T

he world'€™s leading enterprises application software company SAP AG (SAP) is targeting small and medium enterprises (SMEs) in Indonesia, an industry it believes will significantly transform into an information and communications technology (ICT) market in the next few years, say the company'€™s national and regional leaders.

SMEs, the crucial driving force for Indonesia'€™s economy and development, need to turn to ICT to boost their effectiveness and competitiveness, particularly given the looming ASEAN Economic Community (AEC) that will come into effect next year, says Megawaty Khie, the managing director of SAP Indonesia.

'€œMore than 50 percent of our customers in Indonesia are SMEs. They are using SAP software to solve business challenges. We are optimistic that there is still much room to expand. Some big state-owned enterprises have been using our cloud platform. I think mid-size businesses will soon need to turn to the cloud as well,'€ Megawaty told The Jakarta Post at 2014 SAPPHIRE, an annual conference for SAP customers worldwide, in Orlando, the US, earlier this month.

According to data from Indonesia'€™s Cooperatives and Small and Medium Enterprises Ministry, SMEs account for 99.9 percent of businesses in the country, 97.2 percent of domestic employment, and 57.9 percent of the country'€™s gross domestic product (GDP).

Given the pivotal role the SMEs have in the economy, improving their competitiveness will be a key factor for Indonesia in coping with an increase in competition resulting from the AEC that will be implemented in ASEAN member countries beginning next year.

However, she acknowledged most of the SMEs were still '€œconservative'€ when it came to ICT. Many may consider ICT as unessential, particularly concerning the costs ICT generates, while being unaware of the true potential benefits it can bring.

'€œSAP has numerous interesting offerings that are suitable for SMEs. The cloud technology we have for them does not need a lot of ICT expertise to use. We understand a lot of SMEs do not have ICT departments because the main person who is managing the business is the owner,'€ said Megawaty, who moved from Dell Indonesia to SAP in November last year.

'€œThe owners usually don'€™t really know about ICT. They don'€™t want to manage servers or applications that they consider troublesome. But our cloud platform is very easy to use because the package is already ready to use. Shortly after you apply and get connected you will already be able to manage your business from there,'€ she said, adding that SAP products for SMEs were cost-efficient.

Cloud services basically offer companies access to data and programs over the Internet for their operations, so there will be a significant reduction of expenses for installing on-premise software and big data storage or other supporting hardware.

Cloud technologies will enable companies to do financial bookings, reporting, or any other processing in their business, in drastically shorter times compared to using on-premise applications, Megawaty said.

'€œCloud solutions from SAP can adapt to every business process in any market dynamics to improve customer satisfaction.'€

The International Data Corporation (IDC) Indonesia expects that ICT spending in the country will reach US$16.8 billion by the end of this year, reflecting a 12.5 percent increase from 2013. But hardware would remain the priority purchase, absorbing up to 86.9 percent of total estimated spending.

Trailing were spending on IT services and software, to which 8.6 percent and 4.4 percent of spending would respectively head, IDC data showed.

A report by Frost & Sullivan showed that Indonesia'€™s cloud computing market was still low. It said that the cloud market would only exceed $120 million in 2017 as opposed to $31.4 million in 2012.

Eyeing SMEs has been an emphasis in SAP'€™s worldwide business plan. The company'€™s number one cloud platform is called SAP HANA.

SAP serves more than 258,000 customers in 180 countries and 80 percent of them are SMEs.

'€œWe think that the radical simplification of the consumption of software is game changing and we intend to have our cloud technologies available to SME customers all over the world. It will help them grow. I have yet to meet any SME that wants to stay small,'€ SAP CEO Bill McDermott said in a press conference.

Adaire Fox-Martin, the president of SAP Asia Pacific Japan, said the company continued to gain momentum, particularly in India and Southeast Asia. '€œWe are seeing customers adopting SAP to run their business faster, smarter and simpler, especially in emerging markets,'€ she said.

In Indonesia, SAP competes with other ICT companies, including the giant state-owned PT Telekomunikasi Indonesia (Telkom), which has also been eyeing SMEs this year to sell its business software products.

Earlier this year, Telkom stated it had served 150,000 SME clients. Of its target of Rp 10 trillion ($845.67 million) of unconsolidated revenue, 25 percent was targeted to come from SMEs.

Megawaty also said SAP had been looking to work with the government down to local administrations.

'€œWe have done a number of seminars, particularly with the Jakarta municipal administrations, on how our technologies can help them run better. Things are still in progress as we are trying to explore what kind of sectors we can help them with,'€ she said.

Megawaty gave an example of SAP'€™s cooperation with the Chinese government to develop an intelligent traffic management system in six cities.

'€œWe see good prospects for cooperation with the government,'€ she said.

François Lançon, the president and managing director for SAP Southeast Asia, said SAP had been working with many government organizations in the region.

'€œGovernments, like companies, are also going to need to transform. We want to be a big element of that transformation in Indonesia,'€ he said.

Earlier this year, Fujitsu, one of Japan'€™s leading providers of ICT-based solutions, announced the implementation of its Disaster Information Management System (DIMS) by the Jakarta Regional Disaster Management Agency (BPBD).

With the system, the Jakarta BPBD has been able to improve its coordination and disaster response.