SAP takes another stab at the applications mid-market.Enterprise software giant SAP has never had much success in selling its flagship software, R/3 and more recently mySAP.com, to small- and medium-sized enterprises. Not so surprising, given its typical customer has at least 10,000 users. So while the company's March 2002 purchase of TopManage Financial Systems, an Israel-based developer of business applications, demonstrates its renewed commitment to becoming a software provider to smaller companies, how fruitful its efforts will be is open to question.
SAP's earlier efforts to target small- and medium-sized enterprises have, to date, been unsuccessful compared to its track record of selling to large organisations. When the company launched the R/3 version of its enterprise applications suite in 1992, SAP was targeting R/3 for the smaller divisions and subsidiaries of companies running its mainframe-based version, R/2. R/3, said SAP executives, would be marketed to midsize companies, with revenues of "$100 million and below", that were too small for R/2. Instead, R/3 became the best-selling best·sell·er also best seller
A product, such as a book, that is among those sold in the largest numbers.
best enterprise applications for the world's largest organisations. Subsequent attempts to push into smaller companies have centred on marketing scaled-down, pre-configured and hosted versions of the R/3 suite to small- and medium-sized businesses (SMBs) - but with limited enthusiasm or success.
Today, SAP defines the SMB market See SMB. as companies with revenues of less than [pound]150 million per annum Per annum
Yearly. . But at present, it derives around 8% of its licence revenues from SMBs. According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. SAP's European head, Leo Apotheker Léo Apotheker is a member of the Executive Board of SAP AG.
Léo Apotheker has been a member of the SAP AG Executive Board and President of Global Customer Solutions & Operations since 2002. , the company's new strategy will boost this figure to between 15% and 20% in three to five years.
The new strategy, centred on the TopManage acquisition, involves the formation of a dedicated business unit, BU SMB (1) (Small to Medium-sized Business) Also called "SME" (small to medium-sized enterprise), it refers to companies that are larger than the small office/home office (SOHO), but not huge. , for the SMB market. For small businesses with between five and 100 users, SAP will sell the TopManage product through channel partners. For larger organisations in the SMB space, it hopes to sell mySAP.com.
One question that emerges from the TopManage deal is why cash-rich SAP chose to buy a low-end product from a small, little-known Israeli company.
"It's a little bit of a surprise that they'd choose TopManage," says Simon Pollard pollard
fine protein-rich feed supplement for farm animals; a byproduct from the milling of wheat for flour. Called also shorts. , vice president of European research at IT market research company AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. Research. He says that SAP could easily have acquired one of the "bigger mid-market companies" such as Navision or Intentia.
"SAP should have purchased QAD QAD Quality Assurance Division
QAD Quality Assurance Department
QAD Quick And Dirty
QAD Quality Audit Division
QAD Quick Attach/Detach
QAD Question Answer Detail (language arts education)
QAD Quality Application Development or Intentia, by which it would have picked up thousands of new customers that would have been good candidates for SAP's Customer Relationship Management, Advanced Planning and Optimization, and Business Warehouse, and the rest of the SAP suite," concurs Pollard's colleague Bruce Richardson, senior vice president of research. "Of course," Richardson adds, "[these companies] wouldn't have been for sale at the same $5 million to $10 million price as TopManage was."
That SAP was offered TopManage at a preferential price can hardly be in doubt. TopManage was founded by Shai Agassi Shai Agassi (Hebrew: שי אגסי, he was born in 1968) was a member of the Executive Board of SAP AG. and his father Reovan - the team behind portal company TopTier, which SAP bought in March 2001. Shai Agassi has led SAP's portal division since TopTier's acquisition.
SAP executives are quick to emphasise TopManage's strengths. Tim Osman, SAP's manager of mid-market solutions in the UK, says that the TopManage product is an "international product" and "easily configurable in terms of localisation (programming) localisation - (l10n) Adapting a product to meet the language, cultural and other requirements of a specific target market "locale".
Localisation includes the translation of the user interface, on-line help and documentation, and ensuring the images and ". It is currently available in English, Hebrew and Spanish versions, though German and French versions will surely follow soon. TopManage can be easily added to and worked on by SAP, and as a company with significant development resources and a strong brand, "you don't necessarily need to buy an established product", says Osman. The company has more than 800 customers, "most of them outside of Israel", he says.
In terms of function, he says, TopManage offers small companies many advantages over competing products. The product is "lean but also very functionally rich", with capabilities such as simple customer relationship management, sales pipeline tracking and sales force automation Automating the sales activities within an organization. A comprehensive SFA package provides such functions as contact management, note and information sharing, quick proposal and presentation generation, product configurators, calendars and to-do lists. . The combination of all these capabilities is typically available only in products that are "three or four times as large and expensive", he says. It can go live in as little as three days, he claims, and will be competitively priced for the low end of the SMB market. SAP, according to Osman, is "looking to undercut undercut,
n 1. the portion of a tooth that lies between its height of contour and the gingivae, only if that portion is of less circumference than the height of contour.
2. [the cost of running other software] by at least 20% in every market we play in".
Pollard argues that organisations of all sizes are increasingly moving away from large, monolithic enterprise systems, in favour of installing and integrating more granular granular /gran·u·lar/ (gran´u-lar) made up of or marked by presence of granules or grains.
1. Composed or appearing to be composed of granules or grains.
2. systems based on software components that can dynamically exchange data with each other. Typically, they will purchase these components from a wide range of different vendors, integrating them with components developed in-house. "Therefore, the idea that a large corporation will solve its problems by using mySAP.com for all of its large subsidiaries and TopManage for all of its small ones is grossly simplistic sim·plism
The tendency to oversimplify an issue or a problem by ignoring complexities or complications.
[French simplisme, from simple, simple, from Old French; see simple ."
As SAP celebrates its 30th birthday in April 2002, there can be little doubt of the influence the world's third largest software company holds, both in the IT industry as a whole, and among the world's largest buyers of corporate technology. But whether SAP can convince companies that might more readily consider a product from a mid-market enterprise software specialist, such as Sage, Intentia, IBS IBS Irritable bowel syndrome, see there , Navision or increasingly, Microsoft's Great Plains division, that it can offer a product that fits their needs more closely at a price they can afford is questionable.
"I think if it takes off, it'll take off rapidly," says Osman. But while SAP claims it is in the SMB market for the long term, its commitment to the space could still waver if it is not able to achieve significant, immediate revenue growth.
Company name: SAP
HQ: Walldorf, Germany
Main activity: Enterprise applications software
Last full year revenues: [Euro]7.3 billion
Last full year net income: [Euro]780 million
Key issue: With its March 2001 purchase of Israel-based business applications vendor TopManage, SAP is once again trying to break into the small- and medium-sized business market. But whether its new strategy to do so will be any more fruitful than its previous efforts is questionable.