MSMEs offer huge market opportunity for cloud adoption: SAP India VP Subramanian Ananthapadmanabhan

MSMEs offer huge market opportunity for cloud adoption: SAP India VP Subramanian Ananthapadmanabhan

"For us, the business has come in from net new customer acquisitions, partnerships with enterprises from Tier I and II cities, and companies running competitor solutions moving to our platform," said the SAP India VP.

SAP's India Vice President and head of mid-markets, Subramanian Ananthapadmanabhan (Subbu) SAP's India Vice President and head of mid-markets, Subramanian Ananthapadmanabhan (Subbu)

India's 6.3 crore small and mid-size companies have become a huge attraction for some of the world's tech leaders especially when it comes to cloud adoption and other business transformation services. This market, according to French tech giant SAP's India Vice President and head of mid-markets, Subramanian Ananthapadmanabhan (Subbu), is a huge draw for the corporation, especially after its high double-/triple-digit growth in India over the last five quarters.

The growth momentum for SAP in India is led by net new customer acquisitions, companies from Tier I and II towns adopting cloud services as well as enterprises moving to SAP from the competitor platforms. In addition, the tie-ups with the governments, unicorns as well as industry associations have provided further boost to the confidence in a market like India where SAP announced an investment of Rs 500 crore in the beginning of 2021.

Ananthapadmanabhan leads the Indian market unit's growth in the mid-market segment and serves as the acting interim leader for commercial sales.

Below are the edited excerpts from the interview:

Business Today (BT): There is a huge conversation around cloud adoption, particularly hybrid cloud in India. According to you, what kind of market opportunity lies there?

Subramanian Ananthapadmanabhan (Subbu): We are talking at a time when SAP has completed 25 years of its operations in India and has onboarded more than 12,000 customers . We can say that almost 65 per cent of India's GDP is touched by the SAP solutions in terms of our partners across various industries using our solutions and the tremendous value we have been able to create for them, I would like to highlight that currently, 80 per cent of our total revenues from India comes from mid-sized companies, which will also define the future for us.

We have been able to develop an industry cloud initiative/platform which caters to the organisation's needs and the customers/partners are able to develop and build solutions using SAP platforms.

Industry-wise, for instance, automotive companies can develop solutions for various purposes like vehicle pricing, logistics, customer relationship management (CRM) using our applications to plug the gaps, and become more agile . So our industry cloud initiative is essentially a go-to market strategy for the business. From the data on the premises, to the data on cloud -- this will be a key component for any business to remain relevant and innovate with them and hence is the way forward.

BT: What kind of partnerships has SAP been able to enter into since the announcement of Rs 500 crore investment at the beginning of the year?

Subbu: We have seen the businesses in India which were already on the journey of digital transformation even before the onset of the pandemic and others which weren't there yet. Hence, the pandemic was actually a kind of a trigger for them. A few quarters from now, we can say that every organisation is going to be digital. Around 25 per cent of India's GDP comes from micro, small and medium enterprises (MSMEs) and that is where the opportunity lies.

For us at SAP, the business has come in from net new customer acquisitions, partnerships with enterprises from Tier I and II cities, and companies running competitor solutions moving to our platform.

During the pandemic, we announced the 'Global Bharat' programme through which we reached out to various industry associations, signed memoranda of understanding with state governments to be able to reach out to MSMEs in various states and partner with them. We have also offered a digital literacy programme, enabling education of 1.8 million citizens and well as training several thousands of teachers.

Of course, we have seen tremendous traction from the governments, industry associations as well as offtake of cloud solutions to generate deeper relationships with MSMEs.

BT: You talk about partnering with India's MSMEs and offer them various digitisation services. But can you elaborate on the pricing model for this segment especially when these businesses were badly hit by the pandemic and many of them are cash-strapped?

Subbu: We have innovative pricing schemes and solutions tailored to every segment. For instance, in the micro enterprises sector, we extended subscription services at the price of Rs 4,999 per month. On the other hand, mid-sized and large companies are being offered transformation services which are very flexible in nature and enable them to transform in their own terms and timeline. This is essentially cloud democratisation where we want to reduce the entry barriers for the Indian firms and ensure wider cloud adoption.

BT: How about partnerships with governments and public departments when it comes to cloud adoption?

Subbu: Yes, government and public service is a standalone business for us. We have been able to partner with governments and departments such as roads, airports and across industries. The government's focus on digitisation started in 2017 and has only strengthened ever since. We are currently working with the Andhra Pradesh government, industry body NASSCOM and ONGC.

BT: Banking and financial services sector has seen an accelerated cloud adoption than perhaps many other sectors? Are you actively looking at market opportunities in India's financial services sector?

Definitely, our focus lies both on traditional finance companies as well as fintech startups. In some cases, we have been able to outdo our competitors with these companies moving to our platforms in cloud, CRM offerings and even for SAP global marketplace. However, I would like to say that the financial services sector including banks, insurance firms is very fragmented when it comes to adoption of technology, but there has been an aggressive growth surely.

BT. Let's talk about the market for cloud offerings in India. How would you describe the same?

Subbu: It offers unlimited opportunities - we have to admit. At SAP, our last five quarters saw growth come in from industries including auto, pharmaceuticals, life-sciences, and manufacturing. Healthcare is going to be the sunrise sector which will see aggressive digitisation, much ahead of others in newer areas like hospital services, medical devices etc. Hence, we are very bullish on a market like India and expect the growth momentum to continue high double-digits/triple digits. I would like to quote a recent report by McKinsey which depicts the kind of opportunity that lies before us. It says that nearly 48 per cent of India's economy comes from 600 companies and if the country was to move to a $10-trillion economy, at least 1,000 mid-size companies would have to move to large and 10,000 enterprises from small to medium. Now that is where the growth lies -- in terms of market expansion, job creation as well business transformation.

We see unlimited potential in India where there are digitally native companies mushrooming from every area, creating new market potential.

BT: But that would also mean a lot of competition in the cloud business when there are homegrown startups and big firms eyeing a slice of the market-share pie?

Subbu: Yes, there may be competition in the near term, but over time we can build partnerships with such firms, help them scale to a global level by hosting their solutions on our marketplace . We invite them to develop solutions and when they reach a certain level, we can partner with them. Our SAP store is global. If these startups/unicorns build solutions in analytics, SaaS, we offer a much bigger landscape for them. They can even buy from the marketplace, which of course is a separate revenue stream for SAP.

BT: Can you name some of the companies with whom you have partnered recently?

Subbu: Yes, Ola Electric, wakefit, InMobi, Cars24, Ather Energy, HCL Tech, Prestige Ltd, Jindal Steel among several others.

BT: Finally, I would like to ask whether SAP is also looking at tie-ups like we saw in case of Google, Microsoft over the last couple of years, especially when they tie up with the data centres in India to help companies migrate to cloud with the data residency laws likely to be implemented strictly?

Yes, in fact our Rs 500 crore investment announcement does encompass this vision where we work in tandem with Google Cloud, Microsoft Azure or Amazon WebServices, whom we address as hyperscalers and who provide infrastructure. Our rise with the SAP programme does involve partnership with these firms. So, we do have relevance in India currently and our partnerships are going to evolve over the next few quarters.

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