SAP’s Digital Transformation Story For SMBs

Posted on May 25, 2016 by lauriemccabe

“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 ChallengesSlide1

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:

  1. 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;
  2. New business models, again using the example of the music industry, and its evolution from analog to digital buying and streaming;
  3. 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 ProcessesScreen Shot 2016-05-24 at 9.21.49 PM

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.

Perspective

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.

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Can IBM’s Redesigned PartnerWorld Move the SMB Needle?

Posted on February 25, 2016 by lauriemccabe

ibm pw logoEast coast weather and flight issues foiled my attempts to attend IBM’s annual PartnerWorld Leadership Conference last week. I was disappointed, as IBM took advantage of the event to formally launch its newly revamped PartnerWorld program, which focuses on helping partners drive business in strategic areas, most notably in cognitive and analytics. However, I was able to talk to Brig Serman, IBM’s Director of Global Commercial Business, about what these changes mean for IBM, its partners, and small and medium business customers.

Here are some of what I consider the key changes that IBM made, followed by my perspectives on them.

  • Introduced the newly named “commercial segment.” This segment includes the former midmarket segment (businesses with less than 1,000 employees) and “white space” larger enterprises in which IBM has a small or non-existent footprint. IBM has consciously moved away from identifying this segment based on company size, and calling it “SMB” or “midmarket.” Big Blue made the shift because it believes that this segment—which it sells to via the channel—is not well-defined by size, and that other characteristics such as different buying and consumption behavior, including self discovery, self-service transactions, a preference for cloud, and partner involvement.
  • Committed to a channel only model for the commercial segment. IBM has committed to serving this segment by driving higher value solutions exclusively through its global business partner network. Brig’s group includes 450 IBM sales people. Each is responsible for a territory, from understanding market requirements to driving engagement with business partners to increase penetration in that territory. IBM sellers will only be compensated if the sales transaction goes through a business partner.
  • Redesigned the PartnerWorld program to help partners provide more value to this segment. IBM is offering partners refined “roadmaps” to help partners identify and build skills in selected areas in a more simplified and integrated way. These roadmaps direct business partners to invest in software asset certifications for all software brands, with a focus on analytics, cloud, security and mobile solutions. Partners will earn incremental incentives for sales in these areas, offering margin opportunities that are two to three times higher than for hardware sales. The goal here is to help partners move away from hardware only sales towards higher value solutions that include IBM software, industry expertise, their own IP and/or integration. IBM is also providing Business Partners with the shared best practices of its most successful partners, so they can model skills investments, lead generation, presales and post sales support more effectively and make investments that will pay off.
  • Announced new digital programs to help partners build skills. IBM is expanding digital partner benefits. It has overhauled the PartnerWorld University portal, which offers web-based training for both sales and technical skills, adding new courses and certifications, and giving users more tools to track and manage their progress. IBM is also adding Digital Marketing workshops to help partners use digital and social media more effectively. Big Blue is also expanding its Business Transformation Initiative (BTI) to help more partners move up the solutions value chain. Finally, IBM is offering developerWorks.Premium at a reduced price to help developers more easily tap into the IBM ecosystem and build new applications on IBM Cloud.

Perspective

Although IBM has changed the name, the Commercial segment really has the charter as it did before the name change: to help IBM more effectively reach the millions of businesses that it doesn’t sell to today.

IBM’s new channel programs and directions will certainly help IBM increase its footprint in the large enterprise “white space,” where its worth it in terms of deal size for the business partner and IBM to make the investment. The new initiatives are also a step in the right direction in terms of making gains in the SMB market, as partners are clearly IBM’s best bet to grow, scale and make headway in this diverse and complex space. Boosting partners’ technology, sales and marketing expertise will help them make some inroads with prospective IBM customers. These tactics should also help partners more easily surface solutions that might be a good fit for SMBs who are looking to solve a problem.

But IBM also has a big perception problem in the SMB market. Many SMBs believe IBM lacks solutions that are relevant, consumable, and priced right. While IBM does have some solutions, such as SoftLayer, IBM Verse (for collaboration) and cloud-based Watson analytics that are suitable for SMBs, and has recently begun offering free trials for a handful of them. But, most SMBs are blithely unaware of them, and while IBM has the vision, it really doesn’t have mechanisms in place to stimulate the type of viral adoption that vendors such as Google, Box and Slack have enjoyed. In fact, IBM’s cloud marketplace is just in the early stages, and having IBM solutions in third-party marketplaces is also nascent.

