“Digital transformation” is one of the top trending buzzwords in technology today. But what does digital transformation mean? In broad terms, many define it as using digital technology to enable innovation and new, often disruptive, business models. However, technology vendors put different spins on digital transformation, depending on how their solutions fit in to the puzzle.
Most small and medium business (SMB) decision-makers view technology as a key to improving business processes and outcomes (Figure 1). But at the same time,SMBs rank “figuring out which technology solutions can help my business” as one of their top three technology challenges. Although SMBs have bought into the concept of using technology to improve and transform their businesses, many struggle to when it comes to putting a strategy in place to achieve these goals.
Figure 1: SMB Technology Attitudes and Challenges
So I was interested to hear how SAP is framing the digital transformation story for its SAP Business One partners at SAP’s Business One Americas Innovation Summit in April. Although the ERP giant is best know for its large enterprise solutions, Business One, with over 50,000 customers worldwide, is SAP’s flagship business management solution for SMBs.
SAP’s 50,000 Foot View of Digital Transformation
In his opening keynote, Jonathan Becher, Chief Digital Officer at SAP, addressed the growing reality that today, companies need to disrupt or be disrupted. Unlike the industrial revolution, which allowed for a more linear approach to change, the digital era requires exponential change. Becher described digital transformation as consisting of three fundamental shifts:
- New customer experiences, such as in the music industry, which has evolved from vinyl records, tapes and CDs to iTunes and then Spotify and other streaming services;
- New business models, again using the example of the music industry, and its evolution from analog to digital buying and streaming;
- New value creation, as in the case of Airbnb, which has used technology to create a new way for people to list, find, and rent lodging.
While human creativity provides the spark, technology is the fuel that enables businesses to change their business processes and make the vision a reality.
Figure 2: Digital Business Requires Different Processes
HANA: SAP’s Innovation Foundation for Business One
In 2014, Business One became SAP’s first business management solution for SMBs running on SAP’s HANA computing platform. Positioning Business One SQL Server edition as the past, Luis Murguia, SAP’s Senior Vice President and General Manager for Business One, positioned SAP Business One HANA as the “foundation for innovation.” With Business One HANA, SMBs can analyze massive amounts of structured and unstructured information within seconds instead of days, and use predictive analytics to gain new insights into data and optimize business decision-making.
SAP has also modernized Business One with new cloud deployment services from within the SAP cloud. The cloud option is key to SAP Business One HANA growth in the Microsoft-centric SMB market, as it negates the need for the SMBs to understand deploy and manage a new database.
I asked partners at the event, including ECS, Vision 33, Boyum and AchieveIT Solutions, for their views on why customers choose Business One HANA. They noted the solution’s enterprise search capability, which allows users to quickly search for key information. Instead of stepping through tedious pull down menus to find information, such as how many units of an item are in stock, what’s sold and what’s been reordered, users can do a quick search. Another favorite is the ability to create interactive, Excel-like spreadsheets that are connected to the HANA database and refresh in seconds, enabling users to quickly slice and dice data, and make decisions based on real-time information. Partners also said customers see Business One HANA’s user-customizable dashboards and predictive analytics capabilities as top benefits.
Murguia described some real-world examples of how SMBs are using Business One HANA to transform their businesses. For instance, he discussed how a Medistance, an Omron medical equipment distributor in East Europe, changed the game against larger competitors by developing a remote managed care service. Medistance, which had been selling the devices, created a remote managed care service to monitor users’ blood pressure and glucose levels. It now gives away the devices to subscribers to its $15 per month service, which provides alarm notifications and services to evaluate risks and treatment recommendations.
SAP Business One Partners: Key to Moving from Steady to Exponential Growth
Overall, SAP has been steadily growing Business One’s footprint. Sales are up 17% year-over-year, and in 2016, Business One has been adding an average of twenty new customers a day. More important, Business One HANA revenues are also rising. According to SAP, 180 of the 1,000 new Business One customers last quarter chose HANA. However, while SAP is making good progress in wooing new Business One customers to HANA, key challenges remain when it comes to catalyzing exponential growth.
