Business All-in-One

SAP Leverages the “Power of Big” to Benefit SMEs

Some common myths and misconceptions in the world of ERP are hard to kill, particularly when competitors and pundits just won’t let them die. Among these common myths is the perception that SAP is just for the big guys. Yes, the SAP Business Suite and even some predecessors to the Suite are installed in a large percentage of the Fortune 500. And yes, some of them cost millions of dollars and took many years to implement. Of course there are some horror stories, but I would argue those exist for any major ERP vendor.

I have to admit, during my 30+ years of working for software companies (but never for SAP), I might have encouraged some of those misconceptions, just as SAP’s competitors do today. But now, as a recovering software executive turned data junkie, I tend to look beyond the rumors and misperceptions. I go for the facts. Here are a few that are hard to argue with:

  • SAP has about 263,000 customers
  • 80% of them fall in the small to mid-size (SME) bracket. Do the math. The answer is 210,400.
  • SAP does not sell just one product. There is the Business Suite, but also SAP Business One and SAP Business ByDesign (no it is not dead or dying). SAP Business All-in-One is the Business Suite repackaged, by industry, for medium size businesses. You might choose to call it a different product or not, but it really matters little. Repackaged with best practices included, it makes the Business Suite more attractive to smaller (but not too small) companies.
  • SAP Business One, which addresses the lower end of the SME market, is installed in over 45,000 small businesses.
  • SAP’s ecosystem of partners that support small to mid-size businesses is 700 strong and growing.

I am sure one of SAP’s goals for this year’s annual SAP SME Summit was (once again) to help dispel these myths and misconceptions. I am equally sure that SAP understands it will take more than just bringing together customers, press and analysts in its hip New York City office to counter these perceptions. Instead, it seems to be effectively leveraging its extensive resources in order to help small and medium size businesses. Here are a few of different actions it has taken recently:

  • SAP HANA 9 can now be run on less expensive hardware
  • Powerful data visualization tools are available with a copy of SAP Lumira, free to any SAP customer
  • Fiori apps, providing an intuitive and modern new user experience, are now included for free (with paid maintenance) with SAP Business All-in-One
  • A 0% financing program, designed specifically for small businesses, as well as SAP’s partners that sell directly to them. This is a “buy now, pay later” option that gives the small business free financing for 24 months, while the partner gets paid within 5 days.
  • A free connection to the Ariba Network, which connects over 1.6 million companies in 190 countries, allows the small business to list its products. Although the free version does not allow bidding and purchase from the site, this is an effective way for small businesses to reach a large potential group of buyers.

It takes a large company with deep pockets and extensive resources to be able to make these kinds of offers to SMEs. Yes SAP continues to be the 800-pound gorilla in the ERP space but that doesn’t mean it can leverage the “power of big” to the benefit of the little guy.

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Rumors of the Death of SAP Business ByDesign Greatly Exaggerated

I have been hearing rumors about the death of SAP Business ByDesign for several months now. Most of them come to me from SAP competitors, although a few have come through ex-employees. Note the emphasis on “ex.” No employee of SAP has ever confirmed or even hinted at this. However I have to admit the messaging around Business ByDesign has not always been crystal clear, which has allowed for these rumors to spread.

Prior to the SuccessFactors acquisition Business ByDesign was positioned as the platform of choice for development of all cloud offerings. But with the acquisition and the accompanying infusion of “cloud DNA” that story changed. All of a sudden the Business ByDesign platform wasn’t important. The powers that be at the time (SapphireNow May 2012) said,  “Customers don’t care about platforms. They only care about beautiful applications.” We heard less about By Design and more about the benefits of loosely coupled applications over tightly integrated ones. The market interpreted that to mean that Business ByDesign would be broken apart into different bits and pieces and might not survive as an integrated suite. SAP didn’t go out of its way to squash that rumor, so it too spread.

Then came Sapphire Madrid (November 2012) and there was a new platform in town. The HANA cloud platform started showing up on slides with little or no fanfare, and less explanation. The more SAP talked about its cloud strategy, the less we heard about Business ByDesign. Hence more confusion.

Until now

Earlier this week SAP presented a Business ByDesign strategy update to several industry analysts, including yours truly. Most importantly, it positioned Business ByDesign relative to other products in its portfolio. While I often find SAP graphics confusing in that they are too technical and attempt to say too much, I found the graphic shown refreshingly effective.


But it does assume you know something about SAP products, so let me explain. Business ByDesign is essentially a midmarket product, targeting companies that are smaller than the very large enterprises where the Business Suite is sold, and companies that are bigger than the SMBs which is the intended market for Business One. Business ByDesign shares this space with Business All in One, which sits a little higher. Remember, Business All in One (BAiO) is essentially the same underlying ERP that is a big part of the Business Suite. But BAiO bundles ERP with industry-specific content and best practices to make it a better fit and an easier implementation for those midmarket companies in (many) supported industries – midmarket companies that don’t have quite the deep pockets of the large enterprise.

You’ll notice BAiO also dips down into the Business ByDesign space. Business ByDesign is SaaS; BAiO is not, although SAP does offer some cloud alternatives for the Business Suite and BAiO, which have traditionally been deployed on-premise. But these cloud options are more like a hosting environment than SaaS. This overlap might result because of deployment preference or it might result because industry-specific requirements are not be satisfied with the Business ByDesign suite.

But you will also notice the Business ByDesign block extends upward into the top of the midmarket and also encroaches on the large enterprise space as well. Business ByDesign will be offered as two different packages, under two different names, but with one single code base. Business ByDesign is the complete suite, while SAP Cloud for Financials is a subset, including the finance and accounting piece of ByDesign. Even though it will share a code base, the code base was tweaked so that SAP Cloud for Financials could stand alone, without the other non-accounting “legs” of the solution.

The reasoning behind this split into two packages is to address two different buying patterns. SAP Business ByDesign is intended for “Mid market companies and subsidiaries [that] expect an out-of-the-box ready-to-use suite with open interfaces.” SAP Cloud for Financials (the subset) is for “Large Enterprises [that] expect an open ERP backbone to be complemented with SAP and non-SAP Line of Business applications.” While the Business ByDesign buying pattern is pretty clear, the SAP Cloud for Financials might require a bit more explanation.

Conceptually, these two different approaches aren’t all that different. Few large enterprises today are huge monolithic organizations. Instead they are comprised of operating units, divisions and/or business units. While these units might have some operational autonomy, financials will have to be consolidated at a corporate level. Where these units operate as a separate legal entity, a full ERP solution is most likely needed. While in the past these units may have been left to on their own to select and implement ERP, today, standards are more the norm. The 2013 Mint Jutras ERP Solution Study found 94% of companies (with multiple operating locations) have defined standards for ERP today. What better way to enforce these standards than through a cloud-based SaaS environment?

Where does Business ByDesign fit in this scenario? It fits as an integrated suite at the subsidiary level. A lot of different ERP vendors talk about this two-tier kind of approach. Some even advertise they can integrate with SAP at the corporate level, simply because of SAP’s dominance here. A cloud solution at the subsidiary level has a lot of appeal here because it helps the enterprise assert a level of control while also providing some flexibility and autonomy at the subsidiary level.

But how about if we pull a switch here? What if we start to think that maybe the corporate financials might be due for an update or even a major overhaul? With the siren call of the cloud becoming more and more compelling, why not consider replacing that legacy accounting solution at corporate with a modern, technology-enabled, cloud-based solution? You might not think the financial modules of an ERP designed for a midmarket company have the accounting chops necessary to support a large enterprise. But then most accounting applications designed for the midmarket aren’t built by SAP. In fact, SAP can and has used the same design team for Business ByDesign (and therefore SAP Cloud for Financials) that architected the Business Suite. And at that level SAP has dominated for years.

All told, this one simple graphic speaks volumes about the relative positioning of the SAP products. Is there room in SAP’s strategy for three different products (four if you count BAiO, with its separate go-to-market strategy)? I am not only tempted to say yes, I am tempted to say, “Hell, yes.” Think about it. SAP is the 800 pound gorilla and even 100 pound gorillas can handle a diverse portfolio.

Addressing Concerns

So what about some of the accusations and assumptions that have been floating around the rumor mill? Let’s counter a few of them.

“SAP is pushing Business One in the cloud instead of Business ByDesign.”

ByDesign has two characteristics that define it: it is a midmarket suite and a cloud solution that is deployed exclusively as software as a service (SaaS). It was never intended to replace SAP Business One at the low end of the market, but when a small company wanted SaaS ERP, it was the only product SAP had to sell. Now that a “cloud” option exists for Business One, that is no longer the case. This is a clear segmentation of the market by company size. Also, Business One has momentum. With over 40,000 customers and a large and mature channel in place, now that a cloud option is available it is only logical it is starting to gain its own fair share.

“SAP is no longer developing the product.”

SAP has been continuing to develop Business ByDesign, but these efforts might not have been particularly visible over the past couple of years. While SAP Cloud for Financials and Business ByDesign share a common set of code, some effort was involved in order to allow SAP Cloud for Financials to stand alone and yet be easily “coupled” to other solutions. This tends to be “under the covers” work.

And then there is HANA. Business ByDesign pre-dates HANA.  It was built in the NetWeaver era and used MAX DB (database) and TREX (search and classification). In order to take advantage of its advanced technological capabilities, Business ByDesign also had to transition to HANA, resulting in more “behind the scenes” work.

SAP assured those of us on the recent call that it was continuing to invest in the product and the platform. That said, it is also (better) defining the current target market. SAP will focus on developing the ERP backbone and specific capabilities for service industries, while also adding (open) integration capabilities. It will continue the transition to HANA for scale and extensibility. And it will also transition to HTML5 and benefit from the work done on the Fiori applications for a responsive, mobile-first user interface.

“Business ByDesign is a technological dead end. It is based on Microsoft Silverlight.”

See answer above.

“SAP themselves view it as a failure; otherwise it would be available world wide. Instead it is only available in a few countries.”

Twenty four percent (24%) of Business ByDesign business has been in the US and 32% in Germany. But it is available in 15 different countries. Is it concentrating its attention on all 15? No, but then not all 15 of them have really strong economies today. The SAP installed base is a prime market for Business ByDesign so SAP is going where it has the most customers and can make the biggest bang for its buck. That only makes good business sense.

