German software giant SAP, looking to clean up its act following its involvement in state capture, is now subjecting potential deals to thorough scrutiny to eliminate future risk.
The company saw corruption scandals turning it into a symbol of how global firms enabled state capture, but it has been on the road to reclaiming its credibility for the past eight years, and this week appointed long-time staffer Nazia Pillay as MD for Southern Africa to help right the ship.
“Within our market unit and our offices, we have specific processes that we follow through any sales cycle that we have. Within our partner ecosystem, we run due diligence processes through the recruitment of our partners, and we continue to run due diligence throughout their partnerships,” Pillay said in an exclusive interview with Business Times.
We've gone through our challenges very publicly. As SAP South Africa, I think we all welcome the fact that there has been a conclusion to that early last year. Through that process, what was really key to us was keeping our customers at the centre of what was going on
— Nazia Pillay, SAP MD for Southern Africa
She takes the reins after the company forked out huge fines, including a reported R4.1-billion last year to resolve investigations involving bribes paid to South African and Indonesian officials. The Special Tribunal in South Africa ordered SAP to pay about R500m to the Special Investigating Unit (SIU) in relation to two Gupta-linked contracts worth about R1.1bn awarded between 2013 and 2016.
The US justice department and the Securities and Exchange Commission also announced settlements with SAP to resolve investigations under the Foreign Corrupt Practices Act.
“We've gone through our challenges very publicly. As SAP South Africa, I think we all welcome the fact that there has been a conclusion to that early last year. Through that process, what was really key to us was keeping our customers at the centre of what was going on,” Pillay said.
Despite the huge reputational fallout, SAP held on to its customer base. “Through the entire process, we did not lose one customer because of that. In the turning of the tide, we have addressed our challenges, not only publicly, but internally.”
The scandal exposed how multinationals became complicit in undermining good corporate governance. Consulting firms KPMG and McKinsey were also sanctioned and had to pay back money attained from state capture contracts. Bain Consulting shut down its operations in South Africa after being implicated in an elaborate scheme to weaken the South African Revenue Service (Sars).
Pillay said compliance had since become part of the company’s language rather than a checklist. “We've created a culture within SAP that understands that compliance is a dialogue, because you need to talk through situations to be able to understand different perspectives and where the risks may lie.”
Her appointment is about setting a new agenda, she said. “Fundamentally, we are playing quite a critical role within many of the largest and smallest companies within South Africa. It's important for us to be able to partner with them, specifically in the current economic environment, to make sure we fully understand the challenges and help them to architect and prioritise what can help them best.”
SAP saw a stripping out of senior executives after 2017, which naturally created huge uncertainty on the ground. It is now repositioning itself as an AI-first, cloud-first company. It will unpack its new positioning later in October when it hosts an “Innovation Day” in Johannesburg,
“There will be, as always, a lot of focus about cloud ERP [enterprise resource planning], because that is our bread and butter as SAP. But on top of that, we will be talking quite significantly about our Business Data Cloud and how we see SAP playing in the business AI space,” Pillay said.
That message comes at a time when customers are cautious about how and when to use new technologies. “Most of our customers are dabbling in some form of AI. But we are definitely not at the point where we can say all of our customers are using it. A lot of them are looking at how they will eventually use it, and not seeing it as something that they can use right now.”
It is ironic that SAP has faced the music while many of the perpetrators of corruption retain senior government posts. However, Pillay did not point fingers, but focused on corporate strategies to address a stagnant economy.
“One of the biggest things when I'm speaking to the customers is the pressure that they're all currently facing with the lacklustre growth in GDP. That means many of the customers are going to a defensive spin. It's less about the solutions we bring to them, and more about ‘how do we prioritise where to invest first?’
“We really feel the responsibility of the importance we play in the South African economy, and we have the team that's really committed to making sure we do business right.”
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