SAP India is on a growth path never seen before and is now among the top-three fastest growing markets for SAP. The company has clocked double digit growth in the last six quarters and is now the second-largest subsidiary of SAP AG with over 5500 employees (the largest in Asia Pacific including Japan). What's more, SAP India also houses the second-largest SAP R&D Centre. However, the largest enterprise software player globally is now all set to expand its vision in India beyond just serving the enterprise business. The SAP innovation Centre in India will now be actively working on technology for “citizen engagement”. The new initiative will give SAP India an opportunity to enter the vast and hitherto untapped rural market According to SAP India Managing Director Peter Gartenberg, “We’re making a new space for business. We believe in taking on challenges of high value, and this is a high-value challenge. If we can drive prosperity into 65% (rural) of India, obviously that will be great business for SAP, as it will open a whole new world for us.”

To start with, the company has partnered with a village in Rajasthan to pilot test its rural technologies. The idea is to provide software and services for better integration of villages with district level and higher authorities. This will help better manage and streamline services like land record maintenance, issuance of child birth records, et al, with the aid of technology. In recent years, the rise of the Indian economy and strong growth in the MSME sector has led to software vendors like Microsoft, IBM & Salesforce.com, rushing to tap the market with their offerings ranging from cloud computing to mobility platforms. But SAP's dedicated rural play is truly unique.

Interestingly, SAP's acquisition of Sybase in 2010 for $5.8 billion to raise its capability in the mobile data and database markets and take on rival Oracle in terms of product offerings is now providing a great support to the company's rural dream. Since Sybase provides an enterprise platform for mobility, it can help SAP take any information point, and push it to any mobile device and vice versa. This can be a key differentiator in rural India where Internet penetration is very low, but mobile penetration is high and rapidly growing. Gartenberg believes that rural India will skip the whole desktop phase altogether, what with tablets being available for less than Rs.3000. “The good thing with mobility is that power issues become less of a deterrent as on one charge mobiles work longer,” he adds.

Sybase has also been instrumental in strengthening SAP's enterprise penetration. It has customised Sybase mobility applications and cloud capabilities to meet today’s business’s needs. Currently, it controls 25.3% of the $21.2 billion global market for business-management software – more than twice of Oracle’s share, with names like Siemens AG, Exxon Mobil Corp. and Wal-Mart being part of its 180,000 strong companies' client base. Some analysts even believe that SAP license sales may increase by as much as 20% between 2013 and 2015. SAP is expected to meet its 2015 sales forecast of $27.3 billion. And a large part of it is going to come from emerging markets like India and China. The company earns as much as 16% of its revenue from Asia-Pacific, including Japan.

But though SAP's performance in India has been pretty good, it still has miles to go to catch up with its competitors. According to Gartner, SAP is still at Number 3 with a market share of 8.3% in the Indian enterprise software market, behind Microsoft (28%) and Oracle (11.5%). And if SAP expects to get some real meat out of this market, which is growing at around 16.3% compared to the global average of 8.5%, it really needs to pull off something different and concrete. Recently, to support its growing operations in the region, the company has increased its employees' base by 200-300 each in China and India. And there are certainly some business plans afoot. “We are moving heavily into BFSIs and public services, even as we totally dominate the steel mills, mining, infrastructure and power. Lot of people don’t know but the leader in the cloud space on the enterprise front is SAP," reveals Gartenberg. To push its cloud offerings further, SAP has lined up an array of on-demand offerings and giving specific industry solutions..

SAP's competitors in India are not sitting idle either. Microsoft and Salesforce.com are clearly going after smaller businesses and luring them to their fold. On the other hand, Oracle has been very aggressive in getting SAP customers on its (PeopleSoft) enterprise platform. Oracle's push will likely create a big problem for SAP as it has to ensure that it does not lose its existing customers to rival products from Oracle and IBM. In the face of such cut throat competition with rivals nibbling at its heels, the imperative for SAP is to move quickly to maintain and increase its market share in the enterprise software market.

For SAP, its India strategy should be built around warding off competition & entering new spheres of business. Pushing for inorganic growth has been an area where the German SAP has been found wanting unlike its stronger and aggressive American competitors like Oracle, Microsoft, HP and IBM. It probably needs to shed its European (read contented and organic growth style) mindset to compete in a globalised world. Increasingly, businesses are looking at consolidating their needs with one-stop B2B solution vendors, who can offer an all encompassing solution, rather than dealing with multiple players on every front like technology integration, price, support service, et al. In order to meet new market demands and requirements, SAP needs to put its best foot forward, within and beyond its walls.