22       245         267
Additions
   4       58         62       1       24         25
Disposals
   –2       –20         –22       –1       –19         –20
December 31, 2010
   21       182         203
December 31, 2013
   22       250         272
Additions
   4       9         13       2       56         58
Disposals
   –2       –15         –17       –2       –41         –43
December 31, 2011
   23       176         199
December 31, 2014
   22       265         287

The additions relate to legal entities added in connection with acquisitions and foundations. The disposals are due to ~~sales,~~ mergers and liquidations of ~~consolidated or acquired~~ legal entities.
~~In 2010, we acquired Sybase, which is significant to some positions in our financial~~
statements and may affect comparability of our 2011 Consolidated Financial Statements with our 2010 and 2009 Consolidated Financial Statements. For more information about our business combinations and the effect on our Consolidated Financial Statements, see Note (4).
(3) ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Summary of Significant Accounting Policies

(3a) Bases of Measurement
The Consolidated Financial Statements have been prepared on the historical cost basis except for the following:

Derivative financial instruments, available-for-sale financial assets, ~~(except for investments in certain equity instruments without a quoted market price),~~ and liabilities for cash-settled share-based ~~payment arrangements~~payments are measured at fair value.

~~Foreign exchange receivables~~Monetary assets and ~~payables~~liabilities denominated in foreign currencies are translated at period-end exchange rates.
~~Pensions~~Post-employment benefits are measured according to IAS ~~19(Employee~~19 (Employee Benefits) as described in Note (19a).
Where applicable, information about the methods and assumptions used in determining the respective measurement bases ~~and fair values~~ is disclosed in the Notes specific to that asset or liability.

(3b) Relevant Accounting Policies
Reclassifications
We have modified the revenue section of our consolidated income statement to emphasize the combination of our cloud business and our core on-premise business. With this modification, only the order and subtotals were changed; the content of line items remained unchanged. Software andsoftware-related service revenue now starts with the line item cloud subscriptions and support and is followed by line items software and support of our on-premise activities. The software and cloud subscriptions subtotal was deleted and a new sum for software and support was added. Comparative amounts for prior periods presented have been reclassified accordingly to conform to the current presentation.
Additionally, we have changed the classification of the expenses resulting from the Versata litigation in our consolidated income statements from cost of software and software-related services to the TomorrowNow litigation line item and renamed this line item to TomorrowNow and Versata litigation. Prior-year amounts have been adjusted accordingly (2013: €31 million, 2012: –€2 million). We believe that this reclassification helps the comparability of our ongoing operating performance across periods. For more information about this litigation, see Note (24).
We have reclassified our provisions for share-based payments from other provisions to other non-financial liabilities. Prior year amounts (December 31, 2013: €445 million) have been reclassified accordingly. We believe that a classification as other non-financial liabilities reflects the substance of this particular liability more appropriately than a classification under other provisions.
Starting from 2014, we present cash payments for derivative financial instruments related to business combinations separately in our consolidated statement of cash flows. Prior year amounts (2013: €0 million; 2012: €26 million) have been reclassified accordingly. This reclassification improves the transparency of the cash flows for business combinations.
Business Combinations and Goodwill
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred. The consideration transferred in an acquisition is measured at the fair value of the assets transferred and liabilities incurred at the date of transfer of control. Settlements of pre-existing relationships are not included in the consideration transferred. Such amounts are recognized in profit and loss. Identifiable assets acquired and liabilities assumed in a business combination (including contingent consideration) are measured at their fair values at the acquisition date. Changes in contingent consideration classified as a liability at the acquisition date are recognized in profit and loss. We decide on a transaction-by-transaction basis
whether to measure the ~~noncontrolling~~non-controlling interest in the acquiree ~~either~~ at fair value or at the proportionate share of the acquiree’s identifiable net assets. ~~Where a business combination is achieved~~Acquisition-related costs are accounted as expense in ~~stages SAP recognizes~~ the ~~gain or loss from remeasuring~~periods in which the ~~equity interest to fair value in finance income. Acquisition-related~~ costs are incurred and the services are ~~expensed and included in~~received, with the expense being classified as general and administration ~~expenses.~~
~~The excess of the consideration transferred in a business combination over the fair value of the SAP share of the identifiable net assets acquired is recorded as goodwill.~~
~~In respect to at-equity investments, the carrying amount of goodwill is included in the carrying amount of the investment.~~expense.
Foreign Currencies
~~Assets~~Income and ~~liabilities~~expenses and operating cash flows of our foreign subsidiaries that use a functional currency other than the euro are translated at ~~the closing rate at the date of the Statement of Financial Position. Income and expenses are translated at~~ average rates of exchange computed on a monthly basis. ~~All~~Exchange differences resulting ~~exchange differences~~from foreign currency transactions are recognized in other comprehensive income. Exchange differences from monetary items denominated in foreign currency transactions that are part of a long-term investment are also included in other comprehensive income in our Consolidated Statements of Financial Position. When a foreign operation is disposed of, liquidated, or abandoned, the foreign currency translation adjustments applicable to that entity are reclassified from other comprehensive income to profit or loss.
On initial recognition, foreign currency transactions are recorded in the respective functional currencies of Group entities by applying to the foreign currency amount the exchange rate at the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies are remeasured at the period-end closing rate. Resulting exchange differences are recognized, in the period in which they arise, in other non-operating income/expense, ~~net in the Consolidated Income Statements.~~
Operating cash flows of foreign subsidiaries are translated into euros using average rates of exchange computed on a monthly basis. Investing and financing cash flows of foreign subsidiaries are translated into euros using the exchange rates in effect at the time of the respective transaction. The effect of exchange rate changes on cash is reported in a separate line in the Consolidated Statements of Cash Flows.
Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition are treated as assets and liabilities of the foreign operation and translated at the respective closing rates.net.

The exchange rates of key currencies affecting the Company were as follows:
Exchange Rates

      Closing Rate as at December 31,    Annual Average Exchange Rate       Closing Rate as at December 31    Annual Average Exchange Rate
Equivalent to €1       2011    2010    2011    2010    2009       2014    2013    2014    2013    2012
U.S. dollar
   USD    1.2939       1.3362       1.3863       1.3201       1.3962       USD       1.2141       1.3791       1.3198       1.3301       1.2862
Pound sterling
   GBP    0.8353       0.8608       0.8656       0.8570       0.8901       GBP       0.7789       0.8337       0.8037       0.8482       0.8104
Japanese yen
   JPY    100.20       108.65       110.17       115.07       130.66       JPY       145.23       144.72       140.61       130.21       103.05
Swiss franc
   CHF    1.2156       1.2504       1.2299       1.3699       1.5097       CHF       1.2024       1.2276       1.2132       1.2302       1.2055
Canadian dollar
   CAD    1.3215       1.3322       1.3739       1.3583       1.5832       CAD       1.4063       1.4671       1.4645       1.3710       1.2843
Australian dollar
   AUD    1.2723       1.3136       1.3436       1.4198       1.7394       AUD       1.4829       1.5423       1.4650       1.3944       1.2419
Revenue Recognition
Classes of Revenue
We derive our revenue from fees charged to our customers for (a) the ~~sale or license~~use of our hosted cloud offerings, (b) licenses to our on-premise software products and of(c) support, ~~subscription,~~ consulting, customer-specificon-premise software development arrangements, training, and other services. ~~The vast majority of our software arrangements include support services, and many also include professional services and other elements.~~
Software and software-related service revenue, as ~~shown~~presented in our Consolidated Income Statements, is the sum of our ~~software revenue, support revenue, and revenue from subscriptions,~~ cloud subscriptions and support revenue, our software revenue and our support revenue.
Revenue from cloud subscriptions and support represents fees earned from providing customers with:
Software-as-a-Service (SaaS), that is, a right to use 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
Additional premium support beyond the regular support which is embedded in the basic cloud subscription fees, or
Hosting services and related application management 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.
Software revenue represents fees earned from the sale or license of software to customers for use on the customer’s premises, in other ~~software-related services.~~ words, where the customer has the right to take possession of the software for installation on the customer’s premises (on-premise software). Software revenue includes revenue from both, the sale of our standard software products and customer-specific on-premise software development agreements.
Support revenue represents fees earned from providing customers with unspecified future software updates, upgrades, and 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 and software-related service revenue or within cost of software and software-related services the amounts attributable to technical support services and unspecified software upgrades, updates, and enhancements.
Professional services and other service revenue as ~~shown~~presented in our Consolidated Income Statements is the sum of our consulting revenue and other service revenue. ~~Other~~
Revenue from consulting contracts primarily represents fees earned from providing customers with consulting services which primarily relate to the installation and configuration of our cloud subscriptions and on-premise software products.
Revenue from other services mainly represents fees earned from providing customers with training services, and messaging services (primarily transmission of electronic text messages from one mobile phone provider to another).
We account for out-of-pocket expenses invoiced by SAP and reimbursed by customers as cloud subscription and support, support, consulting, or other service revenue, ~~as shown in our Consolidated Income Statements mainly consists~~depending on the nature of the service for which the out-of-pocket expenses were incurred.
Timing of Revenue Recognition
We do not start recognizing revenue from customer arrangements before evidence of an arrangement exists and the amount of revenue ~~from training services, messaging services,~~ and ~~SAP marketing events. Revenue information by segment~~associated costs can be measured reliably, and ~~geographic region~~collection of the related receivable is ~~disclosed in Note (29).~~
probable. 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 collectability becomes unlikely before all revenue from an arrangement is recognized, we recognize revenue only to the extent of the fees that are successfully collected unless collectability becomes reasonably assured again. If a customer is specifically identified as a bad debtor, we stop recognizing revenue from the customer except to the extent of the fees that have already been collected.
We account for out-of-pocket expenses invoiced by SAP and reimbursed by customers as support, consulting, or training revenue, depending on the nature of the service for which the out-of-pocket expenses were incurred.

~~Software~~Cloud subscription and support revenue ~~represents fees earned from~~is recognized as the ~~sale or license of software~~services are performed. Where a periodical fixed fee is agreed for the right to ~~customers.~~ 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.
Revenue from the sale of perpetual licenses of our standard on-premise software products is recognized ~~in line with~~upon delivery of the ~~requirements for selling goods stated in IAS 18 (Revenue)~~software, that is, when ~~evidence of an arrangement exists, delivery~~the customer has ~~occurred, the risks and rewards of ownership have been transferred~~access to the customer, the amount of revenue and associated costs can be measured reliably, and collection of the related receivable is reasonably assured. The sale is recognized net of returns and allowances, trade discounts, and volume rebates. We usually sell or license software on a perpetual basis.
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 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 revenue based on the residual method once the basic criteria described above have been met.
In general, our on-premise software license agreements do not include acceptance-testing provisions. 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.
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.
~~Sometimes we enter into~~Software revenue from customer-specific on-premise software development ~~agreements. We recognize software~~agreements that qualify for revenue ~~in connection with these arrangements~~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. ~~If we do not have a sufficient basis to reasonably~~
measure the progress of completion or to estimate the total contract revenue and costs, revenue is recognized only to the extent of the contract costs incurred for which we believe recoverability to be probable. When it becomes probable that total contract costs exceed total contract revenue in an arrangement, the expected losses are recognized immediately as an expense based on the costs attributable to the contract.
~~Support revenue represents fees earned from providing customers with unspecified future~~On-premise software updates, upgrades, and enhancements, and technical product support. We recognize support revenue for most of our services ratably over the term of the support arrangement. We do not separately sell technical product support or unspecified software upgrades, updates, and enhancements. Accordingly, we do not distinguish within software and software-related service revenue or within cost of software and software-related services the amounts attributable to technical support services and unspecified software upgrades, updates, and enhancements.
~~Subscription and other software-related service revenue represents fees earned from~~ subscription ~~and software rental arrangements, cloud subscriptions and support, and other software-related services. Subscription~~ contracts combine software and support service elements, as under these contracts the customer is provided with current software products, rights to receive unspecified future software products, and rights to product support ~~services~~ during the on-premise software subscription term. ~~Customers~~Typically, customers pay a periodic fee for a defined subscription term, and
we recognize such fees ratably over the term of the arrangement beginning with the delivery of the first product. Revenue from on-premise software subscription contracts is allocated to the software revenue and support revenue line items in our Consolidated Income Statements.
~~Software~~On-premise software rental contracts also combine software and support service elements. Under such contracts, the customer is provided with current software products and product support, but not with the right to receive unspecified future software products. Customers typically pay a periodic fee over the rental ~~term and we~~term. We recognize fees from software rental contracts ratably over the term of the arrangement.
Revenue from ~~cloud subscriptions relates~~rental contracts is allocated to ~~software hosting arrangements that provide the customer with the right to use certain software functionality, but do not include the right to terminate the hosting contract and take possession of~~ the software ~~without significant penalty. Cloud subscription~~ revenue ~~as well as~~and support revenue ~~from~~line items in our Consolidated Income Statements.
We recognize support revenue based on our performance under the support arrangements. Under our major support services, ~~provided for~~ our ~~cloud offerings~~performance obligation is ~~generally recognized~~to stand ready to provide technical product support and to provide unspecified updates, upgrades and enhancements on a when-and-if-available basis. For these support services, we recognize revenue ratably over the term of the support arrangement.
~~Other software-related service revenue mainly results from software-related revenue-sharing agreements with other software vendors.~~
We recognize ~~consulting~~professional services and other service revenue ~~when~~as the services are ~~performed. Consulting revenue primarily results from implementation contracts to install and configure our software products.~~rendered. Usually, our consulting contracts do not involve significant production, modification, or customization of software and the related revenue is recognized as the services are ~~recognized~~provided using the percentage-of-completion method of ~~accounting as outlined above.~~
~~Other service revenue consists of fees from training services, cancelable hosting contracts, application management services (AMS),~~accounting. For messaging services, ~~revenue from SAP marketing events, and referral fees.~~
~~Training services provide educational services to customers and partners regarding~~we measure the ~~use~~progress of our software products. We recognize training revenue when the services are rendered. Cancelable hosting contracts allow the customer to terminate a software hosting arrangement at any time and to take possession of the hosted software without significant penalty. In these contracts revenue is allocated to the hosting element and to the software element. The hosting revenue is recognized ratably over the agreed hosting period. Our AMS contracts provide post-implementation application support, optimization, and improvements to a customer’s IT solution. We recognize revenue from AMS services when the services are rendered. Messaging revenue mainly represents fees earned from transmitting electronic text messages from one mobile phone provider to another. We recognize revenue from message
~~services~~service rendering based ~~upon~~on the number of messages successfully processed and ~~delivered. Revenue from~~delivered except for fixed-price messaging arrangements, for which revenue is recognized ratably over the contractual term of the arrangement.
Measurement of Revenue ~~from marketing events hosted by SAP, for which SAP sells tickets to its customers,~~
Revenue is recognized ~~after the marketing event takes place. Fees from referral services are commissions from partners to which we have referred customers.~~
~~The vast majority~~net of ~~our software arrangements form multiple-element arrangements, as they include support services,~~returns and ~~many also include professional services~~allowances, trade discounts, and other elements. As authorized by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8), we follow the guidance provided by FASB ASC Subtopic 985-605, Software Revenue Recognition, as amended, in order to determine the recognizable amount of license revenue in multiple-element arrangements. Revenue from multiple-element arrangements is recognized using the residual method of revenue recognition when company-specific objective evidence of fair value exists for all of the undelivered elements (for example, support services, consulting services, or other services) in the arrangement, but does not exist for one or more delivered elements (generally software). We determine the fair value of and allocate revenue to each undelivered element based on its company-specific objective evidence of fair value, which is the price charged 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. We allocate revenue to undelivered support services based on 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 the customer. The vast majority of our customers renew their annual support service contracts at these rates. We allocate revenue to future incremental discounts whenever customers are granted the right to license additional software at a higher discount than the one given within the initial
~~software license arrangement, or to purchase or renew support or services at rates below company-specific objective evidence of fair value of the service.~~
We defer revenue for all undelivered elements and recognize the residual amount of the arrangement fee attributable to the delivered elements, if any, when the revenue recognition criteria described above have been met and company-specific objective evidence of fair value for the undelivered elements exists.
~~Combining or segmenting multiple-element arrangements consisting of software and consulting or other professional services depends on:~~
~~Whether the arrangement involves significant production, modification, or customization of the software, and~~
~~Whether the services are not available from third-party vendors and are therefore deemed essential to the software.~~
If neither of the above is the case, revenue for the software element and the other element is recognized separately. In contrast, if one or both of the above is the case, the elements of the arrangement are combined and accounted for as a single unit of accounting, and the entire arrangement fee is recognized using the percentage-of-completion method as outlined above. If the arrangement includes multiple elements, we exclude those elements from contract accounting that meet the criteria for separate recognition (for example support services or training), provided that the elements have stand-alone value.volume rebates.
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 ~~the~~that benefit is reasonably estimable.
Multiple-Element Arrangements
We combine two or more customer contracts with the same customer and account for the contracts as a single contract if the contracts are negotiated as a package or otherwise linked. Thus, the majority of our contracts that contain cloud offerings or on-premise software also include other goods or services (multiple-element arrangements).
We account for the different goods and services promised under our customer contracts as separate units of account (distinct deliverables) unless:
The contract involves significant production, modification, or customization of the cloud subscription or on-premise software and
The services are not available from third-party vendors and are therefore deemed essential to the cloud subscription or on-premise software.
Goods and services that do not qualify as distinct deliverables are combined into one unit of account (combined deliverables).
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.
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 is determined as follows:
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 the customer. The majority of our customers renew their annual support service contracts at these rates.
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:
i) substantive renewal rates contained within an arrangement for cloud subscription deliverables; and
ii) gross margin objectives and internal costs for services.
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 FASB ASC Subtopic 985-605 (Software Revenue Recognition), where applicable, as authorized by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors).
We consider FASB ASC 985-605 in our accounting for options that entitle the customer to purchase, in the future, additional on-premise software. 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 Software and Software-Related Services
Cost of software and software-related services includes the cost incurred in producing
the goods and providing the services that generate software and software-related service revenue. Consequently, this line item includes primarily employee expenses relating to these services, amortization of acquired intangibles, fees for third-party licenses, shipping and ramp-up ~~cost, etc.~~cost.
Cost of Professional Services and Other Services
Cost of professional services and other services includes the cost incurred in providing the services that generate professional service and other service revenue including messaging revenues. The item also includes sales and marketing expenses related to our professional services and other services that result from sales and marketing efforts that cannot be clearly separated from providing the services.
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.
Development activities involve the application of research findings or other knowledge to a plan or design of new or substantially improved software products before the start of commercial use. Development expenditures are capitalized only if all of the following criteria are met:
~~The development cost can be measured reliably.~~
~~The product is technically and commercially feasible.~~
~~Future economic benefits are probable.~~
~~We intend to complete development and market the product.~~
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, ~~all~~ 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 solutions, software-related service portfolio, and ~~messaging~~cloud business.
General and Administration
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.
~~Leases~~Accounting for Uncertainties in Income Taxes
We ~~are a lessee of property, plant,~~recognize current and ~~equipment, mainly buildings, hardware, and vehicles, under operating leases that do not transfer~~deferred tax liabilities or assets for uncertainties in income taxes according to ~~us the substantive risks and rewards of ownership. Rent expense~~IAS 12 based on ~~operating leases is recognized on a straight-line basis over the life~~our best estimate of the ~~lease including renewal terms~~most likely amount if ~~at inception of the lease, renewal is reasonably assured.~~
Some of our operating leases contain lessee incentives, such as up-front payments of costs or free or reduced periods of rent. The incentives are amortized over the life of the lease and the rent expense is recognized on a straight-line basis over the life of the lease. The same applies to contractually-agreed future increases of rents.
~~Income Tax~~
Deferred taxes are accounted for under the liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Statements of Financial Position and their respective tax bases and on the carryforwards of unused tax losses and unused tax credits. Deferred tax assets are recognized to the extent that it is probable that ~~future taxable income~~we will ~~be available against which~~have to pay the
~~deductible temporary differences, unused tax losses, and unused tax credits can be utilized.~~
~~Deferred tax assets and liabilities are measured at~~ amount to, or recover the amount from, the tax ~~rates~~authorities, assuming that ~~are expected~~the tax authorities will examine the amounts reported to ~~apply to the period when the asset is realized or the liability is settled, based on tax rates~~them and ~~tax laws that~~ have ~~been enacted or substantively enacted by the end~~full knowledge of the reporting period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss, unless related to items directly recognized in equity, in the period that includes the respective enactment date.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all ~~of the deferred tax assets to be utilized.~~relevant information.
Share-Based ~~Compensation~~Payments
Share-based ~~compensation covers~~payments cover cash-settled and equity-settled awards issued to our employees. The ~~fair values of both equity-settled and cash-settled awards~~respective expenses are ~~measured at grant date using an option-pricing model.~~
~~The fair value of equity-settled awards is not subsequently remeasured. The grant-date fair value of equity-settled awards is~~ recognized as ~~personnel expense~~employee benefits expenses and classified in ~~profit or loss over~~our consolidated income statements according to the ~~period in which~~activities that the employees ~~become unconditionally entitled to~~owning the ~~rights, with a corresponding increase in share premium. The amount recognized as an expense is adjusted to reflect the actual number of equity-settled~~ awards ~~that ultimately vest.~~ perform.
We grant our employees discounts on certain share-based ~~compensation plans.~~payments. Since those discounts are not dependent on future services to be provided by our employees, the discount is recognized as an expense when the rights are granted.
For the share-based payment plans that are settled by paying cash rather than by issuing equity instruments, a provision is recorded for the rights granted reflecting the vested portion of the fair value of the rights at the reporting date. Personnel expense is accrued over the period the
beneficiaries are expected to perform the related service (vesting period), with a corresponding increase in provisions. Cash-settled awards are remeasured to fair value at each Statement of Financial Position date until the award is settled. Any changes in the fair value of the provision are recognized as personnel expense in profit or loss. The amount of unrecognized compensation expense related to non-vested share-based payment arrangements granted under our cash-settled plans is dependent on the final intrinsic value of the awards. The amount of unrecognized compensation expense is dependent on the future price of our common shares which we cannot reasonably predict.
~~In the event~~Where we hedge our exposure to cash-settled awards, changes in the fair value of the respective hedging instruments are also recognized as ~~personnel expense~~employee benefits expenses in profit or loss. The fair values for ~~hedged programs~~hedging instruments are based on market data reflecting current market expectations.
For more information about our share-based ~~compensation plans,~~payments, see Note (28).
~~Other Components of Equity~~
~~Other components of equity include:~~
Currency effects arising from the translation of the financial statements of our foreign operations as well as the currency effects from intercompany long-term monetary items for which settlement is neither planned nor likely to occur in the foreseeable future.
~~Unrealized gains and losses on available-for-sale financial assets.~~
~~Gains and losses on cash flow hedges comprising the net change in fair value of the effective portion of the respective cash flow hedges that have not yet impacted profit or loss.~~
~~Treasury Shares~~
~~Treasury shares are recorded at acquisition cost and are presented as a deduction from total~~
equity. Gains and losses on the subsequent reissuance of treasury shares are credited or charged to share premium on an after-tax basis. On cancellation of treasury shares any excess of their carrying amount over the calculated par value is charged to retained earnings.
~~Non Controlling Interest~~
Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. Changes in non-controlling interest result from changes in equity of the respective subsidiary as well as changes in ownership. Upon a change in ownership the carrying amount of the controlling and non controlling interest is adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount of adjustment to non-controlling interest and the fair value of the consideration paid or received is recognized directly in retained earnings.
~~Earnings per Share~~
We present basic and diluted earnings per share (EPS). Basic earnings per share is determined by dividing profit after tax attributable to equity holders of SAP AG by the weighted average number of common shares outstanding during the respective year. Diluted earnings per share reflect the potential dilution that would occur if all “in the money” securities to issue common shares were exercised or converted. The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options is based on quoted market prices for the period during which the options were outstanding.
Financial Assets
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.
~~These assets~~ They are recognized and measured in accordance with IAS 39 (Financial Instruments: Recognition and Measurement ). Accordingly, financial assets are recognized in the Consolidated Statements of Financial Position if we have a contractual right to receive cash or other financial assets from another entity. Regular way purchases or sales of financial assets are recorded at the trade date. Financial assets are initially recognized at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Interest-free or below-market-rateclassified as loans and receivables, are initially measured at the present value of the expected future cash flows. The subsequent measurement depends on the classification of our financial assets to the following categories according to IAS 39:
Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are neither quoted in an active market nor intended to be sold in the near term. This category comprises trade receivables, receivables and loans included in otheravailable-for-sale financial assets, and cash and cash equivalents. We carry loans and receivables at amortized cost less impairment losses. Interest income from items assigned to this category is determined using the effective interest method if the time value of money is material. For further information on trade receivables see the Trade and Other Receivables section.
~~Available-for-sale~~ financial assets: Available-for-sale financial assets are non-derivative financial assets that are not assigned to either of the two other categories and mainly include equity investments and debt investments. If readily determinable from market data, available-for-sale financial assets are measured at fair value, with changes in fair value being reported net of tax in other comprehensive income. Fair value changes are not recognized in profit or loss until the assets are sold or impaired.
Available-for-sale financial assets for which no market price is available and whose fair value cannot be reliably estimated in the absence of an active market are carried at cost less impairment losses.
~~Financial assets at fair value through profit or loss: Financial~~ assets at fair value through profit or loss ~~comprise~~including only those ~~financial assets~~ that are held for trading, as we do not designate financial assets at fair value through profit or ~~loss on initial recognition. This category solely contains embedded~~loss.
Regular way purchases and ~~freestanding derivatives with positive fair values, except where hedge accounting is applied. All changes in the fair value~~sales of financial assets ~~in this category~~ are ~~immediately recognized in profit or loss. For more information about derivatives, see~~recorded at the ~~Derivatives section.~~trade date.
All financial assets not accounted for at fair value through profit or loss are assessed for impairment
at each reporting date or if we become aware of objective evidence of impairment as a result of one or more events that indicate that the carrying amount of the asset may not be recoverable. Objective evidence includes but is not limited to a significant or prolonged decline of the fair value below its carrying amount, a high probability of insolvency, or a material breach of contract by the issuer such as a significant delay or a shortfall in payments due. Impairment ~~charges~~losses in the amount of the difference ofbetween an asset’s carrying amount and the present value of the expected future cash flows or current fair value, respectively, are recognized in ~~finance~~Financial income, net. For available-for-sale financial assets ~~such~~which arenon-derivative financial assets that are not assigned to loans and receivables or financial assets at fair value through profit or loss, impairment ~~charges~~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. ~~Impairment losses are reversed if the reason for~~
~~the original impairment loss no longer exists. No such reversals are made for available-for-sale equity investments.~~
Income/expenses and gains/losses on financial assets consist of impairment ~~charges~~losses and reversals, interest income and expenses, dividends, and gains and losses from the disposal of such assets. Dividend income is recognized when earned. Interest income is recognized based on the effective interest method. Neither dividend nor interest income is included in net gains/losses at the time of disposal of an asset. Financial assets are derecognized when contractual rights to receive cash flows from the financial assets expire or the financial assets are transferred together with all material risks and benefits.
~~Investments in Associates~~
~~Companies in which we do not have a controlling financial interest, but over which we can exercise significant operating and financial influence (associates) are accounted for using the equity method.~~
Derivatives
~~We account for derivatives and hedging activities in accordance with IAS 39 at fair value.~~
Derivatives ~~without~~Not Designated ~~Hedge Relationship~~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. ~~For the hedging of~~To hedge currency risks inherent in ~~foreign currency~~foreign-currency denominated and recognized monetary assets and liabilities, we do not designate our held-for-trading derivative financial instruments as accounting hedges, asbecause the ~~realized~~ profits and losses from the underlying transactions are recognized in profit or loss in the same periods as the ~~realized~~ profits or losses from the derivatives.
In addition, we occasionally have contracts which contain foreign currency embedded derivatives to be accounted for separately.
~~Embedded~~ Derivatives Designated as Hedging Instruments
We ~~occasionally have contracts that require payment streams in currencies other than the functional currency of either party~~use derivatives to ~~the contract. Such embedded~~hedge foreign currency ~~derivatives are separated from the host contract~~risk or interest rate risk and ~~accounted for separately if the following are met:~~
~~The economic characteristics and risks of the host contract and the embedded derivative are not closely related.~~
~~A separate instrument with the same terms~~designate them as ~~the embedded derivative would meet the definition of a derivative.~~
~~The combined instrument is not measured at~~cash flow or fair value ~~through profit or loss.~~
~~Derivatives with Designated Cash Flow Hedge Relationship~~
~~Derivatives that are part of a hedging relationship that qualifies~~hedges if they qualify for hedge accounting under IAS 39 are carried at their fair value. We designate and document the hedge relationship, including the nature of the risk, the identification of the hedged item, the hedging instrument, and how we will assess the hedge effectiveness.39. The accounting for changes in fair value of the hedging instrument depends on the type of the hedge and the effectiveness of the hedging relationship. The effective portion of the unrealized gain or loss on the derivative instrument determined to be an effective hedge is recognized in other comprehensive income. We subsequently reclassify the portion of gains or losses from other comprehensive income to profit or loss when the hedged transaction affects profit or loss. The ineffective portion of gains or losses is recognized in profit or loss immediately. For more information about our hedges, see Note ~~(26)~~(25).
a) Cash Flow Hedge
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.
~~Valuation and Testing of Effectiveness~~
~~The fair value of our derivatives is calculated by discounting the expected future cash flows using relevant interest rates, and spot rates over the remaining lifetime of the contracts.~~
~~Gains or losses on~~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, ~~are recognized directly in other comprehensive income,~~ 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 immediately.~~loss.
b) Fair Value Hedge
We apply fair value hedge accounting for hedging certain of our fixed rate financial liabilities.
Valuation and Testing of Effectiveness
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 ~~(EURIBOR),~~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 ~~cash flows~~the designated components of the hedging ~~relationship components~~instrument will offset the impact of fluctuations of the underlying ~~forecasted transactions.~~hedged items.
The method of retrospectively testing effectiveness depends on the type of the hedge as described further below:
a) Cash Flow Hedge
Retrospectively, effectiveness is tested on a cumulative basis applying the ~~Dollar Offset Method~~dollar offset method by using the ~~Hypothetical Derivative Method.~~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%.
b) Fair Value Hedge
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 and the fair value change of the derivatives as the dependent variable is 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.
Trade and Other Receivables
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:

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.
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.
In our Consolidated Income Statements, expenses from recording bad debt allowances for a portfolio of trade receivables are classified as other operating income, net, whereas expenses from recording bad debt allowances for specific customer balances are classified as cost of software and software-related services or cost of professional services and other services, depending on the transaction from which the respective trade receivable results. Sales allowances are recorded as an offset to the respective revenue item.
Included in trade receivables are unbilled receivables related to fixed-fee and time-and-material consulting arrangements for contract work performed to date.
Other Non-Financial Assets
Other non-financial assets are recorded at amortized ~~cost, which approximates fair value due to their short-term nature.~~
cost. We capitalize ~~the discount~~sales commissions (direct and incremental costs incurred when obtaining a contract are considered to be contract cost) related to cloud and subscription deals as part of our ~~loans~~capitalized contract cost. Those assets are amortized over the non-cancelable contract term to ~~employees as prepaid expenses and release it ratably to personnel expenses.~~match them with the respective revenue stream.
Intangible Assets
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 our product offerings and in-process research and development. ~~Other~~Customer relationship and other intangibles consist primarily of customer contracts and acquired trademark ~~licenses and customer contracts.~~licenses.
~~Purchased~~All our purchased intangible assets ~~with~~other than goodwill have finite useful ~~lives~~lives. They are ~~recorded~~initially measured at acquisition cost and ~~are~~subsequently amortized either based on expected usage or on a straight-line basis over their estimated useful lives ranging from two to 1620 years. ~~All of~~
~~our intangible assets, with the exception of goodwill, have finite useful lives and are therefore subject to amortization.~~
~~We recognize~~Amortization for acquired in-process research and development ~~projects as an intangible asset separate from goodwill if a~~ project ~~meets the definition of an asset. Amortization for these intangible~~ 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.
Amortization expenses of intangible assets are classified as cost of software and software-related services, cost of professional services and other services, research and development, sales and marketing, and general and administration depending on their use.
Property, Plant, and Equipment
Property, plant, and equipment are carried at acquisition cost plus the fair value of related asset retirement costs if any and if reasonably
estimable, and less accumulated depreciation. Interest incurred during the construction of qualifying assets is capitalized and amortized over the related assets’ estimated useful lives.
Property, plant, and equipment are depreciated over their expected useful lives, generally using the straight-line method. ~~Land is not depreciated.~~

Useful Lives of Property, Plant, and Equipment

   Useful Lives of Property,
Plant, and Equipment
Buildings
   25 to 50 years
Leasehold improvements
   Based on the lease contract
Information technology equipment
   3 to 5 years
Office furniture
   4 to 20 years
Automobiles
   4 to 5 years