As Murguia noted, Business One partners are essential to accelerating this type of growth. But although some partners have seized on the opportunity Business One HANA provides to sell the digital transformation story, others are sticking with what they know—which is the Microsoft SQL Server version of Business One.
To persuade partners to make this transition, Murguia exhorted them realign their resources and thinking from opportunistic to having a clear vertical and geographic focus. With industry expertise, partners can provide SMBs with guidance for industry-centric innovation, using HANA, cloud, analytics, and mobility as the fuel for change. He underscored the need for partners to make this shift by noting that:
- SAP introduced a new mobile app for sales professionals, which will only run on Business One HANA.
- Only Business One HANA supports multi-currency.
- SAP is providing incentives to sell Business One HANA.
- 95% of new customers use Business One with an industry add-on, and 200 top Business One ISV partners have migrated over 600 vertical apps to HANA.
- Millennial decision-makers will demand the type of Internet-like experience that Business One HANA provides.
Upping Business One’s Go-To-Market Game
SAP is investing in industry-specific marketing programs for consumer packaged goods (CPG), industrial machinery and components, professional services, retail, wholesale and distribution. It is also recruiting non-traditional partners with industry expertise, and providing more support from SAP inside sales to help partners build their pipelines. In addition, SAP has extended its University Alliance program beyond four-year institutions to partner is with community colleges to use Business One HANA in the classroom to encourage more trained millenials into the partner fold.
The vendor is also doubling down on content by making it easier for partners to find and use relevant case studies and to personalize their own success stories. SAP will help partners create more mobile-friendly, bite-size content for its Business One Repository, which currently has over 2700 testimonials. SAP is also “humanizing communication” with local advertising with its “Business One around the world” theme which features local landmarks, and a push to expand social media engagement beyond current Business One customers to a broader swath of businesses in it’s targeted vertical markets.
The digital transformation imperative is clear. Businesses can actively embrace new possibilities and set themselves apart in their markets, or ignore it and risk being stream rolled under.
SAP Business One has a good story and positive proof points in terms of helping SMBs navigate this transformation. In fact, partners told me that once they are in a deal, win rates are over fifty percent.
However, getting into consideration (outside of some European countries and Latin America, where SAP Business One is a recognized SMB brand) is still a struggle. In many geographies, SMBs often discount SAP as a big business brand that’s not for them.
Furthermore, SMBs have many choices when it comes to ERP. While SAP Business One HANA is much less complex than its large enterprise ERP solution, Business One is arguably more complex and takes longer to deploy than several other choices. Some businesses are willing to accept complexity in return for a high degree of customization capabilities, but many will balk at the upfront learning and implementation curve,
To meet its exponential growth goals, SAP needs not only to deliver on the marketing programs discussed above, but must also:
- Develop more compelling “high air cover” brand awareness. SAP needs a much more compelling, omnichannel brand campaign to increase the odds that Business One gets invited to the SMB table.
- Do a better job of “connecting the dots.” How exactly does SAP Business One HANA help SMBs transform and achieve success in the digital era? Why is It more effective than other solutions? SAP must paint a more detailed picture and provide more industry-specific metrics to drive the story home.
- Clear up the cloud story. Business One cloud options are still difficult to sort through. My understanding is that services from the SAP cloud are available in North America, but not in other countries. Some of the European partners I spoke with have their own hosting centers, and say that because of customization requirements and data privacy laws in Europe, multi-tenant cloud isn’t a viable option. If SAP really wants to use the cloud to fuel HANA adoption, it needs to have a much more straightforward cloud story or risks having pure cloud competitors undermine it in deals where cloud is the customer’s preference.
- Put the SAP SMB puzzle pieces together. SAP needs to pull together Business One, Business By Design, Concur, Ariba, SAP Anywhere and other SMB-related SAP solutions into a more holistic, understandable SMB strategy.
SAP has come a long way in transforming the Business One solution for the digital era. However, only time will tell if it can go the distance with additional steps necessary for solution transformation, partner development and marketing reinvention.