SAP Business ByDesign.

Can SAP’s Partner Program Hit a Trifecta In the World of ERP for SMB?

The Odds Have Never Been Better for a Win-Win-Win

In any normal, healthy business relationship, two parties seek a win-win. But in the software partner world, you really need to hit a triple – a win-win-win. In order to truly succeed you need the partner, the software vendor and the end customer all to win. You can’t afford to compromise the success of one for the success of another; you need a perfect trifecta. At the recent SAP Partner Summit immediately preceding SapphireNow 2018 it struck me the odds had never been better for a trifecta, not only in SAP’s home turf of the large enterprise, but also in the world of small to medium size businesses (SMBs).

While it is often hard to sort through all the different products and messages at events like these, particularly for a company the size and breadth of SAP, one message came through loud and clear: SAP needs partners, particularly in the SMB space. The partners are the trusted advisors and the face of SAP. The partners are faster, more nimble and more appropriately sized for dealing with smaller companies that might be intimidated by the likes of SAP, the 800 pound gorilla of ERP.

Many seem to forget (or ignore) the fact that SAP has a huge presence in the SMB market for ERP. Even competitors dismiss SAP as a threat in this space. Agreed, these competitors aren’t seeing SAP in deals, but they should be seeing its channel partners. SAP has one of the most mature partner programs in the industry. It works exclusively through channels in the SMB space and therefore has a vested interest in attracting new partners, and helping and empowering new and existing partners to actively pursue new business more effectively and at a lower cost of sale. More partners means more feet on the street , a broader reach into new geographic territories and even new industry sectors. Quite often partners bring specific and very deep industry expertise.

With over 60,000 customers using SAP Business One and about 4,000 using SAP Business ByDesign, how is it legitimately possible to dismiss SAP as a competitive threat in the SMB market? If those competitors are not seeing these products in competitive situations, that tells me there are a lot deals they just aren’t getting into.

But the 100% channel focus down market is not new. Why are the odds stacked in favor of SAP and its SMB-focused partners now? Let’s back up a little and examine motives here.

What Vendors and Partners Want

During the summer of 2013 Mint Jutras conducted a research project designed to provide insights to enterprise applications vendors engaged in developing and maintaining partner strategies. The study collected input from two different communities: the end users that consume enterprise applications and the solution providers that author and/or sell the solutions. “Solution providers” included both vendors that “manufacture” and “publish” the solutions, as well as their partners. While the data collected is now five years old, many of the insights gleaned are still very relevant today.

The study found the single most important objective of the vendors (in engaging with partners) was expanding their addressable market. SAP seems no different today. Growth would appear to be a high priority. But markets can be expanded in different ways, including geographical expansion into new territories, adding new industries or macro-vertical markets, or expanding within existing industries or verticals by diving deeper into micro-verticals.

Hold that thought for a moment!

So what do these partners look for in a partnership? Figure 1 gives us a general sense of priorities. While priorities vary significantly, the top priority is clearly the quality and functionality of the product itself. Sixty-six percent (66%) of partners interviewed rated this at the very top of the list.

Figure 1: Priorities in choosing a vendor to partner with

Source: Mint Jutras Partner Strategies Study
Note: While partners were asked to sequence these from 1 to 8 where 1 was most important, the scaling was reversed in the analysis. The higher the number presented, the higher the priority

So what do these two perspectives tell us? The ERP product itself is key to the success of both the vendor and the partners. And I would also argue it is very important to the end customer too. The latest (re-)organization around the SMB product offerings at SAP, along with the introduction of a platform approach to development, lead me to believe SAP also agrees with that conclusion.

A year ago in SAP Business One: The Next 20 Years | Becoming an ERP Platform I wrote:

SAP Business One is becoming more than just ERP. It is becoming a business process platform. That means it will be open, extensible, and poised to meet very specific needs across many different verticals… and fully capable of being delivered through the cloud as a service.

