Can SAP commit to the midmarket?

SAP analysts say that, if the company wants to gain prominence in the midmarket, it needs to focus on working with qualified channel providers and building new partnerships.

As SAP wages a battle with Microsoft and Oracle Corp. for midmarket dominance, it needs to continue to assure its channel of resellers that it's committed to small and midsized businesses, according to industry analysts.

SAP has been showing off its Business One software for small and midsized businesses since the second quarter of 2003. It has also worked to eliminate unqualified channel partners who didn't have the expertise or know how to sell complex products, said Joshua Greenbaum, principal consultant at Daly City, Calif.-based Enterprise Applications Consulting.

"There isn't a big software company in the market that does right by its channel partners all the time," Greenbaum said. "In the past, SAP had the wrong kind of partners, and culturally it was not the kind of company that did a large number of partnerships. That didn't help them in the midmarket."

"The fundamental challenge for SAP is convincing the midmarket, and small companies, that SAP as a company and their products aren't too big for them."
Jim Shepherd
senior vice presidentAMR Research

The midmarket is made up largely of customers with small IT staffs and few consultants, yet these companies still demand complex and comprehensive software, Greenbaum said. Currently, SAP is fending off Microsoft, which in January 2003 introduced customer relationship management (CRM) software targeted at SMBs.

"Fundamentally, SAP has to build confidence in its channel partners," Greenbaum said. "They also have to be sensitive to the price issues that they are going to be facing from Microsoft. Microsoft has already shown itself very willing to use price as one of the weapons in its arsenal."

Oracle has also been successful in selling its products to the midmarket through its Oracle Outsourcing service. The service has been attractive to small and midsized companies, because all of the software and technology is hosted by Oracle at a central site in Texas.

"The fundamental challenge for SAP is convincing the midmarket, and small companies, that SAP as a company and their products aren't too big for them," said Jim Shepherd, a senior vice president at Boston-based AMR Research Inc. "So SAP has to convince those buyers that they have either repackaged their mySAP products or [they have to] develop additional products like Business One that are appropriate for midrange buyers."


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