SME

What Acumatica Customers Want – And Get

Openness, Collaboration, Innovation, Acceleration

Talk to any Acumatica customer and very quickly you hear the word “open.” That’s most often cited as a primary reason the company chose Acumatica’s Enterprise Resource Planning (ERP) over other solutions. Why? Because these customers value fit and functionality and completeness of a solution, but they also need flexibility, and often “best of breed” and/or customized functionality to help them differentiate themselves from their competition. But customizing the solution can’t build barriers to growth and change. And for these small to midsize enterprises (SMEs), a flexible, differentiated solution can’t add unwanted complexity and it can’t break the bank.

While many ERP providers today try to be “one stop shops,” the downside of this is added complexity and cost. Acumatica instead chooses to provide an open platform and take a collaborative approach to accelerate innovation, collaborating with customers to plot a product roadmap and with partners to fill gaps and provide specialized functionality. While Acumatica customers don’t necessarily expect ERP to satisfy all their needs, they also don’t want to wind up with a hodge podge of disparate, disconnected solutions. In fact, that is what many are replacing. They turn to Acumatica to facilitate easy integration and connectivity.

This “open” approach provides the added benefit of agility. Face it: We live in disruptive times and disruption can have a cascading impact on business application requirements, making the ability to easily innovate, evolve and change – equally, if not more important than current functionality.

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SAP Anywhere Moves Beyond eCommerce to Provide Complete Front Office

Marketing, Sales and Service for SMBs

At first glance SAP Anywhere might appear to be just another new eCommerce solution for online retailers. But if you dig a little deeper you find much more. Purpose built for the small to medium size business (SMB) with a digital presence, it is a complete front office solution. It is a multi-channel commerce and marketing platform designed to be mobile first, low-touch and easily extensible. It supports SMBs in their efforts to:

  • Design and manage marketing programs and leads
  • Manage inside sales and customer service
  • Have visibility into what’s being sold, through which channel
  • Process online and in-store orders in one place
  • Track and manage inventory

Yes, SAP Anywhere targets retailers, but also recognizes the evolution in the way products are bought and sold today. Not only do retailers sell through multiple channels (online, in store and anything in between), but also more and more manufacturers and distributors have at least one sales channel where they eliminate the middleman and sell directly to the consumer. This places new demands on the business at the point of sale, demands typically not easily addressed by back office solutions such as enterprise resource planning (ERP).

SAP has taken a modular approach to satisfying these needs. Rather than building more complexity into the ERP solution itself, forcing upgrades or replacement, it loosely couples the front office to existing back office solutions. If you are an SAP Business One or SAP Business By Design customer, the integration is out of the box. But the platform approach of SAP Anywhere also allows it to be easily connected to any back office – virtually anywhere.

Supporting Any Model, Anywhere

When it comes to managing the sale of goods, retail and manufacturing/ distribution are typically worlds apart. In retail, at the point of sale you deal with cash, check or debit/credit card; the customer walks away with goods in hand and inventory is depleted. In manufacturing you process your customer’s purchase order, create a sales order and subsequently ship and invoice, relieving inventory and creating accounts receivable. Later you receive cash and apply the cash receipt against accounts receivable either on an open item or a cash balance basis.

Receiving cash in a traditional point of sale system in a retail environment, either in store or online is easy. Managing an open account is more difficult. For a manufacturer or distributor using an Enterprise Resource Planning (ERP) system, managing accounts and accounts receivable is standard practice. Processing a cash sale is more difficult.

In a retail store, the cash in the drawer is reconciled against the sales recorded at the end of the day. In a manufacturing or distribution environment shipments, invoices and cash receipts are reconciled at the end of the month. Yet in all cases, everything must be posted to the general ledger in order to create a balance sheet and profit and loss statement.

So what happens when a manufacturer or distributor sells directly to a consumer? It happens more and more today in showrooms and factory outlets, as well as online. In eliminating the traditional retailer, does the manufacturer need to invest in a retail point of sale (POS) solution, an eCommerce solution, as well as a back office ERP solution… and then interface or integrate them all in the hope they will one day all work seamlessly?

SAP Anywhere supports all these different environments at the point of sale without causing you to jump through hoops, automatically sending the necessary transactions back to ERP, whether you post an order, to be followed by shipment, invoice and payment or whether it all happens at once. And with SAP Anywhere, it’s not just about being able to take cash for a product in hand. Manufacturers or distributors might have a virtual showroom from which you can place a more traditional business-to-business (B2B) order. The manufacturer or distributor might have the goods in stock to be shipped and invoiced, or it might take an order, source the product and have it shipped directly to the customer. SAP Anywhere supports any and all of these different business models.