Furthermore, all businesses (regardless of size and whether or not they are IBM customers) are doing much more research, comparisons and shopping and purchasing online. IBM is changing its high-level value proposition (e.g. easier to discover, shop for, buy and use) to accommodate this evolution, and intends to make the necessary business model and solution changes required to execute on it. But, this type of tectonic shift will take time, and in the interim, it will be difficult for IBM raise awareness about the relevancy of its solutions for the broad SMB market.

Given these realities, helping business partners to invest to accelerate skills development and marketing and sales movement will only go so far. To really move the needle, IBM needs to fully execute on significant cultural, business model, sales and marketing and product design changes. Whether or not IBM has the will to put enough time, energy, commitment into the market to make bigger gains this time remains questionable.

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Slide Show Version! SMB Group’s Top 10 SMB Tech Trends for 2015

Posted on January 14, 2015 by lauriemccabe

(Originally published on the SMB Group website and available here in .pdf format).

Here are SMB Group’s Top 10 SMB Technology Trends for 2015 in slide show format!

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SMB Group Top 10 SMB Technology Trends for 2015

Posted on January 5, 2015 by lauriemccabe

crystal ball

(Originally published on the SMB Group website and available here in .pdf format).

Here are SMB Group’s Top 10 SMB Technology Trends for 2015! A more detailed description of each follows below.

(Note: SMB Group is the source for all research data quoted unless otherwise indicated.)

  1. Cloud is the new IT infrastructure for SMBs.
  2. SMB IT staff and channel partners evolve into cloud managers.
  3. SMBs recalibrate IT strategy and spending for a mobile world.
  4. The Internet of Things (IoT) comes into focus.
  5. SMBs reinvent marketing for the new buyer journey.
  6. KPIs trump ROI and TCO as the new “show me” metric.
  7. Analytics gets SMB-friendly with “bring your own data” and freemium offerings.
  8. It’s time to reimagine work.
  9. SMBs place a premium on protection.
  10. SMBs opt for an incremental, integrated solutions approach.

Detailed SMB Group Top 10 SMB Technology Trends for 2015

  1. Cloud is the new IT infrastructure for SMBs. SMBs increasingly view technology as a key business enabler. According to SMB Group research, 67% of small businesses (1–99 employees) and 81% of medium businesses (100–999 employees) say that technology solutions help them improve business outcomes or run the business better. However, most SMBs don’t have the resources necessary to keep pace with technology on their own. Just 19% of small businesses employ full-time dedicated IT staff. And while 86% of medium businesses have internal IT staff, they are typically IT generalists who lack expertise in newer technology areas such as mobile and analytics. As SMB requirements for fast, easy access to new social and mobile analytics solutions, more compute power and storage, and other services have been increasing, cloud adoption has boomed—with 92% of SMBs are now using at least one cloud business solution and 87% using at least one cloud infrastructure solution. In 2015, cloud solutions are poised for hockey stick growth as more SMB decision-makers turn to a cloud-first approach that not only supports existing business models, but also enables them to develop innovative new products, services and business models. Public cloud adoption will continue to significantly outpace that of private cloud, but more medium businesses in particular will consider a hybrid cloud approach, particularly in industries and applications where security and privacy are top concerns.
  2. SMB IT staff and channel partners evolve into cloud managers. As the cloud becomes mainstream, both internal SMB IT staff and external channel partner roles will evolve from implementation and break/fix support to become more proactive and strategic. SMBs will look for staff and channel partners that can work with line-of-business decision-makers to better align technology investments with business goals, select best-fit solutions and manage cloud service providers. Internal IT staff and channel partners will also need stronger integration expertise to help SMBs get more value from their technology investments. Channel partners will need to cultivate consultative selling and adjust staffing skill sets accordingly. SMB decision-makers will seek help to better understand and articulate new skill-set requirements, and to hire and/or contract for these needs. They will be hungry for thought leadership from SMB vendors, analysts and other influencers.
  3. SMBs recalibrate IT strategy and spending for a mobile world. A growing majority of SMBs now regard mobile solutions as essential business enablers, with 60% saying that mobile solutions are critical to their business. 86% of SMBs agree or strongly agree that mobile apps are a complement to traditional business applications, and 71% believe that mobile apps will replace some traditional solutions entirely. Mobile solutions also account for a growing share of SMBs’ technology budgets. SMB median spending on mobile technology and solutions as a percentage of total technology spending rose from roughly 12% in 2013 to 16% in 2014. Mobile service and device costs still account for the bulk of SMB mobile budgets, but SMB spending in other areas is rising as a percentage of mobile spend. On average, in 2014, SMBs spent 11% of their mobile dollars on apps, 9% on security, 11% on mobile management and 8% on consulting. Planned increased investment in mobile apps and more diverse mobile devices will necessitate a spike in mobile management adoption as well.
  4. The Internet of Things (IoT) comes into focus. IT vendors and prognosticators have been forecasting explosive growth for more intelligent and connected devices of all types. However, many IoT scenarios have been cast in a consumer light, such as smart watches and Tile (a locator for items such as keys and glasses), and the IoT vision has been fuzzy for many SMBs. In 2015, however, early but compelling use-case scenarios and solutions will emerge, leading more SMBs to the “aha” moments required to spark adoption. For instance, radio-frequency identification (RFID) has been used in logistics to track pallets and crates for some time, but mostly in closed-loop systems for high-value goods. IoT will help reduce RFID costs, making it more practical and appealing to retailers to use in order to help improve inventory accuracy, automate customer checkout and reduce theft. Beacons, which are indoor positioning systems that communicate directly with smart phones via Bluetooth, provide another compelling SMB use case. For example, a network of in-store beacons can identify the location of customers in a store and send them push notifications. Or, a trucking company could install beacons to monitor the state of its trucks, provide more timely maintenance, reduce vehicle downtime and decrease costs. Once SMBs understand use cases more clearly, IoT will hold great appeal because it is mostly invisible to end users, which negates adoption issues, and it provides real-time data for better decision-making and better business outcomes.
  5. SMBs reinvent marketing for the new buyer journey. The buyer journey is evolving rapidly and includes many more touch points than ever before. SMBs must transform their marketing approach to connect with more prospects and customers, and to provide them with the right information at the right time in the buying journey. Although many small and even medium businesses rely on point solutions, more will turn to an integrated marketing approach. In 2014, 20% of small businesses and 25% of medium businesses had purchased/upgraded to a marketing automation solution in the past 24 months. Meanwhile, 22% of small businesses and 26% of medium businesses plan to purchase/upgrade a marketing automation solution in the next 12 months. More SMBs will realize that choosing the right marketing automation solution is one of the most important technology decisions they will make, particularly as cloud, mobile, social, analytics and other technologies continue to transform the buying process.
  6. KPIs trump ROI and TCO as the new “show me” metric. Historically, vendors have tended to focus on proving solution value through return on investment (ROI) and total cost of ownership (TCO) analysis and metrics. But these assessments and metrics, while often beneficial, are frequently too vague and/or too dependent on nuanced measurements to be compelling for SMBs. In comparison, key performance indicators (KPIs) can provide SMBs with specific, actionable insights on business performance and what areas need improvement. With so many vendors fighting for SMB dollars, SMBs will increasingly seek out those that help them understand what KPIs are most relevant for their business and industry, and those that provide credible, specific metrics about how their solutions affect these KPIs.
  7. Analytics gets SMB-friendly with “bring your own data” and freemium offerings. Most SMBs don’t have data analysts on staff. These businesses often are intimidated by analytics solutions, which have traditionally been expensive, complex and difficult to use. But cloud computing, better user interfaces, visualization tools, improved algorithms and natural language capabilities as well as a growing number of freemium offerings designed for business decision-makers—not data scientists—are poised to change this. For instance, IBM’s Watson freemium offering allows users to bring in data from many sources, and it has capabilities that reduce data preparation and loading time, including a “fix it” button to repair data quality issues. Once data is plugged into Watson, users can query in natural language to analyze information. As more solutions designed for people with little or no data preparation and analytics skills emerge, analytics will become more consumable for SMBs.
  8. It’s time to reimagine work. Whether you prefer the hashtag #futureofwork, #newwaytowork, #reimaginework or something else, it’s clear that change is on the horizon. Processes, tools, attitudes and behaviors are shifting as mobile, social, cloud, analytics, IoT and other technology advances take hold in SMBs. Likewise, demographic shifts are reshaping the makeup of SMB workers as well as their expectations of what technology should do and how it should do it. For instance, millennials and digital natives are rising through the workforce ranks, while baby boomers are starting to retire or move to part-time work. Meanwhile, the ranks of temporary and contract workers continue to grow. The National Employment Law Project found that temporary help agencies, staffing agencies, professional employer organizations and employment placement agencies fill 2.5% of all jobs, up from 1.4% in 1990. In addition, easy-to-use consumer apps and devices have raised the bar for user experience in the business-to-business (B2B) world. This changing mix of resources, behavior, attitudes and requirements will lead more SMBs to seek better, easier and more affordable ways to access, evaluate, buy and get productive with technology solutions. Vendors that understand and plan for this evolution, provide clear solution value and make SMB customers feel that they are part of a strong ecosystem will have a decisive edge as this trend unfolds. Providing easy access and free trials, clear messaging, a delightful user experience, superior support and vibrant user communities will be key to tapping into this trend.
  9. SMBs place a premium on protection. SMBs are already using basic security and backup tools. However, our research shows that most use point solutions that only tackle part of the problem. The use of more comprehensive solutions to protect and manage data is still far from the norm. But greater reliance on technology, an increasing number of “moving parts” (traditional apps and infrastructure, cloud, social, mobile, etc.) and the need to manage data no matter where it resides necessitate better security, control and management capabilities. SMBs need only turn on the news to understand the financial, brand and legal ramifications of data breaches at large companies such as Sony Pictures, Home Depot and eBay. As awareness rises, SMBs will place a premium on more comprehensive solutions from vendors that offer proactive guidance, deeper expertise, stronger service-level agreements (SLAs) and 24/7 support for an always-on world.
  10. SMBs opt for an incremental, integrated solutions approach. New cloud, mobile and social solutions have made it easier for SMBs to access and use new applications, but they have offered little help with integration. Although 63% of SMBs have partially integrated some applications, 79% still rely on manual Excel file uploads or custom code for integration, which underscores the severity of the problem. SMBs typically lack the expertise and resources to manage the entire integration process, and they need solutions that both encompass and better integrate cloud, mobile, social, analytics, security and other technologies. However, SMBs don’t want—and can’t digest—monolithic solutions. Vendors need to accommodate SMB integration requirements with a LEGO-like approach that enables SMBs to acquire only what they need at a given point in time, and then to add on new capabilities (their own or those of partners) with as little friction as possible when new needs arise. Although integration remains one of the toughest technology nuts to crack, we see new hope. Open ecosystems, embedded integration capabilities and stronger APIs should help pave the way, as should toolsets designed to help non-technical users to configure integrations without coding if they understand business integration workflows and requirements. Built-in collaboration and social communities to help users crowdsource information, find experts and share and/or sell integrations will also be key to making SMB integration a reality.

