“If you have become SAP customer, you will develop together with us”

Last week, largest producer of business automated resource management systems in the world– SAP Company, announced its entry to the Armenian market. Armenia became the sixth country in CIS (after Russia, Ukraine, Belarus, Kazakhstan and Azerbaijan), where SAP decided to develop business. 

SAP General Director in CIS Vladislav Martinov and SAP Deputy General Director in CIS Ishkhan Kazinyan talked about the reasons and prospects of the company’s arrival in Armenia in an interview to Mediamax.

- At the business forum in Yerevan, dated to SAP’s arrival to the Armenian market, you explained this decision of the company by the dynamic growth of IT sector and low labor productivity in Armenian economy. Is that sufficient for SAP’s entry to a market, where business automation is at the embryo level?

Vladislav Martinov: - The sphere of information technologies is announced to be a priority sphere by the decision of the Armenian government. The country leadership realizes that IT is an instrument, which will allow solving a number of tasks (economy diversification, increase of the low level of labor productivity, etc). According to the data of “Enterprise Incubator Foundation” (EIF), the sphere of information technologies in Armenia, following the results of 2009, registered 17% growth, at that the turnover of the companies following the results of the year made USD 130mln, and their productivity increased by 9%. And recently Armenian “Shirak Technologies” Company turned to us and presented a plan for SAP’s business development in Armenia. This pushed us towards the decision to start operating here.

SAP always enters the market at the stage of its conception in order to bring the idea on the use of business solutions for enterprises and the country in general; and thus help create that market. We do not adjust to the growth speeds of a particular market, we establish those speeds ourselves.

- Does Shirak Technologies, being SAP’s partner in Armenia, have an exclusive right to sell the company’s solutions on the territory of the republic?

Vladislav Martinov: - Shirak Technologies is our first and preferred partner in Armenia, since the company invests in building expertise, training consultants and customers, but it is not the exclusive representative.

We are careful as to choosing partners. We select them according to certain criteria: the sector expertise, business expertise, regional coverage. I do not think that SAP will have many partners in Armenia, but if a particular company wants to work with us, the doors are open.

- What solutions will SAP offer in Armenia and what sectors do you consider priority?

Vladislav Martinov: - In the course of 35 years of SAP’s work, we developed and dominated in the big segment, but over the recent 7-10 years, we have been functioning in the market of medium business. Especially for the medium enterprise, we have created SAP Business All-in-One product, which is a fully functional ERP system [Enterprise Resource Planning System], which is preliminarily adjusted to working in typical configuration of the medium business and which contains a large number of sectoral templates, and this fact significantly reduces the cost of its implementation. We believe that this product will be popular in Armenia.

There are two more interesting products, which can enjoy demand here. The first one is SAP Business One solution, which is meant for small enterprise, according to global measures, and, correspondingly, the medium one for Armenia. The second one is SAP Business On-Demand, which is a solution for medium business, provided by SaaS model (Software as a Service). We do not yet supply this one to CIS, but actively develop in the West. This business automation solution allows customers receiving the service via internet in the form of subscription and paying for it monthly. This provides the companies with the chance to automate processes, having only a computer with internet connection at their disposal, and not investing in the infrastructure at that.

SAP niche products can also be of interest for the medium segment; for instance, the SRM solution [Customer Relationship Management], which is a solution for personnel management. There are also other “point” services.

Concerning priority directions, in which we would like to offer business solutions of SAP, I will note the banking system, the governmental sector and the mining industry. Concerning the latter: SAP solutions have factually become a standard in mining sectors of CIS. This means that the gigantic segment expertise of SAP will be available for Armenian mining companies at a significantly more affordable price, than the solutions of suppliers, who are not that closely familiar with the given sector.

Automation of retail trade and production of foodstuffs can also become interesting directions of SAP business in Armenia.

- Our talks with companies, which function in Armenian market of business automation (in particular, with the Armenian partner of “1C”), showed that they somewhat doubt the successful promotion of SAP in Armenia, taking into account the high cost of your solutions, as compared to their own tariffs. How will you comment on this?

