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Small and medium-size businesses need enterprise software to help them run their businesses and connect business processes to customers as much as larger companies, but most of the smaller organizations dont have the financial and technical resources to operate standard enterprise-level offerings.
SAP AG last month joined the slate of enterprise software companies aiming to reach those small companies by acquiring TopManage Financial Solutions, of Tel Aviv, Israel, and setting up an SMB business unit.
TopManages suite includes financial, banking, purchasing, order management, sales and logistics applications. SAP will integrate those offerings with a CRM (customer relationship management) application and sell the package through its SMB unit.
SAP, of Walldorf, Germany, is the latest large developer to aim special scaled-down versions of its software at smaller companies. About a year ago, Microsoft Corp. purchased Great Plains Software Corp., an accounting systems software company targeting the SMB market. More recently, Microsoft, of Redmond, Wash., announced that it is developing a CRM suite for SMBs.
Separately, Oracle Corp. last month rolled out an upgrade to its SBS (Small Business Suite) of software based on technology from NetLedger Inc., which Oracle took an equity stake in last summer. SBS offers an integrated suite of hosted application services, including financials, CRM, purchasing and e-commerce.
These well-established developers offer small businesses a greater sense of security in their technology provider. What they dont seem to offer is a smooth migration path to each vendors full-scale enterprise suite.
Neoteris Inc., a 40-person remote access equipment supplier that uses Oracles SBS for accounting, order processing and sales contact management, has no plans to migrate to Oracles larger E-Business Suite. But Larry Link, vice president of sales, recognizes that migration could be an issue.
“There is nothing on the road map now that says we anticipate running out of horsepower with [SBS],” said Link, in Mountain View, Calif. “The thought is that as we get more complex with our manufacturing, that might be a gating item.”
Evan Goldberg, president and CEO of NetLedger, in San Mateo, Calif., said that there is still a gap between the top end of SBS capabilities and the low end of Oracles E-Business Suite but that both companies are working to close it. Typically, a customers migration path is to move to hosted versions of Oracles E-Business applications first. “By the end of 2003, Oracles SBS will really be able to handle the bulk of businesses up to 500 employees—then, at that point, Oracle will have offerings for every business,” Goldberg said.
Some small businesses welcome the big developers arrival on the scene. Total Immersion Inc., a small company based in New Paltz, N.Y., uses NetLedgers software for its accounting, order entry, order fulfillment and online workshop scheduling needs. Creative Director Glenn Mills, who also serves as the IT team of the six-person company, was comforted by the fact that a big company such as Oracle is behind NetLedger.
“A year ago, we were talking about the bottom falling out of dot-coms. It was scary for us to think of putting everything online [with a company] and trusting that company would be there,” Mills said. “What made me feel better was Oracle. They were a lot less likely to fold, rather than someone out there trying to get a quick IPO [initial public offering].”
Despite plans to expand into Japan, Australia and the United Kingdom, Mills does not see a clear migration path to Oracles E-Business Suite.
“To me, it looks like its too much. Its so involved that—just like the dollar figure—it seems like overkill for what we do,” Mills said.
Joan Fleischman, director of information systems and technology at Fairfield Processing Corp., in Danbury, Conn., purchased Great Plains software before Microsoft purchased the company. A family-owned manufacturing company that makes polyester products, Fairfield employs 200 to 250 people.
Fleischman is not anticipating outgrowing her accounting and order management applications for awhile.
“Weve put an investment in it, and I can see where it will support us another five years, if not longer,” Fleischman said. “It would be really nice to have some applications grow with us. … Im hoping that Microsoft will allow for growth.”
“What it is, more than anything else, is weve looked at the very large packages—weve spent a great deal of money on Siebel [Systems Inc. software], and it was overkill for us, but it was the best out there,” Fleischman said. “If Microsoft is going to integrate their CRM with [Great Plains] existing Solomon, thats a winning situation.”
Each of the enterprise application vendors is aiming its suite at a specific audience within the SMB world. SAPs TopManage portfolio will be marketed to businesses with upward of 50 employees and less-complex business process needs. SAP will also segment the SMB market by industry, targeting services and wholesale markets. Likewise, the company will offer functionality-based price points on its full-scale mySAP Technology platform, officials said.
Oracle typically targets companies with fewer than 100 employees, while Microsoft Great Plains is optimized for medium-size enterprises ranging from 500 to 8,000 employees.