About SMB Group

SMB Group focuses exclusively on researching and analyzing the highly fragmented “SMB market”—which is composed of many smaller, more discrete markets. Within the SMB market, SMB Group’s areas of focus include: Emerging Technologies, Cloud Computing, Managed Services, Business and Marketing Applications, Collaboration and Social Media Solutions, IT Infrastructure Management and Services, and Green IT.

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Intuit QuickBooks Connect: Where Small Business Is Big Business

Posted on October 29, 2014 by lauriemccabe

This is part one of a two-part blog series discussing Intuit’s strategy to help SMBs better capitalize on technology. This first post provides perspectives from Intuit’s 2014 QuickBooks Connect event. The second post, Intuit’s Strategy to Bring Game Changing Technologies to SMBs, provides a detailed glimpse into Intuit’s approach in the SMB market.

QBconnectLast week, Intuit held its inaugural QuickBooks (QB) Connect event in San Jose. The 4,000-plus attendees included accountants, developers, small businesses, press, influencers and analysts. The agenda included a good mix of updates, announcement and inspiration from an all-star line-up of speakers. Below are my top takeaways from each of these areas.

Turning the Cloud Corner

While newer competitors, such as Xero, have made a lot of noise, they haven’t had much of an impact on the market. Instead, Intuit’s Small Business Group continues on its growth trajectory, especially in the cloud. QuickBooks Online’s U.S. subscribers grew 32% in 2014. QuickBooks is no longer just a U.S. solution, however. Intuit now sells QuickBooks in 124 countries, and has translated the solution into 12 languages. As of September 2014, the company has 705,000 paid subscribers for QuickBooks Online, and a total of 32 million customers worldwide.

cloudIntuit has clearly turned the cloud corner. In 2009, just 5% of new users were online, now the majority opt for QuickBooks Online over packaged QuickBooks products. In addition, 80% of QuickBooks Online customers are new to the Intuit universe, indicating the cloud version is doing a good job of pulling in net-new customers. The event signaled that Intuit will be doing more thought leadership as well, as evidenced by offering entrepreneurs one-on-one speed mentoring by Lean Startup Productions at the event.

