Demonstrating the Benefits of Software Products

February 25, 2009 by Johannes Gillar and Sebastian Nikoloff, SAP AG

Prof. Jörn-Axel Meyer, director of the German Institute for Small and Midsized Companies (DIKMU), (Photo: DIKMU)


At the moment, SAP and other software providers are making every effort to court small and midsize enterprises. In terms of IT, where is the main rub for SMEs?

The greatest challenge is keeping pace with growth and the integration of additional systems, particularly when a company grows quickly, undergoes restructuring, or enters into a partnership or merger with another company.

For a rapidly growing company, the challenge in software lies in having to expand a solution’s components, functions, and performance. When companies merge or undertake joint ventures, they have to combine different systems and, in many instances, different IT cultures. That was also what gave rise to the discourse on service-oriented architecture (SOA).

Other than size, what are the distinctions between the small and midsize operations of corporate groups? Are different requirements involved, different challenges for their IT to overcome?

The smaller the company, the less likely it is to have its own department specializing in IT as a service function. Small companies make a more secondary effort to support IT, whereas companies with large numbers of employees have a dedicated IT department and often additional external partners who handle their software and hardware maintenance.

Are IT providers offering the right products to SMEs, or is there room for improvement?

The products on offer are the right ones, but the providers can’t seem to make this known to customers. They either present highly specialized arguments full of technical terms to decision-makers who don’t want to delve into such details, or they promise very abstract benefits along the lines of “increase your company’s profits with this IT solution.” That doesn’t do much for SMEs. The providers urgently need to apply some business sense to closing this gap between too technical and too abstract.

Are industry-specific improvements helping to ascertain the requirements of smaller enterprises?

Industry-specific customization is certainly helpful, but it does have its limits: Companies can vary quite a bit within an industry. In the retail sector, for instance, some merchants sell their wares over the Internet, while others run a brick-and-mortar store that offers more personal support. That’s a world of difference – one also reflected in their distinct IT requirements – and yet both are in the same basic business.

SOA is currently one of the major trends in IT. Has it already reached SMEs, or do providers have more work to do in communicating its advantages?

This is another area providers are too technical or abstract in explaining. As it stands, SMEs don’t have a clear, tangible sense of the possible benefits. Meanwhile, the associations that could support their members from a customer perspective rarely address the topic. SOA can be particularly compelling and crucial to companies that are modular, network-oriented, or active in a range of industries.

SOA is especially suited to companies that are growing quickly and forming cooperations and networks – in other words, having to combine distinct IT cultures. All of this requires better communication.

In addition to solutions for SMEs, the IT industry is discussing new approaches to sales and distribution, such as software as a service (SaaS). Are such leasing models suited to SMEs?

In the current economic crisis, yes; leasing models provide financial relief to buyers. They also enable companies to upgrade more quickly to newer generations of products rather than stand pat with their older solutions.

Meanwhile, companies’ demands are changing with regard to IT: What used to be a matter of show and image has become one of company health. IT has to work, and companies are less willing to overinvest resources in it. They are now prepared to outsource hardware and software to caretakers of sorts. This is where leasing models come into play.

What about SaaS from a security standpoint? It involves storing data outside of the company…

There are definitely some concerns. For smaller companies, the trend is actually toward keeping systems local, which runs contrary to the increased level of networking we’ve seen in the Internet over the past 20 years. That said, leasing models and local data storage aren’t mutually exclusive concepts. Companies can retain control of their data while profiting from the advantages of such models.

Tags: , ,

Leave a Reply