Three more countries are planned for 2013 (New Zealand, Japan and South Africa) and an additional 3 are planned in 2014 (Brazil, Belgium and Singapore).  In addition customers are running customer-specific localizations in another 31 countries.  How many countries does it need to be in?


The supposed death of Business ByDesign seems to just wishful thinking on the part of some competitors. Although I also observe other SaaS ERP companies welcoming SAP onto their turf, as much for validation as for healthy competition. Let’s face it, all other ERP companies love to single out those competitive deals where they have beaten SAP.

Instead of a death knell, I am seeing renewed focus and commitment across SAP at the board, and executive level, as well as in the field. This represents a commitment to the cloud strategy in general and Business ByDesign specifically. Now, more than ever, SAP is clear about its target for the product:

  • The SAP installed base and upper mid-market are key for the Business ByDesign suite. Customers with higher revenue and user count threshold are prime targets as well as subsidiaries of large enterprises.
  • Large enterprises will be the target for packages such as SAP Cloud for Financials and other line of business cloud solutions like SAP Cloud for Customers and SAP Cloud for Sales. SAP will stress integration capabilities with SAP and non-SAP cloud / on premise systems.
  • Its primary industry focus will be professional services, public services and distribution.
  • While the product is available in other countries, SAP will focus its sales efforts where it has its largest installed base and where economic indicators signal a strong market. As a result, go to market efforts will focus on the US, Germany, the UK, Netherlands, Canada and Australia.
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Impressions from SAP Americas Partner Summit: Partners Make it Real

Tis the season for partner summits. SAP Americas Partner Summit was the 3rd of these I attended in a week and a half. This was the first of this type of event for SAP since it recently merged North America and Latin America into a single unit under the direction of Rodolpho Cardenuto, President SAP Americas. This merging of the Americas bucks the trend in the industry. As Latin American economies, most particularly Brazil, continue to emerge, it is more likely for Latin America to be spun off from a previously combined unit.

And the combination of the two Americas has a further bit of a unique twist. Typically North America will be the dominant player, and therefore you might expect it to bring its southern neighbors into the fold. Yet at the Summit, it really felt more like Latin America was taking North America under its wing. Presumably this is largely based on the recent successful growth of Latin America under Mr. Cardenuto’s direction.

Over the course of two days we heard lots from SAP executives on the main stage, in smaller groups and one-on-one meetings. Some of what we heard simply reinforced the four pillars we have been hearing about quite consistently at various events over the past year or more, namely how SAP intends to:

  • Leverage the core business applications
  • Deliver in mobile
  • Lead in the cloud
  • Capitalize on big data (read: HANA, HANA, HANA)

But how do these key elements of SAP’s strategy pertain to the partners and the customers they serve?

Leveraging the core business applications

The key message here: industries are important and partners are critical to building out solutions. There will be common processes across all companies. These common processes are easily handled by basic functionality that has become quite commoditized today, making it hard for any software company to differentiate itself solely on the basics. It is equally hard for any customer running “just the basics” to gain a competitive edge.

SAP’s approach to delivering that source of differentiation is to co-innovate with partners and customers. First of all, SAP constructs specific “value maps” for each of 25 different industries, identifying market trends and specific business capabilities required to compete in these markets. It then creates very unique blocks of solutions for each industry.  The goal is to not just deliver technology, but to create more value for its customers, and therefore SAP is taking a design thinking approach. This has been music to my ears, which are tuned more to business issues than pure technology. I spend much of my time and efforts translating techno-speak to business-speak.

Design thinking is becoming more and more popular these days, but in case you are not familiar with the concept, it is a repeatable process for solving problems and discovering new opportunities. It consists of 4 key elements:

  1. 1.    Define the problem
  2. Create and consider many different options
  3. Refine selected directions
    Repeat steps 2 and 3 until you reach…
  4. Pick the winner; execute

As the pace of change accelerates, as technology allows us to solve problems previously deemed unsolvable, SAP understands it can’t possibly deliver all this value itself, and therefore turns to partners. As Chakib Bouhdary, EVP Industry Solutions and Customer Value stated on stage, “We all have to change our tolerance to IP sharing.” This is an important concept and one critical to encouraging partners to develop complementary solutions, along with a go to market plan that includes revenue sharing.

At first glance this “sharing” of IP and revenue might seem to pertain only to the traditional Value Added Reseller (VAR) or the larger service providers/system integrators. But during the Summit SAP also introduced the SAP PartnerEdge program for Application Development, “a simple and comprehensive program designed to empower partners to build, market and sell software applications on top of market-leading technology platforms from SAP.

How is this new and different? Essentially it lowers the cost of entry for small partners, while also simplifying the process of signing up. Partners can choose from a set of “innovation packs” based on the latest platform technologies from SAP, including the SAP HANA platform, SAP HANA Cloud Platform, SAP Mobile Platform, SAP databases and the SAP NetWeaver platform. The innovation packs contain technology-specific license rights, resources and services to help partners rapidly get enabled to develop applications on SAP platforms. The packs are also designed to support custom development for co-innovation with customers, which often is the first step to developing a more commercial, standard application. All for an entry fee of around 2500 euros.

These small partners pay a low annual fee (500 to 1500 euros per year) for each of these innovation packs. In turn they can also offer their wares through the SAP online app store and potentially reach a much broader market and therefore better monetize their efforts. This encourages a larger volume of smaller partners in a very real “win-win” scenario.

Deliver in Mobile

Notice the SAP Mobile Platform is included above as one of the innovation packs. The consumerization of IT has changed expectations of connectivity and accessibility of data. But nobody (in their right mind) really wants to lift and shift the traditional ERP user interface to a mobile device. Mobile executives today want answers to specific questions, hence the increase in demand for more purpose-built mobile apps. Lots of questions potentially generate the need for lots of mobile apps. And the SAP online app store is the perfect place for partners to showcase those they build on SAP’s mobile platform.

Lead in the Cloud

It seems everyone today wants to claim “leadership” in the cloud and SAP is no exception. With all the “mine is bigger than yours” rhetoric in the market today, determining who is on top is difficult and probably a bit subjective. However, after developing its own “born in the cloud” (SaaS only) business management suite (Business ByDesign), two major “cloud only” acquisitions (SuccessFactors and Ariba), 30 million users in the public cloud and the world’s largest business network supporting $460 billion in transactions, SAP has to be right up there on the leader board.

While there is still a lot of confusion over cloud and SaaS, the interest in both has taken a quantum leap over the past couple of years. I’ve written a lot about the benefits of moving to the cloud, but while others predict that very soon the vast majority of applications will be running in the cloud, my research indicates only 33% will be SaaS in 5 to 10 years. I attribute this to the fact that there are so many solutions running on-premise today and many companies are reluctant to rip and replace only to convert to a SaaS deployment model. So does that limit the number of companies that can effectively leverage the benefit of the cloud to those willing to abandon their current software licenses? SAP says, “No.”

Many of the companies running on-premise solutions would love to relinquish the responsibility of managing and maintaining those solutions and reap the benefits of the cloud. SAP’s answer to this is to offer Managed Cloud as a Service (MCaaS). This isn’t a brand new concept. Back in May, SAP announced its SAP HANA Enterprise Cloud. As I wrote back in May…

On May 7, 2013 SAP announced SAP HANA Enterprise Cloud. As the name implies, it is a cloud-based service that allows an organization to move existing (or new) implementations of the SAP Business Suite and SAP NetWeaver Business Warehouse, powered by HANA, off their own servers and into SAP’s massive data centers. Why would an enterprise want to do this? The short answer: Speed, power and the benefits of cloud computing without the disruption of replacing existing on-premise solutions. Speed and power come from HANA, adding visibility and agility to the business by enabling decisions to be made in real-time with volumes of data that were inconceivable just a short time ago. Cloud computing lowers cost and adds elasticity, allowing capacity to stretch as your business and your need for data grows.

This is not SaaS and is not a public cloud. It is really a private cloud for the customer managed by SAP. This was a purposeful decision on SAP’s part since the objective is to make the solution truly “elastic.” While this term may be common in technology circles, it is less so in the business community. Essentially, it means the customer is never constrained by hardware limitations. Data center configurations expand (transparently to the customer) as more computing power is required. And if there are any lingering concerns about applications running in a public cloud, those go away with this model.

So what does this mean for partners and how is MCaaS different? It means they can bring the benefits of the cloud to those not quite ready for a SaaS solution. Partners can purchase product licenses and offer them, along with other services on a subscription basis. While this is the same concept introduced with the HANA Enterprise Cloud, HANA is not a requirement, nor is the Business Suite. SAP may be hosting the software, but partners may also sign up to do the same. SAP Business One and Business All-in-One are already offered in this kind of hosting model by several of the larger partners.

Capitalize on Big Data (HANA, HANA, HANA)

This was the first SAP event I have attended in a long while where HANA was not the primary focus. Yet its presence was certainly implied, if not directly referenced. Steve Lucas, President, SAP Platform Solutions talked a lot about “the real time connected enterprise:”

  • Real time business applications
  • With real time integrated analytics
  • Delivered on any device in real time (securely anywhere in the world)

Of course you need HANA for this. But I think the real message for the partners here is that SAP needs them to deliver applications that leverage HANA. This makes Dr. Bhoudary’s comment about SAP’s tolerance to IP sharing even more relevant beyond the concept of building out industry solutions. I’ve said it before and I’ll say it again (and again and again if necessary)…Without this way of thinking, without the development of applications leveraging its technology, HANA is simply an elegant technical solution in search of a problem. And as Steve Lucas said, “No one wakes up in the morning and says, ‘I really want to install HANA.’ They wake up with problems to solve…. Partners make it real.”


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SAP Business Suite on HANA: Software that Reinvents Business. Reinvented.

Really? Yes, Really!

On January 10, 2013 SAP announced the availability of SAP Business Suite powered by SAP HANA, a new option for SAP Business Suite customers and an opportunity for SAP to deliver “transformative innovation without disruption.” That’s a mouthful, but one that has the employees at SAP super excited. While the announcement was well-received and the audience seemed to like what it heard, this group of IT influencers didn’t seem to exhibit that same level of excitement. But influencers can be a jaded bunch. All too often as you start to dig deeper you find the story just isn’t all that new or different. In this case I believe the tables will be turned. As influencers and SAP customers alike begin to explore and understand the new and very real possibilities, what first appeared to be just “interesting” will truly become exciting. And there is no limit to those opportunities to innovate.

