SAP, a leading provider of enterprise solutions, is making significant strides to enhance its footprint in India’s tier 2 and tier 3 markets, particularly in states such as Punjab, Uttar Pradesh, and Maharashtra. According to Rajeev Singh, the Vice President and head of corporate and mid-markets for SAP in the Indian subcontinent, this strategic expansion is fueled by the rapid embrace of artificial intelligence (AI) among both small and medium-sized enterprises (SMEs) and larger corporations.

Rapid Growth in Smaller Markets

Singh highlighted that tier 2 and tier 3 cities have demonstrated remarkable growth for SAP. The company is actively collaborating with local partners who play a crucial role in reaching new customers and understanding their unique needs. This partnership approach is instrumental in driving adoption in these emerging markets.

• SAP’s workforce in India: Approximately 15,000 employees.
• Revenue from SMEs: SMEs contribute to 79% of SAP India’s total revenue.
• R&D and Patents: India is responsible for 40% of SAP’s global research and development efforts and over 30% of its patents.

AI Adoption Trends

Interestingly, while SMEs are rapidly adopting AI comprehensively, larger corporations tend to implement it more selectively. A recent study revealed that 96% of SME leaders desire a holistic integration of AI into their operations. In contrast, larger firms are generally open to AI but prefer to introduce it department by department rather than across the entire organization.

Singh explained, “The complexity of larger businesses makes a comprehensive AI strategy more challenging. SMEs tend to have simpler structures, allowing them to adopt AI as a core strategy more easily.” As larger enterprises continue their migration to cloud technology, they are expected to maintain this line-of-business approach for the foreseeable future.

SAP’s Future with AI

SAP aims to seamlessly integrate AI into its core technologies and applications. As for the impact of AI on monetization models, Singh mentioned that SAP is currently taking a cautious stance, as it is still too early to determine how AI will reshape the market. "We are prepared in terms of licensing, but we’ll observe how the market develops," he stated.

In summary, SAP’s ongoing expansion into tier 2 and tier 3 cities in India represents a significant opportunity for growth, driven by the increasing demand for innovative solutions among SMEs and larger enterprises alike. As the landscape evolves, SAP is committed to integrating AI into its offerings, ensuring they stay ahead in this dynamic market.