Germany’s SAP outlines new investment plan for LatAm
Corporate software market leader SAP is updating its regional business strategy and working on a new investment plan for Latin America, the German software giant’s regional CEO, Cristina Palmaka, told BNamericas.
Global consultancy McKinsey has been hired to support it in this process, which entails reviewing the region’s comparative advantages, vis-à-vis other geographies, from the perspective of the verticals targeted by SAP.
The firm has no specific date outlined to complete its new plan, but end-2025 is the general horizon and it falls within the group’s global business plan for the period.
Palmaka, who led SAP Brasil prior to being promoted to regional CEO in the midst of the pandemic in July 2020, said she vowed to bring her model of Brazilian growth to the Latin American operation.
“This year we started to put together a specific team [to work on this process]. We brought in an executive from McKinsey to help us internally. It’s not that we didn’t have regional plans before, but now we’re making a more structured plan for Latin America.”
Despite being regional in scope, the plan will more thoroughly consider the particularities of each local market.
This is because, although there are synergies and shared characteristics across Latin American operations, the reality is different in each market in terms of economic strengths, verticals and even technological maturity.
What Will The Plan Include?
The plan will look deeper into where SAP LatAm should be prioritizing the allocation of its investments, including hiring and distribution of staff.
It is also defining new priority segments to be targeted, beyond the traditional ones.
Agribusiness, renewable energies and start-ups/unicorns, for example, are three SAP verticals that will specifically be afforded a greater focus in the next three years.
According to Palmaka, SAP LatAm also created a unit to map more closely the start-ups with potential to become unicorns.
“All this is part of our 2025 planning. We have to be close to customers on a daily basis, but we have to look at this with a medium- and long-term perspective and adjust, and ensure that resources and investments are allocated in the right way,” she said.
In terms of company profiles, SAP will up its ante on small and particularly mid-sized firms.
“In addition to what we’ve traditionally done, and well, this new perspective involves working more on smaller projects, but with faster returns and faster go-live. It’s what most customers are looking for,” the executive said.
2022 Outlook
Despite prospects of global recession and the macroeconomic and political uncertainties that are building up in the region, Palmaka said SAP has a “good pipeline” of new contracts for the second half of the year.
The executive said enterprises in general are facing “immense” pressure from inflation, interest rates and possible economic recession, but notes that a handful of business sectors continue to perform well.
“With all this uncertainty, there are sectors that continue to grow, even faster than others. The fact that we serve clients from very different industries gives us the possibility to work the business in a more balanced way. I don’t think [the context] changes our perspective that much,” she said.
SAP reports having 50,000 clients in Latin America.
In Q2, it delivered new projects to Rappi, Peruvian agribusiness group Camposol, Brazilian s construction conglomerate Votorantim, Mexican financial services firm Gentera and Mexican dairy company Sello Rojo, among others.
The company said it recorded its 28th consecutive quarter with double-digit growth in sales of cloud solutions in Latin America.
Brazil stood out as one of the six global markets with the best performance in cloud revenues, along with Germany, the US, Switzerland and Japan, SAP said.