And these business models, and even prices, may vary by channel. Are you selling direct, through distributors or through online commerce companies like Amazon or Alibaba? Today are they all forced to use the same catalog and pricing? Or are you forced to create (maintain) separate catalogs for each? Can you tie a channel to a specific warehouse or fulfill all orders from a central distribution point or anything in between? If using a central warehouse, can you reserve inventory for a specific channel? All of these options are supported by SAP Anywhere. Perhaps SAP should call it SAP Anywhere Anyhow.

Flexibility in Payment

SAP Anywhere can also accept a variety of payment methods common in a combination of online and physical retail outlets including in store, showroom, warehouse or simply “in person” transactions (think about a service technician selling a spare part). These payment methods include cash, debit card and stripe (payments infrastructure).

In a physical setting, the application itself supports bar code scanning directly from the mobile device on which the sale is captured, without any added hardware. Or you can add an external scanner connected via Bluetooth. In addition to the scanner you might also connect a printer and make use of cash drawer functions that allow the use of any personal computer with a “locked” cash drawer, all while keeping track of total sales for any day broken out by payment method.

Customer Lead Generation

Completing a sale is great, but not necessarily unique to SAP. However, there is more to the front office function than just selling. The front office is also tasked with creating demand and acquiring new customers. These marketing functions are typically supported by separate applications, if at all. Many SMBs today see digital marketing as an affordable alternative to more traditional software to manage marketing campaigns. But they then struggle to tie these digital campaigns back to the transactions for closed loop marketing.

The next area of investment in developing SAP Anywhere is in the realm of digital marketing. Look for instant integration with Constant Contact and Mail Chimp, both of which can track clicks and other campaign statistics. Next on the docket are search (think Google ads) and integration with social media to integrate campaigns into Facebook, Pinterest, Twitter, Instagram and LinkedIn.

Where and When?

SAP Anywhere isn’t available everywhere… yet. It launched in Beijing in October, in partnership with China Telecom. SAP is planning to launch in the United Kingdom soon, to be followed shortly thereafter in North America. But it will need to continue to expand geographically if it wants to achieve its goal of 100,000 customers within five years. Along with that customer count goal comes an annual revenue goal of $200 million. Because this solution is completely cloud-based, all sales will be by subscription.

If you do the math, this means average annual revenue per customer of just $2,000, making it quite affordable and appealing to the SMB market.

In Summary…

SAP seems to have very aggressive plans for SAP Anywhere, targeting growing SMBs interested in having more customers. And today, who isn’t? The Internet levels the playing field for expansion and growth. But growing your customer base today also requires a digital presence – one that is very carefully orchestrated from lead generation to customer acquisition to customer retention. Don’t settle for just one piece of the puzzle. Make sure you start down a path that can take you Anywhere you want to go. Perhaps SAP Anywhere can help.

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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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SAP Business One Emerges as the SMB ERP Solution to Beat

If you are a small to mid-size business (SMB) faced with a decision about Enterprise Resource Planning (ERP), SAP Business One is likely on your radar. Even if your initial search did not result in placing SAP’s solution on your short list, chances are one of its competitors has brought it to your attention by attacking either SAP or Business One, or both. Why? Just like political attack ads that go after the front-runner, ERP vendors go on the attack against the industry leader. By sheer numbers, SAP is the largest enterprise solution vendor and over 80% of its 263,000 customers are in the small to midsize bracket. With over 45,000 SAP Business One customers, this solution might be an easy target, but it is not going to be easy to beat.

The rationalization, “Nobody ever got fired for choosing [insert front runner here]” doesn’t work for ERP, leastwise for ERP in a small company when it is usually the top boss signing off on the decision. All 45,000 SAP Business One customers could not have been “wrong.” And let’s face it: If you want to make an informed decision about a solution, you don’t go to the competition for the facts. Competitors often get the facts wrong and propagate rumors, myths and misinformation. Any comparison the competitions’ sales/marketing teams offer is often driven by wishful thinking and influenced by drinking their own Kool-Aid. To examine some of those assertions, along with some facts, click on the link below.

