Sanjeev Aggarwal's Blog

October 31, 2012

SAP TechEd 2012: Implications for SMEs and the Partner Ecosystem

Filed under: Blogs - Sanjeev Aggarwal, Cloud Computing, ISV, Mobility, SaaS, Sanjeev Aggarwal Blog, SAP — Tags: , , , , — sanjeevaggarwal @ 12:10 pm

Sanjeev Aggarwal, Partner, SMB Group

During the week of October 15, I attended SAP TechEd 2012 in Las Vegas, along with about 6,500 SAP technology specialists and partners, and a small group of influencers. Although SAP is more widely renowned for its success in the large enterprise market, the small and medium enterprise or SME market (which SMB Group labels the small and medium business or SMB market) is a core part of SAP’s installed base and essential to SAP’s growth strategy. Roughly 80% of SAP’s more than 128,000 current customers are SMEs with less than 1,000 employees. In addition, SAP has more than 12,000 partners worldwide who provide SAP solutions and services to SME customers.

During this year’s TechEd, SAP discussed three areas that underscore SAP’s commitment to the SME market and its fundamental belief that strong growth opportunities lie ahead in this segment.

Taking HANA to the Cloud and to SMEs

  • HANA Cloud was by far the lead theme overall at 2012 TechEd. As Bill McDermott, co-CEO remarked, “HANA lies at the heart of the intellectual renewal going on at SAP.” HANA began life as an in-memory analytics engine, and quickly evolved into a database. Now, as SAP announced at the event, SAP is building the HANA Cloud as a next-generation platform for developers.

    SAP HANA AppServices and SAP HANA DatabaseServices are services that allow developers to create next-generation applications using native SAP HANA, Java and other rapid-development services. The good news is that SAP will now offer for free, developer licenses for SAP NetWeaver Cloud to get more support from the developer community. These shared services will build on SAP’s cloud platform vision by providing building blocks for portals, integration, mobile, analytics, collaboration and commercial services required to expedite building and life-cycle management of applications.

    SAP HANA One, a deployment of SAP HANA on the Amazon Web Services Cloud. HANA One currently supports a relatively small 64GB HANA instance on Amazon’s AWS cloud for $0.99 per hour. This will make it faster and easier and cheaper for developers to build affordable, HANA-enabled apps for SMEs.Although HANA Cloud is still a work in progress, HANA Cloud services and SAP HANA One are first steps to SAP realizing the HANA Cloud development platform vision. Significant work is required to move this from a development/testing proof-of-concept to a production platform where commercial applications can be deployed. SAP needs to develop a strategy to help developers move rapidly to commercial deployment and promotion, as Salesforce.com has done successfully with its Force.com platform and ecosystem.

  • SAP also announced that SAP Business One, version for SAP HANA, has been in limited release mode as of September 18, 2012, with general availability slated for some time next year.

    SAP Business One is SAP’s flagship ERP solution for SMEs with fewer than 100 employees. This HANA-powered version uses the HANA database and allows both the transactional (ERP) and analytical application to be run on the same server, and promises significant performance advantages. Running both ERP transactions and analytics on a single platform speeds access to information for analytics, reporting and search, without slowing down transactional processing.

    While not every SME will need to turbo-charge these functions, some SMEs are challenged with exponential data growth, and managing and extracting the insights they need from it. For instance in the health care industry, companies can integrate patient transactions with insurance company patient utilization records and hospital electronic medical records, to providing a complete real-time view to better manage patient care and costs. By crunching through more data more quickly, these businesses can more readily gain the insights they need to succeed in an increasingly complex and competitive world.
    Meanwhile, SMEs that don’t require the increased speed and power and analytics capabilities that HANA supplies can continue to buy SAP Business One based on Microsoft SQL database, which SAP offers as both an on-premises and cloud based solution.

Enabling Mobility for SMEs

With the acquisition of Sybase and Syclo (which SAP acquired in April’12), SAP is moving to help SMEs develop a mobile application and mobile management strategies. Sybase’s robust, market-proven Sybase Unwired Platform, is now augmented by the Syclo mobile application development platform to enable partners to rapidly develop, configure and deploy mobile apps for SME customers. SAP partners can also help SMEs to add mobile capabilities to their existing business applications, and/or help them develop custom mobile applications to address business requirements. SMB Group research studies indicate that many SMEs are planning to deploy internal mobile solutions in areas such as field service and CRM. In addition, they are planning to provide external mobile apps in areas such as payments, marketing and appointment and reservation scheduling to boost customer engagement and create new revenue opportunities.

Empowering the SME Partner Ecosystem

The partner ecosystem heavily influences SMEs’ business solution purchase decisions. Many of the partners I spoke with at the event provide consulting, implementation services and development for SAP’s SME-focused applications, including Business One, Business by Design, Business All-in-One, Business Objects Edge. Now SAP is helping these partners build skills in HANA and mobility to support new SME requirements.

Partners will play a vital role in helping SMEs customize application, analytics and reporting on the HANA platform or help startups develop new next generation application on SAP HANA Cloud. Likewise, on the mobility front, partners are essential to help SMEs develop a comprehensive mobility strategy that includes mobile access to business application and address the mobile management issues–including devices, access, security and mobile applications –in a unified way.

SAP is sparking renewed interest from and incremental opportunities for the SAP partner ecosystem. HANA Cloud, SAP Business One with analytics powered by HANA, and new mobility solutions will help SAP attract new partners and grow its partner ecosystem. Meanwhile, SAP’s laser focus on the mobility front will help it forge new partnerships with mobile solution developers that want to capitalize on the opportunity to provide mobile solutions via SAP’s Sybase Afaria platform. SAP is also opening up the SAP PartnerEdge program to help attract these new partners with educational tools, resources and training–as well as credentials to validate and certify partner skills for mobility and HANA.

