How is the technology adoption growing in SMB sector? What are the opportunities for companies like SAP in this space?
In the current economic scenario, entrepreneurs and small- to mid-sized businesses (SMB) make up the backbone of the economy. They have the ability and power to drive innovation, create jobs and enhance economic stability. When it comes to technology adoption, there is an impression that SMBs are not much interested in investing on that. Yes, technologies might not be on top of their agenda. What they want to do is to run lean and efficient operations. They do not want to spend more either on inventory or on manpower. It’s here technology helps them.
Today, many SMBs are using mobility devices in their sales operations. The prime driver for this shift was not technology adoption but the need to ensure productivity of their manpower. So, technology adoption meant return on investment and business enhancement. SMBs are very sensitive to the return on what they spend. For instance, if they have a dollar to invest, they will think whether they should invest in people, technology or elsewhere. They will invest in which they will get a maximum profit. Also, when SMBs are doing business with bigger companies, technology is a matter of fact for efficiency.
SAP is able to understand their business requirements totally, and we enable them to run businesses efficiently with less manpower. For us, SMEs contribute to 80% of our business globally, and its much higher in India. We have created a lot of options for them.
So what all does SAP have in the SME basket?
For SMBs, it is not a particular solution that may work, but the ability to deliver the solutions on a flexible model will help them better. And we provide them with the flexibility they need. The knowledge of the industry, ability to understand industry requirements and to provide industry specific solutions are SAP’s USPs. As many SMB players don’t want a capital investments with technology, we have created solutions on Cloud, and offerings on hosted model so that they can turn investments in opex model. We also have created offerings such as rapid deployment solutions (RDS), which ensure that customers start using solutions within a few weeks. It takes care of most of the requirements with most of the best practices in the industry.
SAP also has a strong partner ecosystem for SMEs. Around 40% of the SME business comes from our channel partners. We are working with our partners to create solutions for micro verticals. Partners have helped us to expand our footprint to local market.
How has the response been from SMBs to the Cloud solutions?
Speaking about Cloud, a lot of people are a little bit cloudy over that. Sometimes, they are not clear on what are their Cloud strategies, security in Cloud, and so on. To go on Cloud or not to is completely a business call for SMBs. But we are offering them a choice. We have a ‘Business By Design’ (BYD) — a fully integrated on-demand enterprise resource planning and business management software product designed for SMEs in the Cloud architecture. We have a Cloud solution for HR as well. Further, we have acquired a few organisations and solutions which are very relevant for SMBs in Cloud. We are also offering BYD as a platform and our partners to develop solutions on top of that on their own.
Apart from choices, there needs to be a lot more education for Cloud adoption in the segement.
What are the challenges for SMEs in technology adoption?
One of the biggest challenges is hiring and retaining quality manpower to manage IT operations. It is a global challenge. But this challenge offers more opportunities for hosted or Cloud based solutions. The second is as the business grows, they need more funding for technology. SAP actually works with partners on a funding model to help SMBs with funding support. Sometimes, SMBs also need more education about how new technologies are coming up and how can they help their business.
What are your future plans for the SME segment?
We will continue to work with the partner ecosystem. We are coming with more micro vertical solutions. We would be looking at every part of the customer’s business and will come up with more innovative offerings for the SMB market. We are not only focusing on core ERP, but are also looking at other small solutions such as mobility on Cloud.