Five Things SAP Needs To Do To Make “Simple” Real

SAPPHIRE_NOW_Orlando_2014_004_t-e-JPG@900x598There’s probably nothing harder for a business to accomplish than these two things: 1) make the complex simple; and 2) change market perceptions. But, at SAP’s recent SAPPHIRE NOW 2014 user event, SAP CEO Bill McDermott and other SAP executives ambitiously outlined SAP’s strategy accomplish both of these challenging goals simultaneously.

On the first count, SAP discussed how it will make its notoriously complex software easier to use so that customers can reap more value and streamline their own operations. On the second count, SAP is striving to shift the market’s view of SAP from that of a behemoth that is tough to business with to a kinder, gentler SAP that is much easier for customers and partners to work with.

At the event, SAP outlined many of the investments it is making to help it meet these goals. These ranged from Fiori, SAP’s new (and now free) roles-based user experience for SAP solutions, to its cloud first, mobile first development mandate. SAP founder Hasso Plattner discussed how SAP must redesign what it does with data, independent of what it has done in past 50 years. Plattner emphasized that SAP is moving from delivering monolithic business applications to a “minimalist,” modular approach, with HANA as an underlying and unifying platform. Bill McDermott also discussed the steps SAP is taking and plans to take to reduce internal complexity and management layers at SAP, and get closer to customers and prospects.

In all, SAP made 70+ announcements at Sapphire to back up its newfound direction for “simple.” I’m not going to cover them here, because many of my analyst and press colleagues have already done so in ample detail and with great acumen. However, I will share my suggestions on higher-level approaches SAP needs to incorporate to succeed in its goal of making simple real.

  1. Make SAP events more interactive and engaging.

    After business hours concerts, buffets and have become table stakes at tech industry events. The new bar is to make the entire event more interactive and engaging. Innovative vendors are engaging attendees with interactive, visceral experiences during working hours to help drive home key messages and insights. For instance, SAP could have given attendees a Fitbit or similar device, and set up stations where we could track, visualize, display, query the data collected using HANA and other SAP tools? Providing engaging, hands-on evidence that lets people experience the change would drive home the simplicity message much more convincingly.

  2. SAPPHIRE_NOW_Orlando_2014_011_t-e-JPG@900x600Mix up the executive ranks to get a broader range of perspectives.

    Panelists on stage at the SAP press conference with the Global Managing board consisted of 8 white males and 1 white female, many of who were German. For all I know, these may be the most competent people on the planet! But too much homogeneity can sometimes blind you to opportunities and issues. If SAP wants to become more relevant to a wider range of business decision-makers, I think it will need to foster more diversity within its own senior management and executive ranks. Not only in terms of gender and ethnicity, but also in terms of adding people from more diverse industries, company sizes and types of businesses into the inner circle.

  3. Use social media more effectively.

    SAP has expanded its social media presence over the last few years, but to me, it seems like it spends more time using social to trumpet the SAP message, and not enough time interacting with relevant constituents in meaningful 2-way conversations. For instance, a couple of SAP product groups just started to follow me on Twitter at SAPPHIRE. Not a big deal—except that I’ve been tracking and writing about their stuff for years. If SAP really wants to get closer to customers and engage with more prospects, executives and employees should use social media to prove that it is a company that is accessible and easy to do business with. Why not put HANA horsepower to the test to track, engage, assimilate and evolve based on ongoing conversations across the social media universe?

  4. cloudStop saying SAP is “the” cloud company.

    Unfortunately, this is a statement SAP executives made numerous times at the event, which, as I tweeted, probably caused heads to explode at the likes of Salesforce and NetSuite! While SAP is aggressively moving to the cloud, it is getting there much later than these pure-play, born on the cloud companies. In addition, what’s the upside of even trying to stake this claim this late in the game? Though the puck is certainly moving to the cloud, survey after survey suggests that a hybrid IT environment will be the norm for most companies for a good long while. Positioning its ability to give customers choice is a much more believable and viable path for SAP.

  5. Invest more in small and medium businesses (SMBs). 

Newer solutions such HANA are key to SAP growing wallet share in its flagship large enterprise accounts. But to really boost growth, SAP must become more relevant to more SMBs. While SAP claims that 207,000 small and medium enterprises (SMEs) use SAP solutions, let’s put that in context. First, SAP defines SME as companies with up to $1 billion in revenues—a much higher upper end than most tech vendor’s use. Second, SMB Group defines the broader SMB market to include companies with 1 to 999 employees. Given this definition, we estimate there are roughly 278 million SMBs worldwide. Although SAP Business One has done an admirable job of growing its SMB base and relevance, as a corporation, SAP has a long way to go to make real headway with SMBs—who use price and ease of use (aka simplicity) as key benchmarks when it comes to selecting IT solutions. In other words, SMBs are the litmus test SAP should use to determine if it is making progress with its goal of being simple to use and work with.

I have no doubt SAP is sincere in its quest to simplify its solutions and become an easier vendor for customers to work with. After all, it must achieve these goals to thrive, because simplicity increasingly beats complexity. However, SAP is only at the starting gate. How well it runs the race depends on how quickly it can move beyond using simple as a marketing slogan to truly instill simple into its solutions and its corporate culture.