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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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Technology and Best Practices Fuel Growth for SAP Brazil

SAP’s growth in Brazil has outpaced growth in not only other parts of the world but also growth in the Brazilian market. As an emerging economy, rapid growth is to be expected, but along with that growth comes the usual challenges. These obstacles are amplified in Brazil, a difficult business environment burdened by challenging tax and regulatory requirements. This demanding environment not only presents an impediment to growing Brazilian companies, but also the enterprise software vendors that would love to help, and in doing so, fuel their own growth. SAP’s exceptional success stems from a value proposition that combines new, innovative technology with localized business best practices. And a focused, purposeful plan doesn’t hurt either.

How Much Growth?

The first half of this year SAP Brazil grew its software business by 80%, far ahead of the growth of the overall software market.  Indirect business grew faster than direct, which for SAP means growth in small to medium size enterprises (SMEs), serviced exclusively by its channel partners.

Part of this growth resulted from a regional focus. While the concept of sales regions is widely accepted and even natural in other large countries like the United States, this type of sales approach was new for the vast territory that makes up Brazil. After introducing this regional concept, SAP Brazil saw triple-digit growth in some regions. Software revenues in the northeast part of the country grew by 400%. Just having undivided attention and a more local presence seems to pay off.

Is Brazil a Land of SME Opportunity?

Historically Brazil has been a country of extremes. It is home to some of the largest corporations in the world. And yet according to Endeavor, a non-profit dedicated to promoting long-term economic growth through mentoring and supporting entrepreneurs, about 90% of companies in Brazil are micro-companies. While definitions of a micro-company might vary around the world, they are generally very small. Small companies have tended to stay small in Brazil for two reasons.

Brazil is not a country known for entrepreneurship. Many more startups were born from unemployment than from an entrepreneurial spirit. And once a certain revenue threshold is exceeded, (still) small companies are subject to the same tax and regulatory requirements as very large enterprises. Where the small company lacks the manpower and expertise to handle these stringent requirements, it stays small by design. As many of these businesses are now being passed on to a new generation, the desire for growth is met with frustration. Most have yet to invest in solutions that can help fuel growth. Those vendors that truly understand these local requirements and can offer affordable services and solutions that meet these needs will be most likely to capitalize on this opportunity.

SAP obviously plays in the large enterprise and as a result has a lot of knowledge and expertise available to bring to bear on the problem. Much of what it has learned in supporting large multi-nationals is relevant and the knowledge is transferrable.

But the largest potential for growth in Brazil is in this SME segment. SAP identified 400,000 (out of a total of 2 to 2.5 million small businesses) as being in its addressable market. Today about 1% (4,000) of them are SAP customers and SAP is on a mission to significantly increase that percentage.

Is the Growth Sustainable? Partners Play a Big Role

But is the growth achieved thus far sustainable? Because SAP sells exclusively through the indirect channel in the SME segment, its continued success depends a lot on its partners. For the most part these partners are local (Brazilian) companies and with the exception of the big multi-national consultants and systems integrators, they too are SMEs. So they understand the market and are well positioned to help SMEs deal with Brazilian bureaucracy.

Combining this expertise with SAP’s investment in technology is key. Not every enterprise software vendor has deep enough pockets to address these local requirements. SAP does, and is going two steps further. Step one is in its investment in transformative (some call it disruptive) technology. Step two involves using that technology to embed localized best practices into its solutions.

Because partners are so critical to the success equation, I spoke at length with one of them about what has made SAP and its partners so successful this past year.

Partner Profile: Cienci

Cienci is a partner offering a broad portfolio of SAP products. I asked Ricardo Nobrega da Silva, Director of Cienci to share what he felt was the secret to SAP (and its own) recent successes. His answer: SAP has evolved from an ERP company to a technology company, providing businesses large and small the kind of innovation they need to compete and grow. This is reflected in Cienci’s own broad portfolio. Selling to the mid to large segment of SMEs in Brazil, it offers:

  • SAP ERP, both as ECC (Enterprise Central Component, the heart of the Business Suite) and packaged for the SME as Business All-in-One
  • SAP GRC Nota Fiscal Electronica (SAP NFE) to support companies in complying with the requirements of the Brazilian authorities for electronic invoicing
  • SAP Vendor Invoice Management (VIM) by OpenText, a prepackaged application that works with SAP ERP to stream-line accounts payable processes
  • HANA
  • Fiori, a new collection of 25 apps that will surround SAP ERP, providing a new user experience for the most commonly used business functions of ERP
  • Mobility solutions including
    • SAP Mobile Platform (SMP)
    • Sybase Unwired Platform (SUP)
    • Syclo, a work management mobile app for field service productivity and safety
    •  Afaria to manage devices
    • Apps it has natively developed for mobile devices
  • Integration services using SAP NetWeaver Process Integration (PI) and Gateway
  • Other services in support of SAP products and implementations

In addition, Cienci signed the first Managed Cloud as a Service (MCaaS) contract for Fiori in the world and is also certified for SAP CRM Sales Mobile Rapid Deployment Solution (RDS). It also focuses on SAP HCM solutions and SuccessFactors and signed the first OEM contract for SuccessFactors in the world.