~~Leasehold improvements are depreciated using the straight-line method over the shorter of the term of the lease or the useful life of the asset. If a renewal option exists, the term used~~
~~reflects the additional time covered by the option if exercise is reasonably assured when the leasehold improvement is first put into operation.~~
Impairment of Goodwill and Non-Current Assets
We test goodwill for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of a cash-generating unit to which goodwill has been allocated to is less than its carrying value.
The recoverable amount of goodwill is estimated each year at the same time. The goodwill impairment test is performed at the level of our operating ~~segments~~segment since there are no lower levels in SAP at which goodwill is monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the operating segments that are expected to benefit from the synergies of the combination. If the carrying amount of the operating segment to which the goodwill is allocated exceeds the recoverable amount, an impairment loss on goodwill allocated to this operating segment is recognized. The recoverable amount is the higher of the operating segment’s fair value less cost to sell and its value in use. These values are generally determined based on discounted cash flow calculations. We determine the recoverable amount of a segment based on its value in use. Impairment losses on goodwill are not reversed in future periods if the recoverable amounts exceed the carrying amount.
We review non-current assets, such as property, plant, equipment, and acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Intangible assets not yet available for use are tested for impairment annually.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. If assets do not generate cash inflows that are
largely independent of those from other assets or groups of assets, the impairment test is not performed at an individual asset level; instead, it is performed at the level of the cash-generating unit (CGU) to which the asset belongs.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. The recoverable amount of an asset or its CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are ~~recognized~~presented in other operating ~~income,~~income/expense, net in profit or loss.
Impairment losses for non-current assets recognized in the prior periods are assessed at each reporting date for indicators that the loss has decreased or no longer exists. Accordingly, if there is an indication that the reasons that caused the impairment no longer exist, we would consider the need to reverse all or a portion of the impairment through profit or loss.
~~Contingent Assets~~
We carry insurance policies amongst others to offset the expenses associated with defending against litigation matters as well as other risks. To mitigate the risk of customer default, our trade receivables are partially covered by merchandise credit insurance. We recognize the respective reimbursements in profit or loss when it is virtually certain that the reimbursement will be received and retained by us.
Liabilities
Financial Liabilities
Financial liabilities include trade and other payables, bank loans, issued bonds, private placements and other financial liabilities which comprise derivative and non-derivative financial liabilities.
~~Financial liabilities~~ They are recognized and measured in accordance with IAS 39. Accordingly, they are recognized in the Consolidated Financial Statements if we have a contractual obligation to transfer cash or another financial asset to another party. Financial liabilities are initially recognized at fair value. In the case ofclassified as financial liabilities ~~not~~at amortized cost and at fair value through profit or loss this includes directly attributable transaction costs. If material, financial liabilities are discounted to present value based on prevailing market rates adjusted for credit risk, with the discount being recognized over time as interest expense.loss. The ~~subsequent measurement depends on the allocation of financial liabilities to the following categories according to IAS 39:~~
~~Financial liabilities at fair value through profit or loss~~latter include only ~~comprise~~ those financial liabilities that are held for trading, as we do not designate financial liabilities at fair value through profit or loss on initial recognition. This category solely contains embedded and other derivatives with negative fair values, except where hedge accounting is applied. All changes in the fair value of financial liabilities in this category are immediately recognized in profit or loss. ~~For more information about derivatives, see the Derivatives section.~~
~~Financial liabilities at amortized cost include all non-derivative financial liabilities not quoted in an active market which are measured at amortized cost using the effective interest method.~~
Expenses and gains/losses on financial liabilities consist of interest ~~expenses,~~expense, and gains and losses from the disposal of such liabilities. Interest expense is recognized based on the effective interest method.
~~Financial liabilities are derecognized when the contractual obligation is discharged, canceled or has expired.~~
~~Non-Financial Liabilities~~
Other non-financial liabilities with fixed or determinable payments that are not quoted in an active market are mainly the result of obligations to employees and fiscal authorities and are generally measured at amortized cost.
~~Provisions~~
~~Provisions are recorded when:~~
~~It is more likely than not that we have a legal or constructive obligation to third parties as a result of a past event.~~
~~The amount can be reasonably estimated.~~
It is probable that there will be an outflow of future economic benefits to settle the obligation, while there may be uncertainty about the timing or amount of the future expenditure required in the settlement.
We regularly adjust provisions as further information becomes available or circumstances change. Non-current provisions are reported at the present value of their expected settlement amounts as at the reporting date. Discount rates are regularly adjusted to current market interest rates.
Post-Employment Benefits
~~We measure~~The discount rates used in measuring our ~~pension-benefit~~post-employment benefit assets and liabilities are derived from rates available on high-quality corporate bonds and ~~other post-employment benefits based on actuarial computations using~~government bonds for which the ~~projected-unit-credit method in accordance with IAS 19.~~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 (19a). AsNet interest expense and other expenses related to defined benefit plans are recognized in employee expenses.
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 ~~actuarial calculation for each plan we recognize an asset or liability for the overfunded or underfunded status of the respective~~ defined benefit ~~plan. We classify a portion of the liability as current (determined on a plan-by-plan basis) if the~~liability’s carrying amount ~~by which the actuarial present value of benefits included in the benefit obligation payable within the next 12 months exceeds~~to the fair value of the qualifying plan assets. ~~Changes~~Such adjustments are recorded in ~~the amount of the defined benefit obligation or plan assets~~
resulting from demographic and financial data different than originally assumed and from changes in assumptions can result in actuarial gains and losses. We recognize all actuarial gains and losses directly in retained earnings.
SAP’s pension benefits are classified as defined contribution plans if the payment to a separate fund relieves SAP of all obligations from the pension plan. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit or loss when paid or due.
Certain of our foreign subsidiaries are required to provide termination indemnity benefits to their employees regardless of the reason for termination (retirement, voluntary, or involuntary). We treat these plans as defined benefit pension plans if the substance of the post-employment plan is a pension-type arrangement. Most of these arrangements provide the employee with a one-time payout based on compensation levels, age, and years of service ~~on termination independent of the reason (retirement, voluntary, or involuntary).~~cost.
Deferred Income
Deferred income is recognized as cloud subscription and support revenue, software revenue, support revenue, ~~subscription revenue,~~ consulting ~~revenue, development revenue, training~~ revenue, or other service revenue, depending on the reasons for the deferral, once the basic applicable revenue recognition criteria have been met. These criteria are met, for example, when the ~~related~~ services are performed or when the discounts that relate to a material right granted in a purchase option are ~~used.~~
~~Presentation in the Consolidated Statements of Cash Flows~~
~~We classify interest and taxes paid as well as interest and dividends received as cash flows from operating activities. Dividends paid are classified as financing activities.~~
~~Certain comparative amounts in the Consolidated Statement of Cash Flows have been reclassified to conform with the current~~applied.
~~year’s presentation. Such reclassifications are considered immaterial to the financial statements.~~
(3c) Management Judgments and Sources of Estimation Uncertainty
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.
We base our judgments, estimates, and assumptions on historical and forecast information, as well as 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 accounting policies that most frequently require us to make judgments, estimates, and assumptions, and therefore are critical to understanding our results of operations, ~~are:~~include the following:

Revenue recognition

Valuation of trade receivables

Accounting for share-based ~~compensation~~payments

Accounting for income tax

Accounting for business combinations

Subsequent accounting for ~~goodwill and~~ other intangibles
Determination of operating segments

Accounting for legal contingencies

Recognition of internally generated intangible assets from development
Our management periodically discusses these critical accounting policies with the Audit Committee of the Supervisory Board.
Revenue Recognition
As described in the Revenue Recognition section of Note (3b), we do not recognize revenue before ~~persuasive evidence of an arrangement exists, delivery has occurred, the risks and rewards of ownership have been transferred to the customer,~~ the amount of revenue can be measured reliably,
and collection of the related receivable is ~~reasonably assured.~~probable. 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.
~~In most~~The application of ~~our revenue-generating arrangements we sell to~~ the customer more than one product solution or service. Additionally, we have ongoing relationships with many of our customers and often enter into several transactions with the same customer within close proximity in time. We therefore have to determine:
~~Which arrangements with the same customer are to be accounted for as one arrangement~~
~~Which deliverables under one arrangement are to be accounted for separately~~
~~How to allocate the total arrangement fee to the individual elements of one arrangement~~
The determination of whether different arrangements with the same customer are to be accounted for as one arrangement is highly judgmental as it requires us to evaluate whether the arrangements are negotiated together or linked in any other way. The timing and amount
~~of revenue recognition can vary depending on whether two arrangements are accounted for separately or as one arrangement.~~
Under an arrangement including software and other deliverables, we do not account for the 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 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 software revenue which may otherwise have been recognized up front is recognized over the term of providing the essential deliverable.
We also do not account separately for different deliverables under an arrangement if we have no basis for allocating the overall arrangement fee to the different elements of the arrangement. We believe that such allocation basis exists if we can demonstrate for each undelivered element of the arrangement company-specific objective evidence of fair value as further defined in the Revenue Recognition section of Note (3b). Judgment is required in the determination of company-specific objective evidence of fair value which may impact the timing and amount of revenue recognized depending on:
~~Whether company-specific objective evidence of fair value can be demonstrated for the undelivered elements of a software arrangement~~
~~The approaches used to demonstrate company-specific objective evidence of fair value~~
~~Additionally, our revenue would be significantly different if we applied a revenue allocation policy other than the residual method.~~
~~Revenue from consulting, other professional services, and customer-specific software development projects is determined by applying the percentage-of-completion method.~~
~~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 and expenses reported.~~recognized. If we do not have a sufficient basis to measure the progress of completion or to estimate the total contract revenue and costs, revenue recognition is limited to the amount of contract costs incurred. The determination of whether a sufficient basis to measure the progress of completion exists is judgmental. Changes in estimates of progress towards completion and of contract revenue and contract costs are accounted for as cumulative catch-up adjustments to the reported revenue for the applicable contract.
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 contract
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 of one contract
The determination of whether different contracts with the same customer are to be accounted for as one contract is highly judgmental, 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 contract.
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 is inherently judgmental and requires the use of assumptions about customer defaults that could change significantly. Judgment is required when we evaluate available 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, too, is highly judgmental, as history may not be indicative of future ~~development, particularly in the global economic circumstances resulting from the recent global financial crisis.~~development. Changes in our estimates about the allowance for doubtful accounts could materially impact the reported assets and expenses in our financial statements, and our profit could be adversely affected if actual credit losses exceed our estimates. ~~To mitigate this risk, our trade receivables are~~
~~partially covered by merchandise credit insurance.~~
Accounting for Share-Based ~~Compensation~~Payments
~~As described in Note (28), we have issued both equity-settled as well as cash-settled share-based compensation plans.~~
We use certain assumptions in estimating the fair values for our share-based ~~compensation plans,~~payments, including expected future ~~stock~~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 these plans also depends on our share price at the respective exercise dates. All these assumptions may significantly impact the fair value determination and thus the amount and timing of our share-based compensation expenses. Furthermore, the fair values of the options granted under our 2009 Plan (SOP PP) are dependent on our performance against the Tech Peer Group Index (TechPGI) since grant date, the volatility and the expected correlation between the market price of this index, and our share price.payment expense.
For the purpose of determining the estimated fair value of our stock options, we believe expected volatility is the most sensitive assumption. Regarding future payout under the plans, the price of SAP’s shares ~~of SAP~~ will be the most relevant factor. ~~In respect to~~The fair values of the Restricted Share Units (RSUs) granted under our ~~plan granted in 2009 (SOP PP)~~Employee Participation Plan (EPP) and Long-Term Incentive Plan (LTI) 2015 depend on SAP’s share price directly after the announcement of the preliminary fourth quarter and full-year results for the last financial year of the respective performance period under the EPP (three-year holding period under the LTI 2015), ~~we believe that future payout will~~and thus may be significantly ~~impacted not only by our share price but also by~~above or below the ~~requirement to outperform the TechPGI.~~budgeted amounts. 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 about these plans, see Note (28).
Accounting for Income Tax
We conduct operations and earn income in numerous foreign countries and 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, 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, ~~judgments are~~judgment is necessary in determining our worldwide income tax provisions. We have made reasonable estimates about the ultimate resolution of our tax uncertainties based on current tax laws and our interpretation thereof. Such ~~judgments~~judgment can have a material effect on our income tax expense, income tax provision, and profit after tax.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized. This assessment requires management ~~judgments,~~judgment, estimates, and assumptions. 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 ~~judgments~~judgment regarding future taxable income ~~are~~is based on expectations of market conditions and other facts and circumstances. Any adverse change to the underlying facts or our estimates and assumptions could require ~~that we~~us to reduce the carrying amount of our net deferred tax assets.
For more information about our income tax, see Note (11).
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 at 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, among which are 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~~ Other Intangibles
As described in the Intangible Assets section in Note (3b), all our intangible assets other than goodwill have finite useful lives. Consequently, the depreciable amount of the intangible assets is ~~allocated~~
amortized on a systematic basis over their useful lives. Judgment is required ~~in:~~in determining the following:

The ~~determination of the~~ useful life of an intangible asset, as this determination is based on our estimates regarding the period over which the intangible asset is expected to produce economic benefits to us.

The ~~determination of 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 intangible assets, the outcome of these tests is highly dependent on management’s latest estimates and ~~goodwill, we use certain~~ assumptions ~~and estimates about~~regarding future cash ~~flows,~~flow projections and economic risks, which are complex and require significant judgment and assumptions about future developments. They can be affected by a variety of factors, including changes in our business strategy, our internal forecasts, and an estimate of our ~~weighted-average~~weighted average cost of capital. Due to these factors, actual cash flows and values could vary significantly from the forecasted future cash flows and related values derived using the discounted cash flow method. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, different assumptions and estimates could materially affect our financial position and profit.
~~The results~~Determination of goodwill impairment tests may depend on the allocation of goodwill to our operating segments. This allocation is judgmental as it is based on our estimates regarding which operating segments are expected to benefit from the synergies of the business combination.Operating Segments
We recorded no charges on our goodwill and no significant impairment charges on our intangible assets during 2011. Although we do not currently have an indication of any significant impairment, there can be no assurance that impairment charges will not occurSignificant judgment was involved in the ~~future. For more information, see Note (16).~~determination that SAP’s structure, after the reorganization in 2014, does not include units that meet the definition of an operating segment and that consequently SAP only has a single operating segment.
Accounting for Legal Contingencies
As described in Note (24), ~~currently~~ we are currently involved in various claims and legal proceedings. We review the status of each significant matter not less frequently than each quarter 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:~~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. Such revisions to our estimates of the potential obligations could have a material impact on our financial position and profit. The effects of changes in estimates of potential liabilities related to our legal contingencies had no material impact on our 2009 results. The change in the provision for the TomorrowNow litigation had a material impact on our 2010 and 2011 financial statements. For further information about ~~this case,~~legal contingencies, see Notes (19b) and (24).
Recognition of Internally Generated Intangible Assets from Development
Under IFRS, internally generated intangible assets from the development phase are recognized if certain conditions are met. These conditions include the technical feasibility, intention to complete, the ability to use or sell the asset under development, and the demonstration of how the asset will generate probable future economic benefits. The cost of a recognized internally generated intangible asset
comprises all directly attributable cost necessary to make the asset capable of being used as intended by management. In contrast, all expenditures arising from the research phase are expensed as incurred.
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 developments.

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.
We have determined that the conditions for recognizing internally generated intangible assets from our software development activities are not met until shortly before the developed products are available for sale. This assessment is monitored by us on a regular basis.

(3d) New Accounting Standards Adopted in the Current Period
~~The~~No new accounting standards adopted in ~~fiscal year 2011 did not have~~2014 had a material impact on our Consolidated Financial Statements.
(3e) New Accounting Standards ~~not yet~~Not Yet Adopted
~~A number of new standards, amendments to~~The standards and interpretations (relevant to the Group) that are issued, but not yet effective, ~~for~~up to the ~~year ended December 31, 2011, and have not been applied in preparing these Consolidated Financial Statements. None~~date of ~~these is expected to have a considerable effect on the Consolidated Financial Statements~~issuance of the Group’s financial statements are disclosed below. The Group ~~except for:~~intends to adopt these standards, if applicable, when they become effective:

~~Amendments~~On May 12, 2014, the IASB published amendments to ~~IFRS 7 (Financial Instruments: Disclosures) —Transfers of financial assets, which~~IAS 16 (Property, Plant and Equipment) and IAS 38 (Intangible Assets). The amendments become mandatory for ~~our 2012~~the Group’s 2016 Consolidated Financial Statements and ~~might result~~clarify that – in ~~additional disclosures.~~
~~Amendments~~general – the use of revenue-based methods to ~~IFRS 7 (Financial Instruments: Disclosures) — Offsetting financial assets and financial liabilities, which become mandatory~~calculate the depreciation/amortization is not appropriate (this presumption, however, can be rebutted in certain limited circumstances for our 2013 Consolidated Financial Statements (subject to timely endorsement by the EU) and require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure and which might result in additional disclosures.
IFRS 9 (Financial Instruments), which becomes mandatory for our 2015 Consolidated Financial Statements (subject to timely endorsement by the EU) and is expected to impact the classification and measurement of financial assets.intangibles). We have not yet completed the determination of the impact on our Consolidated Financial Statements.

On May 28, 2014, the IASB issued IFRS ~~10 (Consolidated~~15 (Revenue from Contracts with Customers). The standard becomes effective in fiscal year 2017 with earlier application permitted. We are in the early stage of an analysis of the impact of the standard on our Consolidated Financial ~~Statements), IFRS 11 (Joint Arrangements)~~Statements. This impact could be material, in particular in the areas of allocating revenue to the different performance obligations under one contract and ~~IFRS 12 (Disclosure~~the timing of ~~Interests in Other Entities): This new set of standards provides a single consolidation model that identifies control as the basis for consolidation for all types of entities, establishes principles~~revenue recognition. The standard foresees different alternative approaches for the ~~financial reporting by parties~~adoption of the new guidance. We have not yet taken a decision which of these alternatives we intend to ~~a joint arrangement and~~apply.

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. The new guidance is expected to mainly impact the classification and

~~combines, enhances~~measurement of financial assets and replaces the current disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs, the IASB also issued amended and retitled IAS 27 (Separate Financial Statements) and IAS 28 (Investmentswill result in ~~Associates and Joint Ventures). The new requirements become mandatory for our 2013 Consolidated Financial Statements (subject to timely endorsement by the EU).~~additional disclosures. We have not yet completed the determination of the impact on our Consolidated Financial Statements.
IFRS 13 (Fair Value Measurement) defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. The new standard becomes mandatory for our 2013 Consolidated Financial Statements (subject to timely endorsement by the EU) and is not expected to have a significant impact on our Consolidated Financial Statements.

Amendments to IAS 1 (Presentation of Financial Statements), which become mandatory for the Group’s 2013 Consolidated Financial Statements (subject to timely endorsement by the EU), aim to improve and align the presentation of items of other comprehensive income in financial statements prepared in accordance with IFRS and U.S. GAAP, and will impact the presentation of items within the Consolidated Statements of
Comprehensive Income. While not early-adopting the amendments to IAS 1, SAP already provides additional disclosures to enhance the reader’s insight into which elements of SAP’s cumulative other comprehensive income will, through recycling, impact profit or loss in the future.
Amendments to IAS 19 (Employee Benefits), which become mandatory for our 2013 Consolidated Financial Statements (subject to timely endorsement by the EU), aim to improve the understanding of how defined benefit plans affect an entity’s financial position, financial performance and cash flows, and are likely to impact, for example, the amount of actuarial gains and losses that will impact profit and loss versus be allocated to other comprehensive income as remeasurements. We have not yet completed the determination of the impact on our Consolidated Financial Statements.
Amendments to IAS 32 (Financial Instruments: Presentation) — Offsetting financial assets and financial liabilities, which become mandatory for the Group’s 2014 Consolidated Financial Statements (subject to timely endorsement by the EU), aim to eliminate inconsistencies when applying the offsetting criteria and include some clarifications. We have not yet completed the determination of the extent of the impact on our Consolidated Financial Statements.
(4) ~~BUSINESS COMBINATIONS~~Business Combinations
In ~~2011,~~2014, we concluded the following business combinations:
Acquired Businesses

Sector
Acquisition
Type
Acquired Voting
Interest
Acquisition Date
~~SECUDE AG, Emmetten, Switzerland~~Fieldglass, Inc., Chicago, Illinois, USA
~~SECUDE is a privately held entity engaged in IT security software products~~Provider of SaaS solution to organizations to procure and ~~solutions.~~manage their flexible workforces
~~Asset~~
~~Purchase~~
~~n/a~~Share Deal
~~February 1,~~
~~2011~~100%
May 2, 2014
~~Right Hemisphere~~SeeWhy, Inc., ~~San Ramon, CA,~~Boston, Massachusetts, USA
~~Right Hemisphere is a privately held entity focusing on visual 3-D enterprise solutions~~Provider of behavioral marketing software
Share
~~Purchase~~ Deal
   100%
~~September 16,~~
~~2011~~June 13, 2014

~~Crossgate AG, Munich, Germany~~Concur Technologies, Inc., Bellevue, Washington, USA
~~Crossgate is a privately held entity specializing in hosted B2B integration services, enabling companies to fully integrate~~Provider of integrated travel and ~~network with trading partners, clients, and suppliers.~~expense management solutions
Share
~~Purchase~~
~~100%~~
~~(including a previously owned minority interest of 6%)~~
Deal
~~November 1,~~
~~2011~~100%
December 4, 2014

~~All transactions were immaterial to SAP individually and in the aggregate. All of the acquired~~We acquire businesses ~~develop and/or sell software~~ in specific areas of strategic interest to us, ~~or complement~~particularly to broaden our product and service portfolio.
Business combinations of the prior year are described in the Notes to our Consolidated Financial Statements for 2010. We disclosed that the fair values of the deferred taxes and liabilities relating to legal and litigation related liabilities were provisional. The valuation was completed in 2011. Adjustments to the allocation of the acquisition price resulted in the immaterial changes to amounts reported in the prior year.
~~Acquisitions After the End of the Reporting Period~~
On February 21, 2012, we acquired more than 90 percent of the outstanding ordinary shares of SuccessFactors, and obtained control of SuccessFactors. Subsequent to the acceptance of the tender offer we effected a short-form merger and acquired the remaining shares for the same US$40.00 per share price that was paid in the cash tender offer. Taking into account all components, we estimate the total consideration
to be transferred to be US$3.6 billion (€2.75 billion), all of which is paid in cash. Acquisition-related costs (to be included in general and administrative expenses in our income statements) approximate €12 million (thereof €3.8 million recognized in 2011).
SuccessFactors is a provider of cloud- based human capital management (HCM) solutions. As a result of the acquisition, we expect to significantly accelerate our momentum as a provider of cloud applications, platforms, and infrastructure, and to establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.
The initial accounting for the Concur business combination is incomplete atbecause the ~~time~~acquisition occurred only shortly before the end of the fiscal year. The initial accounting for the other business combinations entered into in 2014 is incomplete because we are still obtaining the information necessary to identify and measure tax-related assets and liabilities of the acquired businesses. Accordingly, the amounts recognized in our financial statements for these items are regarded provisional as of December 31, 2014.
The businesses acquired in 2014 contributed €91 million (thereof €39 million from Concur) to the 2014 cloud subscription and support revenue.
The acquisition-related costs incurred totaled €22 million for our 2014 business combinations, all of which were ~~authorised for issue. Based~~recognized in general and administration expense.
Prior year acquisitions are described in the Consolidated Financial Statements in the 2013 Annual Report.
Acquisition of Concur
We announced on ~~preliminary valuations~~September 18, 2014, that SAP and Concur Technologies, Inc. (NSDQ: CNQR), a leading provider of integrated cloud-based travel and expense management solutions, had entered into an agreement under which SAP would acquire Concur.
On December 4, 2014, following satisfaction of applicable regulatory and other approvals, we acquired 100% of the shares of Concur. SAP paid US$129 per share, representing consideration transferred of approximately US$7.7 billion.
The acquisition of Concur affects comparability of our 2014 Consolidated Financial Statements with our 2013 and 2012 Consolidated Financial Statements.
Financial Impact as of the Acquisition Date
€ millions Concur
Consideration
Transferred
Cash paid
6,181
Liabilities Incurred
13
Total consideration transferred
6,194
The following table summarizes the values of identifiable assets acquired and liabilities assumed in connection with the acquisition ~~we expect to acquire assets~~ of ~~approximately €0.9 billion to €1.1 billion, including identifiable intangible assets ranging from €0.7 billion to €0.8 billion~~Concur, as of the acquisition date.
Recognized Amounts of Identifiable Assets Acquired and ~~cash of approximately €0.1 billion. The assumed liabilities are expected to range from €0.5 billion~~
Liabilities Assumed
€ millions Concur
Contribution
Cash and cash equivalents
552
Other financial assets
107
Trade and other receivables
124
Other non-financial assets
86
Property, plant, and equipment
37
Intangible assets
1,702
Thereof acquired technology
442
Thereof customer relationship and other intangibles
1,247
Customer relationship
1,201
Other intangible assets
46
Thereof software and database licenses
13
Total identifiable assets
2,608
Trade payables
64
Financial liabilities
1,133
Current and deferred tax liabilities
441
Provisions and other non-financial liabilities
40
Deferred income
58
Total identifiable liabilities
1,736
Total identifiable net assets
872
Acquired non-controlling interests at fair value
86
Goodwill
5,408
Total consideration transferred
6,194
to €0.7 billion. We estimate that goodwill resulting from this acquisition will range from €2 billion to €2.5 billion. The goodwill recognized is not expected to be deductible for income tax purposes. Due toIn general, the ~~fact that valuations of assets, liabilities, and contingencies are ongoing, the presented figures may change significantly.~~
~~The~~ goodwill arising from the ~~acquisition~~acquisitions consists largely of the synergies and the ~~skills~~know-how and technical ~~talent~~skills of ~~SuccessFactors’~~the acquired businesses’ workforces.
By combining Concur’s solutions with SAP products we expect to enable our customers to drive operating efficiencies, collaboration, and real-time data sharing across all major spend categories. Concur goodwill is attributed to
~~workforce.~~ 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
Combining Concur products and SAP products to deliver a world-class employee experience
Improved profitability in Concur sales and operations
Valuation of Trade Receivables Acquired
€ millions Concur Trade
Receivables
Gross carrying amount
129
Allowance for doubtful accounts
5
Fair value of receivables
124
Impact of the Business Combination on Our Financial Statements
The ~~allocation~~amounts of ~~goodwill~~revenue and profit or loss of the Concur business acquired in 2014 since the acquisition date included in the consolidated income statements for the reporting period are as follows:
Impact on SAP’s Financials
€ millions    2014 as Reported    Contribution
of Concur
Revenue
   17,560       45
Profit after tax
   3,280       –9
Had Concur been consolidated as of January 1, 2014, our estimated pro forma revenue for the reporting period would have been €18,040 million, and pro forma profit after tax would have been €3,146 million.
These amounts were calculated after applying the Company’s accounting policies and after adjusting the results for Concur to ~~our reportable segments will depend~~reflect material effects from, for example:
Additional depreciation and amortization that would have been charged assuming the fair value adjustment to property, plant, and equipment and intangible assets had been applied from January 1, 2014
The impact of fair value adjustments on ~~our final management structure which has~~deferred revenue on a full-year basis
The borrowing costs on the funding levels and debt/equity position of the Company after the business combination
Employee benefits, such as share-based compensation
Capitalization of sales commissions
Transaction expenses incurred as part of the acquisition
Related tax effects
These pro forma numbers have been prepared for comparative purposes only. The pro forma revenue and profit numbers are not ~~yet~~necessarily indicative either of the results of operations that would have actually occurred had the acquisition been ~~determined.~~in effect at the beginning of the respective periods or of future results.

(5) ~~REVENUE~~Revenue
For detailed information about our revenue recognition policies, see Note (3).
Professional services and other service revenue comprises the following:
Professional Services and Other Service Revenue
€ millions    2014    2013    2012
Consulting
   2,095       2,242       2,442
Other services
   611       623       616
Professional services and other service
   2,706       2,865       3,058
The item includes professional services and other service revenue related to our cloud offerings of €222 million in 2014 (2013: €170 million, 2012: €92 million).
For revenue information by ~~segment and~~ geographic region, see Note (29).

Revenue from construction-type contracts (contract revenue) is mainly included in software revenue and consulting revenue depending on the type of project. In 2014, contract revenue of €285 million was recognized for all our construction projects (2013: €261 million, 2012: €241 million). The status of our construction projects in progress at the end of the reporting period accounted for under IAS 11 (Construction Contracts) was as follows:
Construction Projects in Progress

€ millions        2011            2010            2009        2014    2013    2012
Revenue recognized in the respective year
   172       141       109
Aggregate cost recognized (multi-year)
   229       163       106       201       221       255
Recognized result (+profit/-loss; multi-year)
   14       17       14
Recognized result (+ profit/– loss; multi-year)
   92       87       2
Advance payments received
   5       5       3       7       26       3
Gross amounts due from customers
   20       21       8       0       3       7
Gross amounts due to customers
   44       35       7       24       38       19
Loss provisions
   27       28       1       6       3       34

(6) ~~RESTRUCTURING~~Cost of Software and Software-Related Services
The item includes cost of cloud subscriptions and support revenue of €481 million in 2014 (2013: €314 million, 2012: €199 million).
(7) Restructuring
Restructuring expenses were as follows:
Restructuring Expenses

€ millions        2011            2010            2009        2014    2013    2012
Employee-related restructuring expenses
   0       1       187       119       57       6
Facility-related restructuring expenses
   4       –4       11       7       13       2

Restructuring expenses
   4       –3       198       126       70       8
~~Restructuring expenses in 2011 and 2010 relate to changes in estimates for prior-year restructurings.~~
For further information on our restructuring plans, see Note (19b).
~~As restructuring expenses were significant to our operations in 2009, we have presented these expenses separately in our Consolidated Income Statements in accordance with IAS 1.97.~~ If not presented separately, these expenses would break down as follows:
Restructuring Expenses by Functional Area

€ millions        2011            2010            2009
Cost of software and software-related services
   0       0       17
Cost of professional services and other services
   4       –1       60
Research and development
   0       –1       48
Sales and marketing
   0       –1       59
General and administration
   0       0       14
Restructuring expenses
   4       –3       198
~~(7)~~ ~~OTHER OPERATING INCOME/EXPENSE, NET~~
~~Other operating income/expense, net, was as follows:~~
€ millions    2014    2013    2012
Cost of software and software-related services
   9       12       0
Cost of professional services and other services
   24       14       7
Research and development
   24       0       0
Sales and marketing
   41       29       1
General and administration
   28       15       0
Restructuring expenses
   126       70       8
~~Other Operating Income/Expense, Net~~

€ millions        2011            2010            2009
Miscellaneous other operating expenses
   –3       –5       –3
Gain on disposals of non-current assets
   18       3       11
Miscellaneous other operating income
   10       11       25
Other operating income/expense, net
   25       9       33
~~Gain on disposals of non-current assets includes gains from the sale of a disposal group as of December 1, 2011.~~
~~(8)~~ ~~EMPLOYEE BENEFITS EXPENSE AND HEADCOUNT~~
(8)    Employee Benefits Expense and Headcount
Employee Benefits Expense
Employee benefits expense comprises the following:
Employee Benefits Expense

€ millions        2011            2010            2009
Salaries
   4,939       4,383       4,007
Social security expense
   642       607       554
Pension expense
   176       149       147
Share-based payment expense
   68       58       54
Termination benefits
   59       63       14
Employee-related restructuring expense
   0       1       187
Employee benefits expense
   5,884       5,261       4,963
€ millions    2014    2013    2012
Salaries
   6,319       5,997       5,726
Social security expense
   916       857       777
Share-based payment expense
   290       327       522
Pension expense
   211       212       190
Employee-related restructuring expense
   119       57       6
Termination benefits outside of restructuring plans
   22       39       65
Employee benefits expense
   7,877       7,489       7,286
Pension expense includes the amounts recorded for our defined benefit and defined contribution plans as described in Note (19a).
Expenses for local state pension plans are included in social security expense.
Number of Employees
On December 31, ~~2011,~~2014, the breakdown of our full-time equivalent employee numbers by function in SAP and by region was as follows:
Number of Employees

December 31, 2011 December 31, 2010 December 31, 2009 December 31, 2014 December 31, 2013 December 31, 2012
Full-time equivalents EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total EMEA¹⁾ Americas Asia
Pacific
Japan Total
Software and software-related services
4,068    2,079    2,816    8,963    3,804    1,827    2,254    7,885    3,227    1,276    1,919    6,422    5,953    3,983    5,138    15,074    4,859    2,861    3,541    11,261    4,559    2,628    3,364    10,551
Professional services and other services
6,808    3,963    2,497    13,268    6,787    3,955    2,410    13,152    6,635    3,473    2,240    12,348    7,291    4,304    3,044    14,639    7,177    4,406    3,047    14,629    7,020    4,399    2,840    14,259
Research and development
8,713    3,028    4,120    15,861    8,617    3,154    4,113    15,884    8,525    2,534    3,755    14,814    9,049    3,974    5,885    18,908    8,806    3,630    5,367    17,804    8,952    3,672    5,388    18,012
Sales and marketing
4,856    4,581    2,343    11,780    4,593    4,214    2,180    10,987    4,202    3,559    1,752    9,513    7,069    7,288    3,611    17,969    6,346    6,437    3,041    15,824    5,697    6,220    2,982    14,899
General and administration
2,073    1,120    542    3,735    2,053    1,005    518    3,576    1,919    724    408    3,051    2,436    1,643    944    5,023    2,424    1,445    697    4,566    2,243    1,383    660    4,286
Infrastructure
1,182    702    274    2,158    1,135    628    266    2,029    854    408    174    1,436    1,542    879    373    2,794    1,380    790    318    2,488    1,286    821    308    2,415
SAP Group (December 31)
27,700    15,473    12,592    55,765    26,989    14,783    11,741    53,513    25,362    11,974    10,248    47,584    33,340    22,071    18,995    74,406    30,993    19,568    16,011    66,572    29,757    19,123    15,542    64,422
Thereof acquisitions
264    49    90    403    1,174    1,975    1,084    4,233    158    73    0    231    814    2,890    1,831    5,535    511    571    29    1,111    791    2,987    1,038    4,816
SAP Group (months’ end average)
27,296    15,010    12,040    54,346    25,929    13,164    10,877    49,970    25,927    12,288    10,554    48,769    31,821    19,797    16,725    68,343    30,238    19,418    15,752    65,409    29,009    17,619    14,506    61,134