SAP’s Big Bet on SMBs—With a Fast Growth, Millenial Twist

sapEarlier this week, I had the opportunity to meet with Kevin Gilroy, SAP’s Senior VP and GM for Global Small and Midsize Enterprise Segment & Indirect Channels to hear about SAP’s plans to go big in the small and medium business market, which SAP refers to as small and medium enterprises (SMEs). In a nutshell, the vendor is dramatically ramping up market, channel and solution initiatives to boost its profile and market share in SME.

These initiatives come with an interesting twist. Much of what SAP intends to do in the SME space will focus on recruiting partners—from both developer and VAR ranks—who can provide start-up millennial businesses with next generation solutions to help them grow at lightening speed.

The company claims that it is coming at this from a position of strength, with 80% of its 253,000 customers coming from the  SME ranks. But, SAP’s defines SMEs, as companies with revenues under $1 billion, which skews larger than how most vendors and analysts define it. So what shape will SAP’s new SME initiatives take?

Sharpening the SME Lens

telescopeTo put things in context, SAP’s courtship of SME isn’t new. As I discussed in Top SMB Takeaways: SAP Sapphire 2013, SAP has been sharpening its SME lens for a while. Last year, the vendor announced several new programs to bring the benefits of HANA’s data-crunching power to SMEs,  provide customers with the choice of running its solutions in public, private or hybrid cloud environments, and to make its solutions easier to buy and use.

As I noted in that post, SAP was focusing these initiatives not at the SME masses, but on high-growth SMEs, which SMB Group call Progressive SMBs. Progressive SMBs are growth driven, and more likely to invest in and use technology to gain market and competitive advantage than other SMBs. Our data shows that Progressive SMBs are also much more likely to anticipate revenue gains than peers whose tech investments are flat or declining.

Now, SAP is further sharpening the lens to zero in on millennials that are starting, running and making decisions in SME companies. According to Gilroy, millenials have a different view on technology than older counterparts. They are more comfortable with technology, and more likely to view it as a growth engine, instead of as a cost-cutter.

With a broad portfolio of cloud, mobile, analytics, ecommerce, talent management and ERP solutions, SAP offers many entry points for  these SMEs. The vendor has made some key acquisitions, including Ariba for ecommerce, and Success Factors for talent management, that broaden its footprint in the born on the cloud solution space. SAP has also introduced cloud-based options for many of its traditional on-premises solutions, such as SAP Business One. SMEs often prefer cloud solutions because they can usually be deployed faster, with less technical expertise and without big upfront capital expenditures, paving they way for SAP and its partners to expand their addressable market.

Furthermore, SAP is infusing HANA into its SME offerings, announcing general availability of the 9.0 version of the SAP® Business One application, version for SAP HANA. This is the first business management solution for SMEs running on SAP’s in-memory HANA computing platform. It enables SMEs to analyze structured and unstructured information within seconds instead of days, and use predictive analytics to gain new insights into data and optimize business decision-making.

Powering Up Partner Programs

1-hands-holding-jigsawSAP is powering up partner recruitment to fuel SME expansion. The vendor recruited 500 partners in 2013, growing the partner base to more than 11,500 worldwide, with about 1,000 in the U.S. Gilroy indicated that SAP is planning for double-digit channel growth, but will take a selective recruiting tack. In addition to looking for partners with a next-generation development vision, such as Liquid Analytics, SAP wants partners that are ready to scale their businesses to keep pace with SAP’s double-digit growth in SME.

The vendor has introduced and refreshed several programs to help partners go to market more effectively, including:

  • SAP Marketing University, a free, foundational marketing program to empower partners with the marketing skills they need to grow their businesses. SAP indicates the program has already led to over $1 billion in lead generation activities. Once partners have gone through the program, SAP provides them with the same marketing assets that are available to its internal marketing and sales teams.
  • Partner involvement in SAP’s Run Like Never Before ad campaign, launched in October of 2013. To data, more than 200 partners have taken executed campaigns as part of this program, which is 100% MDF reimbursable.
  • New “buy now, pay later” SME financing options that give SMEs zero-percent financing for up to 24 months for the purchase of any SAP product on the reseller price list.

Perspective

We’ve all seen how quickly innovative, fast-growth SMEs can become marquee brands, from tech sector stars such as LinkedIn to consumer brands such as Green Mountain coffee . SAP sees this too—and that technology is putting the creation-destruction cycle for businesses in hyper-drive.

So SAP’s big bet on becoming the leading IT solutions provider for these high-growth SMEs makes sense. As important, SAP is making an authentic effort to consumerize the SAP experience by reducing friction in choosing, buying and using SAP solutions.

But in this noisy SME space, crowded with competitors coveting the same high-growth SMEs, SAP still needs to do more to dispel the long-standing myth that SAP is only a big business brand. Although SAP solutions may be a good fit for high-growth SMEs, the vendor isn’t a household name with them or the millenials that its is seeking out.

