SAP's CRM strategy is SAP's supply chain management strategy, is SAP's ERP strategy, is SAP's global strategy. The CRM is fully integrated with SCM and ERP and is also cross-functional. SAP has since added two more product lines to its mySAP Business Suite solution directly addressing small and medium business (SMB) market needs. mySAP All-in-One, a fully integrated, industry tailored business management solution, is delivered through a network of channel partners. SAP Business One is also a fully integrated solution geared to the smaller companies and also delivered through a network of channel partners.
Like its competitors, SAP has been addressing the growing SMB market since 1996 with a lean positioning. SAP offered one ERP product line and it was up to the smaller companies to fit their needs to SAP's application. The challenge for SAP was to pre-customize packages to fit a broader spectrum of types of companies. The new product line would target businesses with complex production processes that would need an ERP application to support their businesses. The idea was cultivated in early 2002 and yielded to the creation of mySAP All-in-One.
The intricacy for such a venture lay in the comprehension of the internal motivations for each vertical sector in order to adapt the software to match each specific business model. SAP opted for a wise approach and partnered with industry specialists with a comprehensive knowledge of each sector. SAP provided them with access to the code and the partners built specialized versions on top of SAP's software.
Mid-market organizations demand solutions that are built to support business processes and SAP is definitely fulfilling such expectations by prepackaging and adapting their application to fit the specific needs of this market. Functionality alone is not sufficient to excel in the SMB market. Vendors must clearly demonstrate their understanding of the SMB culture and needs, and consequently relate their product, pricing, and distribution strategy to best match such culture.
The mid-market combines two main groups: an upper mid-market segment and a lower end segment. The growth potential of the mid-market has piqued the interest of large enterprise CRM players. Vendors like Oracle Corp., PeopleSoft Inc., SAP AG, and Siebel Systems Inc., have already gone downstream to offer CRM software for the higher end of the mid-market and for divisions of large companies. This segment was traditionally catered to by mid-market solution providers like Onyx Software Corp, and Pivotal Corp., and now they are being directly challenged by the heavyweights. The lower end relative tranquility, originally catered to by Best Software Inc, Maximizer Software Inc., and FrontRange Solutions Inc., is also being disrupted by vendors like SalesForce.com Inc and UpShot Corp., which offer hosted services at a low-cost monthly subscription. Newcomers like Microsoft Corp with MS CRM, are courting both higher and lower segments.
The SMB market is crowded. Considering the majority of companies worldwide are mid-sized organizations, it is crucial for vendors operating in this arena to partner with consultants, value added resellers (VAR), or independent software vendors (ISV) to secure a broader access to this market. The small size of the mid-market companies makes them even harder for vendors to find and sell to. The local solution provider, however, can act as an extended sales force for the vendors with which they work.
Unlike PeopleSoft, SAP seems to have adopted this reality and has partnered with strategic firms to reach scattered customers. The perfect example of such an alliance is between SAP and American Express for the sales of SAP Business One. Business One was a buyout of an Israeli Company geared to very small businesses and combining CRM with ERP. The relationship between SAP and American Express involves two major components: American Express will serve as an individual reseller of SAP Business One and is building its own national network of highly qualified channel partners. In addition, American Express is working with SAP to develop specialized versions of SAP Business One, to be offered exclusively by American Express and its channel partner network under the brand, SAP Business One -- The American Express Edition.
SAP tends to cover the whole spectrum of the market with SAP Business One, mySAP All-in-One and mySAP Business Suite.
mySAP All-in-One is an e-business solution that encompasses industry specific processes by leveraging SAP best practices. It is pre-packaged in order to reduce implementation time and cost.
For many years Siebel was considered as the leader in providing the most comprehensive CRM package to the market. Today the gap is shrinking and both SAP and Siebel are reaching functional parity, causing users to consider other factors in their selection process. SAP even outscores Siebel in important features such as order management and content management that factor high in a sales force automation (SFA) environment.
As vendors reach functional parity across CRM applications, the SMB users pay more attention to other decisive factors such as integration costs, usability, architecture, and Total Cost of Ownership (TCO). SAP offers mySAP All-in-One as an integrated ERP/CRM solution. The combined solution reduces the integration complexity and TCO when, and only when, the integration is with SAP's own applications.
SAP is tapping a large installed customer base, knowing that that is where its solution will best sell. Patrick Hickey claims that nearly 58% of SAP installations worldwide are in companies with less than $500 M (USD) in revenue (SAP's definition of the SMB marketplace), which represents more than 20,000 potential installations. SAP has strategically selected to secure support from its network of SMB channel partners. These channel partners constitute the vertical expertise needed to customize and implement the mySAP All-in-One application. SAP has a network of eighteen SMB channel partners dedicated to developing, selling, and supporting SAP products across North America. In partnership with its Channel Partners, SAP supplies the end-to-end integration, unlimited scalability, and most pertinent business processes that small and medium-sized businesses require. Partners like the Plaut Sigma would offer CP-Food, Cosmetics, management consulting, and computer reseller solutions. Where as Itelligence covers Automotive, complex manufacturing and wood related companies.
SAP presents its offering in a three-layer horizontal packaging. The first layer supported by SAP represents the technical packaging. Then SAP, together with its horizontal partners, provides the sales and delivery packaging elements. The last layer is the services bundling supported by the horizontal and channel partners. SAP pre-configures the industry specific solution within the desired horizontal (i.e. CRM) module relying on their existing best practices knowledge base and the principles of rapid, low cost implementations.
SAP Best Practices for CRM includes:
- Prepackaged delivery capability to reduce implementation time and cost
- Training and documentation to accelerate knowledge transfer
- Helping companies see the value of CRM
- Pre-configured best practices for the scenarios that SMBs demand
- Integration, flexibility, and configurability of mySAP
- Installation guidelines let you choose the scenarios you want to implement
- A solution that will grow with the company
- Industry-specific capability through Best Practices and mySAP All-in-One
- Dedicated channel supporting SMB customers through sales, delivery, and support
- SMB BU and Smart Business Solutions; SAP's commitment to the mid-market.
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