India will be a growth engine for us globally, says SAP's Scott Russell

Russel says in an interview with Shivani Shinde that looking at the Q1 results, last year's bold pivot and the strategy that the company took was right

For German software giant SAP, last year was about taking some bold decisions. In October, it called out and said it was pivoting to cloud full throttle, which will have an impact on its licences business. Scott Russell, member of the executive board, SAP, in an interview with Shivani Shinde, said looking at the Q1 results, last year’s bold pivot and the strategy that the company took was right. He also talks about how India continues to be the strongest growth story of this shift. Edited excerpts:
 
What has been the impact of the pivot the company announced last year?

 
If you go by the Q1 numbers, it’s been excellent. We had the highest order entry growth across cloud and software in five years while posting the strongest increase in operating profit and margin in a decade. Our cloud backlog accelerated by 19 per cent, un­­­­d­er­­pinned by strong demand in renewal and new deals. “Rise with SAP” was launched towards the end of January and it has been remarkable. It has grown in triple digits for us.
 

“Rise with SAP” was a big shift for the firm. How has its adoption been in India?
 
“Rise with SAP” was our res­ponse emanating from the pandemic and based on customer feedback. SAP has be­en accelerating towards cloud for some time now. But with the pandemic disrupting the supply chain, there was a ne­ed to be able to have flexibility to run mission critical applications on a platform that has the capability to be flexible and innovative for both manufacturing supply chains and looking for the shift into Clo­ud. Rise with SAP is a business transformation process on a single contract, simplifi­ed offering with SAP services, including access to SAP infra and hyperscaler partnerships.

 
The response has been remarkable. We had over 100 new companies and existing customers moving to Rise with SAP, the pipeline is the strongest… India, specifically, has re­ported a fantastic start of the year. We grew cloud business 205 per cent yoy, renewals in Q1 at 111 per cent, and our cloud backlog in India is also growing in double digits. Rise with SAP has seen significant momentum, and India had the largest numbers of client addition. We had the highest net new customers in this quarter. ­We also made an an­n­ouncement that we were investing ~500 crore to localise our multi-cloud strategy in local data centres. We expect to meet these targets and continue to expand. India will be a major growth engine for SAP globally but also will be an innovator in cloud and drive digitisation processes.

 
Small and medium enter­pr­ises (SMEs) have been big adopters of SAP. How have they been affected by the pandemic?
 
We continued to collaborate with our SME clients through the pandemic. Using technology as a lever to change their business model, or to allow cloud to be adopted in a flexible way has been our focus. The SME segment is the leading segment for SAP. We have 9,500 SMEs working with SAP. It has been a challenging period, but we have seen that SMEs are looking at mechanisms to maintain their vi­sion and they need a partner that can give them the speed and agility to digitise. Rise with SAP has reinforced this focus…early signs of 2021 are very encouraging.

 
The pandemic has given dig­i­tisation a surge. What’s be­en your experience in India?
 
After the initial cautiousness, what became clear is that or­ganisations need to invest in their capabilities if they want to rem­ain relevant. And the reality is that cloud is the perfect model to deploy mo­dels that support flexibility and also allow innovation. We see that digitisation has bec­ome strategic on companies’ age­nda more now.
 
Speed of adoption, flexibility of platform, simplicity of engagement, adoption and usage become fundamental aspects that need to be delivered on cloud. That is what we did with Rise with SAP.

 
In the last three to four months, we saw a renewed focus on sustainability. Acce­leration of sustainability and the realisation that they are participating in a linear economy where hundreds and billions of materials are coming into the environment but only 10 per cent get recycled … the market is also saying they need to be sustainable and we are seeing a lot of demand to provide sustainable products.