“SAP software for small and medium-size businesses has become much less complex”

August 25, 2003 by admin

Martin Boll

Martin Boll

What do small and medium-size business expect from a software solution?

Boll: First of all, the functions offered by the software must cover the customer’s requirements. The software should also be good value, and it should be possible to complete the project in a reasonable time. Comprehensive functionality enables us to map our customer’s business processes in full. From our day-to-day experience, we know that the SAP software fully meets our customers’ requirements in terms of both breadth – there are 23 industry solutions – and detail. Functionalities that are not required are then deactivated in Customizing. This corresponds to SAP’s general strategy of offering as comprehensive a product as possible, and then turning off the functions that are not required for a specific customer.

Where is the focus in small and medium-size businesses – Enterprise Resource Planning, Customer Relationship Management, Supply Chain Management, Human Resources…?

Boll: While the demand for CRM has grown in recent months for small and medium-size businesses, the main focus is still on Enterprise Resource Planning (ERP). It’s amazing how much catching up still needs to be done in the area of ERP solutions. This is also borne out by a number of studies, which reveal that, depending on size and industry, up to one third of small and medium-size businesses are still working with individual developments or without an integrated system at all. If these companies decide to use standard software, they start with ERP as the core. A CRM or SCM solution may then be added later.

SAP solutions used to have the reputation of being too complex and too expensive for small and medium-size businesses. Has this perception changed?

Boll: The perception hasn’t changed enough – even though it no longer reflects reality. The reasons for this are historical, and go back to the time when large companies, in particular, were using the mainframe and SAP R/2. SAP’s software has since become much less expensive and also less complex. For example, at Steeb, we have been able to reduce implementation costs by 40 – 50 percent in recent years. Today, we manage projects for customers with sales of up to 30 million euros in around 150 days. Years ago, projects like this would have taken 400 – 500 days of consulting. One of the reasons for this development is the improvements that SAP has made to the implementation methods and customizing. Thus ASAP now contains a whole series of templates that can help in implementation. However, another key factor is of course the skills and expertise of our consultants, because, as always, “people make projects”.

Isn’t it true that small and medium-size companies in particular must be concerned that they will have to adapt their processes to the software solution, rather than the other way round?

Boll: Not at all. Small and medium-size companies usually have a relatively restricted process view, because in contrast to large companies, they rarely have processes that are highly specialized. The relatively simple processes in small and medium-size companies are usually restricted to core processes, and can be easily covered by the functions offered in the SAP products. The core processes, which include procurement, goods receipt, invoice verification and payment, are very similar in most companies. This is precisely what the SAP software is tailored to, and changes to the processes are rarely required.

How would you rate the scope of the SAP products compared to those of its competitors? Does such a comparison apply for Germany alone, or can it be applied at international level?

Boll: SAP currently has the most comprehensive standard business software in the world. None of the competitors can really match it. Even if various pioneers take the technical lead in development for a certain length of time, SAP has always managed to catch them up and then leave them behind. For example, Siebel used to be the leader for CRM, and i2, once the brightest start in the SCM sky, has since almost disappeared as well.

How do you rate the implementation times for the SAP small and medium-size business solutions compared to those of the competition? And what about total cost of ownership?

Boll: With regard to implementation times, we can certainly match the competition. Recently, as part of an offer, we had the chance to compare the implementation times of SAP Business One with those of a rival solution for small and medium-size businesses. Compared to the competitor’s product, our SAP Business One software was missing some functions that were essential for the customer. We added these functions. Despite this project enhancement, our offer was still below the competitor’s. The functionality added in this project will be integrated in the standard features of SAP Business One in the near future. Then, our costs will fall even further below those for comparable products.

I see a similar situation with the total cost of ownership. Looked at over five to eight years, a customer is better off with SAP than with one of our competitors. The support costs are lower, stability is higher. In addition, the useful life of our products is extremely long. Many of our customers use the software for more than 10 years, and in this time, only import the new releases. All of this helps to reduce the total cost of ownership.

Small and medium-size businesses are worried about costly “consultant tourism”. How have you made sure that the competence for an SAP implementation project is consolidated in the expertise of just a few consultants?

Boll: In large companies with highly specialized processes, specialists are required for the detailed work. Small and medium-size companies expect consultants with a broad range of process knowledge. Our consultant training is geared towards this. Consultants should have expertise in more than just one module, should be able to program in ABAP and make simple modifications themselves. Small and medium-size businesses do not need to fear costly consultant tourism. Incidentally, most of Steeb’s projects are fixed-price projects, so our small and medium-size customers can calculate exactly how much their projects will cost.

How would you describe Steeb’s position in the SAP environment? What is your task? Can SAP’s new product strategy be felt in your company?

Boll: On the one hand, Steeb Anwendungssysteme GmbH is a fully-owned subsidiary of SAP AG, and on the other, it is a software company. Our task is to form a kind of spearhead in the small and medium-size sector, in order to investigate the working practices and to win small and medium-size businesses. To date, we have completed more than 350 SAP projects in the small and medium-size sector, and the expertise we have gained from these has flown back into development at Walldorf. As a result, the software has become even more suitable for small and medium-size companies. This can be seen, for example, in the current project “People-centric User Interface”, the aim of which is to create an even more user-friendly and intuitive user interface and further meet the requirements of small and medium-size businesses.

The new SAP product strategy with its focus on SAP Business One for small businesses with up to 100 employees and mySAP All-in-One for medium-size businesses with up to 1000 employees has had a very positive response at Steeb. Many small and medium-size businesses come to us and specifically ask us for industry solutions such as these, because they are tailored for a specific purpose and cover all the main processes from the outset.

In your view, where does the greatest market potential lie – with SAP Business One or with mySAP All-in-One?

Boll: The segment for the smallest businesses is only now being captured. In terms of the number of installations, SAP Business One therefore has the greatest market potential, while in terms of sales, mySAP All-in-One is still clearly ahead. In future, though, SAP Business One may well win ground and take on a leading role in the small and medium-size sector.

Where do you, as a specialist for small and medium-size businesses, think improvements can be made in the SAP solutions?

Boll: Our products and functionalities are completely suited to small and medium-size businesses, but we have a problem with our image. SAP products are still regarded as too complex and too expensive. This is mainly a problem of perception, and reference customer marketing therefore has a very high priority. At Steeb, we have been systematically implementing this strategy for many years. However, not least because of the new products and areas of applications for the SAP solutions, we must continuously win new customers and progressively communicate our successes.

Is it true that SAP wants to move consulting business in-house? Does this also apply for projects in the small and medium-size business sector? What will the consequences of this be for you?

Boll: No, I haven’t witnessed a trend of this kind, even though I can only speak for Steeb. It was always SAP’s strategy to only secure a certain share of the market, in order to guarantee the quality of specific projects and to set standards with reference projects. However, to achieve this, it is sufficient to cover just 10 – 20 percent of the consulting business with in-house staff. SAP is still banking on its implementation partners.

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