¹⁾
Europe, Middle East, Africa
~~The increase of our full-time equivalent employee numbers in 2010 was mainly due to the acquisition of Sybase in July 2010.~~
Allocation of Share-Based ~~Compensation~~Payment Expense
The allocation of expense for share-based ~~compensation,~~payments, net of the effects from hedging these instruments, to the various operating expense items is as follows:
Share-Based ~~Compensation~~Payments

€ millions    2011    2010    2009    2014    2013    2012
Cost of software and software-related services
   5       4       5       33       40       42
Cost of professional services and other services
   11       9       9       48       61       104
Research and development
   16       19       18       71       90       125
Sales and marketing
   15       16       12       76       96       123
General and administration
   21       10       10       62       40       127

Total share-based compensation
   68       58       54
Thereof cash-settled share-based payment plans
   33       29       49
Thereof equity-settled share-based payment plans
   35       29       5
Share-based payments
   290       327       522
Thereof cash-settled share-based payments
   193       240       450
Thereof equity-settled share-based payments
   96       87       72
For more information about our share-based ~~compensation plans,~~payments, see Note (28).
(9)    Other Non-Operating Income/Expense, Net
~~(9)~~ ~~OTHER NON-OPERATING INCOME/EXPENSE, NET~~
Other non-operating income/expense, net was as follows:
Other Non-Operating Income/Expense, Net

€ millions    2011    2010    2009    2014    2013    2012
Foreign currency exchange gain/loss, net
   –58       –175       –73       71       4       –154
Thereof realized gain/loss
   –59       –317       89
Thereof unrealized gain/loss
   13       199       –168
Thereof embedded derivatives
   –12       –57       6
Thereof from financial assets/liabilities at fair value through profit or loss
   83       –75       –102
Thereof from loans and receivables
   –219       184       –32
Thereof from financial liabilities at amortized cost
   226       –105       –20
Thereof from non-financial assets/liabilities
   –13       0       2
Miscellaneous other non-operating income
   2       3       8       3       1       4
Miscellaneous other non-operating expense
   –19       –14       –8       –25       –22       –23
Other non-operating income/expense, net
   –75       –186       –73       49       –17       –173
(10)  Financial Income, Net
~~(10)~~ ~~FINANCE INCOME, NET~~
~~Other finance~~Financial income, net was as follows:
~~Finance~~Financial Income, Net

€ millions    2011    2010    2009
Finance income

Interest income from

available-for-sale financial assets (debt)
   2       0       0
loans and receivables
   62       34       35
derivatives
   37       25       0
Gains on

available-for-sale financial assets (debt)
   1       2       0
available-for-sale financial assets (equity)
   12       9       1
Share of result of associates
   9       3       1
Finance income
   123       73       37
Finance cost

Interest expense from

financial liabilities at amortized cost
   –123       –77       –63
derivatives
   –37       –31       –38
TomorrowNow litigation
   8       –12       0
Losses on

available-for-sale financial assets (equity)
   0       –1       –1
Impairment losses from

available-for-sale financial assets (equity)
   –2       –3       –11
Fee expenses
   –7       –16       –4
Finance cost
   –161       –140       –117
Finance income, net
   –38       –67       –80
€ millions    2014    2013    2012
Finance income
   127       115       103
Finance costs
   –152       –181       –175
Thereof interest expense from financial liabilities at amortized cost
   –93       –131       –130
Financial income, net
   –25       –66       –72
(11) ~~INCOME TAX~~Income Tax
Income tax expense for the years ended December 31 is attributable to the following regions:
Tax Expense According to Region
€ millions    2014    2013    2012
Current tax expense

Germany
   770       836       700
Foreign
   422       326       506
Total current tax expense
   1,192       1,162       1,206
Deferred tax expense/income

Germany
   84       51       –11
Foreign
   –201       –142       –202
Total deferred tax income
   –117       –91       –213
Total income tax expense
   1,075       1,071       993
Income tax expense for the years ended December 31 comprised the following components:
~~Tax Expense According to Region~~

€ millions        2011            2010            2009
Current tax expense

Germany
   635       413       344
Foreign
   521       459       380
Total current tax expense
   1,156       872       724
Deferred tax expense/income

Germany
   –12       23       –16
Foreign
   185       –370       –23
Total deferred tax expense/income
   173       –347       –39
Total income tax expense
   1,329       525       685
Major Components of Tax Expense

€ millions        2011            2010            2009        2014    2013    2012
Current tax expense/income

Tax expense for current year
   1,152       862       783       1,168       1,249       1,173
Taxes for prior years
   4       10       –59       24       –87       33
Total current tax expense
   1,156       872       724       1,192       1,162       1,206
Deferred tax expense/income

Origination and reversal of temporary differences
   162       –388       –51       –126       –168       –266
Unused tax losses, research and development tax credits and foreign tax credits
   11       41       12       9       77       53
Total deferred tax expense/income
   173       –347       –39
Total deferred tax income
   –117       –91       –213
Total income tax expense
   1,329       525       685       1,075       1,071       993
Profit before tax for the years ended December 31 consisted of the following:
Profit Before Tax

€ millions        2011            2010            2009        2014    2013    2012
Germany
   2,323       2,009       1,324       3,338       3,126       2,460
Foreign
   2,445       329       1,111       1,017       1,270       1,336
Total
   4,768       2,338       2,435       4,355       4,396       3,796
The following table reconciles the expected income tax expense computed by applying our combined German ~~corporate~~ tax rate of ~~26.34% (2010: 26.29%~~26.43% (2013: 26.41%; ~~2009: 26.21%~~2012: 26.47%) to the actual income tax expense. Our ~~2011~~2014 combined German ~~corporate~~ tax rate includes a corporate income tax rate of 15.00% ~~(2010:~~(2013: 15.00%; ~~2009:~~2012: 15.00%), plus a solidarity surcharge of 5.5% (2013: 5.5%; 2012: 5.5%) thereon, and trade taxes of ~~10.51% (2010: 10.46%~~10.60% (2013: 10.58%; ~~2009: 10.38%~~2012: 10.64%).
Relationship Between Tax Expense and ~~Accounting~~ Profit Before Tax

€ millions, unless otherwise stated        2011            2010            2009        2014    2013    2012
Profit before tax
   4,768       2,338       2,435       4,355       4,396       3,796
Tax expense at applicable tax rate of 26.34% (2010: 26.29%; 2009: 26.21%)
   1,256       615       638
Tax effect of

Tax expense at applicable tax rate of 26.43% (2013: 26.41%; 2012: 26.47%)
   1,151       1,161       1,005
Tax effect of:

Foreign tax rates
   77       –68       57       –117       –116       –114
Non-deductible expenses
   89       101       94       63       158       111
Tax exempt income
   –149       –96       –52       –86       –146       –169
Withholding taxes
   93       39       40       111       87       71
Research and development and foreign tax credits
   –33       –53       –20       –41       –41       –29
Prior-year taxes
   –25       –27       –56       –10       –113       15
Reassessment of deferred tax assets, research and development tax credits, and foreign tax credits
   0       11       –8       41       60       31
Other
   21       3       –8       –37       21       72
Total tax expense
   1,329       525       685
Total income tax expense
   1,075       1,071       993
Effective tax rate in %
   27.9       22.5       28.1       24.7       24.4       26.2
Deferred tax assets and liabilities on a gross basis as at December 31 ~~2011 and 2010,~~ are attributable to the following items:
Recognized Deferred Tax Assets and Liabilities

€ millions        2011            2010        2014    2013
Deferred tax assets

Intangible assets
   68       69       104       87
Property, plant, and equipment
   16 ��    14       18       18
Other financial assets
   12       12       12       7
Trade and other receivables
   23       30       53       48
Net operating loss carryforwards
   57       56
Pension provisions
   104       97       87       78
Share-based payments
   31       37       107       105
Other provisions and obligations
   286       549       403       303
Deferred income
   44       41       75       42
Carryforwards of unused tax losses
   707       521
Research and development and foreign tax credits
   17       23       85       65
Other
   103       112       172       149
Deferred tax assets
   761       1,040
Total deferred tax assets
   1,823       1,423
Deferred tax liabilities

Intangible assets
   421       507       1,218       693
Property, plant, and equipment
   58       47       53       52
Other financial assets
   210       226       494       330
Trade and other receivables
   15       21       69       32
Pension provisions
   37       37       4       6
Share-based payments
   3       1
Other provisions and obligations
   1       3       120       107
Deferred income
   3       5       11       6
Other
   25       31       9       14
Deferred tax liabilities
   770       877
Deferred tax assets/liabilities, net
   –9       163
Total deferred tax liabilities
   1,981       1,241
Total deferred tax assets/liabilities, net
   –158       182

The ~~decrease in~~ deferred tax assets ~~mainly results from the tax effect of the reduction in the provision recorded for the TomorrowNow litigation. The decrease in~~and deferred tax liabilities, especially on intangible assets, net operating loss carryforwards, and other financial assets,
increased mainly ~~results from the subsequent effects~~because of our business combinations in ~~prior years. It mostly~~
~~relates to intangible assets and other financial assets.~~
~~Current income tax payments were reduced in 2011 in the amount of €53 million (2010: €1 million; 2009: €2 million) due to the TomorrowNow litigation.~~2014.

Deferred tax assets have not been recognized in respect of the following items for the years ended December ~~31, 2011, 2010, and 2009, because it is not probable that future taxable profits will be available against which we can utilize the benefits thereof:~~31:
Items ~~not~~Not Resulting in a Deferred Tax Asset

€ millions        2011            2010            2009
Unused tax losses

Not expiring
   38       9       13
Expiring in the following year
   10       5       1
Expiring after the following year
   93       103       138
Total unused tax losses
   141       117       152
Unused research and development and foreign tax credits

Not expiring
   17       21       0
Expiring after the following year
   3       2       4
Total unused tax credits
   20       23       4
€ millions    2014    2013    2012
Unused tax losses

Not expiring
   140       68       49
Expiring in the following year
   62       43       6
Expiring after the following year
   908       525       517
Total unused tax losses
   1,110       636       572
Deductible temporary differences
   96       178       202
Unused research and development and foreign tax credits

Not expiring
   32       25       32
Expiring in the following year
   0       1       0
Expiring after the following year
   22       1       36
Total unused tax credits
   54       27       68

€567 million (2013: €421 million; 2012: €367 million) of the unused tax losses relate to U.S. state tax loss carryforwards.
Current income tax payments were reduced by €71 million in 2014 (2013: €0 million; 2012: €4 million) due to the TomorrowNow and Versata litigation.
We have not recognized a deferred tax liability on approximately ~~€5.54~~€8.87 billion ~~(2010: €4.56~~(2013: €7.07 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.
The proposed dividend payment of €1.10 per share for the year ended December 31, ~~2011,~~2014, will not have any effects on the income tax of SAP ~~AG.~~SE.

Total income tax including the items charged or credited directly to share premium and other comprehensive income for the years ended December 31 ~~2011, 2010, and 2009,~~ consists of the following:
Total Income Tax

€ millions        2011            2010            2009        2014    2013    2012
Income tax recorded in profit
   1,329       525       685       1,075       1,071       993
Income tax recorded in share premium
   –10       –1       0       –3       –5       –4
Income tax recorded in other comprehensive income that will not be reclassified to profit and loss

Actuarial gains/losses on defined benefit pension plans
   –5       –18       0
Remeasurements on defined benefit pension plans
   –7       3       –4
Income tax recorded in other comprehensive income that will be reclassified to profit and loss

Unrealized gains/losses on available-for-sale financial assets
   0       0       1
Gains/losses on cash flow hedges
   –1       –5       11
Currency effects
   –6       5       0
Cash flow hedges
   –10       0       17
Exchange differences
   –21       8       3
Total
   1,307       506       697       1,034       1,077       1,005
~~The income tax recorded in share premium relates to our equity-settled share-based compensation.~~
We are subject to ongoing tax audits by domestic and foreign tax authorities. ~~As a result of the tax audit of SAP AG and its German subsidiaries for the years 2003 through 2006,~~Currently, we are mainly in dispute with the German and the Brazilian tax ~~authorities~~authorities. The German dispute is in respect of intercompany financing ~~matters. We strongly disagree with~~matters while the ~~tax authorities’ position and intend to vigorously contest it. Currently,~~Brazilian dispute is in respect of license fee deductibility. In both cases, we expect that we will need to initiate litigation to prevail. WeFor both of these matters, we have not recorded a provision ~~for this matter~~ as we believe that the tax authorities’ ~~claim has~~claims have no merit and that no adjustment is warranted. If, contrary to our view,
the ~~German~~ tax authorities were to prevail in their arguments before the court, we
would expect to have an additional tax expense (including related interest ~~expense) for the tax audit period 2003 through 2006~~expenses and ~~for the following years 2007 through 2011~~penalties) of approximately ~~€130~~€871 million in total.

(12) ~~EARNINGS PER SHARE~~Earnings per Share
Restricted shares (the bonus shares in the Share Matching Plan as discussed in Note (28) below) granted to employees under our share-based ~~compensation programs~~payments are included in the diluted earnings per share calculations to the extent they have a dilutive effect.

Earnings per share for the years ended December 31 was calculated as follows:
Earnings per Share

€ millions, unless otherwise stated        2011            2010            2009
Profit attributable to owners of parent
   3,438       1,811       1,748
Issued ordinary shares
   1,227       1,226       1,226
Effect of treasury shares
   –38       –38       –38
Weighted average shares — basic⁽¹⁾
   1,189       1,188       1,188
Dilutive effect of share-based payment plans⁽¹⁾
   1       1       1
Weighted average shares — diluted⁽¹⁾
   1,190       1,189       1,189
Basic earnings per share, in €, attributable to owners of parent
   2.89       1.52       1.47
Diluted earnings per share, in €, attributable to owners of parent
   2.89       1.52       1.47
€ millions, unless otherwise stated    2014    2013    2012
Profit attributable to equity holders of SAP SE
   3,280       3,326       2,803
Issued ordinary shares¹⁾
   1,229       1,229       1,229
Effect of treasury shares¹⁾
   –34       –35       –37
Weighted average shares outstanding, basic¹⁾
   1,195       1,193       1,192
Dilutive effect of share-based payments¹⁾
   3       2       1
Weighted average shares outstanding, diluted¹⁾
   1,197       1,195       1,193
Earnings per share, basic, attributable to equity holders of SAP SE (in €)
   2.75       2.79       2.35
Earnings per share, diluted, attributable to equity holders of SAP SE (in €)
   2.74       2.78       2.35

⁽¹⁾
Number of shares in millions
(13) ~~OTHER FINANCIAL ASSETS~~Other Financial Assets
Other financial assets as at December 31 were as follows:
Other Financial Assets

   2011    2010    2014    2013
€ millions    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total
Loans and other financial receivables
   269       313       582       42       328       370       173       286       459       90       243       333
Debt investments
   400       0       400       0       0       0       40       0       40       38       0       38
Equity investments
   0       161       161       0       107       107       1       596       597       0       322       322
Available-for-sale financial assets
   400       161       561       0       107       107       41       596       637       38       322       360
Derivatives
   148       17       165       116       0       116       464       90       554       123       6       129
Investments in associates
   0       47       47       0       40       40       0       49       49       0       36       36
Total
   817       538       1,355       158       475       633       678       1,021       1,699       251       607       858

Loans and Other Financial Receivables
Loans and other financial receivables mainly consist of time deposits, investments in ~~insurance policies relating to~~ pension
assets ~~(semi-retirement and time accounts)~~ for which the corresponding liability is included in employee-related obligations (see Note ~~(20b)~~(19b)), other receivables, and loans to ~~employees.~~employees and third parties. The majority of our loans and other financial receivables isare concentrated in ~~Germany.~~the United States.
As at December 31, ~~2011,~~2014, 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 on financial risk and the nature of risk, see Note (25).
Available-for-Sale Financial Assets
Our available-for-sale financial assets consist of debt investments in ~~German government~~ bonds of financial and non-financial corporations and municipalities and equity investments in listed and unlisted securities.

These available-for-sale financial assets are denominated in the following currencies:
Currencies of Available-for-Sale Financial Assets

€ millions    2011    2010    2014    2013
Euros
   432       34       77       51
U.S. dollars
   123       71       542       305
Other
   6       2       18       4
Total
   561       107       637       360

Our equity investments include securities measured at cost because they do not have a quoted market price and fair value cannot be reliably measured. These equity investments had a carrying value of €122 million and €79 million
~~as at December 31, 2011, and 2010, respectively. Effects from impairment losses, reclassifications and gains/losses from sales of such equity investments were immaterial for all periods presented.~~
~~As of December 31, 2011, we do not intend to dispose of any equity investments at cost in the near future.~~ For more information on fair value measurement with regard to our equity investments, ~~at cost,~~ see Note (27).
Derivatives
Detailed information about our derivative financial instruments is presented in Note (26).

(14) ~~TRADE AND OTHER RECEIVABLES~~Trade and Other Receivables
Trade and other receivables as at December 31 were as follows:
Trade and Other Receivables

   2011    2010    2014    2013
€ millions    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total
Trade receivables, net
   3,431       0       3,431       3,031       0       3,031       4,241       1       4,242       3,801       14       3,815
Other receivables
   62       84       146       68       78       146       89       99       188       63       84       147
Total trade and other receivables
   3,493       84       3,577       3,099       78       3,177
Total
   4,330       100       4,430       3,864       98       3,962
The carrying amounts of our trade receivables as at December 31 are as follows:
Carrying Amounts of Trade Receivables

€ millions    2011    2010    2014    2013
Gross carrying amount
   3,566       3,187       4,428       3,953
Sales allowances charged to revenue
   –94       –112       –134       –96
Allowance for doubtful accounts charged to expense
   –41       –44       –52       –42
Carrying amount trade receivables, net
   3,431       3,031       4,242       3,815
~~Changes~~The changes in the allowance for doubtful accounts charged to expense were ~~as follows:~~
~~Increase (Decrease)~~immaterial in ~~Allowance for Doubtful Accounts Charged to Expense~~

€ millions    2011    2010
January 1
   44       48
Utilization
   –6       0
Addition
   6       9
Release
   –3       –14
Exchange rate effects and other changes
   0       1
December 31
   41       44
~~Concentrations of credit risks are limited due to our large customer base and its distribution across many different industries and countries worldwide.~~all periods presented.
The aging of trade receivables as at December 31 was:
Aging of Trade Receivables

€ millions    2011    2010
Not past due and not individually impaired
   2,803       2,390
Past due but not individually impaired

Past due 1-30 days
   308       278
Past due 31-120 days
   163       206
Past due 121-365 days
   58       60
Past due over 365 days
   13       42
Total past due but not individually impaired
   542       586
Individually impaired, net of allowances
   86       55
Carrying amount of trade receivables, net
   3,431       3,031
~~We believe that the recorded sales and bad debt allowances adequately provide for the credit risk inherent in trade receivables.~~
€ millions    2014    2013
Not past due and not individually impaired
   3,349       3,054
Past due but not individually impaired

Past due 1-30 days
   345       330
Past due 31-120 days
   339       258
Past due 121-365 days
   118       120
Past due over 365 days
   16       13
Total past due but not individually impaired
   818       721
Individually impaired, net of allowances
   75       40
Carrying amount of trade receivables, net
   4,242       3,815
For more information about financial risk and how we manage it, see Notes (25) and (26).

(15) ~~OTHER NON-FINANCIAL ASSETS~~Other Non-Financial Assets
Other Non-Financial Assets

   2011    2010    2014    2013
€ millions    Current    Non-current    Total    Current    Non-current    Total    Current    Non-Current    Total    Current    Non-Current    Total
Prepaid expenses
   95       39       134       101       31       132       207       66       273       179       57       236
Other tax assets
   68       0       68       58       0       58       101       0       101       92       0       92
Advance payments
   11       0       11       8       0       8
Inventories
   11       0       11       12       0       12
Capitalized contract cost
   90       99       188       55       50       105
Miscellaneous other assets
   2       0       2       2       0       2       33       0       33       20       0       20
Total other non-financial assets
   187       39       226       181       31       212
Total
   431       164       595       346       107       453
Prepaid expenses primarily consist of prepayments for operating leases, support services, and software ~~royalties that will be charged to expense in future periods.~~royalties.
(16) ~~GOODWILL AND INTANGIBLE ASSETS~~Goodwill and Intangible Assets
Goodwill and Intangible Assets

€ millions    Goodwill    Software and
Database
Licenses    Acquired
Technology/
IPRD    Customer
Relationship
and Other
Intangibles    Total
Historical cost

January 1, 2010
   5,088       334       663       758       6,843
Foreign currency exchange differences
   38       3       7       –5       43
Additions from business combinations
   3,398       11       569       1,155       5,133
Other additions
   0       79       0       0       79
Retirements/disposals
   0       –10       1       –5       –14

December 31, 2010
   8,524       417       1,240       1,903       12,084

Foreign currency exchange differences
   117       1       19       28       165
Additions from business combinations
   170       1       26       11       208
Other additions
   0       76       0       0       76
Retirements/disposals
   –5       –6       –18       –12       –41

December 31, 2011
   8,806       489       1,267       1,930       12,492

Accumulated amortization

January 1, 2010
   94       219       376       266       955
Foreign currency exchange differences
   2       4       7       5       18
Additions depreciation
   0       36       143       142       321
Retirements/disposals
   0       –10       1       –5       –14

December 31, 2010
   96       249       527       408       1,280

Foreign currency exchange differences
   1       0       12       13       26
Additions depreciation
   0       49       171       266       486
Retirements/disposals
   0       –3       –18       –12       –33

December 31, 2011
   97       295       692       675       1,759

Carrying value December 31, 2010
   8,428       168       713       1,495       10,804

Carrying value December 31, 2011
   8,709       194       575       1,255       10,733
~~The disposal of goodwill (€5 million) relates to the sale of a disposal group that included operations of an acquired entity.~~
€ millions    Goodwill    Software and
Database
Licenses    Acquired
Technology/
IPRD    Customer
Relationship
and Other
Intangibles    Total
Historical cost

January 1, 2013
   13,288       533       1,778       3,054       18,653
Foreign currency exchange differences
   –345       –2       –40       –95       –482
Additions from business combinations
   842       2       192       182       1,218
Other additions
   0       43       0       0       43
Retirements/disposals
   0       –18       –1       –105       –124
December 31, 2013
   13,785       558       1,929       3,036       19,308
Foreign currency exchange differences
   1,247       15       160       297       1,719
Additions from business combinations
   6,012       16       540       1,312       7,880
Other additions
   0       86       0       2       88
Retirements/disposals
   0       –4       –42       –3       –49
December 31, 2014
   21,044       671       2,587       4,644       28,946
Accumulated amortization

January 1, 2013
   96       335       843       953       2,227
Foreign currency exchange differences
   –1       –2       –20       –22       –45
Additions amortization
   0       51       249       303       603
Retirements/disposals
   0       –17       –1       –105       –123
December 31, 2013
   95       367       1,071       1,129       2,662
Foreign currency exchange differences
   4       7       73       81       165
Additions amortization
   0       78       255       282       615
Retirements/disposals
   0       –4       –42       –3       –49
December 31, 2014
   99       448       1,357       1,489       3,393
Carrying amount

December 31, 2013
   13,690       191       858       1,907       16,646
December 31, 2014
   20,945       223       1,230       3,155       25,553
The additions, other than from business combinations, to software and database licenses in ~~2011~~2014 and ~~2010~~2013 were individually
acquired from third parties and include cross-license agreements and ~~patents, whereas the additions to acquired technology and other intangibles primarily result from our business combinations discussed in Note (4).~~patents.
We carry the following significant intangible assets:
Significant Intangible Assets

      Carrying Amount in
€ Millions    Remaining Useful
Life in Years
          2011            2010
Sybase — Acquired technologies
   435       518       3-5
Business Objects — Acquired technologies
   50       86       1-4
Sybase — Maintenance-related customer relationships
   706       846       11
Sybase — Messaging and license- related customer relationships
   173       189       1-9
Business Objects — Maintenance- related customer relationships
   215       250       10-13
Business Objects — Other customer relationships
   42       67       5-8
Total significant intangible assets
   1,621       1,956
€ millions, unless otherwise stated    Carrying Amount    Remaining Useful
Life (in years)
   2014    2013
Business Objects – Customer relationships: Maintenance
   126       150       7 to 10
Sybase – Acquired technologies
   149       225       1 to 2
Sybase – Customer relationships: Maintenance
   418       466       8
SuccessFactors – Acquired technologies
   184       206       5
SuccessFactors – Customer relationships: Subscription
   402       383       12
Ariba – Acquired technologies
   166       186       6
Ariba – Customer relationships
   516       480       11 to 13
hybris – Acquired technologies
   128       159       6
hybris – Customer relationships
   136       137       3 to 13
Fieldglass – Acquired technologies
   96       0       8
Concur – Acquired technologies
   445       0       7
Concur – Customer relationships
   1,233       0       16 to 20
Total significant intangible assets
   3,999       2,392
~~The~~
Goodwill Impairment Testing
SAP had a single operating segment in 2014 (in 2013, we had four).
Single Segment
We determined the recoverable amount for our single segment based on fair value less costs of disposal using market capitalization derived from public quotations of SAP stock. We believe that no reasonably foreseeable change in the price of SAP stock would cause the carrying amount of our single operating segment to exceed its recoverable amount.
Unallocated Goodwill
The unallocated goodwill ~~by reportable segment at~~of €5,533 million relates to the acquisition of Concur. Since the Concur
acquisition was executed very close to December 31, ~~2011,~~2014, the impact of the acquisition on our segment structure had not yet been decided at year-end 2014 and ~~2010,~~an impairment test on this goodwill had not been carried out. We therefore considered whether there were factors that could indicate signs of impairment, including preliminary business plans of the acquired business. In our view, the calculations that were based on trading and transaction multiples of benchmark companies comparable to the business for this recent acquisition represent the best estimate of fair value. The data gathered for the benchmark companies was ~~as follows:~~
~~Goodwill by Segment~~

€ millions    12/31/2011    Thereof
Changes in
2011    12/31/2010    Thereof
Changes in
2010
Product
   5,206       151       5,001       776
Consulting
   781       11       764       67
Training
   176       3       171       22
Sybase
   2,546       0       2,492       2,533

Total
   8,709       165       8,428       3,398
obtained from publicly available information. Analysis of these factors did not reveal any indications of impairment. For more information about ~~our segments~~the acquisition, see Note ~~(29).~~
The recoverable amounts for all our segments have been determined based on “value in use” calculations. The calculations use cash flow projections based on actual operating results and a company-wide five-year business plan approved by management. Cash flows for periods beyond this five-year business plan were extrapolated using the segment-specific terminal
growth rates disclosed in the table below. These terminal growth rates do not exceed the long-term average growth rates for the markets in which our operating segments operate. Our estimated cash flow projections are discounted to present value by means of the pre-tax discount rates disclosed in the table below together with the terminal revenue growth rates. These pre-tax discount rates are based on a weighted average cost of capital approach (WACC)(4).

      Product    Consulting    Training    Sybase
Pre-tax discount rates
   12.7 %    12.1 %    12.6 %    13.6 %
Terminal revenue growth rate
   3.6 %    3.2 %    2.4 %    3.6 %
The segments sell complementary products and services and their recoverable amounts are based on some of the same key assumptions. These key assumptions on which management has based its cash flow projections for the period covered by our five-year business plan are:
~~Key assumption~~ ~~Basis for determining values assigned to key~~
~~assumption~~
~~Budgeted revenue growth~~
Revenue growth rate achieved in the period immediately before the budget period, increased for an expected increase in SAP’s addressable market in the areas of cloud, mobility, and database as well as expected growth in the established categories of applications and analytics. Values assigned reflect past experience as well as expectations regarding an increase in the addressable market.
~~Budgeted operating margin~~
Operating margin budgeted for a given budget period equals the operating margin achieved in the period immediately before the budget period, increased for expected efficiency improvements. Values assigned reflect past experience, except for efficiency improvements.
We believe that any reasonably possible change in any of the above key assumptions would not cause the carrying value of our product, consulting, or training segments to exceed their respective recoverable amounts.
~~The Sybase segment’s recoverable amount exceeds its carrying amount by €922 million. The projected cash flows for the Sybase segment are derived from the budgeted operating margins~~
and based on an average cash flow growth rate of 18% during the five-year business plan approved by management. The average cash flow growth rate would need to be 7.8 percentage points lower in order for the Sybase segment’s recoverable amount to be equal to its carrying amount. For the year ended December 31, 2011, the Sybase segment exceeded 2011 projected cash flows.
(17) ~~PROPERTY, PLANT, AND EQUIPMENT~~Property, Plant, and Equipment
Property, Plant, and Equipment

€ millions    Land
and
Buildings
Other Property,
Plant, and
Equipment

Advance Payments
and Construction in
Progress
   Total
Historical cost

January 1, 2010
   1,252       1,277       33       2,562
Foreign currency exchange differences
   50       38       1       89
Additions from business combinations
   10       14       0       24
Other additions
   30       226       7       263
Retirements/disposals
   –34       –165       0       –199
Transfers
   28       3       –31       0

December 31, 2010
   1,336       1,393       10       2,739

Foreign currency exchange differences
   7       3       0       10
Additions from business combinations
   0       0       0       0
Other additions
   29       337       6       372
Retirements/disposals
   –19       –183       –1       –203
Transfers
   7       1       –8       0

December 31, 2011
   1,360       1,551       7       2,918

Accumulated depreciation

January 1, 2010
   382       809       0       1,191
Foreign currency exchange differences
   19       26       0       45
Additions depreciation
   45       166       0       211
Impairments
   2       0       0       2
Retirements/disposals
   –23       –136       0       –159
Transfers
   0       0       0       0

December 31, 2010
   425       865       0       1,290

Foreign currency exchange differences
   4       1       0       5
Additions depreciation
   47       191       0       238
Retirements/disposals
   –16       –150       0       –166
Transfers
   0       0       0       0

December 31, 2011
   460       907       0       1,367

Carrying value


December 31, 2010
   911       528       10       1,449

December 31, 2011
   900       644       7       1,551

€ millions Land and
Buildings
Other Property,
Plant, and
Equipment

Advance Payments
and Construction in
Progress
   Total
December 31, 2013
903    873    44       1,820
December 31, 2014
1,010    1,050    42       2,102
~~The~~Total additions ~~and disposals in other property, plant, and equipment~~(other than from business combinations) amounting to €629 million (2013: €545 million) relate primarily to the replacement and purchase of computer hardware and ~~cars~~vehicles acquired in the normal course of ~~business.~~
business and investments in data centers.
~~(18)~~ ~~TRADE AND OTHER PAYABLES, FINANCIAL LIABILITIES, AND OTHER NON-FINANCIAL LIABILITIES~~
(18) Trade and Other Payables, Financial Liabilities, and Other Non-Financial Liabilities
(18a) Trade and Other Payables
~~(18a)~~ ~~Trade and Other Payables~~
Trade and other payables as at December 31 were as follows:
Trade and Other Payables

   2011
Term    2010
Term 2014    2013
€ millions    Current    Non-Current
Balance on
12/31/2011
   Current    Non-Current
Balance on
12/31/2010
Current Non-Current Total    Current Non-Current Total
Trade payables
   727       0       727       700       0       700    756    0    756       640    0    640
Advance payments received
   95       0       95       97       0       97    112    0    112       80    0    80
Miscellaneous other liabilities
   115       43       158       126       30       156    138    55    193       130    45    175
Trade and other payables
   937       43       980       923       30       953    1,007    55    1,061       850    45    895
Miscellaneous other liabilities include mainly deferral amounts for free rent ~~periods.~~periods and liabilities related to government grants.
(18b) Financial Liabilities
~~(18b)~~ ~~Financial Liabilities~~
Financial liabilities as at December 31 were as follows:
Financial ~~liabilities~~Liabilities

2014

2013
   2011
Term    2010
Term Nominal Volume Carrying Amount Nominal Volume Carrying Amount
€ millions    Current    Non-Current
Balance on
12/31/2011
   Current    Non-Current
Balance on
12/31/2010
Current
Non-
Current
Current
Non-
Current
Total Current
Non-
Current
Current
Non-
Current
Total
Bonds
   600       1,595       2,195       0       2,191       2,191    631    4,000    630    3,998    4,628    500    1,800    500    1,791    2,291
Private placement transactions
   423       1,237       1,660       0       1,069       1,069    247    1,936    247    1,948    2,195    86    1,922    86    1,891    1,977
Bank loans
   101       1       102       1       1,098       1,099    1,279    3,000    1,277    2,985    4,261    0    0    0    0    0
Financial debt
2,157    8,936    2,154    8,931    11,085    586    3,722    586    3,682    4,268
Derivatives
NA    NA    287    46    333    NA    NA    97    72    169
Other financial liabilities
   207       92       299       141       91       232    NA    NA    120    4    124    NA    NA    65    4    69
Financial liabilities
   1,331       2,925       4,256       142       4,449       4,591    2,561    8,980    11,542    748    3,758    4,506

Financial liabilities are unsecured, except for the retention of title and similar rights customary in our industry. Effective interest rates on our ~~financing~~financial debt (including the effects from interest rate swaps) were ~~2.98%~~1.77% in ~~2011, 2.76%~~2014, 2.48% in ~~2010,~~2013, and ~~4.32%~~2.87% in ~~2009.~~
2012.
AnFor an analysis ~~showing~~of the contractual cash flows of our financial liabilities based on maturity, ~~is provided in~~see Note (25). ~~Information~~For information on the risk associated with our financial liabilities, ~~is provided in~~see Note (26) ~~and~~. For information on fair values, ~~is provided in~~see Note (27).