SAP will also need to be cautious not to overplay the millennial hand. While millenials are likely to be more digitally savvy than older generations, the U.S. Small Business Administration says that self-employment among younger age groups has actually been dropping. From 2005 to 2010, self-employment among indi­viduals age 25 and under decreased 19 percent, compared to a 7 percent drop in the overall population. In reality, self-employment rates increase with age. For example, they were 2 percent for those 25 and under and 23 percent for those 65 and over in 2010. Simply stated, while millenials may prove to apply technology in business in more innovative ways, they are a relatively small part of the entrepreneurial population.

However, SAP is moving in the right direction. As it increases its investment to understand and engage with SMEs, SAP can continue to fine-tune its SMB story, and widen the circle of high-growth SMEs that will hear it and relate to it.

Top SMB Takeaways: SAP Sapphire 2013

sapphireA couple of weeks ago, I had the opportunity to attend Sapphire 2013, SAP’s annual user conference. As is the norm for these events, SAP opened the fire hose to reveal new directions, product and solution announcements, and partner and customer wins through a myriad of meetings and sessions.

Rather than attempt to drench you with the full blast, I’ll focus this post on what I see as most relevant for SAP’s direction in the small and medium business (SMB) space.

HANA for All

SAP HANASAP is betting big on its HANA platform, which began life in 2010 as an in-memory database and has quickly evolved to become SAP’s “development platform for innovation,” for both SAP and third-party developers.

At Sapphire, SAP underscored that HANA isn’t just for big business. The vendor discussed several initiatives to bring the benefits of HANA’s data-crunching power to SMB analytics and online transaction processing (OLTP) requirements. For instance:

  • SAP Business One on HANA. Business One is SAP’s ERP solution for small businesses and for departments in larger companies. The solution integrates core business functions, including financials, sales, customer relationship management, inventory, and operations, and includes embedded analytics and reporting capabilities. SAP offers Business One both as an on-premises offering or via a cloud-based subscription model. In September 2012, SAP announced SAP Business One analytics, powered by SAP HANA. This solution provides a Linux-based HANA analytics appliance for companies running SAP Business One on a Windows server with Microsoft’s SQL database. At Sapphire, SAP introduced a new offering, Business One, version for HANA,  slated for availability later this year. This version runs directly on HANA, enabling both the transactional (ERP) and analytical applications to run on the same Linux-based server. By running both ERP transactions and analytics on a single platform, Business One version for HANA speeds access to information for analytics, reporting and search, without slowing down transactional processing.
  • SAP Startup Focus Program, which enables startups to build solutions for small businesses. SAP has engaged over 430 startups to use HANA as a platform to develop user-friendly real-time analytics and advanced predictive solutions. For instance, Vish Cancron, CEO of Liquid Analytics, talked about his company’s cloud-based, mobile analytics applications for iPhone, iPad, Blackberry and Android users.  As Vish explained to me in this video discussion at a prior event, Liquid Analytics uses gamification and predictive analytics to help make it easier, quicker and more fun for wholesale industry sales reps to place orders and set and meet sales goals.
  • SAP HANA One. SAP has partnered with Amazon’s Web Services Cloud to offer a pay-as-you model for trying and using HANA. SAP claims that users can import data and get up and running with HANA cloud in as few as 5 minutes. HANA One is designed for analytics professionals, SIs and ISVs, supports up to a 30 GB compressed data set, and is priced at one dollar per hour per user. While most SMBs don’t have analytics professionals, HANA One gives SIs and developers an accessible, affordable mechanism to develop and test new HANA apps for SMB customers. SAP has also created an online and community support network to help SMBs get started and navigate their way through a HANA One instance.

Cloud Front and Center

sap cloudSAP’s journey to the cloud has been underway for several years. Though the company has seen a few setbacks, almost all of SAP’s solutions are now available in the cloud, including:

  • Home-brewed SAP ERP solutions such as Business One, Business All-in-One, Business Suite  and of course, cloud-only Business ByDesign.
  • Acquired cloud solutions such SuccessFactors and Ariba.
  • Afaria, SAP’s mobile management platform, which SAP announced at the event is now available as a cloud-based service, branded as Afaria in the Cloud.
  • SAP HANA One Premium, an advanced version of SAP HANA One with the same data compression rate but with greater accessibility to SAP source data, all SAP backend systems, data integrators and full SAP Support.

SAP also offers customers a choice of running some of its ERP solutions in either a public or private cloud environment, and a choice of cloud providers as well. For instance, customers can choose to run Business One in Amazon’s AWS, or in SAP’s HANA cloud center, an SAP partner’s cloud, or in a private on-premises cloud.

Notably, SAP revealed that it’s own HANA Cloud Center has the capacity to accommodate all of its current installed base customers. This gives existing customers a convenient on ramp both to move ERP solutions to the cloud and gain the power of HANA in one fell swoop–and underscores just how important the cloud is to enable SAP’s HANA strategy.

Upgrading the User Experience

sap uiLet’s face it, SAP is not known for user-friendly software or contracts. But the company is on a quest to improve customer experience by making its solutions more accessible and user-friendly. SAP is also expanding its portfolio of rapid deployment solutions (RDS), which offer fixed cost, fixed scope preconfigured software, best practices and implementation services that give customers everything they need to get up and running on midmarket solutions such as Business All-in-One in just a few weeks. SAP currently offers over 900 rapid-deployment solutions across its product lines. In addition to developing more appealing and streamlined user interfaces, SAP is trying to simplify pricing and contracts.

