Investments in digital technologies driving growth

As the Saudi economy moves into the digital age, the results are more visible every day, radically enriching the customer experience and revolutionizing organizations in both public and private sectors.

SAP Saudi Arabia Software Trading Ltd, a local chapter of giant German multinational software corporation SAP SE, is extensively involved in “the Kingdom’s digital transformation backed by a bold move to localize SAP technology.”
In a joint interview, Ahmed Jaber Al-Faifi, SAP managing director, and Andy Froemmel, chief operating officer, spoke to Ghazanfar Ali Khan, Arab News Riyadh bureau chief, on the potential economic value that could be unleashed by the full deployment of digital technologies among consumers, business and government.

Here are the excerpts of the interview:

Q. How is the SAP Saudi Arabia Software Trading doing in terms of business? Which are the major projects currently being executed by your company in Saudi Arabia? Please provide me brief information about the projects.
Al-Faifi: SAP Saudi Arabia is tracking closely and positively against our long-term growth plan for the country.
Based on our 5-year country plan launched in 2012, we are exceeding the expected target, with average year over year revenue growth of 32 percent.
The staff, geographic reach, and number of accounts have also been significantly grown with major offices in Riyadh, Jeddah, and AlKhobar.
We see strong growth opportunities in the current business climate, as 70 percent of executives posted double-digit revenue growth in 2014, and 60 percent are planning to increase business investment in the country, according to the recent “MENAT Business Outlook Survey” by The Economist Corporate Network.

Q. In a competitive market like Saudi Arabia, how do you differentiate SAP from major players; and please define what makes the brand and the entity SAP unique?
Al-Faifi: SAP is committed to supporting the Kingdom’s digital transformation, with the outcome-based digital economy mandating digital transformation of businesses and industries.
This requires the development of talent, ecosystem, localized technology, and the right business models and processes.
SAP has conducted with partners more than 350,000 student-training days free of charge in the last two years through its own training centers in the country, major universities, and training institutes — helping many graduates to gain the industry and technology knowledge necessary for digital transformation.
We have also made a bold move in localizing SAP technology to Saudi Arabia.
Today, public sector and private sector SAP customers can use the latest innovative technologies from SAP, fully localized with Saudi government lows and regulations embedded in the system such as GOSI, PPA, and civil and military human resources systems.
On the innovation side, SAP works closely with a number of large, medium, and small companies on their digital reformation plans.
We co-innovate, by rebuilding the processes and business models that enable those customers to improve their business outcome in a very competitive market.
Our recent co-innovation projects include Saudi Arabian Airlines (Saudia) as a major transportation player in the region, and with Bin Sammar Trading and Contracting Company in the construction industry.

Q. Could you provide us with an idea on SAP’s current strategy in the context of the Kingdom and the Middle East? Everybody knows SAP as a pioneer in enterprise software solutions. Lesser known is your vital role in green growth. How does your software help wind energy analysts and utility companies?
Al-Faifi: In Saudi Arabia, we have seen government efforts to diversify the economy and improve the efficiency in different industries, such manufacturing, mining and metals, petrochemical, tourism, and construction.
Digital transformation is a key pillar to make the economic transformation happen successfully, and SAP is enabling the digital transformation with best-practice solutions, innovations and experience in 25 industries.
Our strategy helps our customers run simple and more efficiently, and become closer to their own customers for the best outcome of results.
Customers in industry verticals such as utilities, which have to manage large amounts of data and that require real-time insights, are among our most prominent.
Our energy management solutions help organizations to enhance regulatory compliance and operational efficiency, improving customer service and navigate environmental challenges.
From smart grids and utilities, SAP is committed to supporting utilities innovation, and is working with leading utilities organizations in the region such as DEWA in Dubai and FEWA in the UAE to deliver best practices.
With the strong growth in energy efficiency and renewable energy and water and waste management in the region, smart utilities will be at the heart of the Middle East’s transformation in the coming decades.

Q. I understand that cloud is still a relatively small part of the business, with most of your revenue coming from the traditional software offerings. Do you foresee your cloud offerings becoming a major part of the business in near future?
Al-Faifi: SAP is one of the fastest-growing cloud companies at scale in the world — and are coming off of a strong Q4 FY2015 in which we saw exceptional momentum and fast growth in the cloud, and double-digit growth in our core license business.
For FY2015, new cloud bookings increased 103 percent to 890 million euros, and our non-IFRS cloud and software revenue grew by 20 percent to reach 2.3 billion euros.
Full interview:
www.arabnews.com

Our whole line of products and solutions is moving to the cloud, which provides our customers with the business agility needed to transform and succeed in the digital economy, and overall run simple.

