SAP, the Germany-headquartered enterprise solutions provider that is celebrating its 50th year, has seen business being hit by the Russia-Ukraine conflict. But its businesses in other markets, Japan and India in particular, are growing strongly. PAUL MARRIOTT, president of SAP APJ, on his recent visit to India, spoke with Shivani Shinde about the India business, cloud adoption, supply chain challenges and hybrid work. Edited excerpts:
How significant is the APJ region in SAP’s growth plans?
There’s a strategy for Asia that’s been evolving over the last five years, and I’ve revised it a bit. Its vision is empowering Asia’s sustainable future. The macroeconomics of Asia are extremely interesting for SAP. If you look at the GDP and where it’s trending in the next 10 years, we’re likely to be getting to high 30-40 per cent of the GDP from Asia. This is a huge opportunity for SAP.
That growth is also reflected in the growth of SAP’s Asia business quarter on quarter for multiple years. There’s some markets within Asia, which also have particularly high growth opportunity. India is a great example of that. We have seen absolutely incredible performance in this market over the last 18-24 months.
SAP announced a couple of quarters back a complete shift to the cloud. How has this region and India in particular grown?
This year, we see a massive shift to the cloud. Organisations like Mahindra & Mahindra, Wipro, HCL Technologies, among others, are all moving to the cloud. Not only are they taking their entire SAP landscape into the cloud with us, but they’re also a global go-to market partner for us. When these big organisations shift internally and become very visible with what they’ve done, it also drives customers in India and in the region that those partners support, and drives them to build capacity.
On cloud adoption, I see three things happening. First, a massive acceleration in digital transformation and the digitisation of everything. These really fall into two categories: Customers either have extremely large-scale business transformations that are underpinned by digital transformation; or, you sometimes see it more tactically. But this demand to move to the cloud is multiple times more than what it was pre-pandemic.
The second big linked part of that is supply chains and the emergence of global networked applications. Third, as organisations automate more and more in the network, they also get all the scope three sustainability measures, because a lot of the supply chain is basically scope three sustainability targets that you’re trying to solve.
Can you elaborate on the global network applications?
Over the past decade SAP has been investing in creating business network capability. We’ve always had a heritage of automating business processes within an organisation. But now organisations are more global, and they operate as part of an ecosystem. At SAP, we believe it is companies and businesses that drive the momentum and shape the future of their respective industries. In line with this, we encourage corporates in setting up industrial business networks that enable members to collaborate and establish standardised data and information flows across the entire value chain of their network.
An example of this Catena-X, a joint project of German automotive OEMs and suppliers. Together with BMW, Deutsche Telekom, Bosch, Siemens and ZF Friedrichshafen, as well as the former German Federal Minister of Economic Affairs and Energy, SAP aims to establish standardised data and information flows across the entire value chain of the automotive network. Another example is SAP Fioneer, which aims to enable FSI (financial services industry) customers to transition into modern applications and cloud-based business processes and platforms.
What this enables us is a level of automation, particularly around things like supply chains, which we’ve never had the opportunity to do before. This is especially important today, with supply chains getting impacted by regional conflicts.
Companies have also realised that they cannot control the macro, but they can build more transparency and agility into the supply chain process. That is what the network also allows you to do. Asia too has industries which can create such a network.
What is your take on the war for talent and how is SAP managing it?
Seventy per cent of the world’s STEM graduates now come out of Asia, and India is a massive contributor. We run a university alliances programme that embeds us into universities, where we build SAP knowledge on top of the core degree that they’re doing. I set a goal of 10,000 certifications of students coming out of universities this year. My goal in the next five years is if I get even 5 per cent of that STEM talent, I would create another million SAP professionals, or potential professionals, in the marketplace.
Looking at our long-term capacity requirements, this part of the world can have a profound impact on the supply of people globally. We’re scaling it up as quickly as we can. The opportunity for talent coming out of India is massive, because you’ve got one of the biggest footprints of talent coming out of the universities, along with tech innovation and startups as well.
What is the “Pledge to flex” programme at SAP?
We launched this initiative mid-pandemic. But it is only now that we’ve truly got into this hybrid model. We believe that in a motivated environment people will do the right thing to achieve work-life balance. Hence we don’t prescribe when someone should be at home, or when they should be in the office. It also depends on the type of work/role one has and how the team leader is setting up the guidelines. I would encourage people to have face-to-face meetings as well -- this is especially true where collaboration and innovation is important.
We’re investing in office space to create that type of collaborative workspace. We’ve got new offices in Singapore and India. We are opening new offices in Tokyo, Sydney and other geographies. How we get the hybrid model working is still evolving at SAP. We are constantly crowdsourcing feedback from our employees on how to find that balance. In a recent employee engagement survey we asked what the preferences of the employees were to get that hybrid model work-life balance. Interestingly, we found that the younger talent actually wants to be in the office more than older talent.
Has this helped you in retaining more people?
Any attrition is normally directly correlated to employee engagement indicators. Most of the time they leave because of the person they work for, or because they don’t see growth in the company. We have an overall Employee Engagement Index, which is an index of really just how happy are people working at SAP. In both India and across the region we have a leadership trust index. This measures how employees trust their manager. We’re at record highs with leadership trust both in India and across the region.
We have a diversity and inclusion index which is a measure of how inclusive we are to every demographic right to create a more diverse workforce. We’re at record highs on this metric. This does not mean we do not have competition that is looking at our top talent. “Pledge to flex” allows people to get a work-life balance.