The HANA Story: What It Means to Business

Part of the reluctance to “feel the excitement” might stem from the fact that we’ve been hearing about HANA for a few years now. Six years ago Hasso Plattner, cofounder of SAP and Chairman of its Supervisory Board, had a vision of what the system of the future would look like. That vision included:

  • All active data must be in memory. In Hasso’s words, he wanted to “get rid of the rusty spinning disk.”
  • Full exploitation of massively parallel processing (MPP) in order to efficiently support more users
  • The same database used for online transaction processing (OLTP) and analytics, eliminating the need for a data warehouse as a reporting tool for OLTP to support live conversations rather than “prefabricated briefing books”
  • Radically simplified data models
  • Aggressive use of math
  • Use of design thinking throughout the model

But such a vision obviously took time to deliver, so for the first few years the world heard about this transformative technology, but couldn’t touch, feel or see it. In 2011 we started to see some results as HANA for analytics became a reality and pioneering companies began to see performance improvements previously unheard of in terms of speed and the ability to handle massive volumes of data.

In 2012 it became real as SAP released HANA as a platform for developers. But the vision was still one of powerful technology and much of the talk over the past six years has been presented in very technical terms. “Here is this super technology; let’s work together to find ways to use it.” That’s not necessarily how business executives and non-technical decision-makers think. Instead they think in terms of business problems. “I have this problem. How are you going to help me solve it?”

While the ability to “support live conversations” and efficiently “handle more users” might resonate with a business executive, these messages were often over-shadowed. Business executives don’t necessarily perceive the value of eliminating disks, simplifying data models or using math. They don’t know what MPP is or design thinking.

So now, with this announcement, SAP is trying hard to change the conversation to be less about the technology and more about the business value.  What is the real value? In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past.

It is in uncovering these types of solvable business problems that the excitement will build. As Dr. Vishal Sikka, member of the SAP Executive Board, Technology and Innovation said, “Now the software at the heart of thousands of the world’s best-run companies can work and think as fast as our imagination.” But many business executives simply don’t have the same kind of creative imagination as a Vishal Sikka or a Hasso Plattner.

SAP Business Suite might be reinvented on HANA but how does that help customers reinvent their businesses? The trick will be in unleashing their imaginations and helping them see the possibilities. Yet in its attempt to make the message universal and relevant at the highest levels of its customers’ organizations SAP often introduces a level of abstraction that is lost on its audience. So we need to translate some of these high level messages into something that might be a little more concrete.

Becoming a real-time business

SAP’s brochure says, “Becoming a real-time business requires managing daily business transactions of your core business processes in real time, such as finance, sales and production – and as well, to capture data from new sources like social media, mobile apps or machine sensors.” However, how many enterprises today have a stated goal of “becoming a real-time business?” They don’t. They have goals such as growing revenue or reducing costs to improve profits. They may or may not be able to connect the dots between those goals and collecting and analyzing data in real time.

For those dealing directly, or even one step removed from an actual consumer or consumer product, the value of data from social media and/or mobile apps might be intuitive. For these companies, their brand is of paramount importance and they take great risk in ignoring social media or opportunities to connect directly with potential customers through mobile devices. So adding this dimension to the decision-making process should be well-received once you get the customer to think in those terms.

For manufacturers of industrial products… not so much. The world is changing, but slowly. It is entirely possible for them to think “social” isn’t business; it is something someone does on their personal time. And mobile devices are what their kids use to text their friends, play games and listen to music. For those same manufacturers, machine sensors and automated data collection (ADC) devices may have been on shop floors for many years. Those sensors and devices may in fact have the ability to shut down a line of production before bad product is produced. But can the data be effectively analyzed in order to improve products and processes? It is very possible that vast quantities of collected data have been underutilized for years, for one simple reason – there is just too much of it. And because it is collected continuously and automatically, it is constantly in a state of flux.

That thought actually brings to mind a parallel in history that dates back to the 1970’s.

Will HANA Bring to IT what MRP brought to Manufacturing?

The business world hasn’t seen something with this kind of potential impact emerge on the market since the introduction of MRP in the 1970’s. Those outside of the world of manufacturing might not appreciate the real significance MRP had, but there are a lot of parallels between the potential for HANA and the automation of the planning process that MRP brought about.

In a nutshell, MRP (material requirements planning) takes a combination of actual and forecasted demand and cascades it through bills of material, netting exploded demand against existing inventory and planned receipts. The result is a plan that includes the release of purchase orders and shop orders and reschedule messages. While the concept might be simple enough, these bills of material could be many layers deep and encompass hundreds or even thousands of component parts and subassemblies. Without automated MRP there is simply too much data and complexity for a human to possibly work with.

As a result, prior to MRP, other ways of managing inventory became commonplace. You had simple reorder points. Once inventory got below a certain point, you bought some more, whether you actually needed it or not. You also had safety stock as a buffer, and the “two bin” system was quite prevalent. When one bin was empty, you switched to the other and ordered more. These simplistic methods may have been effective in some environments, but the net result was the risk of inflated inventory while still experiencing stock outs. You had lots of inventory, just not what the customer wanted, when it wanted it. And planners and schedulers still had to figure out when to start production and they knew enough to build a lot of slack time into the schedule. So lead times also became inflated and customer request dates were in jeopardy.

Once MRP entered the picture, these were seen as archaic and imprecise planning methods. Even so, most didn’t rush right out and invest in MRP when it was first introduced. In fact now, decades later, the adoption rates of MRP in manufacturing still sits at about 78%. Why? The existing practices were deemed “good enough” and, after all, that’s the way it had always been done.

It required a paradigm shift to understand the potential of MRP and the planning process executed by MRP was complex. Not everyone intuitively understood it. And if they didn’t really understand, planners were unwilling to relinquish control.

Yet over time, MRP brought a new dimension to material planning. It brought a level of accuracy previously unheard of and helped get inventory and lead times in check. Manufacturers can experience an average of 10% to 20% reduction in inventory and similar improvements in complete and on-time delivery as a result of implementing MRP.

Now with HANA we’re introducing the potential to improve processes, not by 10% to 20% but by several orders of magnitude. But it also requires a paradigm shift.

Manufacturers, as well as other types of companies, are quite accustomed to making decisions from a snapshot of data, usually in report format, possibly through spreadsheets. They have become desensitized to the fact that this snapshot is just that, a picture of the data, frozen in time.

What if you never had to run another report? Instead, whenever you needed a piece of data or an answer to a question, you had immediate and direct access, not to the data as it was at the beginning of the day, or the end of last week, but to the latest data in real time? That’s what Hasso envisions when he talks about “live conversations versus prefabricated briefing books.” But those used to making decisions from those briefing books need to be educated on the possibility of the live conversation.

And, oh, by the way, traditional MRP, a game changer in the 1970’s and 1980’s is in for a major transformation.  Early MRP, and even versions of MRP today took and still take a long time to run and need exclusive use of the data. So it is typically run overnight or over a weekend. Think of the possibilities if it could now run in minutes or even seconds. Is that possible? With HANA, yes.

“Transformative Innovation Without Disruption”

In his opening remarks Hasso introduced the concept of “transformative innovation without disruption.”  In fact innovation was a key driver for John Deere, the early adopter of HANA mentioned previously in the context of solving previously unsolvable problems. Derek Dyer, director, Global SAP Services, Deere and Company outlined three ways in which the company views HANA as a game changer:

  • Bringing new innovation to the business by solving problems deemed unsolvable in the past
  • Simplification of the IT stack while introducing the ability to deal with huge volumes of data
  • Better serving the business by providing real-time access to data for better decisions

John Deere was originally attracted to HANA based on the performance aspects of the platform. The “Wow!” it was seeking was speed. It has had some initial success with its early projects, but sees a new world with ERP now on HANA. It intends to transform itself from a manufacturing company to a solutions based business. An example: It plans to take data from sensors in equipment in the field, determine how the equipment is being used, under what conditions. Not only will the data be real-time, but it will also allow them to answer back to the customer with very personalized, specific answers, and also support better collaboration with suppliers, dealers and customers.

Seeking Innovation

John Deere and other early adopters can provide some examples and perhaps some motivation, but each company will have to discover its own possibilities for changing the game. This is where SAP’s reference to “design thinking” comes into play. It is a protocol for discovering new opportunities and for solving problems.  It starts out with defining the problem. Because these problems might, as John Deere points out, have been previously deemed unsolvable, this step might not be as simple as it sounds. But it is the first critical step in finding that “excitement.” It can also be the most difficult. SAP and its partners can help.

What about Disruption?

The very term “disruption” is a source of controversy these days. Many talk about “disruptive technology” and refer to it as a good thing. But there are different kinds of disruption. A new technology that disrupts the way you think about problems and processes can have a very positive influence. But when new software (for example a new release of ERP) disrupts your business because you can’t ship a product or support your customer, it is definitely a bad thing. Upgrades to software like the SAP Business Suite are often viewed as disruptive in the bad sense, rather than in a good way. This is the kind of disruption SAP is promising to avoid.

Customers can take advantage of the Business Suite on HANA without upgrading their existing Business Suite. Current reports and customizations are preserved, including integration with other applications. And even partial migrations are possible. And there is no forced march now or in the future. SAP remains committed to supporting the customer’s choice of databases, including database technology and vendors. So the choice is left to the customer.

Yes, there is a cost associated with moving the Business Suite to HANA, but pricing for the new database works similarly to pricing for other databases even though the customer will experience huge improvements in speed, including 10 to 1000 times faster analytics.

Key TakeAways

It is clear that a key value proposition for SAP HANA is speed, but the vast possibility for business innovation trumps the value gained for improved performance. But each SAP Business Suite customer will have to identify its own possibilities for innovation. For some these opportunities for innovation may be staring them in the face. Others will have to dig deep into existing processes and identify those problems they have been living with for so long that they might appear to be unsolvable. Once uncovered, ask the very real question, “Can I solve this problem today with HANA?”

