SAP AG, the world’s largest business management software maker, said that it plans to grow its customer base more than five times by 2010, as more small and medium enterprises (SMEs) buy software from the company.
The German company, which competes with Oracle Corp. in the business software market, will have a total of 15,000 customers in India in three years, with 12,000 of these being SMEs “that are now seeking to buy packaged software,” according to Geraldine McBride, president and CEO, SAP Asia Pacific and Japan. The company claims that some 30% of its business in India currently comes from 1,000 SMEs and that this proportion could increase to 50% by 2010. SAP does not disclose its revenue and profit numbers for India.
SAP also plans to invest around $1 billion (Rs4,100 crore) in India over the next five years and double the number of software engineers in its Bangalore development centre to around 8,000 by 2010.
India also has a huge base of around 40,000 software engineers trained in SAP solutions; many of these engineers work for large Indian software services firms for whom “SAP-implementation” or helping clients move to SAP software is an important revenue stream. .
Chennai-based retailer Subhiksha, which runs supermarkets and pharmacies chains in India, said it would be investing around Rs10 crore on deploying SAP software this year. It will recover the investment in two years time by “making its business more efficient,” said R Subramanian, managing director, Subhiksha Trading Services. And other Indian firms such as Cadila Healthcare Ltd are also looking at software as a service model, wherein they do not have to pay any licensing fee and invest in new servers upfront and just pay a monthly per-user fee to business software vendors such as SAP
“These companies are seeking a low-cost model, and that is why software as a service makes sense to them,” said McBride. SMEs can save up to 60% of what they would have otherwise spent on software by moving to this model, according to experts. Globally, software vendor Salesforce.com, which has America Online and chip-maker Advanced Micro Devices (AMD) as its customers, charges $65 for every user on a monthly basis. Last year, Microsoft joined hands with telco Bharti Airtel Ltd to provide its own business software to small businesses in India.
In India, retail is the fastest growing segment for SAP, with companies such as Reliance Retail buying software from it.