SAP reinforcing cloud computing offer for Latin American SMEs, CEO says

Thursday, January 27, 2011

SAP (NYSE: SAP) will revamp its cloud-based solution offering for Latin American SMEs by launching a new business suite on demand (BYD), the company's CEO for the region, Rodolpho Cardenuto, told BNamericas.

The suite will be rolled out in the third or fourth quarter starting in Mexico, the executive said. Meanwhile, SAP will continue to offer large enterprises cloud versions of specific solutions such as CRM, SCM and HCM.

"It's very specific adoption that is very focalized for large enterprises," he said.

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At the same time, Cardenuto admitted that the percentage of ERP clients willing to switch from a traditional to cloud-based solution remains small.

"Today in Latin America, what I can tell you is that it's a very, very small percentage," he said during a webcast. "People say it's growing a lot, but it's growing from a very small base. A small base can double and still not be significant."


SAP's overall Latin American strategy this year will remain focused on the banking, retail, consumer goods and government industries, with Mexico, Colombia and Brazil expected to represent top growth markets.

The company has also made progress in Peru's construction sector, and is banking on strong financial and retail sector sales this year, according to the CEO.

Other priorities include building out the regional channel partner network and fomenting sales of mobile software solutions, referred to by SAP as "on device." Cardenuto said SAP Latin America expects to sign up 100 new mobile clients by year's end.

SAP's global sales are seen increasing to the tune of 10-14% this year, but Cardenuto said the Latin America division will look to double that figure, while posting double-digit growth in each country in the region.

2010 WRAP-UP

Representing roughly 8% of global sales, SAP's Latin America division posted a 48% year-over-year increase in software revenue last year, driven by a 91% surge in Brazil.

"Brazil is in a privileged situation," Cardenuto said. "We are talking about oil and gas and mining. There are companies in those industries that are favoring the adoption of SAP."

The company also notched significant advances in Puerto Rico, Chile and Peru, which saw software revenues increase 63%, 54% and 50%, respectively. On the other hand, Cardenuto underscored continued challenges in the Venezuelan market.

Growth was evenly split between large enterprises and SMEs, which raked in 48% and 49% revenue increases, respectively. The mills and mining and insurance sectors pulled away from the pack, each racking up 500% year-over-year sales spikes, followed by oil and gas with 179% growth and retail with 45%.

SAP signed up 1,800 new Latin American clients during the year, highlighted by a 44% uptick in SME clients in the Mexico and Central America division. With those changes, SAP's regional client base surpassed 10,900.

Globally, SAP saw sales increase 17% to 12.5bn euros (US$17.1bn), while net profits crept up 4% to 1.82bn euros.