SAP Plots New Mid-Market Strategies

SAP (NYSE: SAP) and its partners plotted new mid-market strategies at the company's 2006 Field Kick-Off Meeting, or FKOM, which drew to a close in San Antonio, on Wednesday. In addition, SAP partners used the conference as a launchpad to introduce a slew of vertical and micro-vertical applications.

On Thursday, it is widely expected that SAP will roll out its hosted CRM application, a product the company is targeting toward the enterprise market, according to Bill Wohl, vice president and head of global communications at SAP.

There have been some suggestions in the industry media that it is meant for the SMB market, he noted. "When we come out with our product, you will see there is a strong focus on the enterprise," Wohl told CRM Buyer.

Mid-Market Push

Nonetheless, SAP has been focusing other products on the mid-market space -- its All-in-One suite and Business One application -- and plans to continue the momentum it has developed in this niche over the last year or so, Rodney Seligmann, senior vice president and COO of SAP's territory sales organization, told CRM Buyer.

In mid-2005, SAP reorganized its internal operations to intensify its focus on the mid-market space, he noted.

Currently, the mid-market accounts for one-third of SAP's revenues, Seligmann continued. "We set a global target of increasing that number to between 40 percent [and] 45 percent by 2010."

Vertical Apps

SAP is increasing its sales and marketing resources to reach that goal. It is also redoubling efforts to expand both its direct and indirect sales channels.

Finally, it is focusing on what is increasingly viewed as a core strength of its mid-market products: its vertical business lines.

These are clever plays for SAP, which faces a major perception challenge, IDC Analyst Ray Boggs told CRM Buyer. "When people say 'SAP,' they think 'enterprise software.' Not everybody realizes that SAP also has a mid-market product line."

Concentrating on the vertical development has paid off for the company, he added. "Vertical specialties are very compelling for buyers, and they also resonate with channel partners."

In the SMB space, in particular, vendors have been placing greater emphasis on the reseller channel in recent months, Boggs said. "They are focusing more on recruiting, retaining and even coordinating among them."

Among the new iterations of SAP's mid-market applications that partners rolled out at the San Antonio conference:

• SAP Business One partner CitiXsys Technologies, which introduced iVend Retail, a Point-of-Sale (POS) and retail business management application that provides inventory visibility and automated procurement processes for small retailers;
• Corporate Renaissance Group (CRG), which announced three add-ons for SAP Business One -- inventory and partner management, cost allocation and employee management capabilities;
• Manufacturing Information Systems (MISys) also announced a Business One add-on that automates inventory control, multi-level material billing, revision control and production work orders;
• Radio Beacon introduced Radio Beacon WMS, an SAP Business One add-on for manufacturers and distributors to improve inventory accuracy, streamline warehouse operations and process back orders; and
• mySAP All-in-One partner Systech Integrators unveiled CLEAR Vision and CLEAR Vision Financials, a financial application for mid-size high tech manufacturers.

How Small?

SAP may be moving downstream, but it is still an application suited for larger SMBs, according to Boggs.

Both All-in-One and Business One mesh with mySAP's code base, he said.

"It means you can move within the SAP world if you want to upgrade. It also means these implementations can be complicated. It might cost as much as US$50,000 to implement," Boggs pointed out.

Still, that is still a better deal than a $1 million, eight-month implementation of mySAP, he said.