Intuit’s QuickBooks Online development platform is also growing. Developer booths were in the spotlight at the event, and hundreds took Intuit’s Hackathon (link() challenge for a shot at winning a chunk of the $100,000 pot. Method:CRM took home the $55,000 grand prize for its Method:Donor app. Payments Cloud by Cloud Conversion, Safety Net by Jobber, and Service Titan won the $15,000 runner-up prizes.

Finally, Intuit’s Accountant Partner Network has always been essential to the vendor’s small business success. Throughout the event, Intuit speakers discussed “the power of we,” and ways in which the company is enhancing Intuit’s QB Accountant Edition to reduce the amount of time accountants need to spend on low-value data entry chores and increase the time they spend providing their customers with strategic business advice (some of which I note below).

Of course, the combination of a healthy pipeline of new QuickBooks Online customers plus a vibrant developer and accountant ecosystem bode well for continued growth.

Sometimes Less Is More 


As Intuit CEO Brad Smith noted, Intuit is not focusing on creating more and more features for fewer and fewer small businesses. Instead, the company is looking for ways to make things easier for small businesses. According to Dan Wernikoff, senior VP and general manager of Intuit’s Small Business Group said, Intuit’s goal is to “make accounting completely invisible to small business owners.”

To that end, Intuit is plowing much of its R&D budget (which is about 16% to 17% of its revenues) into making its products simpler for small businesses, accountants and developers to use. Key announcements unveiled at the event included something for everyone:

Small businesses:

  • A full-service payroll solution, that handles payroll tax complexities
  • Automatic synching for bank and credit card transactions in QuickBooks Online
  • Easier ways to create reports, such as P&L and balance sheets in QuickBooks Online
  • Ability to accept credit card payments in QuickBooks Online in under a minute
  • A new payments offering that enables invoicing, accepting payments and updating books
  • A new QuickBooks Self-Employed solution to help freelancers, contractors and home-based business to separate personal and business finances

Accountants: 

The big news here was the new QuickBooks Online Accountant edition, which gives accountants the ability to work on their clients’ books anywhere, anytime and provides:

  • Customizable dashboards that provides snapshots of action items and deliverables.
  • Toolbox for one-click access to any client, from anywhere within QuickBooks Online.
  • Books-to-tax integration, so users can automatically push bookkeeping data to Intuit Tax Online.
  • Integration with Box, to give accountants a better, easier way to share content and collaborate with their clients.

Developers:

Intuit is striving to create a “drop dead simple environment” for developers to build and sell their apps. To that end, Intuit introduced:

  • New developer experience, featuring seamless cloud integration, new SDKs, and simpler documentation to make it easier to call on QuickBooks Online APIs.
  • New payments API to allow deep integrations with QuickBooks Online.
  • New Apps.com marketplace to enable developers to reach more QuickBooks customers with their solutions. Over 400 apps are already integrated with QuickBooks Online and available on Apps.com.

Inspiration On Tap

qbconnect speakersUnbelievably (this from someone who attends many events and co-manages a small business!) all the speakers featured at QuickBooks Connect were inspiring and informative. The speaker line-up was very diverse, but one commonality is that all are successful entrepreneurs. You can watch them on demand at www.qbconnectlive.com. Pearls of wisdom were flowing like water, but here are some of my favorites, which I hope will inspire you too! 