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SAP’s Cloud Strategy: Striving For Clarity

Sometimes procrastination pays off. Whenever I attend an event like SapphireNow, I always write something about it. In the case of Sapphire in particular, I usually have several things I want to “say.” But it has been over a week since I headed out from the event (a bit early this year) and yet this is my first attempt to write anything. Why? First of all, I was on the road, but that usually doesn’t stop me. The bigger reason… I had been really looking forward to hearing about (and writing about) SAP’s cloud strategy.  With the acquisition of SuccessFactors and the reorganization of the teams, I had a lot of questions. Unfortunately the presentations (to groups both large and small) this year created more new questions than they answered and I struggled with how I could publicly voice my lingering questions and concerns constructively.

But before I resolved that dilemma, the picture changed.

Yesterday (May 22, 2012) SAP announced it would expand its cloud presence through the acquisition of Ariba. While I know Ariba quite well, I haven’t followed the company closely over the past several years. The SAP announcement said, “Ariba is the second largest cloud vendor and runs the largest global trading network, driving more than $319 billion in commerce transactions among more than 730,000 companies.” The acquisition will make SAP a clear leader in cloud Supplier Relationship Management (SRM) and also has a direct impact on some of my concerns.

My Questions

To put this in context, let me explain some of the questions I had after I heard Lars Dalgaard, former SuccessFactor CEO and now SAP Executive Board Member, speak about the company’s cloud strategy. During his keynote, and also in a press release launched during the show, cloud solutions were announced for four lines of business to manage people, money, customers and suppliers. That statement alone raised no red flags with me. Every company deals with those four elements in some form or another. But the comment Lars made next did cause concern. He added something along the lines of, “That covers everything any company would need.” With my own roots extending deeply in the manufacturing space, my first thought was, “Did I hear that right?” Those four elements are indeed critical to every manufacturer, but there’s also more to manage, like inventory, planning and scheduling, engineering and production. I Tweeted:

Didn’t hear @LarsLuv talk about #Manufacturing processes in #cloud #sapphirenow

So just to be sure, in the press conference that followed, I asked if this had been an oversight or had SAP specifically decided against competing in this market. The answer I got (from Lars himself) was that SAP thought the interest and demand for other solutions far outweighed the interest and demand for manufacturing solutions. This included solutions that surround ERP with functions such as CRM and HCM. History bears this out. Adoption rates for cloud solutions for these extensions far exceeds cloud-based ERP. But that’s more about what’s running in the cloud, not what kind of company is running it. So that implied (but didn’t specifically state) that other applications were a higher priority for the cloud than ERP.

OK, that’s a business decision and SAP appeared to be going where the easiest sell and the most opportunity was. I followed up with another Tweet saying it didn’t look like SAP was going after the same market as Plex Systems, a SaaS only ERP solution provider that markets and sells exclusively to manufacturers. Response in the Twitter stream went like this:

Hide conversation


William_Newman: RT @ERP_cindyjutras: Didn’t hear @LarsLuv talk about #Manufacturing processes in #cloud #sapphirenow > can already happen w/ @sapbydesign 11:46am, May 15 from Twitter for iPhone


LarsLuv: @William_Newman @erp_cindyjutras @sapbydesign that’s right, and we’re excited about this 2:23pm, May 15 from Twitter for iPhone

Now of course, having followed Business ByDesign since its very first coming out party in New York City in September 2007, I knew it had manufacturing functionality and I have spoken with more than a few manufacturers that use it today. That was partly why I asked the original question. But these exchanges left me more confused. I don’t expect the guy at the top to get mired in the details, but is SAP going after manufacturing with cloud solutions or not? I know it has a strong solution in on-premise solutions (the Business Suite and Business All-in-One plus complementary manufacturing and supply chain planning and execution applications), and I know partners strengthen the Business One offering for manufacturers. But I’m left thinking ByDesign will compete better against NetSuite’s solution for light manufacturing than it will against Plex Systems’ Plex Online or other mature ERP solutions for manufacturers now offered in various flavors of SaaS or hosting.

So what about ERP in general?

The second sentence of the cloud strategy press release continued, referring to the four lines of business, “These are planned to be offered in a consistent way and seamlessly integrated into enterprise resource planning (ERP) business software.” Now we already heard that SAP was responding to demand for other applications that extend and surround ERP (like HCM and CRM), and this statement implies these other applications will be fully integrated with ERP. Indeed Lars talked both about “loosely coupled end-to-end integration” and the press release states, “SAP plans to deliver its multitenant cloud solutions as a loosely-coupled suite of best-of-breed applications.”  But nowhere in the press release did it specifically talk about delivering ERP as part of the cloud strategy. Yet if Business ByDesign isn’t ERP then I wouldn’t know what else to call it today. And it is only available as a multi-tenant SaaS solution (i.e. via the cloud). Does this mean ByDesign will be transformed from ERP into a loosely-coupled suite of best-of-breed applications? Is there a difference?

Loosely Coupled versus Tightly Integrated

The difference lies under the covers. There is work to be done in order to make this transformation. SAP will be pulling different components out of ByDesign so they can stand alone. Finance will be first and in fact will be the solution to satisfy the “money” line of business referenced previously. This allows SAP to bundle different elements together like finance (money) and human capital management (employees). Other functions will be prioritized and extracted in the future, but finance is the logical place to start as it is probably the most marketable as a separate “best of breed” application.

Everyone needs general ledger, accounts payable and accounts receivable and many smaller companies are intimidated by the thought of implementing a full blown integrated ERP. And in offering these loosely coupled applications it provides the customers with more choice to keep other non-SAP solutions or even to buy new non-SAP solutions. While this provides more choice, it also encourages complexity and makes less business sense from a cross-sell and up-sell perspective.

The advantage of a tightly integrated ERP is the ability to eliminate redundant data and reduce complexity. There used to be an intrinsic functional advantage of “best of breed” applications over those included in ERP. The disadvantage (trade-off) of course was lack of integration. But those functional differences have shrunk over the years as ERP solutions offer more robust features and functions even in some non-core modules. And there is no integration required between the modules of ERP – it is all built in.

In terms of redundancy of data, with integrated ERP there is only one customer master shared by order management, accounts receivable and any other function that deals with customers. There is only one supplier master file shared by purchasing and accounts payable and perhaps manufacturing planning. This is one of the reasons most ERP vendors have moved away from selling individual modules in favor of a bundled set of core modules and charging on a per user basis. A customer using fewer modules will have fewer users and pay less. As they expand into new areas, they add more users (and pay more), but there is no additional license or installation to worry about.

SAP appears to be bucking this trend and moving in the opposite direction, moving from fully integrated ERP to loosely coupled best of breed applications. So in pulling out the finance function, SAP will need to bring the customer and supplier master files along with them. OK, that’s just a packaging issue. But those same customer and supplier files will also have to be bundled with best of breed order management and purchasing solutions. Then if a customer buys finance, order management and purchasing, will they have two copies of a customer master and two copies of a supplier master? Probably not. There are other ways to handle this – most likely by defining these masters as meta data. And it makes it easier to deal with multi-vendor solutions. Good for the customer, not as good (business-wise) for SAP. This isn’t especially difficult, but it will mean that developers will be working on this instead of working on innovation.

How does Ariba change the game?

Today all cloud offerings across these four lines of business: customers, money, employees and suppliers are managed in a single business unit run by Lars Dalgaard. When (and of course if) the acquisition is completed, Ariba will run as a separate SAP company. SAP has done this twice before rather successfully – first with Business Objects and then with Sybase. Eventually both were quietly merged into the SAP fold.  But in the meantime, there will be two business entities within the SAP corporate structure that together provide all the cloud offerings. When that happens the supplier area will land in the house of Ariba, as it should.

I actually think this will be a very good thing. Lars has great experience with Human Capital Management. He has a proven track record for delivering on a go-to-market strategy (something that has been lacking with Business ByDesign) and he has the necessary cloud DNA. He’s already brought energy and focus to SAP’s cloud strategy. But a global trading network and experience with supply chains and supplier networks is something that fits much more naturally into a manufacturing (and also a distribution) environment and Bob Calderoni (current CEO of Ariba) clearly has more experience on that front. Will Business ByDesign be divided up and shared or will it stay with Lars? I suspect had Bob been at Sapphire I might have gotten different answers to my questions about manufacturing and maybe even those about Business ByDesign.

Bottom line though… even as Bob and Lars manage different segments of SAP’s cloud strategy it is imperative that they work together as a single cloud team. The SAP co-CEOs said as much. And eventually SAP will quietly merge Ariba into SAP proper. At that point there may only be room for one of these powerful leaders at the top. Will this fact influence the journey up until that happens? Time will tell.




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SAP Business One Heads Into the Cloud

Many have their heads in the cloud today. This goes for both individuals, as well as companies. The interest in Software as a Service (SaaS) has been steadily increasing over the past several years, led by enterprise applications such as Customer Relationship Management (CRM) and elements of Human Capital Management (HCM) such as recruitment, talent management and benefits administration. Yet broader applications such as Enterprise Resource Planning (ERP), which provide the transactional system of record on which a business is based, have been slower to warm to the idea. Today that is changing and as many weigh the pros and cons of SaaS ERP, the advantages appear to be winning.

On March 6, 2012, SAP announced that SAP Business One, characterized as its ‘most affordable ERP solution for small and growing businesses’, is now available “on-demand.” Previously only available as a licensed on-premise or hosted solution, this added deployment option launches Business One as a multi-tenant SaaS solution. The On-Demand version is available now in 18 countries (more to be added later) through selected partners. Subscriptions are competitively priced and offered on a monthly, named-user basis.

Responding to Market Opportunity

The fact that ERP has lagged behind other enterprise software with respect to SaaS deployment has led to conjecture. Has lack of acceptance of SaaS ERP resulted from few options being available? Or were few options made available because of lack of interest? While that may have been a valid debate in years gone by, the resistance to SaaS ERP appears to be breaking down while interest in traditional on-premise solutions seems to be waning.

The Mint Jutras 2011 ERP Solution Study, with over 900 qualified responses, found SaaS deployment is now more likely to be considered than traditional hosting options from Indian Domain Registration. Yet even more stunning is the decline in the willingness to consider on-premise deployments. You can consider Fastest WordPress Hosting if needed. A few years back the percentage willing to consider traditional deployments would have been in the 90’s while recent research pegs it at 56%. And the comparison is even more dramatic when we compare “World Class” ERP implementations where we see SaaS heavily favored over licensed options:

  • SaaS/On-Demand: 62%
  • Hosted by ERP vendor: 44%
  • Hosted by an independent 3rd party: 35%
  • Traditional licensed on-premise: 38%

Mint Jutras defines “World Class” ERP implementations as the top 15% in terms of results measured, progress achieved against company-specific goals and current performance. These are the implementations that have delivered the most business benefit to the enterprise, whether it is large or small. Installing ERP is a means to an end, and not the end itself.

