Small Businesses and Midsize Enterprises Are Rapidly Adopting SAP’s SME Solutions
When Allison’s Pantry, a $10 million specialty foods and baking company, outgrew its accounting software and needed to improve visibility into its operations through a truly integrated, company-wide solution, it turned to SAP Business One, part of SAP’s SME Solutions. When Johnson Products Company took over a line of business from Procter & Gamble and needed a business management system quickly, it implemented SAP Business ByDesign. And when Abiomed, an $85 million medical device company, needed to increase visibility into its manufacturing operations and support growth, it selected SAP Business All-in-One. All of these projects went live very rapidly — ranging from a couple of weeks to less than six months.
Such successes from small and midsize enterprises (SME) are repeated many times every quarter, but they almost always surprise people who usually associate SAP software with large enterprises. It’s SAP’s best-kept secret: Approximately 80% of SAP’s 105,000 customers fall into the SME category, and a large number of SAP’s SME customers have fewer than 100 employees. On average, 22 new SME customers choose SAP solutions every day.
In this post, I’ll explain why SMEs are flocking to SAP’s solutions, what impact these solutions are having on their businesses, and what this might mean for your business.
Smaller Doesn’t Mean Simpler: Solutions Tailored to SMEs
Contrary to some opinions, being smaller doesn’t relieve SMEs of demanding business requirements; for example, the US Food and Drug Administration doesn’t grant special approvals for smaller firms, nor do Walmart and Toyota relax their standards for smaller suppliers. SMEs have to find powerful solutions to address their specific needs at a fraction of the cost and complexity of full-scale ERP implementations. So what are these specific needs, and how does SAP address them?
Unlike larger enterprises, SMEs usually sell a narrow range of products and services to their customers and have more limited resources. As a result, their risk tolerance is low, and they don’t have much room for error. Continued success lies in a sharper focus on execution through developing two key capabilities:
- End-to-end visibility into businesses processes, so issues can be identified and addressed quickly
- An integrated business system that eliminates silos, so operational metrics can be measured and tracked to enable a system of accountability
SAP has developed a portfolio of targeted solutions that address both these issues and are specifically designed to enable its SME customers, from small start-ups to established midsize businesses, to select a solution that best fits their needs
The Best Things Come in Small Packages
The above examples show that SME customers are looking for systems that provide them with end-to-end visibility into business processes, eliminate departmental silos, support growth, and deliver business insights — but at a lower cost of ownership than typical ERP and BI solutions. SAP addresses these needs for small businesses by:
- Packaging the basic functionality directly into the software and adding components such as mobility and business analytics. For example, the SAP Business One starter package contains all the core functionality that a small business needs around logistics, finance, sales and purchasing management but then adds Customer Relationship Management, Business Analytics and mobile access to data via an iPad or iPhone – previously beyond the reach of most small businesses.
- Packaging numerous prebuilt, preconfigured, and pretested best practices templates directly into the software solutions and componentizing them so users can pick and choose the functions they need. For example, SAP Business All-in-One contains industry best practices for business processes — such as purchasing or build-to-order manufacturing — to help small to midsize manufacturers, wholesale distributors, and service companies deploy a tailored, enterprise-level business management solution quickly and affordably, and yet be positioned for growth without the solution becoming a constraint.
- Creating specific programs to further accelerate deployments. A specific example is the SAP Business All-in-One fast-start program, a product of collaboration among SAP and several hardware partners to bring software and hardware into one pre-integrated, pretested package. As a result of such programs, a typical deployment of SAP’s SME solutions can be reduced to a few weeks. To make it even more affordable, select partners in the fast-start program offer a subscription-based hosting option.
SAP’s SME Solutions Can Benefit Large Companies, Too
Many large enterprises are also turning to SAP’s SME solutions for their smaller subsidiaries or affiliates. Using the SME portfolio as a cost-effective alternative to implementing a large ERP system to connect their subsidiaries to a main business network, large enterprises can provide the same level of operational excellence they have at their headquarters to their smaller subsidiaries, distributors, and business partners, while gaining the visibility needed to make better, faster decisions company-wide.
For example, Checkpoint Systems, Inc., with revenues of over $770 million, used the SAP Business One application to launch its new franchises and network them to company headquarters, which runs SAP ERP. The franchisee sales reps use SAP Business One to manage all of their job-related processes from order to cash. Their orders flow back to the SAP ERP application at Checkpoint, which ships directly to the franchisees’ customers from a central warehouse for delivery in 24 to 48 hours. When it introduces new products, Checkpoint downloads updates across the business network to SAP Business One users. Now it has the best of both worlds — a central company focused on large accounts, and a network of franchises serving the “mom and pop” stores. This penetration across all retail segments allows Checkpoint to sell to everyone and expand its business.