Tie-up with Alibaba, impressive results help it defy economic trend
German software company SAP SE is seeing big growth opportunities from China's e-commerce boom and its partnership with Alibaba Group Holding Ltd, said Mark Gibbs, president of the software giant's Greater China region, on Tuesday.
Gibbs' comments came after SAP Greater China delivered a strong financial performance in the first quarter of 2016, defying the country's economic slowdown.
As China beefs up efforts to upgrade its traditional industries with cutting-edge information technology and tech-savvy manufacturing, SAP will see more robust growth here, Gibbs said.
SAP partnered with Alibaba Cloud last month to help local businesses accelerate digital transformation. The two sides are working on HANA one, a lighter version of HANA, which is SAP's in-memory computing platform, and aims to create a one-stop-shop cloud-computing environment.
"Instead of coming out with fancy statements, the tie with Alibaba Cloud is a long-time partnership, and will be the next big growth engine for SAP," Gibbs said, adding the two companies will soon unveil a next-generation cloud-computing platform.
In the first quarter of 2016, SAP's China branch recorded double-digit growth in its software revenue and triple-digit growth in its cloud business.
First-quarter operating profit for the company, headquartered in Walldorf, Germany, jumped 5 percent from previous year to 1.104 million euros ($1.23 million) mostly due to a steady growth in sales of its enterprise software, which helps manage business operations and customer relations, and its cloud computing-related services.
In China, more than 75 percent of the company's customers are small and medium-sized enterprises, while more than 50 percent of China's leading State-owned firms are also using the company's service.
"A lot of mergers have occurred in China's SOEs which are going global and facing mounting competitions. They have to be competitive and deal with vast amounts of data. That's exactly where SAP can play," Gibbs said.
SAP also has a product for small and mid-sized businesses called SAP Anywhere, which was innovated in China. It allows firms to buy services at a cost-effective rate and the implementation time is hours, not days or months, which are often seen in rival products.
China's cloud-computing market is still in its infancy, but it is starting to get crowded, with players including international heavyweights Microsoft Corp, and homegrown internet companies like Alibaba and Tencent Holdings Ltd.
Vincent Fu, an analyst at Gartner Inc, said traditional software vendors such as Microsoft and SAP are eager to evolve into a service provider by boosting their cloud computing capabilities.
