SAP in India

We’ve had a lot of discussion on this forum about why there are no Technology Product Companies in India, and why such companies are needed.

Let’s take a look at a company that is selling lots of technology products in India, and intends to sell even more: SAP.

Recently, the Economic Times reported about SAP’s results in India, and their plans:

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After seeing a record year in 2006, SAP India is now targeting to touch the 15,000 customer mark in the country by 2010.

This is part of the company’s Vision 2010. Alan Sedghi, president & CEO, SAP Indian Sub Continent, said, “India will be an integral part of SAP’s emerging market growth globally. We want to have a dominant presence in both the Fortune 2,000 and Fortune 2,00,000 company categories in the country and have set an ambitious target of having a 15,000-strong customer base in the next four years.”

Currently with about 1,400 customers, SAP India accounts for about 3% of SAP Global’s customer base. By 2010, SAP Global has set a target of reaching 150,000 customers, so a 15,000 figure will mean that India will account for 10% of the total customer base for the company, said Mr Sedghi.

The enterprise software solutions vendor ended 2006 with about 1,400 customers in India across large, mid and small enterprises. This included 883 SME customers and an addition of 498 new customers across sectors like consumer products, retail, BFSI, professional services and pharma.

According to the CEO, SAP India grew 40% in revenues in 2006 over the previous year with about 35% of the software revenues coming from SMEs.

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These are interesting statistics. It tells me a few things:

(1) SAP is successfully penetrating the Indian market, and thus, is creating a strong position in the Enterprise / SME software segment.

(2) It is also training the businesses in India on how to acquire and evaluate technology products, especially software. For a long time, the Indian market did not like to buy business apps. They bought design software (Adobe, Autodesk, Macromedia) and plenty of hardware. SAP’s success, therefore, reflects a sign of maturity in the enterprise and SME customer base, and a move away from trying to do non-core activities on their own.

(3) SAP is doing well in the SME segment in India. That’s a very large market opportunity, since India is full of SMEs, and has only a few truly large enterprises.

SAP’s success is India is something to note, as it is aligned with an important emerging market trend. Similarly, what the company learns by selling to SMEs in India, can potentially be replicated globally. Both India and SME are key.

And for Indian entrepreneurs, aligning with the SAP eco-system, understanding the “gaps” and “needs” of the Indian customers around SAP’s products, may offer up opportunities for “product” entrepreneurship.