SAP Labs will complete two decades in India this month. The Germany-based tech major which gave the world Enterprise Resource Planning (ERP) software has added several more offerings over the years. Its R&D centre in Bengaluru is its biggest outside Germany. In a conversation with BusinessLine , Dilip Khandelwal, President, SAP HANA Enterprise Cloud and Managing Director, SAP Labs India spoke about the challenges the company faces in transitioning to new areas and the approach it is taking to reskill its employees. Excerpts
Can you give us a sense of the last 20 years for SAP Labs in India?
Digital core, CRM manufacturing, supply chain are all being driven out of India. The transition from “On-premises” to “cloud first” has been quite successful. We have a big installed base when it comes to On-premises installations.
Having said that from a development methodology we will build for the cloud. A new customer seeking solutions from SAP, moving to the cloud is no issue. The question is how do we take existing installed base of customers with investments in legacy systems. If you look at it from their view point, they are seeing disruptions in their business and changing technology. So, they will eventually have to move some parts of their business to the cloud. The customers should be aware that they are in a state of what McKinsey calls a “twin mode of IT”. This is managing both old (technology) investments and transitioning into the new technologies. We are the facilitators in their journey. This is the first year where our numbers in the cloud (implementation) are higher than On-premises implementations. It would be wrong to call us an only “On-premises” company. A year and half from now, we will double our cloud computing implementations.
With this changing trend, how has your employee mix changed?
In the past, if you had to join SAP, you need to have work experience, and the other normal parameters that used to be followed when it was concerned with hiring. In the past six years, we as a company decided specifically in India as a strategy that 50 per cent of our hires will come from universities.
It is also no longer a strategy of hiring only BE or engineering graduates. If we are building a product in the manufacturing space and the skill required for the same, we look for people with exposure in multiple domains. So, a doctorate or a person with design experience to a domain expert (in manufacturing) is preferred in our hiring mix.
One of the major challenges IT companies face these days is reskilling their mid-level managers. How has SAP Labs tackled this issue?
I have a different philosophy. Technologies change very fast and now the cycles are six months or so. The question is do you want your employee to train on every technology or do I create a mindset which is about adapting to changing scenario. If the person has a mind block then there is an issue. With things such as AI, jobs will change but the need for people will not. If you want to be successful in the new world, you need to adapt.
From a cost point of view, how are the margins in cloud, considering that you have to make overall investments in tech upgradation, partners?
We are committed on our operating margins. I can tell you that the transition was not easy. This is because On-premises technology implementations come with higher margins when compared to the cloud. Over a period of time, margins will get better in the cloud too. Today, we have 150-million user installed base in the cloud.
We have our own data centres and provide services through them. Alternatively, we also host SAP on Windows or Amazon. However, we do not compete with them and this is only to give customers an option.