Speaking SOA with SAP

WHEN SAP CEO Henning Kagermann stated earlier this year that SAP’s Arabia’s performance in the region was “less than perfect” it could be said that he was being a little harsh.

Having achieved a market share of 33% in the region last year, high profile customers such as Aramco and a string of customer win-backs under its belt, SAP’s presence in the region is growing ever stronger.

Worldwide the company has embarked on an aggressive strategy to push the development and adoption of what it sees as the future for enterprise software — service-orientated architecture (SOA).

It has also pledged to focus increasingly on developing vertical specific ERP solutions in a move away from traditional onesize fits all approach.

We asked Phil Blower, sales director of SAP Arabia, about what the future holds for ERP in the region, how companies in the Middle East will keep pace with the rest of the world when it comes to adopting the latest ERP technology, and what SAP’s regional strategy is.

How strong is SAP’s presence is the Middle East region?
We’ve got somewhere over 200 individual customers and 450 to 500 installations in the Middle East. The market share that we’re seeing from IDC is 33% in this region (MENA) and Oracle is 23% so it is a very significant gap, which will broaden. The new business growth is also very strong. We’ve taken 20 new customer orders this year — we expect to take another ten before the year’s out.

You have stated previously that the public sector is a key area of focus for you in this region and that you are hoping to attract more customers in this space. Why do you regard this as such as important sector for SAP?
We have a huge amount of strength in public sector across the world — both local authority and federal authority systems.

We were slow to the market here, there’s no question and that allows a competitor to take some early adopters in the public sector. The public sector is an area that gets a lot of attention from the governments in the region. There’s a lot of petrol dollars available clearly to fund development.

What other sectors are you focused on in the region?
Financial services are an area worldwide where SAP has a lot of strength. In this region there are a number of developing requirements in financial services, there are rules that you have to comply with that are naturally quite complex.

That’s an area where we’re putting a lot of focus — we’ve run a number of workshops again here in Saudi for showing the market what we’re capable of delivering. We’ve got a number of projects with banks at the moment where we’re in the process of showing them what SAP can do and hopefully moving to an implementation project.

The other area in financial services that is growing is regional banks. As regional banks grow, the need for a system that you can deploy centrally and then access remotely in a very secure and easy fashion is increasingly necessary.

How important is the SME sector to SAP in the region?
It’s an absolutely key area and it’s a good example of one where SAP worldwide has already stated we want to take a very significant market share in SME by the year 2010. Here in the region we’re just completing a project to put a specific version of the software in place for the mid market — pre-configured so you have functionality built into it.

We’ve put in place a team focused on SME. The unique and different characteristic about the SME market is you typically access it through a different channel.

You don’t typically go direct to that as a sales force, you manage partners to take that product to that marketplace. In the Middle East we’re putting that together right now and launching towards the end of this year with a very aggressive target for growth in 2007.

What is SAP’s regional business strategy going forward?
I’d sum it up as a continued use of that industry focus using the best practice that we can adopt from the worldwide strength of SAP, using a large amount of expertise from outside the region to supplement the expertise we have inside the region.

And increasing investment in the region — our headcount is somewhere over 100 right now and we’re expanding in certain areas particularly in the sales and pre-sales area in our own implementation and consulting capability.

I would be surprised if we weren’t closer to 150 than 100 by the end of next year — a very rapid expansion. In the last year we’ve opened an office in Oman, we’ve opened an office in Khobar in Saudi and we already have offices across the rest of Saudi and in Egypt.

Will the region keep pace with the rest of the world in terms of its adoption of SOA?
Our region is keeping pace. One of our subsidiary users in the region is way ahead of its parent company in its implementation of SAP software.

A lot of the larger customers take a lot of time to roll new functionality out. The upgrade to move to the new world of ERP 2005 is very straightforward technically and you can adopt new functionality as you see fit.

You can do that in a weekend as a technical upgrade with no new installations and no change.

How strong is your relationship with your parent company SAP AG?
The relationship is incredibly strong. We get tremendous support from the head office and in return the head office wants tremendous return. Adding four points to our market share between 2004 and 2005 was a remarkable achievement — much faster growth than you’ll see in any developed part of the SAP world. But is that good enough? It’s never good enough. No parent company is ever going to say they’re satisfied because they don’t want you to stop growing or improving.

Earlier this year IT Weekly reported that at the Sapphire SAP user event in May SAP AG’s CEO Henning Kagermann stated business in the region was “not perfect” and that there was room for improvement in this area.
I think anybody who’s running a business would say their business isn’t perfect and there’s room for improvement, unless they are arrogant to a point of denial.

He lives in a country where SAP has 99% market share, we only have a peer group market share of 53%. Worldwide SAP has a 62% market share through the peer group. The nature of the SAP management is that they are looking for perfection in what we do and will always push us to work harder and harder; investing more SAP resources locally to drive our business.

There’s a lot of competition for talent in this part of the world, getting more people on board isn’t just a matter of finding the dollars to pay the salaries, it’s about finding the people. One way of improving is to deploy more resources. We’re growing rapidly to do that. Another aim is to work more closely with our partners and bring more international partners into the region.

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