The contender

ACN sat down with Sergio Maccotta, managing director of SAP Middle East and Africa, to discuss the current state of the Middle East software market.

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The contender MACCOTTA: More of 40% of our business comes from small and midsize firms.
By  Imthishan Giado Published  January 24, 2010 Arabian Computer News Logo

What are SAP’s current market objectives for the year to come?

The objectives are mainly in terms of endorsing and communicating to the market. Our customers are demanding innovation, and how to better understand how to increase the value from IT, how to make the organisation clearer. The objectives here are to have SAP presenting a new strategy as well as the innovative solutions that we have, as well as all the tools that we are providing to the ecosystem, in order to increase the value realisation.

Is it more difficult to explain to customers the value of investing in the large SAP ecosystem?

Selling is always a matter of matching the customer requirements with a good solution. I think that we are in a privileged situation because SAP has a good solution and because in this part of the world, customers have a lot of requirements in order to transform the explosive growth that they have experienced in the past into something manageable and be prepared for the next growth wave.


We call them ‘winback’ – these are the most exciting moments when whatever you are doing for supporting the market culminates into seeing a customer of the competition decide to stop their previous investment and jump into SAP.

What size of customers are you targeting at the moment?

More of 40% of our recent business is coming from small and midsize organisations here in the Middle East. We are talking about a 60/40 split between larger organisations and midsize organisations. In November 2009, I concluded a small deal with a chemical company that’s just forming itself but has a huge vision. As of today, they have only 12 employees, they have five users and they are running through an implementation with SAP.

So it’s a greenfield site which has now got adaptability, best practices, implementing it quicker and then getting ready for running on the right way. That’s the most exciting part. In a crisis, companies are cutting investments.  But companies are reducing investments and deciding where to save. If you can deliver value, they continue investing and this is what is happening in the Middle East.

In the current economic climate, is there more pressure to cut the prices of your products and services – and are you doing so?

I wouldn’t say that there is more pressure now than in the past. There is always pressure because you have to make an investment and it’s only available at the moment where it matches the expectation of the customer. Definitely if you are moving down to medium or smaller organisations, you need to be more scalable. You cannot have a project that’s running in the way that large enterprises are running.

You need to have a unique interface, you need to have a pre-configured solution, you need to work by deltas and you need to reduce implementation costs and risks. This is our approach on the midsize market companies.

In terms of product mix, what are the present requirements of regional companies?

This market is an emerging one and potentially a bit newer and fresher than western ones. A lot of companies are still going through the first wave of ERP adoption. That’s the first step towards having a consolidated view of your processes and data.

In the past, we have experienced a massive demand on pure ERP. It’s continuing to grow, mainly for the new customers that are purchasing SAP as of today. The point is, that as we start to have a consistent customer base here that has already gone through the first wave of implementation and then they are going the second wave. That’s more about extending their projects into areas like business intelligence and customer intelligence products as well as extending logistics and supply chain.

It gives you the impression that companies are not working like one single entity, they are creating networks of business and by doing this, they are making higher efficiency of dealing with suppliers and of course, with the customers.

What am I selling as of today? There is still a great deal of ERP solutions, but we are seeing a lot of demand growing faster and faster on CRM, business intelligence as well as extended logistics. For the latter, I’m talking about wide solutions that include transportation, production and whatever is in your network.

By the way, it’s interesting to see that business intelligence is also seen from new customers that have completely different IT infrastructure – which is competitive with SAP a lot of the time. They are simply putting in place an additional layer of business intelligence that is easily integrated with what they have, in order to increase their visibility.

Which verticals are currently drawing your attention?

SAP is working across the industries. Here in the Middle East, we are counting more than 15 industries that have installations on SAP. In the past, we have seen adoption in mainly process industries, such as steel companies, oil and gas, petrochemical. That was for quite a long while, quite a thick layer of revenues for SAP.

As of today, we see other industries emerging like the public sector, specifically healthcare which is really investing a lot. It’s a matter of development of the society. Governments are investing in order to improve the level of services to citizens. Hospitals are becoming more of an independent business, they have to be profitable and make sure that the level of service that they are offering to their patients is up to expectations.

There is also a lot of competition. Simply look here in Dubai to the type of competition that you find whenever you are searching for a clinic or for a hospital. In order to really improve your business, you need to have solutions in order to manage your beds, your portfolio of services, but also CRM solutions that are helping you understand better what your customers are requesting.

It’s becoming a normal industrial business, but it’s a peculiar one. We are perceiving a lot of investments and development there.

Financial institutions here in the Middle East have been potentially a bit more protected against the financial crisis. As of today, they are also looking for potential new grooves in order to revitalise their relationship with their customers and managing the risk, while having a clear vision on the processes.

In the extreme, you might think that the construction market has been affected a lot here in the Middle East after the crisis. Certainly, there has been a lot of reshaping. Nevertheless, construction in Q3 has still been one of the strongest vertical markets. Contractors are modifying their pattern of business – but in order to do this, they have to be even more efficient in managing costs and the financial exposure.

So even in an area such as the construction market which we might think is getting less important, we are still seeing a lot of investment.

Are the majority of customers you are signing up greenfield ones or conquests from your well-known software rivals?

Yes, I would say that we have some. We call them ‘winback’ – these are the most exciting moments when whatever you are doing for supporting the market culminates into seeing a customer of the competition decide to stop their previous investment and jump into the SAP family.

That’s for me the best way to demonstrate that what we are providing to the market has a value for their business.

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