Reason for SAP length restrictions

Question

I am currently working in a company which uses SAP ERP. The average organization name length of our business partners is about 100 chars, which may be domain specific. The SAP way now seems to be that users have to split such names into chunks of 40 chars length (no joke). This certainly does not reflect reality at all and leads to the weirdest problems.

When I ask people about the reason of this restriction, they say things like “you know, the core of this software is from the 1970s, when every bit was expensive”. These kind of answers are not satisfying at all.

So what is the real reason?