According to my understanding, Shi’ah is an Arabic word for group. No such group apparently existed prior to the institution of the caliphate – khalafah – and it was only instituted to oppose Abu Bakr Siddique the first Khalif.
Did Shi’ah exist prior to the caliphate? If so, why has their practice of Islam changed to the extent that they now appear to follow a different religion?

The word Shi’ah means to follow. Thus, to be Shi’ah means to follow the path of the
Holy Prophet (PBUH) as his pure household did, the real true Islam of the Prophet Muhammad (PBUH).
The Prophet (PBUH) himself used the word Shi’ah to indicate specific people. Qur’anic commentaries, hadith collections, history books and indeed, literature in general, refer to the Prophet (PBUH) using the word Shi’ah to describe the followers of Ali (A.S). He did this so frequently that Salman al-Farsi, Ammar ibn Yassar, Abu Dharr Giffari and al-Miqdad in particular, became known as followers of Ali (A.S) – Shi’at Ali (A.S).
Jaber bin Abdillah reported that once, as Ali (A.S) approached a group of people, the Prophet (PBUH) said, ‘By He who holds my soul in His hands, that one there, Ali and his followers – hatha wa shi’ah tu, will be those who will succeed on the Day of Judgement.’ It was at that time that Allah revealed the following ayah,
Those who believe and do good deeds are truly the best beings created.Qur’an 98:7

This is recorded in the following Sunni sources:

1. al-Durr al-Manthur, Vol. 8, p. 589, 1st ed, 1983, Dar al-Fiqr, Beirut, Lebanon
and with minor differences in wording or Isnad, the same report appears in:
2. al-Sawa’iq al-Muhriqa by Ibn Hajar, Section 11, Part 1, Ayah 11
3. Yanabi’ al-Mawadah (The Springs of Love) by al-Kunduzi al-Hanafi, Vol. 2, p. 61
4. Nur al-Absar by Shiblenji pp. 71 and 102
5. al-Fusul al-Muhima by Ibn al-Sabag al-Maliki, p. 107
6. Fara’id as-Sumtain by al-Hamwini al-Shafi’ih, Vol. 1, p. 156
7. Shawahid al-Tanzil by al-Hakim al-Hasakani, Vol. 2, pp. 336 – 356
8. Kifayat al-Talib by al-Kunji al-Shafi’i, pp. 244 – 246
9. al-Manaqib by al-Kawarizmi al-Hanafi, pp. 62 – 187
10. Nazm Durar al-Sumtain by al-Zarendi al-Hanafi, p. 92
11. The Biography of Imam Ali (A.S) from Tarikh Demashk by Ibn Asaker, Vol.2, p. 442
12. Tafsir al-Tabari, Vol. 30, p. 146
13. Tazkirat al-Khawas by Sibt ibn al-Jawzi, p. 18
14. Fath’ al-Kadir by Shawkani, Vol. 5, p. 477
15. Ruh al-Ma’ni by Alusi, Vol. 30, p. 207
16. Ansab al-Ashraf by Balaziri, Vol. 2, p. 182

It is recorded in the following Shi’ah sources that:

1. When ‘Umm Salama’, the wife of the Prophet (PBUH), was asked about Ali (A.S), she said, ‘I heard Allah’s Messenger say that Ali and his shi’ah are the successful ones.’

2. A hadith states that the Prophet (PBUH) said, ‘Allah Almighty has a sceptre fashioned from rubies which none will acquire other than us and our Shi’ah. The remaining people are to be excluded from it.’

3. Another hadith, transmitted on the authority of Anas ibn Malik, states that the Messenger of Allah (A.S) said, ‘Seventy thousand of my community will enter Paradise without reckoning or
He then turned to Ali (A.S) and said, ‘They are your Shi’ah and you are their Imam.’ Kitab al-Irshad in The Book of Guidance by Shaykh al-Mufid,
translated by Professor Howard, pp.25-26

The Prophet Muhammad (PBUH) appointed Imam Ali (A.S) as his successor at Ghadir Khum. Both Abu Bakr and Umar are recorded as having congratulated Ali (A.S) on this appointment. After the death of the Holy Prophet (PBUH) it was the caliphs who made the changes which you have observed as constituting ‘a different religion’.
al-Amini in his book al-Ghadir, Vol. 1, pp. 166–86
lists all the sources from Sunni books regarding this event.