When it comes to new solutions, SAP is aiming to get accessibility and ease of use right from the get go. For instance, SAP’s newly minted Afaria for the Cloud solution for mobile management sports a streamlined user interface and is priced at 1 Euro per user per month. At that price, the solution should be attractive for even very small businesses that need to manage mobile devices get an affordable solution. It also opens the door for SAP to prove its worth, develop a relationship, and sell other solutions to new small business customers.

Shining the Spotlight on Ariba

aribaAttracting new customers, growing revenues, and increasing profitability are perennial challenges for all SMBs. As revealed in SMB Group’s 2012 SMB Routes to Market Study, about one-quarter of SMBs sell goods and services to large enterprises. These B2B SMBs want a bigger share of the billions of dollars that large businesses spend annually on goods and services. SAP is shining the spotlight on its Ariba business commerce network as a means to help them reach this end. SAP provides all of its Business One customers with a free connection into the Ariba network, and any company, whether an SAP customer or not, can enroll as a Supplier on the cloud-based Ariba Network. Once enrolled, SMBs can connect and collaborate customers, partners, peers, and prospects. Ariba gives SMBs another way to provide more value to its existing SMB customers, and an additional entry point to bring non-SAP SMBs into the SAP fold.

Perspective

We’ve all seen how quickly innovative, fast-growth start-ups can become marquee brands. SAP understands that the creation-destruction cycle for businesses in hyper-drive, as underscored by the story of Under Armour, a featured customer and keynote panelist at Sapphire. Kevin Planck, Under Armour CEO, discussed how he founded the company in his basement in 1996 to design T-shirts that would wick moisture to help athletes stay cool and dry. He also talked about how Under Armour has evolved and grown, and how SAP has helped the company achieve twelve consecutive quarters of 20%+ growth.

SAP is betting big on becoming the leading IT solutions provider for these high-growth SMBs, which SMB Group call Progressive SMBs. Progressive SMBs are growth driven, and more likely to invest in and use technology to gain market and competitive advantage than other SMBs. Our data shows that Progressive SMBs are also much more likely to anticipate revenue gains than peers whose tech investments are flat or declining. SAP’s strategy to target  Progressive SMBs with leading edge technologies that provide clear business benefit should help it to tap in more deeply to this segment.

As important, SAP seems to be making an authentic effort to consumerize the SAP experience by reducing friction in choosing, buying and using SAP solutions. In our 2012 SMB Routes to Market Study, 42% of small businesses rate “solution is easy to use” as the top reason to put solutions on their short lists. SAP is addressing this challenge with a commitment to the cloud, tight integration to HANA within business applications, and focus on bringing new, easy to buy and use applications to market.

Although SAP isn’t likely to become the volume leader, the company is charting a leadership course to engage fast-growth SMBs–who also have the potential to become high-value SAP customers–with a differentiated and compelling story.

SAP Shines the Spotlight on Small and Medium Businesses

SAP SME SummitSAP’s stellar success in building its blue-chip large enterprise business has often overshadowed its considerable but quieter achievements in small and medium business (SMBs) markets. But SAP is not a household name in the SMB community. Even technology insiders are often surprised to learn that SMBs (or as SAP refers them, small and medium enterprises, or SMEs) account for the majority of SAP’s 197,000 customer base.

But at SAP’s first small and medium-sized enterprise (SME) summit, hosted at the company’s New York offices in late November, co-CEO Bill McDermott and other key SAP execs made it clear that SAP is intensifying its aspirations and endeavors with new programs and initiatives that reach well beyond its conventional solutions.

From SME Solutions to an SME Ecosystem

Over the last few years, SAP has steadily grown its SME business with its traditional solution offerings. For instance, year-over-year revenues have grown 20% for SAP Business One, SAP’s flagship ERP offering for small businesses. As discussed in The Progressive SMB: Customer Stories are Worth 1,000 Analyst Words, SAP has been particularly attractive to Progressive SMBs, who realize the increasingly direct connection between strategic IT investments and successful business outcomes.

The steady growth of SAP solutions has been admirable, but, as we learned at the SME Summit, SAP is casting a much wider net through a series of different initiatives that bring SAP’s big data, mobile and cloud capabilities to smaller organizations in a more accessible manner. Together, these are starting to take the shape of a growing SAP SME ecosystem. For instance, SAP is:

  • Growing and enabling the traditional partner channel. SAP channel partners currently account for one-third of SAP SME sales. SAP intends to raise this to 40% by 2015. To help accomplish this, SAP is enabling more of its traditional partners (VARs, SIs, MSPs, etc.) with Rapid Deployment Solutions (RDS).  Currently, SAP offers 150 RDS solutions, which provide businesses with fixed cost, fixed scope preconfigured software, best practices and implementation services that give customers everything they need to get up and running in just a few weeks. RDS has proven to be very instrumental in driving SAP’s growth in the SME sector. In the past year, RDS deployments in SME have outpaced the 500%+ overall RDS growth rate over the prior year. The importance of building and enabling the channel cannot be underestimated: according to SMB Group’s 2012 SMB Routes to Market Study, over half of SMBs purchase business applications through indirect channels.
  • Recruiting partners to build micro-vertical solutions on Business One. The small business market is actually very fragmented. While all small businesses share some common needs, each micro-vertical has unique requirements and needs specific capabilities when it comes to business software. SAP is building a development-focused partner channel to zero in on the needs of each micro-vertical. For instance, SAP partner Orchestra is building specialized solutions on Business One for small businesses in the fuel, beer and food industries. OrchestraBeer was showcased at the Summit. In this video interview, Ryan Hilliard, CEO of Hilliard’s Beer, a small startup with less than 10 employees, explains to me why he selected OrchestraBeer. Ryan plans to grow his business, and wanted a solution that would grow with him, and one over the lifetime of his business. But he also needed a turnkey solution geared to his business, and able to track specific metrics–such as batches and barrels of beer for visibility into his supply chain and production.
  • Empowering startups with SAP HANA. At the Summit, SAP announced that it has powered over 150 startups in Silicon Valley with SAP HANA. These startups are using HANA as a development platform to provide SMBs with a new, user-friendly generation of real-time analytics and advanced predictive solutions. For instance, Vish Canaran, CEO of Liquid Analytics, talked about his company’s cloud-based, mobile analytics applications for iPhone, iPad, Blackberry and Android users.  As Vish explained to me in this video discussion, Liquid Analytics starts with the user experience to help optimize productivity. Liquid Analytics apps use gamification and predictive analytics to help make it easier, quicker and more fun for wholesale industry sales reps to place orders and set and meet sales goals. As noted in SMB Group’s 2012 SMB Routes to Market Study, the data fire hose is running at full blast and shows little signs of abating. But, the big gap in big data is painfully evident for small businesses: Just 18% have purchased/upgraded a business intelligence solution in the past 24 months, and only 17% plan to do so in the next 12 months. Solutions such as Liquid Analytics show promise to offer small businesses an accessible, user-friendly ways to harness big data for business good.
  • Extending the Ariba network effect. As part of SAP’s recent Ariba acquisition, every SAP customer gets a free connection into the Ariba network (and any company, whether an SAP customer or not, can enroll as a Supplier on the Ariba Network). As revealed in our 2012 SMB Routes to Market Study, about one-quarter of SMBs sell goods and services to large enterprises. Since attracting new customers, growing revenues, and increasing profitability are perennial SMB challenges, we expect that SMB interest and involvement in big company supplier networks to heat up in 2013. As discussed in SMB Group’s Top 10 SMB Technology Predictions for 2013, access to the Ariba network is one opportunity that SMBs can leverage to compete for their share of the $300 billion dollars that large businesses spend annually on goods and services.

Looking Beyond Technology

SAP is also expanding its engagements with influencers, venture capitalists, governmental agencies and other vital SME catalysts. The Summit’s “Power of Small” panel featured speakers with wide-ranging perspectives and influence in the SME market, and underscored that SAP’s focus will go well beyond technology to include initiatives focused on policy, people, capital to help create an environment in which SMEs can thrive.

For example, Linda Rottenberg of Endeavor, who pioneered the examination of how high-growth business can transform economies, discussed the necessity of “mentor capital” for SME success. At the event, Bill McDermott announced that SAP has committed to help Endeavor select, mentor, and accelerate high-impact entrepreneurs on a global scale. Sunil Hirani of trueEX examined the effect of immigration policies on entrepreneurship in the U.S., and the importance of aligning governmental policies to help SMEs prosper.

Perspective

With these initiatives, SAP is tapping into a very important trend. As discussed in SMB Group’s Top 10 SMB Technology Predictions for 2013, Progressive SMBs, who invest more in technology and use technology for competitive advantage are also much more likely to anticipate revenue gains than peers whose tech investments are flat or declining. We also see this gap widening year over year, and expect that it will continue to do so.

Although not everyone at SAP may yet “get” small business, it was clear from the event that Co-CEO Bill McDermott does understand them, and also values the increasingly make or break role that technology plays for SMEs. SAP’s commitment to enabling partners to expose it technology in a relevant way, and its investment in the broader SME community were on display at this high-profile event, making it clear that McDermott wants to make SAP a household name among SMEs.  A lofty goal, to be sure, but one that SAP is very committed to aspiring to.

BI and Analytics for Mid-Market Businesses: My Podcast with SAP

I recently joined Paul Clark from SAP in a thought leadership podcast to discuss the topics of Business Intelligence (BI), Enterprise Performance Management (EPM), and Social Analytics for Mid-market companies.

In the podcast, we discuss the various aspects and uses of Enterprise Performance Management (EPM), Business Intelligence (BI), and Social Analytical tools within the dynamics of a mid-market business. We talk about how the proper use of EPM and BI tools and software by companies in the mid-market can achieve a higher level of corporate consistency and efficiency in performance management.
Our conversation also turned to a newer area of business intelligence–Social Analytics. Social Analytics tools monitor and analyze market and brand sentiment and the return on social engagement with consumers. They can help mid-market companies monitor and engage with customers in the areas of support, sales and ongoing relationship development.

We offer some final advice on the “first steps” towards achieving an improved level of performance management within the mid-market corporation.