So demand is definitely on the rise, and so is supply. With the launch of SAP Business One On-Demand, SAP is now one of several major ERP vendors taking to the cloud applications that are already well established as on-premise solutions. However, in evaluating these transitions, it is important to understand all the options as well as the limitations.

Often these transformations resemble hosted solutions more closely than they do software as a service. Some industry observers insist that a cloud offering be multi-tenant (along with other qualifications) before they will regard it as “true SaaS” and even go so far as to accuse vendors who offer single-tenant solutions (also known as multi-instance) of “cloud washing.” With its multi-tenancy for Business One, SAP avoids this label. But not all companies seeking a cloud-based solution want the same thing. It is important to look beyond these labels, understand your requirements and make sure they are met.

Not SAP’s Only Cloud Story

Often meeting customer requirements takes experience and practice. Note that this is not SAP’s first or only foray into the cloud. In fact, its cloud heritage dates back to 2007 when it officially launched its first SaaS solution, SAP Business ByDesign. Like Business One, ByDesign is part of SAP’s small to midsize enterprise (SME) product portfolio. Unlike SAP Business One, ByDesign is and has always been a SaaS only solution. Originally SAP segmented its SME portfolio only by company size, either by annual revenues or by number of employees.  Today SAP uses a slightly different positioning scheme. Business One is still viewed as the most affordable and recommended for small and growing businesses whether these companies are seeking an on-premise or on-demand solution. Business ByDesign, offered exclusively in a SaaS environment, is positioned as the best solution for mid-size companies looking for SaaS ERP. SAP Business All-in-One, which shares the same ERP as the Business Suite, is a scalable solution for mid-size companies looking to stay on premise. However, the earlier positioning by company size, combined with the assumption that SaaS was largely for small companies, often led to speculation by industry observers that ByDesign would cannibalize sales of Business One.

This never proved to be the case, in part because ByDesign was still a very “young” product and in part because SAP delayed unleashing its considerable selling and marketing engines to power sales. You see, unlike SAP Business One On-Demand, ByDesign was not originally released as a multi-tenant solution. While this did not adversely affect the value proposition, it did negatively impact the economics for SAP. It was not until Feature Pack 2.5 was released in mid-2010 that multi-tenancy was introduced, allowing SAP to reduce its internal cost by a factor of 20.

In the meantime, SAP had also announced other “on-demand” offerings, including what it refers to as “Line of Business” applications, as well as Business Intelligence (BI) On-Demand. While not originally the case, through evolution and performance improvements, ByDesign was announced as “the” platform of development for these on-demand solutions as well. SAP was getting more and more serious about its cloud offerings.

In December 2011, SAP went one step further and announced its acquisition of SuccessFactors, a SaaS-only HCM solution. However, it was quite clear, even at the outset, that this announcement was more about cloud than it was about HCM.  Amid the hoopla of the $3.4 billion acquisition, there was also speculation that ByDesign was dead. That prediction appears to be far from true. No, the latest cloud offering, Business One On-Demand, does not use the ByDesign platform but given the breadth of the entire SAP product portfolio, there appears to be room for multiple offerings and more than one platform.

So what does all this history have to do with Business One On-Demand? It’s really about the culture. Amidst all the merger and acquisition fanfare, there has been repeated reference to the ‘cloud DNA’ of SuccessFactors and the appointment of its CEO Lars Dalgaard, to take responsibility for all SAP cloud offerings. When an enterprise application has traditionally only been sold with an up-front license, like Business One has, shifting to a subscription based selling is a tough transition for the sales team (and sometimes Wall Street) to make. SAP management appears to “get this” and is proactively taking steps to address this. The first step last year was a conscious shift to sell all SME business through channels.  The acquisition of SuccessFactors and the appointment of Mr. Dalgaard to oversee cloud offerings is a second and important one.

Proposed Value Proposition

So what is the value proposition offered by SAP Business One On-Demand? In many respects, it is the same value proposition of any SaaS ERP offering. Survey participants in the Mint Jutras ERP Solution Study cited a wide variety of benefits to SaaS deployment, but three primary themes emerged: lower costs, more upgrades and the ability to support remote employees and locations.


Survey respondents anticipate lower total cost of ownership (TCO), smaller start-up costs and fewer Information Technology (IT) resources required in a SaaS environment. In order to deliver these benefits, SAP simply needs to price Business One On-Demand competitively. While SAP is not announcing the price publicly, (remember it intends to sell through its channel so prices are suggested) targets shared privately appear to be competitively priced and will necessarily fluctuate somewhat depending on geography.

There are still some that feel the cost of SaaS ERP is really not that much more inexpensive than on-premise, particularly over the longer term. Of course, this does not take into consideration avoiding the cost of hardware or internal IT resources to manage the installation. But even if you ignore the hardware factor, there is one advantage of purchasing SaaS ERP from a vendor that offers both SaaS and on-premise. That solution provider should be able to draw an apples-to-apples price comparison between the two deployment options.

SAP and its partners should be able to assist in helping the prospective customer in determining the break-even point purely from a software, services and maintenance stand-point. But don’t forget hardware, infrastructure costs and remember, often the larger costs from a TCO perspective are the soft costs of internal resources.

One cost concern expressed by 47% of survey respondents was that of escalating costs. What’s to prevent a software company from exorbitantly raising prices at the end of the term of the initial contract? Because SAP does not sell Business One On-Demand directly, it cannot guarantee, with absolute certainty that the price will not increase beyond reasonable expectations, but is relying on the competitive nature of its channel to keep escalating costs in check.


While lower TCO was the most frequently cited benefit of SaaS ERP, a close second was the reduced cost and effort of upgrades (48% of survey respondents). The availability of more leading edge technology through more frequent updates was also a significant factor for 39%. The frequency and method of upgrades do vary from vendor to vendor. Those with SaaS-only solutions, developed exclusively for an on-demand environment might have a bit of an advantage here in that they are not tied to a prescribed release cycle. Those which offer the same solution on-premise and on-demand may not be as fluid in the delivery of innovation. Existing customers of on-premise solutions often prefer a longer release cycle since the upgrade process can be disruptive. This disruption is minimized in a SaaS environment because much of the burden of the upgrade process is assumed by the SaaS solution provider.

SAP does not expect to accelerate the upgrade release cycle of Business One simply to compete on this front, but also points to the maturity of the product relative to newer products developed for SaaS only. With over 34,000 installations, the product is indeed mature. However, even mature products must continue to evolve to meet new business challenges, so SAP isn’t entirely off the hook for keeping pace with innovation. SAP intends to continue to deliver upcoming innovations including enhanced support and application management via its Remote Support Platform (RSP), enhanced mobile integration and complete partner initiated lifecycle management.

Indeed SAP is beginning to see the convergence of the three pillars of innovation it has been touting for the past two years: cloud, mobility and in-memory.  Many of the new mobile apps developed both by SAP and its partners, now (or soon to be) available through an “apps store” will have as much relevance for SMEs as for large enterprises. And in February 2012 SAP announced through “new analytics powered by SAP HANA for the SAP® Business One application and SAP HANA, Edge edition, SMEs will be able to leverage powerful in-memory technology from SAP.” The goal is to enable decision-making, dramatically increasing the speed of existing processes and speeding up access to potentially large amounts of data.

Remote Access

And finally, the third overall theme in terms of the appeal of SaaS ERP is in the support of distributed environments. There are several factors at play here. First of all, operating from multiple locations is no longer an issue only for large enterprises. The Mint Jutras ERP Solution Study found the average number of operating locations supported by ERP in small companies (annual revenues less than $25 million) was 2.5. This average grew to 5.5 as annual revenues grew to the $25 to $250 million range.

Secondly, large enterprises are often comprised of a network of small to mid-size divisions or subsidiaries. SAP has long referred to this scenario as an integrated business network. A very common scenario is to have a two-tier ERP strategy where one ERP is used at corporate (often called administrative ERP) and a second standard (often referred to as operating ERP) is used for units/divisions/locations. Because of its dominance in large enterprises, SAP is often the administrative ERP. While many other ERP vendors will make a concerted effort to interface to SAP at this level, nobody is better positioned to do this than SAP itself with one of its SME products.

Ninety percent (90%) of companies surveyed (and 97% of World Class ERP implementations) have defined standards for ERP implementations. What better way to control the standardization of solutions and processes than through SaaS deployment? In fact 36% of survey respondents cited the ease of remote access for a distributed workforce as a key advantage of SaaS and 27% noted the ease of bringing up remote sites.

Handling the Perception of a Down-Side

While SaaS ERP is gaining in acceptance, there is still a significant segment of the population who will not consider this deployment option and even those that will consider it still have some lingering concerns. Only 10% of the Mint Jutras ERP Solution Study indicated they had no concerns whatsoever in considering SaaS ERP.

In addition to the concern over the possibility of escalating costs, 46% expressed fear of down-time risk and unpredictable performance. Although a viable concern, due diligence can significantly reduce risk here. Prospective customers should ask for historical performance and they should also ask for guarantees of up-time, although appropriate caveats for natural or even man-made disasters may be negotiated in. Glenn Rhodes, IT Manager, DRIFIRE, a manufacturer of flame resistant clothing stated, ““Before we moved Business One into the cloud, I was concerned about performance impact but the impact has been minimal. Often you don’t see a difference at all.”

But the top concern, even with so much business being transacted over the World Wide Web, is still one of security, with 58% of survey participants expressing this concern. Mint Jutras would agree everyone should be concerned over security. But you should be concerned regardless of deployment option. And if you are a small company, without a dedicated IT security expert on board, chances are you assume more risk than you would in a SaaS environment, particularly one that has successfully completed an annual SAS 70 Type II audit. The SAS 70 certification was developed by the American Institute of Certified Public Accountants (AICPA) to annually audit the effectiveness of operations, controls  and safeguards to host and process data. Indeed another 29% of respondents admitted that part of the appeal of SaaS was the comfort of leaving security and other IT issues to the experts.

