SAP owes much of its success to its corporate strategy. It used a horizontal integration strategy to earn so much of its money. R/1, one of the earliest forms of ERP (enterprise resource planning), is a software that SAP focused on using on multinational companies. This R/1 software was known to save these companies hundreds of millions, and even billions, of dollars; thus with them being able to gain the most profit from it, "they were willing to pay SAP a premium price for its product." (Jones, 2011) The development their of ERP's helped SAP in developing a global base of companies. Soon after, SAP wanted to focus on its development of the ERP software and consulting services for companies. Thus, SAP "formed a series of strategic alliances with major global consulting companies such as IBM, Accenture, and Cap Gemini to install its R/1 system in its growing base of global customers" (Jones, 2011).
One if the business level strategies used by SAP is that of an outsourcing consulting strategy. Due to it being hard, and expensive, for the ERP to adapt information with SAP's software, the harder it had become for companies to realize the benefits and potential value of the ERP software. But using the outsourcing consulting strategy "allowed it to penetrate global markets quickly and eliminated the huge capital investment needed to employ the thousands of consultants required to provide this service on a daily basis." (Jones, 2011) Choosing to use this strategy did not work out well for SAP. They ended up not expanding their consulting operations quick enough to keep up with there ERP software which "left the door open for IBM and Accenture to dominate the software consulting industry." (Jones, 2011) Thus, many managers chose to invest in research and development of its software and became a product-focused company. They believed that through the research and development that their software would "produce the technical advances that would be the source of its competitive advantage.
