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Tuesday, September 10, 2013

Q&A: We aspire to building a "second home" in China: SAP


We aspire to building a "second home" in China, contributing to China's sustainable growth and the realisation of the "China Dream", says Stephen Watts, President of SAP Asia Pacific Japan. He also enumerates dealing with big data analytics, IT talent shortage and the rise of mobile as the top three IT challenges enterprises are facing in this region today.

In your opinion, what are the top three IT challenges enterprises are facing in the Asia Pacific region today and how is SAP helping customers tackle those challenges?
Dealing with big data analytics, IT talent shortage and the rise of mobile are the top three IT challenges enterprises are facing in this region.

Driving value from big data
With the massive amounts of data available to enterprises these days-in 2011, the amount of data surpassed 1.8 zettabytes, or the equivalent of 57.5 billion 32 GB iPads-enterprises are facing both a challenge and an opportunity. Approached poorly, the big data phenomenon can create costs and burdens on enterprises, whereas approach from the right perspective-with the right strategy drawing upon a detailed plan, tools and technology-big data can reveal valuable information about end-users and deliver a competitive advantage.

SAP has developed solutions that provide users with self-service access to the data and insights they need to be more competitive, no matter where the information resides. It helps them to make faster and better decisions, and increases their overall productivity. SAP BusinessObjects BI solutions help employees to capture, analyse, and use big data to solve business challenges by using a combination of predictive and analytics solutions. It enables employees to uncover hidden signals and trends and to better understand customer needs.

And with SAP HANA, the company's in-memory analytics solutions, users are able to analyse big data at the speed of thought and to instantly adjust their strategy in real-time. It enables enterprises to respond in real-time to changes in market dynamics, gaining real-time insights for higher engagement with employees, customers and partners.

IT talent shortage
Businesses are struggling to find qualified workers with the required IT skills, such as expertise in big data and cloud computing technologies. This talent shortage is set to exacerbate if the growth in talent doesn't match the growth rate of the industry.

SAP has also put in place a Global Graduate Program that helps build talent in Asia by providing a curriculum for universities and making the transition from campus to corporate life easier. In 2013, 300 people are expected to graduate from the programme in China, India, and Japan. SAP currently partners with more 70 universities in China.

SAP also recently launched the SAP Academy for Sales programme, a new sales development programme which will be globally delivered in a state-of-the art facility. It will employ a full-time faculty that will infuse new techniques, technologies and learning practices designed to create the salesforce of tomorrow. The recruiting teams will target recent college graduates from identified colleges and universities around the globe with the plan to train these new employees through a rigorous development programme focused specifically on selling. The company's initial class will begin in early February 2014. This new initiative will create a great sales development brand for SAP in the marketplace and elevate SAP's standing as a workplace of choice for new and graduating talent.

Rise of mobile
The flexibility and freedom to get business done anytime and anywhere also makes it more difficult to maintain the security and control over corporate data when employees are accessing and storing business information on their smartphones, tablet computers and even own mobile devices (BYOD). And the rush of new devices never seems to end, making it hard to stay in front of innovations.

To meet the challenges brought by the mobile boom, SAP offers mobile device management and security capabilities, mobile applications platform, and messaging / B2C infrastructure. SAP enables customers to manage mobile devices and to develop and deploy mobile applications to reach their employees and end users. Together with our partners, SAP delivers an expanding number of mobile apps and will continue to innovate in this important area of growth.

How has your experience been leading SAP in the region? What do you think are your company's strengths here? Any weaknesses?

Experience
I love building and coaching teams. This is one of the best parts of the job, because as a manager, that's the legacy you leave behind. Today, we have about 6,000 people across Asia and continue to build and scale in the region. There are some subtle differences between leading in Asia versus other cultures, such as making sure to listen. If you speak first where many people are non-native English speakers and you speak confidently, in many cases those who are in the room would not disagree. It's more constructive, however, to let others speak first to hear their perspective, so I work hard to create an environment to encourage everybody else to speak up before I provide my point of view on things.

Strengths

Cloud momentum
One of SAP's core goals is to build a Euro 2 billion (US$2.6 billion), profitable cloud business by 2015 and to make the cloud delivery of solutions mainstream. Cloud is a very important part of where our business is going.

Our cloud business is very healthy. Cloud revenues grew triple-digits, pointing to an accelerating move to the cloud as selected organisations in APJ seek faster time-to-value from the convenience and agility of cloud-based offerings from SAP
Cloud growth was particularly impressive in China, India and SEA YoY, and triple-digit growth in Japan QoQ (Q2 FY13)

We are in the process of achieving the capability to offer our Public Cloud solutions to Chinese customers.

