SAP is eyeing the transportation and logistics sector for its next wave of growth in India.
Earlier, the company offered its Enterprise Resource Planning (ERP) software but companies are increasingly asking for specific software modules that connect different parts of their business – both internally and with their customers.
To address this, the ERP software maker will start offering solutions around ‘big data', mobility and analytics for shippers and third party logistics companies who ship automotive components and consumer packaged goods.
According to International Data Corporation estimates, SAP holds a 36 per cent market share in Supply Chain Management (SCM) segment and with this new focus, it plans to increase this further. SAP and Oracle hold 65 per cent market share in the Indian enterprise software segment, according to analysts.
It in transport
“Warehouse and transportation management are beginning to use IT and this is where we want to focus,” Mr Saj Kumar, Vice-President – SCM, PLM & Marketing Solutions APJ for SAP, told Business Line.
Third-party logistics companies currently handle about 7 per cent of the logistics business in India as compared to over 50 per cent in developed markets such as the US and Japan.
Bullish on logistics
One of the reasons for SAP's bullish predictions regarding this market is the increasing costs involved in logistics business due to a whole host of reasons.
“Logistics providers spend about 40-50 per cent in transportation costs and with better asset utilisation, accurate billing, and selecting the right routes, they can reduce their costs up to 30 per cent,” added Mr Kumar. These leakages are very high in India and according to KPMG's estimates, these costs account for 13 per cent of GDP. In comparison, logistics costs are estimated at 10 per cent of Europe's and 11 per cent of Japan's GDPs.