Why SMEs’ cloud adoption in West Africa is rising – SAP
Pedro Guerreiro, Managing Director Central Africa at SAP in this interview with BusinessDay’s Frank Eleanya speaks on the growth of adoption of cloud technology by small and medium enterprises (SMEs) in West Africa and other parts of the continent. He refers to West Africa as the ‘lighthouse’ when it comes to the adoption of enterprise resource planning (ERP) which is cloud-based, and explains what it takes to win in a highly competitive market.
You are one of the biggest ERP providers, what is your experience playing in the market?
In terms of the biggest ERP providers in Africa, definitely. We are global leaders in ERP.
We provide an intelligent enterprise that goes beyond the core function of ERP. We have been in Africa since 1982. We have been investing since then in the region and the region has been investing in SAP. Our headquarters for the region are in South Africa. We have an office in West Africa, in Lagos. We have an office in East Africa in Nairobi. We have an office in Lusophone or Portuguese-speaking countries in Angola. I manage those three offices so I have a good perception of the ERP business in those regions. It is definitely growing. There is more and more demand for ERP. We do have customers both in government parastatals and the private sector.
We are the leading global ERP company. We are also very much focused on cloud business. In terms of experience in African markets, the customers start adopting the core processes – finance, payment, sales, and even capital management type of processes, depending on the size you might start very small. We have SME-specific solutions and very often organisations grow out of it into solutions for larger corporations. The ERP market is very active and we have a lot of demand. We have a lot of customers in both the SME space and large corporations that run their core operations through ERP. Many of them have been our customers for decades. So it is a healthy market for us. We are punching above and beyond, deploying the infrastructure as well as the capability to manage that infrastructure. We train our people to manage the many customers across industries.
Can you give us specific growth of ERP and cloud services in Africa?
Growth is high. Looking at the East African region, for instance, year-on-year is four digits growth and it is triple digits when it comes to year-to-date. West Africa has been my lighthouse when it comes to cloud adoption. Over the last 2-3 years West Africa has been leading other regions including East, Central Africa which includes the Lusophone countries. It is not surprising because they have a lot of SMEs so there is high adoption catering to specific needs of customers.
Most customers are afraid of things like security, which is a growing threat. Companies have to decide what they want to do. They can manage it on their own which requires ongoing training for their people and constant upgrades to their applications for cyber security. You need to keep them up to date with the best standards and globally these standards are changing daily. They are very dynamic. Alternatively, the company can put their trust in an SAP data centre. We have German engineers that are trained specifically in cyber security and they are exposed to thousands of infrastructures. It is almost common sense – you want to focus your energy on your core business while we help you with the rest.
We have customers in other regions like the Angolan national oil company which contracted an agency to manage the business operations. The agency adopted our cloud infrastructure and implemented the ERP. They adopted the electronic signatures, they have our human capital management, all of these are on the cloud. The ERP is on the cloud. So there is high adoption. We are proud that West Africa is the lighthouse on the cloud but we see it growing across Africa.
What is driving the growth in West Africa, is its population or infrastructure or the quality of the products?
I might be wrong here, but I don’t think it is the population. I think as management understands the needs of their business, customers and their employees the more they come to understand best practices, it becomes more obvious to identify trends. And digital transformation is the motto. People that manage these companies want to learn more about digital transformation. Obviously, technologies like the internet are more widely available. So I think it is a combination of awareness of how to run a business within digital transformation trends and available products both from infrastructure when it comes to the internet or even from an SAP perspective which is known as the intelligent enterprise. The software industry evolves, and SAP strives to evolve faster. That is our goal to constantly deliver on the business needs of our customers.
Talk to us about having 80 percent mid-size companies access your products.
My career has spanned across Europe, the US, and Africa. If you go to the US, brands that you have barely heard about are embracing the cloud. But that is a different market. When you come to Africa, you have a growing economy or are even described as a fast-growing economy with large populations. Those economies are not driven only by the big brands or the conglomerates. They are part of the ecosystem but there is a lot that is happening in the mid-market. That mid-market doesn’t have the same resources, nor do they need the same licence models but business process-wise they still need to run finance, they still need to track capital management, balance sheet, and performance inflows. The needs are across the board. So what we do is understand the needs but also have specific products for businesses of different sizes. We have global products that are fit for specific markets and in specific geographies like Africa, we push more mid-market types of solutions and our partner ecosystem grows around those mid-market types of solutions. It is not coincidental that we have 80 percent of our user base as SMEs. It is the market that we operate in and we have adapted to the market that we operate in through our offers, with our channel, and the type of resources the market needs.
What are the challenges you faced getting the 80 percent SME users?
SME is a volume business but it is highly customer focused. You cannot think of volume in the abstract. You have to think about volume and know your customer and get to the level of satisfaction they are accustomed to. So it is not just volume sales, the customer downloads the software and doesn’t expect quality. The customer will move on in that case. Our solutions are ERP solutions and require some levels of patience and skills and some level of customer satisfaction to achieve customer retention, customer management. For us, the main priority is always to scale in quality. We will never be happy with the number of partners we have. We always need more partners. We always need to have partners motivated. So that the ecosystem is ready to serve our customers and then you can keep growing the customer base in numbers. In the end, when you talk about SMEs you need to have more happy customers.
How are you dealing with growing competition in the ERP market?
Honestly, it is all about quality and the value that you bring to your customers. At the end of the day, if you don’t do your job, the competition will fill the gap. Competition is good for everyone. It helps to grow the market and provide choice to customers. For us, we continue to focus on driving quality every day and helping our customers transform. That is how we win in the market. If your customers are satisfied they will reference you, they will tell others ‘I chose SAP because of XYZ”.