company profile: Rising SAP

05 May 2006
It is hard today to find a global software or computer company that did not start off as the dream of just two or three individuals. Microsoft, the name behind the world's most popular operating system, was famously born as a two-man show in Bill Gates' garage, while Apple Computer, the tech firm behind the iPod, had an equally humble origin in the basement of Steve Jobs' parents' house.

Germany's SAP has a similar history. It was established in Mannheim in 1972, when five former IBM employees decided to set up their own software firm called Systemanalyse & Programmentwicklung. Since then, it has grown rapidly to become the world's fourth largest software company in terms of market capitalisation. With annual revenues topping $10,000 million, it is also the biggest enterprise resource planning (ERP) solution software provider. More than 12 million users work each day with SAP solutions, spread across 32,000 customers in 120 countries.

The Middle East is a small, but increasingly important, part of SAP's business. Total sales last year from the Middle East & North Africa (MENA) region, including Iran, hit $62 million, a year-on-year rise of more than 20 per cent. Hopes are that with no end to the regional economic boom in sight, this level of growth can be maintained over the medium term at least.

'In terms of growth, this is our fastest growing region,' says SAP Arabia sales director Phil Blower. 'We see ourselves growing by the same rate over the coming years.'

Dubai-based SAP Arabia is SAP's partner company overseeing regional operations. It was established in 1993, after winning its first contract to provide an ERP system to a Saudi Basic Industries Corporation (Sabic) subsidiary. It has not looked back. Today, it claims to have an absolute market share of 30 per cent for MENA, excluding Iran a sizable lead of 9 per cent over Oracle, its main competitor.

SAP's sales force is dotted across the region, with offices in Egypt, Iran, Morocco and Saudi Arabia. 'We try to keep as close as possible to the customer,' says Blower. SAP's clients range from small businesses such as Safad for Engineering & Electronics, a company operating in the Palestinian territories which has just 25 users, to mega corporations such as Saudi Aramco. When Aramco's ERP system was launched in 2002 after six years of implementation, it was one of the world's largest ERP roll-outs.

The company provides business software solutions across a range of major sectors from oil and gas and petrochemicals, for which it is perhaps best known, to banking and construction. The latter is a relatively new regional market for SAP, but one with great potential, given the current construction boom.

'We recently entered the construction sector, selling a software package to a Dubai-based firm,' says Blower. 'It was important, because in this industry, people like to see a local reference. Companies do not want to come on board until they see it implemented and tested in other companies. But once that's done, then the others quickly follow suit.'

The advantages of employing an ERP system are well-documented. Instead of having many different types of system to handle different processes such as accounting, manufacturing, operation, distribution and logistics, a cross-functional and enterprise-wide system can integrate all these functions, allowing firms to gain efficiencies and save on costs. Solutions are generally sold on a per user basis or by customer. Roll-out times vary from a few months to two or three years. Training is part of the implementation process, normally taking a few days for basic functions, and several months for advanced users.

For example, with the Aramco roll-out known as Big Bang the SAP implementation replaced more than 170 different systems, equating to about three-quarters of the company's systems infrastructure. At the touch of a button, workers at the Aramco co

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