SAP's Growing SMB FootprintBy Baselinemag | Posted 2007-11-19 Print
The German business intelligence software vendor turns to integrators and resellers to expand its share of the small and midsize enterprise.
Lately SAP AG has been selling boatloads of ERP software to the SMB market. In fact, SAP has more than 25,000 SMB customers in the U.S. Today, almost two-thirds of the German ERP vendor's customers and nearly one-third of its $14.6 billion revenue come from the SMB segment, according to the Aberdeen Group.
All of which is impressive on several counts. First, the rap on ERP has traditionally been that it's often hugely expensive and highly complex, takes forever to implement, and requires the kind of internal infrastucture and IT support found in the enterprise.
So what's SAP doing to convince SMB owners to embrace SAP ERP 6.0 as a product platform, especially since SMBs likely don't know or care what ERP 6.0 is or does? The answer is a lesson in what vendors, consultants and system integrators need to do to successfully bring enterprise solutions down to the SMB market.
First of all, SAP isn't selling ERP 6.0 per se, at least not to the SMB crowd. Management of the world's largest business software company is far too shrewd to make that pitch. Instead, SAP has buried ERP 6.0 under the covers of two offerings with names that no doubt resonate with business owners more readily than ERP 6.0: SAP Business One (for small businesses) and SAP All-in-One (for midmarket companies). Both are sold as systems that run every aspect of a business, enable companies to cut costs, bring products to market sooner, comply with regulations and improve customer relationships. The term ERP 6.0 likely never passes the sales reps' lips.
SAP claims these solutions are preconfigured, easy to install and extend without draining precious IT resources—ERP for dummies, in other words. Chances of a small or even midsize company implementing and expanding an ERP 6.0 system—no matter what it's called—totally on its own, are slim to none.
Which brings us to the second move SAP made to capture a bigger SMB marketshare—namely, putting together a national network of partners including systems integrators, distributors, consultants and value-added resellers to hold customers' hands and lead them through implementation. Back in May 2005, the company announced a next-generation channel program for its global partner network as part of its strategy to expand its applications software business to small and midsize companies.
"This is a multichannel coverage model for SAP," says Michael Slotnick, the company's senior vice president of small and midsize enterprises. "We are actively recruiting partners to provide coverage and solution expertise to our business."
Today the company has 2,400 partners globally focusing on SMBs. It sells its All-in One software through both direct and indirect channels, while its SAP Business One offering for small business is sold exclusively by SAP's partners. And as it rolls out new offerings, it bolsters its partner program accordingly.
As an example, in late September, the company introduced SAP Business ByDesign, an on-demand enterprise software solution built to address SMBs' application management issues. A month later, it announced the addition of 22 SAP resellers worldwide to assist in its further rollout of Business ByDesign.
This is one vendor that never makes a move without ensuring it has partners to follow through on any new initiative.
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