SAP braced for government-level deals

The German software major and global leader in enterprise software solutions, counts among its customers the governments of Singapore, Israel, Thailand and Australia, as also the Thai central bank, Bank of Thailand.

SAP's e-governance solution is working for the state of Philadelphia. "I will try to replicate in India SAP's success in the governments sector in Thailand," Sedghi, who also head's SAP's Thai operations, declares as a personal challenge.

SAP has the right credentials in terms of ability to localization and build in transparency to compete in the government space.

In late March this year, it was the first to ship its VAT application to its Indian customers so that they could be ready for the introduction of VAT which was them slated for April 1.

"And we shipped it free as we saw it as an obligation to our customers, not an opportunity to make money," Sedghi noted.

SAP India has secured a solid foothold in the public sector space with its core ERP solution installed in companies like BHEL, Bharat Petroleum and most recently ONGC.

The first phase of the mammoth ONGC installation went live in 11 months, Sedghi revealed, in response to the general complaint that ERP solutions take a long time to install.

Other than targeting the government space, SAP is also concentrating on another growth area in India, small and medium businesses (SBM), in which segment it has a 35 per cent share of the market for enterprise solutions.

"SAP will soon make an announcement on channel partners with SMBs in mind," Sedghi declared.

"SAP has a solid and long term vision for India," borne out of the over 60 per cent share it has of the Indian market for enterprise application solutions.

And it is very pleased with the experience of its customers. By installing solutions from SAP, Mahindra & Mahindra have reduced inventories by 30 per cent and lead time by 50 per cent; BPCL has saved Rs 40 crore; ABB India has increased operational efficiency by 20 per cent; and L&T has recovered its entire investment in two years.

These experiences indicate that SAP comes out the "best" in terms of both return on investment and cost of ownership, the two criteria by which solution vendors have been increasingly judged as companies cut back on IT spending during the slowdown. Seeking to distance SAP from its competitors, Sedghi recalled that during the global technology slowdown beginning 2000, SAP's global revenue growth rate fell but never turned negative.

India is a "huge growth market for SAP and it has massive growth plans for it."

Reluctant to go into a comparison of the market in India with that in China, Sedghi explained that "China will be a big consumption market but India will not be far behind. India should be taken seriously not just in terms of future consumption but the talent and capabilities to handle it."

Indian installation of SAP products is particularly aided by the presence of great development capabilities present in India. (SAP's India development facilities are its second most important and are likely to more than double in the next couple of years.)

"This close proximity and cultural congruity (between Indian customers and developers) is good for our customers" and SAP will seek to leverage it to promote the growth of its Indian business.