Bonds
As at December 31, ~~2011,~~ we had outstanding bonds with the following terms:
Bonds

Maturity Issue Price Coupon Rate Effective Interest
Rate Nominal Volume
on 12/31/2011 in
€ millions Balance on
12/31/2011 in
€ millions Balance on
12/31/2010 in
€ millions Maturity Issue Price Coupon Rate Effective
Interest Rate
Nominal Volume
(in respective
currency in
millions)

Carrying
Amount on
12/31/2014
(in € millions)

Carrying
Amount on
12/31/2013
(in € millions)

Eurobond 1 – 2010
2014    99.755 % 2.50% (fix)    2.65 % 500    498    498    2014    99.755%    2.50% (fix)    2.64 % €500    0    500
Eurobond 2 – 2010
2017    99.780 % 3.50% (fix)    3.59 % 500    498    497    2017    99.780%    3.50% (fix)    3.58 % €500    490    499
Eurobond 3 – 2010
2012    99.863 % 1.75% (fix)    2.01 % 600    600    598
Eurobond 4 – 2010
2013    99.857 % 2.25% (fix)    2.39 % 600    599    598

Eurobond 5 – 2012
2015    99.791%    1.00% (fix)    1.17 % €550    549    547
Eurobond 6 – 2012
2019    99.307%    2.125% (fix)    2.27 % €750    778    745
Eurobond 7 – 2014
2018    100.000%    0.381% (var.)    0.43 % €750    748    0
Eurobond 8 – 2014
2023    99.478%    1.125% (fix)    1.24 % €1,000    992    0
Eurobond 9 – 2014
2027    99.284%    1.75% (fix)    1.86 % €1,000    990    0
Eurobonds
4,547    2,291
Other bonds
US$98    81    0
Bonds
2,195    2,191    4,628    2,291
~~The~~
Since September 2012, we have used a debt issuance program to issue bonds in a number of tranches in different currencies. Currently, this program has a total volume of €6 billion.
In November 2012 and in November 2014, we issued bonds under the program as shown in the table above. At the reporting date, a volume of €1.95 billion (2013: €4 billion) is available for new bond issuances.
All our Eurobonds are listed for trading on the Luxembourg Stock Exchange.
Our other bonds were originally issued by Concur in 2010 and 2013. The majority of these notes were settled shortly after the acquisition of Concur and the remainder of US$98 million is expected to be settled in the first quarter 2015.
Private Placement Transactions
Our private placement transactions have the following terms:
Private Placements

   Maturity Coupon Rate Effective Interest
Rate Nominal Volume in
Respective
Currency on
12/31/2011 in
millions Balance on
12/31/2011 in
€ millions Balance on
12/31/2010 in
€ millions
German promissory note SSD
€697    697    696
Tranche 1 – 2009
2012    4.04% (fix)    4.08 % €63.5
Tranche 2 – 2009
2012    3.46% (variable)    3.51 % €359.5
Tranche 3 – 2009
2014    4.92% (fix)    4.98 % €86
Tranche 4 – 2009
2014    3.81% (variable)    3.86 % €158
Tranche 5 – 2009
2014    3.72% (variable)    3.76 % €30
U.S. private placement
US$ 1,250    963    373
Tranche 1 – 2010
2015    2.34% (fix)    2.40 % US$ 300
Tranche 2 – 2010
2017    2.95% (fix)    3.03 % US$ 200
Tranche 3 – 2011
2016    2.77% (fix)    2.82 % US$ 600
Tranche 4 – 2011
2018    3.43% (fix)    3.50 % US$ 150

Private placements
1,660    1,069
The coupon and the effective interest rates for the floating rate tranches 2, 4, and 5 of the German promissory notes (“Schuldscheindarlehen,” SSD) were calculated based on the last three-month EURIBOR interest rate fixing for the tranches in 2011.
      Maturity    Coupon Rate    Effective
Interest Rate
Nominal Volume
(in respective
currency in
millions)

Carrying
Amount on
12/31/2014
(in € millions)

Carrying
Amount on
12/31/2013
(in € millions)

German promissory note

Tranche 3 – 2009
   2014       4.92% (fix)       4.98%       € 86    0       86
U.S. private placements

Tranche 1 – 2010
   2015       2.34% (fix)       2.40%       US$ 300    247       216
Tranche 2 – 2010
   2017       2.95% (fix)       3.03%       US$ 200    161       145
Tranche 3 – 2011
   2016       2.77% (fix)       2.82%       US$ 600    494       434
Tranche 4 – 2011
   2018       3.43% (fix)       3.50%       US$ 150    121       108
Tranche 5 – 2012
   2017       2.13% (fix)       2.16%       US$ 242.5    197       175
Tranche 6 – 2012
   2020       2.82% (fix)       2.86%       US$ 290    238       206
Tranche 7 – 2012
   2022       3.18% (fix)       3.22%       US$ 444.5    372       313
Tranche 8 – 2012
   2024       3.33% (fix)       3.37%       US$ 323    277       225
Tranche 9 – 2012
   2027       3.53% (fix)       3.57%       US$ 100    88       69
Private placements
            2,195       1,977
The U.S. private placement notes were issued ~~through~~by one of our subsidiaries that has the U.S. dollar as its functional currency.
Bank Loans
~~Our~~As at December 31, we had outstanding bank loans ~~have~~with the following terms:
Bank Loans

      Maturity    Coupon Rate    Effective Interest
Rate    Nominal Volume
on 12/31/2011 in
€ millions    Balance on
12/31/2011 in
€ millions    Balance on
12/31/2010 in
€ millions
Acquisition term loan
   2012       1.45% (var.)       2.02%       0       0       992
Additional term loan
   2012       2.64% (var.)       2.64%       100       100       100
Other loans
   —       variable       variable       2       2       7

Bank loans
               102       1,099
The acquisition term loan to finance the acquisition of Sybase in July 2010 with an initial drawdown of approximately €2.64 billion and an outstanding nominal volume of €1.0 billion as at December 31, 2010, was repaid early during 2011.
~~The coupon and the effective interest rate for the additional term loan were calculated~~
~~based on the last 12-month EURIBOR interest rate fixing for this financing instrument in 2011.~~
   Maturity Coupon Rate Effective
Interest Rate
Nominal Volume
(in respective
currency in
millions)

Carrying
Amount on
12/31/2014
(in € millions)

Carrying
Amount on
12/31/2013
(in € millions)

Concur term loan - Facility A
2015    0.272% (var.)    1.64 % €1,270    1,268    0
Concur term loan - Facility B
2017    0.532% (var.)    0.98 % €3,000    2,984    0
Other loans
INR 637    9    0
Bank loans
4,261    0
Other Financial Liabilities
Our other financial liabilities mainly comprise ~~derivative liabilities and~~ liabilities for accrued ~~interests.~~interest.
(18c) Other Non-Financial Liabilities
~~(18c)~~ ~~Other Non-Financial Liabilities~~
Other non-financial liabilities as at December 31 were as follows:
Other Non-Financial Liabilities

   2011
Term    2010
Term    2014    2013
€ millions    Current    Non-Current
Balance on
12/31/2011
   Current    Non-Current
Balance on
12/31/2010
   Current    Non-Current    Total    Current    Non-Current    Total
Other employee-related liabilities
   1,541       92       1,633       1,362       85       1,447       1,979       122       2,101       1,775       112       1,887
Share-based payments liabilities
   289       97       387       299       146       445
Other taxes
   440       0       440       364       0       364       539       0       539       488       0       488
Other non-financial liabilities
   1,981       92       2,073       1,726       85       1,811       2,807       219       3,026       2,562       257       2,819
Other employee-related liabilities mainly relate to vacation accruals, bonus and sales commission accruals, as well as employee-related social security obligations.
For more information about our share-based payments, see Note (28).
Other taxes comprise mainly payroll tax liabilities and value-added tax liabilities.
(19) ~~PROVISIONS~~Provisions
Provisions ~~based on due dates~~ as at December 31 were as follows:
Provisions

   2011    2010    2014    2013
€ millions    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total    Current    Non-Current    Total
Pension plans and similar obligations (see Note (19a))
   25       71       96       2       76       78       2       87       89       2       62       64
Other provisions (see Note (19b))
   537       195       732       1,285       216       1,501       148       62       210       344       70       414
Total
   562       266       828       1,287       292       1,579       150       149       299       346       132       478
~~(19a)~~
(19a) Pension Plans ~~and Similar Obligations~~
~~We maintain several defined benefit~~ and ~~defined contribution pension plans for our employees in Germany and at foreign subsidiaries, which provide for old age, disability, and survivors’ benefits.~~ Similar Obligations
Defined Benefit Plans
The measurement dates for ~~the~~our domestic and foreign benefit plans are December 31. Individual benefit plans have also been established for members of our Executive Board. Furthermore, in certain countries we provide termination indemnity benefits to employees regardless of the cause for termination. These types of benefits are typically defined by law in these foreign countries.
~~Our domestic defined benefit pension plans provide participants with pension benefits that~~
~~are based on the length of service and compensation of employees.~~
There is also a domestic employee-financed pension plan for which SAP guarantees a minimum return on investment which is equivalent to the return guaranteed by the insurer. Even though the risk that SAP would be liable for a return that cannot be met by the insurance company is very remote, these employee-financed plans do not qualify as defined contribution plans under IFRS and are included in domestic plan assets and plan liabilities.
~~Foreign defined benefit pension plans provide participants with pension benefits that are based on compensation levels, age, and length of service.~~
The following table shows the ~~development~~present value of the ~~present values~~nature of the benefits provided by the defined benefit obligations:
Nature of the Benefits
Domestic
Plans Foreign
Plans Other Post-
Employment Plans Total
€ millions 2014 2013 2014 2013 2014 2013 2014 2013
Present value of defined benefit obligation

Benefits based on final salary

Annuity
18    14    0    2    0    0    18    16
Lump sum
0    0    6    5    37    25    43    30
Benefits not based on final salary

Annuity
48    40    234    189    0    1    282    230
Lump sum
714    574    36    35    9    8    759    617
Total
780    628    276    231    46    34    1,102    893
Present value of the defined benefit obligations (DBOs) and the fair value of the plan assets with a reconciliation of the funded status to net ~~amounts:~~amounts as at December 31 were as follows:
~~Change in the~~ Present Value of the DBO and the Fair Value of the Plan Assets

   Domestic
Plans    Foreign Plans    Other Post-
Employment Plans    Total
€ millions    2011    2010    2011    2010    2011    2010    2011    2010
Change in benefit obligation

Benefit obligation at beginning of year
   416       346       439       343       25       20       880       709
Service cost
   –2       –4       19       17       3       3       20       16
Interest cost
   20       18       14       17       1       1       35       36
Employee contributions
   25       46       4       4       0       0       29       50
Actuarial loss (+)/gain (–)
   11       13       0       29       –1       2       10       44
Benefits paid
   –5       –4       –28       –17       –2       –1       –35       –22
Acquisitions/divestitures
   –4       1       –1       4       0       4       –5       9
Curtailments/settlements
   0       0       –3       0       0       –4       –3       –4
Other changes
   1       0       0       0       0       0       1       0
Past service cost
   0       0       –3       –3       0       0       –3       –3
Foreign currency exchange rate changes
   0       0       16       45       1       0       17       45
Benefit obligation at year-end
   462       416       457       439       27       25       946       880
Thereof fully or partially funded plans
   462       416       417       404       13       12       892       832
Thereof unfunded plans
   0       0       40       35       14       13       54       48
Change in plan assets

Fair value of plan assets at beginning of year
   414       345       386       311       4       4       804       660
Expected return on plan assets
   19       17       7       19       1       0       27       36
Employer contributions
   2       1       17       31       3       5       22       37
Employee contributions
   25       46       4       4       0       0       29       �� 50
Benefits paid
   –5       –4       –28       –17       –2       –1       –35       –22
Acquisitions/divestitures
   –4       0       0       2       0       0       –4       2
Settlements
   0       0       –3       0       0       –4       –3       –4
Other changes
   0       0       0       0       –1       0       –1       0
Actuarial loss (-)/gain (+)
   9       9       –7       –1       0       0       2       8
Foreign currency exchange rate changes
   0       0       11       37       0       0       11       37
Fair value of plan assets at year-end
   460       414       387       386       5       4       852       804
Funded status at year-end
   –2       –2       –70       –53       –22       –21       –94       –76
Amounts recognized in the Consolidated Statement of Financial Position:

Non-current pension assets
   0       0       2       2       0       0       2       2
Accrued benefit liability (current)
   0       0       –25       –2       0       0       –25       –2
Accrued benefit liability (non-current)
   –2       –2       –47       –53       –22       –21       –71       –76
Total
   –2       –2       –70       –53       –22       –21       –94       –76
Domestic
Plans Foreign
Plans Other Post-
Employment Plans Total
€ millions 2014 2013 2014 2013 2014 2013 2014 2013
Present value of the DBO
780    628    276    231    46    34    1,102    893
Thereof fully or partially funded plans
780    628    239    196    26    20    1,045    844
Thereof unfunded plans
0    0    37    35    20    14    57    49
Fair value of the plan assets
767    623    234    201    13    11    1,014    835
Net defined benefit liability (asset)
13    5    43    30    33    23    89    58
Amounts recognized in the Consolidated Statement of Financial Position:

Non-current other financial assets
0    0    0    6    0    0    0    6
Current provisions
0    0    –2    –2    0    0    –2    –2
Non-current provisions
–13    –5    –41    –34    –33    –23    –87    –62
Total
–13    –5    –43    –30    –33    –23    –89    –58
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:
Actuarial Assumptions ~~for Defined Benefit Liabilities~~

   Domestic Plans    Foreign Plans    Other Post-Employment Plans    Domestic Plans    Foreign Plans    Other Post-
Employment Plans
Percent    2011    2010    2009    2011    2010    2009    2011    2010    2009    2014    2013    2012    2014    2013    2012    2014    2013    2012
Discount rate
   4.6       4.9       5.1       3.2       3.3       4.7       5.4       5.7       5.7       2.2       3.6       3.3       1.1       2.1       1.9       4.2       5.2       4.8
Rate of compensation increase
   2.5       2.5       2.5       1.8       1.8       2.3       3.0       5.0       6.9
Future salary increases
   2.5       2.5       2.5       1.7       1.7       1.8       3.8       4.7       4.2
Future pension increases
   2.0       2.0       2.0       0.0       0.0       0.0       0.0       0.0       0.0
Employee turnover
   2.0       2.0       2.0       10.1       9.9       9.5       1.3       2.5       2.3
Inflation
   0.0       0.0       0.0       1.3       1.3       1.3       1.3       1.1       1.1
The ~~assumed~~sensitivity analysis table shows how the present value of all defined benefit obligations would have been influenced by reasonable 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. The reasonable possible change in actuarial assumptions of 50 basis points in either direction, except for discount ~~rates are derived from rates available on high-quality corporate bonds and government bonds for which~~rate, would not materially influence the ~~timing and amounts~~present value of ~~payments match the timing and the amounts of our projected pension payments.~~all defined benefit obligations.
Sensitivity Analysis
   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2014 2013 2014 2013 2014 2013 2014 2013
Present value of all defined benefit obligations if:

Discount rate was 50 basis points higher
725    585    259    217    44    32    1,028    834
Discount rate was 50 basis points lower
840    675    296    246    49    36    1,185    957
The components of total expense of defined benefit pension plans for the years ~~2011, 2010,~~2014, 2013, and ~~2009~~2012 recognized in operating expense were as follows:
Total Expense of Defined Benefit Pension Plans

   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2011 2010 2009 2011 2010 2009 2011 2010 2009 2011 2010 2009
Service cost
–2    –4    –6    19    17    15    3    3    2    20    16    11
Interest cost
20    18    18    14    17    15    1    1    1    35    36    34
Expected return on plan assets
–19    –17    –15    –7    –19    –14    –1    0    0    –27    –36    –29
Curtailment
0    0    0    0    0    –1    0    0    0    0    0    –1
Past service cost
0    0    0    –3    –3    0    0    0    0    –3    –3    0

Total expense
–1    –3    –3    23    12    15    3    4    3    25    13    15
Actual return on plan assets
28    26    -3    5    18    42    0    0    0    33    44    39
Due to the fact that 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 turn into 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.~~
~~We have recognized the following amounts of actuarial gains and losses for our defined benefit pension plans:~~
~~Actuarial Gains (Losses) on Defined Benefit Pension Plans~~

   Domestic Plans Foreign Plans Other Post-Employment
Plans Total
€ millions 2011 2010 2009 2011 2010 2009 2011 2010 2009 2011 2010 2009
Beginning balance of actuarial gains (-) and losses (+) on defined benefit plans
–6    –10    –18    86    53    57    0    –2    –2    80    41    37
Actuarial gains (-) and losses (+) on defined benefit plans recognized during the period
2    4    5    7    30    3    –1    2    0    8    36    8
Other changes
0    0    3    0    0    –5    –1    0    0    –1    0    –2
Foreign currency exchange rate changes
0    0    0    4    3    –2    1    0    0    5    3    –2
Ending balance of actuarial gains (-) and losses (+) on defined benefit plans
–4    –6    –10    97    86    53    –1    0    –2    92    80    41
For the determination of the total expense for the years 2011, 2010, and 2009, the projection of the defined benefit obligation and the fair value of the plan assets as at December 31, 2011, 2010, and 2009, the following principal actuarial assumptions (expressed as weighted averages for our foreign and post-employment benefit plans) were used:
~~Actuarial Assumptions for Total Expense~~

   Domestic Plans Foreign Plans Other Post-Employment Plans
%     2011         2010         2009         2011         2010         2009         2011         2010         2009
Discount rate
4.9    5.1    5.8    3.2    4.4    5.0    5.3    5.6    6.5
Expected return on plan assets
4.5    4.5    4.5    1.5    5.1    5.3    7.8    7.6    6.5
Rate of compensation increase
2.5    2.2    2.1    1.8    1.8    2.3    3.1    4.9    6.3
   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012
Current service cost
3    7    –2    16    15    15    6    3    3    25    25    16
Interest expense
22    19    21    5    4    8    2    1    1    29    24    30
Interest income
–23    –20    –22    –5    –4    –7    –1    –1    –1    –29    –25    –30
Past service cost
0    0    0    0    1    0    0    0    0    0    1    0
Total expense
3    6    –3    16    16    16    7    4    3    26    26    16
Actual return on plan assets
133    10    106    10    9    15    1    1    1    144    20    122

Our investment strategy on domestic benefit plans is to invest all contributions in stable insurance policies. ~~The expected rate of return on plan assets for our domestic benefit~~
~~plans is calculated by reference to the expected returns achievable on the insured policies given the expected asset mix of the policies.~~
The expected return assumptions for our foreign plan assets are based on weighted average expected long-term rates of return for each asset class, estimated based on factors such as historical return patterns for each asset class and forecasts for inflation. We review historical return patterns and other relevant financial factors for appropriateness and reasonableness and make modifications to eliminate certain effects when considered necessary. Our ~~foreign benefit plan asset allocation at December 31, 2011, and our target asset allocation for the year 2012 are as follows:~~
~~Plan Asset Allocation for Foreign Plans and Other Post-Employment Obligations~~

Percent    Target Asset
Allocation 2012    Actual % of 2011
Plan Assets    Target Asset
Allocation 2011    Actual % of 2010
Plan Assets
Asset category

Equity
   12       10       12       11
Fixed income
   66       60       81       80
Real estate
   3       3       3       5
Insurance policies
   1       1       0       0
Cash and other assets
   18       26       4       4

Total
   100       100       100       100
~~The~~ investment strategies for foreign benefit plans vary according to the ~~respective~~ 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. ~~Our~~Although our policy is to invest in a risk-diversified portfolio consisting of
a mix of assets, ~~within~~both the ~~above target~~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 the underfunding by addition of liquid assets. To minimize these actuarial and market fluctuations, SAP reviews relevant financial factors for appropriateness and reasonableness and makes modifications to eliminate certain effects when considered necessary.
Our plan asset allocation ~~range.~~as at December 31, 2014, and December 31, 2013, was as follows:
Plan Asset Allocation
   2014    2013
€ millions    Quoted in
an Active
Market    Not
Quoted in
an Active
Market    Quoted in
an Active
Market    Not
Quoted in
an Active
Market
Asset category

Equity investments
   75       0       48       0
Corporate bonds
   60       0       65       0
Government bonds
   1       0       0       0
Real estate
   31       0       33       0
Insurance policies
   0       780       0       632
Cash and cash equivalents
   41       0       34       0
Others
   27       0       23       0
Total
   234       780       203       632
Our expected contribution in ~~2012 is €1 million for~~2015 to our domestic ~~defined benefit pension plans~~ and ~~€47 million for~~ foreign defined benefit pension plans ~~all~~is immaterial. The weighted duration of ~~which is expected~~our
defined benefit plans amounted to ~~be paid in cash.~~14 years as at December 31, 2014, and 15 years as at December 31, 2013.

The ~~amounts for~~table below presents the ~~current year and four preceding years~~maturity analysis of ~~pension obligation, plan assets, funded status, and experience adjustments are as follows:~~the benefit payments:
~~Pension Obligation, Plan Assets, Funded Status and Experience Adjustments~~Maturity Analysis

   Domestic Plans Foreign Plans Other Post-Employment
Plans Total
€ millions 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007
Defined benefit obligation
462    416    346    314    274    457    439    343    306    287    27    25    20    18    13    946    880    709    638    574
Liability experience adjustments
11    13    –13    –10    –37    0    29    31    –45    0    –1    2    0    0    –1    10    44    18    –55    –38
Plan assets
460    414    345    314    272    387    386    311    261    311    5    4    4    3    0    852    804    660    578    583
Asset experience adjustments
9    9    –18    –8    –30    –7    –1    28    –99    –10    0    0    0    0    0    2    8    10    –107    –40

Funded status
–2    –2    –1    0    –2    –70    –53    –32    –45    24    –22    –21    –16    –15    –13    –94    –76    –49    –60    9
      Domestic Plans    Foreign Plans    Other Post-
Employment
Plans
€ millions    2014    2013    2014    2013    2014    2013
Less than a year
   10       8       23       20       2       1
Between 1-2 years
   17       9       40       36       2       2
Between 2-5 years
   56       58       58       53       6       5
Over 5 years
   983       989       195       205       17       64
Total
   1,066       1,064       316       314       27       72
Defined Contribution ~~Plan/~~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 ~~as well as in~~and some other countries we make contributions to public pension plans that are operated by national or local government or a similar institution. The expenses of defined contribution plans and state plans for the years ~~2011, 2010,~~2014, 2013, and ~~2009,~~2012, were as follows:
Total Expense of Defined Contribution Plans and State Plans

€ millions        2011            2010            2009        2014    2013    2012
Defined contribution plans
   151       136       132       188       182       173
State plans
   244       215       183       360       316       296

Total expense
   395       351       315       548       498       469
(19b) Other Provisions
~~(19b)~~ ~~Other Provisions~~
Changes in other provisions over the reporting year were as follows:
Other Provisions

€ millions Balance
1/1/2011 Addition Accretion Acqui-
sition Utili-
zation Release Currency
Impact Balance
12/31/2011 1/1/2014 Addition Accretion
Utili-
zation
Release Currency
Impact 12/31/2014
Employee-related provisions
52    70    5    –74    –7    1    47
Provisions for share-based compensation
147    49    0    0    –70    –9    2    119
Other employee-related provisions
167    93    0    0    –63    –8    0    189
Customer-related provisions
50    83    0    0    –56    –29    0    48    36    115    0    –113    –2    2    39
Litigation-related provisions

TomorrowNow litigation
997    32    0    0    –25    –757    –16    231
Other litigation-related provisions
43    26    0    0    –13    –5    2    53
TomorrowNow and Versata litigation
223    331    0    –555    –23    25    1
Other intellectual property-related litigation
12    2    0    –3    –1    1    11
Intellectual property-related provisions
235    333    0    –558    –24    26    12
Restructuring provisions
33    137    0    –102    –11    2    59
Onerous contract provisions (other than from customer contracts)
33    0    2    –11    –2    2    24
Other provisions
97    17    5    5    –25    –8    1    92    24    7    0    –2    –1    1    29

Total Other Provisions
1,501    300    5    5    –252    –816    –11    732
Total other provisions
414    662    7    –859    –47    34    210
Thereof current
1,285    537    344    148
Thereof non-current
216    195    70    62

~~For more information about~~Intellectual property-related provisions relate to litigation matters. Customer-related provisions relate primarily to disputes with individual customers. The expense from customer-related provisions was almost completely offset by insurance proceeds. Both classes of provision are described in Note (24).
In 2014, we established a restructuring plan to execute a number of organizational changes triggered by our ~~share-based compensation programs, see Note (28).~~
~~Other employee-related~~new cloud and simplification strategy. Restructuring provisions primarily ~~comprise obligations for time credits,~~include personnel costs which result from severance payments ~~jubilee expenses,~~for employee terminations and ~~semiretirement. While most~~contract termination costs, including those relating to the termination of ~~these employee-related~~lease contracts.
Prior year restructuring provisions ~~could be claimed within~~relate to restructuring activities incurred in connection with the ~~next 12 months, we do not expect~~organizational changes in sales and go-to-market in the ~~related cash flows within this time period.~~
~~Customer-related provisions include performance obligations~~EMEA and North America regions as well as ~~expected contract losses.~~the integration of Sybase employees into our global finance and administration organization and the integration of the business activities of Crossgate. For more details, see Note (7). The ~~associated~~
cash outflows associated with employee-related restructuring costs are substantially short-term in nature.
~~Litigation-related provisions relate primarily to the litigation matters described in Note (24). We have established provisions taking into account the facts of each case.~~ The timing of the cash ~~outflows~~flows associated with ~~legal claims~~
~~cannot be reasonably determined in all cases. The legal and litigation-related~~facility-related provisions ~~assumed in connection with~~is dependent on the ~~2011 acquisitions are measured at provisional values. For details see Note (3c). The estimate regarding the provision for the TomorrowNow litigation was adjusted substantially following the judgment~~remaining term of the ~~court in September 2011. For more details, see Note (24).~~associated lease.
Other provisions relate mainly to decommissioning, restoration and similar liabilities associated with leased facilities, onerous contracts, warranty obligations and restructuring provisions. The associated cash outflows for decommissioning, restoration and similar liabilities, which are typically long-term in nature, are generally expected to occur at the dates of exit of the facilities to which they relate. The utilization of onerous leases depends on the terms of the underlying lease contract. The related outflow for the remaining other provisions is of short-term nature.
(20) ~~DEFERRED INCOME~~Deferred Income
Deferred income consists mainly of prepayments made by our customers for cloud subscriptions, support services and ~~professional services,~~consulting services; fees from multiple element arrangements allocated to undelivered ~~elements,~~elements; and amounts recorded in purchase accounting at fair value for obligations to perform under acquired support contracts in connection with acquisitions.
As at December 31, 2014, current deferred income included a total of €690 million in deferred revenue (December 31, 2013: €443 million), which in the future will be recognized as revenue from cloud subscriptions and support.
(21) ~~TOTAL EQUITY~~Total Equity
Issued Capital
As at December 31, ~~2011,~~2014, SAP AGSE had issued ~~1,228,083,382~~1,228,504,232 no-par value bearer shares (December 31, ~~2010: 1,226,822,697)~~2013: 1,228,504,232) with a calculated nominal value of €1 per share. Upon conversion of the Company into an SE, all shares of SAP AG became shares of SAP SE. All the shares issued are fully paid. The following table shows the changes in the number and the value of issued shares and treasury shares in millions.
Change in Issued Capital and Treasury Shares

   Number of Shares in
Millions    Value in € Millions
   Issued
Capital    Treasury
Shares    Issued
Capital    Treasury
Shares
January 1, 2009
   1,226       –38       1,226       –1,362
Issuing shares under share-based payment programs
   0       0       0       0
Reissuance of treasury shares under share-based payment programs
   0       1       0       42

December 31, 2009
   1,226       –37       1,226       –1,320
Issuing shares under share-based payment programs
   1       0       1       0
Purchase of treasury shares
   0       –6       0       –220
Reissuance of treasury shares under share-based payment programs
   0       4       0       158

December 31, 2010
   1,227       –39       1,227       –1,382
Issuing shares under share-based payment programs
   1       0       1       0
Purchase of treasury shares
   0       –6       0       –246
Reissuance of treasury shares under share-based payment programs
   0       7       0       251

December 31, 2011
   1,228       –38       1,228       –1,377
   Number of Shares
in Millions    Value in € Millions
      Issued
Capital    Treasury
Shares    Issued
Capital    Treasury
Shares
January 1, 2012
   1,228       –38       1,228       –1,377
Issuing shares under share-based payments
   1       0       1       0
Purchase of treasury shares
   0       –1       0       –53
Reissuance of treasury shares under share-based payments
   0       2       0       93
December 31, 2012
   1,229       –37       1,229       –1,337
Reissuance of treasury shares under share-based payments
   0       2       0       57
December 31, 2013
   1,229       –35       1,229       –1,280
Reissuance of treasury shares under share-based payments
   0       2       0       56
December 31, 2014
   1,229       –33       1,229       –1,224
Authorized Shares
The Articles of Incorporation authorize the Executive Board to increase the issued capital:

Up to a total amount of €250 million by issuing new ~~common~~no-par value bearer shares against contributions in cash until June 7, 2015 (Authorized Capital I). The issuance is subject to the statutory subscription rights of existing shareholders.

Up to a total amount of €250 million by issuing new ~~common~~no-par value bearer shares against contributions in cash or in kind until June 7, 2015 (Authorized Capital II). Subject to ~~certain preconditions and~~ the consent of the Supervisory Board, the Executive Board is authorized to exclude the shareholders’ statutory subscription ~~rights.~~rights in certain cases.

Up to a total amount of approximately €30 million by issuing new ~~common~~no-par value bearer shares against contributions in cash or in kind until June 7, 2015 (Authorized Capital III). The new shares ~~can~~may only be used ~~for share-based compensation (as employee~~to grant shares to employees of SAP SE and its subsidiaries (employee shares). ~~Shareholders’~~The shareholders’ subscription rights are excluded.
Contingent Shares
SAP ~~AG’s issued~~SE’s share capital is subject to a contingent capital increase ~~of common shares. The contingent increase~~which may be effected only to the
extent that the holders or creditors of ~~the~~ convertible bonds ~~and~~or stock options ~~that were~~ issued or guaranteed by SAP AGSE or any of its directly or indirectly controlled subsidiaries under certain share-based ~~payment plans~~payments exercise their conversion or subscription ~~rights.~~rights, and no other methods for servicing these rights are used. As at December 31, ~~2011, €134~~2014, €100 million, representing ~~134~~100 million shares, iswas still available for issuance ~~(2010: €207~~(2013: €100 million).
~~Share Premium~~
Share premium represents all capital contributed to SAP with the proceeds resulting from the issuance of issued capital in excess of their calculated par value. Share premium arises mainly from issuance of issued capital, treasury shares transactions and share-based compensation transactions.
~~Retained Earnings~~
Retained earnings contain prior years’ undistributed profit after tax and unrecognized pension costs. Unrecognized pension costs comprise actuarial gains and losses relating to defined benefit pension plans and similar obligations.

Other ~~comprehensive income~~Comprehensive Income
The component of other comprehensive income before tax that will be reclassified to profit or loss in the future includes the following items:
Items ~~Booked~~Recognized in Other Comprehensive Income ~~that~~That will be Reclassified to Profit or
Loss Before Tax

€ millions    2011    2010    2009
Gains (losses) on exchange differences on translation
   106       193       76
Reclassification adjustments on exchange differences on translation
   0       0       –2

Exchange differences on translation
   106       193       74
Gains (losses) on remeasuring available-for-sale financial assets
   –6       5       15
Reclassification adjustments on available-for-sale financial assets
   –1       –2       0

Available-for-sale financial assets
   –7       3       15
Gains (losses) on cash flow hedges
   –23       –88       –41
Reclassification adjustments on cash flow hedges
   22       67       84

Cash flow hedges
   –1       –21       43
€ millions    2014    2013    2012
Gains (losses) on exchange differences
   1,165       –576       –214
Gains (losses) on remeasuring available-for-sale financial assets
   130       79       33
Reclassification adjustments on available-for-sale financial assets
   –2       –19       –20
Available-for-sale financial assets
   128       60       13
Gains (losses) on cash-flow hedges
   –41       78       21
Reclassification adjustments on cash-flow hedges
   3       –78       42
Cash-flow hedges
   –38       0       63

Treasury Shares
By resolution of SAP ~~AG’s Annual~~SE’s General Meeting of Shareholders held on June 4, 2013, the authorization granted by the General Meeting of Shareholders of 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 ~~AG was authorized~~SE to ~~purchase,~~acquire, on or before June ~~30, 2013,~~3, 2018, shares of SAP SE representing a pro rata amount of capital stock of up to ~~120~~€120 million in aggregate, provided that the shares ofpurchased under the ~~Company on the condition that such share purchases,~~authorization, together with any other shares in the Company previously acquired ~~shares,~~and held by, or attributable to, SAP SE do not account for more than 10% of SAP ~~AG’s~~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 ~~subscription rights and~~option or conversion rights under the Company’s share-based payment ~~programs.~~plans. Also, we may use ~~the~~ shares held in treasury as consideration in connection with ~~the acquisition~~mergers with, or acquisitions of, other companies.
~~Miscellaneous~~Dividends
~~Under the German Stock Corporation Act (Aktiengesetz), the~~The total ~~amount of dividends~~dividend available for distribution to SAP ~~AG’s~~SE shareholders is based on the profits of SAP AGSE as reported in its statutory financial statements ~~which are determined~~
prepared under the accounting rules ~~stipulated by~~in the German Commercial Code ~~(Handelsgesetzbuch)~~(Handelsgesetzbuch). For the year ended December 31, ~~2011,~~2014, the Executive Board ~~of SAP AG~~ intends to propose that a dividend of €1.10 per share (that is, an estimated total dividend of ~~€1,3 billion) to~~€1,315 million), be paid from the profits of SAP ~~AG.~~SE.
Dividends per share for ~~2010~~2013 and ~~2009~~2012 were ~~€0.60~~€1.00 and ~~€0.50~~€0.85 respectively and were paid in the succeeding year.
(22) ~~ADDITIONAL CAPITAL DISCLOSURES~~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 ~~aim for~~seek to maintain a capital structure that ~~gives~~will allow us to cover our funding requirements through the capital markets at reasonable conditions, and in so doing, ensure a high ~~degree~~level of independence,
~~security,~~ confidence, and financial ~~flexibility so that we can, for example, access capital markets on reasonable terms to satisfy funding requirements.~~flexibility.
~~We currently do not have a~~After undergoing an external credit rating process, on September 19, 2014, SAP SE was assigned a first-time long-term issuer credit rating of “A2” by Moody’s and “A” by Standard & Poor’s, both with ~~any agency. We do not believe that a rating would have a substantial effect on our current or future borrowing conditions and financing options.~~outlook “Stable”.

