The China Growth Plan Gains Momentum with Cloud

Bill McDermott calls China the second home of SAP. Mark Gibbs, president of SAP Greater China, explains why and provides an update on the company’s China Growth Plan.

The president of SAP Greater China (China, Hong Kong, Taiwan, and Macau) appeared relaxed during his recent visit to headquarters in Walldorf. No wonder: Mark Gibbs can report strong double-digit growth in the region fueling confidence that the growth plan for China will succeed.
Announced at the end of 2011, the China Growth Plan consists of five components: Go to Market, Awareness, Innovation, End-to-End Solutions, and Ecosystem. SAP is making US $2 billion available through 2015 to finance this expansion in China.

SAP co-CEO Bill McDermott has already taken to calling China: “The second home of SAP, where the company has established itself as a trusted innovator.”

“The investments in China are beginning to pay off,” Gibbs explains. SAP has been bringing in a lot of new talent and expanding operations such as a new SAP China headquarters in Beijing to open next year.

Big Data for mega companies

“The next big opportunity is about data management, Big Data,” says Gibbs. He explains that China has mega companies with more than 1 million employees. At the same time, it can be a challenge scaling SAP solutions to this number of users.

The plan is to follow an industry model, and initially focus on lighthouse customers across all industries. “We look at China Best Practices that are relevant for industries such as automobile, utilities or finance, and cascade that down. Especially, financial services has been a big success story for us.”

The team is developing best practices to expand the footprint within these accounts and to gain new customers. Example lighthouse customers include China Minsheng Bank and the second largest car dealership in the world, China Grand Auto.

One Service pilots in China

This is where “One Service” comes in, an offering developed by SAP’s head of support Uwe Hommel, who is based in the Beijing. One Service currently encompasses all SAP support and consulting services for large Chinese companies. “They recognize the fact that we are generating value with this,” says Gibbs. “One Service allows us to build a much closer relationship with our customers.” In his view, this pilot has the potential to be rolled out around the world.

Cloud and mobile expanding quickly

Gibbs also expects great things from the cloud. In the future, SAP wants to offer public cloud services through China Datacom, a joint venture with China Telecom. This would make SAP the first international company able to offer such services in this market. China Com Services is currently implementing solutions from SuccessFactors, an SAP company, for its own HR-related needs. Gibbs expects the cloud business to continue to expand at a rapid rate, especially during the second half of this year.

Another growth area for SAP will be mobile, as China is a very mobile-orientated business. The number of cell or smart phones exceeds everywhere else in the world.

Another focus is on small and midsize enterprises (SMEs). There are hundreds of thousands of SME companies in China – more than 70 percent of Chinese SAP customers are SME companies. “We want to make sure that SAP supports those companies with a dedicated team and partners that help us in geographic coverage and with their expertise to implement solutions,” says Gibbs.

China Liaison Office connects customers

Gibbs’ visit to SAP headquarters was organized by the China Liaison Office in Walldorf. “This office provides support for international SAP customers that are active in China, and Chinese SAP customers that are expanding internationally,” explains Gibbs. “Take the automobile industry. All of those companies have operations in China, and the China Liaison Office helps our customers to share experiences and ensures that we have a seamless communications channel between SAP headquarters in Walldorf and our offices in China for all China-related questions and projects.” The China Liaison Office is headed by Andreas Hube, who has spent many years in China in various SAP management positions.

Innovations will come from China

While Gibbs continues to learn new things every day – the SAP manager has been living in Asia for more than 12 years – he has a good understanding of Chinese culture and how the Chinese market operates. “Companies in China approach everything with an eye cast on the long-term,” he says.

“China is showing how fast innovation will change the world. Over the last 10 years, the perception was that China was learning from the rest of the world. Now, Chinese companies are expanding globally, they are innovating not only in China for China, but globally.” Gibbs names connected cars as an example. The idea was originally born in Germany, but is now being enhanced with innovation made in China.

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