We want to double India's contribution to SAP by 2025: MD Kulmeet Bawa

In a Q&A, Kulmeet Bawa, president and managing director for SAP Indian Subcontinent talks about how the India unit has performed, and its contribution to both top line and innovation

German software giant SAP has set an ambitious target to make its cloud business a €22 billion revenue unit and take global revenues to €36 billion by 2025. The company has also said that for 2022, its cloud business will grow by 23-26 per cent. Kulmeet Bawa, president and managing director for SAP Indian Subcontinent, wants to double India’s contribution to the 2025 target that the company has laid out. In an interview with Shivani Shinde, he talks about how the India unit has performed, and its contribution to both top line and innovation. Edited excerpts:

In 2020, the company decided to pivot and embrace the cloud structure in totality. What has that meant for India?

I think it was October 2020 when we actually made that shift and we holistically pivoted to cloud. The impact can be seen in our performance. We recently announced our quarter numbers and it has been about consistent outperformance. We overperformed on almost every single metric across the globe. We’ve accelerated our cloud growth in 2021 massively with a call out for 2022 saying that we would grow by 23 to 26 per cent. We launched Rise with SAP in January 2021. We saw a phenomenal 1,200-1,300 companies moving on to our ERP cloud. I think the strategy we put into place is resonating very well with our customers.
 

India led from the front in this entire transition to cloud. Clearly, the most stellar performance in our history was the year 2021. We were one of the largest contributors to the number of customers that adopted Rise with SAP and moved to cloud. Some of the largest enterprises like Mahindra, HCL and Bajaj Electricals, and internet companies like Ola Electric chose us for their digitalisation road map. From an India perspective, three of the four quarters we grew at triple digits, which is massive.

…how big is the India business now?

We are definitely closer to the 13,000 customer mark today. Almost 80 per cent of our business is the mid-market and the rest would be enterprises. More imp­or­tantly, we completed 25 years in India and have gr­o­wn to 14,000 people here, between SAP labs and our delivery centres. We have got a massive footprint, the second largest for SAP outside of Germany.

SAP has said that 2022 will be a growth year. How is India placed in this and what is the contri­bution expected out of the country?

One, we will continue to build India as one of the fastest growing strategic markets, in addition to further diving deep into our investments in India, such as leveraging the innovation hub. Globally, SAP has said that by 2025 we expect our cloud revenue to be more than €22 billion, and our total revenues would be around €36 billion. Simply put, India needs to continue to be a significant contributor to this goal and we want to double our contribution by 2025.

Two, our nation-building initiatives also need to double down in India. SAP has been here for 25 years now. Our customers in India contribute to more than 60 per cent of its GDP. Almost 10,000 small and medium enterprises, 50 million consumers of gas and electricity today are supported through our solutions. Eight out of the 10 cars that you see on the road are manufactured by companies that are running SAP. We want to further this by working closely with the start-up ecosystem. We also want to create an early talent bedrock for SAP globally.

How crucial is the start-up opportunity in India?

It’s a market that we have not focused on enough so far, but we have doubled down as part of our strategy to focus on internet companies, unicorns and digital natives separately. Eight to 10 months back, we set up a business unit to look into this. We are seeing some good early wins. A few months back we laun­ched a project called “Nakshatra”, which was especially for the digital natives to help them scale faster. But we also want to co-innovate with the start-ups.

The pandemic has impacted two segments of every business severely, the HR and the sales team, both people-oriented. How did the SAP sales team pivot to a completely cloud selling environment?

I think it was largely a cultural and a mindset shift rather than a tech shift. In the on-premises world, we could go and sell a few million-euro implementation deal to a customer, and it would own the licences. And then there are services that customers go ahead and implement, which would take six months or one year. In the cloud world, it is all about subscription, annualised recurring revenue and renewals. The reason why I call this a cultural shift is because now the teams needed to be clear about focusing on the customer. It is no more just about selling stuff. It’s about us selling right. When did the customers go live? Once they’ve gone live then starts the whole adoption and consumption layer. Are customers choosing what we’ve sold? Are they even consuming it to the best, and are the best practices being deployed? Have we got the right partner in the right services? I use this terminology from my past (ex-army officer) that it’s no longer about “fire and forget”. Second was a renewed focus on renewals. This was another shift we brought into the way we were approaching business. It is no more about just selling. How much are we renewing, what’s my leaky bucket? Do I have a leaky bucket?

Focus on renewals is important as it gives us an opportunity to upsell and cross-sell because in the cloud world, it’s not about what you sold. It’s about can I get a rebound tomorrow. We are doubling down on this. We’ve announced Cloud Success Services Organisation that focuses on customer lifetime value. It is a game changer. What we have done is combine our entire services organisation with our customer success organisation (post-sales). This has been a massive consolidation setup, and it’s still early days.