Capital Structure

   2011    2010    % Change
   € Millions
% of
Equity and
Liabilities
   € Millions
% of
Equity and
Liabilities

Total equity
   12,707       55       9,824       47       29
Total current liabilities
   6,266       27       5,153       25       22
Total non-current liabilities
   4,252       18       5,862       28       –27
Total liabilities
   10,518       45       11,015       53       –5
Equity and liabilities
   23,225       100       20,839       100       11
   2014    2013    Change (in %)
   € millions
% of
Total equity and
liabilities
   € millions
% of
Total equity and
liabilities

Equity
   19,598       51       16,048       59       22
Current liabilities
   8,544       22       6,347       23       35
Non-current liabilities
   10,366       27       4,695       17       121
Liabilities
   18,909       49       11,043       41       71
Total equity and liabilities
   38,507       100       27,091       100       42
~~At year-end 2011,~~In 2014, we ~~returned~~took out a two-tranche bank loan of €4,270 million in total and issued a three-tranche Eurobond of €2,750 million in total with maturities of four to ~~being mainly equity-financed, as our debt ratio (defined as~~twelve years to finance the ~~ratio~~acquisition of ~~total liabilities to equity~~Concur. In addition, we took a €500 million short-term bank loan for the acquisition of Fieldglass and ~~liabilities) decreased to 45% at~~repaid it in the ~~end of 2011 (as compared to 53% at~~same year. We also repaid a €500 million Eurobond and the ~~end of 2010). This positive development is mainly due to the strong operating cash flow in 2011, which enabled us to repay all~~last tranche of the ~~acquisition-related debt outstanding as at December 31, 2010. For the same reason,~~promissory notes amounting to €86 million. Thus, the ratio of total financial debt to total equity and liabilities ~~decreased~~increased by 13 percentage points to ~~17%~~29% at the end of ~~2011 (21%~~2014 (16% as at December 31, ~~2010)~~2013).
Total financial debt consists of current and non-current bank loans, bonds and private placements. For more information about our financial debt, see Note (18).
As part of our financing activities, the Company intends to repay a €550 million Eurobond as well as a US$300 million U.S. private placement tranche when they mature in 2015. Furthermore, we are planning to repay a substantial portion of our outstanding bank loans.
We will consider issuing new debt, such as bonds or U.S. private placements, to refinance existing bank loans or to cover additional capital needs.
While we continuously monitor ~~these~~the ratios ~~continuously,~~presented in and below the table above, our main focus is on the management of our net liquidity position as outlined in the following table:
Group Liquidity of SAP Group

€ millions    2011    2010    Change
Cash and cash equivalents
   4,965       3,518       1,447
Current investments
   636       10       626

Total Group liquidity
   5,601       3,528       2,073
Current bank loans
   101       1       100
Current private placement transactions
   423       0       423
Current bonds
   600       0       600

Net liquidity 1
   4,477       3,527       950
Non-current bank loans
   1       1,106       –1,105
Non-current private placement transactions
   1,240       1,071       169
Non-current bonds
   1,600       2,200       –600

Net liquidity 2
   1,636       –850       2,486
€ millions    2014    2013    Change
Cash and cash equivalents
   3,328       2,748       580
Current investments
   95       93       2
Group liquidity
   3,423       2,841       582
Current financial debt
   –2,157       –586       –1,571
Net liquidity 1
   1,266       2,255       –989
Non-current financial debt
   –8,936       –3,722       –5,214
Net liquidity 2
   –7,670       –1,467       –6,203

~~Net liquidity 1 is total Group liquidity minus current financial debt. The increase of current financial debts relates to reclassifications due to changes in the respective maturity profile.~~
Net liquidity 2 is net liquidity 1 minus non-current financial debt. Our strong operating cash flow in 2011 was the main reason for the improvement of our net liquidity ratios since December 31, 2010. The increase in private placement liabilities in 2011 compared with December 31, 2010, results from a US$750 million private placement transaction concluded in the United States on June 1, 2011.
We seek to maintain a positive net liquidity position at the end of 2012. We intend to reduce our financial debt as and when the debt falls due. We will consider issuing new debt, such as bonds or private U.S. placements, only if market conditions are advantageous. Depending on the level of net liquidity we seek to achieve, we intend to continue to consider repurchasing
~~shares for treasury in the future, but not before the fourth quarter of 2012.~~
~~For further information about our financial debt, see Note (18b).~~
Distribution Policy
Our ~~goal~~general intention is to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and potentially repurchasing shares. The amount of future dividends and the extent of future repurchases of shares will be balanced with our effort to ~~continue to~~ maintain an adequate liquidity position.
In ~~2011,~~2014, we ~~were able to distribute €713~~distributed €1,194 million in dividends from our ~~2010~~2013 profit ~~(as compared~~(compared to ~~€594~~€1,013 million in ~~each of 2010~~2013 and ~~2009~~€1,310 million in
2012 related to ~~2009~~2012 and ~~2008~~2011 profit, respectively)., representing €1.00 per share. Aside from the distributed dividend, in ~~2011 and 2010~~2012 we also returned
~~€246 and €220~~ €53 million ~~respectively~~ to our shareholders by repurchasing our own ~~shares (no share repurchase occurred in 2009).~~shares.
~~Commitments exist in connection with~~As a result of our equity-settled share-based ~~payment plans~~payments transactions (as
described in ~~(Note 28)~~Note (28))~~, which~~ we have commitments to grant SAP shares to employees. We intend to meet these commitments by reissuing treasury shares or issuing ~~common shares (For~~ordinary shares. For more information about contingent capital, see ~~(Note 21))~~Note (21).

(23) ~~OTHER FINANCIAL COMMITMENTS AND CONTINGENT LIABILITIES~~
Other Financial Commitments

Other Financial Commitments

Our other financial commitments as at December 31, ~~2011,~~2014, and ~~2010,~~2013, were as follows:

Other Financial Commitments


€ millions	2011		2010		2014		2013
Operating leases		878		754		1,332		1,204
Contractual obligations for acquisition of property, plant, and equipment and intangible assets		76		74		111		80
Other purchase obligations		496		387		748		390

Purchase obligations		572		461		859		470
Capital contribution commitments						77		34
Total		1,450		1,215		2,268		1,708

Our operating leases relate primarily to the lease of office space, hardware, and ~~cars,~~vehicles, with remaining non-cancelable lease terms between less than one and 2534 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 ~~car purchase obligations.~~vehicles. The remaining obligations relate mainly to marketing, consulting, maintenance, license agreements, and other ~~third-party~~third-

party agreements. Historically, the majority of such purchase obligations have been realized.

SAP invests and holds interests in other entities. As of December 31, 2014, total commitments to such equity investments amounted to €123 million (2013: €62 million) of which €46 million had been drawn (2013: €28 million). By investing in such equity investments, we are exposed to the risks inherent in the business segments in which these funds choose to invest contributed funds. Our maximum exposure to loss is the amount invested plus unavoidable future capital contributions.

Commitments ~~under operating leasing contracts and purchase obligations~~ as at December 31, ~~2011,~~2014, were as follows:

Other Financial Commitments


€ millions	Operating Leases		Purchase Obligations		Operating Leases		Purchase Obligations		Capital Contribution Commitments
Due 2012		212		371
Due 2013-2016		535		170
Due 2015						262		479		77
Due 2016–2019						729		318		0
Due thereafter		131		31		341		62		0

		878		572
Total						1,332		859		77

Our rental and operating lease expenses were ~~€241~~€291 million, ~~€267~~€273 million, and

~~€264~~ €277 million for the years ~~2011, 2010,~~2014, 2013, and ~~2009,~~2012, respectively.

~~Contingent Liabilities~~

In the normal course of business, we usually indemnify our customers against liabilities arising from a claim that our software products infringe a third party’s patent, copyright, trade secret, or other proprietary rights. In addition, we occasionally grant function or performance guarantees in routine consulting contracts or development arrangements. Also, our software license agreements generally include a clause guaranteeing that the software substantially conforms to the specifications as described in applicable documentation for a period of six to 12 months from delivery. Our product and service warranty liability, which is measured based on historical experience and evaluation, is included in other provisions (see Note (19b)).

~~For contingent liabilities related to litigation matters, see Note (24).~~

(24)	~~LITIGATION AND CLAIMS~~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 ~~which~~ we have acquired, ~~and~~ claims that relate to customers demanding indemnification for proceedings initiated against them based on their use of SAP ~~software.~~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 record a provision for such matters when it is probable that we have a present obligation that results from a past event, is reliably estimable and the settlement of which is probable to require an outflow of resources embodying economic benefits. For the TomorrowNow litigation, we have recorded a provision of US$272 million (US$1.3 billion as at December 31, 2010). We currently believe that resolving ~~all other~~the claims and lawsuits ~~against us,~~pending as of December 31, 2014, will neither individually ornor in the aggregate ~~did not and will not~~ have a material adverse effect on our business, financial position, profit, or cash flows. Consequently, the provisions ~~currently~~ recorded

for these ~~other~~ claims and lawsuits as of December 31, 2014, are neither individually nor in aggregate material to SAP.

However, the outcome of litigation and ~~other~~ claims ~~or lawsuits~~ is intrinsically subject to considerable uncertainty. Management’s view of the litigation may also

change in the future. Actual outcomes of litigation and ~~other~~ claims ~~or lawsuits~~ 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. ~~We cannot~~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 ~~maximum possible loss in case of an unfavorable outcome.~~

~~For a description of the development of the provisions recorded~~financial effect that these lawsuits and claims would have if SAP were to incur expenditure for ~~litigation, see Note (19b).~~these cases.

Among the claims and lawsuits are the ~~following:~~following classes:

Intellectual ~~Property~~Property-related Litigation and Claims

~~In January 2007, German-based CSB-Systems AG (CSB) instituted legal proceedings~~Intellectual property-related litigation and claims comprise cases in ~~Germany against SAP. CSB alleges~~which third parties have threatened or initiated litigation claiming that ~~SAP’s products infringe~~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 recorded for intellectual property-related litigation and claims ~~of a German patent~~ and ~~a German utility model held by CSB. In its complaint, CSB has set~~ the change in the carrying amount in ~~dispute at €1 million~~the reporting period are disclosed in Note (19b). The expected timing of any resulting outflows of economic benefits from these lawsuits and claims is ~~seeking permanent injunctive relief. Within these proceedings CSB is~~uncertain and not ~~precluded from requesting damages in excess~~estimable as it depends generally on the duration of ~~the amount in dispute. In July 2007, SAP filed its response in~~ the legal proceedings ~~including~~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 ~~nullity action~~claim has been quantified were not material to us as of December 31, 2014 and ~~cancellation proceeding against~~2013. Based on our past experience, most of the ~~patent~~

intellectual property-related litigation and ~~utility model, respectively. The nullity hearing on~~claims tend to be either dismissed in court or settled out of court for amounts significantly below the ~~German patent was held in January 2009~~originally claimed amounts and not material to our consolidated financial statements. Only a few cases (specifically the TomorrowNow and the ~~German court determined that the patent is invalid. On appeal~~Versata litigation) ultimately resulted in ~~June 2011, the Federal Supreme Court also concluded the patent was invalid. The cancellation hearing for the utility model was held in May 2009~~a significant cash outflow, as described below.

Individual cases of intellectual property-related litigation and ~~the court determined that the utility model was invalid. CSB is appealing the invalidity determination of the utility model, however, the infringement hearing has been stayed pending the appeals.~~

~~In May 2010, CSB-Systems International, Inc., (CSB) instituted legal proceedings in the United States against SAP. CSB alleges that SAP’s products infringe one or more of the~~ claims ~~in one patent held by CSB. In its complaint, CSB seeks unspecified monetary damages and permanent injunctive relief. The Markman hearing was held in June 2011. The trial is scheduled for June 2012.~~comprise:

In March 2007, United States-based Oracle Corporation and certain of its subsidiaries (Oracle) instituted legal proceedings in the United States against TomorrowNow, Inc., its parent company SAP America, Inc., and SAP America’s parent company SAP AGSE (SAP). Oracle filed several amended complaints between 2007 and 2009. As amended, the lawsuit alleges copyright infringement, violations of the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act, unfair competition, intentional and negligent interference with prospective economic advantage, and civil conspiracy. The lawsuit alleges that SAP unlawfully copied and misappropriated proprietary, copyrighted software products and other confidential materials developed by Oracle to service its own customers. The lawsuit ~~seeks~~sought injunctive relief and monetary damages, including punitive damages, alleged by Oracle to be in the billions of U.S. dollars. The trial was held in November 2010. Prior to trial, SAP ~~AG,~~SE, SAP America and TomorrowNow stipulated to liability for certain claims and SAP agreed to pay Oracle US$120 million for attorneys’ fees. After the trial, the jury returned a damages verdict of US$1.3 billion. The judgment, which was issued on February 3, 2011, additionally provided for prejudgment interest of US$15 million. The judgment amount iswas also subject to post-judgment interest, which accrues from the time judgment iswas entered.

The jury based its verdict on the theory of a hypothetical license, that is, the value of what TomorrowNow would have paid if it had negotiated with Oracle a license for the copyrights infringed by TomorrowNow. Before and during the course of the trial, various

damages amounts had been presented by the parties to the litigation. They included the following:

Before the trial, Oracle had requested damages in excess of US$3.5 billion based on alleged “saved acquisition costs,” the court dismissed that damage claim based on a pretrial motion, but Oracle had ~~requested damages in excess of US$3.5 billion based on alleged “saved acquisition costs”; the court dismissed that damages claim based on a pretrial motion, but Oracle has~~ the right to appeal that dismissal.

b)	During the trial, Oracle’s damages experts presented an amount of US$408 million based on lost profits and disgorgement of infringer’s profit.

During the trial, members of Oracle management presented, as part of their testimonies, amounts of up to US$5 billion. Oracle’s damages expert presented a damages estimate of “at least” US$1.655 billion under a hypothetical license theory. Oracle’s counsel asked the jury to award “somewhere between US$1.65 and US$3 billion.”

c) During the trial, members of Oracle management presented, as part of their testimonies, amounts of up to US$5 billion. Oracle’s damages expert presented a damages estimate of “at least” US$1,655,600,000 under a hypothetical license theory. Oracle’s counsel asked the jury to award “somewhere between US$1.65 and US$3 billion.”

d) During the trial, the damages expert for TomorrowNow and SAP presented an amount of US$28 million based on lost profits and infringer’s profits or, alternatively, US$40.6 million based on a hypothetical license theory. Counsel for SAP and TomorrowNow asked the jury to award US$28 million.

d)	During the trial, the damages expert for TomorrowNow and SAP presented an amount of US$28 million based on lost profits and infringer’s profits or, alternatively, US$40.6 million based on a hypothetical license theory. Counsel for SAP and TomorrowNow asked the jury to award US$28 million.

We believed both before and during the trial and continue to believe that the hypothetical license theory is not an appropriate basis for calculating the damages. Instead, we believe that damages should be based on lost profits and infringer’s profits. As such, SAP filed post-trial motions asking the judge to overturn the judgment. A hearing on the post-trial motions was held in July 2011. On September 1, 2011, the trial judge issued an order which set aside the jury verdict and vacated that part of the judgment awarding US$1.3 billion in damages. The trial judge also gave Oracle the choice of accepting ~~the~~ reduced damages of US$272 million or having a new trial ~~which would decide between damages~~ based on lost profits orand infringer’s profits. Oracle filed a motion seeking an early appeal from the ruling vacating the jury’s damages award, which was denied by the judge.

Consequently, Oracle elected to proceed with a new trial. ~~The~~In lieu of a new trial, ~~date has~~the parties stipulated to a judgment of US$306 million while each preserving all rights for appeal. Both parties filed respective notices of appeal; ultimately, SAP did not ~~yet been set.~~

~~Additionally, in June 2007, SAP became aware that~~pursue an appeal, and instead defended the ~~United States Department~~district court’s judgment. On appeal, Oracle sought three forms of Justice (U.S. DOJ) had opened an investigation concerning related issues and had issued subpoenas to SAP and TomorrowNow. The DOJ investigation has been resolved by way of a plea agreement which includes TomorrowNow pleading guilty to 11 counts of violationsrelief: (1) reinstatement of the ~~Computer Fraud~~November 2010 US$1.3 billion verdict; (2) as a first alternative, a new trial at which Oracle may again seek hypothetical license damages (based in part on evidence of alleged saved development costs) plus SAP’s alleged infringer’s profits without any deduction of expenses (Oracle did not put a number on its claim for the requested new trial); and ~~Abuse Act, one count~~(3) as a second alternative, increase of ~~criminal copyright infringement,~~ the ~~payment~~remittitur (alternative to new trial) to US$408.7 million (versus the US$272 million Oracle had previously rejected). The hearing was

held on May 13, 2014. On August 29, 2014, the appeals court issued its decision affirming the district court’s judgment and rejecting Oracle’s request to reinstate the November 2010 jury verdict or allow it to seek hypothetical license damages at any new trial. The appeals court did order an increase in the remittitur (as an alternative to new trial) to US$356.7 million, as opposed to the US$408.7 million Oracle requested. In mid-November, 2014, Oracle made its election to accept the remittitur. On November 14, 2014, the trial judge entered final judgment and the civil case was closed. Payment to Oracle of a US$20359 million ~~fine and three years probation. No charges were brought against SAP AG or subsidiaries thereof other than TomorrowNow.~~was made on November 25, 2014.

In April 2007, United States-based Versata Software, Inc. (formerly Trilogy Software, Inc.) (Versata) instituted legal proceedings in the United States District Court for the Eastern District of Texas against SAP. Versata ~~alleges~~alleged that SAP’s products infringe one or more of the claims in each of five patents held by Versata. In its complaint, Versata ~~seeks~~sought unspecified monetary damages and permanent injunctive relief. The first trial was held in August 2009. The jury returned a verdict in favor of Versata and awarded Versata US$138.6 million for past damages. In January 2011, the court vacated the jury’s damages award and ordered a new trial on ~~damages in May 2011.~~damages. The ~~re-trial~~retrial was held in May 2011. The jury returned a verdict in favor of Versata and awarded Versata US$345 million for past damages. In September 2011, the judge denied SAP’s post-trial motions with the exception of reducing the damages verdict by US$16 million to approximately US$329 million. The judge also ordered approximately US$60 million in pre-judgment interest. Additionally, the judge granted Versata’s request for a broad injunction which prohibits SAP from 1) selling products in the United States with the infringing functionality, 2) providing maintenance to or accepting maintenance revenue from existing customers in the United States until such customers disable the infringing functionality and verify such disablement, and 3) licensing additional users to existing customers in the United States until such customers disable the infringing functionality and verify such

disablement. Finally, the judge stayed the injunction pending the outcome of an appeal.

Both parties appealed to the U.S. Court of Appeals for the Federal Circuit. The appeal hearing occurred in February 2013 and a decision was issued on May 1, 2013. The three-judge panel ruled in Versata’s favor on infringement and damages, leaving both fully intact. The past damages verdict stood at approximately

US$390 million. Regarding the injunction, the court ruled that the injunction was too broad, stating that SAP should be able to provide maintenance or additional seats for prior customers of the infringing products, so long as the maintenance or the additional seat does not involve, or allow access to, the “enjoined capability” where enjoined capability is ~~appealing.~~

defined as the capability to execute a pricing procedure using hierarchical access of customer and product data. SAP filed a petition seeking rehearing by the three-judge panel that issued this decision and/or by the entire appeals court. The appeals court requested that Versata respond to SAP’s petition no later than July 29, 2013. In August ~~2007, United States-based elcommerce.com, Inc. (elcommerce) instituted legal proceedings in~~2013, the appeals court denied SAP’s request for rehearing and issued its mandate passing jurisdiction to the district court.

Separately, SAP filed a petition with the United States ~~against SAP. elcommerce alleges that SAP’s products infringe one or more~~Patent and Trademark Office (USPTO) challenging the validity of the ~~claims in one patent held by elcommerce.~~asserted Versata patent. In ~~its complaint, elcommerce seeks unspecified monetary damages and permanent injunctive relief. The court in East Texas~~January 2013, the USPTO granted SAP’s request to ~~transfer~~reconsider the validity of Versata’s patent and instituted the relevant procedure (transitional post grant review). A decision was issued in June 2013 rendering all challenged patent claims (including all the patent claims SAP was found to have infringed) unpatentable. Versata filed with the USPTO a request seeking reconsideration of the decision on six different grounds. The USPTO invited SAP to file an opposition responding to two of the six grounds. On September 13, 2013, the USPTO denied Versata’s request for reconsideration. In November, 2013, Versata sought appeals court review of the USPTO decision. The hearing on appeal occurred on December 3, 2014. A decision on appeal is expected in 2015.

In June 2013, following the determination of unpatentability, SAP filed a request with the appeals court to stay the litigation pending review of the USPTO decision. That request was denied in early July 2013.

In December 2013, SAP filed with the United States Supreme Court a petition for a writ of certiorari to review the decisions of the appeals court. That petition was denied in January 2014. Immediately thereafter, Versata requested that the District Court dismiss its remaining claims for injunctive and equitable relief. The District Court granted that request and deemed the previously entered judgment final. On that same day, SAP requested that the District Court vacate the judgment or stay the litigation, based on the USPTO decision declaring Versata’s patent claims unpatentable. Versata requested an order

requiring SAP to pay the judgment. In April 2014, the District Court denied SAP’s motion to vacate the judgment or stay the litigation. SAP filed an appeal seeking review of that district court decision. On motion by Versata, the appeals court dismissed SAP’s appeal in June 2014. On June 30, 2014, SAP filed a motion with the appeals court to stay issuance of its mandate. That motion was denied. SAP subsequently requested from ~~East Texas to Pennsylvania. Subsequent to~~ the ~~Markman ruling by the court, the parties agreed to the entry of final judgment regarding non-infringement by SAP. elcommerce has appealed the court’s Markman ruling. The hearing~~U.S. Supreme Court a temporary stay for the ~~appeal has not yet been scheduled.~~purpose of the Court considering a petition for a writ of certiorari. That request was denied. Versata’s request for an order requiring SAP to pay the judgment remained undecided at the District Court. In August 2014, Versata and SAP entered into a Patent License and Settlement Agreement (the “Agreement”) to settle the existing patent litigation between the companies. Under the terms of the Agreement, Versata will license to SAP certain patents in exchange for a one-time cash payment and a potential additional contingent payment. The Agreement also provides for general releases, indemnification for its violation, and dismisses the existing litigation with prejudice.

In February 2010, United States-based TecSec, Inc. (TecSec) instituted legal proceedings in the United States against SAP ~~Sybase,~~(including its subsidiary Sybase), IBM, and many other defendants. TecSec ~~alleges~~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 trial has not yet been scheduled. The legal proceedings ~~have been~~were stayed against all defendants pending a decision from the ~~outcome of an appeal by TecSec regarding~~U.S. Supreme Court on SAP’s and other defendants’ request for review. Supreme Court review was declined in June 2014. The lawsuit has resumed at the ~~court’s determination that IBM does not infringe the patents.~~district court but only with respect to one defendant. The lawsuit against SAP and Sybase remains stayed.

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 seeks a declaratory judgment that five patents owned by Wellogix are invalid and/or not infringed by SAP. The trial has not yet been scheduled. The legal proceedings have been stayed pending the outcome of ~~re-examinations~~six reexaminations filed with the ~~U.S. Patent and Trademark Office.~~

~~Other Litigation~~

USPTO. In ~~April 2008, South African-based Systems Applications Consultants (PTY)~~September 2013, the USPTO issued a decision on four of the six reexaminations, invalidating every claim of each of the four patents. SAP is awaiting a decision on the two remaining reexamination requests. In response to SAP’s patent Declaratory Judgment

~~Limited (Securinfo)~~action, Wellogix has re-asserted trade secret misappropriation claims against SAP (which had previously been raised and abandoned). The court granted SAP’s motion for an early dispositive decision on the trade secret claims, but Wellogix has asked the court to reconsider its decision and we are awaiting the court’s decision on the reconsideration motion.

In August 2007, United States-based elcommerce.com, Inc. (elcommerce) instituted legal proceedings in ~~South Africa~~the United States against SAP. ~~Securinfo alleges~~elcommerce alleged that ~~SAP has caused~~SAP’s products infringe one or more of ~~its subsidiaries to breach a software distribution agreement with Securinfo.~~the claims in one patent held by elcommerce. In its complaint, ~~Securinfo seeks~~elcommerce sought unspecified monetary damages and permanent injunctive relief. The court in East Texas granted SAP’s request to transfer the litigation from East Texas to Pennsylvania. Subsequent to the Markman ruling by the court, the parties agreed to the entry of ~~approximately €610 million plus interest. In September 2009,~~final judgment regarding non-infringement by SAP of the method claims of the patent and invalidity of the system claims. elcommerce has appealed the court’s Markman ruling. The hearing for the appeal was held in May 2012. SAP also filed a ~~motion~~reexamination request with the USPTO to invalidate elcommerce’s patent. On September 23, 2013, the USPTO issued a decision invalidating the patent. elcommerce sought rehearing from the USPTO, but that request was denied in March, 2014. The Federal Circuit appeals court also issued a decision in February, 2014, confirming that SAP did not infringe some claims of the elcommerce patent, but reversing the district court’s decision of invalidity of the patent. SAP has asked the Federal Circuit court to reconsider its invalidity decision. In June 2014, elcommerce and SAP jointly moved to dismiss the appeal on the Federal Circuit court. The legal dispute is thus closed.

Customer-related Litigation and Claims

Customer-related litigation and claims include cases in which ~~was rejected. A trial date~~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.

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 (19b). 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).

Contingent liabilities exist from customer-related litigation and claims for which ~~was scheduled for June 2011~~no provision has been ~~postponed. No new trial date has been scheduled yet.~~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.

Non-Income Tax-related Litigation and Claims

We are subject to ongoing audits by domestic and foreign tax authorities. Along with many other companies operating in Brazil, we are involved in various proceedings with Brazilian authorities regarding assessments and litigation matters on non-income taxes on intercompany royalty payments and intercompany services. The total potential amount related to these matters for all applicable years is approximately ~~€82~~€95 million. We have not recorded a provision for these matters, as we believe that we will ~~prevail on these matters.~~prevail.

For ~~income-tax risk-related~~more information about income tax-related litigation ~~please refer to~~risks, see Note (11).

(25)	~~FINANCIAL RISK FACTORS~~Financial Risk Factors

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.

Market Risk

a) Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk of loss due to adverse changes in foreign currency exchange rates. Under IFRS, foreign currency exchange rate risks arise on account of monetary financial instruments denominated in currencies other than the functional currency where the non-functional currency is the respective risk variable; translation risks are not taken into consideration.

As a globally active enterprise, we are subject to risks associated with fluctuations in

foreign currencies with regard to our ordinary operations. 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, occasionally we generate ~~foreign-currency-denominated~~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 (26).

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 ~~AG is~~Group are exposed to risks associated with forecasted intercompany cash flows in foreign currencies. These cash flows arise out of royalty payments from ~~SAP~~ subsidiaries to ~~SAP AG.~~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 ~~SAP AG in Germany,~~the IP holders, as the royalties are mostly denominated in the subsidiaries’ local currencies, while the functional currency of ~~SAP AG~~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 ~~Canadian dollar,~~Brazilian real, 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. However, ~~as at December 31,~~ we were exposed to a cash flow risk from the consideration to be paid in U.S. dollars for the acquisition of ~~SuccessFactors, Inc.~~Concur and Fieldglass in 2014 and hybris in 2013 as the funds ~~are~~were provided through our free cash and aacquisition term ~~loan,~~loans, both mostly generated in euros. For more information, see ~~Notes (4) and~~Note (26).

~~Interest-Rate~~b) Interest Rate Risk

Interest-rate risks result from changes in market interest rates, which can cause changes in the fair values of fixed-rate instruments and in the interest to be paid or received for variable-rate instruments. We are exposed to ~~interest-rate~~interest rate risk as a result of our investing and financing activities mainly in euros and U.S. dollars.

As at December 31, ~~2011,~~2014, our liquidity was mainly invested in time deposits ~~and government bonds~~ with fixed yields, and money market instruments with variable yields, held as cash equivalents and current and non-current investments. Since ~~we do not account for~~most of the ~~fixed-yield~~fixed

yield time deposits held at year-end ~~at fair value, we are~~have short maturities, they do not ~~exposed~~expose us to ~~an interest-rate risk with regard to these investments. However,~~ a substantial fair value interest rate ~~exposure arises from the government bonds classified as available for sale. Also,~~risk. However, we are exposed to a cash flow risk from our cash held at banks spread across the ~~variable-yield~~world and the variable yield money market funds, mainly held in the ~~euro zone~~United States and ~~the U.S.~~Germany.

As at December 31, ~~2011,~~2014, we ~~are also~~were exposed to an ~~interest-rate~~interest rate risk from our financing activities (for more ~~details on~~information about the individual instruments, see Note (18b))~~. While all~~ as €3.8 billion of our issued bonds ~~with a total volume of €2.2 billion~~ and ~~our~~all the U.S. private placement notes ~~with a volume of US$1.25 billion~~ pay fixed interest ~~the SSD,~~leading to a fair value risk while our term loans totaling ~~€697 million has~~€4.3 billion and a ~~€547.5 million variable-rate tranche, which gives~~€750 million-bond give rise to a cash-flow risk, as the interest payments are based on the prevailing EURIBOR rates. ~~The same applies to the variable-rate additional term loan with a volume of €100 million.~~

~~Equity-Price~~c) Equity Price Risk

~~Equity-price risk is the risk of loss due to adverse changes in equity markets.~~ We are exposed to such equity price risk with regard to our investments in listed equity securities ~~(2011: €39~~(2014: €209 million; ~~2010: €28~~2013: €83 million) and our share-based ~~compensation plans~~payments (for the exposure from these plans, see Note (28)).

Credit Risk

~~Credit risk is the risk of economic loss of principal or financial rewards stemming from a counterparty’s failure to repay or service debt according to the contractual obligations.~~

To reduce the credit risk in ~~trade receivables and~~ investments, we ~~have made the following arrangements:~~

~~An agreement with an insurer~~arranged to ~~insure part of our trade receivables against credit losses~~

~~The receipt of~~receive rights to collateral for certain investing activities in the full amount of the investment volume, which we would ~~only~~ be allowed to make use of only in the case of default of the counterparty to the investment.

~~With~~ In the ~~exception~~absence of ~~these transactions, we have not executed~~other significant agreements to reduce our ~~overall~~ credit risk exposure, ~~such as master netting arrangements. Therefore,~~ the total amounts recognized as cash and cash equivalents, current investments, loans and other financial receivables, and derivative financial assets represent our maximum exposure to credit risks, except for the agreements mentioned above.

Liquidity Risk

~~Liquidity risk results from the potential inability to meet financial obligations, such as payments to suppliers or employees.~~ A maturity analysis that provides the remaining contractual maturities of all our financial liabilities held at December 31, ~~2011,~~2014, is shown in the table below. Financial liabilities shown in the table below 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 last relevant interest rate fixed as at December 31, ~~2011.~~2014. 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.~~negative, except for the derivative forward contracts entered into in connection with the acquisition of Concur, where we buy and sell US$8.5 billion because we plan to settle those net. The cash outflows for the currency derivatives are translated using the applicable forward rate.

The cash flows for unrecognized but contractually agreed financial commitments are shown in Note ~~(24)~~(23).

Our foreign currency exposure as at December 31 ~~2011, the euro had gained (lost) 10% against all~~(and if year-end exposure is not representative, also our major currencies, the effective portion of the foreign currency cash-flow hedge recorded in other comprehensive income would have been €70 million higher (lower) (December 31, 2010: €46 million higher (lower); December 31, 2009: €55 million higher (lower)) than presented.average/high/low exposure) was as follows:

During 2014, our foreign currency embedded derivatives, any changes in the value of such derivatives is recognized in profit or loss. If, on December 31, 2011, the euro had gained (lost) 10% against the Swiss franc (which is the currency accounting for the majority of our exposure from foreign currency embedded derivatives), Other non-operating expense, net would have been €41 million higher (lower) (December 31, 2010: €42 million higher (lower); December 31, 2009: €38 million higher (lower)) than presented.

The foreign currency options held to hedge the cash flow risk from the consideration to be paid in U.S. dollars for the acquisition of SuccessFactors, were not designated as cash flow hedges. Therefore, any change in the value of these derivatives is recognized in profit or loss. If, on December 31, 2011, the euro had gained (lost) 10% against the U.S. dollar, Other non-operating expense, net would have been €6 million higher (€50 million lower) than presented.

