SAP unleashed a firehose of information at SAPPHIRE 2018, held the first week of June. Key themes, as discussed in SAP press releases, focused on helping customers build “intelligent enteprises,” fueled by HANA and Leonardo artificial intelligence, machine learning and analytics capabilities. Under this umbrella, SAP introduced SAP C/4HANA, a set of CRM solutions that it plans to integrate with S/4HANA ERP solutions.
Not surprisingly, SAP didn’t make any announcements in the small and medium business (SMB) space during the event—after all, large enterprises account for the lion’s share of its revenues. But SAP does have SMB solutions in its portfolio, and I gathered a sprinkling of small and medium business (SMB) related information during a couple of meetings.
The Intelligent Enterprise
As I understand it, the “intelligent enterprise” represents SAP’s strategy to integrate, modernize and infuse new capabilities into its solutions portfolio—to businesses of all sizes—small, medium and large. Today, SAP’s portfolio encompasses hundreds of different products, many acquired by SAP over the years. Current reality is that a lot of these applications aren’t integrated—businesses need to use integration tools and system integrators to get them to talk to each other. SAP’s strategy is to use open APIs and its cloud platform to integrate these applications and the business processes they support–from ERP to CRM to HR and more–and create a consistent user experience across them with Fiori.
The result is software that serves as a copilot for the business—serving up intelligent recommendations, automating rote tasks, spotting anomalies, and making more precise predictions. And providing this functionality via hands free, voice-enabled interfaces as well as through more traditional ones.
SAP’s strategy is similar to what almost all business application suite vendors are driving towards. From Acumatica to Zoho, from NetSuite to Xero, and from Salesforce to Workday, vendors are opening up their cloud platforms and embedding AI, ML and other game-changing technologies into their solutions to help streamline processes and make it easier for companies to put new technologies to work.
In fact, “The Cloud is the Platform for SMB Digital Transformation” was the #1 trend in SMB Group’s 2018 Top 10 SMB Technology Trends. As a result, the cloud is becoming the backbone that enables SMBs to take advantage of new technologies they need to sustain and grow their businesses.
With all of these vendors busily opening up APIs and pumping new technologies into their solutions and platforms, the real magic and differentiation—especially for SMBs–will be to provide better automation, integration and insights in a friction-fee, consumable way.
SAP’s complex story and the many moving parts that underlie it will be a hard sell for most SMBs.
Consolidating SAP Business One and ByDesign Development, Sales and Partner Channels
SAP recently consolidated its two SMB-focused ERP solution suites, SAP Business One and Business ByDesign, under one marketing management umbrella, headed up by Ivo Totev, a recent recruit from UNIT4 Group.
Perhaps part of SAP’s reasoning here is that this will help make it easier to bring the intelligent enterprise vision to SMBs.
SAP positions Business One, available on-premises as well as via partner-mangaed clouds, as ERP for companies with fewer than 250 employees. It positions Business ByDesign, a pure cloud play, for businesses with 350 to 1500 employees.
According to SAP, the right solution for businesses with 250 to 350 employees is determined based on industry, as each of these solutions has different vertical strengths and capabilities.
SAP will continue to invest in and develop both solutions, but believes that by unifying them into one organization, it can:
- Reduce confusion among SMBs as to which solution is the likely to be the best alternative.
- Provide SMB-focused partners –who are SAP’s primary sales channel to SMBs–with one point of entry to sell both solutions—and sell the better fit to customers.
- Increase the number of partners that can sell, implement and support both solutions
- Use a microservices layer to develop and share components across both solutions, e.g. build new capabilities once and deploy them in both products. This should help reduce development costs and speed up delivery of new capabilities
- Enable partners to use the same microservices layer to develop add-on functionality that can be used in both solutions.
SAP has been plugging away on the SMB ERP front since 2002, when it acquired Business One (formerly Top Manage). Over the years, Business One customer ranks have grown to about 60,000. But SAP doesn’t directly offer Business One as a multi-tenant cloud solution. Meanwhile, SAP launched its pure cloud play, Business ByDesign (which now has about 6,000 customers) in 2007. Given how prominently the cloud figures in SAP’s intelligent enterprise strategy, it makes me wonder what and how positioning and strategy may shift for these two solutions.
What About CRM for SMBs?
I have more questions than answers about SAP’s CRM story for SMBs.
Both Business One and ByDesign have some CRM capabilities, but their primary selling point into the market is through ERP. Meanwhile, SAP just mothballed SAP Anywhere, which bundled CRM, ecommerce, service, ordering, and inventory management into a cloud-based solution, designed to give SAP a CRM-centric entry point into the small business market.
SAP Anywhere went through several fits and starts since launching in 2015. SAP experimented with different geographical and industry targets, but nothing really stuck. In my opinion, SAP Anywhere missed the mark due to a combination of factors, stemming from an insufficient understanding of the different types of small businesses and the capabilities, services and usability that small businesses need.
I also didn’t hear SAP discuss any specifics as to if, when or how the C/4HANA story will dovetail with Business One and ByDesign. But SAP C/4HANA, which pulls together acquired capabilities from Hybris, Gigya and CallidusCloud, seems awfully complex for SMBs.
Perhaps SAP will embed some C/4 HANA capabilities into Business One and ByDesign, or maybe it will resurrect some of SAP Anwhere’s functionality and integrate this into its ERP suites—but it seems that this story is still TBD.
SAP Analytics Cloud
In contrast SAP’s analytics SAP Analytics Cloud offering for SAP appears to be well-thought out and aligned with SMB needs and realities. SAP realized that its analytics portfolio, which spans from on-premises solutions to cloud-based ones, was confusing for most SMBs.
So SAP has decided to focus on the cloud for future innovation. SAP Cloud Analytics is the key offering for SMBs. The solution provides real-time analytics in a self-service model, and Its priced right—at $24/user/month.
SAP isn’t abandoning its on premises analytics solutions however. The vendor has pledged maintenance for them through 2024 to ensure that existing customers can protect their investments in the near term. It has also increased interoperability between SAP on-premises and cloud analytics solutions to help customers transition to the cloud over time.
Summary and Perspective
Large enterprises continue to fuel SAP’s bottom line and consume the lion’s share of SAP’s focus. While it has made some inroads in SMB, particularly with Business One, most SMBs don’t even consider SAP when they looking at potential business applications—and many don’t even know that SAP offers solutions relevant to their needs.
Based on this year’s SAPPHIRE, it looks like SAP is okay with this status. While SAP continues to tinker around the edges of its SMB strategy and portfolio, it is still falling short on the focus and commitment it will need to make to move the needle in the SMB market in a more substantial way.
©SMB Group 2018