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SAP used to be synonymous with ERP solutions; the company's name was often used interchangeably with the solution. However many other companies have since jumped into the ERP fray. Competition has heated up, and SAP has bolstered its offer, moving into areas such as analytics and mobility.
BNamericas spoke to Chris Powell, marketing head for Latin America and the Caribbean, to find out more about the direction the German giant is taking, as well as more specific plans for Latin America - the firm's fastest growing region.
BNamericas: When you talk about SAP, people tend to associate it with ERP, as it was your original battle horse. You've since moved on but still have a solid ERP suite. What are you doing to change this image of SAP as only an ERP solutions provider?
Powell: I don't know if it's a matter of changing the image as it is adding on to it. We have a great reputation in that area, and for many years SAP was absolutely focused around efficient execution - whether it was about shipping products, paying invoices or various things along those lines. The idea was trying to enable customers to do things in the right way.
I think what we're looking to move on to, with some of the strategic acquisitions that we made in different innovations, is about doing the right things as well. It's about... the customers' ability to analyze and predict for their business. Helping to ensure that companies can not only do the back office pieces, but also really look at their business from a strategic point of view and be able to do the analysis, to say what they want to do and ensure that's what they are doing. There's also the whole mobility shift that adds onto that.
In terms of changing the image, when I first started at this company, we talked about how perception drove reality. It was about driving the perception of SAP as a company. I think now so many things have changed in terms of marketing and the world that we live in, so it's now as simple as reality driving reality. We need to change this image with reality, and I think reality will start to take hold as people learn more about SAP.
BNamericas: You mentioned strategic acquisitions, I'm assuming you're talking about BusinessObjects with analytics and then last year Sybase with mobile. Are there any areas where SAP is looking to shore up a bit more in terms of acquisitions?
Powell: The general approach we've always had has been based on three pillars - organic growth, co-innovation with partners and strategic acquisitions. We haven't been in the game to acquire market share as some of our competitors have been known to do.
In terms of specific acquisitions, we're in a big M&A market right now. There will always be areas - I can't speak of the specific areas that we're looking at - but there is no question that as we continue to grow, we'll look at our own organic growth, looking with partners, and doing some strategic acquisitions to fill some of the gaps.
BNamericas: You've talked about analytics and mobile. What would be some of the other areas where SAP is looking to expand?
Powell: It's fairly straightforward what we've been doing around business analytics and all the elements related to that with mobile, and some of the user interfaces that you need to put on top of all these different elements, to tie them all together. We're looking at areas of business analytics, which continues to be a tremendous growth area for us, in terms of in-memory and the mobile space.
BNamericas: What are some of the deployments you've seen in Latin America with in-memory computing appliance HANA, and how are the clients using it?
Powell: I'm not sure which clients I can mention specifically, but there are three stages that we're seeing in terms of the meetings that we have around in-memory customers and potential customers. The first is that people are hearing the buzz about in-memory but they're not completely sure what it means or how it will transform their business, so we have to get through that stage.
The second is having initial discussions about challenges and potential areas where technology and the overall way we're moving forward with this can be applied in their business.
The third aspect is much more in-depth discussions.
With regard to how HANA is being applied, it cuts across industries. It's in so many ways that customers are looking to quickly turn around and make decisions on inventory control, and their overall logistics chain. We're also seeing some manufacturers looking at the use of in-memory technology and real-time data that they can pull out of the system to be able to immediately change their manufacturing approaches.
BNamericas: Management of big data is one of the current trends; another has to do with the cloud. How is SAP responding to this strong and growing trend throughout the world, and specifically in Latin America?
Powell: We see the cloud as an extension of how our customers want to work. We're looking for ways in which our customers will be able to save on resources, whether it's with hardware or software, or faster time to implement. We feel we have a complete cloud offering - the functionality of our entire suite is found on the cloud today. We have the [on-demand ERP] ByDesign offering, and we're looking to expand that, especially in Latin America. We've had significant uptake in the last year or two with the ByDesign offering. And with the launch just recently, in August, in Mexico, we've already seen contracts closing and we're anticipating more next year, when we'll expand throughout Latin America. I believe that Brazil will be one of the first countries we'll be looking to move into.