Which brings us to the final and very important factor in considering consuming Business One as a service: Who is the partner that will actually be delivering the service? What is the partner’s track record? Fully assess its ability to deliver services.

A New Kind of Partner

With the introduction of Business One On-Demand, SAP is also introducing a new kind of partner. In the past, a typical Business One partner would be an ERP specialist, a company engaged in selling and servicing an ERP solution. Some also might have provided a hosting option. This is the type of partner that will be most likely to see an opportunity to expand their offerings into the cloud. Some (not all) existing partners may seek certification by SAP to deliver the cloud option. Often these partners specialize in extending the Business One solution. In these cases, SAP will insure that existing on-premise add-ons will run in the cloud without disruption.

In addition to these existing partners, new strategic partners will include telecom service providers. These types of companies are experts in hosting, cloud infrastructure, billing and support. Generally speaking they are not experts in ERP. Some may decide to invest in building an ERP practice, others may not. Those that do not will most likely be partnering with one or more of the existing Business One partners who are experts in ERP and Business One, but have no experience or desire to provide this cloud infrastructure and support.

Key Takeaways

SAP sees the introduction of SAP Business One On-Demand more as a bid for new-named business, although it will be possible for existing Business One customers to make the transition to the cloud. SAP’s Business One business has been steadily growing and the market for ERP in small companies is far from saturated.

On balance the advantages of a SaaS environment for ERP seem to outweigh the disadvantages. Cost savings, including TCO, startup costs and cost of IT staff can be substantial. Even if the subscription cost equals the cost of software and maintenance over time, there are still the savings achieved by eliminating the purchase or continued maintenance of hardware.  If you have no IT staff today, there is no need to hire any. If you have good IT staff on board, let them engage in more strategic, value-add activities than routine maintenance without sacrificing the ability to take advantage of upgrades and innovation.

If you operate in a distributed environment, the advantages of a SaaS environment can be considerable in bringing standardization across the enterprise, providing access to remote employees and in bringing remote sites up quickly.

As with any selection of ERP, fit and functionality should be foremost in the decision-making process, along with ease of use and TCO which will directly impact the return on investment (ROI). So it is still important to put Business One and the partners selling it through their paces during the evaluation process. Make a careful choice that is right for your business.

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Engagement vs Transactional Systems: Not a “from-to” especially for SME. SAP as an Example

I recently read Ray Wang’s Blog in the Harvard Business Review entitled “Moving from Transaction to Engagement” and something about it didn’t sit well with me. I wasn’t getting the “from – to” part. Recording transactions isn’t optional. Whatever tool you use to create your system of record (whether it is ERP or accounting applications or something else) is a necessary foundational tool. If you think tools that help you build relationships can replace transactional systems, then maybe you believed “eyeballs were everything” back in the dot-com boon and we all know how that story ended.

Since it troubled me I went back and read all the comments to Ray’s blog post and also a couple of pieces he referenced: Geoffrey Moore’s paper “Systems of Engagement and The Future of Enterprise IT: A Sea Change in Enterprise IT” and Dion Hinchcliffe’s “Moving Beyond Systems of Record to Systems of Engagement.” OK, I feel a little better now. But only a little.

I feel better because both Geoffrey Moore and Ray (in response to a comment) acknowledge that these transactional systems of record are necessary. And even Dion Hinchcliffe admits, “It’s safe to say that most firms would go out of business without the data within and automated capabilities of their systems of record.” But to say, they are all in maintenance mode, “ERP has hit its limit” and that “Transactional systems remain in a hard coded, rigid structured approach” ignore the change in how software is developed today and the real possibility of bringing better means of flexibility, engagement and communication to ERP. Yes, ERP must bring discipline and therefore must define data structures, but that doesn’t mean the application or implementation needs to be rigid.

I define ERP as an integrated suite of modules that form the transactional system of record for a business. So when we talk about transactions and systems of record, I assume we are largely talking about ERP. The trouble is, it has become harder and harder to tell where ERP ends and other applications begin. But that’s a good thing. It means software makers are providing added functionality and that ERP is seamlessly interacting with other applications. So why can’t we bring these characteristics of engagement systems (and maybe even experiential systems) to ERP? I’m not going to go down the route of “personal fulfillment” systems because we can’t lose sight of the fact that the purpose of the engagement is to generate transactions (because transactions mean revenue). I know I am over-simplifying but, I don’t think most executives want to discuss speed in the context of a time-space continuum and businesses can’t survive in a “feel good” environment where everyone gets a trophy for “engaging” regardless of whether revenue is flowing in.

SAP has gotten picked on a lot lately as a legacy application and as rigid, so let’s take SAP and its approach as an example of how transaction systems can be enhanced, not replaced by engagement systems. And let’s talk about it in a way that is not just for the large enterprise, because 78% (90,000) of SAP customers are small to midsize enterprises (SMEs). Customers are front and center of engagement, and to effectively engage you need to understand your customer. In order to understand your customer, you need data from a lot of different sources. Some of that data is structured and you are probably already sitting on a mountain of it from a variety of sources:

  • Your ERP system – what they bought, how much they paid, how well you performed in delivering product and collecting cash (all those pesky transactions).
  • Your support, contact or call center – including issues and resolution
  • Your Sales Force Automation solution – contacts, pipeline and quotes
  • Marketing Automation – how many times have you touched them?
  • Others might include document management, customer project management, engineering design and/or compliance specs, specific test results, etc.

SAP is approaching this by enhancing solutions from the outside in, rather than the inside out. What do I mean by that? I mean they are developing innovations SAP BusinessObjects Edge, business analytic applications and new dashboards and user interfaces that can be layered on any of their solutions, including those for SMEs like SAP Business All-in-One, SAP Business One and SAP Business ByDesign. That’s smart in two ways. First, they need only develop it once rather for each of their different ERP solutions. Secondly, by adding innovation in layers, they create the perfect environment for bringing data sources together from different applications. And in keeping these innovations on the “edge”, SAP can make them more “social” by tying in other sources of data, including “conversations” through chat and email, thereby supplying the “richer social orientation” of an engagement system. And once these new interfaces are placed on top of ERP, the user perceives them as a new and better ERP.

This also is the perfect opportunity to apply external business rules and event management, “smarter intelligence” that might otherwise be well beyond the reach of SMEs. Of course, looking beyond the conversations that might be shared between employees and customers, there is far more data out there about your customer than ever comes near your ERP and surrounding applications. There are Twitter streams and LinkedIn discussions and FaceBook pages. There are news feeds and stock watches. The list goes on and on. The trick is to put that data into the context of the data in ERP in order to put it into the context of your business.

And how you deliver it will be critical. Just constructing these focused dashboards is a good start. And perhaps good BI tools would be enough in the hands of a talented and well-staffed IT department, but SMEs won’t have that luxury. Part of “engagement” needs to be getting your employees, including business executives, to engage with the data that you have and that means engaging with applications -which is why it is more important for SAP to deliver business analytics as a configurable and ready to use application rather than just BI tools. But making these analytics accessible is also very important.

Business executives from large multi-billion dollar companies, down to the smallest startups want to be connected through mobile devices. And executives from smaller companies are just as likely to blur the lines between business hours and personal time, perhaps even more so because of the number of different hats they might wear in managing a small business. In our untethered world of mobile connectivity, we all become more tethered to work even in the “off hours.” And the older generation is now learning from younger generations and becoming more comfortable with specialized mobile consumer “apps.” In response, SAP is developing mobile apps and recognizes they must model consumer apps. That means they must be smaller in scope and more directly applicable to a particular function. No training required for the user interface and limited training required for the business process it is intended to perform.

SAP still has some decisions to make in making this type of mobility affordable to SMEs in a world increasingly moving away from corporate standards, producing a more “bring your own device” environment. But SAP has already delivered the SAP BusinessObjects Mobile app for iPad, in addition to the SAP BusinessObjects Explorer for iPad/iPhone , which is already one of the top downloaded apps for business with over 200,000 downloads from the Apple Apps store.

Of course no discussion of SAP would be complete today without mention of “in memory” but this is actually quite relevant in the context of both adding engagement characteristics to transactional systems and customer analytics. If you thought you were drowning in data before, once you open the door to capturing and channeling all these sources of public information, you will now be faced with a virtual tsunami of data. And make no mistake; this is not just a large enterprise problem. Once you open that door, you open the floodgates. So SMEs will need to deal with “big data” just as larger companies will. SAP is intending to bundle SAP HANA (its answer to big data) with SAP Business One for small companies, and SAP HANA will power SAP’s On Demand solutions, including By Design, but there might be a donut hole forming around Business All-in-One (BAiO). SAP HANA will be an option for both the Business Suite and BAiO and pricing has not yet been made public.

SAP is of course just one example, and I could have used other vendors as examples along the way. But SAP also has a very broad and deep footprint and has more irons in the innovation fire with more resources to bring to bear than your typical ERP solution provider. And SAP certainly touches a lot of SMEs (over 90,000).  But it also has a lot of history and a reputation of being rigid, in terms of both product and company. It hasn’t made the big splash about “Social” that Salesforce has recently. It’s been hard to miss Salesforce CEO Marc Benioff’s exhorting the virtues of the social enterprise.  But in the meantime SAP has been bringing more “engagement” to its transactional systems.

So the key takeaway here is that transactional systems can indeed take on some of the characteristics of an engagement system. While yes, they need to be structured, structured doesn’t necessarily mean rigid. I don’t think ERP has hit the wall – I think it still has a ways to go and many, including SAP still have the legs to take them there.

Disagree? Prove me wrong.

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Turning the SAP TechEd messages upside down for the SME

This year’s SAP TechEd was the first to feature an SME (Small to Midsize Enterprise) track. As we wrap up Las Vegas (next stop Madrid), it is time to reflect on the real relevance to SME of the themes and messages presented at TechEd. Much of the event was an excellent presentation of technology, followed by some ideas and examples of how you might use that technology.  That is the way IT departments in large enterprises might approach their IT strategy and budget. And, after all the intended audience for the event was IT in general and developers in particular. But typically there aren’t any developers in small companies and most SMEs have very limited IT staffs. So really the SME audience at TechEd was the partners that service those SMEs.

