Ramón Alvarez
Director General
SAP México
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View from the Top

New Plants Need SAP Systems Ahead of Time

Mon, 09/01/2014 - 13:13

Q: If an OEM uses SAP, are their suppliers obliged to run SAP in order to be integrated in the supply chain?

A: They can use whatever they want, but all the information that an OEM like Volkswagen sends will be through SAP, so it is easier for its suppliers to be connected through SAP as well. It is not an obligation but no supplier wants to argue with its main customer. We also offer a solution where, for example, Volkswagen would host SAP for its suppliers. This creates a collaborative community which uses SAP together. Walmart, Nestle, Procter & Gamble, and Coca- Cola all run these communities with their suppliers.

Q: How do SAP’s solutions improve the functioning of the automotive supply chain?

A: We split our solutions based on the different tiers of the supply chain. We have solutions designed for the OEMs as almost all of them run SAP, but the issue is with Tier 2 and 3 suppliers for whom we offer two kinds of solutions. One of our solutions is cloud-based, integrating various aspects like the back office and manufacturing, which is particularly attractive to Tier 2 suppliers. We also created a pre-configured solution that can be implemented in six months and integrates the entire supply chain. Automotive companies are very interested in talent management solutions, given the talent war raging over there not being enough engineers to supply the industry. Such solutions can later be reinforced with product lifecycle management (PLM), but that is not an immediate concern.

Q: What is your R&D focused on right now in order to offer added value to your existing customers?

A: Almost all our R&D is geared toward moving our solutions to the cloud. This will help us provide simpler solutions with an implementation time of no more than three months. Many of our clients do not use the full functions of our solutions, on average they use 45% of what our solutions have to offer. With the cloud, we want to be able to start a solution with 45% of its functionality to help speed up implementation for a particular client. The customer might want a solution with all the bells and whistles but we first advise them to start with the functions they are sure to use, and potentially expand functionality at a later date. All our clients want cloud-based solutions, and we have actually stopped selling on-premise solutions for customer relationship management, human capital management, and marketing.

Q: How do you convince people of the safety of cloud- based solutions?

A: 90% of data leaks within companies come from employees. We show our clients that BMW, Coca-Cola, and even the Mexican government have turned to cloud-based solutions for security purposes. Another opportunity is created by the fact that few companies want to put their data on servers in the US due to the Patriot Act. This represents a huge opportunity for SAP in Mexico. In response to this, we will be creating a massive SAP data server in Mexico and we will be partnering up with companies like Telmex that already have data centers.

Q: What are the most successful customized solutions you have for the automotive industry?

A: We implemented one solution for Volkswagen. It was having problems with suppliers running SAP so it asked us for a very specialized connector to share information, such as schedules or requirements for the just-in-time program. That is our most successful case in the automotive industry because Volkswagen is so open with its suppliers. We were notified about the new Audi plant two years ago and Volkswagen asked us to start preparing projects based on the specifications of the new plant.

Q: What is the vision in SAP’s global headquarters for the Mexican market?

A: We are victims of our own success. We tripled our business in three years so the view is that the Mexican subsidiary can do anything. Our headquarters strongly believes we can grow by 20% or 30% again, year after year, as we have already done so. We may be able to do that for one or two years but doing so beyond that would be very tough. SAP’s targets for emerging markets are much higher than for developed countries. The goal might be to grow in North America by 10%, but for Mexico, Colombia, and Brazil that target could reach 30%. Automotive companies are placing the vast majority of their growth expectations on emerging markets like Mexico as well.