  • Arianna Huffington, chair, president and editor-in-chief of the Huffington Post: Stop wearing “busy” like a badge of honor! It’s not! Success is more than the metrics of money and power. We need health and well-being to be truly successful and happy.
  • Debbie Blox, CEO of Goldieblox, and winner of Intuit’s 2014 Super Bowl ad contest: You need to put yourself out there, and ask for what you need, because it takes a village to create a successful, sustainable small business! Be specific about what you want, and get advisors.
  • Tristan Walker, CEO of Bevel: You don’t get what you don’t ask for, and trials are really blessings in disguise.
  • Martha Stewart, founder and Chief Creative Officer of Martha Stewart Living Omnimedia, reminded us that we need to work really hard to be successful but must be compensated fairly for our hard work, and that once you’re through changing–you’re through!
  • Clif Bar CEO Kevin Cleary: Find people who share your passion and empower them to break things. The future of business is to upend the unacceptable.
  • Marc Andreessen, cofounder and partner of Silicon Valley venture capital firm Andreessen Horowitz: There’s a pivot happening with web, cloud and mobile enabling small businesses to use tech more aggressively.
  • Earvin “Magic” Johnson, chairman and CEO of Magic Johnson Enterprises and NBA legend: Have the courage to say I don’t know everything and to get help! Also, know your customer, serve them well they’ll keep coming back
  • Scott Cook, Intuit Founder and Chairman of the Executive Committee: Every one of Intuit’s successful businesses takes off via word of mouth.
  • Brad Smith, CEO of Intuit: We strive to be the operating system behind small business success.

Perspective

Intuit may have been born in the era of green screens and DOS, but it is now all in with solutions for today’s cloud, mobile, social and analytics technologies. However, one thing that hasn’t changed at Intuit is its commitment to helping small businesses thrive. This combination of strengths bodes well for fueling the next era of innovation for Intuit and for small businesses.

Disclosure: Intuit paid for most of my travel expenses to attend QuickBooks Connect.

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SuiteWorld 2014: NetSuite Hits Its Stride

Posted on May 28, 2014 by lauriemccabe

suiteworldI recently had the opportunity to attend SuiteWorld 2014, NetSuite’s annual user conference—along with about 6,500 attendees including customers, partners, journalists and analysts. The event provided us with a good mixture of history, progress, new announcements, and future directions.

Memory Lane–A Somewhat Bumpy Road to the Cloud

I’ve been following NetSuite as an analyst since 1998, when Evan Goldberg (still serving as NetSuite’s CTO) and Mei Li (now SVP NetSuite Corporate Communications), first came to Summit Strategies, where I worked at the time. Early on, NetSuite was NetLedger, offering a simple accounting solution geared towards small and medium businesses (SMBs). The term “cloud” hadn’t yet been coined to describe the model of delivering software as a service (SaaS). In fact, even the SaaS term hadn’t surfaced. Back in the day, we called them Application Service Providers (ASPs) or just online solution providers.

NetSuite was one of a just a handful of vendors that came to pitch this new software delivery method to us in 1998. Salesforce and Employease (long ago acquired by ADP) and maybe a few now defunct vendors probably rounded out this tiny group. Of course, in the next couple of years, we were flooded with visits from seemingly anyone with a similar ideas that could create a PowerPoint presentation.

Over the past 16 years, many cloud vendors have come and gone, as for the most part, the road to the cloud has turned out to an evolutionary–not revolutionary–journey. Mainstream customer adoption of cloud solutions only started to become a reality in 2008, when the “great recession” hit, and the OPEX cloud model became much more attractive to cash-strapped companies. Looking at NetSuite specifically, I remember that for quite a few years in there, the vendor seemed stuck at a count of 5,000 active customers, and some wondered if it could ramp up to the next level of growth.

Fast Forward 

Today, while some roadblocks remain, many companies view the cloud as a mainstream approach to get the solutions they need to run their businesses. In fact, in some areas, such as collaboration and marketing automation, SMB plans for cloud adoption are higher than for on-premise.

Figure 1: Current and Planned Solution Deployment Methods Business Applications

Slide1

However, financials and ERP—NetSuite’s flagship solutions—have moved more slowly to the cloud than other types of applications. There are many reasons for this, including:

  • Deeper existing market penetration of financials, accounting and ERP. Financial and accounting software has been around a lot longer than many other types of software. So especially in the early days of the cloud, NetSuite (and other cloud-based financial/ERP vendors) needed to convince companies to replace incumbent on premise financials and ERP systems with a new cloud solution. In contrast, vendors outside of the core ERP and financial realm were selling solutions to automate functions that many companies had not yet automated—a much easier pitch to make.
  • Fewer users. Fewer people within an organization typically use financials and ERP systems than, for instance, CRM or collaboration tools. For many companies, the cloud model becomes more compelling as the number of users increases.
  • More regulatory and security requirements. Financial information is subject to many more regulatory concerns than many other functional areas. This, combined with many companies’ reluctance to house the company’s “crown jewels” with a third-party, have slowed the pace of financials and ERP cloud adoption.

Furthermore, the cloud has made it easy for business decision-makers to adopt new apps as needed, without IT involvement or even centralized corporate oversight. NetSuite has always focused on the value of a single, integrated system of record—certainly a longer, higher up the food chain sell than buying other types of solutions.

NetSuite’s Integration Value Proposition Comes of Age

men with puzzle piecesDespite these challenges, NetSuite has successfully stayed the more challenging course, and more companies are coming around to the value proposition that integrated solutions help remove friction and streamline business processes. For Q1 2014, NetSuite announced a record $123 million in revenue, up 34% year-over-year, and more than 20,000 organizations now use NetSuite to run their businesses.

At SuiteWorld, NetSuite showcased its 2014 Transformer Award winners, including Tableau Software, Jive Software, Shaw Industries, Williams-Sonoma and MusclePharm, to illustrate how NetSuite helps them grow and manage change more effectively. But their stories reflect a broader phenomenon. I’ve personally talked to many customers—and not only from NetSuite’s ranks—about how much better business runs when everyone views and works with the same, real-time information.

NetSuite’s Next Phase

Over the years, NetSuite has added integrated CRM, Ecommerce and other areas to its unified platform. At SuiteWorld 2014, NetSuite not only announced a new, improved user interface, but additional integrated offerings including:

  • B2B Customer Center,  built on NetSuite’s SuiteCommerce platform, to provide B2B merchants a platform to deliver a seamless, efficient B2C-like online shopping experience, with the ability to view order status, details and history, track shipments, reorder goods, and more.
  • A new services resource planning (SRP) solution, that provides integrated ERP, CRM and professional services automation (PSA). The offering includes client management, project and resources management, time-and-expense management, and project accounting in a single solution, designed to enable both product- and project-based businesses to modernize and transform operations the way manufacturing resource planning (MRP) did for manufacturing businesses.
  • The TribeHR SuiteApp. After acquiring TribeHR (a social human resources management suite) last year, NetSuite has migrated tight integration with TribeHR to the NetSuite platform. This brings HR capabilities to NetSuite and provides native integration across TribeHR and other NetSuite solution components.

NetSuite has also come to terms with the fact that one company can’t possibly develop ALL the functionality every company will need, or sell and service all of its potential customers. To that end, NetSuite is bringing more partners into its fold to fill in the white space and provide its customers with a richer ecosystem.

For instance, over 100 developer partners had booths and/or conducted sessions at SuiteWorld. The mix included established vendors such as Avalara, DocuSign and Kronos, to newer entrants such as FieldAware and VertexSMB, all of whom have developed integrations with NetSuite.

On the sales channel side, partners ranged from enterprise-focused players, such as CapGemini and Accenture, to smaller ones such as Cloud ERP (which has built its Australia/New Zealand-based business around selling and supporting the full range of NetSuite solutions), and FHL Cloud Solutions, which has developed a successful micro-vertical approach to marketing and selling NetSuite in industries such as wine, medical devices, and furniture wholesale and distribution.

NetSuite also launched the NetSuite BPO Partner Program at SuiteWorld. Through this program, NetSuite and its partners intend to simplify the outsourcing model and help drive costs down and better server smaller customers. Partners who provide Business Process Outsourcing (BPO) or Business Process as a Service (BPaaS) use NetSuite’s unified solution platform to provide services to their clients. Partners get access to SuiteCloud, NetSuite’s development platform to tailor their NetSuite offerings to industries or client-specific needs. Early partners include Capgemini, McGladrey and Accretive Solutions.

Perspective

Integration helps bring order to chaos–and helps companies reap more value from their application investments. But let’s face it, integrating applications after the fact is a difficult, messy and expensive affair, and one that many SMBs struggle to get done.

In today’s social, mobile and multi-channel world, consumers—whether B2B or B2C—have more power, and all vendors face increasing pressure to provide better, faster, and more user-friendly products, services and engagement to attract and retain customers. Having a unified system of record enables companies to have a more knowledgeable view of customer behavior, and to present a more unified face to customers, whether they’re engaging in marketing, sales, billing or service transaction. This means that the appeal and value of taking an integrated approach will only rise—as will NetSuite’s fortunes.

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

Posted on March 21, 2014 by lauriemccabe

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.

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