I hope you enjoy the podcast!

Podcast Segments and Timeline:

00:00 – 01:10: Introductions and backgrounds

01:10 – 16:50: Enterprise Performance Management and Business Intelligence. Here’s what we covered:

  • Defining Enterprise Performance Management (EPM) and Business Intelligence (BI) and the role it can play in helping mid-market(*) companies and where
  • The rate of adoption of performance management practices and business intelligence in mid-market organizations
  • Key issues facing mid-market leadership teams when it comes to enterprise wide performance management practices
  • Some guidance for mid-market company leaders with respect to improving corporate performance and long-term success
  • What results are mid-market companies seeing from EPM and Business Intelligence solutions?

16:50 – 30:00: Social Analytics. What we covered:

  • Defining Social Analytics and the role it can play in helping mid-market companies and where
  • Whether mid-market companies are becoming interested in monitoring social networks and social media. If so, what they plan to do with this information and insight
  • Whether the data from social networks is an opportunity for mid-market companies
  • Final advice for CFO’s first steps to improve corporate performance management.

Thanks to Paul Clark and Chris Herbert (discussion moderator) for participating in this conversation. Below are their bios.

Paul Clark

Paul Clark is responsible for the messaging and deliverables that describe the business analytics solutions from SAP, from business intelligence and enterprise information management to enterprise performance management and governance, risk, and compliance. Paul has over 20 years’ experience in marketing, specializing in product and solution marketing. He holds a BSc from the University of Bristol, UK and a Management DESS from the Université de Savoie, France.

Chris Herbert

Chris Herbert is the manager of the CFO Intellectual Exchange Network which brings thought leaders together to share experiences and engage in conversations around the office of finance and the role technology is playing to improve business performance, compliance and overall success.

The Progressive SMB: Customer Stories are Worth 1,000 Analyst Words

I attended SAP’s SAPPHIRE NOW 2012 several weeks ago and am finally getting a chance to share my thoughts on the customer meetings I had with Big Byte Corporation and KEEN Footwear at the event. These two customers are very “real” SMBs. BigByte has 52 employees; KEEN has 130. Neither is a Silicon Valley venture capital startup, which let’s face it, is a very different breed. Why did they choose SAP, which, after all, is best known for its footprint in large companies? Their perspectives about this are quite interesting because they personify what we at the SMB Group call “Progressive SMBs.”

The Progressive SMB Class–What is it, and Why is it Important?

Our 2011 SMB Routes to Market Study indicated that many SMBs are tightening their tech wallets for 2012 as compared to 2011 (Figure 1). But the study also showed a distinct segment of SMBs that we call “Progressive SMBs.” Despite economic uncertainties, Progressive SMBs plan to increase IT investments. They see IT as a tool for business transformation, and a way to create market advantage and level the playing field against bigger companies. Although while price is a factor, they rate other criteria–such as the ability to customize solutions, strong vendor reputation, and local support and service–higher than other SMBs when making technology purchase decisions. Figure 1: SMB IT Spending Plans and Revenue Expectations More important, Progressive SMBs have higher revenues expectations than their peers. For instance, 75% of the Progressive medium businesses (who are increasing technology spending) anticipate revenue gains in 2012, compared to just 17% of medium businesses that plan to decrease IT spending. BigByte and KEEN Footwear have both adopted a Progressive strategy. They illuminate how Progressive SMBs think about IT, and how their businesses have benefitted by making a bigger investment in IT than most of their SMB peers.

BigByte’s SAP Story

Founded twenty years ago, BigByte provides annual global warranty services, after-sales tech support, product repair and refurbishment and reverse logistics services to large companies such as Apple, Cisco and Panasonic. BigByte had used a combination of entry-level financials, homegrown apps, spreadsheets and manual processes for a long time. But keeping track of the significant inventory on consignment from its customers became more challenging over time. And, since every manufacturer has its own, unique set of processes to handle warranty service, BigByte was struggling to accommodate each company’s individual workflow. By 2009, BigByte’s resources were stretched thin. It didn’t have the inventory controls it needed, and was spending too much time pulling data together for reports. At the same time, the company’s owner wanted to prepare the business for growth and/or acquisition. He realized that to accomplish this, the business had to become more efficient. Michael Franklin, who I spoke with at SAPPHIRE NOW, was hired as COO to fix the problem. Initially, Mike hadn’t considered SAP; he had a couple of other ERP solutions he was vetting for the job. But the company’s owner spotted an SAP ad in Golf Magazine, and thought, why not get information? Mike went to SAP’s web site and was connected to Softengine, an SAP Business One partner. Why did BigByte decide to buy SAP Business One? The other solutions Mike was looking at promised many of the same things, such as a unified management for core business functions and embedded analytics. What sold the company on SAP Business One echoes what we heard in our survey about what Progressive SMBs are looking for:

  • Good value and no pricing surprises. Soft Engine offered a fixed price for implementation, and fixed monthly price per user, per month pricing for everything else (hosting management, 24×7 support, upgrades, etc.).
  • Fast time to value. As part of the fixed scope implementation BigByte got the software and 21 users up and running in less than 6 months via Softengine’s hosting program for Business One.
  • The ability to customize. BigByte needed to tailor return authorization functionality tailored for each of its customers–and be able to customize for future ones too.
  • Trust in and credibility. Softengine had a strong mix of SAP credentials and competencies, along with managed services and cloud infrastructure design and deployment.

