SMBs are increasingly being sucked into the “vortex of globalization”, asserts the report “Mittelstandsmonitor 2005”. Small and midsize companies today need to overcome some of the same challenges faced by global corporations if they are to assert themselves on the market. This includes improving business processes in order to react quickly to changes on the market and cutting costs in order to remain competitive. This also places new demands on the company’s IT, be it in a small firm with a regional customer structure or midmarket companies that operate globally. These challenges can only be met by means of integrated, scalable, and future-proof systems.
Supporting business strategies
Business software applications such as these need to support a company’s long-term (international) growth strategies just as much as its relationships to its customers and partners (keyword: e-business functionality). In the international context this also includes mapping local statutory requirements, such as HR and invoicing. Furthermore, midmarket companies require trustworthy implementation partners who know their clients’ needs and are on their wavelength. With its PartnerEdge solution, SAP has devised a program for the dynamic SMB market that ensures that “our clients are advised and supported exclusively by highly qualified partners, since we seek to establish long-term relationships with our customers and partners,” explains Donna Troy, Senior Vice President who is also responsible for the SAP mid-market sector at global level.
The right choice
The choice of a software solution is particularly important for midmarket companies, and technical, business management, and user-specific aspects (such as intuitiveness of use) all play a part in the selection process. Technical feasibility, financial overhead (hardware, software, licenses, maintenance), low operating costs (TCO) and a rapid ROI (Return on Investment) form a tightly meshed set of factors upon which midmarket companies base their investment decisions. This also includes integrating staff into the process and building up the requisite knowledge about handling the functions of the software as early as possible, such as through training sessions. Before making a selection and corresponding investment decision, small and midsize companies who are seeking to implement a new company software application should consider the following ten points:
- Does the solution cover both business management and industry-specific processes in the company as comprehensively as possible?
- Does the solution improve business processes and consequently increase productivity?
- Is the solution a sound investment and is it future-proof in order to support future growth and to reflect changes in economic conditions (such as new legal guidelines)?
- Is the solution an integrated system that enables uniform data recording and data processing without any changes of media?
- Does the software provide opportunities for analyzing customers, employees, finances, products and suppliers?
- How high are the operating costs (maintenance, updates, implementation of new releases)?
- When selecting the SAP service provider and the future SAP solution (SAP Business One or SAP industry-specific solution), were the individual departments and future key users included in the process, such as by drafting a list of specifications in which the requirements of all parts of the company affected are collected and consolidated?
- Does the future implementation partner suit the company, does he speak the “language of the midmarket”, and can he provide appropriate references?
- Can the solution be implemented within a particular period of time and – if possible – at a fixed price?
- How long is the payback period (Return on Investment) of the new solution?
The demands on a midmarket-compliant software solution, then, are highly complex. This is why SAP has introduced a two-pronged strategy for the midmarket. Firstly, SAP Business One is a cost-effective and integrated business management solution for small midmarket companies that includes financials with analyses and reports, warehouse management, fitting/installation, ERP, and CRM. The standard business solution is supplemented by certified add-ons or interfaces from SAP solution partners that additionally cover the business processes of specific industries.
Tailor-made solutions have been developed for the foodstuffs and livestock feed industry, small manufacturing companies, project management for service companies, and also cross-sector for audit-compliant archiving of tax-relevant data. The standard solution thus grows smoothly with the company and can be seamlessly integrated into larger SAP landscapes thanks to the SAP Exchange Infrastructure (SAP XI), a central component of the SAP NetWeaver technology platform. This considerably simplifies integrated processes such as consolidated reporting for companies with several branches.
Meeting multi-layered demands
The qualified mySAP All-in-One solutions, on the other hand, are based on SAP industry-specific solutions, i.e. “SAP Best Practices”. These are preconfigured SAP systems that can be implemented quickly and map typical processes of individual industries, such as hi-tech or mechanical engineering. The SAP midmarket partners further hone the basic, core processes defined in SAP’s best practice solutions and “refine” them into qualified mySAP All-in-One solutions. The qualification process is drawn up in close consultation with SAP and is subject to regular checks. Moreover, the solutions are subject to continuous development as the mySAP All-in-One solutions and SAP’s Best Practices are enhanced by knowledge gleaned from implementation projects that is of relevance for the whole industry.
The broad portfolio of SAP midmarket solutions takes into account the complexity and diversity of midmarket companies of all sectors and all sizes. As large midmarket companies often operate internationally at different sites, the solutions also come in different language versions, enabling users to communicate across the company on a standard platform. Further, partners such as itelligence (www.itelligencegroup.com), Plaut (www.plaut.com), or Steeb Anwendungssysteme (www.steeb.de/english) now provide solution packages with clearly defined components at fixed prices. This guarantees the greatest possible cost control for midmarket companies.
Successfully bridging the gap to the customer
The success of the two-pronged approach – SAP Business One as a comprehensive base package and mySAP All-in-One as the basis for industry-specific requirements – is a product of SAP’s partner strategy and the global SAP partner network. When purchasing a new standard or industry-specific solution, small and midsize companies seek implementation partners who know their target group and “speak the same language”. As a result of their specific knowledge of the SMB market in terms of sectors or regional peculiarities, and their local positioning, they are competent local partners capable of bridging the gap to the customer.
Investments pay dividends
In its study “Unternehmenserfolg durch IT” (Company Success via IT), Accenture business consultants explicitly referred to the close relationship between investment in IT and improved business processes and higher productivity. This can be clearly demonstrated with SAP midmarket solutions. For instance, the sauerkraut manufacturer Leuchtenberg has reduced its administrative costs by between 10 and 15 percent and IT operating costs (maintenance and service) by around 15-20 percent in comparison to its legacy system since the introduction of SAP Business One. The SAP standard solution increases the productivity of the company, reduces costs and opens up new scope for investment in order to remain competitive. The investment in SAP Business One has thus paid off in a variety of ways for Leuchtenberg.
Whether SAP Business One or mySAP All-in-One is the correct SAP midmarket solution often depends less on the size of the company and more on the complexity of its business processes. The decisive factor is that it supports companies in organizing their business more efficiently. And that is ultimately the most important thing.
For further information:
General: www.accenture.de; on the subject of ROI and TCO in the midmarket, see also the SMB NEWS article at http://smbnews.sap.info/en/go/23422
and www.sap.com/germany/media/50072272.pdf (ROI studies by SAP)
SAP: www.sap.com/solutions/smb/businessone and www.sap.com/solutions/smb/allinone