Steve Watts, president (Asia-Pacific and Japan) at SAP, is one of the most enviable technology executives. When SAP, the Germany headquartered software solutions provider, reported a stellar fourth quarter numbers today, Asia-Pacific and Japan (APJ) was the cherry on the icing with a growth of 22 per cent.
The company expects at least 40 per cent of SAP’s software revenue coming from partners in APJ. Within APJ, both India and China have continued to double digit growth for over 10 quarters now, and Japan delivered double-digit growth for the eight consecutive quarters.
Importantly, for Watts, the highlight of 2012 was the fact that the company’s revenue from APJ has doubled in three years. “Our fourth quarter pipeline alone was 10 per cent bigger than the full year of 2010. And I see a good pipeline as we go ahead,” said Watts.
Other than the fast pace of growth that the region has witnessed in the recent past, compared to more mature markets, what has helped SAP is its early investments in the region. For the fourth quarter software and software-related service revenue for the APJ region was Euro 720 million and Euro 2.24 billion for the full year.
SAP has not only invested in the region for selling its products, but a large part of its investment has been used for setting up development centres in India and China. SAP Labs India, one of the largest development centres of the company, was set up in 1998 and has a headcount of 4,000. Total headcount in India is 5,500. In China, of the 4,000 employees, half are part of the SAP Labs in the country.
“We have always wanted to be closer to our customers and these Labs help us do that. SAP Labs India develops products and solutions for the Indian market and the global markets as well. About four to six months back, based on customer feedback, we launched SAP suit or solutions in Hindi. It has been a tremendous addition for customers,” said Suprakash Chaudhuri, acting managing director of SAP India.
Going ahead, Watts believes that growth from APJ will be strong for CY13, especially in India and China. “Asia has about 950,000 enterprises (with revenue about or less than Euro 500 million), of this about 10,000 do not run on SAP. So we have headroom to grow. Two, 70 per cent of our revenue comes from existing installed base of SAP. Additionally, while we have been strong in the manufacturing sector, we are seeing growth coming from non-manufacturing sector,” added Watts. In terms of products, SAP is seeing demand for its database, mobile and Hana offerings.
In India, the company is seeing growth in both the enterprise and small and medium enterprise (SME) segment. The SME segment in India grew 40 per cent for the company.