1. At the time of the case, why has SAP America grown so rapidly? What challenges have been created by the company’s explosive growth?

Growth due to Strategic reasons: * They decide to remain a product company rather than converting to a solutions company which lead to creating a beneficiary ecosystem for itself as well as for its consulting partners * Targeted the top tier companies which were believed to rely only on mainframes, but by having a good sales force they were able to close big deals efficiently. * Focus on manufacturing related industries which gave them the chance to generate revenue by licensing the product and pricing on the Licenses was according to the usage of the client. * Main aim was to make their product the de facto industry standard so that they had large number of users and hence high revenue.

Market Forces: * R/3 was way ahead in technology than any product in the market at that time. It gave clients the option to tailor the product according to their needs without changing any code. * The scope of R/3’s reach was massive, it was open architecturally thus giving a lot freedom to the client in terms of database, hardware etc. * The timing of the product release was perfect because re-engineering and process redesign was on the rise.

Organizational Factors: * Sales force was better organized and were given autonomy so that they could close deals faster. * Every step of the implementation was worked out to minute details thus giving companies the needed assistance and resources for the successful transition.

Challenges faced because of the explosive growth: * Because of the growth a lot of staff was recruited but the administrative systems were not properly in place. * SAP in house consultants were leaving because the growth had become stagnant and also because SAP had taken a stand