~~Our~~ sensitivity to foreign currency exchange rate fluctuations ~~has~~ increased ~~during~~compared to the year ended December 31, ~~2011,~~2013 mainly due to the ~~increase of the nominal amounts hedged in a cash-flow hedge relationship and the nominal amounts underlying the foreign currency options held in connection with~~hedging transactions for the acquisition of ~~SuccessFactors.~~Concur. However, due to our hedging strategy, this comparatively high exposure was only one-sided; there was no substantial downside risk.

~~The following table shows the contractual maturities~~ of the ~~cash flows for the SSD interest payments:~~years presented.

If, on December 31, ~~2011, 2010,~~2014, 2013, and ~~2009~~2012, interest rates had been ~~100 basis points higher (20 basis points lower),~~higher/ lower as described above, this would not have had a material effect ~~on:~~

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:

The table below shows the carrying amounts and fair values of financial assets and liabilities by category of financial instrument as well as by category of IAS 39. 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 non-financial assets or liabilities are shown in the column headed “Not in scope of IFRS 7” to allow a reconciliation to the corresponding line items in the Consolidated Statements of Financial Position. The carrying amounts and fair values of our financial instruments as at December 31 were as follows:

   2011 2010
Book
Value
12/31 Measurement
Categories Fair
Value
12/31 Not in
Scope
of
IFRS 7 Book
Value
12/31 Measurement
Categories Fair
Value
12/31 Not in
Scope
of
IFRS 7
€ millions Category At
Amortized
Cost At
Cost At
Fair
Value At
Amortized
Cost At
Cost At
Fair
Value
Financial liabilities

at fair value through profit or loss
HFT    –179    –179    –179    –109    –109    –109
at amortized cost
AC    –5,014    –4,761    –4,834    –253    –5,397    –5,144    –5,162    –253
Out of IAS 39

Financial instruments related to employee benefit plans
186    186    182    182
Investment in associates
47    47    40    40
Derivatives with hedging relationship
–39    –39    –39    –34    –34    –34
Total financial instruments
4,660    4,031    122    382    4,340    125    1,785    1,593    79    –2    1,573    115

The following table allocates those financial assets and liabilities that are measured at fair value in accordance with IAS 39 either through profit or loss or other comprehensive income as at December 31, 2011, to the three levels of the fair value hierarchy according to IFRS 7.

~~The following parameters and assumptions were used for the computation of the fair value at grant date:~~

As at December 31, ~~2011,~~2014, the valuation of our outstanding cash-settled plans was based on the following parameters and assumptions:

Fair Value and Parameters Used at ~~Year End~~Year-End 2014 for Cash-Settled Plans

As at December 31, 2013, the valuation of our outstanding cash-settled plans was based on the following parameters and assumptions:

The number of awards under our cash-settled plans developed as follows in the years ended December 31, ~~2011, 2010,~~2014, and ~~2009:~~2013:

Changes in Numbers of Outstanding Awards ~~under our~~Under Our Cash-Settled Plans

Performance against the KPI targets was 90.27% (2013: 100%) in fiscal year 2014.

The following table shows the parameters and assumptions used at grant date to determine the fair value of ~~free-matching~~free matching shares, as well as the quantity of shares purchased and ~~free-matching~~free matching shares granted through this program in ~~2011~~2014, 2013, and ~~2010:~~2012:

The number of awards under our SMP developed as follows in the years ended December 31, 2014, and 2013:

The following table shows the breakdown of the expense recognized for this program in ~~2011~~2014, 2013, and ~~2010 and the unrecognized expense at year end in € millions:~~2012:

Software and Software-Related Service Revenue by ~~Location of Customers~~Region


Supervisory Board		Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on December 31, ~~2011~~2014
Prof. Dr. ~~h. c.~~h.c. mult. Hasso Plattner^{2), 4), 5)6), 7), 8)} Chairman		Supervisory Board, Oligo Lichttechnik GmbH, Hennef, Germany (until August 28, 2014)

~~Lars Lamadé~~Christiane Kuntz-Mayr^{1), 2), 4), 8)} Deputy ~~Chairman~~Chairperson ~~Project~~Development Manager ~~Service & Support~~

Pekka Ala-Pietilä^{5)4), 6), 7), 8)} Chairman of the Board ~~Blyk Ltd., London, UK~~of Directors, Solidium Oy, Helsinki, Finland		Board of Directors, Pöyry Plc, Vantaa, Finland Chairman of the Board of Directors, CVON Group Limited, London, UK Board of Directors, CVON Limited, London, UK ~~Board of Directors, CVON Innovations Limited, London, UK~~ ~~Chairman of the Board of Directors, Blyk Services Oy, Helsinki, Finland~~ Chairman of the Board of Directors, CVON Innovation Services Oy, Turku, Finland Board of Directors, CVON Future Limited, London, UK Chairman of the Board of Directors, Blyk ~~(NL)~~International Ltd., London, UK Chairman of the Board of Directors, ~~Blyk (DE) Ltd., London, UK~~ ~~Chairman of the Board of Directors, Blyk (ES) Ltd., London, UK~~ ~~Chairman of the Board of Directors, Blyk (BE) Ltd., London, UK~~Huhtamäki Oyj, Espoo, Finland Board of Directors, ~~Blyk.nl NV, Amsterdam, the Netherlands~~ ~~Chairman of the Board of Directors, Blyk.be SA, Hoeilaart, Belgium~~ ~~Chairman of the Board of Directors, Blyk International Ltd., London, UK~~ ~~Board of Directors, HelloSoft Inc., San José, California, United States (until January 1, 2011)~~ ~~Chairman of the Board of Directors, Solidium Oy,~~Sanoma Corporation, Helsinki, Finland (from ~~March 4, 2011)~~April 9, 2014)

~~Thomas Bamberger~~^{1), 3)} ~~Chief Controlling Officer COO~~

~~Panagiotis Bissiritsas~~^{1), 2), 5), 6)} ~~Support Expert~~

~~Willi Burbach (until August 7, 2011)~~ ~~Developer~~

~~Prof. Dr. Wilhelm Haarmann~~^{2), 6), 8)} ~~Attorney-at-law, certified public auditor, certified tax advisor~~ ~~Senior Partner HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer, Frankfurt am Main, Germany~~


Supervisory Board		Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on December 31, ~~2011~~2014
~~Peter Koop~~Panagiotis Bissiritsas^{1), 2), 5)} ~~Industry Business Development~~Support Expert

~~Christiane Kuntz-Mayr~~Catherine Bordelon(from July 7, 2014)^{1), 8)} Bid & Proposal Manager

Prof. Anja Feldmann^{4), 8)} Professor at the Electrical Engineering and Computer Science Faculty at the Technische Universität Berlin

Prof. Dr. Wilhelm Haarmann^{2), 5), 7), 8)} Attorney-at-law, certified public auditor, certified tax advisor Linklaters LLP, Rechtsanwälte, Notare, Steuerberater, Frankfurt am Main, Germany		Chairman of the Supervisory Board, CinemaxX AG, Hamburg, Germany (until April 25, 2014) Supervisory Board, Celesio AG, Stuttgart, Germany (from March 14, 2014)

Margret Klein-Magar^{1), 5)2), 4), 7)} Vice President, Head of People Principles

Lars Lamadé^{1), 2), 7), 8)} Head of Customer & Events GSS COO Managing Director, Rhein Neckar-Loewen GmbH, Kronau, Germany		Deputy ~~Chairperson~~Chairman of the ~~Works Council at SAP AG~~Supervisory Board, Rhein-Neckar-Loewen GmbH, Kronau, Germany (until August 31, 2014)

Steffen Leskovar(from July 7, 2014)^{1), 3), 4)} Resource Manager

Bernard Liautaud^{5)2), 4), 6)} General Partner Balderton Capital, London, UK		~~Board of Directors, Clinical Solutions Holdings Ltd., Basingstoke, Hampshire, UK~~ Board of Directors, nlyte Software Ltd., London, UK Board of Directors, Talend SA, Suresnes, France Board of Directors, ~~Cap Gemini, Paris, France~~ ~~Board of Directors, Quickbridge (UK)~~Wonga Group Ltd., London, UK Board of Directors, SCYTL Secure Electronic Voting SA, Barcelona, Spain Board of Directors, Abiquo Group Inc., Redwood City, California, United States (until February 27, 2014) Board of Directors, Vestiaire ~~de Copines~~Collective SA, ~~Neuilly-sur-Seine,~~Levallois-Perret, France ~~(from August 2, 2011)~~ Board of Directors, Dashlane, Inc., New York, New York, United States Board of Directors, Recorded Future, Inc., Cambridge, Massachusetts, United States Board of Directors, eWise Group, Inc., Redwood City, California, United States Board of Directors, Qubit Digital Ltd., London, UK Board of Directors, Stanford University, Stanford, California, United States Board of Directors, Citymapper Ltd., London, UK Board of Directors, Sunrise Atelier, Inc., New York, New York, United States (from August 2, 2014) Board of Directors, Opbeat Inc., San Francisco, California, United States (from September ~~9, 2011)~~11, 2014)

Dr. ~~Gerhard Maier~~h.c. Hartmut Mehdorn^{1)5), 2), 3)8)} ~~Development Project Manager~~

~~Dr. h. c. Hartmut Mehdorn~~^{4), 6)} ~~Chief Executive Officer, Air~~CEO of Flughafen Berlin-Brandenburg GmbH, Berlin, ~~PLC, Rickmansworth, UK~~Germany		Advisory Board, Fiege-Gruppe, Greven, Germany Board of Directors, RZD —– Russian Railways, Moscow, Russia ~~(from October 27, 2011)~~

Dr. ~~Hans-Bernd Meier (from August 8, 2011)~~Kurt Reiner^{1), 4), 5)} ~~Independent Consultant for SAP Projects~~Development Expert

~~Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim~~ ~~Milberg~~Mario Rosa-Bian^{2), 3)1), 5), 7)8)} ~~Chairman of the Supervisory Board, BMW AG, Munich, Germany~~Project Principal Consultant


Supervisory Board ~~Bertelsmann AG, Gütersloh, Germany~~ ~~Supervisory Board, Festo AG, Esslingen, Germany~~ ~~Supervisory Board, ZF Friedrichshafen AG, Friedrichshafen, Germany (until~~		Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on December 31, ~~2011)~~ ~~Supervisory Board, Festo AG & Co. KG, Esslingen, Germany (from March 24, 2011)~~ ~~Board of Directors, Deere & Company, Moline, Illinois, United States~~
	2014
Dr. Erhard Schipporeit^{3), 8)7)} Independent Management Consultant		Supervisory Board, Talanx AG, Hanover, Germany Supervisory Board, Deutsche Börse AG, Frankfurt am Main, Germany Supervisory Board, HDI V.a.G., Hanover, Germany Supervisory Board, Hannover Rückversicherung ~~AG,~~SE, Hanover, Germany Supervisory Board, Fuchs Petrolub ~~AG,~~SE, Mannheim, Germany Supervisory Board, BDO AG, Hamburg, Germany ~~(from July 7, 2011)~~ Board of Directors, TUI Travel PLC, London, UK (until December 11, 2014) Board of Directors, Fidelity Funds SICAV, Luxembourg Supervisory Board, Rocket Internet AG, Berlin, Germany (from August 22, 2014)


~~Supervisory Board~~		~~Memberships on supervisory boards and other comparable~~ ~~governing bodies of enterprises, other than subsidiaries of SAP~~ ~~on December 31, 2011~~
Stefan Schulz^{1), 4)3), 5), 6), 8)4)} Development ~~Project Manager~~Executive, Vice President		Supervisory Board, ORTEC International B.V., Zoetermeer, the Netherlands

Jim Hagemann Snabe(from July 7, 2014)^{2), 5)} Supervisory Board Member		Board of Directors, Bang & Olufsen A/S, Struer, Denmark Board of Directors, Danske Bank A/S, Copenhagen, Denmark Supervisory Board, Allianz SE, Munich, Germany (from May 7, 2014) Supervisory Board, Siemens AG, Munich, Germany

Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer⁵⁾³⁾ Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH, Erlangen, Germany		Deputy Chairman of the Supervisory Board, ~~Heitech~~HEITEC AG, Erlangen, Germany Supervisory Board, Dürr AG, Bietigheim-Bissingen, Germany ~~Supervisory Board, Infineon Technologies AG, Munich, Germany (until February 17, 2011)~~ Deputy Chairman of the Supervisory Board, LEONI AG, Nuremberg, Germany Chairman of the Supervisory Board, Festo AG & Co. KG, Esslingen, Germany

The total compensation of the Executive Board members for the years ~~2011, 2010,~~2014, 2013, and ~~2009~~2012 was as follows:

The ~~projected~~defined benefit obligation ~~(PBO)~~(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:

Subject to the adoption of the dividend resolution by the shareholders at the Annual General Meeting of Shareholders on May ~~23, 2012,~~20, 2015, the total annual compensation of the Supervisory Board members for ~~2011~~2014 is as follows:

During the fiscal year ~~2011,~~2014, payments to and DBO for former Executive Board members were as follows:

On December 31 ~~2011,~~of each of 2014, 2013 and 2012, the shareholdings of SAP’s board members were as follows:

At ~~SAP AG’s~~the Annual General Meeting of Shareholders held on May ~~25, 2011, SAP’s~~21, 2014, our shareholders ~~mandated~~elected KPMG AG Wirtschaftsprüfungsgesellschaft ~~to serve~~ as ~~SAP AG’s~~SAP’s independent auditor for ~~2011.~~2014. 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 ~~2011~~2014 and the previous years:

No events that have occurred since December 31, 2014, have a material impact on the Company’s Consolidated Financial Statements.


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
SAP Erste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf^6),7)		100.0		—		–22,037		782,807		—
SAP Foreign Holdings GmbH, Walldorf		100.0		—		–11		1,064		—
SAP Fünfte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf⁷⁾		100.0		—		–2,010		2,621,438		—
SAP Hosting Beteiligungs GmbH, St. Leon-Rot		100.0		—		—		25		—
SAP Portals Europe GmbH, Walldorf		100.0		—		36		124,226		—
SAP Portals Holding Beteiligungs GmbH, Walldorf		100.0		—		–3		930,078		—
SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf^6),7)		100.0		—		29,141		353,015		—
SAP Puerto Rico GmbH, Walldorf		100.0		43,724		2,793		–5,055		18
SAP Retail Solutions Beteiligungsgesellschaft mbH, Walldorf		100.0		—		388		9,903		—
SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf⁷⁾		100.0		—		—		25		—
SAP Ventures Investment GmbH, Walldorf⁷⁾		100.0		—		–17		172,973		—
SAP Vierte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf		100.0		—		–1		24		—
SAP Zweite Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf^6),7)		100.0		—		286,900		169,273		—
TechniData GmbH, Markdorf		100.0		105		–94		28,990		—
TRX Germany GmbH, Berlin		100.0		—		–15		1,618		—
REST OF EUROPE, MIDDLE EAST, AFRICA
Ambin Properties (Proprietary) Limited, Johannesburg, South Africa		100.0		—		364		1,727		—
Ariba Czech s.r.o., Prague, Czech Republic		100.0		10,766		360		2,005		193
Ariba France, SAS, Paris, France		100.0		13,700		539		3,974		47
Ariba Iberia, S.L., Madrid, Spain		100.0		1,878		75		790		11
Ariba International Sweden AB, Stockholm, Sweden		100.0		1,478		53		372		5
Ariba Middle East & North Africa FZ-LLC, Dubai, United Arab Emirates		100.0		321		–7		317		1
Ariba Slovak Republic s.r.o., Kosice, Slovakia		100.0		1,668		53		449		32


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Ariba Technologies Ireland Ltd., Dublin, Ireland		100.0		998		70		437		—
Ariba Technologies Netherlands B.V., Amsterdam, the Netherlands		100.0		3,735		64		6,293		6
Ariba UK Limited, Egham, United Kingdom⁸⁾		100.0		11,183		670		184		—
b-process, Paris, France		100.0		12,107		–2,972		–7,528		38
Business Objects (UK) Limited, London, United Kingdom⁸⁾		100.0		—		—		341		—
Business Objects Holding B.V.,‘s-Hertogenbosch, the Netherlands		100.0		—		–1		4,283		—
Business Objects Software Limited, Dublin, Ireland		100.0		895,290		657,070		5,227,134		291
Christie Partners Holding C.V., Rotterdam, the Netherlands		100.0		—		–1		–21,829		—
ClearTrip Inc. (Mauritius), Ebene, Mauritius		54.2
Cleartrip MEA FZ LLC, Dubai, United Arab Emirates		54.2
Concur (Austria) GmbH, Vienna, Austria		100.0		10		—		38		1
Concur (France) SAS, Paris, France		100.0		1,237		–14		14,532		98
Concur (Italy) S.r.l., Milan, Italy		100.0		—		—		13		—
Concur (Switzerland) GmbH, Zurich, Switzerland		100.0		33		1		12		2
Concur Czech (s.r.o.), Prague, Czech Republic		100.0		938		44		1,617		242
Concur Denmark ApS, Frederiksberg, Denmark		100.0		—		—		3		—
Concur Holdings (France) SAS, Paris, France		100.0		—		–112		5,689		—
Concur Holdings (Netherlands) B.V., Amsterdam, the Netherlands		100.0		–479		–650		–26,441		14
Concur International Holdings (Netherlands) CV, Amsterdam, the Netherlands		100.0		–1,384		–2,744		1,022,116		—
Concur Technologies (UK) Ltd., London, United Kingdom		100.0		3,472		154		–9,303		203
ConTgo Consulting Limited, London, United Kingdom⁸⁾		100.0		74		–139		–2,522		10
ConTgo Limited, London, United Kingdom		100.0		—		—		–2,384		—
ConTgo MTA Limited, London, United Kingdom		100.0		—		—		—		—
Crossgate UK Ltd., Slough, United Kingdom⁸⁾		100.0		—		—		—		—
Crystal Decisions (Ireland) Limited, Dublin, Ireland		100.0		—		5		44,548		—
Crystal Decisions Holdings Limited, Dublin, Ireland		100.0		—		7		77,732		—
Crystal Decisions UK Limited, London, United Kingdom⁸⁾		100.0		—		—		2,361		—
EssCubed Procurement Pty. Ltd., Johannesburg, South Africa		100.0		—		—		–816		—


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Fieldglass Europe Limited, London, United Kingdom⁸⁾		100.0		8,606		145		83		53
GlobalExpense (Consulting) Limited, London, United Kingdom		100.0		—		—		—		—
GlobalExpense (UK) Ltd, London, United Kingdom		100.0		627		157		2,936		99
hybris AG, Rotkreuz, Switzerland		100.0		169,965		–23,583		1,064,162		33
hybris Austria GmbH, Vienna, Austria		100.0		3,552		17		–150		5
hybris France SAS, Levallois-Perret, France		100.0		14,941		–302		1,204		43
hybris Netherlands BV, Amsterdam, the Netherlands		100.0		5,961		–293		5,457		10
hybris Software AB, Västerås, Sweden		100.0		8,455		–180		8,031		9
hybris Sp.z.o.o., Gliwice, Poland		100.0		8,478		444		959		166
hybris UK Ltd., London, United Kingdom⁸⁾		100.0		34,934		122		22,474		76
Joe D Partners C.V., Utrecht, the Netherlands		100.0		147,005		4,601		379,538		—
KXEN Ltd., London, United Kingdom⁸⁾		100.0		113		1,534		102		—
Limited Liability Company “SAP Labs”, Moscow, Russia		100.0		23,219		–1,157		871		267
Limited Liability Company “SAP CIS”, Moscow, Russia		100.0		371,669		19,212		64,644		745
Limited Liability Company SAP Kazakhstan, Almaty, Kazakhstan		100.0		18,885		–1,369		2,211		23
Limited Liability Company SAP Ukraine, Kiev, Ukraine		100.0		27,739		–3,954		–5,674		100
Merlin Systems Oy, Espoo, Finland		100.0		9,805		–237		3,078		31
OOO hybris Software, Moscow, Russia		100.0		1,947		–79		86		13
Quadrem Africa Pty. Ltd., Johannesburg, South Africa		100.0		6,420		301		–490		107
Quadrem Netherlands B.V., Amsterdam, the Netherlands		100.0		38,278		–144		62,319		4
Quadrem Overseas Cooperatief U.A., Amsterdam, the Netherlands		100.0		—		—		—		—
SAP (Schweiz) AG, Biel, Switzerland		100.0		653,771		67,711		161,753		635
SAP (UK) Limited, Feltham, United Kingdom⁸⁾		100.0		918,166		66,215		71,294		1,326
SAP Belgium NV/SA, Brussels, Belgium		100.0		217,771		12,142		137,164		254
SAP Bulgaria EOOD, Sofia, Bulgaria		100.0		3,934		233		1,461		4
SAP Business Services Center Europe s.r.o., Prague, Czech Republic		100.0		32,449		677		8,033		543
SAP Business Services Center Nederland B.V., Utrecht, the Netherlands		100.0		185,146		4,841		52,407		17


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
SAP Commercial Services Ltd., Valletta, Malta		100.0		—		–9		–26		—
SAP ČR, spol. s r.o., Prague, Czech Republic		100.0		77,642		3,862		12,020		249
SAP Cyprus Ltd, Nicosia, Cyprus		100.0		3,224		–591		637		2
SAP d.o.o., Zagreb, Croatia		100.0		7,073		–25		–595		13
SAP Danmark A/S, Copenhagen, Denmark		100.0		198,122		20,137		26,961		174
SAP East Africa Limited, Nairobi, Kenya		100.0		9,765		1,065		3,571		47
SAP Egypt LLC, Cairo, Egypt		100.0		12,064		–2,477		–14,316		51
SAP EMEA Inside Sales S.L., Barcelona, Spain		100.0		13,262		489		3,627		128
SAP España – Sistemas, Aplicaciones y Productos en la Informática, S.A., Madrid, Spain		100.0		272,734		14,456		239,459		421
SAP Estonia OÜ, Tallinn, Estonia		100.0		2,082		44		332		1
SAP Finland Oy, Espoo, Finland		100.0		121,412		11,867		50,820		110
SAP France Holding, Paris, France		100.0		1,086		116,189		5,285,256		3
SAP France, Paris, France		100.0		962,341		220,000		1,562,780		1,431
SAP Hellas S.A., Athens, Greece		100.0		30,644		658		15,159		55
SAP Holdings (UK) Limited, Feltham, United Kingdom⁸⁾		100.0		—		–22,538		806,037		—
SAP Hungary Rendszerek, Alkalmazások és Termékek az Adatfeldolgozásban Informatikai Kft., Budapest, Hungary		100.0		48,571		1,959		11,384		522
SAP Ireland Limited, Dublin, Ireland		100.0		–9		13		9,738		—
SAP Ireland US-Financial Services Ltd., Dublin, Ireland		100.0		175		383,434		5,546,367		3
SAP Israel Ltd., Ra’anana, Israel		100.0		42,182		–1,359		2,241		57
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Milan, Italy		100.0		412,905		23,511		319,741		567
SAP Labs Bulgaria EOOD, Sofia, Bulgaria		100.0		27,105		1,221		6,248		535
SAP Labs Finland Oy, Espoo, Finland		100.0		7,085		272		41,827		47
SAP Labs France SAS, Mougins, France		100.0		61,658		1,929		20,335		359
SAP Labs Israel Ltd., Ra’anana, Israel		100.0		52,455		2,418		20,395		289
SAP Latvia SIA, Riga, Latvia		100.0		2,463		192		7		3
SAP Malta Investments Ltd., Valletta, Malta		100.0		—		–9		–26		—
SAP Middle East and North Africa L.L.C., Dubai, United Arab Emirates³⁾		49.0		178,374		–31,274		–97,964		387
SAP Nederland B.V.,‘s-Hertogenbosch, the Netherlands		100.0		482,572		39,550		484,180		492
SAP Nederland Holding B.V.,‘s-Hertogenbosch, the Netherlands		100.0		—		55		521,972		—


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
SAP Norge AS, Lysaker, Norway		100.0		89,223		2,683		23,147		80
SAP Österreich GmbH, Vienna, Austria		100.0		200,712		21,244		26,047		350
SAP Polska Sp. z o.o., Warsaw, Poland		100.0		82,131		6,928		18,508		122
SAP Portals Israel Ltd., Ra’anana, Israel		100.0		67,283		22,357		99,695		201
SAP Portugal – Sistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda., Porto Salvo, Portugal		100.0		82,651		8,079		26,294		280
SAP Public Services Hungary Kft., Budapest, Hungary		100.0		3,043		450		1,673		7
SAP Romania SRL, Bucharest, Romania		100.0		38,742		7,242		12,504		374
SAP Saudi Arabia Software Services Ltd, Riyadh, Kingdom of Saudi Arabia		100.0		59,241		5,959		49,068		52
SAP Saudi Arabia Software Trading Ltd, Riyadh, Kingdom of Saudi Arabia		75.0		45,716		–38,596		–69,848		97
SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland		100.0		92,360		859		35,455		1,104
SAP sistemi, aplikacije in produkti za obdelavo podatkov d.o.o., Ljubljana, Slovenia		100.0		14,822		879		4,447		25
SAP Slovensko s.r.o., Bratislava, Slovakia		100.0		37,361		1,775		10,193		175
SAP Svenska Aktiebolag, Stockholm, Sweden		100.0		179,009		10,332		10,791		164
SAP Training and Development Institute FZCO, Dubai, United Arab Emirates		100.0		6,836		463		–43		39
SAP Türkiye Yazilim Üretim ve Ticaret A.S., Istanbul, Turkey		100.0		90,901		–4,128		6,418		189
SAP UAB (Lithuania), Vilnius, Lithuania		100.0		3,048		95		38		1
SAPV (Mauritius), Ebene, Mauritius⁴⁾		0		—		–139		23,882		—
SAP West Balkans d.o.o., Belgrade, Serbia		100.0		15,153		1,437		4,778		32
SeeWhy (UK) Limited, Windsor, United Kingdom		100.0		1,073		–53		267		14
SuccessFactors (UK) Limited, London, United Kingdom⁸⁾		100.0		26,546		888		3,218		96
SuccessFactors Ireland Limited, Dublin, Ireland		100.0		633		25		3		—
SuccessFactors Netherlands B.V., Amsterdam, the Netherlands		100.0		5,730		379		–7,288		20
Sybase (UK) Limited, Maidenhead, United Kingdom⁸⁾		100.0		—		–2		348		—


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Sybase Angola, Ltd., Luanda, Angola		100.0		—		—		1,607		—
Sybase Iberia S.L., Madrid, Spain		100.0		—		17		65,937		—
Syclo International Limited, Leatherhead, United Kingdom⁸⁾		100.0		—		—		—		—
Systems Applications Products Africa Region (Proprietary) Limited, Johannesburg, South Africa		100.0		94,963		3,847		28,584		8
Systems Applications Products Africa (Proprietary) Limited, Johannesburg, South Africa		100.0		—		–1		64,816		—
Systems Applications Products Nigeria Limited, Abuja, Nigeria		100.0		18,782		–1,492		1,334		64
Systems Applications Products South Africa (Proprietary) Limited, Johannesburg, South Africa		89.5		235,092		–1,640		–7,881		446
The Infohrm Group Ltd., London, United Kingdom⁸⁾		100.0		22		–98		1,295		—
TRX Europe, Ltd., London, United Kingdom		100.0		209		–45		509		20
TRX Luxembourg, S.a.r.l., Luxembourg City, Luxembourg		100.0		—		—		1,633		—
TRX UK, Ltd., London, United Kingdom		100.0		—		—		554		—
AMERICAS
110405, Inc., Newtown Square, Pennsylvania, USA		100.0		—		—		17,209		—
Ariba Canada, Inc., Mississauga, Canada		100.0		4,842		186		1,463		25
Ariba, Inc., Sunnyvale, California, USA		100.0		430,080		–97,920		3,436,913		1,242
Ariba International Holdings, Inc., Wilmington, Delaware, USA		100.0		—		—		—		—
Ariba International, Inc., Wilmington, Delaware, USA		100.0		6,807		380		-3,681		—
Ariba Investment Company, Inc., Wilmington, Delaware, USA		100.0		373		5,327		244,911		—
Business Objects Option LLC, Wilmington, Delaware, USA		100.0		—		852		73,290		—
Captura Software, Inc., Wilmington, Delaware, USA		100.0		—		—		—		—
ClearTrip Inc., George Town, Cayman Islands		54.2
CNQR Operations Mexico S. de. R.L. de. C.V., San Pedro Garza Garcia, Mexico		100.0		214		9		211		16


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Concur (Canada), Inc., Toronto, Canada		100.0		371		11		3,782		31
Concur Holdings (US) LLC, Wilmington, Delaware, USA		100.0		—		—		106		—
Concur Perfect Trip Fund LLC, Wilmington, Delaware, USA		100.0		—		—		—		—
Concur Technologies, Inc., Wilmington, Delaware, USA		100.0		30,998		–5,209		7,098,997		2,367
Extended Systems, Inc., Boise, Idaho, USA		99.0		—		–93		18,658		—
Fieldglass, Inc., Chicago, Illinois, USA		100.0		49,640		–72		802,515		362
Gelco Information Network, Inc., Bellevue, Washington, USA		100.0		—		—		39,079		—
Gelco Information Network GSD, Inc., Wilmington, Delaware, USA		100.0		—		—		—		—
H-G Holdings, Inc., Wilmington, Delaware, USA		100.0		—		—		21,456		—
H-G Intermediate Holdings, Inc., Wilmington, Delaware, USA		100.0		—		—		21,456		—
Financial Fusion, Inc., Concord, Massachusetts, USA		100.0		—		—		—		—
FreeMarkets International Holdings Inc. de Mexico, de S. de R.L. de C.V., Mexico City, Mexico		100.0		—		—		–61		—
FreeMarkets Ltda., São Paulo, Brazil		100.0		65		–78		–546		—
hybris Canada, Inc., Montréal, Canada		100.0		37,214		–499		–523		256
hybris (US) Corp., Wilmington, Delaware, USA		100.0		70,808		–643		25,615		185
iAnywhere Solutions, Inc., Dublin, California, USA		99.0		58,089		16,452		212,818		36
Inxight Federal Systems Group, Inc., Wilmington, Delaware, USA		100.0		—		—		75		—
Jobs2Web, Inc., Minnetonka, Minnesota, USA		100.0		54		27		5,760		—
Outtask LLC, Wilmington, Delaware, USA		100.0		—		—		—		—
Plateau Systems LLC, Arlington, Virginia, USA		100.0		582		3,660		16,147		—
Quadrem Brazil Ltda., Rio de Janeiro, Brazil		100.0		22,784		–488		6,946		157
Quadrem Canada Ltd., Mississauga, Canada		100.0		827		32		563		7
Quadrem Chile Ltda., Santiago de Chile, Chile		100.0		13,958		–1,608		47		173
Quadrem Colombia SAS, Bogotá, Colombia		100.0		236		–21		–4		—
Quadrem International Ltd., Hamilton, Bermuda		100.0		19,241		9,878		89,505		—


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Quadrem Peru S.A.C., Lima, Peru		100.0		4,204		–343		–2,600		91
San Borja Partricipadoes LTDA, São Paulo, Brazil		100.0		—		—		—		—
SAP America, Inc., Newtown Square, Pennsylvania, USA		100.0		3,576,310		–273,031		13,579,632		5,777
SAP Andina y del Caribe C.A., Caracas, Venezuela		100.0		11,749		5,597		–42,193		26
SAP Argentina S.A., Buenos Aires, Argentina		100.0		173,060		52,125		47,823		548
SAP Brasil Ltda, São Paulo, Brazil		100.0		516,203		–3,965		38,209		1,488
SAP Canada, Inc., Toronto, Canada		100.0		639,306		37,393		501,468		2,287
SAP Chile Limitada, Santiago, Chile		100.0		—		1,460		–29,671		104
SAP Colombia SAS., Bogotá, Colombia		100.0		118,945		–22,486		–13,359		257
SAP Costa Rica, S.A., San José, Costa Rica		100.0		14,905		–5,757		–10,838		16
SAP Financial, Inc., Toronto, Canada		100.0		—		27,115		7,019		—
SAP Global Marketing, Inc., New York, New York, USA		100.0		291,239		6,230		33,076		537
SAP Industries, Inc., Newtown Square, Pennsylvania, USA		100.0		529,357		47,627		477,848		414
SAP International, Inc., Miami, Florida, USA		100.0		22,166		2,073		11,867		65
SAP International PANAMA S.A., Panama City, Panama		100.0		2,562		–52		322		1
SAP Investments, Inc., Wilmington, Delaware, USA		100.0		—		24,418		783,739		—
SAP LABS, LLC, Palo Alto, California, USA		100.0		487,404		24,832		282,077		1,931
SAP México S.A. de C.V., Mexico City, Mexico		100.0		298,901		3,078		–15,996		647
SAP National Security Services, Inc., Newtown Square, Pennsylvania, USA		100.0		230,020		48,412		238,904		304
SAP PERU S.A.C., Lima, Peru		100.0		32,509		357		5,544		54
SAP Public Services, Inc., Washington, D.C., USA		100.0		294,721		29,271		306,671		202
SAP Technologies Inc., Palo Alto, California, USA		100.0		—		—		—		—
Sapphire SAP HANA Fund of Funds, L.P., Wilmington, Delaware, USA⁴⁾		0		—		1,957		4,171		—
Sapphire Ventures Fund I, L.P., Wilmington, Delaware, USA⁴⁾		0		—		3,875		224,288		—
Sapphire Ventures Fund II, L.P., Wilmington, Delaware, USA⁴⁾		0		—		–7,348		–4,184		—
SeeWhy Inc., Boston, Massachusetts, USA		100.0		1,503		–1,153		25,409		12