SAP continues to invest (and invest heavily) in the ongoing development of the generic core ERP, including new features and functions, as well as the user experience. It will also invest in the underlying architecture and technologies that enable partners to more easily enhance and extend the solution for the specific needs of different vertical, and in some cases even more specialized micro vertical industries.

Remember I told you to hold that thought about micro-verticals?

Many of SAP’s partners have been developing extensions to SAP Business One for years. It is part of the value they add. Yet up until now they have also been very likely to customize the software for individual customers. Yet some have approached it differently – I would say they are being smarter in packaging up specialized functionality for specific verticals. For example:

  • Produmex offers solutions for industry verticals including life sciences, consumer products, food & beverage, wholesale & distribution, including third party logistic providers (3PLS).
  • Liberali offers SAP Business One with complementary solutions for agriculture management.
  • VistaVu Solutions specializes in industrial field service companies, including those in the oil and gas industry.
  • beas Manufacturing offers a bit more generalized solution, but specifically for manufacturing.
  • MTC Integration Technology is very specialized, offering the MTC Chicken Integration Solution built on SAP Business One.

These are just a few of the hundreds of partners that have been creating add-on solutions that complement SAP Business One for years. The plan now is to open up the platform, making it more extensible (i.e. easier to add new functionality) while preserving the integrity of the core. SAP will encourage loose coupling of these extensions through modern APIs (application programming interfaces) and discourage invasive customization.

Now SAP is taking this one step further. It has combined the development teams for SAP Business One and SAP Business ByDesign to further encourage development of shared components. Where new features and functions require deep and complex integration with existing code (on either product), they might (still) be embedded in the existing product. A new field service mobile app for SAP Business One is a perfect example.

But where the new component has a limited number of touch points with the existing product, it can be loosely coupled. In these cases it will be developed once and simply connected to one (or both) using product specific APIs.

While obviously a win for SAP, why is this a win for the partners? The partner gets more product to sell to a larger audience (both installed bases combined). This of course is further encouragement for SAP Business One partners (the larger of the two partner communities) to take Business ByDesign into their own stable of products to sell. For partners that might be starting to hit a ceiling with Business One (for size and multi-company requirements), it allows them to continue up market a bit as well.

What About Customers?

Quite simply, the customers get more innovation, faster. So how important is this? In our study we also asked the customers to prioritize the different types of value add they might look for from a partner. Figure 2 shows the results. (Note: Hopefully I haven’t confused you. Forgive me, but I got a little lazy here and did not reverse the scaling as I did in the previous figure. Here, the lower the number, the higher the priority.)

Figure 2: Customer Priorities for “Value-Add”

Source: Mint Jutras Partner Strategies Study

Note: Customers were asked to sequence these from 1 to 6 where 1 was most important. We DID NOT reverse scaling in this analysis. The lower the number presented, the higher the priority

The important take-away here is that functionality is key. Over the years customers have been conditioned to expect and request additional functionality in terms of customization, which has been invasive and often built barriers to applying further innovation. We hope that in the future these types of requests will be satisfied, not by invasive customization, but by extending the solution. SAP is providing the architectures, tools and technology to make this happen, but it will require a culture shift for both customers and partners to embrace this new approach.

To further drive that point home, there currently exists about 3,500 add-ons to SAP Business ByDesign and 60% of ByDesign customers use at least one. As a multi-tenant SaaS solution it was never possible to develop modifications with invasive code changes, so ByDesign Is already a step ahead of Business One in this regard. But it is not quite “there” yet, as evidenced by the fact that most are still one-offs. So that culture shift amongst customers and partners still needs to happen.