Q. Is Saudi Arabia the fastest growing market for SAP in the Middle East and Africa region in terms of revenue and customers? What has been the share of Saudi Arabia annually in the company’s overall global revenue?

Al-Faifi: While we do not divide our markets into granular detail by country, the Kingdom of Saudi Arabia is tracking closely with our internal SAP metrics, and we foresee high potential for further development in the Kingdom.

Q. How many Saudi employees are currently on the pay roll of SAP in Saudi Arabia? How many young Saudis you think will be hired/employed by SAP within five years from now. Even a conservative estimate will do? What types of training opportunities you are offering to new SAP employees, especially Saudis? Please give a brief account of the training programs— in-house and abroad.

Al-Faifi: Talent development is vital for the Kingdom to face the rapid growth of technological innovation and of millennials entering the workforce, who will comprise 75 percent of the global workforce by 2030.
We fully support Saudi talent development and nationalization strategies in the Kingdom and in the MENA region, with a strong talent pipeline of Saudi nationals.
As part of our support for Saudization, SAP Saudi Arabia has achieved Platinum status, the highest-possible ranking Saudi Ministry of Labor’s Nitaqat system, showing that we have significantly exceeded Saudization targets for companies in our industry and size.
In line with Saudi government initiatives and our own internal priorities, we are also providing full support for Saudi females in having long-lasting, productive careers, especially in the sales field.
Demonstrating our organizational achievements, the independent international organization the Top Employers Institute recently ranked SAP Saudi Arabia as one of the Kingdom’s “Top Employers,” surpassing global standards.
Judges at the Top Employer Institute rated SAP Saudi Arabia highly in nine key categories: talent strategy, workforce planning, on-boarding, learning and development, performance management, leadership development, career and succession management, compensation and benefits, and culture.
At SAP, we are also dedicated to providing Saudi nationals with the knowledge, skills, and hands-on experience to succeed in the Digital Economy.
Our SAP Training and Development Institute provides theory and training in SAP solutions and certifications, soft skills, and internship experience for university students and recent graduates.
TDI has conducted more than 350,000 student-training days, and counts 35 University Alliance Partners in the Kingdom, having trained more than 5,000 students and 176 instructors.
Since its founding in 2012, TDI has created an “in-country value” of more than $31 million in Saudi Arabia, and $91 million in MENA.
In particular, TDI’s Young Professionals Program, which develops certified SAP Associate Consultants, has graduated 298 young professionals in the Kingdom, with over 90 percent being placed into employment.
SAP TDI also counts three Dual Study Programs in the Kingdom, combining theory and practice, including King Fahd University of Petroleum and Minerals, Effat University, and Yanbu University College.

Q. Are you currently working with any project or initiative of the Saudi government, which is exerting all efforts to promote e-governance? It’s important to note here that the Saudi government has successfully launched a large number of services to be attended and completed online.

Al-Faifi: SAP is working very closely with the Saudi government to deliver innovations and career training for high-potential Saudi youth, in line with our commitment to supporting the Kingdom’s economic diversification and ICT sector growth.
In the Kingdom, we are already working with the Saudi Ministry Department of Zakat and Income Tax on smart tax revenue collection, and in the region with agencies such as the Dubai Electricity and Water Authority (DEWA) deploying smart utilities meters, the UAE Federal Electricity and Water Authority for smart utilities infrastructure.
With the Kingdom currently building four Economic Cities, we are dedicated to sharing global best practices from our Future Cities platform, which co-innovates with more than 4,500 government bodies around the world in Smart Cities.
Among the leading Future Cities innovations are the BCN4U mobile tourism app in Barcelona, Spain; smart stadium infrastructure in FC Bayern Munich’s home stadium the Allianz Arena; and the Hamburg Port Authority for smart port and traffic solutions to reduce traffic congestion and make the port more efficient to see more throughput.

Q. SAP has been a leader in corporate responsibility. How critical is this to the culture of the company, and would you highlight some of SAP’s initiatives in this regard, if any in this country or the region?

Al-Faifi: Corporate Social Responsibility is a cornerstone of SAP’s corporate culture, with our approach ensuring a sustainable company, customers, and society. We aim to enact positive social change through economic growth, job creation, innovation, and community.
One of most important CSR initiatives in the region has been our support for refugees fleeing conflict, in partnership with the UN High Commissioner for Refugees (UNHCR). The One4 Project with iTunes and Imagine Dragons has raised $5.5 million to support thousands of refugees in Europe, while SAP employees have raised more than $1 million for refugee aid.
In SAP’s home country of Germany, SAP is developing a free, online, openSAP German language course, and integration activities.