Interestingly, although debating what isn’t and isn’t really a “true” cloud solution has become the most popular past time for many of us in the industry, this was not an issue for BigByte. Mike wanted the best ERP solution for BigByte, but didn’t want to manage the IT infrastructure needed to support it. Two years later, Mike says that Business One has given the company what it needs: automated processes and efficiencies; reliable, unified and real-time data; dashboards, tools and reporting for better decision-making. BigByte also uses Business One mobile apps for things such as approving purchase orders. Net-net, Mike estimates the company cut labor costs by about 15%, and cut IT costs by about 80%, because it now outsources hardware maintenance. IT now helps power the business, instead of just supporting it. BigByte can adjust to different customers’ processes and requirements, giving the company the agility to replace shrinking customer demand in the optical disk drive sector with the new customers in the growing LCD market. And, with its business processes in order, BigByte is also much more credible to potential buyers.

KEEN Footwear

If you’re an outdoor enthusiast, you know (and probably love) KEEN Footwear, a Portland, Oregon-based footwear designer and distributor. KEEN’s founders went into business to invent sandals that protect the toes with a signature protective “toe bumper.” Today the company offers shoes, bags and socks for many outdoor activities and for casual wear. I had the opportunity to talk to David Boeschenstein, KEEN’s COO about their SAP story. When Dave came to KEEN from Adidas in 2008, the company had outgrown its ERP system. Dave’s charge was to select a scalable solution that could adapt as the company continues to grow. He looked at a few options–including SAP Business All-in-One (BAiO) for apparel and footwear, which is used by several others in the outdoor and specialty footwear sectors. After extensive evaluation involving multiple users from each department, KEEN decided SAP BAiO–along with SAP Business Objects and Business Warehouse–would be the best fit for the company. Now remember, KEEN has only just over 130 employees! But they are another prime example of a Progressive SMB. KEEN views IT as an essential enabler to drive business growth, and wanted solutions that will scale to support the initiatives they have planned for the next 5 years and beyond. According to Dave, Keen’s motivation for installing SAP solutions was “to ensure we provide our customers with excellent service. Our business operations mandate is to make it easy for customers to do business with KEEN wherever in the world they interact with our products and our fans.”. SAP partner Gravity Pro helped KEEN deploy BAiO (using Rapid Deployment Solutions, or RDS), Business Objects and Business Warehouse in July 2011. KEEN is now live in the U.S., Canada, and The Netherlands.

Customer Stories are Worth 1,000 Analyst Words (or more!)

Much has already been written about the details of the new products, strategies and solutions that SAP announced at Sapphire, and this is, of course, very valuable to understand. But sometimes not enough is discussed from the customer’s point of view–and some of the most important things–namely the business outcomes from technology–can get lost in translation. The BigByte and KEEN experiences help put the SAP into perspective for SMBs, and illustrate how Progressive SMBs are making their decisions about business solutions. They also highlight why it is so important to be–or become–a Progressive SMB.

SAP Business One, Chapter Two: Raising the Small Business Bar

In the world of SAP enterprise resource planning (ERP) solutions for small and medium businesses (SMBs), SAP Business One is sometimes overshadowed by SAP Business All-in-One (BAiO), which has SAP’s large enterprise ERP at its core, and by and SAP Business ByDesign, which is SAP’s first software-as-a-service (SaaS) ERP entry.

But Business One, which is designed from the ground up to meet the needs of small businesses with fewer than 100 employees, has quietly kept growing both its capabilities and in new customer acquisition. During the past year or so, SAP has also made some significant new investments in three key areas: mobile, on demand and big data.

Taken together, these developments could open a new chapter for Business One–and for small businesses that want to use IT to transform their businesses.

Chapter One–A Brief History

Business One has its roots in SAP’s acquisition of TopManage Financial Systems in 2002. SAP made the acquisition to provide small businesses (and subsidiaries in larger companies) with an affordable way to move up from entry-level accounting solutions to a single, integrated business management offering.

The solution is designed for small businesses that have little or no IT resources. It provides a unified suite of financials, sales, customer relationship management, inventory and operations capabilities, along with embedded analytics and reporting capabilities.

Over the years, SAP has continued to invest in Business One to keep pace with changing market requirements and global demands. Business One is now available in 27 languages and 40 localizations. To help partners more easily extend solution functionality, SAP built an integration platform for Business One that has since attracted over 550 add-on solutions. Today, Business One has over 35,000 customers in over 80 countries. At its current pace, SAP estimates that it is on track to add about 5,000 new customers per year.

Chapter Two–Mobile, On Demand and Big Data

Fast forward to today. SAP is infusing Business One with the new mobile, on demand and big data capabilities it needs to take the solution to the next level.

On the mobile front, SAP launched Version 1.5 of its Business One mobile app in February 2012. The mobile app gives customers access to key Business One functionality, such as alerts and approvals, real-time Crystal Reports, customer and supplier data and inventory information via mobile devices. The app is available for the iPhone and iPad via SAP, and for Android devices through its partners. Looking ahead, SAP plans to add new mobile functionality for as sales document creation so that sales reps can do more on the go. SAP is also updating the user interface (UI) so that mobile users can have multiple windows open the same time so they can more easily view the information they need.