In addition, the current SAP Mentors and partners that I met at TechEd were excited about the new opportunities that this will open up for them. For existing SAP partners, SAP’s new HANA and mobile solutions provides a pathway to incremental opportunities in their existing account, and an entrée to develop business in new ones.

Perspective

SAP is betting that these new technologies and solutions will give it an edge in the SME market. But for many SMEs, this is uncharted territory. SAP will need to make a hefty investment—particularly around HANA—to build awareness and understanding of the value that it brings to the table. Likewise, it must build on TechEd to ensure that it rolls out a steady, effective training program to help partners position, design, build, implement and support SAP solutions in these areas.

That said, as discussed in The Progressive SMB: Customer Stories are Worth 1,000 Analyst Words, SMB Group research indicates a distinct and growing segment of SMEs that we call “Progressive SMBs.” Despite economic uncertainties, Progressive SMBs plan to increase IT investments. They see IT as a tool for business transformation, and a way to create market advantage and level the playing field against bigger companies. Furthermore, Progressive SMBs have higher revenues expectations than their peers.

For instance, 50% of the small and 73% of the medium Progressive businesses (who are increasing technology spending) anticipate revenue gains in 2012, compared to just 15% of the small and 8% of medium businesses that plan to decrease IT spending.

The opportunity for SAP lies in growing the Progressive SME segment. After all, its unlikely that SME technology stragglers are going to become SAP customers. To accomplish this, SAP will need to make a significant investment outside of its installed base (as well as within) to educate SMEs about the increasingly dire consequences that technology laggards are likely to face, and the tremendous upside that they can gain by using IT solutions more strategically. Then, SAP must clearly connect the dots to demonstrate how SMEs can apply its new solutions to leapfrog competitors and grow their businesses.

If SAP can alert and educate a broader SME audience, then it can not only help narrow this gap, but also increase the market opportunity for its new solutions.

January 28, 2010

Mid-Market companies benefit from the significantly better ROI offered by the synergistic relationship between ERP and BI

Strong value in considering/purchasing ERP plus BI simultaneously/at the beginning of the implementation cycle

ERP solutions come with a reporting toolset consisting of a predefined set of reports and with general purpose query tools to generate reports from data within ERP database. Most often, these tools are difficult and confusing to use and rely on an IT team to deliver the requested report, which can take time. ERP systems provide acceptable reports on day-to-day operations but if business requirements change, these static ERP reports need to be customized. Business users need on-demand reports, which are cumbersome and expensive to deliver in a timely manner. By using BI reporting solutions, these systems empower the business user to define and generate the needed reports, freeing valuable IT (or consultant) resources in the process, such that data and time can be better exploited to make meaningful business decisions.

I have been talking to several mid-market companies that have implemented ERP solutions followed by a business intelligence solution (initially deployed for reporting from the data in the ERP solution). Their recommendation, based on their experience of deploying both solutions, is that mid-market enterprises should consider utilizing ERP and BI together (possibly through a planned phased implementation approach), a strategy that would realize significantly higher ROI versus the alternative of considering each independently of the other.

The crux of this recommendation comes from closely looking at the customizations required to make the ERP solution useful for these companies. A significant number of customizations needed in ERP systems are related to generating reports to provide detailed information (in part, similar to that previously obtained through their formerly implemented legacy systems) for decision-making and presenting it in a useful and easy-to-understand manner—a daunting and expensive proposition. Complementing a BI solution with an ERP solution makes the generation of reports required by corporate management and various lines-of-business very easy and eliminates the need for any extensive customizations (as was required to generate these in an exclusively ERP system). The right business intelligence solutions can help extract significant value from the extensive data repositories in an ERP solution. The combination of ERP and BI should also bode well for mid-market companies in the current difficult economic environment, as companies strive for maximum efficiency by looking to cut costs and realize projects that provide them with short-term returns. The companies that have already implemented ERP could benefit by focusing on BI solutions for reporting, corporate performance management and consolidation (CPM) and strategy planning.

Mid-market customers using SAP Business-All-in-One as their key ERP solution have said that the extra time, effort, and money spent to customize their initial ERP could have gone towards paying for a BI solution (in several of the cases they were using SAP BusinessObjects Edge BI). Additionally, the reports they now get from their SAP BusinessObjects solutions (after integration) are more detailed and accurate than before. Other added benefits of this integrated solution—including savings on maintenance, IT administration time, integration and consulting support for upgrades, etc—largely result from the fact that SAP has already spent the time and effort to tightly integrate these two solutions providing better workflow and departmental self-service capabilities to develop and customize reports for their needs. With this solution, individual users can also more easily drill down from these reports to get deeper context to explain the factors influencing what is shown in reports beyond the visually attractive graphs and tables.

As a result, this combined SAP Business-All-in-One and SAP BusinessObjects Edge BI solution could provide significantly better Return on Investment (ROI) than each solution considered independently, and if the SAP BusinessObjects Edge BI can be paid for by reducing the customizations required in SAP Business-All-in-One, the combined solution also has a much lower total cost of ownership (TCO). With the mid-market focused Business All-in-One fast-start program from SAP coupled with the SAP best practices for the SAP BusinessObjects Edge BI for reporting and CPM solution, mid-market enterprises will be able to benefit from fast deployment, more productive and streamlined solution.

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