Alex Atzberger occupies a small and unpretentious office on the 31st floor of Ciros office tower on Nanjing Road overlooking the Central Business District in Shanghai. Across the street is the former Shanghai Race Course where horseracing and gambling were a favorite pastime for Shanghai’s establishment until banned by the Communist Government when they came to power in 1949. The former clubhouse is now home to an art gallery and a restaurant called “Kathleen’s.” If the Mercedes, Porsche, Maserati, and Ferrari dealerships dotting the neighborhood are any indication, Shanghai’s wealthy class now place their bets on sports cars rather than thoroughbreds.
Situated in the center of the largest city in the world’s biggest economy, Atzberger surveys the scene like a military strategist. A senior vice president at the age of 35, Atzberger is the mastermind behind SAP’s $2 billion investment plan in China and the person responsible for its implementation. The only adornment on Atzberger’s walls is a map of China studded with stickers marking the cities where SAP plans to open new offices.
Atzberger believes that China is the single biggest geographical opportunity for SAP. “We need to be in more cities,” he says of the company’s coverage strategy. But the overall strategy is a five-pronged, long-term plan that also envisions solutions for the China market, a stronger ecosystem of channel partners, higher awareness of the brand through targeted marketing efforts, and co-innovation with partners. A few years ago SAP transferred the head of its support organization to Beijing and is taking an aggressive approach to hiring this year. “Only if all these pieces come together can we be successful,” says Atzberger.
Expanding Network of Offices
SAP is establishing offices in what were once known as the second-tier cities, but are increasingly the powerhouses of the Chinese economy: cities like Wuhan, better known as a “furnace” for its scorching summer temperatures; and Xi’an, familiar to tourists as the home of the Terracotta Army. Beijing will continue to be irreplaceable as SAP China headquarters due to its proximity to the public sector and government, while Shanghai is and always will be the business center of China. Most of China’s formidable manufacturing industry is located in and around the cities near Shanghai. According to Atzberger, more than 70 percent of China’s GDP comes from 100 cities with a population of one million.
Atzberger admits that SAP needs to better explain the value it provides to customers in China, and that the business software has often been used “as an expensive typewriter.” SAP is in China to repair that situation through focused customer orientation and improved coverage. “We have an extensive need for education and awareness in the market,” he says, explaining that dedicated teams will focus on branding, channel engagement, and building a healthy ecosystem. The SAP Forums, for example, will be hitting the cities where SAP is opening offices.
More Than Just Localization
How does SAP plan to make China run better? One way is through the top accounts. “Some of our solutions don’t cover the requirements that customers have here today,” he says with disarming honesty. “But the requirements are ones that play to our strength. One requirement is the enormous data they have to work with, a perfect HANA application. Another is specific China reporting standards. This is something we can build in our products. It’s more than localization. It is really about building solutions for China in China.”
Atzberger remembers as a child growing up in Germany being impressed by the new high speed ICE trains. Now the Maglev (magnetic levitation) train, built with Siemens technology, the only one of its kind in operation in the world, rattles through the former farmland of Pudong at speeds of 430 kpm, taking travelers from the airport to downtown in eight minutes. With a taxi the same trip takes 45 minutes minimum.
“What I see around me in terms of technology adoption is amazing,” he says, describing the new Nanjing train station, the biggest in the world and its next-model trains – all generations ahead of Germany. “There is no existing infrastructure,” he explains, “which allows China to go for the latest and greatest.”
For the same reasons Chinese companies are leapfrogging technology innovations and opting for cloud-based and mobile solutions. “There are a lot of private and midsize companies in China with big ambitions. This segment is probably behind the multinationals and state owned enterprises in terms of technology adoption, but also the one who innovate fastest and are the most open,” says Atzberger, calling this SAP’s “sweet spot for innovating” in China.
After a recent trip to Nanjing, Hasso Plattner, chairman of the SAP Supervisory Board, asked SAP China to look into opportunities to open an innovation research center in cooperation with Nanjing University.
Nanjing’s various districts compete with each other to attract investors by offering parcels of land in software parks or high tech valleys – just like Silicon Valley, says Atzberger, a Harvard Business School graduate. “Huawei already has 10,000 developers there,” he says, citing a hugely successful local ICT company.
“It’s fascinating to see how big the Chinese government thinks and how much of the decision is taken at the provincial level. They have a long term vision and do everything for you to become part of this – it’s incredible. We are now reviewing their offers,” says Atzberger.
What the West Can Learn From China
The government is obviously a critical stakeholder in China and Atzberger is interested in the value inherent in being part of the country’s agenda: “We need to win with China, not just in China. Our value proposition is high. The German-Chinese relationship is excellent, and we are working with other German companies on sharing best practices,” he says, adding that cooperation on topics like sustainability is high. He speculates that local companies may have an advantage when decisions are made by local government officials that impact vendor selection but his approach is surprisingly sinicized. In fact, when asked what the West can learn from China he has a clear and immediate answer:
“It’s good to have a plan. I totally believe in market mechanisms. The years when SAP was struggling were when we didn’t have a clear long-term strategy. Countries need clear long-term strategies too. You need to know where you want to go. China has this.”
Born in Hong Kong in the Year of the Dragon, Alex Atzberger was predestined to lead SAP’s China Growth Plan. He tells how his mother left Germany and went out to Malaysia by sea to join her husband who was working in the Far East in the late 1960s. The father’s career took the family around the world, slowly shaping Atzberger’s worldview. “I always liked the big picture stuff,” he says, looking out at the view of the world’s megacity.