“The Heart of the Business is SME”

Feature Article | April 14, 2009 by Johannes Gillar and Georg Middendorf

Lateinamerika

SAP recently created the region Multi-Country Latin America, MCLA. What were the reasons behind this?

To serve our customers more efficiently – that was the main reason to merge the former regions Andean & Caribbean and South. We also found that these regions have a great deal in common, so that merging them allows us to provide a better infrastructure. In addition, we are able to reduce costs, which we now reinvest in better customer services.

What do you want to achieve in this region in the next five years?

Certainly I would like to see evolving growth. To stay successful, it is crucial to continually satisfy our customers and manage our partner ecosystem well. So my schedule is to grow and each year serve new parts of this market that we are not reaching today.

What role does the midmarket play in your organization?

A significant one. In MCLA and in Latin America in general, the heart of business is small and midsized enterprises. As for large enterprises, of course, you’ll also find them in every country of the MCLA region. Even in Peru, traditionally a homeland to SMEs, you have substantial holdings.

Nevertheless, the majority of the market consists of midsized companies. The only exceptions are Brazil and Mexico. These countries have a considerable number of large enterprises, especially Brazil, which has several hundred enterprises that are large even by European standards.

What difficulties do SMEs in Latin America face? How can SAP help them?

The paramount difficulty is competitiveness. The world is becoming smaller and smaller, with the result that your competitor is getting closer and closer to you. So the SMEs are looking at SAP as a trusted advisor to help them gain competitiveness and become more productive and efficient. Chile and Peru, for example, are economies under heavy fire in terms of global competition.

If you visit them, you sometimes feel that you are in Singapore or New York because you can see goods and services from around the world. So if the SMEs want to remain competitive, they have no choice but to be efficient.

What industries drive SAP’s business in the MCLA region?

There are some industries that are highly dynamic and active; retail and distribution, for example, is always a very intense market. Banking has been growing steadily in our region for the past few years and is looking very good. Mining is extremely important towards the Pacific in countries such as Chile, Peru, and Colombia.

Oil is a good segment since most of the Latin American countries are oil exporters, primarily Venezuela and Mexico. And now Brazil is catching up. 20 years ago, the country was a heavy oil importer, but today the Brazilian company Petrobras is a successful oil exporter that conducts research offshore and has discovered many oil reservoirs.

Other industries? The public sector is also quite strong. Many governments have invested in modernizing their customer-facing activities, for example, tax collection or health management. Utilities are also going strong in Latin America. And last but not least, the financial services sector is dominant in the Caribbean. As you can see, this is a wide range of industries – but with our many industry solutions, we are able to support them all.

Many SAP customers around the world have problems finding skilled SAP consultants for their solutions. How do you manage to win the best talent here?

You’re right, resources are an issue. In Latin America we lack skilled professionals. The main reason for this is the rapid growth of the economy and the growth of the market. At SAP, we’ve been very successful in engaging with our customers on projects – and for every dollar you sell in terms of a product license, you probably generate two or three dollars of consulting business. This is true of the whole business ecosystem, not just of SAP. But while we’ve had a great growth rate, it hasn’t been in the education industry. There we have a shortfall.

At the end of 2006, we launched a continent-wide program called SAP Professionals, which is an extensive initiative to team up with educational centers. We develop facilities to train people to become certified professionals. In 2007 we certified close to 5,000 professionals in the MCLA region and in 2008 almost 7,000.

We will probably maintain this program for the next few years until we are sure that we have enough resources. That way we feel confident that we can support our customers well in an economically expanding Latin America.

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