SAP, the world largest provider of enterprise application, reported that its 2011 numbers were one of the best in 40 years, indicating enterprise spending on technology continues. It says it is confident of achieving its target of $26 billion in revenue by 2015. Jim Hagemann Snabe, co-CEO, talks to Shivani Shinde about the trends. Edited excerpts:
What has been the growth driver for the company’s performance?
We have seen growth across regions. In constant currency, we have grown 25 per cent. While the emerging markets have grown faster, even Europe, which has been under pressure, has grown 21 per cent. It proves our strategy of focusing on innovation was right. We are seeing that even in this uncertainty, customers are willing to invest if innovation is right and especially if it helps them manage better during these times.
Your guidance for 2012 also sounds bullish. What trends are you seeing in IT spending?
We have been market leaders in business suites and analytics. On top of that, we decided on three new technologies — mobile computing, in-memory computing called HANA and cloud. This meant we go beyond the efficiency question. We are seeing ourselves emerge as the preferred choice to help a company innovate, whether it’s about analysing market trends or customer behaviour better.
If you see our 2011 numbers because of the investment in these new technologies, our core business is becoming more and more important. Our plan for 2012 is to compete for leadership in five segments — our core market offering in application and analytics, mobile initiatives, that grew the fastest in 2011, and leadership in database and the cloud. The combination of these five is unique in the industry and this is driving growth for us.
How has the company’s bet on new innovation done?
Extremely well. We have seen extreme traction in mobile solutions. We had a target of reaching euro 100 million by the end of 2011; we have overshot that. We can more than double that target in 2012. HANA, our in-memory solution, is the fastest growing product in our history. In Q4 alone, we did euro 100 million. In the cloud segment, we are entering with our acquisition of SuccessFactors; there, the growth rate will be enormous. We earlier had little presence in the cloud, but with SuccessFactors, we are now number two.
How has the Indian market grown for SAP?
India is one of the fastest growing markets globally. In Q4, we saw triple digit growth in India. In terms of technology adoption, we have seen uptake in solutions for mobility and in-memory computing and our flagship product, HANA. For us, the Asia-Pacific and Japan grew 30 per cent and India grew more than 100 per cent.
What trends do you see in enterprise technology adoption in India?
In the past, when we came up with new innovation, it was first adopted by the West, and then we would bring it to the emerging markets. What is happening now is the reverse. The way mobility is being adopted in India, it seems you have jumped a generation of tech adoption. Mobile is becoming the preferred way to reach a billion people at low cost. We see the adoption of mobile solutions in markets like India and China grow faster compared to other geographies. Even in case of in-memory computing, the volume of data generated here is significant. The only way to understand this data is to move it into main memory. In the past two years, we have been ahead of competition.
How important are the emerging markets going to be for SAP’s 2015 roadmap?
Traditionally, we have seen very strong traction in the emerging markets. We doubled our investment in these markets long ago. We have over the last five years invested heavily in India (SAP has 6,000 employees here). In September last year, we also announced an ambitious plan to invest $2 billion in China by 2015. We see the results of these investments — China is growing more than 60 per cent annually and India by more than 100 per cent.
