 "SMEs fuelling India growth story: Adaire Fox-Martin")
As global business software entity SAP completes 20 years in India, the country has come to assume a significant role in the multinational’s strategy. Adaire Fox-Martin, the Singapore-based president of SAP Asia Pacific Japan, talks to Moulishree Srivastava about the market here and related issues. Edited excerpts:
How has been SAP’s journey here?
Quite a story, through many different evolutions of technology. SAP as a global company is 44 years old and the first operation in India is 20 years old. In India, we have 6,600 customers and 9,000 employees. Of the customers, 5,500 fit into the SME (small and medium enterprises) category. So, what we are servicing is, I think, the growth engine of India as an economy. And, (there is) the eco-system of 650 partners that operate around us. Then, we have been able to use a lot of intellectual capital (here) — our own development, organisation and placing a lot of development work in this country, as well as some of the outsourced elements of our services business.
There are some key elements that India contributes to our overall business model that differentiates India and allows SAP to be more of what we want to be as a corporate organisation. First, the presence of development labs really helps us in Asia, to leverage that intellectual property (IP) without having to go to North America or Europe. There is an understanding (here) of some of the nuances that are (in) Asia, that often do not exist if you are outside Asia. India is a huge opportunity for us to be the source of innovation out of Asia for the rest of the world.
The growth of employee pool has allowed us to create some programmes that we have been able take beyond India, into other markets. For instance, there was a programme to ensure women can continue to work even after they have had families. Learning from the India programme applies to other global markets.
The other thing is, there is a huge social conscience in our team, so there are enormous number of programmes that are run around digital literacy, supporting women in entrepreneurship into the tech industry, and because of the sheer strength of the employee base, the impact of those is phenomenal, and some of the ideas that generate here do begin to have a ripple effect on other market units.
What about growth from India, as compared to other Asian markets?
India compares very favourably. And, there are some strength areas. From my perspective, some of the SMEs that are present today could be Fortune 100 tomorrow, if you see how the representation of Asia has changed in that. SME (segment) is the one element that is fuelling India’s growth.
The other element is the SAP strategy around cloud solutions. Cloud creates a lower entry point for systems like SAP that weren’t there five to six years back, when you needed to buy hardware, have IT (information technology) expertise within your organisation and facilitate the implementation of an SAP environment. SAP helps business become auditable and accountable at all levels, across borders. When I look at the cloud opportunity, SAP has acquired and integrated the largest cloud properties in the world. We run business networks on Aruba, we run Concur travel and expense networks, and human capital management. These kinds of functions provide Indian companies an opportunity to participate in utilisation of these systems in a way that was not (earlier) possible.
How does India fare as compared to other Asian markets?
We went through a period where business confidence was low here. People weren’t clear on whether to make a decision or not from either an investment perspective or in terms of growth. In the most recent past, I see an absolute difference in this and the net result is the (India’s) overall contribution. SAP India in our recent Q2 results was a very significant contributor to Asia-Pacific, with double digit growth.
Also, there is so much start-up activity which differentiates India from some of the other locations. We're partnering with organisations in India to help create accelerators and incubators, so that start-ups have access to technology such the SAP HANA platform, to enable them to try a solution in a different context. Also, the contribution of our staff to CSR (corporate social responsibility) initiatives is higher in India, pro rata.
India is transitioning to a GST (national goods and services tax) regime. How prepared is SAP?
We are in the process of understanding it; we have a huge role to play for our existing customers which are managing their financial environment on an SAP platform. Last year, we created a paper around the approach and held summits. We have been putting localisation teams, to be able to support our customers when the time comes and the policy is finalised. To create a reporting framework where you are accountable to the government is an opportunity for a company like SAP to acquire new customers, too.
Is SAP ready with the software upgrade that is needed for companies to become GST-compliant?
Once we understand the deadline, we will be ready to engage. Once it is finalised, we will be ready to go.
How has been the HANA adoption in India and globally?
This is one of our fastest growing products. There was no precursor to this solution and we now have 3,700 customers running this across the world, across 25 industries and a myriad of different business processes. The uptick in India has been incredible. There are some innovators who adopted early, and have been doing wonderfully in terms of changing the business process. This would continue to grow and HANA is absolutely one of the cornerstones of our growth. Half our revenue is coming from our platform business.
