The “Power of Small” to Drive Job Creation and Business Innovation in Saudi Arabia

December 11, 2012 by SAP News 0

IT Adoption by SMEs Seen as Foundation of Country’s Plans to Stimulate Economy and Inspire Entrepreneurialism; Saudi Arabian Companies Hail Impact of Cutting-Edge Business Software Solutions

RIYADH, Kingdom of Saudi ArabiaSmall and Medium-sized Enterprises (SMEs), particularly those punching above their weight thanks to empowering IT solutions, were identified as key to Saudi Arabia’s future prosperity at a round-table event hosted by SAP yesterday.

“Information technology is a key pillar for SMEs to become a prime engine of economic growth in Saudi Arabia,” said Ahmed Al-Faifi, Managing Director, SAP Saudi Arabia.

“The advances in business-oriented solutions for Mobility, Analytics and Cloud, are driving the competitiveness of SMEs by furnishing business leaders and entrepreneurs with the best in class technology innovations needed to gain clear insights of the business dynamics at their finger-tips, any time, any place.”

SAP believes that more technologically empowered SMEs can have a particularly positive influence on job creation in Saudi Arabia. The Ministry of Labor estimates that unemployment stands at around 10 per cent among Saudis, and youth unemployment is four times higher than any other age bracket.

There is also plenty of scope to improve business competitiveness and profitability, with a report recently published by the World Bank noting that the SME sector currently forms 90 per cent of all Saudi companies, yet only contributes a quarter of total employment and about a third of the country’s gross domestic product.

Saudi Arabia’s Ninth Economic Plan (2010-2014) has specifically highlighted the importance of SMEs in the development of the Kingdom’s economy.

Encouragingly, IT-driven innovation among SMEs on the rise in Saudi Arabia; SMEs spent $2.85 bn on IT in 2011 – 33 per cent of the country’s entire IT expenditure – and IT market intelligence leaders IDC predicts a five year compound annual growth rate (CAGR) of 12.6 per cent over the next five years.

According to Gartner, the global SME market is projected to grow more than $1 trillion by 2014, with a five-year CAGR of 5.7 per cent. Fellow analyst Forrester notes that the SME ERP market alone is expected to grow to $31.3 billion by 2014 (CAGR 6.1 per cent).

“Saudi Arabia needs to stimulate the development of existing SMEs, beget new companies through better financial solutions, provide greater access to markets, and facilitate targeted mentoring of youth and entrepreneurs,” said Dhiraj Daryani, Research Manager, IDC MEA.

“The best way that SMEs are preparing for growth is to have sophisticated business systems in place that allow small companies to operate like big companies, and ultimately compete and win business. But it doesn’t end there. Smart SMEs are also standing out from the crowd by investing in the big trends of 2012: mobility and cloud. In doing so, progressive companies are not only investing in technology innovations but are garnering results in terms of higher revenue expectations to drive impact.”

SMEs are critical to SAP’s long-term growth strategy, which includes doubling its addressable market, reaching 1 billion people and achieving global revenues of €20 billion by 2015. Nearly 80 per cent of SAP’s customers are small businesses and midsize companies.

79 per cent of all SAP SME customers originate from over 3,000 value-added reseller (VAR) channel partners (the goal is to increase that to 100 per cent in the coming years) that provide localization, regional and industry expertise and support.

SAP solutions for SMEs include SAP Business One, a single integrated solution for successfully managing small businesses, which gained over 14 customers per working day in 2011 (35,000+ customers to date); and SAP Business All-in-One, a customizable and extensible solution for midsize companies with deep industry best practices built in.

Currently, there are over 1,100 partner-developed add-on solutions for SAP Business One and SAP Business All-in-One.

Saudi construction and engineering company CAP France BAT is a recent convert to SAP solutions and, with the assistance of SAP partner Inntree Technology Services, implemented an ERP solution that included specifics for the Engineering and Construction sector, the BI suite and management dashboards. Already, CAP France BAT has increased productivity by reducing the procurement cycle by more than 40 per cent, whereas management has become more incisive through better decision-making tools. Key to the overhaul has been the optimization of a 70,000 item inventory, which has enabled delivery schedule alignment with zero errors.

The company recently took gold in the Medium Implementation Category of the SAP MENA Quality Awards.

“We need to be agile and able to operate around the clock, and that calls for enhanced visibility and better decision making,” said Hadi Darwiche, Business Development Manager, CAP France BAT.

“SAP has given us the platform to run our operations better. We have improved employee productivity, customer engagements and responsiveness, and truly gained a competitive edge in the marketplace.”

Saudi construction, trading and manufacturing business Abdullah Al-Sayed Group also turned to SAP when it needed to take the company to the next level.

Working with partner SAP partner CIC, the company’s implemented Business-All-in-One.

“Nowadays, an SME needs it all: a business solution that is flexible to meet the current and future needs while also being affordable, efficient and eminently adaptable. Through implementing SAP we have created tremendous added value for our stakeholders, and achieved an entirely new level of operational performance and excellence. SAP is currently working side by side to our blue collars workers and engineers even in dust and rain, providing an exceptional alignment between technology and practice, ” said Salman Abdullah Al-Sayed, CFO,Abdullah Al-Sayed Group.

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