To that end, SAP is not only supplying the development platform on which to base this shift, but also a digital commerce platform. There is a whole new team at SAP dedicated to this kind of digital transformation. According to Bertram Schulte, SAP’s chief digital officer, “The ability to represent our ecosystem offerings side-by-side with related SAP IP [intellectual property] on sap.com is powered by the SAP App Center. We have over 1,500 applications from 1,100+ partners that provide the type of open marketplace where our customers can find the solutions they are looking for.” For SAP customers, searching for, finding and purchasing a new add-on solution is facilitated. I don’t believe this will have a major impact on the acquisition of a new ERP customer, but once you are a customer, the whole process from start to end is dead simple.

Click here to listen to Bertam talk about this digital transformation.

Conclusion

So, are you a betting man or woman? What do you think the odds are that SAP, along with its partners and customers in the SMB space, can hit a trifecta? Will SAP be successful in growing its business in a way that is lucrative for its partners and satisfies the needs of its customers? Where are we in terms of this culture shift to last mile functionality through extensions rather than customization? Who stands to gain the most? Does anyone stand to lose? Is everyone ready for some change?

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The Three Dimensions of SAP Business ByDesign Set The Stage for Growth Part 3

This is the 3rd and final post of a 3-Part series on how SAP sets out to enable growth with its cloud ERP solution, SAP Business ByDesign. In Part 1 we talked about SAP Business ByDesign’s architecture and in Part 2 we discussed the user experience and configuration of the solution. If you missed either you can catch up with Part 1 and/or Part 2 or, if you prefer to skip the suspense you can read the full report now.

Organization Structure

SAP Business ByDesign allows growing companies to maintain a single organization structure that defines relationships between all legal entities both from a financial consolidation standpoint as well as an organizational (reporting) point of view. As enterprises mature and grow both of these tend to shift and change.

Legacy solutions often require these different structures to be maintained separately by business unit, embedding the enterprise structure within the general ledger account, making maintenance clumsy and any type of change difficult. Once established, changing the structure of the chart of accounts is next to impossible. In legacy systems personnel reporting structures were likely to be defined in a completely separate solution, if they were recorded at all. These two are often not aligned identically and this causes problems in managing performance while maintaining governance and control.

Take your sales organization for example. Sales is often managed as a global organization, yet salaries are paid and revenue is accrued by country and different countries mean separate legal entities. Sales representatives are part of both a legal entity and a global sales organization that spans multiple entities. Pipeline and quotas may be determined in an entirely different way, by internal, external or global sales and/or perhaps by product lines. Where can you get a full picture of performance from any or all perspectives?

SAP Business ByDesign provides the flexibility to structure all of this once, in a way that makes most sense, not in the way dictated by your ERP.

Embedded Analytics

Often companies look to reporting capabilities within their ERP solutions for managing operational performance. Yet in managing growth, you need to look beyond current operations and analyze the potential of growth opportunities. For this you need analytics. Most ERP implementations today don’t adequately deliver either because ERP has long had the reputation for being easier to get data into than decisions out of.

Standard reporting is never exactly what decision makers want and need and they often tire of waiting for the IT staff to make modifications or deliver new reports. And when making more strategic decisions about growth, they need to ask a lot of questions and the process is very iterative. Yet it is very hard to know where to start and what questions to ask.

Companies are sitting on a mountain of data, making it difficult to process through it very quickly in order to discern which key performance indicators (KPIs) will be most indicative of future performance. After all, they can’t look at every detail. So decision makers settle for aggregate summary data instead of the real detail they need. And they put the request for analytics on the back burner while they fight the operational fires. This is particularly true of mid-size companies struggling with the same kind of decisions as large enterprises, but without the deep pockets and large staffs to address them specifically.

This is why SAP Business ByDesign embeds analytics directly into the business scenarios. The analytics are browser-based and available on mobile devices, complete with alerts that can be sent in real time. SAP makes extensive use of dashboards, which business users can create or personalize for themselves. But SAP didn’t turn its back on business users’ almost universal love for spreadsheets. Offline analysis using Microsoft Excel is still possible.

