Aju Business Daily

SEOUL -- For its digital autonomy, South Korea has raised the need to establish a state-led cloud infrastructure as the establishment of super-fast 5G telecom networks fuels the use of could platforms. However, an expert in corporate digital transformation calls for greater efforts to accelerate deregulation, especially in financial and public areas.

"It's true that there are many regulations compared to the United States. Even compared to the Asia-Pacific region, regulations are strong," SAP Korea CEO Lee Seong-yeol said in an interview with Aju Business Daily. "Awareness of the transition to cloud has improved, but regulations in the financial or public sectors need to be further lifted."

The South Korean branch of SAP, a multinational software company, raised sales from 391.7 billion won ($350 million) in 2018 to more than 400 billion won in 2019. SAP's solutions are now used by big South Korean companies, including Hyundai Motor which adopted a cloud-based enterprise resource planning (ERP) solution in 2019. ERP is the integrated management of main business processes, often in real time and mediated by software and technology.

"South Korea also has a fairly high growth rate in the cloud market," Lee said, adding South Korean companies began showing interest in cloud infrastructures in 2017. Since then, the introduction of SaaS (Software as a service) has begun to be a major agenda item, with more companies purchasing SaaS products.

"The biggest achievement is that a company called SAP has been recognized not only as an ERP but also as a cloud company and partner for digital transformation in South Korea," Lee said. SAP is ready to provide SaaS, Lee said, promising to join hands with local companies to create an ecosystem by developing software that can be used within SAP's on-demand cloud platforms.

"Small and medium-sized companies lack the manpower or costs to independently design software and services they need for their companies," Lee said. "SAP's solution could be a ‘comprehensive gift set’ for them. It’s cheaper than installation-type service methods in the past, and updates are also provided in real time."

Amazon and Microsoft are top players in South Korea's cloud-based PaaS and SaaS market. PaaS and SaaS are provided in various sectors including manufacturing, security, fintech and healthcare. Lee said that SAP has acquired global enterprise software players to become a leading player in the B2B (business to business) market while turning solutions such as S/4Hana, an upgraded ERP for large enterprises, into SaaS.

For digital transformation, customers can receive services in the form of PaaS (platform as a service) that can include all SAP services, he said. "The first strategy is to become a partner in digital transformation this year with S/4 Hana, which is based on the cloud."

The second goal, Lee said, is to work with South Korean software companies to develop software that can be utilized within SAP platforms. "We will actively create an ecosystem where partners develop corporate software within SAP platforms like Google Play and Apple App Store."

SAP can upgrade SaaS solutions by applying new technologies such as AI and 5G, Lee said, adding that SAP would integrate new technologies such as blockchain, Internet of Things and machine learning into core solutions.

In June 2018, Doosan Heavy Industries & Construction, a key contractor in South Korea's nuclear power industry, forged a business partnership with SAP to develop a solution for efficient power plant operation and prevent faults by utilizing SAP's "Leonardo" platform.

(This interview was conducted by Aju Business Daily reporter Jeong Myoung-Seob)