German software firm SAP is one of the many technology firms that have successfully transitioned to the cloud. In India, it operates two entities—SAP India, which is the sales and marketing arm, and SAP Labs India, its research and development centre. Around 10% of SAP Labs’ employees are based in India, which has emerged as a cutting-edge R&D hub and is the largest centre outside of Germany.
SAP Labs’ Bengaluru centre hosts the company’s research on the Internet of Things and has the ownership for its Asset Intelligence Network, a cloud-based collaborative asset management platform. In a conversation with TechCircle, Mahesh Nayak, chief operating officer of SAP Labs India, speaks about how the company has evolved its business in the age of artificial intelligence, IoT and machine learning for large enterprises. Edited excerpts:
How has the cloud changed SAP as a company?
In our 46 years of existence, we were largely an enterprise resource planning (ERP) company for the first 20-25 years, but that changed after the advent of the internet. Our focus was to enable our products to work on the Internet (or cloud) and on the mobile platform for the next 10 years. Over the last decade, the landscape has fundamentally changed again with big data, IoT and consumer interactions of enterprises moving to the mobile platform. We have been able to innovate along with the transition. There is a lot of buzz around AI, ML, augmented reality (AR) and virtual reality (VR). We have invested a lot in these areas like our Leonardo platform, which has most of our ML, AI and big data tools and software. Our new cloud solutions are based on these technologies.
How has SAP Labs implemented Industry 4.0?
From an IoT perspective, we are working with a few customers on the 4.0 platform. Products such as the Asset Intelligent Network were developed end-to-end in India from ideation to development. Customers across the world provided inputs while we developed this.
Are your existing large customers reluctant to adopt on-premise solutions? Is private cloud gaining prominence with sceptical customers?
It often depends on the customer. Customers are reluctant to keep confidential data on public access cloud. Most still prefer to keep their data on-premise. Some businesses prefer not moving to the cloud. Now, all our functionalities are available on the cloud. Indian customers are still evaluating what in their core businesses could go on the cloud. We find that it is often the hybrid solution that works for them.
As you develop more solutions in deep tech, do you see yourself entering completely new business domains and competing with companies you had not expected to?
There are multiple things that work from an AI/ML perspective. It depends on how the stack provider views it—from a hardware provider perspective, middleware or the business solution—to make sense of all the data that is collected. From an SAP perspective, it depends on how the customer wants to redefine running their business processes. Hardware players offer solutions in the data collection domain. They can anticipate what data should be collected by the system. Our forte lies in how we use that data and those technologies to make intelligent decisions. All players have certain strengths. A combination of all three is what finally benefits the customer. We don't have a full-stack solutions provider yet. There will be partnerships between the large firms.
With the government adopting more digitisation initiatives, are there any large projects that you are working on with them?
We have worked with a couple of state governments for ERP implementation. There have been some changes in terms of digital governance especially in Telangana and Andhra Pradesh, which are far ahead. Karnataka too has been doing a lot of work on digitisation but our contribution here is minimal and there are many opportunities to explore.
A lot of data still has to be digitised, like government records, for the full technology solution to have any reasonable impact, which I think will still take time to be implemented. Some governments have done that. We are working on some interesting projects with various state governments and the central government. Nearly 80 lakh train tickets today are delivered using SAP systems. We work with state power utility distributors. Five of them use our systems.
What factors have delayed digital transformation for enterprises?
In terms of awareness, customers want to be part of the digital transformation. There are several factors, and not just for investment purposes, to collect data. People know that things are happening fast. AI cannot work on its own. You need to have enough data to develop an AI system to make decisions. Companies need to invest a lot to collect the requisite data and what kind of data in order to use it. They must take multiple steps to transform their businesses. The data should not be collected in silos. At the same time, the business processes need to transform to benefit from digital transformation. Once companies have clarity on how they achieve that change, you will see deep tech having an impact.
Do you see all the emerging technologies converging in the next phase of R&D?
Most innovation has to come from a platform perspective and not simply applications on top of a platform that could deliver everything. This is a new emerging business trend that we need to look at. Our strength lies in business processes and we will continue to innovate on that. These platforms and applications will have different providers. Our advantage is that we have a platform that collects the data and where the AI is already built into it. Now, even startups want to build their own platforms. Somewhere, all of this will move into one technology. But we will not have a plethora of platform providers and the industry will soon start consolidating.
You recently announced a new cohort of startups for your accelerator. What do you look for in them?
A batch graduates after a year and 16 of them are doing so this year. We have enhanced our accelerator from a 75-seater facility to a 100-seater one. We can fit in 16-18 startups a year. We focus on newer technologies and the batch includes startups from domains like conversational commerce, IoT, logistics supply chain and even a couple of healthcare companies. It is about the idea and the collaboration potential that matters to us. Six of them are co-innovating with us today to develop solutions for customers. We will have joint go-to-market strategies with these startups and often the touchpoints of the solution stack are often established and they can move out of our campus. SAP, as well as our customers, see it as a complete solutions offering.