In an exclusive interaction with R Jai Krishna of CyberMedia News Nagaraj Bhargava, vice president (Marketing), SAP India talks about the strong traction witnessed by the company in the Indian SME space.

What is the addressable market size for SAP in the Indian SME market?

The current total addressable SME market for SAP in India stands about 54 per cent of the total Information Technology market. SAP in India, has a strong SME customer base of over 2300, which is a clear indicator of the leadership position of SAP in this market segment. In FY 07 we saw a 230 per cent increase in our revenues from the SME segment. SAP India is the fasted growing region for SAP globally and one of the key factors contributing to this growth is SME. The company is witnessing strong traction in this space. The potential that we see in India is not limited to the business horizon alone. India is also the second largest R&D hub and is the second largest support center for SAP globally.

What is the USP of SAP in this segment?

SAP offers a range of solutions to address each company’s diverse business requirements. SAP’s broad and innovative solution portfolio for small and midsize business addresses the most heterogeneous and comprehensive demands of the SME customers. Some of the solutions offered are SAP Business One, SAP Business All-in-One, and the new offering SAP Business By-Design solutions.

What have been your achievements and what does that signify?

SAP has been observant in reading and rationalizing the need of SMEs, both stated and unstated. Our achievement is three-fold. One is our growing customer base, which is over 2300. Second, analyst reports, stating 48.3 per cent market share in the enterprise application space (Frost and Sullivan) and third our SME performance in India which highlights a 2.35 times growth in revenue over FY 2007.

We made an early entry into a market, providing solutions designed specifically for SMEs helping them stay ahead of the competition with timely, well-informed decisions, turning their challenges into opportunities and responding to changing market conditions. This helps the SMEs to grow profitably and have access to global best-practices relevant to their industry.

What in your view is the reason behind your success in the segment?

SMEs are increasingly depending on an effective business solution to streamline operations, ensure speed, flexibility and responsiveness, improve operational efficiency and bring in innovation. SAP has the advantage of being an early entrant in this market. We have spent a lot of time and effort in educating the market to the value of adopting best practices-driven business solutions for their business. We have pioneered the micro-vertical solution segment for the Indian market as we did globally. We have worked closely with our partner ecosystem in delivering our solutions to the Indian market.

What are the challenges and opportunities in Indian SME segment in SAP portfolio?

In India SMEs are spread across the country. To reach customers across locations we have an extensive partner ecosystem network that brings together over 200 partners with SAP. This knowledgeable partner network ensures that our solutions are accessible to the vast pool of SMEs spread the country. We are also constantly investing in joint marketing initiatives with our partners to expose Indian SMEs to best practices and solutions.

Till date we have conducted over 400 SME road shows with our partners across India. Another area where we invest significantly is in providing our partners with training and certification programs to help them develop solutions that deliver value to customers.

What are your future plans for this segment, and how do you intend to take this to the market?

A growing SME market, opportunistic investors, and middleware technologies converge to make the SME market for ERP applications one of the most competitive environments for market growth and product innovation within enterprise applications. SME continues to remain a key focus area for SAP. Market studies by research organizations like IDC, Frost & Sullivan and Gartner estimate the Indian ERP market to be growing annually around 18-20 per cent and SAP leads the enterprise application software market with a 42.5 per cent share, according to the latest F&S survey in 2007.

Interestingly, SAP is witnessing a third wave of IT adoption wherein vendors are responding by bulking up and leveraging middleware integration, and expanding their partner ecosystems. Customers stand to benefit over the next five years from reduced ownership costs, improved domain expertise, and better support and service delivery through direct interactions, new competitors and stronger partner networks.
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