Our goal is to be the No. 1 SaaS provider in China and we are contemplating models that will allow us to reach this goal. This is a priority for SAP in China

The cloud market in APJ for 2013 is estimated at Euro 1.9 billion (CMI Market Model) and "Cloud First" strategies among CIOs are expected to increase three-fold over the next four years (IDC).

Innovation and co-innovation
In a world that requires continuous innovation-and without disruption-SAP has established a culture of co-innovation. Through our open ecosystem, we offer co-innovation from SAP and partners.

SAP's global research network consists of 19 research locations worldwide with 14 SAP Labs in 12 countries, including two in China (Shanghai and Chengdu) and two in India (Bangalore and Gurgaon)

IT services provider NTT Data announced in August an SAP solutions lab in Hyderabad, India, to build solutions using next-generation technologies including analytics, user experience and mobility
Ecosystem
We continue to invest in our partner ecosystem to drive development and delivery of innovative software solutions that address the specific market demand in APJ.

The Partner Adoption Center (PAC) in China in association with SAP Co-innovation Labs provides partners end-to-end support for growing their business and delivering co-innovated solutions

By 2015, we plan to attract one million developers to our platforms. With revenue from partners already at almost 40 percent, APJ is the region that is most advanced in achieving this target

We continue to invest in our broad partner ecosystem to drive development and delivery of innovative software solutions that address industry-specific and local market needs.

Weaknesses
Like our competitors and partners, we saw macro challenges in Asia last quarter. China, Australia and Japan were slower than expected but we had strong double digit growth in several markets including India and Southeast Asia. And as said, the world is moving to the cloud rapidly. This quarter marked a turning point for SAP in our ambition to lead in the cloud. SAP's cloud is growing +171 percent year over year, faster than Salesforce, NetSuite and Oracle. And despite the current challenge, we believe there are strong growth opportunities in Asia. In China, our pipeline is strong and long-term, we expect a return to solid growth as we continue to leverage our $2 billion investment in this strategic market.

We are also encouraged by strong growth rates in India of over 60 percent and Southeast Asia of around 15 percent. By 2015, China is expected be one of SAP's top five markets.

What are SAP's growth markets in the region? Are you bullish about any particular country or vertical?
SAP is accelerating investments in the key growth markets, including India, Korea, Southeast Asia and China. China has been SAP's largest investment area in the last few years. We announced in 2011 that we would invest 2 billion dollars into China by 2015 and pledged to double our workforce there. We are well on our way and continue to scale and invest.

We aspire to building a "second home" in China, contributing to China's sustainable growth and the realisation of the "China Dream". We're in the process of achieving the capability to offer our Public Cloud solutions to Chinese customers. In addition, tier 2 and 3 cities in China provide great business opportunities for SAP in China. We have sent engineers to cities like

Chengdu to develop cloud and other technologies. Business in China is moving from the coastal regions to the mid-west and SAP is actively following this trend. And we have R&D teams in Xi'an as well as Beijing, Nanjing and Dalian.

Southeast Asia is also a market that has seen good growth. The appointment of a new managing director for Southeast Asia, Francois Lancon, enhances the company's leadership skills in this multi-country, multi-cultural market unit and has led to a quarterly growth of 28.2 percent in software in the latest quarter (Q2 FY13) as well as YoY growth in cloud.

After Cloud and Big Data, IT companies are now talking about the Internet of Things. Is that the next big trend?
I wouldn't call the Internet of Things the next big trend. It's a reality today. In most organisations, proprietary information is lodged in databases and analysed in reports and then rises up the management chain. Information also originates externally-gathered from public sources, purchased from information suppliers or harvested from the Internet. But the predictable pathways of information are changing in a way that the physical world itself is becoming a type of information system with actuators and sensors embedded in physical objects that are linked through wired and wireless networks. These networks create huge volumes of data that flow. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly.

So, cloud computing and big data analytics are playing a major role in providing enterprises with the tools they need to take advantage of the information assembled through the Internet of Things and turn data into valuable information for business decisions in real-time.

Is there any other trend that you see emerging on the horizon?
Another trend is driving eCommerce across devices and channels in a unified, seamless manner.

The future of commerce and customer engagement is about helping enterprises to deliver relevant, contextual and consistent experiences for customers across all their digitally-enabled interactions. For example, a user might become aware of a new product through social media, conduct research on a review site, compare prices through different websites and online stores and finish the purchase/transaction on a smartphone. SAP recently acquired hybris and the combination of hybris' omni-channel commerce solutions with SAP's in-memory, cloud and mobile innovations will facilitate customer insight and engagement for purchases across different devices and channels.

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