To celebrate its 30th Anniversary, SAP is presenting the Asian Leadership Series comprised of interviews with captains of industry speaking on key business issues for the 21st Century. Each interview highlights one of three themes -- vision, innovation or experience -- concepts that have driven SAP's success over the past three decades. Lee Kum Kee Hero Honda Tenaga Nasional Berhad Quanta Computer Singapore Airlines Legend Computer LG Chem

30 Years of SAP 1972 • SAP is founded as "Systems Analysis & Program Development" in Mannheim, Germany • Number of employees at year end: 9 • Total revenues: DM 620,000 • SAP R/1 solutions launched 1974 • Two local companies -- Rothhandle and Knoll -- select the newly developed SAP Financial Accounting (RF) System 1976 • SAP organizes as a limited liability corporation with the name of "Systems, Applications and Products in Data Processing" 1977 • SAP moves its headquarters from Mannheim to Walldorf 1979 • SAP R/2 solutions launched • Total revenues: DM 4 Million 1980 • 50 of the 100 largest industrial companies in Germany are SAP clients 1982 • SAP revenues increase to DM 24 million for the year and more than 250 companies in Germany, Austria and Switzerland are using SAP-developed programs 1985 • Headquarters in Walldorf expand by 10,000 square meters • Sales increased by another 45% • SAP system is used throughout Europe as well as South Africa, Kuwait, Trinidad, Canada and the United States • The first headquarters in the United States is established in Wayne, Pennsylvania 1988 • Subscribed capital stock increases from DM 5 Million to DM 60 Million, company goes public (Frankfurt and Stuttgart) • SAP gains its 1000th Customer, Dow Chemical 1989 • SAP stock is traded on the Zurich stock exchange • 1st SAPPHIRE Conference • 1st Stockholder Meeting • Established Asia Pacific presence with offices in Australia and Singapore. • Number of employees: Over 1000 • SAP enters Russian market and begins development of a Russian version of the R/2 system 1992 • SAP enters Hong Kong market • SAP R/3 solutions launched • Revenue increases to DM 831 million of which almost 50% derives from international operations 1993 • Customer base grows to 3,500 companies • SAP introduces an R/3 version for the Japanese market 1995 • Customer base grows to 6,000 • SAP share included in the German stock index (DAX) 1996 • SAP R/3 Release 3.1 is Internet-enabled 1997 • SAP begins developing industry-specific solutions 1998 • Company is listed on the New York Stock Exchange • Company launches new solutions for Business Information Warehouse, Business-to-Business Procurement and Supply Chain Management. 1999 • SAP delivers mySAP.com • SAP receives "Best Managed Companies" Award by Industry Week 2000 • Named "Most Successful Company Over the Long-term in the 90's" (Jury of 40 CEO's: Wiesbaden 3/10/2000) 2001 • SAP acquires Top Tier and forms SAP Portals • Revenues for SAP in 2001 top EUR 7.3 Billion 2002 • SAP acquires TopManage Software Solutions for its SMB offering • SAP customer base grows to 18,000 • SAP has over 27,800 employees • SAP celebrates its 30th Anniversary! Q1. Taiwan Direct Shipment service has been important in Quanta's success. How did it come about? A1: In 1997 one of the biggest computer vendors was having problems in the notebook segment. It kept inventories in the U.S. and different locations in Europe. With models and components changing all the time, this was proving to be inefficient. So they came to us for help. We took their orders in Taiwan, configured the notebook PCs there and shipped them to their customers. The notebook computer is quite lightweight, so it's not expensive to ship to any place in the world. This is how the Taiwan Direct Shipment service began. Q2: You mentioned introducing innovation into corporate management. Give us an example. A2: In the OEM business, we have to be very fast and flexible. The challenge is how to do this when our customers have different needs. So we created different business units for each customer. Now each customer feels he is dealing with a small personal company with access to huge resources. Q3: What is the biggest obstacle you face today? A3: The biggest obstacle is the maturity of the computer industry. What is the next big application for the PC going to be? Can the PC market continue to grow? We need some new innovation. So the big questions is: What's next?

In this interview, top executives of Singapore Airlines (SIA) talk about how innovation and contempt for the status quo has helped the company grow from the humblest of beginnings into an industry leader.

Innovation and an Independent Spirit Keeps SIA Flying Ahead of the Competition
Most leading airlines jet into the same airports with the same types of planes, and compete for the same groups of passengers, using similar services. So how, then, does one differentiate itself from another? The answer is that they scarcely do. A rare exception, however, is Singapore Airlines. With its independent approach to doing business and an ability to consistently introduce innovation into its operations, SIA has gained a reputation as a pacesetter when it comes to service in the industry.

"Even before the inception of SIA in 1972, back when we were known as Malaysia-Singapore Airlines (MSA) we paid particular attention to the quality of our cabin service," says Michael Tan, SIA's Senior Executive Vice-President (Commercial). "As a relatively small regional airline at that time, we wanted to stand out and be recognized. We chose cabin service to differentiate ourselves from the major international airlines and to create a major competitive edge." This focus on service, he adds, has now become a part of the corporate culture, with the company encouraging its employees to search out ways to continually improve the service.

