SAP targets midmarket with e-business solutions

SAP AG is throwing its weight behind a new line of e-business solutions aimed at the midmarket with a slew of pre-packaged vertical offerings and an aggressive expansion of resellers and channel partners for small- and medium-sized businesses.

First announced in June, the mySAP All-in-One set of verticalized e-business solutions initially will feature 12 customized e-business solutions for various industry segments including automotive, oil and gas, commercial printing, manufacturing, engineering and construction, and management consultants among others.

SAP joins Microsoft Corp., PeopleSoft Inc., JD Edwards, and other ERP companies that increasingly are targeting midmarket companies that need deep functionality without the expense of deploying and maintaining some of the higher-end solutions.

SAP already has a large presence in the small- and medium-size business (SMB) market, according to Pat Hickey, SAP director of small and mid-market solutions. Two-thirds of its installed base is comprised of companies with less than US$500 million in annual revenue.

“On one hand [SMBs] need a functionally rich offering…but on the other hand they lack the budgets and internal resources to be able to implement this,” Hickey said. It involves coming to market with very industry-specific, niche offerings that present a pre-packaged system that works for the needs of a particular industry and is implemented in a turn-key, out-of-the-box, fixed-priced style,” Hickey said.

SAP plans to jointly develop and market these industry-specific solutions with partners, and will grow the program to offer 50 niche solutions marketed with partners by the end of next year, Hickey said. SAP already has added resellers such as intelligence Inc., unit Inc., Osprey, and Plaut Sigma Solutions and channel partners such as Condo and Bramasol to delve further into the market.

Each of the midmarket solutions will be tailored to the needs of the particular industry with integration into mySAP horizontal solutions such as supply chain management. For example, the printing solution features intelligent job and production configuration and tools to allow companies to quote a number of different jobs. It integrates with supply chain management and inventory management. The automotive solution features integrated production planning and shipping for improved manufacturing efficiency and enhanced interfaces for easy entry of production data by shop floor staff.

“We not only preconfigured to that industry…but also developed new programs for them,” Hickey said. “If we are targeting a management consulting company, we can walk in there with CRM and service management capabilities, which is important. We can walk into an automotive client with the supply chain management and EDI. We are combining best-of-breed functionality from any industry with a powerful ERP solution. You can implement it rapidly…and you have all the scalability in the world that the SAP [solution] is offering you.”

Despite the intense focus recently on the ERP mid-market, most companies seem to be taking a purely defensive stance to prepare for Microsoft’s highly anticipated entrance into the mid-market CRM and enterprise applications market, said Joseph Marino, an analyst with Current Analysis, in Sterling, Va.

“The ROI (return on investment) profile is not anything in comparison to the large enterprise companies they are going after,” Marino said. “If they think they are going after the Microsoft Great Plains market, that requires a retooling. If it’s defensive, who are they worried about? Is Microsoft going to make incursions into their primary market? Certainly, no – but there could be incursions. It sounds like they are covering bases, and in a wise way.”