Setting the Course for a Boom Market in China

To keep up with rapid changes, SAP Labs China plans to grow from 600 to 1,500 employees over the next two years. Current and future solutions for midsize companies are the focus of developments for the booming Chinese market. About 65 percent of the employees at the Shanghai Pudong Software Park work on SAP Business One, a service-based application, and on preconfigured SAP Best Practice offerings for the Asia-Pacific region and for Latin America. The employees are also developing innovative concepts, such as the Service Factory, a business center for customers and partners that is being set up in Chengdu. Additional work is devoted to SAP ERP Financials and the adaptation of SAP software for the Chinese market. That’s a task that will become increasingly important. So far, about 90 percent of the solutions that have been developed in Shanghai have been developed for the global market. That will change.
In terms of absolute numbers, the software market in China is still relatively small. However, experts project a significant market for enterprise solutions for small and midsize businesses, and SAP Labs China is setting a course for the expected boom. According to Shang-Ling Jui, the director of SAP Labs China since 2003, China offers the right preconditions for strong growth in IT. “We have a healthy midsize sector, a large domestic market, a high proportion of foreign investments, and a huge pool of talent,” says Jui with confidence. Jui was born in Taiwan and has had a career that makes it easy for him to make the comparison. He studied at Stanford University in the United States and earned a doctorate from the University of Siegen in Germany. He became a German citizen and has since described himself as a “German with a Chinese soul.” After he graduated the University of Siegen, he worked as a software developer at ThyssenKrupp in Dortmund, Germany and as an engineer at EADS in Munich. He joined SAP in 1992 and has held various positions in Walldorf, the United States, and now in China.

Role model for new markets

According to Jui, China can serve as a role model for small and midsize businesses because the use of SAP software is largely unknown in many companies and software budgets are very small. “Whatever is presented here as a solution must be quick to implement, economical, and easy to operate. If SAP can gain a foothold here – and we already have very many successful customers among small and midsize companies – we can use this knowledge to be successful in traditional markets and in developing and threshold countries,” he says with confidence.
Founded for just this purpose, the Innovator Club serves as a source of information and a forum for an exchange of ideas. Founders of companies, IT directors, academics, and government representatives meet quarterly to discuss opportunities for collaboration and offer feedback on SAP software. Membership includes not only SAP customers, but also users of competitors’ products. “We want to know why they decided to use other products,” says Markus Alsleben, who handles strategic business development at SAP Labs China. “The feedback we receive goes directly into a requirements analysis.” The Innovator Club also contributes to positioning SAP as an open company and an authority in the market. “We help Chinese firms deal with rapid changes and prepare them for growth,” he adds. Contact with government representatives also allows for a better understanding of their requirements and more intense collaboration.

Research and new blood

SAP Labs also supports the establishment of SAP research in China. It developed innovative concepts for supply chain management – with RFID, for example – and was involved in research for the new A1S solution for small and midsize companies. SAP Labs cooperates closely with renowned universities throughout the country to set up research networks and make early contact with students.
All that should pay off as SAP Labs expands its work force to 1,500 employees. The average age of the new employees is less than 30. Every year, Chinese universities graduate four million students, about 1.7 million of them with a background in engineering, so Chinese software companies have no problem engaging talented young people. Nonetheless, SAP maintains intensive contact with universities. It does so both to maintain a voice in research projects and to position SAP Labs as the top destination for new employees. “We pick the roses,” says Jui confidently. SAP has a good reputation as an employer.
A good reputation carries responsibilities, so the Stanford graduate acknowledges the expansion at SAP Labs as a great challenge. “We must ensure that the integration of new employees occurs seamlessly,” he says. The quality of the work, which is regularly tested with customer surveys, cannot be affected. Employees regard the corporate culture and the good opportunities for advancement very highly. “Our employees do not face the situation that exists in most other research institutes, which often deal only with pure localization issues or with the periphery of software. They know that they work creatively at SAP and can affect something,” emphasizes Jui.
When selecting personnel, Jui prefers applicants with a high learning potential. It’s important for him that the graduates can become familiar with new topics quickly and can appropriate new knowledge. “Ultimately, the technological change in our industry is enormous,” he says. To integrate the new employees physically, a multistory office building is going up next to the SAP campus in the Shanghai Pudong Software Park. The success of Jui’s personnel policy can be seen in the number of employees who leave the company – just under 7 percent. “That’s a low and a healthy number,” says Jui.