SAP SE keen to tap India’s logistics and supply chain management sector

Recently, in a first, the entire executive and supervisory board of SAP SE was on a 3-day visit to Bengaluru's Whitefield SAP Lab campus. Being the fastest-growing and second-largest lab outside of its headquarters in Germany, employing over 15,000 employees, India is on track to become the company’s biggest hub in coming years. With its cloud and cloud ERP suite revenues seeing a year on year growth of 25% and 34% in the recent q3, SAP has been looking at embedding AI across all its offerings. The company had launched initiatives like ‘ Rise with SAP’ and ‘Grow with SAP’ in 2021 to get its customers to move from on-prem to cloud for ERP solutions and adopt the benefits of new gen AI tools. With nearly 7,000 customers now adopting ‘Rise with SAP’, in India it has clients like Asian paints, Tata Companies, Mahindra & Mahindra, using its entire suite of cloud offerings.

Speaking exclusively to Fortune India during this visit, Thomas Saueressig, head of Customer Innovation Delivery, pointed out that having tier-1 Indian IT services companies such as TCS, Infosys, HCLTech, Wipro, TechM all being SAP customers themselves also helps in growing, as they take SAP’s offerings to their client base being the best in first reference for themselves. “What is also super interesting and exciting for us as a company, 50% of the unicorns in India run on SAP, grow with SAP. For our public cloud - SaaS, ERP, India is the market with the fastest growth in adding net new names,” he said.

As the Government of India aspires to grow the country into a $30 trillion economy by 2047 from the current $3 plus trillion, digital intervention/digitisation of most sectors is seen as an imperative. With logistics being a critical link in enhancing the country’s GDP, SAP sees a massive opportunity here for the company to tap. “If you think about logistics, one of the key challenges from an India perspective is the cost of logistics. And that's too high,” says Thomas. Globally with large logistics companies like DHL deploying its software to manage its operations, in India SAP is adopting a multipronged approach to be able to leverage both the private and government sector deal opportunities in the logistics and supply chain management space.

In the private space, aside from the traditional services sector with manufacturing now gathering steam, the company sees potential to expand its revenue base. “If you talk of manufacturing industries, by default, you have the planning, the components and, you need different warehousing and inventory management, which means the more manufacturing industries India is building up, the more business we see, because manufacturing, warehouse is exactly the core of SAP,” states Thomas, along with logistics companies themselves being the clients. Currently in India, SAP has over nearly 14,000 clients of which 80% are in the MSME sector.

“In the recent past, the company has also had several meetings with the Government of India and is keen to tap into the public sector market. “For the government, we had a tremendous amount of conversation about how to bring the optimisation from a supply chain planning together for combining road, rail and air,” he said. With its software solutions to optimize the processes of the government and public sector management along with the supply chain planning cloud solution - IBP (integrated business planning). SAP is confident of being able to amply penetrate the segment.

With artificial intelligence now becoming an increasingly indispensable element in IT products and service offerings, for SAP a large part of its AI development work happens in the India labs. “Our customers are leveraging AI in the context of their business, with more than 30,000 customers around the globe using AI every single day. We clearly see it’s mainstream now, and that’s exciting,” Thomas said.

In the third quarter of 2024 the company saw 30% of its total deals, and sees generative AI as a massive booster for its AI business. SAP also plans to increase its India hiring, specifically given the talent pool.