How has been SAP’s journey here?
Quite a story, through many different evolutions of technology. SAP as a global company is 44 years old and the first operation in India is 20 years old. In India, we have 6,600 customers and 9,000 employees. Of the customers, 5,500 fit into the SME (small and medium enterprises) category. So, what we are servicing is, I think, the growth engine of India as an economy. And, (there is) the eco-system of 650 partners that operate around us. Then, we have been able to use a lot of intellectual capital (here) — our own development, organisation and placing a lot of development work in this country, as well as some of the outsourced elements of our services business.
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What is the significance of India in SAP’s global strategy?
There are some key elements that India contributes to our overall business model that differentiates India and allows SAP to be more of what we want to be as a corporate organisation. First, the presence of development labs really helps us in Asia, to leverage that intellectual property (IP) without having to go to North America or Europe. There is an understanding (here) of some of the nuances that are (in) Asia, that often do not exist if you are outside Asia. India is a huge opportunity for us to be the source of innovation out of Asia for the rest of the world.
The growth of employee pool has allowed us to create some programmes that we have been able take beyond India, into other markets. For instance, there was a programme to ensure women can continue to work even after they have had families. Learning from the India programme applies to other global markets.
The other thing is, there is a huge social conscience in our team, so there are enormous number of programmes that are run around digital literacy, supporting women in entrepreneurship into the tech industry, and because of the sheer strength of the employee base, the impact of those is phenomenal, and some of the ideas that generate here do begin to have a ripple effect on other market units.
What about growth from India, as compared to other Asian markets?
India compares very favourably. And, there are some strength areas. From my perspective, some of the SMEs that are present today could be Fortune 100 tomorrow, if you see how the representation of Asia has changed in that. SME (segment) is the one element that is fuelling India’s growth.
The other element is the SAP strategy around cloud solutions. Cloud creates a lower entry point for systems like SAP that weren’t there five to six years back, when you needed to buy hardware, have IT (information technology) expertise within your organisation and facilitate the implementation of an SAP environment. SAP helps business become auditable and accountable at all levels, across borders. When I look at the cloud opportunity, SAP has acquired and integrated the largest cloud properties in the world. We run business networks on Aruba, we run Concur travel and expense networks, and human capital management. These kinds of functions provide Indian companies an opportunity to participate in utilisation of these systems in a way that was not (earlier) possible.
How does India fare as compared to other Asian markets?
We went through a period where business confidence was low here. People weren’t clear on whether to make a decision or not from either an investment perspective or in terms of growth. In the most recent past, I see an absolute difference in this and the net result is the (India’s) overall contribution. SAP India in our recent Q2 results was a very significant contributor to Asia-Pacific, with double digit growth.
Also, there is so much start-up activity which differentiates India from some of the other locations. We're partnering with organisations in India to help create accelerators and incubators, so that start-ups have access to technology such the SAP HANA platform, to enable them to try a solution in a different context. Also, the contribution of our staff to CSR (corporate social responsibility) initiatives is higher in India, pro rata.
India is transitioning to a GST (national goods and services tax) regime. How prepared is SAP?
We are in the process of understanding it; we have a huge role to play for our existing customers which are managing their financial environment on an SAP platform. Last year, we created a paper around the approach and held summits. We have been putting localisation teams, to be able to support our customers when the time comes and the policy is finalised. To create a reporting framework where you are accountable to the government is an opportunity for a company like SAP to acquire new customers, too.
Is SAP ready with the software upgrade that is needed for companies to become GST-compliant?
Once we understand the deadline, we will be ready to engage. Once it is finalised, we will be ready to go.
How has been the HANA adoption in India and globally?
This is one of our fastest growing products. There was no precursor to this solution and we now have 3,700 customers running this across the world, across 25 industries and a myriad of different business processes. The uptick in India has been incredible. There are some innovators who adopted early, and have been doing wonderfully in terms of changing the business process. This would continue to grow and HANA is absolutely one of the cornerstones of our growth. Half our revenue is coming from our platform business.