VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Tuesday, December 30, 2025
SAP SE
SAP · XETRA
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
SAP is a German enterprise software vendor with two primary reported segments: Cloud and Software (the majority of revenue) and Services. The strongest moats sit in the ERP-centered software stack, driven by workflow/data lock-in, suite bundling, and an extensive partner ecosystem that delivers implementation capacity and complements. Recurring support and cloud subscriptions provide multi-year revenue visibility, while professional services are more competitive and lower-moat.
Primary segment
Cloud and Software
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
2 segments · 5 tags
Updated 2025-12-30
Segments
Cloud and Software
Enterprise application software suites and cloud subscriptions (ERP-centric) plus platform services
Revenue
87.3%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Services
Enterprise software consulting, implementation, and premium support (SAP landscapes)
Revenue
12.7%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Cloud and Software
Enterprise application software suites and cloud subscriptions (ERP-centric) plus platform services
SAP-reported segment includes cloud revenue, software licenses, and software support (FY2024).
Data Workflow Lockin
Demand
Data Workflow Lockin
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Core ERP and adjacent suites sit in the system-of-record layer; migrations and process redesign create high change costs.
Erosion risks
- Rise of modular, API-first best-of-breed stacks reduces suite dependence
- Customer migrations to competitor clouds during major ERP refresh cycles
- Data portability and interoperability mandates
Leading indicators
- Net retention / renewal rates for cloud subscriptions
- Share of customers adopting S/4HANA Cloud vs legacy ECC
- Customer reported churn or competitive displacement in large deals
Counterarguments
- Large enterprises can multi-vendor and standardize on hyperscalers with alternative app ecosystems
- Cloud-native ERPs can win greenfield deployments faster than SAP migrations
Suite Bundling
Demand
Suite Bundling
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
ERP-centered suite plus adjacent LoB apps and analytics/AI creates cross-sell and reduces point-solution penetration in core processes.
Erosion risks
- Customer pushback against bundled pricing
- Regulatory scrutiny of tying/bundling in enterprise software
- Best-of-breed vendors winning specific LoB categories
Leading indicators
- Attach rates of BTP / analytics / LoB apps to core ERP deals
- Average contract value (ACV) expansion for existing customers
- Competitive win/loss on core ERP with/without suite
Counterarguments
- Enterprises increasingly procure modularly and integrate through iPaaS
- Suites can lag specialist functionality, driving selective replacement
Ecosystem Complements
Network
Ecosystem Complements
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Large partner ecosystem builds extensions and delivers implementation capacity, reinforcing SAP adoption and creating complements around BTP and ERP.
Erosion risks
- Partner talent shifts toward competing platforms
- Quality/control issues in partner-delivered implementations
- Platform commoditization reduces extension differentiation
Leading indicators
- Number of active partners and certified consultants
- Partner-sourced pipeline / % revenue influenced by partners
- Marketplace extension growth and usage
Counterarguments
- Systems integrators can be platform-agnostic and steer customers to alternatives
- Partners capture much of services profit, limiting SAP ability to enforce quality/pricing
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Recurring support and cloud subscriptions (plus multi-year cloud backlog) increase revenue visibility and reduce short-term competitive pressure at renewal.
Erosion risks
- Renewal repricing pressure during IT budget downturns
- Customer migrations off maintenance to competitor SaaS during modernization cycles
- Shorter contract durations in SMB/upper mid-market
Leading indicators
- Cloud backlog / remaining performance obligations trend
- Recurring revenue mix and renewal rate
- Support revenue stability vs cloud migration pace
Counterarguments
- Contracts renew, but customers can use renewal cycles to demand concessions
- Cloud contracts can be repriced downward if value perception declines
Compliance Advantage
Legal
Compliance Advantage
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Capabilities oriented toward public sector and regulated customers (e.g., security, sovereign cloud initiatives) can be a differentiator in high-compliance deployments.
Erosion risks
- Regulation changes faster than product/security roadmap
- Government procurement shifts toward open standards and interoperability
- Competition from hyperscaler sovereign cloud offerings
Leading indicators
- Public sector cloud wins and renewals
- Security/compliance certifications achieved and maintained
- Incidents that trigger increased scrutiny (breaches, outages)
Counterarguments
- Large competitors also invest heavily in compliance certifications and sovereign cloud
- Public-sector buying can be price-sensitive and policy-driven
Services
Enterprise software consulting, implementation, and premium support (SAP landscapes)
Includes consulting, premium support, and other services revenue (FY2024).
Brand Trust
Demand
Brand Trust
Strength: 2/5 · Durability: medium · Confidence: 3/5 · 1 evidence
SAP-branded support tiers can be trusted for mission-critical operations, but systems integrators often capture implementation spend.
Erosion risks
- Customers prefer independent SIs for transformation programs
- Delivery quality issues can damage trust quickly
- Talent scarcity and wage inflation reduce differentiation
Leading indicators
- Services attach rate to cloud deals
- Customer satisfaction/NPS for premium support programs
- Share of services delivered by SAP vs partners
Counterarguments
- Global SIs (and boutique firms) often have deeper implementation benches and industry-specific accelerators
- Services are easier to substitute than core software
Evidence
...run our customers' most mission-critical business processes end to end.
Positions SAP software as core to end-to-end business processes, consistent with high workflow lock-in.
...unmatched wealth of business data stored in SAP systems...
Highlights concentration of enterprise business data inside SAP landscapes, increasing migration friction.
...Business Suite offering in the cloud...
SAP explicitly frames a cloud Business Suite approach, consistent with bundling across end-to-end processes.
...customers, and our partner ecosystem to unlock innovation...
SAP describes BTP as enabling customers and partners to build/integrate/extend, supporting an ecosystem complements moat.
Our worldwide ecosystem of more than 25,000 partners...
Scale of partner base supports implementation capacity and complements.
Showing 5 of 9 sources.
Risks & Indicators
Erosion risks
- Rise of modular, API-first best-of-breed stacks reduces suite dependence
- Customer migrations to competitor clouds during major ERP refresh cycles
- Data portability and interoperability mandates
- Customer pushback against bundled pricing
- Regulatory scrutiny of tying/bundling in enterprise software
- Best-of-breed vendors winning specific LoB categories
Leading indicators
- Net retention / renewal rates for cloud subscriptions
- Share of customers adopting S/4HANA Cloud vs legacy ECC
- Customer reported churn or competitive displacement in large deals
- Attach rates of BTP / analytics / LoB apps to core ERP deals
- Average contract value (ACV) expansion for existing customers
- Competitive win/loss on core ERP with/without suite
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.