SAP sees LatAm corporates unfreezing software investments

SAP, the world’s leading software provider, says Latin American companies are unfreezing critical investments in management platforms that have been stalled since the beginning of the pandemic. 

It cites growth in contracts signed with oil and gas firms, financial service companies and retailers, among others, especially for supply chain, sustainability and customer experience solutions.

“In 2021, we saw more structuring projects materializing. 2020 was a year of 'emergency' investments, when we sought to help the industry deal with the restrictions caused by the pandemic,” president of SAP Latin America & Caribbean, Cristina Palmaka (pictured), told BNamericas.

SAP expects structural software investments to continue in 2022, despite possible macroeconomic and political headwinds.

According to Palmaka, political factors such as the elections in Colombia and Brazil and the first year of the new administration in Chile could add some turbulence to the business environment.

Inflation, rising interest rates (ultimately impacting companies’ access to credit and financing), and persistent supply chain constraints are other obstacles.

“I would say our expectations for 2022 are optimistic, but we're cautious. January 2022 was in line with what we expected for a 'normal' January," she said.

'GO GREEN' DEMAND

Palmaka sees continuity in the demand for supply chain and procurement solutions, in addition to customer experience (e-commerce) and, in particular, management tools geared towards energy transition, sustainability and ESG. Among these, software purchases are aimed at helping companies quantify and record carbon emissions and oversee their waste.

In Q4, Brazil's Petrobras inked a new deal with SAP for the development of a cloud solution to support its plan to reduce total emissions by 25% and water use by 30% by 2030.

Mexico's Fermaca also signed up for the same solution, with the goal of identifying risks and complying with Mexican hydrocarbon industry regulation in terms of environmental regulations, and industrial and operational safety.

In Chile, Chilean salmon group Cultivos Yadran signed a contract to acquire SAP's new sustainability suite, the Product Footprint Management.

Other major new contracts, for a variety of solutions, were ratified with Mexican retailer Grupo Lala, Colombian multi-utility EPM (Empresas Públicas de Medellín) and Brazilian pulp and paper Grupo Suzano,

SAP's Latin American sales continue to be mostly in the "as-a-service" format, that is, in the cloud.

Although there are views that, during the pandemic, some companies migrated workloads to the cloud that did not need to be migrated, increasing their costs, Palmaka says that gains in efficiency and opex are perceived for the vast majority of companies.

In 4Q21 the company reported its 26th consecutive quarter of double-digit growth in cloud revenues, with Brazil and Mexico standing out in the region. The company does not break down sales by country.

SAP's global revenue in 2021 was 27.8bn euros (US$30.9bn), up 2%, with cloud and software revenue increasing by 4%.