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
SuccessFactors, Inc., San Mateo, California, USA		100.0		525,251		–60,752		2,736,785		1,320
SuccessFactors Canada Inc., Ottawa, Canada		100.0		8,477		292		430		39
SuccessFactors Cayman, Ltd., Grand Cayman, Cayman Islands		100.0		—		—		–578		—
SuccessFactors International Holdings, LLC, San Mateo, California, USA		100.0		—		—		6,966		—
SuccessFactors International Services, Inc., San Mateo, California, USA		100.0		496		132		244		—
Surplus Record, Inc., Chicago, Illinois, USA		100.0		3,040		533		9,377		13
Sybase 365 LLC, Dublin, California, USA		100.0		97,752		2,640		67,436		103
Sybase 365 Ltd., Tortola, British Virgin Islands		100.0		—		—		–1,032		—
Sybase Argentina S.A., Buenos Aires, Argentina		100.0		—		72		699		—
Sybase Global LLC, Dublin, California, USA		100.0		—		—		8,024		—
Sybase Intl Holdings LLC, Dublin, California, USA		100.0		—		–1		12,887		—
Sybase, Inc., Dublin, California, USA		100.0		502,464		233,850		5,087,314		789
Technology Licensing Company, LLC, Atlanta, Georgia, USA		100.0		—		—		—		—
TomorrowNow, Inc., Bryan, Texas, USA		100.0		—		–137,084		–46,194		3
Travel Technology, LLC, Atlanta, Georgia, USA		100.0		—		—		—		—
TripIt LLC, Wilmington, Delaware, USA		100.0		—		—		—		—
TRX, Inc., Atlanta, Georgia, USA		100.0		1,303		–228		15,346		169
TRX Data Service, Inc., Glen Allen, Virginia, USA		100.0		—		—		—		—
TRX Fulfillment Services, LLC, Atlanta, Georgia, USA		100.0		—		—		—		—
TRX Technology Services, L.P., Atlanta, Georgia, USA		100.0		—		—		—		—
ASIA PACIFIC JAPAN
Ariba India Pvt. Ltd., Gurgaon, India		100.0		6,937		937		3,556		42
Ariba International Singapore Pte. Ltd., Singapore, Singapore		100.0		4,400		–508		–5,865		18
Ariba Software Technology Services (Shanghai) Co. Ltd., Shanghai, China		100.0		2,067		779		1,504		4
Ariba Technologies India Pvt. Ltd., Bangalore, India		100.0		30,289		2,679		9,710		665


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
Beijing Zhang Zhong Hu Dong Information Technology Co. Ltd., Beijing, China³⁾		0		1,256		65		1,030		6
Business Objects Software (Shanghai) Co. Ltd., Shanghai, China		100.0		7,003		155		8,905		96
ClearTrip Private Limited, Mumbai, India		54.2
Concur (Japan) Ltd., Bunkyo-ku, Japan		75.0		298		–287		3,610		43
Concur (New Zealand) Limited, Wellington, New Zealand		100.0		—		1		–4		—
Concur (Philippines) Inc., Makati City, Philippines		100.0		1,133		52		1,869		798
Concur Technologies (Australia) Pty. Limited, Sydney, Australia		100.0		1,204		44		–888		73
Concur Technologies (Hong Kong) Ltd, Hong Kong, China		100.0		279		12		304		18
Concur Technologies (India) Private Limited, Bangalore, India		100.0		712		61		394		400
Concur Technologies (Singapore) Pte. Ltd., Singapore, Singapore		100.0		377		19		829		13
ConTgo Pty. Ltd., Sydney, Australia		100.0		–2		–2		–212		—
Fieldglass AsiaPac PTY Ltd, Brisbane, Australia		100.0		3,443		–69		–492		26
hybris Australia Pty Limited, Surry Hills, Australia		100.0		7,425		190		412		23
hybris Hong Kong Ltd., Hong Kong, China		100.0		3,194		–53		503		11
hybris Japan K.K., Tokyo, Japan		100.0		2,697		36		–71		10
Nihon Ariba K.K., Tokyo, Japan		100.0		3,079		–16		1,400		15
Plateau Systems Australia Ltd, Brisbane, Australia		100.0		—		—		–584		—
Plateau Systems Pte. Ltd., Singapore, Singapore		100.0		—		—		–473		—
PT SAP Indonesia, Jakarta, Indonesia		99.0		50,444		4,140		7,600		55
PT Sybase 365 Indonesia, Jakarta, Indonesia		100.0		—		–19		—		—
Quadrem Asia Pte. Ltd., Singapore, Singapore		100.0		—		–4		—		—
Quadrem Australia Pty Ltd., Brisbane, Australia		100.0		3,448		205		3,343		—
Quadrem China Ltd., Hong Kong, China		100.0		—		—		—		—
Ruan Lian Technologies (Beijing) Co. Ltd., Beijing, China		100.0		117		12		–1,007		—
SAP (Beijing) Software System Co. Ltd., Beijing, China		100.0		574,096		–32,651		–9,435		4,231
SAP Asia Pte Ltd, Singapore, Singapore		100.0		314,717		–8,132		78,223		1,033
SAP Asia (Vietnam) Co. Ltd., Ho Chi Minh City, Vietnam		100.0		2,006		98		706		47
SAP Australia Pty Ltd, Sydney, Australia		100.0		534,203		–9,262		231,758		866
SAP Hong Kong Co. Limited, Hong Kong, China		100.0		48,083		–6,578		–13,540		106


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
SAP India (Holding) Pte Ltd, Singapore, Singapore		100.0		—		18,596		278		—
SAP India Private Limited, Bangalore, India		100.0		380,610		19,978		218,328		1,822
SAP Japan Co. Ltd., Tokyo, Japan		100.0		599,709		31,491		440,325		1,026
SAP Korea Ltd., Seoul, South Korea		100.0		209,026		1,737		22,645		356
SAP Labs India Private Limited, Bangalore, India		100.0		205,749		12,151		7,233		4,847
SAP Labs Korea, Inc., Seoul, South Korea		100.0		16,193		558		19,676		120
SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia		100.0		103,687		5,613		11,758		118
SAP New Zealand Limited, Auckland, New Zealand		100.0		76,095		5,446		52,808		103
SAP Philippines, Inc., Makati, Philippines		100.0		38,545		–2,832		–919		147
SAP SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING (THAILAND) LTD., Bangkok, Thailand		100.0		81,508		2,848		15,845		63
SAP Taiwan Co. Ltd., Taipei, Taiwan		100.0		90,469		14,098		46,933		128
Shanghai SuccessFactors Software Technology Co., Ltd., Shanghai, China		100.0		15,738		1,578		1,990		189
SuccessFactors (Philippines), Inc., Pasig City, Philippines		100.0		3,403		82		107		101
SuccessFactors Asia Pacific Limited, Hong Kong, China		100.0		6		—		–571		—
SuccessFactors Australia Holdings Pty Ltd., Brisbane, Australia		100.0		—		–3,195		–17,912		—
SuccessFactors Australia Pty Limited, Brisbane, Australia		100.0		21,976		837		8,825		109
SuccessFactors Business Solutions India Private Limited, Bangalore, India		100.0		12,128		215		684		219
SuccessFactors Hong Kong Limited, Hong Kong, China		100.0		2,013		83		1,634		—
SuccessFactors Japan K.K., Tokyo, Japan		100.0		3,025		–107		–94		14
SuccessFactors Singapore Pte. Ltd., Singapore, Singapore		100.0		4,240		179		342		19
Sybase Hong Kong Ltd, Hong Kong, China		100.0		—		–2		—		—
Sybase India Ltd., Mumbai, India		100.0		—		4		2,354		—
Sybase Philippines, Inc., Makati City, Philippines		100.0		—		2		–7		—
Sybase Software (China) Co. Ltd., Beijing, China		100.0		22,405		–2,571		16,501		296
Sybase Software (India) Private Ltd, Mumbai, India		100.0		14,586		1,199		10,638		228
TRX Technologies India Private Limited, Raman Nagar, India		100.0		—		–50		1,845		1


As at December 31, 2014	Ownership		Total Revenue in 2014¹⁾		Profit/Loss (-) after Tax for 2014¹⁾		Total Equity as at 12/31/2014¹⁾		Number of Employees as at 12/31/2014²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
II. JOINT OPERATIONS AND INVESTMENTS IN ASSOCIATES
Alteryx, Inc., Irvine, California, USA		13.89		30,045		–8,191		11,497		182
China DataCom Corporation Limited, Guangzhou, China		28.30		36,934		–3,658		37,418		880
Greater Pacific Capital (Cayman) L.P., Grand Cayman, Cayman Islands		5.35		315		–769		339,250		—
Procurement Negócios Eletrônicos S/A, Rio de Janeiro, Brazil		17.00		24,582		1,281		14,440		—
SAP - NOVABASE, A.C.E., Porto Salvo, Portugal		66.66		—		—		5		—
Yapta, Inc., Seattle, Washington, USA		46.60

~~On February 21, 2012, SAP acquired SuccessFactors. Please see Note (4) for details.~~

~~In connection with the acquisition of SuccessFactors. we used the syndicated term loan facility to partially finance the purchase price. For more information, see Note (26).~~

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/ Loss
(-) after
Tax for
2011¹⁾

Total Equity
as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
REST OF EUROPE, MIDDLE EAST, AFRICA

Ambin Properties (Proprietary) Limited, Johannesburg, South Africa⁴⁾
   100.0       0       243       –233       0
Armstrong Laing Limited, London, United Kingdom⁴⁾
   100.0       0       –1       3,065       0
Business Objects (UK) Limited, London, United Kingdom⁴⁾
   100.0       0       –2,368       30,535       0
Business Objects Holding B.V., s-Hertogenbosch, the Netherlands⁴⁾
   100.0       0       184       4,208       0
Business Objects Software Limited, Dublin, Ireland
   100.0       752,508       276,843       3,017,120       224
Cartesis UK Limited, London, United Kingdom⁴⁾
   100.0       0       –30       1,119       0
Christie Partners Holding CV, Rotterdam, the Netherlands⁴⁾
   100.0       0       –1       –21,824       0
Crossgate Italia S.p.A., Milan, Italy^3),4)
   100.0       364       –60       594       13
Crossgate S.a.r.l., Paris, France^3),4)
   100.0       251       –378       –3,778       3
Crossgate UK Ltd., Slough, United Kingdom^3),4)
   100.0       184       –278       –5,245       6
Crystal Decisions (Ireland) Limited, Dublin, Ireland⁴⁾
   100.0       0       –85       44,527       0
Crystal Decisions France S.A.S., Levallois-Perret, France⁴⁾
   100.0       0       5,497       6,655       0
Crystal Decisions Holding Limited, Dublin, Ireland⁴⁾
   100.0       0       152       77,708       0
Crystal Decisions UK Limited, London, United Kingdom⁴⁾
   100.0       0       12       2,202       0
Edgewing Limited, London, United Kingdom⁴⁾
   100.0       0       0       –17       0
Joe D Partners CV, Utrecht, the Netherlands⁴⁾
   100.0       0       –16,229       621,539       0
Limited Liability Company SAP CIS, Moscow, Russia
   100.0       349,593       31,405       109,845       619
Limited Liability Company SAP Kazakhstan, Almaty, Kazakhstan
   100.0       33,086       3,955       5,567       15
Limited Liability Company SAP Ukraine, Kiev, Ukraine
   100.0       16,599       –923       –2,551       93
Merlin Systems Oy, Espoo, Finland⁴⁾
   100.0       9,463       692       2,569       29
S.A.P. Nederland B.V., s-Hertogenbosch, the Netherlands
   100.0       376,155       47,926       380,050       398

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after Tax
for
2011¹⁾

Total Equity
as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
SAF Simulation, Analysis and Forecasting Slovakia s.r.o., Bratislava, Slovakia⁴⁾
   100.0       1,311       103       272       23
SAP—NOVABASE, A.C.E., Porto Salvo, Portugal⁴⁾
   66.7       –       –       –       0
SAP (Schweiz) AG, Biel, Switzerland
   100.0       576,669       89,183       168,840       600
SAP (UK) Limited, Feltham, United Kingdom
   100.0       673,825       50,362       71,201       1,083
SAP Belgium—Systems Applications and Products NV/SA, Brussels, Belgium⁴⁾
   100.0       177,627       12,751       110,734       235
SAP BULGARIA EOOD, Sofia, Bulgaria⁴⁾
   100.0       2,636       –142       653       10
SAP Business Services Center Europe, s.r.o., Prague, Czech Republic
   100.0       21,750       772       7,028       316
SAP Commercial Services Ltd., Valletta, Malta
   100.0       0       –2       –12       0
SAP ČR, spol. s r.o., Prague, Czech Republic
   100.0       85,560       9,276       29,971       237
SAP CYPRUS Ltd, Nicosia, Cyprus⁴⁾
   100.0       2,731       –137       –1,961       2
SAP d.o.o., Zagreb, Croatia
   100.0       6,413       –469       –883       13
SAP Danmark A/S, Copenhagen, Denmark
   100.0       147,497       16,985       31,776       158
SAP Egypt LLC, Cairo, Egypt
   100.0       4,633       –2,713       –4,622       35
SAP EMEA Inside Sales S.L., Barcelona, Spain
   100.0       16,399       525       2,178       124
SAP España—Sistemas, Aplicaciones y Productos en la Informática, S.A., Madrid, Spain⁴⁾
   100.0       233,879       22,918       200,433       356
SAP Estonia OÜ, Tallinn, Estonia
   100.0       1,507       –142       –126       1
SAP Finland Oy, Espoo, Finland
   100.0       100,698       5,154       70,063       106
SAP France Holding, Paris, France
   100.0       1,382       89,758       4,969,849       4
SAP France, Paris, France⁴⁾
   100.0       743,215       189,451       1,602,884       1,430
SAP HELLAS S.A.—SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING, Athens, Greece
   100.0       28,669       1,620       9,233       53
SAP Hungary Rendszerek, Alkalmazások és Termékek az Adatfeldolgozásban Informatikai Kft., Budapest, Hungary
   100.0       43,825       –91       15,693       404
SAP Ireland Limited, Dublin, Ireland
   100.0       3,237       355       –825       0

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/ Loss
(-) after
Tax for
2011¹⁾

Total Equity
as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
SAP Ireland US-Financial Services Ltd., Dublin, Ireland⁴⁾
   100.0       255       165,948       2,537,691       3
SAP Israel Ltd., Ra’anana, Israel
   100.0       21,717       2,636       –706       56
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Milan, Italy⁴⁾
   100.0       328,025       25,211       267,781       508
SAP Labs Bulgaria EOOD, Sofia, Bulgaria
   100.0       21,310       1,040       3,115       457
SAP Labs Finland Oy, Espoo, Finland⁴⁾
   100.0       6,617       213       45,993       45
SAP LABS France S.A.S., Mougins, France
   100.0       41,258       1,947       19,731       277
SAP Labs Israel Ltd., Ra’anana, Israel
   100.0       40,131       1,276       13,238       291
SAP Latvia SIA, Riga, Latvia
   100.0       1,979       34       –482       1
SAP Malta Investments Ltd., Valletta, Malta
   100.0       0       –2       –12       0
SAP Middle East and North Africa L.L.C., Dubai, United Arab Emirates
   49.0       76,783       –16,460       4,596       198
SAP Nederland Holding B.V., s-Hertogenbosch, the Netherlands⁴⁾
   100.0       0       2,548       521,529       0
SAP Norge AS, Lysaker, Norway
   100.0       74,740       6,172       23,724       83
SAP Österreich GmbH, Vienna, Austria
   100.0       174,889       20,005       33,508       339
SAP Polska Sp. z o.o., Warsaw, Poland
   100.0       69,864       7,602       33,206       119
SAP Portals Israel Ltd., Ra’anana, Israel⁴⁾
   100.0       61,924       19,502       35,182       311
SAP Portugal—Sistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda., Porto Salvo, Portugal
   100.0       54,549       3,235       11,647       96
SAP Public Services Hungary Kft., Budapest, Hungary
   100.0       1,314       108       431       5
SAP Romania SRL, Bucharest, Romania
   100.0       16,153       2,235       7,588       100
SAP Saudi Arabia Software Services Limited, Riyadh, Kingdom of Saudi Arabia
   100.0       23,828       2,069       33,470       26
SAP Saudi Arabia Software Trading Limited, Riyadh, Kingdom of Saudi Arabia
   51.0       18,829       –5,469       2,349       36
SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland
   100.0       63,779       1,687       29,372       715

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after Tax
for
2011¹⁾

Total
Equity as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
SAP sistemi, aplikacije in produkti za obdelavo podatkov d.o.o., Ljubljana, Slovenia
   100.0       16,352       749       7,332       24
SAP Slovensko s.r.o., Bratislava, Slovakia
   100.0       35,364       2,631       20,754       160
SAP Svenska Aktiebolag, Stockholm, Sweden
   100.0       140,440       12,119       23,763       119
SAP Türkiye Yazilim Üretim ve Ticaret A.S., Istanbul, Turkey
   100.0       51,901       –1,720       12,499       120
SAP UAB (Lithuania), Vilnius, Lithuania
   100.0       3,199       –104       233       3
SAPV (Mauritius), Ebene, Mauritius^3),7)
   0       0       –36       13,314       0
SAP West Balkans d.o.o., Belgrade, Serbia
   100.0       12,068       2,001       4,196       27
Sybase (Schweiz) GmbH, Zurich, Switzerland⁴⁾
   100.0       1,526       72       1,301       6
Sybase (UK) Limited, Maidenhead, United Kingdom⁴⁾
   100.0       39,010       7,253       6,440       200
Sybase 365 Limited, Maidenhead, United Kingdom⁴⁾
   100.0       0       0       0       0
Sybase ApS, Copenhagen, Denmark⁴⁾
   100.0       336       19       456       2
Sybase Europe B.V., Utrecht, the Netherlands⁴⁾
   100.0       177,866       4,219       23,355       45
Sybase France S.a.r.l., Paris, France⁴⁾
   100.0       46,298       12,006       1,653       114
Sybase Iberia S.L., Madrid, Spain⁴⁾
   100.0       13,089       –22       –21,745       33
Sybase Italia SRL, Milan, Italy⁴⁾
   100.0       7,968       303       –150       32
Sybase Luxembourg S.a.r.l, Luxembourg⁴⁾
   100.0       213       0       –25       0
Sybase Nederland B.V., Utrecht, the Netherlands⁴⁾
   100.0       1,926       157       –1,535       12
Sybase Norge AS, Oslo, Norway⁴⁾
   100.0       613       71       895       2
Sybase Software BVBA/SPRL, Zaventem, Belgium⁴⁾
   100.0       2,833       89       947       16
Sybase South Africa (Proprietary) Limited, Johannesburg, South Africa⁴⁾
   100.0       21,609       1,424       –3,109       131
Sybase Sverige AB, Kista, Sweden⁴⁾
   100.0       5,546       174       1,726       22
Systems Applications Products Africa Region (Proprietary) Limited, Johannesburg, South Africa⁴⁾
   100.0       31,680       6,221       20,611       15
Systems Applications Products Africa (Proprietary) Limited, Johannesburg, South Africa
   100.0       0       4,098       85,410       0

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after Tax
for
2011¹⁾

Total Equity
as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
Systems Applications Products Nigeria Limited, Abuja, Nigeria⁴⁾
   100.0       13,435       955       2,690       34
Systems Applications Products South Africa (Proprietary) Limited, Johannesburg, South Africa⁴⁾
   89.5       191,933       7,618       33,369       317
TomorrowNow (UK) Limited, Feltham, United Kingdom⁴⁾
   100.0       0       –6       22       0
TomorrowNow Nederland B.V., Amsterdam, the Netherlands
   100.0       0       –67       –3,275       0
AMERICAS

110405, Inc., Newtown Square, Pennsylvania, USA
   100.0       0       0       16,147       0
Business Objects Argentina S.R.L., Buenos Aires, Argentina⁴⁾
   100.0       0       0       79       0
Business Objects Option, LLC, Wilmington, Delaware, USA
   100.0       0       1,004       65,757       0
Clear Standards, Inc., Sterling, Virginia, USA⁴⁾
   100.0       1,061       -1,189       15,251       0
Crossgate Inc., Atlanta, USA^3),4)
   100.0       313       -921       -7,335       24
Extended Systems, Inc., Boise, Idaho, USA⁴⁾
   100.0       0       -41       17,557       0
Financial Fusion, Inc., Concord, Massachusetts, USA⁴⁾
   100.0       0       0       0       0
Frictionless Commerce, Inc., Newtown Square, Pennsylvania, USA⁴⁾
   100.0       926       -671       36,524       0
iAnywhere Solutions Canada Ltd., Waterloo, Canada⁴⁾
   100.0       1,367       1,313       3,385       142
iAnywhere Solutions Inc., Dublin, California, USA⁴⁾
   100.0       30,102       66,396       177,422       67
INEA Corporation USA, Wilmington, Delaware, USA⁴⁾
   100.0       0       3       333       0
Inxight Federal Systems Group, Inc., Wilmington, Delaware, USA⁴⁾
   100.0       0       -1       99       0
Khimetrics Canada, Inc., Montreal, Canada⁴⁾
   100.0       —       —       —       0
Liberia LLC, Wilmington, Delaware, USA⁴⁾
   100.0       —       —       —       0
Maxware, Inc., Newtown Square, Pennsylvania, USA⁴⁾
   100.0       190       45       -377       0
Right Hemisphere Inc., San Ramon, California, USA^3),4)
   100.0       756       -1,605       48,508       28
SAP America, Inc., Newtown Square, Pennsylvania, USA
   100.0       3,186,980       257,874       1,520,738       5,740

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after Tax
for
2011¹⁾

Total
Equity as
at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
SAP Andina y del Caribe C.A., Caracas, Venezuela
   100.0       24,069       2,085       2,779       36
SAP ARGENTINA S.A., Buenos Aires, Argentina
   100.0       156,386       10,194       29,911       573
SAP Brasil Ltda, São Paulo, Brazil
   100.0       446,070       519       97,702       1,275
SAP Canada Inc., Toronto, Canada
   100.0       674,306       47,090       451,864       2,058
SAP Colombia S.A.S., Bogota, Colombia
   100.0       65,014       -6,671       -10,507       159
SAP Costa Rica, S.A., San José, Costa Rica
   100.0       7,409       423       2,502       9
SAP Financial Inc., Toronto, Canada⁴⁾
   100.0       0       23,551       7,743       0
SAP Global Marketing, Inc., New York, New York, USA
   100.0       238,518       3,892       22,759       480
SAP Government Support & Services, Inc., Newtown Square, Pennsylvania, USA⁴⁾
   100.0       97,000       22,037       148,490       183
SAP Industries, Inc., Newtown Square, Pennsylvania, USA⁴⁾
   100.0       358,574       42,453       401,089       403
SAP International, Inc., Miami, Florida, USA⁴⁾
   100.0       56,008       809       12,855       50
SAP Investments, Inc., Wilmington, Delaware, USA⁴⁾
   100.0       0       21,303       659,558       0
SAP LABS, LLC, Palo Alto, California, USA⁴⁾
   100.0       458,999       20,168       137,595       2,029
SAP México S.A. de C.V., Mexico City, Mexico
   100.0       223,775       -11,504       -10,147       408
SAP PERU S.A.C., Lima, Peru
   100.0       24,280       209       1,333       44
SAP Public Services, Inc., Washington, D.C., USA⁴⁾
   100.0       334,786       49,020       263,747       237
SAP Technologies Inc., Palo Alto, California, USA⁴⁾
   100.0       0       0       0       0
SAP Ventures Fund I, L.P., Wilmington, Delaware, USA^3),7)
   0       0       4,455       15,481       0
Sybase 365 LLC, Dublin, California, USA⁴⁾
   100.0       49,237       -6,371       92,932       128
Sybase 365 Ltd., Tortola, British Virgin Islands⁴⁾
   100.0       0       0       -1,990       0
Sybase Argentina S.A., Buenos Aires, Argentina⁴⁾
   100.0       2,251       351       1,469       12
Sybase Canada Ltd., Waterloo, Canada⁴⁾
   100.0       18,579       990       5,105       69
Sybase de Mexico, S. De R.L. de C.V., Mexico City, Mexico⁴⁾
   100.0       5,805       -1,586       -135       27
Sybase do Brasil Software Ltda., Sâo Paulo, Brazil⁴⁾
   100.0       17,328       -1,178       -316       31

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after Tax
for
2011¹⁾

Total Equity
as at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
Sybase Global LLC, Dublin, California, USA⁴⁾
   100.0       0       0       7,529       0
Sybase Intl Holdings LLC, Dublin, California, USA⁴⁾
   100.0       0       0       12,047       0
Sybase, Inc., Dublin, California, USA⁴⁾
   100.0       355,879       23,167       4,509,013       1,225
TomorrowNow, Inc., Bryan, Texas, USA⁴⁾
   100.0       16       421,025       -192,873       3
ASIA PACIFIC JAPAN

Beijing Zhang Zhong Hu Dong Information Technology Co. Ltd., Beijing, China⁴⁾
   100.0       1,676       254       -603       6
Business Objects Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia⁴⁾
   100.0       0       0       261       0
Business Objects Software (Shanghai) Co., Ltd., Shanghai, China⁴⁾
   100.0       7,444       1,715       7,102       108
iAnywhere Solutions K.K., Tokyo, Japan⁴⁾
   100.0       8,845       -162       -2,903       21
PT SAP Indonesia, Jakarta, Indonesia
   100.0       44,166       5,090       13,989       49
PT Sybase 365 Indonesia, Jakarta, Indonesia⁴⁾
   100.0       94       -6       229       0
Right Hemisphere Ltd., Auckland, New Zealand³⁾
   100.0       547       -1,365       4,953       39
Ruan Lian Technologies (Beijing) Co. Ltd., Beijing, China⁴⁾
   100.0       0       -26       -1,164       1
SAP (Beijing) Software System Co., Ltd., Beijing, China
   100.0       307,921       -10,043       26,608       2,652
SAP Asia Pte Limited, Singapore, Singapore
   100.0       259,969       31,471       58,537       676
SAP Asia (Vietnam) Co. Ltd., Ho Chi Minh City, Vietnam^3),4)
   100.0       382       27       405       34
SAP Australia Pty Limited, Sydney, Australia
   100.0       426,967       25,988       259,227       615
SAP HONG KONG CO. LIMITED, Hong Kong, China
   100.0       32,187       -937       1,163       50
SAP INDIA (HOLDING) PTE LTD., Singapore, Singapore
   100.0       0       -6       300       0
SAP INDIA PRIVATE LIMITED, Bangalore, India
   100.0       343,699       38,868       185,953       1,518
SAP JAPAN Co., Ltd., Tokyo, Japan
   100.0       639,458       48,744       528,303       1,053
SAP Korea Limited, Seoul, South Korea
   100.0       118,258       11,014       27,358       215
SAP Labs India Private Limited, Bangalore, India
   100.0       153,304       -4,379       3,569       4,138

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss
(-)
after
Tax
for
2011¹⁾

Total
Equity as
at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia
   100.0       59,606       6,610       18,383       122
SAP New Zealand Limited, Auckland, New Zealand
   100.0       42,207       4,324       33,945       42
SAP PHILIPPINES, INC., Makati, Philippines
   100.0       28,426       879       9,090       38
SAP R&D Center Korea, Inc., Seoul, South Korea⁴⁾
   100.0       9,009       347       15,944       90
SAP SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING (THAILAND) LTD., Bangkok, Thailand⁶⁾
   49.0       45,622       2,396       35,215       50
SAP TAIWAN CO., LTD., Taipei, Taiwan
   100.0       58,408       6,271       26,331       71
Sybase (N.Z.) Limited, Wellington, New Zealand⁴⁾
   100.0       2,564       750       4,389       5
Sybase (Singapore) Pte Limited, Singapore⁴⁾
   100.0       9,539       -22       974       168
Sybase 365 Ltd. (HK), Hong Kong, China⁴⁾
   100.0       —       —       —       0
Sybase Australia Pty Limited, Sydney, Australia⁴⁾
   100.0       15,267       2,100       8,357       35
Sybase Hong Kong Limited, Hong Kong, China⁴⁾
   100.0       8,975       -150       223       69
Sybase India, Ltd., Mumbai, India⁴⁾
   100.0       0       161       2,675       0
Sybase K.K., Tokyo, Japan⁴⁾
   100.0       20,690       510       1,597       66
Sybase Korea, Ltd, Seoul, South Korea⁴⁾
   100.0       9,364       326       2,877       47
Sybase Philippines Inc., Makati City, Philippines⁴⁾
   100.0       0       1       -11       0
Sybase Software (China) Co. Ltd., Beijing, China⁴⁾
   100.0       16,922       2,055       16,536       396
Sybase Software (India) Private Ltd, Mumbai, India⁴⁾
   100.0       3,904       257       6,741       196
Sybase Software (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia⁴⁾
   100.0       2,387       103       1,643       3
Sybase Taiwan Co. Ltd., Taipei, Taiwan⁴⁾
   100.0       3,913       -430       1,019       19
Technidata EHS Solutions Asia Pte Limited, Singapore⁴⁾
   100.0       0       -51       47       0
TomorrowNow Australia Pty Limited, Sydney, Australia⁴⁾
   100.0       0       6       404       0
TomorrowNow Singapore Pte Limited, Singapore, Singapore⁴⁾
   100.0       0       -10       79       0

as at December 31, 2011    Ownership
Total
Revenue
in 2011¹⁾

Profit/
Loss (-)
after
Tax for
2011¹⁾

Total
Equity as
at
12/31/2011¹⁾
   Number of
Employees
as at
12/31/2011²⁾
Name and Location of Company    %    €(000)    €(000)    €(000)
II. INVESTMENTS IN ASSOCIATES

Alteryx Inc., Orange, California, USA⁴⁾
   9.20       18,338       -1,587       -4,456       132
ArisGlobal Holdings, LLC, Stamford, Connecticut, USA⁴⁾
   16.00       32,837       -3,017       2,283       696
China DataCom Corporation Limited, Guangzhou, China⁴⁾
   28.30       0       0       40,276       0
Greater Pacific Capital (Cayman), L.P., Grand Cayman, Cayman Islands
   5.35       —       —       —       0
Original1 GmbH, Frankfurt am Main, Germany
   40.00       60       -4,405       3,494       17
Procurement Negócios Eletrônicos S/A, Rio de Janeiro, Brazil⁴⁾
   17.00       19,484       1,451       15,773       0
TechniData IT-Service GmbH, Markdorf, Germany⁴⁾
   26.00       12,300       600       1,254       101


asAs at December 31, ~~2011~~2014
Name and Location of Company
~~III. OTHER EQUITY INVESTMENTS (ownership of 5 percent or more)~~
~~Aepona Ltd., Belfast, Northern Ireland, United Kingdom~~
~~Apigee Corporation, Santa Clara, California, USA~~
~~Apriso Corporation, Long Beach, California, USA~~
~~Connectiva Systems, Inc., New York, New York, USA~~
~~Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern, Germany~~
EIT ICT Labs GmbH, Berlin, Germany
~~Ignite~~Evature Technologies (2009) Ltd., Ramat Gan, Israel
Five 9, Inc., ~~Frisco, Texas,~~San Ramon, California, USA
Follow Analytics, Inc., San Francisco, California, USA
GK Software AG, Schöneck, Germany
InnovationLab GmbH, Heidelberg, ~~GermanyiTAC~~Germany
iTAC Software AG, Dernbach, ~~GermanyiYogi~~Germany
iYogi Holdings Pvt. Ltd., Port Louis, Mauritius
Jibe, Inc., New York, New York, USA
Kaltura, Inc., New York, New York, USA
Krux Digital, Inc., San Francisco, California, USA
Lavante, Inc., San ~~José,~~Jose, California, USA
MuleSoft, Inc., San Francisco, California, USA
MVP Strategic Partnership Fund GmbH & Co. KG, Grünwald, Germany
Narrative Science, Inc., Chicago, Illinois, USA
Nor1, Inc., Santa Clara, California, USA
On Deck Capital, Inc., New York, New York, USA
Onventis GmbH, Stuttgart, Germany
OpenX Software Limited, ~~London, United Kingdom~~Pasadena, California, USA
~~PayScale~~Patent Quality, Inc., ~~Seattle,~~Bellevue, Washington, USA
Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
Post for Systems, Cairo, Egypt
~~Powersim Corporation, Herndon, Virginia, USA~~
Realize Corporation, Tokyo, Japan
Retail Solutions, Inc. (legal name: T3C, Inc.), Mountain View, California, USA
Return Path, Inc., New York, New York, USA
RideCharge, Inc., Alexandria, Virginia, USA
Rome2rio Pty. Ltd., Albert Park, Australia
Room 77, Inc., Mountain View, California, USA
Scytl, S.A., Barcelona, Spain
Smart City Planning, Inc., Tokyo, Japan
~~SupplyOn AG, Hallbergmoos, Germany~~Socrata, Inc., Seattle, Washington, USA
~~InnoWerft—~~StayNTouch Inc., Bethesda, Maryland, USA
Storm Ventures V, L.P., Menlo Park, California, USA
SV Angel IV L.P., San Francisco, California, USA
TableNow, Inc., San Francisco, California, USA
Technologie- und Gründerzentrum Walldorf Stiftung GmbH, Walldorf, Germany
The SAVO Group Ltd., Chicago, Illinois, USA
Ticketfly, Inc., San Francisco, California, USA
TidalScale, Inc., Santa Clara, California, USA
Trover, Inc., Seattle, Washington, USA
Upfront V, LP, Santa Monica, California, USA
Visage Mobile, Inc., Larkspur, California, USA
Zend Technologies, Ltd., Ramat Gan, Israel