Vladislav Martinov: - It would be incorrect to compare the products of “1C” and SAP. We are more partners that rivals. In CIS there are many examples of integration of our solutions, for instance, “1C” solves tasks of tax reporting automation and we are in charge of resource management automation for the entire enterprise.

We do not take Armenian participants of the market of business automation as competitors, we take them as partners. I will explain why. During the first years of SAP work in Russia and Ukraine, there were many projects, in which “1C” products amended our solutions. SAP NetWeaver platform allows integrating various applications and securing a single information space. This is why the customer, a part whose work is automated by local companies, does not necessarily need to change from scratch and purchase the solutions of SAP. Instead, the customer may choose a more priority business process for automation, automate it with our help, and then integrate the new solution to the already existing applications of other producers.

If SAP takes up adjustment of its solutions to the local specificity, probably, this will not be the best solution for the customers in Armenia. Probably, the most optimal solution will be integration with local suppliers. This is why I urge local colleagues to consider us as partners, since the most important is to give customers maximum value from use of the product at an optimal price.

- But there are “1C” solutions, which are meant for automation of trade, production, etc.?

Ishkhan Kazinyan: - Yes, “1C” has solutions for trade, production, but business solutions of SAP are the quintessence of best business practices: business processes of the most successful companies from various sectors (from purchase to production and sale of the goods) are “fixed” in our SS.  

According to the results of ForresterResearch research in 2009, SAP has been declared leader in elaboration of solutions for business efficiency increase.

If you have become SAP customer, you will develop together with us. And to grow with a partner, which enjoys annual turnover of 10bln EUR, 10% of which is invested in development of own products every year, is a huge opportunity.

- Does SAP have a promotion strategy for Armenia?

Ishkhan Kazinyan: – The strategy is simple: there are 15-20 large customers functioning here. They do not differ at all from the remaining customers of SAP all over the world. We will provide them with our services and products.

There are also a number of smaller companies and our task is to understand how added value is formed at their enterprises and to find optimal mechanisms of work with this category of customers.

Besides, we will actively cooperate with partners in order to provide high quality services and optimal price-quality correlation for our Armenian customers. We do not hope to gain profit in Armenia in 2011-2012. Our short-term strategy is investments in the market.

- Can Armenia, taking into account the small local market, make its contribution to SAP development, becoming a regional supplier of the company’s solutions?

Vladislav Martinov: - Of course. Armenia gets a good prospect to become a regional center of expertise, that is to say, start providing services of SAP consultants and programmers outside the country, since local IT specialists possess high qualification.

For instance, Belarus became a serious supplier of such specialists for the international community of SAP. In this country the number of outsourcing programming centers is very large. Dozens of thousands of people service there both Russia and global customers. Belarusian Epam Company, for instance, is one of the largest global partners of SAP. 

- What will, according to you, be the future of ERP systems in Armenia?

- Vladislav Martinov: - What is taking place in Armenia now is like what was there in Russia and Ukraine a few years ago. Despite the presence of private property, in our countries there are many remains of administrative-planned economy and there is no tough competition so far. 

But very soon there comes the realization of the fact that the market is global and one should not limit oneself to the borders of one’s own country. Sooner of later, the seemingly unshakable local companies start losing customers and profit. This happened to the banking sector and the retail market of Russia with the arrival of global players in the local market. Ones, who got prepared beforehand and implemented similar efficient business management tools, as the ones western competitors had, managed to remains standing in the struggle.

Expansion to the global market or merger with a large foreign company provides for certain culture of doing business and comparable management tools in it.

As a conclusion, I would like to make a comparison: when representatives of big business purchase a car, they try to purchase the safest, most stylish, comfortable, prestigious, to put it short, the best one. So there is a question: why should they make an exception, while choosing the business management system, which, by the way, is more important for their well-being? One should not try to save on something that allows earning much more.