While these partners were very well represented, can they effectively carry the message to their customers? In order to do that, those partners will have some translating to do, because that’s not how an SME “thinks.” SMEs don’t go looking for technology. They go looking for solutions to their business problems. So can we – and more importantly, the SAP partners turn the messages from TechEd upside down and still make them work for SMEs?

Fellow analyst Laurie McCabe did a great job highlighting the key themes for TechEd (HANA, mobility, cloud / on demand). None of these themes are new. While that makes it harder for those of us in the press and analyst community to find something new and different to “report,” this is actually a good thing for customers and partners alike. Instead of dealing with a different “message du jour” generated for each major even (which some vendors are known to do), SAP is continuing to firm up the foundation upon which they will deliver. The bad news is that some of these promises take a lot of time and effort to deliver, so sometimes it seems like we talk for a long time about what the future deliverables will be without actually seeing them. And while some SMEs might be slower out of the gate to embrace technology as part of the solution, once they do, they are no less impatient to get on with it than larger companies.

So let’s start with the mobility theme. An executive from an SME may not be orchestrating a large, multi-national global enterprise, but they are managing increasingly distributed environments. The Mint Jutras 2011 ERP Solution study found even small companies (those with revenues under $25 million) managed an average of 2.7 operating locations and this number grew along with revenues:

  • Small companies (revenues less than $25 million) : 2.7 operating locations
  • Lower mid-market ($25m – $250m) :                          5.0 operating locations
  • Upper mid-market ($250m – $1 billion):                     8.3 operating locations
  • Large enterprise (revenues exceeded $1 billion):     10.1 operating locations

And executives from smaller companies are just as likely to blur the lines between business hours and personal time, perhaps even more so because of the number of different hats they might wear in managing a small business. In our untethered world of mobile connectivity, we all become more tethered to work even in the “off hours.” And the older generation is now learning from younger generations and becoming more comfortable with specialized mobile consumer “apps.” So mobile access to enterprise data and functions is just as relevant for SMEs as it is for large companies, whether they realize it or not.  

And this access needs to be flexible. In the past large corporations were likely to issue standardized devices (usually a BlackBerry and usually primarily for email, phone and calendaring). Today employees in companies both large and small are buying their own devices and using them for both personal and business purposes and also expecting to do more with them. This creates a need for mobile device management and SAP has a solution for that (Afaria), but this is going to be a tough sell into a small company. Yes, they want mobile access, but they want “apps” not tools to build apps and manage devices and aren’t necessarily willing to pay for that.

In response, SAP is developing mobile apps and recognizes they must model consumer apps. That means they must be smaller in scope and more directly applicable to a particular function. No training required for the user interface and limited training required for the business process it is intended to perform. In some ways these requirements are similar to any business application intended for SMEs. Multi-purpose, horizontal applications, particularly ERP, must accommodate many different functions, and different types of businesses with similar but different business needs. This often introduces a level of complexity that SMEs simply can’t effectively cope with. Some respond by over-simplifying and implementing a solution with limited functionality. But this leaves the business underserved.

Many of these apps that we expect to see delivered by SAP in early 2012 will be mobile analytic applications. These should be of particular interest to SMEs, particularly those that have invested in ERP but have not ventured beyond traditional ERP reporting. By definition, ERP is neither a single purpose nor a simple “app.”  In forming the system of record of the business, ERP is the repository for potentially huge volumes of data that remains largely untapped.

Very often decision-makers themselves rarely, if ever, touch ERP directly, but instead rely on subordinates and/or traditional reporting from ERP for input to decision-making. Not only does this introduce latency, turning real time data into historical data, in relying on traditional reporting, decision-makers have a choice of looking at data in the aggregate at a summary level (that is too high for real conclusions) or wading through so much detail it is impossible to see the big picture. The ability to start at a summary level and drill down to successive levels of detail is becoming more common as a feature within ERP, but being able to do so through a mobile device is very rare. And that might just be the ticket to connecting the executive decision-maker directly to the data on which good decisions are based.

This is where SAP TechEd’s other big “theme” comes into play. HANA is SAP’s in-memory computing engine which is the platform on which these mobile analytics apps are being built. Often HANA and in-memory computing in general is associated with “big data”, which is in turn associated with big companies. But HANA is as much about speed as it is big data. And with speed, it is normal to add more and more data, reaching beyond that which is normally stored in enterprise applications. Think about the enormous potential of useful but unstructured data that is floating out there via the Internet and can be retrieved through search engines and the like. But rarely will you find an SMB that is willing to invest in in-memory computing.

As a result, HANA is not yet a reality yet for most SMEs.  Currently HANA is only available as an “appliance”, which means it needs to sit outside of the SME’s ERP solution. HANA will be certified for SAP BW (BW stands for Business Warehouse) in November but BW is most often found in large enterprises.

And then there’s the cost. While SAP is not disclosing pricing, another fellow analyst, Dennis Moore has pieced together some intelligence relating to cost. Dennis projects the entry level cost for software to be about $120,000. Purchasing HANA on an appliance today brings the projected total to about $250,000 plus services. So a pilot project might start at about $300,000, which is far more than the average small company pays for an ERP solution today.

But SAP intends to “fix” this by putting HANA “inside” both Business ByDesign (SAP’s On Demand ERP) and Business One. While adoption of ByDesign is still nascent, over 32,000 companies run Business One today. By replacing its current underlying infrastructure with HANA as a platform, SAP will have brought this powerful technology to the SME for the cost of their maintenance. Those upper mid-market companies running SAP Business All-in-One, which is built on the same ERP as the Business Suite, will have the option of upgrading to HANA as a platform, but it won’t be free. However, this is still “futures” so SMEs still have plenty of time to imagine how best to take advantage of this new technology, and unfortunately many will not. But they will at least experience some performance improvements as a result, once they upgrade.

Which brings us to the third theme – SAP’s On Demand platform. It is the underlying architecture of SAP’s Business ByDesign that provides this platform, bringing On Demand capabilities even to those that might be running ERP on premise. Software as a Service (SaaS) has made tremendous in-roads in certain functional areas, like Customer Relationship Management (CRM), Supply Chain Management (SCM) and Human Capital Management (HCM) for large and small companies alike. But most companies have a long history of avoiding SaaS ERP.

The barriers of resistance to SaaS ERP are breaking down slowly. One might expect the smallest companies to be most interested in SaaS ERP, but the Mint Jutras 2011 ERP Solution Study indicated just the opposite. When asked which deployment options they would consider if purchasing an ERP solution today, the willingness to consider a SaaS ERP solution actually increased with company size. While 44% of all survey respondents would consider SaaS, only 42% of SMEs (those with annual revenues under $500 million) would, compared to 59% of larger companies (revenues greater than $500 million). Although this is somewhat counter-intuitive, this implies SMEs are more likely to take advantage of what SAP calls its Line of Business (LOB) on demand solutions – applications like Sales On Demand that are more purpose-built for a particular functional area.

This also makes SAP’s plans for an “App Store” all that much more relevant. It is anticipated that this on-line store will allow customers to buy, download and deploy both SAP and partner apps based on the ByDesign platform. This should be appealing to both customers and the partner ecosystem that has grown to sell and support the Business One product, in addition to the ecosystem growing to support Business ByDesign.

And so it would seem there is an SME-specific message to all three of these themes. The challenge for SAP and its partners is to clearly articulate the value as well as the cost and the return on that investment to these smaller companies who continue to anxiously and cautiously watch every penny.

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HANA, HANA, HANA! Can SAP prove the value to companies both large and small?

All the talk at SAPTechEd this week has been about HANA, SAP’s new in-memory computing engine. While there were plenty of “techies” at the event this week, you don’t have to be too much of a technologist to understand that processing data that is stored in memory is going to be a lot faster than processing it from disk. And results from early adopters have been more than impressive. Examples include Yodobashi who took the process of running incentive payments from 3 days down to 2 seconds. Or Nong-fu Spring who ran the same script in HANA and in an Oracle data mart and found HANA to be 200 times faster. In fact these results are so impressive, one SAP customer said to me, “It sounds too good to be true.”

I suspect many other SAP customers may have similar sentiments. This all sounds great but how does my company benefit? Indeed my colleague Laurie McCabe of the SMB Group summed it up with a question to Sanjay Poonen, President, Global Solutions and Go-to-Market. Laurie asked, “HANA, HANA, HANA. That’s all we’ve heard. Can you bring it down to earth for us?”

Sanjay did. Think of HANA as a platform that will power all that is SAP. You know that little sticker on your laptop that says “Intel Inside?” Mine says “Intel Pentium Dual-Core InsideTM”. I remember when Pentium processors first came out, eclipsing the performance of their predecessors. Today we just take Pentium processors for granted. And if you are like me, you probably don’t know much more about what’s inside, but you’ve come to expect a high level of performance from a brand that you know and trust. While making HANA an industry standard is an unrealistic goal, making it an SAP standard is not and SAP expects to boost performance in a major, game-changing way.

You won’t see SAP using the phrase “HANA Inside” (note the trademark symbol on my sticker and yours). But you will see it porting all its enterprise applications to this platform. Although with such a broad product portfolio, this is a huge task.  All on demand (SaaS) products including Business ByDesign and other “line of business” on demand products (e.g. Sales On Demand) will be powered by HANA. For Business Suite customers, it will become an option. For SAP Business One (SAP’s ERP solution running in over 30,000 small companies), it will be embedded. There won’t be any decision to be made and there won’t be a price tag attached. It will just come with HANA inside.

For existing Business One customers, it will be delivered through the upgrade/release cycle. As Sanjay put it, “It will be like taking your car to the dealership and driving away with a larger engine.” I suppose this analogy works for the Business Suite as well, but while that “larger engine” for Business One would be covered under an extended warranty (maintenance), there would be a price tag associated with it to power the Business Suite. And I would expect the engine embedded in Business One might not unleash the full power of the engine. That’s OK because I suspect many Business One and On Demand customers will simply benefit from improved speed and performance and never look beyond to take advantage of the full power of HANA. For that you need vision and a certain degree of creativity to see the potential. Indeed we’ve only seen a few glimpses of these so far.

Today HANA is only available in appliance form on hardware from several vendors and SAP still has a long way to go in terms of making its enterprise applications available on the platform. Even though we’ve been hearing about HANA now for a couple of years, it represents a major technology transformation and SAP is still in early stages of innovation.