“All the latest technology trends are important in Brazil, just as they are in other parts of the world. This includes social, mobile, cloud and big data. SAP is a big company and has invested a lot in bringing innovation to the market faster across a broad portfolio. Take mobility as an example. It is the only company that can deliver both a platform to manage devices [Afaria] as well as a development environment to develop mobile applications,” said Mr. Nobrega.

Is Technology Enough?

That said, even though Brazilians are generally receptive to new technology, Mr. Nobrega cautions they will only buy it if the technology adds business value. While he feels SAP is making the right response to the market with the right solutions, smaller companies need to be educated on the potential business impact. Like smaller companies around the world, they tend to focus on cost only and are reluctant to invest.

So educating these small companies is a necessary step in the process. The challenge for SAP and its partners is to prove the value, particularly if the technologies, and even sometimes the issues, are not well understood.

This issue is not unique to Brazil. Most small and medium size business executives are not technologists, and unless they are, they might not know or care about that underlying technology, because they don’t understand it. They might feel the systems they have today are the best on the market. In other words, they don’t know what they don’t know. Or they may simply feel they can’t afford anything better.

There is danger in this type of thinking. Those lagging behind in technology-enabling their businesses don’t need to understand how new technology works but they do need to understand what it can do for them.  They also need to understand that solutions today are more affordable than ever. And finally they need to be able to quantify the potential return on investment. This education process is a job for both SAP and partners like Cienci.

The first step in this education process might be in dispelling some SAP myths.

Myth #1: The first myth is that SAP is only for big companies. The reality is that a large majority of SAP’s customers, numbering more than 80,000, are SMEs.

Myth #2: The second is the SAP only offers complex and expensive ERP. In fact SAP offers three different solutions in Brazil:

  • The SAP Business Suite with ECC at its core
  • SAP Business All-in-One, which also has ECC at its core, but is pre-configured for specific industries and packaged with best practices to speed and ease implementation
  • SAP Business One, an entirely separate and distinct ERP product designed for small companies (generally with fewer than 100 employees)

Myth #3: The next myth is that SAP solutions are only offered as a traditional on-premise deployment. In fact there are several different cloud deployment options, including managed services in the cloud (MCaaS) and Software as a Service (SaaS).

Myth #4: And the final myth is that all implementations are long, slow and cost millions of dollars. The reality is the speed and ease of implementations has been steadily improving over the past decade and there are instances where first go-live milestones are achieved in weeks, not months and years. As to the cost, get a quote.

Of course any company, large or small, will need to cost justify a solution. For this, we would point to Mint Jutras research that quantifies the results measured since implementing ERP. And these results might surprise you.

Figure 1: Improvements Realized Since Implementing ERPSAP Brazil Fig 1

Source: Mint Jutras 2013 ERP Solution Study

The improvements shown in Figure 1 come from the 2013 Mint Jutras ERP Solution Study. These improvements were measured “since implementing ERP”. While it would be tempting to call them results achieved “as a result of ERP”, in reality improvements like these always result from a combination of people, process and technology. ERP can’t take all the credit, but is often the catalyst and vehicle by which they are achieved. World class denotes the top 20% in terms of performance measured by results, progress against goals and current performance in selected (universal) key performance indicators. Note that even those not world class achieve very significant results, typically enough to cost justify the investment.

Summary and Key Takeaways

The growth SAP has enjoyed in Brazil over the past year has resulted from combining its efforts with those of its local partners. Leveraging its heavy investment in development and its experience with large enterprises around the world, it has brought the necessary functionality to its solutions. Deep pockets and a focus on disruptive technology have allowed it to stay ahead of the technology curve. The challenge will be in not getting too far ahead of the adoption curve. SAP and its partners will have to work together to educate prospects and even existing customers to better understand the potential, not for technology sake, but in demonstrating the impact on the business itself.

But to pave the way for this technology-enablement, SAP and its partners first need to mentor and guide small growing businesses through the Brazilian jungle of bureaucracy, tax and regulatory compliance.

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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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