Hype? Then think Singapore Girl; the Raffles Class business service; KrisWorld, the industry's most innovative inflight entertainment; and SIA's culinary piece de resistance, the World Gourmet Cuisine service for all customers, which provides a selection of signature dishes devised by a panel of eight internationally known chefs. As well as these amenities, the numerous industry awards the airline garners on an annual basis speak for themselves. In 2001, SIA won Best Airline to Asia for the ninth consecutive year in Travel Weekly; it was voted Best International Airline by Conde Nast Traveler for the seventh year in a row; and it collected 20 Business Traveler awards, including two for best overall airline.

"There's a lot of pride among our staff," notes Cheong Choong Kong, the company's deputy chairman and CEO. "If for one year, for example, we don't win the Conde Nast award for best airline, a lot of our people would be very disappointed," he adds, apparently still recalling that the company has won this prestigious award "only" 13 out of 14 times.

As well as looking good in the corporate showcase, such recognition also helps explain why SIA is one of the most profitable airlines in the business. In the financial year ending March 2002, the airline chalked up US$567 million in operating profits, despite a difficult year for the industry that saw many of SIA's competitors fall into the red.

Success Rooted in History
SIA management also speak about a culture of independent thinking and innovation that goes back to the airline's humble beginnings a half-century ago. In 1947 the then Malaysian Airways Ltd. began flying from Singapore Kallang Airport to several Malaysian destinations. Despite the severe handicap of serving a small local population, the company grew rapidly by flying further afield and winning over new customers.

"Our success is rooted in the earliest days," says Cheong. "We decided very early on to be an international carrier because of the limitations of our home base. We had to develop a well-connected network (of destinations)."

This all took place during a time when the industry was highly protectionist and maintained a cartel. But the forerunners of SIA declined to participate, and therefore did not have to follow the cartel's restrictive rules. And when the Singapore government opened up the island's skies to foreign competition, SIA benefited from the ensuing reciprocity. As a result, the airline steadily expanded its reach around the globe, particularly after it became one of the first airlines to order Boeing's 747 aircraft. Today, SIA and its subsidiaries fly to 90 destinations in 38 countries.

"The experience gained in the 1970s -- competing in an open skies environment -- really toughened us up," says Tan. "It paved the way for our success today, because we have learned to adapt quickly to fast-changing market conditions. In other words, we have become a truly market-driven company."

The Future of Innovation
The search for innovation and the desire to maintain a fresh approach to doing business has now become institutionalized within the corporation -- and not merely with the staff dealing directly with passengers, but throughout the entire enterprise.

One example is Futureworks, a brainstorming group made up of young people gathered from across SIA and its subsidiaries, including the cargo, engineering, and ground handling companies. Representing finance, human resource management, marketing and the like, the group regularly brainstorm to come up with ideas for new products and fresh ways of doing things, to improve services for passengers. The best ideas are deliberated over by management and some go on to be tested in the field. Those that are found feasible are implemented.

"Just as our corporate culture encourages employees to improve our cabin service, Futureworks is a means for SIA staff to test out innovative ideas throughout our operations," says Tan. "It's a seed recently planted that will grow into an integral part of our culture and impact all aspects of our business."

Futureworks and other less formal brainstorming gatherings throughout the SIA Group are looking to build on what's gone before, including current innovative hit services such as KrisWorld, SIA's inflight entertainment system. KrisWorld is presently being updated to include almost 200 entertainment options, including audio and video programming, video games and news. The KrisWorld remote control unit also doubles as an inflight telephone, which allows passengers make calls to almost anywhere in the world, via a satellite network. Operating instructions for the system come in five languages: English, French, German, Chinese and Japanese.

SIA is also investing some US$400 million over the near term to integrate its customer service, management systems and supply chain, to provide customers with one seamless e-service, whether they are on the ground or in the air. At the center of this online service is the company's Web site (www.singaporeair.com). Besides providing a wide range of travel information, including a currency converter, weather reports at destinations, and flight times, users can perform transactions such as booking flights.

While competing airlines also provide customer Web sites, most cater only to their domestic customers. With no serious domestic market of its own, SIA has opted to "think globally, act locally." By the end of last year, it had tailored Web sites in each of the 38 locations it has offices around the world to be country-specific, to cater to local customers' needs. Users can now access a site in one of five languages, via a PC, PDA or a cellphone.

Nevertheless, while the company cultivates innovation, "Understand that innovation is a means to an end," points out Cheong. "Not an end in itself. We don't go about saying 'Let's innovate!' The end is a satisfied customer, and innovation is a means of achieving that."

Flying on Technology
Singapore Airlines has long used technology to help run its business operations and enhance its customer services. But over the years it gradually acquired a large number of legacy systems, some of which did not always communicate well with each other. In 2000, executives decided it was time to overhaul the IT systems of the entire SIA Group, in order to create one common IT platform. After looking at various systems, the company decided in September 2000 to partner with SAP and implement mySAP.com.

The decision was based on a number of factors, including evaluation of competing systems, the reputation of SAP as an application solution provider, and a relationship that goes back to 1997 when SIA began using SAP Financials to take care of its accounting needs.

Currently, SIA is replacing its legacy systems in all of its operations, including logistics, human resources, finance and supply chain management. At the same time, the SAP system will oversee commercial supplies, baggage handling, production planning and production control, as well as the kitchen and catering side of the airline operations, where SIA produces up to 50,000 meals each day. SIA will also move its engineering subsidiary and machine repair operations over to SAP systems.

Implementation of mySAP.com will help SIA standardize its business processes throughout the enterprise and in SIA subsidiaries. This streamlining of IT will allow executives, managers and authorized staff to access important information easily and quickly, reducing the time it takes to make decisions and improving efficiency throughout the company.



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