Financial services, wholesale distribution and retail in Cyprus are going through a major transformation of refocusing on innovation and differentiating services through evolving tech solutions, says Alex Mouradian.
SAP is originally a German company, but over the decades has become a truly European one known under the name SAP SE. It provides corporate software solutions and is one of the global mega vendors alongside companies like Microsoft and IBM, with the difference that it is the only real European actor. SAP currently generates over €20 billion per year in revenue, and has more than 80,000 companies in more than 180 countries, and over 300,000 business customers – as opposed to Microsoft who have predominantly penetrated the household market, while SAP operates strictly in the corporate world. The European software giant covers the entire spectrum from small SMEs to large enterprises, and global companies such as Unilever. With operations in Cyprus for a good ten years, SAP has witnessed the growth and development of the country’s business and tech landscape.
Could you please describe SAP and its core business?
As a corporate software solutions company, our core operations address companies’ horizontal needs, as in financials, human capital needs, by providing companies the technology to empower their employees. We also meet the needs of our customer’s customer, by allowing our customers to have a 360-degree view of their capabilities and fully service their customer’s requests. The major challenge today is to have the technology to be able to adapt to change and constantly innovate. Another challenge is that customers are becoming more knowledgeable and demanding, and make more educated choices for the services they need. Another core business segment of ours is to provide business networks for companies to connect and perform transactions. An example of this is Ariba, a cloud solution providing sales, purchase and tender options between many actors in various sectors around the globe, with billions of dollars of commerce happening as we speak. Another good example of a business network from SAP is Concur, it provides an expense management system for companies that require business travel. We are very proud of our brand, and although we are a large global company dealing with other large corporations, we’re trying to shake up our image a little bit, as we have come a long way and also now deal with SMEs. Consequently, we are changing our profile in line with the market trends to be adaptable, flexible and follow the pulse of the market and technology.
What are the emerging trends in technology at the moment?
The internet of things (IOT) is growing and technology is now allowing us to digitise things we could never even imagine before. For instance, you can put sensors on your goods during shipping to feed data to centralised systems to inform you about metrics that you’re concerned about. Being able to collect information centrally and automatically process it could save you a lot of money. By collecting information about a system, you can monitor it and prevent it from breaking down. You could also apply it to the most basic things in day to day life, like the use of washing powder, with a small gadget on your washing machine that you can press when you run out of detergent, and get products delivered to your home.
The general concept is that new technologies allow us to rethink our business models and how we live, this is unprecedented. The challenge for new companies is to rethink their models and explore how to achieve a competitive edge. Technology by itself is useless, the key lies in usage. Today, tech is driving all businesses forward, with everyone relying on it to advance and bring change. We can see the same trend in Cyprus, with a growing demand in both IT-related services and staff. The cloud is the driving force of the IT industry. Everything is going on the cloud with all mega vendors having invested in it, and SAP is leading the way in many of these areas.
SAP has been active in Cyprus for a decade, what have been the biggest changes in business that you have witnessed over that time?
In 2006, when I came on board, SAP Cyprus had about 50 customers. Today in 2017, we have more than 500. We are now in a position to address the entire spectrum, from the lower scale of SMEs to large enterprises, while addressing the end-to-end business challenges of almost any organisation. This has offered us a good vantage point for witnessing trends. Cyprus businesses have matured tremendously in the past 10 years. I remember when I started seeing customers a decade ago, coming from London and after having worked with larger European organisations, I noticed that in Cyprus the level of maturity with which businesses addressed their requirements was incomparable. Things have changed, but there’s still a long way to go as many Cyprus-based businesses still perceive IT as a cost instead of an investment, and this is the main difference with their European counterparts. Similarly, they are less prone to pay for corporate services, because they have a trader’s mentality, it’s a cultural issue here. But some organisations are impressively advanced and these shortcomings also provide future opportunities for companies like ourselves, and the market can grow much more.
