What are SAP’s reasons for moving into the small and midsize business (SMB) market?
We’ve actually been a leader in this space for a while. Currently, almost 60 percent of SAP’s installations are in businesses with annual revenues under $500 million, almost 40 percent in businesses with revenues under $200 million. So we have been and remain quite focused on this segment.In part, it’s because we work with businesses of all sizes that SAP delivers significant value to SMBs. Through our work with our more than 19,000 customers, we have a multiple more than anyone else in our industry developing industry-specific best practices that provide quite a head start to small and midsize businesses. For instance, we have worked with the high-tech industry and our business partners to tailor our software to develop and support best practices for the high-tech manufacturers, including electronics and semiconductor manufacturers, among others. When we work with midsize high-tech companies, they can take advantage of this immense experience and SAP expenditure right out of the box. It’s a huge advantage we bring to the table. Then there are the myriad transactions that large companies rely on – many of which involve SMBs. Take procurement processing, for example. Our larger clients tell us that within their broad community of vendors, this is a strategic issue for them. However, while these larger companies now rely on electronic processing for the bulk of their procurement processing, their vendors – and particularly the SMBs among them – often are not Internet- or supply chain-enabled. SAP has increasingly moved e-business into the heart of larger clients’ operations. We also help smaller business partners become active participants in those very same value-added processes. So, in this sense, we work with these smaller customers for exactly the same reasons we work with larger companies.
That said, what are some of the key differentiators of the SMB segment?
First of all, most organizations have very limited IT departments, if any full-time IT staff at all. Project management teams interact directly with and make decisions at the CEO/owner level. Most SMBs are in a state of enormous change but do not have resources for “task forces” or other full-time personnel to manage that change. Many are family-owned companies, some with three or more generations of family management. So, not surprisingly, it is especially important to be close to the customer – to serve not only as a partly outsourced IT department, but more importantly, as a key business advisor. And these companies are very cautious about risk.To help SMBs face all these challenges, we have not only developed SAP Business One and mySAP All-in-One solutions, we have also hand-picked and trained the most competent partners to act as customers’ key advisors on a continuing, long-term basis. These partners have been selected for their expertise in promoting, implementing, and maintaining solutions within specific industries and localities. Then we certify them on SAP’s industry-specific solutions so that they enhance their expertise, minimize implementation times, and help customers maximize the value of their software solutions.
How does SAP distinguish between solutions based on mySAP Business Suite and the SAP Business One and mySAP All-in-One offerings for smaller businesses? And what kind of recommendations can you make to SMBs to help them determine which is right for them?
It’s simply the sophistication and complexity of a company’s business processes and the size of the company. mySAP Business Suite is the most complete e-business platform that exists – I don’t think you’d find a challenge to that. mySAP All-in-One is based on that platform, but it is pre-packaged for specific industries and designed for customers in the small- and midsize-company market. In this way, we are able to deliver the benefits of the mySAP platform to midsize customers at low cost, and already reflecting the customer’s specific business needs.For a company with less business complexity – a non-manufacturing company with less sophisticated logistics, for example – SAP Business One is a fantastic solution. SAP Business One was developed separately from mySAP All-in-One. It is a very intuitive yet powerful integrated solution for the smaller customer market. We’re talking generally about the space below $100 million in annual sales, with maybe ten to several hundred employees. SAP Business One offers these companies a solid and integrated platform for financials, general ledger, order management, sales-force automation, and other related functions.For SMBs of any size, SAP offers support in developing long-term relationships with partners that will serve them well into the future. The closeness of our relationships with our partners and customers is one of the main foundations in tailoring SAP to serve the SMB market.
Could you elaborate on the SMB partnership program: What are the major benefits for partners, what is the overall goal for SAP, how is it different from competitor programs?
Very simply, SAP is about quality, not quantity. We hand-pick our partners through directed recruitment efforts and maintain a personal relationship with each partner going forward. Unlike some of our competitors, partners cannot sign up with SAP by paying a fee and registering on a website. We also require a great deal of mandatory training for our partners. In turn, SAP Business One and mySAP All-in-One partners reap the benefit of a personal relationship and intense support from SAP.We have been very successful attracting precisely the kind of partners we want – highly competent individuals dedicated to the long-term business success of our customers. Many of these partners have a long history in this market and have worked with some of our competitors.
Since the start of SAP’s SMB solutions, what were the major challenges you had to overcome?
Our biggest challenge has been the misperception in the market that SAP is only for large companies. Yes, it is certainly well known that a very significant percentage of the Fortune 1000 have chosen to do business with us. But we have over 20,000 customers globally – only 1,000 of them could possibly be in the Fortune 1000.As I noted, almost 40 percent of SAP’s software installations globally are in businesses under $200 million in revenue, and almost 60 percent in businesses under $500 million. We have been a very strong player in this market – albeit without great fanfare – for some time. But since our competition doesn’t find great success in challenging our solutions, our customer dedication, or our low cost-of-ownership, their only lever is to promote misperceptions. It may take some time and effort, but I see us winning this battle of misperception on a daily basis.
What do partners appreciate or criticize most when partnering with SAP?
Partners most appreciate having a personalized relationship with SAP, with regular (even daily) contact between us and the partner. Much of our competition has a somewhat distant relationship from their partner community – they behave simply as an arms vendor. We are knee-deep engaged in sales training, implementation training, demand generation, and sales support with our partners.Our team is built to leverage each partner’s strengths, and to constantly improve each partner’s ability to fulfil for our mutual customers. Partners also appreciate that every asset we build and every kind of training or other investment we ask them to make, has its roots in driving customer success. In the end, if we can mutually drive customer success for SMBs, both SAP and our partners will be successful.