SAP restructures South America operations, Ecuador candidate for subsidiary

- Friday, March 25, 2011

SAP restructures South America operations, Ecuador candidate for subsidiary

A need to understand market particularities make Ecuador the most likely country for a new SAP (NYSE: SAP) subsidiary, the company's sales vice president for Argentina, Colombia, Chile, Peru and Venezuela, Leonel Graff, told BNamericas.

SAP currently maintains a commercial office in Ecuador, but opening a full-fledged subsidiary - which includes financial administration, human resources, consulting, training, sales and marketing teams - may make sense, Graff said.

"It wouldn't necessarily be opened due to business volume, but rather due to the complexities that arise from serving the country separately," he said. "I don't have a fixed date [regarding the opening of the subsidiary]. It's in our plans."

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SAP currently leverages its Colombian subsidiary to cover Ecuador, while its Argentine subsidiary covers Uruguay and Paraguay and its Peruvian division is responsible for Bolivia.

CONTEXT

Earlier this year, SAP overhauled its South American operations to form the Spanish Speaking South America (SSSA) division, which includes all regional countries expect Brazil.

Linguistic and cultural bonds, as well as top-level knowledge about business activities, will add cohesiveness to the new unit, though managers in the division's "northern hub" and "southern hub" will be in charge of deciphering nuances between countries, Graff said.

"We are eliminating the role of the country manager, and we are creating a sales vice presidency for the entire region," he said. "The first significant task will be unifying the sales processes throughout the entire region.... The processes that will support sales will be the same, and this includes the way we view the distribution of the accounts and also the different channels we use to get to the market."

Graff said the changes will focus support services and make the division more sales-oriented. SAP SSSA expects to post double-digit revenue growth this year, which will include a return to positive increases in Venezuela, the executive added without providing further details.

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

Globally, SAP saw sales increase 17% to 12.5bn euros (currently US$17.7bn) in 2010, while net profits crept up 4% to 1.82bn euros.