How has demand in corporate IT solutions in Cyprus evolved, especially with the SME sector regaining momentum after the crisis?
I will draw a line marking before and after of the 2013 banking crisis. We’ve been providing services to SMEs for the last decade or so with a good volume of SME business, although many were through special funding whether Cypriot government sponsored initiatives or through EU-funded programmes. All projects in the lower SME space always had this funding element attached. After 2013, and particularly in the 12 months following, SMEs took the biggest hit, it came to a standstill, they didn’t have any deposits and were too dependent on funding that was not available anymore. From the end of 2014 and onwards, we have seen a strong comeback in the lower SME sector and a very different shift in mentality, with private Cypriot SMEs setting up projects, self-funding, and showing a greater maturity in how they tackle their challenges. This will transcend into the marketplace and also benefit the consumers. While we’re on that subject, an area with potential for SMEs is to think beyond the local market and realise they can reach much further, thanks to today’s technology.
What type of cloud solutions are in high demand in the Cyprus business landscape?
We see a strong demand in cloud HR and cloud sales solutions. From what I hear, a lot of companies have switched to the cloud for basic services, like email, usually the first and most non-threatening step. From 2016, we have also started to see an emerging demand for more specialised cloud solutions, such as sales management solutions. This is a strong growth area that we are closely looking at.
With many businesses starting to explore cloud solutions, what are the most common misconceptions you come across?
Cybersecurity is always a hot topic. There’s a prevailing misconception that using the cloud is unsafe, even though data centres used for storing cloud activities are military-grade and these solutions have gained the trust of the biggest corporations and economic actors in the world. More awareness should be raised about the safety as well as the benefits of cloud services.
How is the Cyprus banking sector taking on digitisation of their services?
Banks are high consumers of tech and they have realised it can offer a crucial differentiation and unique selling point. The Cyprus banks took a huge hit in 2013 and there was a knock-on effect on their use and consumption, as well as knowledge of IT products. But we are seeing a reacquired appetite and banks have set themselves up to re-innovate and re-engineer themselves in a more digital way and we should expect to see growth in the financial services area.
Which are the three sectors showing the most potential for growth in Cyprus for the next years?
I see the financial services, wholesale distribution and retail as having to go through a major transformation. Also, the shipping industry is very promising and one of the strongest sectors we have in Cyprus. The financial services sector has spent the last two years reorganising and adapting to the new reality. Now it is a matter of refocusing on innovation and differentiating services the same way banks typically do with IT. With regards to wholesale, it needs to rethink its value proposition. The old days of the Cypriot wholesaler to import, store and distribute with a healthy margin, are coming to an end. Competition is greater, and exclusivity is no longer there, it is much easier to have multiple representatives of global brands, which is pushing them to rethink their distribution channels. This is why we’re seeing third-party logistics companies coming to Cyprus. The retail industry has changed completely, the consumer is more brand and price-aware. The typical Cypriot consumer is highly educated by EU standards and has choices, this pushes you to have your own value proposition, whether you’re a start-up or a large retail chain.
What is your message to foreign investors about Cyprus?
Cyprus is a great and unique place for companies to invest in. World-renowned gaming company Wargaming is a perfect example. I wish more companies would take advantage of what Cyprus has to offer. Today, we are branding Cyprus and there is a real link between lifestyle and services. Over the next five years, I hope that a lot of new companies will realise the value proposition. The political aspect of things will be very interesting and the next year and a half will set the pace for economic growth.
Alex holds a BEng (Hons) Civil Engineering with Computing degree and an MSc Management from the University of Surrey. He began his career in international leading IT organizations based in London. From August 2006 he manages SAP Cyprus, which today includes more than 500 customers as well as an ecosystem of the authorized SAP channel partners with more than 100 professionals. In April 2014, he was assigned the same position for Malta while in January 2017 he was appointed as Sales Director for Greece, Cyprus and Malta.