SAP SE

Our holistic view of the performance measures described above, and the associated analyses, together form the foundation of our value-based management. We use planning and control processes to manage the compilation of these key measures and their availability to our decision-makers across various management levels. SAP’s long-term strategic plans are the point of reference for our short- and medium-term planning and controlling processes. We initially identify future growth and profitability drivers at a highly aggregated level for the entire SAP Group.

In a first step, the financial plan’s growth ambition is determined by the Group’s comprehensive product portfolio, which is grouped into solution areas, and profitability drivers are allocated to functions such as development, marketing, sales, delivery, and administration.

In a second step, the planned total revenues and total expenses are allocated to the operating segments and the areas of functional responsibility of the individual members of the Executive Board (“Board area”). If one of these Board areas represents both a functional department and operating segments, planned revenues and expenses are allocated at segment level. Budget adjustments may be applied during the year to reflect changes in priorities, to achieve efficiency targets, and to reflect internal and external factors. Budget adjustments and the assessment of the performance are managed either at the Board area level if the Board area constitutes a single segment, or at the segment level if the Board area comprises several segments. The Executive Board member is responsible for distributing the budget within the Board area or at segment level as applicable. Based on an integrated portfolio process running in parallel to the budgeting process, we ensure aligned investment behavior across Board areas with regard to specific solution or sub-solution areas.

In a final step, customer-facing revenue targets and cost-of-sales and marketing targets are broken down into sales regions and market units.

Based on our detailed annual plans, we determine the budget for the respective fiscal year. We also have processes in place to forecast revenue and profit on a quarterly basis, to quantify whether we expect to realize our financial targets, and to identify any deviations from plan. We continuously monitor the affected operating segments and board areas in the SAP Group to analyze their developments and define any appropriate actions. Our entire network of planning, controlling, and reporting processes is implemented in integrated planning and information systems, based on SAP software, across all organizational units so that we can conduct the evaluations and analyses needed to make informed decisions. Financial targets for headcount and expenses are substantially based on our topline ambitions. If we determine that SAP’s topline plans are at material risk of not being achieved, we need to be agile and ensure that planned expenses are still properly aligned to the Company’s overall financial ambition.