Insufficient flexibility for business customization, poor ease of use, and long implementation have become major complaints about SAP’s core products by many SAP clients in China. Despite SAP’s wide adoption by large enterprises in China, including Nongfu Spring (the first one in APAC using HANA — in-memory computing platform — in production) and Sinopec (ranked No. 5 in Fortune 500 in 2012), these client issues are problems for SAP for its continued expansion into the China market. SAP uses its SAP Labs network across the globe to deliver local market-oriented solutions for different geographies. In my recent visit to SAP Labs China, one of the four hub labs that drive corporate product strategy and execution of global projects, I found that SAP is taking the right steps to integrate local requirements and deliver product capabilities that address the above issues:

  • Solutions customized for China regulations and business practices. SAP Labs China developed not only localized solutions for general purpose such as Golden Tax features, which is mandated by the Chinese government for its interfacing national taxing system, but also key solutions for local industries such as business real estate, international commerce, public finance, and healthcare.
  • More ease of use. To solve the ease-of-use problem, including the user interface look and feel and usage behavior of the product, SAP Labs China reinvented finance user experience and business processes for Chinese customers, and it also optimized the user interface for its human resource module.
  • Reverse innovation. To standardize SAP’s global offering so it can be applied to different customers, industries, and regions, SAP also reverse integrated the local innovations into SAP solutions as add-ons, such as the account aging analysis based on HANA, as well as mobile workforce scheduling features.
  • Design-thinking strategy. All the above capabilities are based on the design-thinking strategy rolled out in SAP Labs China. The product design and release plan is based on the customer requirement by engaging clients from the bottom up.

Although SAP is taking the right path, it still should:

  • Set up a regular collaboration mechanism and build reference customer cases of working with clients in each industry.
  • Consider the right organizational structure and technical enablement to support the increased requirement on the internal bandwidth of its local resources.
  • Improve the efficiency of managing SCRUM teams. Today, SAP Labs China has rolled out SCRUM methodology inside its project-based technical team, but the efficiency could be further improved, such as by sharing and discussing product backlogs electronically rather than with paper stickers.
  • Enable partners to provide solutions on long-term basis. Today, many SAP partners do not have the same product knowhow or similar agile development process. SAP should also effectively transfer its knowledge and experience to its partners to better serve its customers and reduce its own pressure.

SAP clients in China should identify the gap between their requirements and SAP’s offerings, escalate these business requirements to SAP, and work closely with SAP by sharing business insights. Finally, recognize that a pure SAP solution may never have the flexibility to address your unique needs, so you should choose the right workaround, such as using a business process management suite (BPMS) to extend SAP when necessary.