In March, SAP introduced Business One OnDemand to offer Business One in a cloud-based, subscription model. The OnDemand version has and will maintain the same functionality and interface as the on premise version. SAP is certifying partners to host the solution to ensure that they meet security, performance and quality standards. In most cases, these hosting partners provide the back-end infrastructure, and team with SAP VARs who sell and implement the solution. SAP has also created a Cloud Control Center that supplies partners with automated tools to manage Business One OnDemand throughout the solution lifecycle.

Some pundits have claimed that Business One OnDemand is not a true, multi-tenant, software-as-a-service (SaaS) solution. So I asked SAP for clarification on some of the technicalities and learned that users do need a remote desktop solution (such as those from Citrix or Microsoft) to access Business One OnDemand. And, while the solution is multi-tenant in that users share the same instance of the application and SQL server, each user has its own database schema.

Since Business One OnDemand requires a remote desktop solution and customers don’t share a database schema, cloud purists are likely to discount it. However, these details are much less likely to create issues issue for actual small business customers–and may work in SAP’s favor.

The fact that SAP’s on premise and on demand versions share the same interface and database structure means that existing customers can move to the cloud without complex data conversions or additional user training. Meanwhile, SAP Business One can now get into consideration among prospects that are only considering a cloud solution. And, some of these prospects may prefer to have their own dedicated database schema, along with access to the 550+ partner apps that are in Business One arsenal. Finally, NetSuite, arguably the leading SaaS ERP vendor, has been moving away from its original small business focus to concentrate more on the mid-market and departments of large enterprises, ironically paving the way for SAP to make inroads here.

SAP also announced Analytics powered by SAP HANA for SAP Business One, which will be generally available in late 2012. HANA is SAP’s “big data” solution. It’s a column-based, in-memory database that allows applications to zip through calculations for millions of records in just fractions of a second. SAP HANA for SAP Business One is scaled for the needs of small companies. It combines the SAP HANA-based application with SAP Crystal Reports software so small businesses can get the benefits of speedy data crunching and use the tools that they are already comfortable with to analyze this data. The solution includes a set of predefined, ready-to-run dashboards and reports.

While some small businesses may not require this added horsepower, the offering is relevant for those that need to more effectively analyze more and more complex content–including audio, video, and text–to compete effectively in their markets. These customers will be able to create interactive reports and run ad-hoc analysis much faster than they could before; navigate through various business objects from one screen; and use free-style search to access information more quickly.

The Rest of the Story

SAP Business One isn’t for all small businesses. After all, although the price tag is low compared to other SAP offerings, Business One still represents a significant expenditure compared to the typical small business accounting solutions.

But, even amidst–or maybe because of–economic uncertainties, our SMB Group 2011 Small and Medium Businesses Routes to Market Study indicates that there is sizeable segment of the small business market that plans to increase IT investments. These “progressive” small businesses see IT as a means to create market advantage and achieve their business goals. While price is a factor, they rate other criteria–such as the ability to customize solutions, strong vendor reputation and local support and service–higher than other SMBs when making technology purchase decisions. Business One hits the mark on these criteria, and consequently, is likely to enjoy continued good growth in this segment.

However, this progressive segment is demanding and will expect SAP to stay ahead of the curve. To do so, SAP will need to address a couple of additional areas in this new chapter, including:

  • Collaboration and social. One of the biggest trends in social-collaboration space is to connect collaborative activities with business processes. SAP has already merged its Streamwork team with its newly acquired SuccessFactors’ Jam team, and the combined entity is hammering out SAP’s future direction in this area. SAP needs to add social and collaboration capabilities to Business One sooner, rather than later, to ensure that Business One customers can take advantage of integrating collaborative and business processes.
  • Mobile applications for external users. Business One has a solid solution and game plan for internal (employee) mobile apps, but what’s the plan to extend access to selected functions to external customers, partners and suppliers? The SMB Group’s 2012 SMB Mobile Solutions Study indicates strong plans among small businesses to provide mobile apps for external users for activities such as appointment scheduling, payments, marketing offers and service. Over the long-term, partners should probably be responsible for developing most of these apps, but SAP needs to seed the area to jump-start partner app development.

Overall however, SAP Business One, Chapter Two is off to a good start. The mobile app has already been downloaded more than 34,700 times; about 60 partners are preparing to come on board to offer Business One OnDemand; and over 30 customers are in ramp up with Analytics powered by SAP HANA for SAP Business One.

In addition, while large enterprise solutions will continue to dominate SAP news, SAP’s commitment to and investment in small business solutions is growing. For instance, the vendor recently announced that it is sponsoring a global competition with Ashoka Changemakers, The Power of Small: Entrepreneurs Strengthening Local Economies.  The contest is designed to identify innovative strategies that can help small businesses grow and thrive in underserved communities.

The bottom line? SAP clearly takes small business seriously–and small businesses that are ready to move up from stand-alone accounting solutions should take SAP Business One seriously too.

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