Anthony McMahon, SVP General Business (SME) & Channels: "All solutions we promote are designed with the SME customers in mind"

In conversation with PC Quest, Anthony McMahon, SVP General Business (SME) & Channels, Asia Pacific & Japan talks about SAP solutions.

Does it make sense for SAP to have too many customized individual solutions or is it more the packaged kind of a solution?

It is more the packaged kind, what we focus on is that we try and customize by industry and not by the customer. The strength of SAP is that we have been a part of large enterprise business for over 40 years and the industry-based practice, expertise, digital transformation and business process are brought together with the right type of solutions for the SME customers. What we are trying to do is to create best run SME packages, where the customer can see the total cost of the software or cloud solution and the Go Live services to get it up and running as well as gain the user adoption.

What are the solutions that are customized specifically for SME?

The best run SME solutions we have today are about 40 solutions across 18 SAP partners. We have a target of reaching out to 60 best run SME solutions across 25 partners this year. These are the pre-packaged, end to end, industry-focused, software cloud endorsed services and Go Live cost.

All the solutions that we promote or sell are designed with the SME customer in mind. The simplicity of going LIVE with a particular solution is what makes customers have much higher expectations around the return that they are getting from the investment in a shorter period of time. We don’t have a dedicated CIO to make many of these decisions. These solutions are tech savvy which is why SME’s need to have a trusted partner that they select.

What are types of industries you are focusing on?

SAP has stated 26 large industries but when we look into some of those industries, there are a lot of micro industries involved. So, you take an industry like retail or fast-moving consumer goods which have a lot of fragmentation and make it difficult to understand if it is the last mile retailer or is it an online marketplace or is it someone supplying to that industry as a part of supply chain. We try and really focus on those industries and many of our partners add their knowledge of those market industries through our technology. We have also done a lot of work in India, particularly in the geographical expansion...

In terms of the geographical expansion you mentioned, how many cities are you reaching out to?

We just rolled out a program in the last few months called “Dare to Dream.” We are targeting 15 cities beyond the large metros like Ludhiana, Jaipur, Nasik, Mysore, Surat, Aurangabad in which we worked with the relevant industry associations in those cities. In Jaipur, we partnered with the Federation of Rajasthan Trade as a lot of textile industries are there.

What we do with the “Dare to Dream” initiative promotes our SME customers who have been leaders in their respective industries and have shown digital transformation to talk to their peers and have industry association and talk about what is happening in their industries at the local, regional and global levels.

Who are the partners?

We have hundreds of partners, in fact, 600 in India are certified to sell our solutions for SME customers which can be software or cloud into that respective customer base. Now, few of these 600 foci on government or large enterprise but they also have the right and the capability to select SME’s which they do today. Our Best Run SAP partners have pre-approved certified SAP packages that are linked to the Dare to Dream initiative where we certify the capabilities of that partner. What we haven’t certified is the overall solution that they take to the market which the customers will evaluate themselves.

Is relationships with the partners are exclusive?

No, it’s not exclusive, some of these partners are vendors and many of the early ones initially were using the solutions coming from the SAP. Hence, these two things have happened as we have gone with the Geo Expansion. We discussed and worked with our experienced SAP partners and the aim is to continue to grow by sharing with them where we are going to invest in the SME Segment and Geo Expansion so that they can also expand.

Their tradition was focused on large cities but now they have opened offices or are in the process of opening offices in some of the smaller locations. So, we are looking at our existing SAP base and working with them with their geographic expansion strategy and are also identifying new partners.

Do the partners work in specific geographies or are they more of the domain specialists?

The newer partners are more geographically based but in India a lot of the geography-based locations are by default industry focused. In the end, we have gone with focused industry associations in cities and match partners that also have experience in that area but are also geographically located there. Somewhere they have a regional presence like intelligence, so we asked them to look into these geographical locations as they have an expertise in these industries for these solutions but it is for them to decide whether it’s worthwhile opening an office and putting a delivery team.

What will be the ballpark cost? How much it would cost typically in SME?

One is that we want to make sure that our SME customers have the predictability of their investment cost and they go live with it, that’s why we drove that. The second thing we try to do is that we look to scale. There are a number of SMEs we are trying to reach out to with our solutions. It’s very different from the SAP large enterprise model where it can be hardly customized. The Go Live services investment versus the software component in those larger enterprises are often much bigger. It could be 1 to 5, 1 to 6, 1 to 10 and that’s obviously where a lot of the large SIPs have built a very healthy and successful SIPs services packages.

How many of the partners are conversant with the cloud?

Our partner Savic is very conversant with SAP cloud platform. We have already closed the number of deals because of the industry differentiation that they are delivering over the cloud platform. A couple of partners are now deploying a solution with SAP cloud platform because I believe that’s the only way they can make it repeatable and we are trying to spend a lot of time educating our partners that the future way to architect is that these repeatable solutions must be on the SAP Cloud platform because that’s how we can create assets once and reuse them.

We have strategies around intelligence enterprise which by design is at the core and the cloud is On Prim but the extension of all these additional intelligence technologies whether it would be HCM Supply Management Procurement, Spend Management with Conquer, procurement and sourcing through a ReBa, that all of those clouds can be interconnected to this digital call through the cloud platform, plus new technologies like Leonardo and Internet Of Things or also enabled.

What is the total customer base?

The SME customer base in India is about 7500 to 10000 customers which are not a lot if we think about the addressable potential in India. Most of our businesses was an outgrowth in focus industries in larger enterprise and public sector hence there is growth for SAP in those segments because of the new cloud offerings, but this is also because we have a high market share in our space, so there may be some innovation on the new ERP technologies but most of the growth for SAP is new growth and it is going to come in the SME segment. The numbers are growing rapidly especially in a market like India. The SAP brand awareness is more on the LA space but the Dare to Dream initiative, best run SME solutions, new partners, Geo Expansion, these are all examples of trying to change that perception in that segment.

How much will be India’s contribution to the overall APAC SME business?

The SME contribution to SAP India’s business is the highest business percentage in the Asia Pacific and Japan. In markets like Australia, Japan and Korea contribution from the SME segment sits somewhere between 10 and 15 per cent which is growing but it is much lower. Markets like Southeast Asia which is a combination of many countries and India were often above 20 % and we have an aspiration to be a part of the GDP Contribution of that segment in India as we should be contributing at a much higher rate. 30 or 40 % of SAP India’s business for SAP comes from software.

SAP industry has a lot of success with ERP into the segment today which came into play even before we drove a very aggressive geographical expansion strategy hence it can increase. It’s hard to give exact numbers but it’s the benchmark that is used to demonstrate to other countries that the SME growth on the number of references we got across industries is the success we have in the channel strategy. It was the first market in this country that we went live with the best run SME packages and we picked India deliberately because we felt it is the best example of high customer’s expectations around TCOs

How many best run implementations have happened so far?

We launched the best-run packages about this time last year, it is fair to say probably the first six months was making sure that we had the right solutions, the right process that it was a repeatable and easy first one for both the partners and in the last 6 months we started to really accelerate to go to market with Dare to Dream, advertising, social awareness and solutions amplification of the success stories.

That’s why we picked India for our best run packages because we thought if we get it right here then that would be great as this is the acoustic and TCO expectation and it’s a very successful SME market for us already. We are doing Geo Expansion and that’s why we picked India where we hired few more people to create a solution packaging team for the region based in India.

The next country we went to was Korea, it was the second market unit that had the highest SME penetration and then we are going towards the second half of the next geo expansion. We will be reaching out to the rest of Asia but we wanted to get it right in India first and then in Korea.

Written By: Jyoti Bhagat & Divya Bishi