Good Growth is Profitable Growth

Throughout, whether looking at subsidiaries or the corporate whole, you will need to manage cash and liquidity, payroll services, quality assurance and the financial close. For this you need visibility, delivered by SAP Business ByDesign’s embedded analytics. And you will need a consolidated view across these potentially different businesses within the business. You can’t run a sales and marketing team like a service and repair facility. And you can’t run a field service operation identically to a manufacturing operation. Yet all these have a common thread of master data (customer, products, parts, employees) and need to be consolidated at HQ.

Of course you want to satisfy the individual needs of the different types of businesses within a business, but you also don’t want to be trying to cobble together a unified view from disparate systems. This is the advantage of SAP Business ByDesign’s approach of a single, multi-purpose solution – providing it really can meet the individual needs of the different functions. During your evaluation process, look carefully at those business scenarios delivered with the standard solution. These will provide the base of operation of each facet of your business and those operations may vary and change with growth.

Summary and Key Take-aways

Cloud ERP is indeed a great enabler of growth for mid-size companies, particularly those looking to take bold steps in a rapidly changing business climate. It is clear that SAP has taken the needs of these mid-size companies seriously, particularly those that are fast growing. Keeping in line with its current mantra of “Run Simple,” SAP Business ByDesign can indeed help simplify the growth process through its three-dimensional design philosophy incorporating simplicity, flexibility and extensibility.

For mid-size companies looking to take full advantage of unprecedented growth opportunities, any old ERP is not enough. If you are in search of a cloud-based ERP solution that can help you grow and grow quickly, SAP Business ByDesign definitely deserves consideration.

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The Three Dimensions of SAP Business ByDesign Set The Stage for Growth Part 2

This is Part 2 of a 3-Part series on how SAP sets out to enable growth with its cloud ERP solution, SAP Business ByDesign. In Part 1 we talked about SAP Business ByDesign’s architecture. If you missed it you can back up and read it here or, if you prefer to skip the suspense you can read the full report now.

New Generation User Experience

In Cloud ERP: The Great Enabler of Growth we talked about the people challenges associated with growth. New generations of ERP, delivered through the cloud can help alleviate some of these challenges. But Mint Jutras research finds that “ease of use” means more than just a pretty face. Ease of use is first and foremost about efficiency, which not only requires a user interface that is intuitive, but also processes that align with the way business really works – business scenarios that maximize efficiency and minimize time to complete tasks.

Of course the real proof that SAP Business ByDesign delivers on these promises comes with a demonstration, but SAP’s design methodology is conducive to supporting both. When designing a business scenario, SAP designers go on site, observing the way people work and interact. Their designs are based on these observations and then validated, typically in multiple countries (China, India, Germany and the United States) before being incorporated into the product.

The result of this methodology has been an emphasis on the human engineering of the process. Each individual works from a personalized home page, which combines functions from within SAP Business ByDesign with other functions (e.g. email, calendars, maps, etc.) and a powerful enterprise search capability (think of it as a Google-like search throughout your enterprise data). Business processes are made more efficient as tasks are pushed to users. Throughout, there is a theme of simplicity and personalization.

Business Configuration

Personalization within SAP Business ByDesign is achieved through a “Business Configurator” that takes advantage of the pre-defined business scenarios discussed earlier and a rules-based catalog. Together these allow each customer to tailor the solution to specific needs by interacting in business language, not code and without invasive customization. These business scenarios map the workflow of a business process through the various functions of the solution. Selecting a pre-defined scenario automatically selects all the functions necessary during initial implementation. Customers can then selectively fine-tune the settings immediately or as business conditions change.

This type of configuration tool is particularly important as companies expand into new locations, either through organic growth or acquisition.

The combination of the SAP Business ByDesign business configurator, pre-defined business scenarios and a library of business rules enable this type of standardization. Customers need only to supply company-specific data, including assignments of tasks, to support a “push approach” within an organizational structure. By pushing tasks to an individual, processes continue uninterrupted, making the most efficient use of that person’s time. Nothing falls through the cracks.

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