Q. What are policies and key priorities for SAP for the year 2016 and 2017 in order to retain your leadership position in the Saudi market and the Middle East market as a whole? How do you see the company changing in three years from now Mr.Al-Faifi? And how do you see yourself creating that change?

Al-Faifi: While there have been slight government budget reductions for FY2016, we are bullish on the Saudi market and the MENA region, and are committed to unlocking opportunities in the digital economy through our co-innovation strategy.
In the currently economically challenging times, we see a major opportunity to help Saudi companies to become more efficient and run simpler in the digital economy.
We are dedicated to guiding companies across all sizes and verticals in their digital transformation journeys, and especially in high-potential verticals such as Smart Cities and retail.
2016 will be a landmark year for organizations undergoing digital strategies.
Thanks to our committed team, we are committed to supporting Saudi’s digitization through our partner and training ecosystem, and sign partnerships to support Saudi talent development to grow the next generation of Saudi leaders.

Attribute: Andy Froemmel, chief operating officer, SAP Saudi Arabia

Q. SAP SE recently said that it is seeing robust demand for its latest flagship finance and logistics software and reaffirmed expectations for operating profit of 5.9 billion euros. Software license, support and cloud subscription revenue may grow by 10 percent from last year’s 14.3 billion euros, said the report. Please provide your comments on these figures with reference to the Kingdom and the Gulf states (GCC).

Andy: Customer adoption of our next generation business suite SAP S/4HANA continues to accelerate sharply, as we now count more than 2,700 customers around the world, with the number more than doubling from Q3 to Q4 FY2015.
SAP S/4HANA runs on the real-time SAP HANA platform, and its dashboards help companies to reduce complexity and cost, while delivering customer value and competitiveness to succeed in the digital economy.
While we cannot provide software growth figures for the region due to regulations as a publicly-listed company, we are seeing strong growth and customer demand, from retailers to construction companies to government agencies.

Q. In a report published recently, security experts said they have uncovered 21 vulnerabilities in the widely used SAP HANA computing platform that hackers could use to steal information from businesses or shut down the system. What is your take on this report?

Andy: SAP stands for secure and reliable software solutions. As the global leader in business software, we take customer security seriously and implement the highest degree of product safety.
We are continuously looking for ways to ensure customers’ systems are secured at the highest levels by improving our solutions, informing customers about recommended precautionary steps and providing security services and products (for details see www.sap.com/security) to our customers.

Q. How do you explain the relevance and the importance of Internet of Things? What is SAP’s role in IoT?
Andy: The Internet of Things (IoT) era is a potential “Second Industrial Revolution,” driving growth in the Digital Economy.
We predict that by 2030, the global IoT opportunity could reach a staggering $14 trillion.
In the digital economy, all organizations must completely re-think their business processes around digital — prioritizing aspects such as real-time business analytics, the Internet of Things, mobility, and social media.
The Saudi government is driving technological innovation, as the country has among the Middle East and North Africa’s highest rates for Internet usage, mobile broadband, and social media usage. And the government is also committed to providing over 1 million jobs for Saudis, especially women.
In the financial climate, we advise organizations not to cut back on technology and talent investment, but rather appoint Chief Digital Officers to guide digital growth to emerge stronger and more agile in the Digital Economy.

Q. What are your future plans in terms of tapping more business from this country and from the region, which is seeing billions of dollars of investments in the public and private sectors like defense, oil and gas, banking and telecom?
Andy: In these challenging economic times, we are dedicated to helping companies to become more efficient and drive digitization.
Digital transformation and training the next generation in digital skills in the Kingdom and the wider MENA region will require public-private-people partnerships — combining the public sector vision and risk, the private sector’s expertise and vision, and the academic sector’s theory and skills development.
The public sector, oil and gas, retail, banking and finance, telecoms, defense, sports, and Smart Cities are all examples of high-potential industry verticals that are in the process of digitization.
We are committed to leveraging our global best practices, on-the-ground expertise, our robust SAP Global Channel Partner Program ecosystem with more than 300,000 customers to drive growth in the digital economy.
Already we have seen strong success in the Kingdom, with customers such as Bin Sammar Trading and Contracting Company, Saudi Arabian Airlines (SAUDIA), Saudi Paper, and STC.
Source: Arab News