Reaching High for the Low End

Pinnacle Computing supplies business management solutions to customers with an annual turnover in the range of GBP 5 million to 10 million throughout the United Kingdom and Ireland. Key vertical markets include manufacturing, distribution, construction, finance, and service. Pinnacle has been an SAP partner for the past year and has been implementing SAP Business One solutions since the UK release of the product in mid-2003.
Pinnacle has been a long-time Sage partner, with its business focused on providing Sage-based solutions to clients at the high end of the SMB segment. However, according to James Spencer, group operations director at Pinnacle, the company came to realize that it needed a product to meet the increased opportunities at the lower end of the SMB market.
SAP Business One was chosen because the firm saw SAP as the foremost ERP vendor in the market and the product as a good market fit. Furthermore, the SAP relationship would add value to the Pinnacle brand, and the SAP team supporting SAP Business One in the UK, although small, was open, cooperative, and encouraging.
Spencer lists a number of characteristics of SAP Business One that make it an especially good fit for the lower end of the SMB market: The product is technically strong, with good functionality that is not too complex. It is quick and simple to implement, and the extra functionality included – such as the built-in CRM functions – makes a strong selling point. With this end-to-end capability, he explains, clients start with an integrated product that offers a lower level of management complexity than a system based on multiple products.
Other SAP Business One benefits noted by Spencer include the opportunity for the customer to state that its business runs on SAP, which boosts its credibility. And the fact that SAP Business One integrates well with other SAP platforms lets smaller firms trade more effectively with larger organizations running an SAP enterprise application.

The numbers tell the tale

The overall effect on Pinnacle profitability has not yet been determined, says Spencer, since the company has been selling SAP Business One for only a few months and several projects are still being implemented. However, the project numbers alone are impressive: Pinnacle sold ten SAP Business One solutions in its first half year of the partnership and is aiming to quadruple that number by the end of 2004.
Although Pinnacle does not usually develop specific functionality for SAP Business One solutions, it will implement additional functionality for particular customers. Spencer notes that it is easy to tailor elements like the user interface or data structure to suit customer needs.
He points to two implementation projects as indicating what can be achieved with an SAP Business One solution. One client in mobile communications replaced a complex collection of legacy systems with SAP Business One; another, in the IT sector, implemented a SAP Business One solution in a matter of days.
Because of its strong position in its key market segments, Pinnacle has no plans to expand its geographic coverage beyond the UK and Ireland. However, the size of its customer base and the level of revenues are critical factors for the company’s profitable growth. SAP Business One should enlarge its customer base as it enters a new market segment, says Spencer, adding to the existing base of loyal customers for Sage-based solutions. He also sees SAP Business One as reducing the firm’s risk by eliminating reliance on Sage as the single vendor without undermining existing customer relationships.

Will the big dog bite?

At first, Spencer recalls, Pinnacle worried whether an outfit as large as SAP could provide small partners with the tailored support they needed. However, this turned out not to be a problem. Pinnacle has found the small SAP-UK team responsive, structured, and personable – not at all the feared dictatorial player.
The relationship with SAP, says Spencer, has been well received at all levels of the Pinnacle organization, and, as the numbers show, motivation of the sales staff has not been an issue. As he sums up the situation, “The SAP brand really adds quality and value to our business, and we view the relationship as an important element of our long-term business success.”
Information availability and communication within the SAP Business One partner program is good, with the partner website and the weekly newsletter seen as key elements. SAP has also done an excellent job in building the awareness in the UK of the SAP Business One concept, he says: The investments made in marketing, awareness campaigns, and advertising have been effective. And the expected issue of SAP being seen as a vendor focused solely on large enterprises has not even been broached by customers.
From a sales perspective, Spencer notes that it is generally difficult for vendors to effectively generate leads for partners, particularly in the SMB segment. Yet SAP has done a good job of generating inbound leads, and improved telemarketing activities have also facilitated lead generation.
Training, he says, got off to a shaky start; however, this has improved since partner training was subcontracted to a third party, which has instituted a good program and communicates well. Still, he finds training costs high, and that may become an issue, since it adds a significant burden to the expense of placing a new product in the portfolio of a small company.

Derek Davis
Derek Davis