SAP plans to acquire small cos in India

European software giant SAP is looking to acquire small companies in India as part of its plan to grow in the Asia-Pacific region. “We are scanning across the regions — mainly India, China and Japan — for acquisitions. There are some interesting possibilities for us to make ‘tuck-in’ (small and easy to integrate) acquisitions,” said SAP-Asia Pacific & Japan president and CEO Geraldine McBride.

“Historically, we have acquired small companies with strong intellectual property assets housing up to 200 employees and with revenues in the range of $10 million. We plan for this trend to continue as we go ahead with growth in the APAC and Japan region,” said SAP corporate officer and member of the executive council Jim Snabe.

He told ET that the company has identified sectors for acquisition and the company is currently evaluating its options. He, however, denied to give further details on these identified sectors. However, these acquisitions will not be a part of the $1-billion investment announced earlier last year.

“We are looking at innovations to drive our acquisitions. The case for the Indian software space is that although innovative software development is taking place here, these companies are not witnessing mass adoption of their architecture, SAP would look to bring this mass adoption to these small companies which we tend to acquire and that’s where the acquisition synergies fit,” Mr Snabe said.

“We are looking at companies which will bring us valuable IP in the SME space or key industry areas. We will not make huge acquisitions but take the IP and innovation and integrate it,” added Ms McBride.
Earlier this year SAP acquired the US-based planning, budgeting, forecasting, and consolidation software maker OutlookSoft while its other recent buys include Canada-based retail software vendor Triversity and another US-based retail software vendor Khimetrics. The company has not used the acquisition route too much in the APAC region. In 2006, it bought compliance solutions company Virsa Systems which had significant presence in this region.

Another area that SAP is looking to build on in India is co-innovating with its partners. “We are working with Indian system integrators who have built innovative solutions and taking them global. For example, Wipro has developed a pre-packaged solution for SMEs. SAP and Wipro are now together expanding the offering to APAC. Another such partner is TCS,” Ms McBride said, adding, “We will not have formal joint ventures with them but ‘loose JVs’ or ‘GTM (go-to-market) plays’ to offer such solutions globally.” The Asia Pacific & Japan region contributes nearly 13% of total revenues fro SAP at present. “We hope to increase this contribution to about 20% by 2010 and India would be a key driver for achieving this growth target, along with two other high growth markets – Japan and China,” she added.