Title of each class		Name of each exchange on which registered
American Depositary Shares, each Representing one Ordinary Share, without nominal value		New York Stock Exchange
Ordinary Shares, without nominal value		New York Stock Exchange*


~~INTRODUCTION~~Introduction			1
~~FORWARD-LOOKING STATEMENTS~~Forward-Looking Statements			1
Performance Management System			2
~~FINANCIAL MEASURES CITED IN THIS REPORT~~			3
PART I			1110
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			1110
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE			1110
ITEM 3. KEY INFORMATION			1110
Selected Financial Data			1110
Exchange Rates			1312
Dividends			1312
Risk Factors			1413
ITEM 4. INFORMATION ABOUT SAP			2827
~~The~~Overview of the SAP Group ~~of Companies~~			28
~~Portfolio of Software~~Strategy and Business Model			30
Seasonality			32
Products, Research & Development, and Services			3533
~~Research and Development~~Acquisitions			4538
Partner Ecosystem			5439
~~Acquisitions and Disposals~~Customers			5640
Environmental Performance: Energy and Emissions			58
~~Seasonality~~			59
~~Sales, Marketing and Distribution~~			5942
Intellectual Property, Proprietary Rights and Licenses			60
~~Organizational Structure~~			6044
Description of Property			6145
ITEM 4A. UNRESOLVED STAFF COMMENTS			6346
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			6346
Overview			6346
~~Economic Conditions~~Economy and the Market			6447
~~Outlook for 2011~~Segment Information			6549
Performance Against Outlook for 2014 (Non-IFRS)			49
Operating Results (IFRS)			51
Foreign Currency Exchange Rate Exposure			84
~~Outlook~~			8563
Liquidity and Capital Resources			9063
Off-Balance Sheet Arrangements			9467
Contractual Obligations			9568
Research and Development			9568
Critical Accounting Estimates			9668
New Accounting Standards not yet Adopted			9669
Expected Developments			69
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			9775
Supervisory Board			9775
Executive Board			9876


Compensation Report			9977
Employees			~~117~~94
Share Ownership			~~118~~95
Share-Based Compensation Plans			~~118~~95
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS			~~119~~95
Major Shareholders			~~119~~95
Related-Party Transactions			~~120~~96
ITEM 8. FINANCIAL INFORMATION			~~120~~96
Consolidated Financial Statements and Financial Statement Schedule			~~120~~96
Other Financial Information			~~120~~96
ITEM 9. THE OFFER AND LISTING			~~121~~97
General			~~121~~97
Trading on the Frankfurt Stock Exchange and the NYSE			~~122~~97


ITEM 10. ADDITIONAL INFORMATION			~~123~~98
Articles of Incorporation			~~123~~98
Corporate Governance			~~123~~98
Change in Control			~~128~~103
Change in Share Capital			~~128~~103
Rights Accompanying our Shares			~~129~~104
Taxation			~~130~~105
Material Contracts			~~136~~110
Documents on Display			~~136~~110
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			~~136~~111
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			~~137~~111
American Depositary Shares			~~137~~111
PART II			~~139~~113
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			~~139~~113
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			~~139~~113
ITEM 15. CONTROLS AND PROCEDURES			~~139~~113
Evaluation of Disclosure Controls and Procedures			~~139~~113
Management’s Annual Report on Internal Control Over Financial Reporting			~~139~~113
Changes in Internal Control Over Financial Reporting			~~139~~113
ITEM 16. [RESERVED]			~~140~~113
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT			~~140~~113
ITEM 16B. CODE OF ETHICS			~~140~~114
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES			~~140~~114
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees			~~140~~114
Audit Committee’s Pre-Approval Policies and Procedures			~~140~~114


Year	Average⁽¹⁾		High		Low
2007		1.3797		1.4862		1.2904
2008		1.4695		1.6010		1.2446
2009		1.3955		1.5100		1.2547
2010		1.3216		1.4536		1.1959
2011		1.4002		1.4875		1.2926


Large accelerated filer þ		Accelerated filer ¨		Non-accelerated filer ¨


ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			~~141~~115
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			~~141~~115
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT			~~142~~115
ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES			~~142~~115
Introduction			115
Legal Framework			116
Significant Differences			116
SAP SE is a European Company With a Two-Tier Board System			116
Director Independence Rules			116
Audit Committee Independence			117
Rules on Non-Management Board Meetings are Different			118
Rules on Establishing Committees Differ			118
Rules on Shareholders’ Compulsory Approval are Different			118
Specific Principles of Corporate Governance			118
Specific Code of Business Conduct			118
PART III			~~146~~120
ITEM 17. FINANCIAL STATEMENTS			~~146~~120
ITEM 18. FINANCIAL STATEMENTS			~~146~~120
ITEM 19. EXHIBITS			~~146~~120
Signatures			~~148~~121
~~SAP AG and Subsidiaries~~Index To The Consolidated Financial Statements			F-1
Report ofto the Independent Registered Public Accounting Firm			F-2
Consolidated Financial Statements			F-3


€ millions, unless otherwise stated	for the years ended December 31,
	2011										2010						2014										2013
	IFRS		Adj.		Non-IFRS		Currency Impact		Non-IFRS Constant Currency		IFRS		Adj.		Non-IFRS		IFRS		Adj.		Non-IFRS		Currency Impact		Non-IFRS Constant Currency		IFRS		Adj.		Non- IFRS
Revenue
Software revenue		3,971		0		3,971		96		4,067		3,265		0		3,265
Support revenue		6,967		27		6,994		58		7,052		6,133		74		6,207
Subscription and other software-related service revenue		381		0		381		–1		380		396		0		396
Revenue measures
Cloud subscriptions and support																		1,087		14		1,101		–3		1,098		696		61		757
Software																		4,399		0		4,399		0		4,399		4,516		2		4,518
Support																		9,368		5		9,373		114		9,487		8,738		19		8,756
Software and support																		13,767		5		13,773		113		13,886		13,254		21		13,275
Software and software-related service revenue		11,319		27		11,346		153		11,499		9,794		74		9,868		14,855		19		14,874		110		14,984		13,950		82		14,032
Consulting revenue		2,341		0		2,341		35		2,376		2,197		0		2,197
Other service revenue		573		0		573		8		581		473		0		473
Professional services and other service revenue		2,914		0		2,914		43		2,957		2,670		0		2,670		2,706		0		2,706		32		2,738		2,865		0		2,865

Total revenue		14,233		27		14,260		196		14,456		12,464		74		12,538		17,560		19		17,580		142		17,722		16,815		82		16,897

Total operating expenses
Operating expense measures
Cost of software and software-related services		–2,107		285		–1,822						–1,823		202		–1,621		–2,894		350		–2,543						–2,629		364		–2,265
Cost of professional services and other services		–2,248		32		–2,216						–2,071		18		–2,053		–2,379		121		–2,258						–2,402		123		–2,278
Total cost of revenue																		–5,272		471		–4,801						–5,031		487		–4,543
Gross profit																		12,288		490		12,778						11,784		570		12,354
Research and development		–1,939		41		–1,898						–1,729		23		–1,706		–2,331		127		–2,204						–2,282		120		–2,162
Sales and marketing		–3,081		127		–2,954						–2,645		95		–2,550		–4,304		170		–4,134						–4,131		205		–3,926
General and administration		–715		30		–685						–636		26		–610		–892		86		–806						–866		70		–796
Restructuring		–4		4		0						3		–3		0		–126		126		0						–70		70		0
TomorrowNow litigation		717		–717		0						–981		981		0
TomorrowNow and Versata litigation																		–309		309		0						31		–31		0
Other operating income/expense, net		25		0		25						9		0		9		4		0		4						12		0		12

Total operating expenses		–9,352		–198		–9,550		–127		–9,677		–9,873		1,342		–8,531		–13,230		1,288		–11,942		–152		–12,093		–12,336		921		–11,415

Operating profit and margin
Operating profit measures
Operating profit		4,881		–171		4,710		69		4,779		2,591		1,416		4,007		4,331		1,307		5,638		–9		5,628		4,479		1,003		5,482
Operating margin in %		34.3				33.0				33.1		20.8				32.0
Operating margin (in %)																		24.7				32.1				31.8		26.6				32.4


millions, unless otherwise stated		2011⁽¹⁾		2011		2010		2009		2008		2007		2014⁽¹⁾		2014		2013		2012		2011		2010
		US$		€		€		€		€		€		US$		€		€		€		€		€
Income Statement Data: Years ended December 31,	Income Statement Data: Years ended December 31,
Software and software-related service revenue			14,684		11,319		9,794		8,198		8,457		7,427		17,975		14,855		13,950		13,165		11,319		9,794
Total revenue			18,464		14,233		12,464		10,672		11,575		10,256		21,250		17,560		16,815		16,223		14,233		12,464
Operating profit			6,332		4,881		2,591		2,588		2,701		2,698		5,240		4,331		4,479		4,041		4,884		2,591
Operating margin in %⁽²⁾			34.3		34.3		20.8		24.3		23.3		26.3		24.7		24.7		26.6		24.9		34.3		20.8
Profit after tax			4,461		3,439		1,813		1,750		1,848		1,908		3,969		3,280		3,325		2,803		3,437		1,813
Profit attributable to owners of parent			4,460		3,438		1,811		1,748		1,847		1,906		3,969		3,280		3,326		2,803		3,435		1,811
Earnings per share⁽²⁾
Basic in €			3.75		2.89		1.52		1.47		1.55		1.58		3.32		2.75		2.79		2.35		2.89		1.52
Diluted in €			3.75		2.89		1.52		1.47		1.55		1.58		3.32		2.74		2.78		2.35		2.89		1.52
Other Data:
Weighted-average number of shares outstanding
Basic			1,189		1,189		1,188		1,188		1,190		1,207		1,195		1,195		1,193		1,192		1,189		1,188
Diluted			1,190		1,190		1,189		1,189		1,191		1,210		1,197		1,197		1,195		1,193		1,190		1,189
Statement of Financial Position Data: At December 31,	Statement of Financial Position Data: At December 31,
Cash and cash equivalents			6,441		4,965		3,518		1,884		1,280		1,608		4,027		3,328		2,748		2,477		4,965		3,518
Total assets⁽³⁾			30,130		23,225		20,839		13,374		13,900		10,161		46,597		38,507		27,091		26,306		23,227		20,839
Current financial liabilities⁽⁴⁾			1,727		1,331		142		146		2,563		82		3,099		2,561		748		802		1,331		142
Non-current financial liabilities⁽⁴⁾			3,795		2,925		4,449		729		40		6		10,867		8,980		3,758		4,446		2,925		4,449
Issued capital⁽⁵⁾			1,593		1,228		1,227		1,226		1,226		1,246		1,487		1,229		1,229		1,229		1,228		1,227
Total equity			16,485		12,707		9,824		8,491		7,171		6,478		23,715		19,598		16,048		14,133		12,689		9,824


Month	High		Low
2011
July		1.4508		1.4014
August		1.4510		1.4158
September		1.4283		1.3446
October		1.4172		1.3281
November		1.3803		1.3244
December		1.3487		1.2926
2012
January		1.3192		1.2682
February		1.3463		1.3087
March (through March 8, 2012)		1.3320		1.3114


	Dividend Paid per Ordinary Share
Year Ended December 31,	€			US$
2007		0.50			0.77	⁽¹⁾
2008		0.50			0.68	⁽¹⁾
2009		0.50			0.60	⁽¹⁾
2010		0.60			0.85	⁽¹⁾
2011 (proposed)		1.10	⁽²⁾^,(4)		1.46	^(2),(3)


	Dividend Paid per Ordinary Share
Year Ended December 31,	€			US$
2010		0.60			0.85	⁽¹⁾
2011		1.10	⁽²⁾		1.38	⁽¹⁾
2012		0.85			1.11	⁽¹⁾
2013		1.00			1.37	⁽¹⁾
2014(proposed)		1.10	⁽³⁾		1.19	^(3),(4)


	Carrying Amount		Contractual Cash Flows
€ millions	12/31/2011		2012		2013		2014		2015		2016		Thereafter
Non-derivative financial liabilities
Trade payables		–727		–727		0		0		0		0		0
Financial liabilities		–4,034		–1,264		–687		–840		–276		–495		–792

Total of non-derivative financial liabilities		–4,761		–1,991		–687		–840		–276		–495		–792
Derivative financial liabilities and assets
Derivative financial liabilities
Currency derivatives without designated hedge relationship		–179
cash outflows				–2,887		–10		–10		–10		–10		–40
cash inflows				2,797		0		0		0		0		0
Currency derivatives with designated hedge relationship		–34
cash outflows				–569		–50		0		0		0		0
cash inflows				534		49		0		0		0		0
Interest rate derivatives with designated hedge relationship		–8
cash outflows				–9		–5		–3		0		0		0
cash inflows				6		3		1		0		0		0
Derivative financial assets
Currency derivatives without designated hedge relationship		118
cash outflows				–2,172		0		0		0		0		0
cash inflows				2,281		0		0		0		0		0
Currency derivatives with designated hedge relationship		4
cash outflows				–82		0		0		0		0		0
cash inflows				87		0		0		0		0		0

Total of derivative financial liabilities and assets		–99		–14		–13		–12		–10		–10		–40


	Effects on Other Non-Operating Expense, Net						Effects on Other Comprehensive Income
€ millions	2014		2013		2012		2014		2013		2012
Derivatives held within a designated cash flow hedge relationship
All major currencies –10%								74		57		60
All major currencies +10%								–74		–57		–60
Embedded derivatives
All currencies –10%		32		35		41
Swiss franc +20%/other currencies +10% (2013, 2012: all currencies +10%)		–62		–35		–41


€ billions	2014		2013
Year-end exposure towards all our major currencies		1.0		0.9
Average exposure		2.7		1.0
Highest exposure		7.7		1.1
Lowest exposure		1.0		0.9


	Effects on Financial Income, Net
€ millions	2014		2013		2012
Derivatives held within a designated fair value hedge relationship
Interest rates +100 bps in U.S. dollar area/ +50 bps in euro area (2013, 2012: +100 bps in U.S. dollar/euro area)		–116		–24		0
Interest rates –50 bps in U.S. dollar/euro area (2013, 2012: –20 bps in U.S. dollar/euro area)		70		5		0
Variable rate financing
Interest rates +50 bps in euro area		–65		0		0
Interest rates –50 bps in euro area		65		0		0


€ billion	2014								2013
€ billion	Year-End		Average		High		Low		Year-End		Average		High		Low
Fair value interest-rate risk
From investments		0.04		0.05		0.08		0.04		0.04		0.06		0.13		0.04
Cash flow interest rate risk
From investments (incl. cash)		2.45		2.48		2.74		2.13		1.73		2.23		2.71		1.73
From financing		5.03		0.75		5.03		0.00		0.00		0.31		1.00		0.00
From interest rate swaps		2.55		2.44		2.55		2.39		2.39		0.60		2.40		0.00


Type	Fair Value Hierarchy	Determination of Fair Value/ Valuation Technique	Significant Unobservable Inputs	Interrelationship Between Significant Unobservable Inputs and Fair Value Measurement
Other financial assets
Debt investments	Level 1	Quoted prices in an active market	NA	NA
Listed equity investments	Level 1	Quoted prices in an active market	NA	NA
	Level 2	Quoted prices in an active market deducting a discount for the disposal restriction derived from the premium for a respective put option.	NA	NA
Unlisted equity investments	Level 3	Market approach. Comparable company valuation using revenue multiples derived from companies comparable to the investee.	~~calculated~~• Peer companies used (revenue multiples range from 0.4-8.5) • Revenues of investees • Discounts for lack of marketability (20%)	The estimated fair value would increase (decrease) if: • The revenue multiples were higher (lower) • The investees’ revenues were higher (lower) • The liquidity discounts were lower (higher).
		Market approach. Venture capital method evaluating a variety of quantitative and qualitative factors like actual and forecasted results, cash position, recent or planned transactions, and market comparable companies.	NA	NA
		Last financing round valuations	NA	NA
		Liquidation preferences	NA	NA
		Net asset value/ Fair market value as reported by the respective funds	NA	NA
Call options for share-based payments plans	Level 2	Monte-Carlo Model. Calculated considering risk-free interest rates, the remaining term of the derivatives, the dividend yields, the stock price, and the volatility of our share.	NA	NA
Call option on equity shares	Level 3	Market approach. Company valuation using EBITDA multiples based on actual results derived from the investee.	• EBITDA multiples used • EBITDA of the investee	The estimated fair value would increase (decrease) if: • The EBITDA multiples were higher (lower) • The investees’ EBITDA were higher (lower)


Type	Fair Value Hierarchy	Determination of Fair ~~values of our derivative interest-rate~~Value/ Valuation Technique	Significant Unobservable Inputs	Interrelationship Between Significant Unobservable Inputs and Fair Value Measurement
Other financial assets/ Financial liabilities
Foreign exchange (FX) forward contracts ~~are calculated by discounting the expected~~	Level 2	Discounted cash flow using Par-Method. Expected future cash flows ~~by taking~~based on forward exchange rates are discounted over the ~~prevailing market and future rates for the~~respective remaining term of the contracts using the respective deposit interest rates and spot rates.	NA	NA
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.	NA	NA


Type	Fair Value Hierarchy	Determination of Fair Value/Valuation Technique
Financial liabilities
Fixed rate bonds (financial liabilities)	Level 1	Quoted prices in an active market
Fixed rate private placements/ loans (financial liabilities)	Level 2	Discounted cash flows. Future cash outflows for fixed interest and principal are discounted over the term of the respective contracts using the market interest rates as ~~a basis.~~of the reporting date.


	SOP 2007 (2007/2008 Tranche)		SOP PP		SOP 2010 (2010/2011 Tranche)		BO Rights
Option pricing model used		Binomial		Monte-Carlo		Monte-Carlo		Binomial
Range of grant dates		3/21/2007 4/3/2008		5/6/2009		9/9/2010 6/9/2011		2/10/1998 1/21/2008
Quantity of awards issued in thousands		15,664		10,321		10,589		5,162
Weighted average fair value as at Dec 31, 2011		€5.20		€3.12		€7.84		€27.41
Weighted average intrinsic value as at Dec 31, 2011		€3.82		0		€0.80		€22.90
Expected life as at Dec 31, 2011 in years		0.8		2.2		4.9		1.3
Risk-free interest rate (depending on maturity)		0.00%		0.18%		0.70% to 1.20%		0.30%
Expected volatility SAP shares		25.5% to 27.1%		28.6%		27.4% to 29.1%		32.0%
Expected dividend yield SAP shares		1.70%		1.70%		1.70%		1.70%
Share price of reference index		n. a.		173.06		n. a.		n. a.
Expected volatility reference index		n. a.		18.0%		n. a.		n. a.
Expected dividend yield reference index		n. a.		1.11%		n. a.		n. a.
Expected correlation SAP share/reference index		n. a.		40.4%		n. a.		n. a.


(000)	SOP 2007 (2007/2008 Tranche)		SOP PP		SOP 2010 (2010/2011 Tranche)		BO Rights
Outstanding as at 12/31/2008		14,486		N/A		N/A		2,963
Granted in 2009		0		10,321		N/A		0
Exercised/paid in 2009		0		0		N/A		–704
Expired in 2009		0		0		N/A		0

Forfeited in 2009		–998		–243		N/A		–372

Outstanding as at 12/31/2009		13,488		10,078		N/A		1,887
Granted in 2010		0		0		5,397		0
Exercised/paid in 2010		–167		0		0		–571
Expired in 2010		0		0		0		0
Forfeited in 2010		–323		–503		–24		–216

Outstanding as at 12/31/2010		12,998		9,575		5,373		1,100

Granted in 2011		0		0		5,192		0
Exercised/paid in 2011		–8,172		0		0		–432
Expired in 2011		0		0		0		0
Forfeited in 2011		–832		–632		–515		–130

Outstanding as at 12/31/2011		3,994		8,943		10,050		538

Additional information
Awards exercisable as at 12/31/2009		5,965		0		N/A		1,390
Awards exercisable as at 12/31/2010		12,998		0		0		1,060

Awards exercisable as at 12/31/2011		3,994		8,943		0		538

Aggregate intrinsic value of vested awards in € million, as at 12/31/2009		0		0		N/A		19
Aggregate intrinsic value of vested awards in € million, as at12/31/2010		15		0		0		22

Aggregate intrinsic value of vested awards in € million, as at 12/31/2011		15		0		0		10

Weighted average exercise price in €		37.03		47.58		42.88		21.29
Provision as at 12/31/2009 in € millions		53		14		N/A		29
Provision as at 12/31/2010 in € millions		59		36		4		24

Provision as at 12/31/2011 in € millions		20		28		27		17

Expense recognized in 2009 in € millions		20		5		N/A		6
Expense recognized in 2010 in € millions		0		21		4		6

Expense recognized in 2011 in € millions		–4		–8		28		5


thousands	LTI Plan 2015 (2012 – 2014 tranches)		EPP 2015 (2012 – 2014 tranches)		RSU (2013 – 2014 tranches)		SOP 2010 (2010 – 2014 tranches)		SFSF Rights		Ariba Rights
Outstanding as at 12/31/2012		466		3,502		NA		17,427		2,403		2,360
Granted in 2013		311		2,087		1,559		7,421		NA		NA
Adjustment based upon KPI target achievement in 2013		–18		–139		0		NA		NA		NA
Exercised in 2013		–196		–3,502		0		–2,215		–797		–1,362
Forfeited in 2013		–48		–103		–96		–967		–531		–90
Outstanding as at 12/31/2013		515		1,845		1,463		21,666		1,075		908
Granted in 2014		242		2,177		1,256		8,965		NA		NA
Adjustment based upon KPI target achievement in 2014		–41		–458		–88		NA		NA		NA
Exercised in 2014		–70		–1,845		–738		–2,730		–520		–737
Forfeited in 2014		–55		–104		–301		–1,619		–224		–45
Outstanding as at 12/31/2014		591		1,615		1,592		26,282		331		126
Outstanding awards exercisable as at
12/31/2013		0		0		0		1,609		0		0
12/31/2014		0		0		0		3,313		0		0
Total carrying amount (in € millions) of liabilities as at
12/31/2013		41		115		32		183		20		24
12/31/2014		45		94		55		167		8		5
Total intrinsic value of vested awards (in € millions) as at
12/31/2013		43		115		0		37		0		0
12/31/2014		38		94		0		49		0		0
Weighted average share price (in €) for share options exercised in
2013		54.96		59.90		NA		55.47		30.12		33.89
2014		54.96		57.48		56.62		56.65		30.10		33.86
Total expense (in € millions) recognized in
2012		53		216		NA		74		38		21
2013		–11		118		34		83		10		21
2014		13		82		57		29		1		4


	2011		2010
Grant date		6/8/2011		9/8/2010
Share price at grant date		€41.73		€35.45
Purchase price set by the Executive Board		€44.07		€35.12
Risk-free interest rate		1.95%		0.82%
Expected dividend yield of SAP shares		1.70%		1.65%
Expected life of free-matching shares in years		3.0		3.0
Free-matching share fair value at grant date		€39.69		€33.71
Number of shares purchased in thousands		1,334		1,591
Number of free-matching shares granted to employees in thousands		408		489
Number of free-matching shares granted to SLT in thousands		73		82
Total free-matching shares granted in thousands		481		571


thousands	SMP
Outstanding as at 12/31/2012		4,071
Granted in 2013		573
Exercised in 2013		–462
Forfeited in 2013		–196
Outstanding as at 12/31/2013		3,986
Granted in 2014		568
Exercised in 2014		–432
Forfeited in 2014		–187
Outstanding as at 12/31/2014		3,935


	2011		2010
Expense recognized relating to discount		18		21
Expense recognized relating to amortization of free-matching shares		9		2
Additional discount granted under the Share Award Program		4		3

Total expense relating to SMP		31		26

Unrecognized expense as at December 31,		22		15
Average remaining vesting period in years as at December 31,		2.2		2.7


€ millions	Product		Consulting		Training		Sybase		Total
2011
External revenue from reportable segment		10,025		2,955		376		873		14,229
Segment result		5,940		864		147		226		7,177
Depreciation and amortization directly attributable to each segment		–14		–11		–1		–16		–42

2010
External revenue from reportable segment		9,020		2,714		362		387		12,483
Segment result		5,395		746		136		127		6,404
Depreciation and amortization directly attributable to each segment		–17		–8		–2		–7		–34

2009
External revenue from reportable segment		7,846		2,498		332		N/A		10,676
Segment result		4,731		781		115		N/A		5,627
Depreciation and amortization directly attributable to each segment		–53		–7		–2		N/A		–62


Executive Board		Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on December 31, ~~2011~~2014
Bill McDermott ~~Co-Chief~~Chief Executive Officer, Labor Relations Director Strategy, Governance, Business Development, Corporate Development, ~~Innovation,~~ ~~Sales, Field Services, Consulting, Ecosystem Activities,~~ Communications and Marketing, Human Resources, Business Network		Board of Directors, ANSYS, Inc., Canonsburg, ~~Philadelphia,~~Pennsylvania, United States Board of Directors, Under Armour, Inc., Baltimore, Maryland, United States ~~Board of Directors, PAETEC Communications, Inc., Fairport, New York, United States (until December 1, 2011)~~

~~Jim Hagemann Snabe~~Robert Enslin(from May 4, 2014) ~~Co-Chief Executive Officer~~Global Customer Operations Global Go-to-Market Efforts, ~~Strategy, Governance, Corporate Development, Innovation,~~Cloud and Line of Business Sales, Regional Sales and Operations, ~~Products~~Specialized Industry Sales, Ecosystem and ~~Solutions Development, Communications, Marketing~~Channels, End-to-End Customer Experience		~~Board of Directors, Thrane & Thrane A/S, Lyngby, Denmark~~ ~~Board of Directors, Bang & Olufsen a/s, Stuer, Denmark (from September 23, 2011)~~ ~~Board of Directors, Linkage A/S, Copenhagen, Denmark (until November 22, 2011)~~

~~Dr. Werner Brandt~~Bernd Leukert(from May 4, 2014) Products & Innovation Global Development Organization, Analytics, Applications, Cloud, Database & Technology, Mobile, SAP Labs Network (joint leadership with Gerhard Oswald)

Luka Mucic(from July 1, 2014) Chief Financial Officer, ~~Labor Relations Director (acting)~~Chief Operating Officer Finance and Administration including Investor Relations and Data Protection & Privacy, Process Office		~~Supervisory Board, Deutsche Lufthansa AG, Frankfurt am Main, Germany~~ ~~Supervisory Board, QIAGEN N.V., Venlo, the Netherlands~~ ~~Supervisory Board, Heidelberger Druckmaschinen AG, Heidelberg, Germany (until July 28, 2011)~~

Gerhard Oswald ~~Chief Operating Officer~~Global Service & Support SAP Active Global Support, ~~Installed Base Maintenance & Support, Global IT, Globalization Services,~~ SAP HANA Enterprise Cloud, Quality Governance & Production, ~~COO Operations, University Alliances, Global User Groups Organization, Chief Process Office,~~ Solution & Knowledge Packaging, SAP Labs Network (joint leadership with Bernd Leukert)


~~Vishal Sikka~~ Technology Platform (including Application Platform & Database), Products (BI tools, EIM, Analytics & Planning Applications), Product Architecture & Governance, Design & New Applications, Research including Global Incubation

Executive Board Members Who Left During ~~2011~~2014


€ thousands	2011		2010		2009
Short-term employee benefits		20,175.5		13,254.4		30,470.4
Share-based payment		4,015.7		3,919.5		4,412.0

Subtotal		24,191.2		17,173.9		34,882.4

Post-employment benefits		1,546.5		1,999.0		1,479.0
—thereof defined-benefit		696.2		797.0		1,171.0
—thereof defined-contribution		850.3		1,202.0		308.0
Termination benefits		4,124.9		10,947.5		2,326.8
Other long-term benefits		4,031.0		3,407.0		0

Total		33,893.6		33,527.4		38,688.2


Number of SAP shares	2011		2010		2009		2014		2013		2012
Executive Board		20,560		13,747		15,336		36,426		30,201		35,271
Supervisory Board		121,524,139		122,156,130		127,193,136		107,467,372		119,316,444		121,363,858


as at December 31, 2011	Ownership		Total Revenue in 2011¹⁾		Profit/Loss (-) after Tax for 2011¹⁾		Total Equity as at 12/31/2011¹⁾		Number of Employees as at 12/31/2011²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
I. Fully Consolidated Subsidiaries
GERMANY
Crossgate AG, Munich³⁾		100.0		3,784		–2,281		119,615		120
Crossgate Technologies AG, Göttingen—Rosdorf^3),4)		100.0		1,310		899		–797		77
OutlookSoft Deutschland GmbH, Walldorf⁴⁾		100.0		0		–1		–1		0
Right Hemisphere GmbH, Munich^3),4)		100.0		66		3		36		1
SAF Germany GmbH, Konstanz⁴⁾		100.0		582		27		387		0
SAP Beteiligungs GmbH, Walldorf		100.0		3		2		49		0
SAP Deutschland AG & Co. KG, Walldorf⁸⁾⁹⁾		100.0		2,759,982		606,243		1,285,917		4,723
SAP Dritte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^4),5),8)		100.0		0		61,197		553,154		0
SAP Erste Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^5),8)		100.0		0		–23,158		804,545		0
SAP Foreign Holdings GmbH, Walldorf		100.0		0		0		–61		0
SAP Fünfte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^4),8)		100.0		0		0		2,318,309		0
SAP Hosting Beteiligungs GmbH, St. Leon-Rot		100.0		0		0		26		0
SAP Portals Europe GmbH, Walldorf⁴⁾		100.0		0		644		124,115		0
SAP Portals Holding Beteiligungs GmbH, Walldorf⁴⁾		100.0		0		–30		928,937		0
SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf^4),5),8)		100.0		0		32,248		323,902		0
SAP Puerto Rico GmbH, Walldorf		100.0		27,447		–2,991		–2,366		34
SAP Retail Solutions Beteiligungsgesellschaft mbH, Walldorf		100.0		0		–679		13,822		0
SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf^3),8)		100.0		0		0		25		0
SAP Vierte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf		100.0		0		0		25		0
SAP Zweite Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^4).5),8)		100.0		0		80,695		164,750		0
Sybase Germany GmbH, Düsseldorf⁴⁾		100.0		34,226		1,854		–1,119		156
TechniData BCS GmbH, Siegen		100.0		4,162		86		831		31
TechniData GmbH, Markdorf		100.0		503		–17,005		80,013		0


as at December 31, 2011	Ownership		Total Revenue in 2011¹⁾		Profit/ Loss (-) after Tax for 2011¹⁾		Total Equity as at 12/31/2011¹⁾		Number of Employees as at 12/31/2011²⁾
Name and Location of Company	%		€(000)		€(000)		€(000)
REST OF EUROPE, MIDDLE EAST, AFRICA
Ambin Properties (Proprietary) Limited, Johannesburg, South Africa⁴⁾		100.0		0		243		–233		0
Armstrong Laing Limited, London, United Kingdom⁴⁾		100.0		0		–1		3,065		0
Business Objects (UK) Limited, London, United Kingdom⁴⁾		100.0		0		–2,368		30,535		0
Business Objects Holding B.V., s-Hertogenbosch, the Netherlands⁴⁾		100.0		0		184		4,208		0
Business Objects Software Limited, Dublin, Ireland		100.0		752,508		276,843		3,017,120		224
Cartesis UK Limited, London, United Kingdom⁴⁾		100.0		0		–30		1,119		0
Christie Partners Holding CV, Rotterdam, the Netherlands⁴⁾		100.0		0		–1		–21,824		0
Crossgate Italia S.p.A., Milan, Italy^3),4)		100.0		364		–60		594		13
Crossgate S.a.r.l., Paris, France^3),4)		100.0		251		–378		–3,778		3
Crossgate UK Ltd., Slough, United Kingdom^3),4)		100.0		184		–278		–5,245		6
Crystal Decisions (Ireland) Limited, Dublin, Ireland⁴⁾		100.0		0		–85		44,527		0
Crystal Decisions France S.A.S., Levallois-Perret, France⁴⁾		100.0		0		5,497		6,655		0
Crystal Decisions Holding Limited, Dublin, Ireland⁴⁾		100.0		0		152		77,708		0
Crystal Decisions UK Limited, London, United Kingdom⁴⁾		100.0		0		12		2,202		0
Edgewing Limited, London, United Kingdom⁴⁾		100.0		0		0		–17		0
Joe D Partners CV, Utrecht, the Netherlands⁴⁾		100.0		0		–16,229		621,539		0
Limited Liability Company SAP CIS, Moscow, Russia		100.0		349,593		31,405		109,845		619
Limited Liability Company SAP Kazakhstan, Almaty, Kazakhstan		100.0		33,086		3,955		5,567		15
Limited Liability Company SAP Ukraine, Kiev, Ukraine		100.0		16,599		–923		–2,551		93
Merlin Systems Oy, Espoo, Finland⁴⁾		100.0		9,463		692		2,569		29
S.A.P. Nederland B.V., s-Hertogenbosch, the Netherlands		100.0		376,155		47,926		380,050		398


As at December 31, 2014
Name and Location of Company
III. OTHER EQUITY INVESTMENTS (ownership of 5% or more)
Alchemist Accelerator Fund I LLC, San Francisco, California, USA
All Tax Platform - Solucoes Tributarias S.A., São Paulo, Brazil
Amplify Partners L.P., Cambridge, Massachusetts, USA
ArisGlobal Holdings LLC, Stamford, Connecticut, USA
Convercent, Inc., Denver, Colorado, USA
Costanoa Venture Capital II L.P., Palo Alto, California, USA
Data Collective II L.P., San Francisco, California, USA
Data Collective III L.P., San Francisco, California, USA