With a steady revenue growth and a 33 per cent jump in its two-year-old cloud business, SAP is focusing on micro, small and medium enterprises (MSMEs) in India as the next big revenue platform. SAP Asia Pacific Japan President Scott Russell talks to Romita Majumdar on the company’s strategy and how Indian companies are quick to embrce digital transformation. Edited excerpts
How is SAP addressing companies’ demand for digital transformation?
In Asia-Pacific our software and cloud revenues grew 13 per cent and cloud subscriptions and support revenue grew 52 per cent. Our first focus in India is on digital transformation and innovation for small and medium enterprises. The second is our partnership with the Ministry of Micro, Small and Medium Enterprises where we are targeting 30,000 firms to become digital ready. Besides these two, we are also educating businesses and people and working with over 320 universities.
Can MSMEs afford costs of digital solutions?
We have got a pricing model for all our solutions and about 80 per cent of our customers in India and even across Asia Pacific and Japan are small and medium enterprises. Our pricing is not only competitive but we have also been working with MSMEs ever since we have had a base in the region. We have existing solutions that are tailor-made for this segment. These businesses will ultimately be the economic drivers.
How has business in India responded to digital transformation?
Indian customers have appetite for innovation and lead change. Companies here are not debating a move to digital as they are always pushing to grow their business in the domestic market and internationally. Further, the stable economic and social atmosphere helps create a sense of confidence. This is encouraging. We are optimistic about adoption of digital solutions across all markets.
Indian IT firms are going through a rough patch of low growth and lay-offs in some cases. Your views?
No such issues are being faced by SAP business or professionals as the demand is strong. There is a strong resilience in the market place that we operate in and short-term economic cycles don’t have a major impact on our business. In our case, we generally increase our headcount by 1,000 every year and we currently have an employee base of 11,000. If you add the 600 partners we work with, the number of SAP professionals goes up to 200,000 people.
What are key technology areas that SAP is currently investing in?
Internet of things (IoT), artificial intelligence (AI), machine learning (ML) and big data are our major focus areas. We have built innovation centres around the world, which helps us identify solutions in these technology areas. We also partner with clients to solve their business problems. We are seeing a significant shrinkage in average time to deploy projects due to digitisation. For example, our goods and services tax solution leveraged an existing platform and extended it across a number of areas to solve a business problem. Our second largest innovation centre is located in Bangalore.
How are you working with start-ups?
We work with start-ups in a number of ways. They can create a viable business and harness a market within a short time and that is a target area for SAP. We have a focused global programme which helps incubate start-ups and bring them up to scale. We have a proud history of working with small enterprises to help them grow their business. We keep an eye on innovations across the start-up ecosystem and have a close relationship with the start-up community. It helps us rethink our business models.