SAP eyes 50% SMB revenue

SAP, a global provider of business software solutions, is betting big on the small and midsize businesses (SMB) in India. The euro 2.78-billion company expects the SMB segment to contribute to 50 per cent of its revenues in India from around 30 per cent at present.

Speaking to Business Standard, Alan Sedghi, president and managing director, South Asia, SAP India Private Limited, said, "India is a strategic market for SAP. It has a great opportunity to grow and we expect that the SMB segment's contribution to our revenues in India will grow to 50 per cent by 2007."

SAP earned revenues of euro 363 million in the Asia Pacific region. Though the company declined to divulge any specific numbers on revenues from India, Sedghi said that it had grown between 50 per cent and 70 per cent year-on-year over the last four years.

"We hope to grow more this year as compared to the last year," he added. SAP has more than 850 customers in India that include ONGC, ITC Retail, Madura Garments, Tata Motors and Mahindra & Mahindra. Around 450 of these belong to the SMB segment.

It is estimated that there are more than a lakh small enterprises in India and a very small percentage of these use enterprise business software at present. The domestic market potential for enterprise software from this segment is expected to be over Rs 700 crore for 2004-08.

"In this regard, we are planning to increase our physical presence in tier-II and tier-III cities. We already have a presence in these cities via our channel partners but for greater market exposure and to expand our business opportunities we would like to establish our own physical presence as well," Sedghi said.

The company is targeting to grow at 2.5-3 times that of the market in the SMB segment.

SAP channel partners typically serve companies with annual revenues of less than $200 million. These include 20 All-in-One partners who are basically involved with prepackaged versions of mySAP Business Suite with built-in content, tools and methodologies for the SMB segment, and 15 SAP Business One partners, who deal with emerging and dynamic businesses ranging in strength from 10 to several hundred employees. "By the end of this year our Business One partners will increase to 100," Sedghi said.

Meanwhile, the company this year is setting up offices in six new cities including Hyderabad, Chennai and Noida. It is also looking for partners in Nepal.

With regard to its R&D activities in India, SAP is investing euro 20 million in its third phase expansion in Bangalore, which, when completed in the first quarter of next year, will have a capacity to house 1,300 people.

The company employs around 3,500 people in India. This year, SAP will be adding 3,500 people globally out of which a significant portion will be in India.