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    SAP Looks to the Midmarket

    Written by

    Renee Boucher Ferguson
    Published December 11, 2006
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      SAP is looking to an aggressive midmarket push to help triple its customer base over the next four years and stave off competition from the likes of Oracle and Microsoft.

      In his keynote speech Dec. 4 at the companys annual analyst conference here, Shai Agassi, president of SAPs Product and Technology Group and a member of its executive board, said he asked his team to “shoot for the moon” when describing his vision for a transformational midmarket suite.

      “Whats the moon? Take a company doing $100 [million] to $200 million in business, and be able to set them up in a week or two, on a system they love,” Agassi said. “The cost of operation would be half that of what it costs today. Thats the moon. [The reality is,] take something thats on the market today and make it work. We started from this foundation—MySAP ERP and CRM on demand on NetWeaver.”

      SAP officials announced earlier this year plans to expand the companys customer base of about 35,000 users to 100,000 by 2010. They want to maintain a leading edge in the business applications market as Oracle closes the gap through acquisitions (it has bought 24 companies in as many months), Microsoft builds its Dynamics suite of applications for the midmarket and Infor Global Solutions tries to gain momentum with its own spate of purchases. Infors SSA Global buy in September made it the third-largest ERP (enterprise resource planning) vendor behind SAP and Oracle.

      SAP has a two-pronged midmarket plan: the development of two new application suites and a hard push to build a bigger channel to sell more products into the midmarket.

      The company is developing two separate suites for the midmarket, where it already has Business One for the lower midmarket and All-in-One for the upper midmarket.

      /zimages/4/28571.gifClick here to read more about SAP taking aim at the midmarket.

      While Business One will continue to be the offering for SAPs smallest customers, All-in-One will evolve into a suite of integrated best practices and enterprise services, based on MySAP ERP 2005, that partners can take and adapt for particular verticals, company officials said. The second offering will be a platform on NetWeaver that will enable “alternative delivery models,” said SAP spokesperson Jim Dever. That could mean SAP ERP on demand for the midmarket. Both offerings, expected in 2007, will play heavily into SAPs channel development.

      When Donna Troy and Tom Kindermans started with SAP about two years ago, the company didnt have an indirect sales division. Troy, executive vice president of the global SME (small and midsize enterprise) division, and Kindermans, vice president of the global indirect channel sales division, have changed that. To date, SAP has more than 20,000 customers managed through a base of 2,300 partners, which have developed about 550 industry solutions. “We want to grow that substantially,” said Troy, based in Paris.

      One approach is to expand SAPs nascent Partner Edge program, initially geared to SMEs, to be the partner program for all of SAP. “The reality is, we needed to do that to ensure a whole collaborative environment,” said Kindermans, based at SAPs headquarters in Walldorf, Germany.

      SAP also is providing targeted demand generation for partners, supporting co-innovation and creating a collaboration network in which partners can find and work with one another. In addition, the company is compensating sales based on competency, regardless of whether the income is generated from a direct or an indirect sale.

      Daniel Head, director of sales at software developer SoftBrands, has worked with SAP to co-develop manufacturing extensions to Business One. SoftBrands sells those applications through SAPs manufacturing partner network and into the subsidiaries of large SAP accounts through the direct sales force. Heads biggest challenges as a SAP partner are educating the market about whats available through SAP and its channel network and finding partners to compete against a global direct sales channel. Microsoft is SAPs biggest competitor in the midmarket, so SAP needs to do the opposite of what Microsoft does, according to Head in Minneapolis.

      “Microsoft has channel partners that openly compete, and that damages credibility,” Head said. “Business One is built as a horizontal offering that partners verticalize. Previously, SAP defined manufacturing as a vertical, but really its not. Now SAP is taking those partners and helping them define their market. … That way, SAP doesnt have competing or conflicting ISV partners.”

      /zimages/4/28571.gifCheck out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

      Renee Boucher Ferguson
      Renee Boucher Ferguson

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