Revenue Misses Mean SAP

By Renee Boucher Ferguson  |  Posted 2007-01-25 Print this article Print

Must Prioritize Midmarket Push"> Given SAPs recent software revenue misses—its second and fourth quarters in 2006 fell short of expectations—and the response to those misses, SAP has really had to move its midmarket strategy to the front burner, according to Greenbaum. Part of the challenge of entering the midmarket relatively quickly lies in building an indirect channel that can effectively sell SAPs services. That effort has been in the past an uphill battle for SAP—a company that has traditionally sold its enterprise software through a direct sales channel. That said, SAP has done a tremendous amount of work in the past year building out an ecosystem around NetWeaver.
According to Kagermann, some of SAPs future investment will go toward developing "new customer engagement models and a large and diverse partner ecosystem." Earlier in January, SAP formed an SME (small and midsize enterprise) unit headed by Hans-Peter Klaey, who will oversee the go-to-market strategy, organizational alignment and multichannel delivery for the new midmarket suite. SAP also aligned all of its partner programs under a single umbrella, dubbed Partner Edge—a critical move in building an indirect channel.
"This market has to be sold through a partner channel. Traditional direct sales wont work," Greenbaum said. "The channel is where the rubber hits the road. Its going to be something SAP is going to have to work hard at. The good news is its SAP, and a lot of companies will want to work with them. The bad news is the onus [on partners] is proving against the old SAP that is complex and not fit for the midmarket." The challenge when it comes to developing an entirely new on-demand suite, according to Zach Nelson, CEO of on-demand ERP provider NetSuite, is the time it takes to do it right. "NetSuite is the only company that has an ERP-based on-demand business suite, and it took us eight years to build the product up to meet the needs of midsized companies," said Nelson, in San Mateo, Calif. "So if SAP introduces an on-demand suite that has only been in development for a year, it wont have the functionality needed by QuickBooks customers, much less a midsized enterprise." Granted, a hefty portion of Nelsons company is owned by Larry Ellison, the CEO and co-founder of SAP nemesis Oracle. But Nelson brings up an important issue: the time it takes to build a reliable on-demand service and support organization., the poster child for on-demand software, has been in business since 1999. Last year, amidst explosive growth, the company experienced some persistent issues with downtime that resulted in some customers losing access to their CRM applications for hours at a time—the industry standard for uptime is "five nines," or 99.999 percent of the time. But at this stage in the game—SAP said it will release A1S in March—its too early to tell whether or not SAP would take the trouble to build out a service and support infrastructure, given the reliability of an outsourcing model. Check out eWEEK.coms for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel