TBY talks to Nick Malone, Managing Director of SAP Kazakhstan & Central Asia, on its industry-specific solutions, support for SMEs, and the makings of a successful local strategy.
TBY What were the highlights of 2011?
NICK MALONE On a global basis, 2011 was a fantastic success. We experienced the best results in the company’s near 40-year history, and it was the same story for our operations in Kazakhstan. The CIS region as a whole grew very quickly, and in Kazakhstan we experienced growth at faster multiples than that of other markets in the region. We have been confident in what Kazakhstan has to offer based on the fundamental economic structure of the economy and its correlation to SAP market dominance in many industries. During 2011, we expanded our footprint within the subsoil sector, made significant progress in the public sector, and formulated a structured and pragmatic program to address the SME sector, which has started to gain momentum.
As we look forward to 2012 and beyond, we are excited about the prospect of promoting new innovations in the sphere of real time (in memory) analytics and especially our mobile solutions and cloud offerings, which will complement and further enhance the value our clients can leverage from SAP innovations. Overall, we are very satisfied with our 2011 performance and remain confident and committed to our strategy to enable Kazakhstan to “Run Better.”
What strategies have you followed to achieve such a successful year?
In order to realize the ambitions that we have set forth in our growth plan, we have invested significantly in both increasing the market awareness as to the tangible business value of SAP technologies, as well as developing the professional skills, certification, and volume of the consulting partners that we have within our local ecosystem. These measures are essential not only to project success and value realization for our clients, but also to form sustainable local content and employment opportunities in the local IT sector. In Kazakhstan, our strategy is to engage with our clients strategically, meaning that we seek to form long-term partnerships with clear and measurable objectives. We aim to be involved in formulating modernization plans in line with client and state objectives, such as the Productivity 2020 program, the People’s IPO, and the topic of financial and operational governance. All of these elements are starting to come together: the local content, the investment, and the value realization programs. When we have forward-looking visibility, it gives us the opportunity to maintain or even increase our investment program in the region. The year 2011 marked the success of a good strategy that was launched several years ago.
How do you see the demand for SAP consultants developing?
In a word: significantly. As a rough rule of thumb, for every dollar invested in software, there is a ratio of investment required for implementation, ranging from 1:2 to 1:3. Kazakhstan is our regional hub in Central Asia, which includes Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan. More than 90% of our business currently comes from Kazakhstan, which enjoys the political drive, expanding innovation, and a large amount of foreign investment; this cannot yet be said for the surrounding Central Asian states. However, if we acknowledge the vast resource wealth of Central Asia (outside of Kazakhstan) and take a mid-term perspective, we anticipate that the surrounding regions will need to adopt SAP technology to tackle the same challenges that Kazakhstan has been addressing in recent years. This, coupled with maturing demand in the Russian and Belarus regions, provides the basis for Kazakhstan to become a net exporter of IT consulting services and intellectual property (IP) in the medium to long term. The CIS market will reach a value of $2.5 billion-$3 billion by 2015, and will continue to grow; the question is where the human capital will come from and to what extent Kazakhstani businesses will catch the wave.
How does SAP benefit the Kazakhstani market?
SAP’s global mission statement is to “Make the World Run Better.” As 63% of the world’s GDP touches an SAP system, this is not as far-fetched a statement as it may at first appear. In Kazakhstan, we are able to introduce benefits in the short term, such as increasing the operational efficiency of a company and enabling the governance models that increase the confidence of both national and international investment communities. Within the region there is a lot of work to do to modernize via the adoption of global best practices, and thus the need to develop the local “knowledge economy.” As an indication of our long-term commitment to the region, in 2011, the SAP board approved a project to translate our core product range into the Kazakh language to support the state in its initiative to retain the nation’s cultural heritage. The project is enormous; there are more than 30,000 terms, words, and phrases that are used in IT systems today, and many of those words do not exist in the language. Kazakh is an old language, and this project will help drive its evolution. The project is a multimillion-dollar investment spanning more than two years. Does the market today justify that investment? It’s questionable, but we believe that the market in the future will benefit from this.
What level of demand do you see from smaller actors in the economy?
SAP is perceived to be exclusively for global companies that run very large, expensive, and complex operations. This is a far cry from reality today, where we are able to provide both industry-specific preconfigured software and rapid deployment services solutions, which vastly reduce project costs and time to benefit. We are tackling the SME market by providing transparency in the form of fixed prices, costs, and scope packages. Another way that we address SMEs is by working at the state level to provide cloud services; this changes the game for prospective SME clients by removing the barriers of entry and adoption both technically and from a cost perspective. As a consequence, this creates opportunities for new services and hosting partners. SMEs should be able to gain access to the global best practice technology through SAP, but in a virtual environment at an affordable price without the need for capital investments.
© The Business Year