SAP plans investment to retain edge, fund innovation

BEIJING - International business software provider SAP AG plans to invest at least $2 billion in China by 2015 to keep its competitive edge and fund innovation.

"We have successfully grown our business in China over the past 20 years and now want to scale our operations to fully meet the needs of both enterprises and our ecosystem," Bill McDermott, co-chief executive officer, said on Tuesday in Beijing.

The investment is likely to focus on financing research and development (R&D) and adding staff, according to SAP.

Since SAP's investment plan is being released at the beginning of the 12th Five-Year Plan (2011-2015) period, "it may indicate SAP's ambitions in the country over the next five years," said Chen Yingli, senior analyst at CCID Consulting Co, a Beijing-based technology information consultancy.

SAP has more than 4,000 clients in China, and more than 80 percent are local enterprises, said Hera Siu, CEO of SAP China.

"As a multinational business software maker, SAP has served many large enterprises around the globe, which is obviously a big edge that China's local business software developers don't have," said Chen.

However, SAP has failed to provide adequate localized services to its Chinese customers and faces "increasing challenges from Chinese competitors" such as UFIDA Software Co Ltd and Kingdee International Software Group Co Ltd, according to Chen.

"Both foreign and local companies' began doing research into cloud computing and the mobile Internet at the same time, which is likely to offset SAP's advantage in the industry."

The Germany-based company said it plans to establish five to six new regional headquarters in China to better serve local clients.

SAP's China arm plans to recruit 2,000 new employees by 2015, and it will train another 22,000 consultants over the next few years, said Siu in October.

SAP now has about 8,000 software consultants in China.

"SAP will help local enterprises with our new technology and solution plans" so they can enter the global market, said Siu.

The localization strategy will also help the integration of SAP and Sybase, said a company statement released on Tuesday.

SAP acquired Sybase in 2010 for $5.8 billion.

Moreover, 94 percent of the employees in SAP's R&D team in the country are Chinese, said Shang-Ling Jui, the company's global senior vice-president and managing director of SAP Labs China.

SAP is aiming for 20 billion euros ($27 billion) in global annual sales by 2015, compared with 12.5 billion euros in 2010, Bloomberg News reported, adding that its annual sales in the Asia-Pacific region, excluding Japan, generate about 11 percent of the world total.

China Daily

(China Daily 11/16/2011 page14)