SAP has made its global commitment to the SMB space clear. How does SAP UK & Ireland fit into the big picture?
We have a great deal to contribute on both a national and global level. In the UK and Ireland, around 50 percent of our customers have a turnover of £200 million or less, and it represents our fastest growing market sector. Take the UK market, for example. SMBs are responsible for over half of the business revenue and employment in the UK. To give you an idea of what this means in numbers, 55 per cent of the non-government workforce in the UK work in small to midsized businesses – that’s around 12.5 million people. These are striking figures and illustrate how important the market is for us.
Are there are any significant differences in the UK and Irish markets that require a different go-to-market approach?
There are always certain differences in the IT cultures of SMBs in different nations. For example, UK midsize organizations tend to spend more on application-driven solutions than their European counterparts. There’s also, for example, a higher degree of IT sophistication in German companies than in UK SMBs, with significantly less companies having Internet access in the UK. Companies in the UK and Ireland are also subject to slightly different regulatory forces. These are all factors that we take into consideration when we approach the market but at the end of the day we’re looking at the business issues facing SMBs and these tend to be same the world over. The market is extremely competitive, there are lots of players, and capital is often the key concern. Business processes also don’t differ much from country to country. Many SMBs supply large industries and the supply chain management processes are the same whether the supplier is in Taiwan or England. Essentially, what SAP is offering is a portfolio that is designed to meet the IT requirements of the global SMB market. What we do in the UK and Ireland is add a local flavor based on our knowledge of the national market.
How does the partner channel for mySAP All-in-One and SAP Business One work in the UK and Ireland?
The basic channel partner structures for mySAP All-in-One and SAP Business One are the same – SAP Business One and mySAP All-in-One are supported by two distinct channels and sold by two different groups of value added resellers (VARs), who operate within the national market. Our strategy for recruiting partners is also, on the whole, very similar to the rest of Europe. We look for specialist resellers who can demonstrate vertical market expertise and have already proven themselves in the market. We need our VARs to be able to offer a high-paced implementation and a quick return on investment. This is particularly important for SMBs in the current spending climate.However, one thing we do focus on more in the UK and Ireland, when we look for a partner, is geographical coverage. We want to establish a strong local presence through our partners and research has shown that this is our customers’ number two requirement after usability. Remote services and call center support have their benefits, but SMB customers often want the security of a local partner – someone who is close by and, if push comes to shove, can be with them in a couple of hours. Many of the partners we’ve already recruited have been able to commit several regional sales people to SAP Business One and mySAP All-in-One, so we’re already achieving the wider geographical reach that we’re looking for.
How many partners do you have on board and what are your plans for expanding the channel?
For SAP Business One, we currently have a network of 28 resellers, who have an established presence in a particular geographical region or a specific vertical market. With mySAP All-in-One, we have a smaller specialist channel of 15 partners, each one concentrating on their own vertical market. Naturally, we have plans to expand and strengthen the channel infrastructure, but for us, it’s not actually the quantity of resellers that’s critical; it’s the number of sales people each reseller can provide. If one reseller can offer a dedicated team of 20 SAP sales people, that’s more attractive to us than five resellers with just four sales people each. At the end of the day, it’s a question of quality not quantity. We are being very careful not to flood the channel in the UK and Ireland. More VARs do not necessarily mean more business and we want to keep the reseller base fairly exclusive. This means recruiting high quality partners, giving them first-class support, but also trusting them enough to give them exclusivity in certain vertical sectors. The last thing we want is VARs wasting time fighting with each other to secure deals. This is bad channel business and doesn’t benefit SAP or the end user.
You are also recruiting partners from the Independent Software Vendor (ISV) community. What progress has been made in this area?
We are particularly pleased to have broadened our reseller portfolio to include the newly formed Independent Software Vendor program. We have already started working with an ISV called DCS Automotive, who provide a vehicle dealer management system named Quantum that is based upon SAP technology. DCS Automotive have already signed their UK pilot customer, and we are looking forward to expanding this area in 2004.
Recruiting independent software vendors will bring SAP UK & Ireland up against companies such as IBM, Microsoft, and Oracle. What does SAP have to offer over the competition?
In short, we offer much more. Other companies provide architectures, databases, and operating systems for independent software vendors. With SAP Business One, SAP is offering a much fuller solution – an actual application. Our message to the ISV community is simple but powerful: you concentrate on the specialized stuff and the vertical functionality; let SAP take care of the rest. The strong foundation of SAP Business One and the first-class development support we offer our partners also gives SAP the edge over the competition. Partnering with SAP helps ISVs to reduce their product development costs, ease migration paths, and enables tight integration to SAP products – opening up new opportunities in the global market.
Overall, could you sum up how important the SMB market is to SAP UK & Ireland?
It’s of immense importance. SAP is committed to becoming the global vendor of choice in this space. In the UK and Ireland, we are looking to meet SAP’s global targets and make sales in the SMB sector count for between 15 to 20 percent of our revenue by the end of 2005. In 2004, we anticipate concluding around 250 deals in this space.