IN AUGUST LAST YEAR, SAP Labs India created a flutter in the software industry when it announced its participation in cancer diagnosis and human genomics research along with the Institute of Bioinformatics and Applied Biotechnology (IBAB) in Bangalore. After all, just a couple of years ago, SAP Labs India, with a centre each in Bangalore and Gurgaon, was considered little more than an outpost of sorts, writing code for its parent company, German tech giant SAP, known best for its complex, high-end enterprise software. (Nearly 80% of Fortune 500 companies use SAP software.)
For V.R. Ferose, managing director of SAP Labs India, this was a moment of triumph. Just two years ago, SAP Labs India was facing a crisis—a slew of anonymous e-mails about a demotivated work force in India had been sent to SAP board members. Ferose, then 35 and head of the Gurgaon centre, was put in charge and given clear instructions: Turn the company around in 18 months, or get ready to be sacked. The beginning was not promising: His first meeting as MD was attended by four of the 80 vice presidents. “There were leadership issues, high attrition, and the excitement of R&D was missing,” says Ferose. “It was a leaking system.” Unfazed, he drew up a 100-day plan, took steps to identify inefficient processes, and then improved those processes. It was tough and at one point he thought of quitting.
But it worked. Today, SAP Labs India is an integral part of SAP’s €14 billion (Rs 99,568 crore) business, contributing to design and development, delivery, end-to-end quality assurance, and research on next-generation analytic capabilities for database products such as HANA. Of the 55 lines of SAP’s business, the ownership of 10, including human capital management and supplier relationship management, resides here. What’s more, future strategies in these business lines are worked on here, and there’s increased consultation with global sales teams regarding new products. Of the 6,400 employees that SAP has in India today, 4,695 are with SAP Labs India, making it the second-largest R&D location after Germany.
One of the first big successes for SAP Labs under Ferose was using HANA, an existing database technology that can process vast quantities of data at high speed. It was aimed at researchers, who need to process huge amounts of data in very little time in areas such as human genomics and drug discovery. No one had expected the India team to use HANA for product innovation; the India centre was considered good at support services but lacking in original thinking and product conception. Uma Rani, vice president, SAP Labs India, says that till HANA, employee morale was at its lowest, and there was no product ownership, which she calls the hallmark of an R&D centre.
Today, product innovation serves not only global customers, but the domestic market as well. Charitra, an online network solution for NGOs, was developed here and is now a global product. Any Time Money (a financial solution that transfers money for people without bank accounts) and TracOHealth (an online tracker of vaccines for the masses) are set for global launches. In stark contrast to the enterprise focus SAP so far had, it is now bringing out consumer-friendly and socially relevant products. The India team’s efforts reflect that. “Today, 90% of products meet the desires, not the needs, of 10% of the global population. But the products from India meet the needs of people and have a wider social appeal,” says Ferose.
WHEN FEROSE TOOK over, it was not just the India operations facing a crisis. Globally, SAP was seeing a slide in customer trust and employee confidence, and newbies such as NetSuite and Salesforce.com were gaining market share. Then came a shake-up at the top with Bill McDermott and Jim Hageman Snabe taking over as co-CEOs of SAP. The $5.8 billion acquisition of Sybase for mobile apps and the $3.4 billion purchase of SuccessFactors for new cloud offerings followed. SAP’s labs worldwide were called upon to integrate with these companies and innovate.
India was identified as an important cog in the wheel as it is where most customers have back-office operations. The domestic market was growing too and looked lucrative. The need to turn it around was urgent. An old hand, Ferose was SAP’s first non-German executive assistant between 2005 and 2007. He had trained 18 hours to 20 hours a day to understand how the company worked, its strategies, and expectations from other regions. “The schedule was gruelling. I survived, but most leave within three to six months of joining. It was like doing multiple MBA courses at the same time,” recalls Ferose.
When he joined SAP Labs India, he had grabbed an opportunity to lead a maintenance team for the human capital management business. This was considered an “uncool” job that no one wanted. Ferose not only kept his 15-member team together but also got it to file 20 patents, of which eight were accepted. This was taken as a case study by the SAP board. Since Ferose took over as MD, attrition has dropped from 15.5% to 10.1%, and patent filing has doubled to 20% of the global tally. This adds to business gains.
His colleagues say he started with simple steps such as transparency in communication and removing hierarchies. “Employees saw their bills being cleared in a day and laptops being delivered in a week instead of three months. They realised the man meant business,” says Pravin Agarwala, vice president, SAP Labs India. Pari Natarajan, co-founder and CEO of Bangalore-based Zinnov Management Consulting, which tracks R&D in India, says Ferose did not change the organisational structure, but by showing that an engineer could rise to become MD, “he gave others the hope that they could too”.
Initiatives such as a crèche and parking preference for employees driving eco-friendly vehicles such as the electric car, Reva, increased employee involvement. Ferose would also invite well-known people, such as former President A.P.J. Abdul Kalam and movie maker Shekhar Kapur, to interact with the team to “bring them closer to the external world”.
In the book, Jugaad Innovation, written by Navi Radjou, Jaideep Prabu, and Simone Ahuja, Ferose has been described as an unconventional thinker who has given employees the freedom to test and deploy solutions that will make them happier at work.
With SAP Labs India having stabilised, the management has a more challenging role for Ferose now. From January, Ferose will head the globalisation services division from India. This makes him responsible for customising products for local needs. Not a simple task, considering that SAP has a presence in 120 countries and Ferose needs to understand the different business and regulatory environments, languages, and local practices, among other variables. The next phase of Ferose’s journey has just begun.