Early projects have focused on analytics. This might be viewed as the low hanging fruit of in-memory computing, bringing speed and agility to big data. But while the power of in-memory computing might be intuitively obvious to IT, to be successful, it cannot be viewed just as a new and better toy for IT. IT needs to sell the value to the budget holders and SAP needs to win the hearts and minds (and wallets) of line of business executives.

SAP is open to performing proof of concept (POC) projects today, and the cost of the project can be applied against the purchase of HANA and a more extensive project. But also several purpose built applications represent a first step in proving that value. In fact two new applications were also released this week:

  • SAP Smart Meter Analytics: mines smart meter data to analyze customer energy usage patterns to improve system load forecasting
  • SAP CO-PA Accelerator: planned functionality includes real-time profitability reporting on large-scale data volumes , instant, on-the-fly analysis of profitability data at any level of granularity, aggregation and dimension and cost allocations

These join previously released Strategic Workforce Planning that supports analysis of the effect of changes to a company’s employee base.

These are all great examples that target specific use cases. But SAP wants the use case to be pervasive.  And in order to achieve that, the platform needs to make applications better and faster, easier to use at a lower total cost of ownership. These improvements will spur new ideas of how to take full advantage of the technology. That’s a tall order. So far the dramatic results of early projects have created a certain mystique, or what Sanjay calls “the halo effect” and with that comes differentiation. He welcomes the sentiment that it is “too good to be true.” Give him a chance and he’s anxious to prove it is not.

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SAP Business One: What’s New? What’s Next?

 Having recently posted updates on both SAP Business ByDesign and SAP Business All-in-One, I felt it only fair to also weigh in on the “other” SAP Enterprise Resource Planning (ERP) solution for small to mid-size enterprises (SME) – SAP Business One. With almost 30,000 Business One customers, it enjoys a larger installed base than most all other ERP solutions vying for the attention of small businesses. Besides having featured it prominently on the main stage at SAPPHIRE NOW 2011, what has SAP been up to in terms of delivering innovation and what plans does it have for the future?

For those of you not familiar with the product line, SAP Business One is sold exclusively by over 1,100 partners in 40 countries around the world and is available in 25 languages. A Business One customer typically has fewer than 100 employees.  Designed for small companies, Business One is an integrated suite including:

  • Financial management  
  • Sales and order management, including the ability to support eCommerce through an on-line web store
  • Warehouse and production management
  • Customer relationship and service management
  • Purchasing
  • Reporting –using SAP Business One with SAP Crystal solutions

It is extendable with a Software Developer’s Kit (SDK) and indeed there are over 450 partner solutions, including some that are industry-specific. SAP also leaves more specialized functionality, such as Human Capital Management for example, to its partners.

While employee headcount is an important qualifier, it is not the only qualifier. Several years back I remember speaking with Mike Cornell, EVP of Bamboo Pipeline and a Business One customer. When I first met Mike in 2007, he had recently completed his initial implementation. His company had been a candidate for a new ERP because its existing solution couldn’t handle the growing velocity of transactions that accompanied the fast growth of its early years.  Bamboo Pipeline’s revenues had doubled on average every two years, making it one of the fastest growing suppliers of landscape materials in the USA. But Mike made a comment back then that stuck with me. He said something along the lines of, “When we hire employee number 101, I have no intention of ripping Business One out and implementing something else.” He was obviously in it for the long haul and would not have selected Business One had he not been confident that it would scale with him.

I recently caught back up with Mike for an update. Being in the landscape design business, selling directly to building contractors, Bamboo Pipeline was impacted by the housing bust that followed the financial crisis in 2008. At that point the role of ERP changed. Instead of fueling growth, it instead became a shock absorber.  Bamboo Pipeline preserved revenues throughout the downturn in the economy but improved margins each year. According to Mike, “We were in the midst of trying to manage change and a decline in revenue. However, because our technology platform [Business One] was configurable and adaptable, we were able to very quickly add a whole new line of business. While in the past we had simply sold to landscapers, our new Plants Express business ( allows us to sell direct to consumers through a partnership with Home Depot. We started with an eight store pilot and now we are in 130 stores and will be in 170 by the fall of 2011. This went from 0% to 30% of our business and we launched it with $0 investment in technology and one new employee. If we had needed to buy new technology we probably would not have been able to do it. Nobody was lending money. Having it in place allowed us to launch this new side of the business. It removed labor capacity as an obstacle and provided efficiency for bottom line survival.”

So beyond making the businesses of its customers more sustainable, what has the Business One team been up to? Like most of SAP’s products, it has been the beneficiary of new developments in Business Analytics, mobility and in-memory computing, and like the rest of the “new” SAP, has gotten much closer to its customers.

Reporting and Business Intelligence

Visibility into the business is one of the primary goals of any ERP solution and yet even today many companies, large and small, are still making decisions based on gut feel. Executives need to know their businesses better in order to make decisions and act boldly. One seemingly small, but deceptively important feature of Business One is a key here. That is its drill-down capability. To the left of any field on the screen you will see a little arrow. Want to know more? Just click on the little arrow and it will drill down to more detail. And you can keep drilling further and further. For super users that understand all the structure and relationships within the data and the application, this might seem like a nice little shortcut that keeps them from traversing a hierarchical menu and data structure. But for an executive that doesn’t have the time, patience or inclination to understand all those structures, it is the key to the kingdom. And that key unlocks a wealth of knowledge right at the touch of a button.

Then of course there is reporting.  The reporting mechanisms of ERP represent a key factor in decision-making and Business One relies primarily on the SAP Crystal Reports software for this visibility. There are Crystal Reports that come as standard fare within SAP Business One, pulling live data from all different parts of the solution, from accounting to sales to production and inventory. And SAP will continue to add more and more of these standard reports. However, I think the bigger value proposition will come from the release of SAP BusinessObjects Edge BI 4.0 for the SAP SME products (including Business One.) Adding the SAP Crystal Dashboard Design (formerly Xcelsius) is where the real added value lies, allowing you to create your own views and combine data from both SAP and non-SAP sources.

In SAP Business All-in-One (BAiO) Living Up to Its Name I wrote, “But perhaps where the BAiO user is likely to see the biggest change is in the experience of working with the product. You really have to see this to get the full effect because describing the new user interface as a portal or a mash-up really doesn’t do it justice.” The same kind of experience is available with Business One. Picture a screen that combines frequently used transactions or inquiries from your enterprise application (ERP or CRM), along with a Google-like search, maybe Microsoft Outlook and a few charts of key performance indicators. Maybe other widgets or Microsoft Office components would be added? It would be tailored by role, customizable by individual preference. It would be the equivalent of setting up a home base of operations from which a business user could comfortably operate all day long.

Unfortunately the typical Business One demo doesn’t show this off to its full extent. I can understand why. You don’t get this same experience without some add-on’s to the basic Business One. So I can see that the pre-sales folks don’t want to oversell the ERP product, particularly in selling to small companies that are typically very budget-constrained. And yet, for an incremental added cost, the additional value can be exponential, truly bringing the user experience to life.


But decision makers aren’t just sitting in an office, at a laptop or desktop all day long. They are increasingly mobile and are far more likely today to stay relatively connected at all hours of the day and night. We hear lots these days about connecting to enterprise data through a mobile device. And there certainly are plenty of those mobile devices around. The mobile access Business One delivers today is largely for the purpose of securing approvals. Indeed my own research has found that approvals, authorizations, notifications and alerts are the top priorities of those using mobile devices today. So this really takes a “push” approach – pushing alerts to the mobile device in order to obtain approvals. The action to be taken might be a phone call or email in response, but it also might be a simple click.

 SAP sees mobile access as more of a push and pull in the future, allowing decision makers on the run to pull data on demand, rather than waiting for it to be selectively pushed to them.

In Memory Computing

If you have attended any SAP event, or even engaged in a sales presentation over the past 12 to 18 months, you’ve no doubt heard of “in-memory computing.” In the upcoming year, SAP plans to revamp existing SAP solutions with the power of in-memory computing and to release completely new applications such as Sales and Operations Planning, Trade Promotion Management, Smart Meter Analytics, Intelligent Payment Broker, cash and liquidity forecasting. SAP already has Business One running on the SAP High-Performance Analytics Appliance (HANA) in its labs. In memory computing usually equates to “big data” and big data is generally associated with large enterprises. So why is this significant? There are two scenarios at play here.

First of all, while we don’t ordinarily think of small companies as generating the massive volumes of data associated with in-memory computing, organizations of any size must deal with a proliferation of data. And while transaction volumes in small companies can’t compare to those in large multi-billion dollar multi-nationals, it’s not just business transactions that generate data. There is a plethora of other data ranging from quality and characteristic data collected on a plant floor, to consumer preferences that influence buying decisions of a retailer to smart meter readings in managing energy consumption and promoting sustainability. And then of course there are the massive volumes of data being amassed in social media outlets such as Facebook, Twitter and blogs. Even small companies cannot hide from the influence of the masses today.

Secondly, sometimes those large enterprises are indeed comprised of business units, subsidiaries and divisions that run individually as small companies that interoperate as an integrated business network. Not only must the business unit handle its own data, but that of its sister divisions. And ultimately the parent company must make decisions by consolidating and analyzing data from a vast number of sources. But individual business units can also benefit from having this facility with managing and analyzing massive volumes of data at the speed of their business.

Business executives don’t know or care about advances in data compression, columnar data store, and in-memory computing technology, but they do care about the speed and power the next generation of enterprise data management can bring to decision making. Whether the goal is to dramatically improve data-intensive processes such as planning, forecasting, and pricing optimization or to analyze sales profitability or manage cash and liquidity, once this power is in the executives hands, it will be difficult, if not impossible, for them to go back to “business decisions as usual.”

Key Takeaways

While SAP is well known in the world of the large enterprise, a fairly well-kept secret is that 75% of all of SAP’s business is sold to SMEs. SAP Business One continues to play an important role in providing a solution to the low end of the SME market. The reporting and Business Intelligence strategy will continue to be important, as will mobility, bringing enterprise data to the mobile device in a very easy and consumable fashion. SAP also will continue to build out the Business Network Integration story in multi-entity corporations that operate much like a network of small to mid-size companies. And finally, the 2011 and 2012 timeframe will see more concentration on reaping the benefits from SAP’s in-memory computing technologies.

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