BNamericas: What would some of the challenges be that the cloud represents for SAP?
Powell: It's a different type of customer conversation than what we've had in the past, a different sales model. Any type of change like that in a company such as SAP, where we've had a stable and solid sales model for a number of years - that's some of the challenge.
I think the ByDesign offering is extremely strong when compared with the solutions from key competitors such as Totvs. The ByDesign user interface is incredibly compelling.
In terms of some of the perceptions out there, some of the legacy systems take some time to overcome, but [doubts] are put to rest when people see these products... So it's about making sure there's the right understanding in the market and that people really do have interaction with the products, whether that's ByDesign or Sales On Demand, which is an incredible niche product that's getting rave reviews. We need to get it out there more and have people see it.
BNamericas: How do you get these solutions out there - the right solution into the right customer's hands?
Powell: SAP throughout the world, and most definitely in Latin America, views the channel as one of our tremendous growth opportunities and driving overall coverage. We can work more closely with partners in everything from co-innovation, to sales and implementation.
We also have subsidiary models to work with our strong installed base.
BNamericas: What's SAP doing in respect with social media?
Powell: One area is from a marketing component. I think there's a lot more we can do - it's really where you start to blur the lines between marketing and the other elements of the business. Social strategies in general are going to be utilized end to end. As recently as 1-2 years, ago people would've thought of social media as being an information channel, an awareness tool, but we're seeing that rapidly expand and be relevant up and down the chain of overall demand management.
It's about… driving and understanding what the conversations are, and being able to react to that and use it as the two-way channel that it is.
The other area I'd say where SAP is much more ahead of anyone else I've seen is our SCN - the SAP Community Network. That has over 2.5mn members worldwide, and it's a tremendous resource in terms of allowing us to keep a pulse on what's happening and what's being discussed in the market. It's also a tremendous resource for our customers, and for prospects to go in. It provides everything from technical discussions to business process discussions. We've been successful in combining this group of people together so they can leverage their know-how, their own experience with SAP products and start to benefit from each other.
BNamericas: SAP has been working on opening some innovation centers throughout Latin America. Why and what are the benefits to doing this?
Powell: The most obvious benefit is co-innovation. As we're looking to expand in terms of overall ecosystem and channels, a big piece of that is working with partners to understand ways we can co-innovate.
As we're providing a total suite of products, we believe the partners will be able to add into this and provide customers with both niche as well as new innovation areas that only a strong partner network can do. The co-innovation centers are really our response to the increasing specialization that's taking place in the market. People are looking for more specialization, and the way you do that is with a strong partner network.
BNamericas: Does the type of co-innovation differ between regions?
Powell: I think the strategy is the same but the levels of maturity are different, as are the partner bases when considering more established geographies when compared to Latin America. We're just launching this now and trying to drive much more of this type of activity.
About Chris Powell
During his 10 years with SAP, Chris Powell has held a number of roles, implementing large-scale initiatives around business topics such as global demand generation, systems design and implementation and worldwide performance management. He has driven the alignment of marketing practices across disciplines and regions for efficiency gains and support of SAP business goals from the global to country level.
Prior to joining SAP, Powell held various management positions within the insurance and healthcare industries. He also co-founded "Renaissance Philadelphia," a network of more than 500 professionals who participated in literacy and environmental volunteer opportunities for the community. Powell has a degree in economics from Penn State University.
About the company
Founded in 1972 and headquartered in Walldorf, Germany, enterprise application software firm SAP (which stands for "systems, applications, and products in data processing") serves more than 176,000 customers worldwide with its applications and services.
The company has over 54,000 employees and sales and development locations in more than 50 countries worldwide. SAP's IFRS revenue reached 12.5bn euros (currently US$16.9bn) in 2010.