Steve Sahl has been a key player in a few successful start-ups—and he has witnessed a few IT disasters, the sort of troubles that arise when a small, growing company outpaces its software.
As CEO of a newly launched network security company, The Barrier Group, Sahl said he chose carefully when it came to buying software.
The Minneapolis, Minn.-based Barrier Group decided on SAP's Business One. In April, The Barrier Group became one of SAP's 3,700 global clients using the SMB product.
"When business picks up, what will we do?" Sahl said. "This really was our undoing at my last start-up." That start-up was acquired, and its story turned out well -- but not before executives like Sahl lost a lot of sleep and some money.
In choosing Business One, Sahl said, "I relied very heavily on my technical folks, and their experience with SAP. And I wanted to make sure I was working with partners that have an outstanding reputation in the marketplace. I'm building credibility with customers right now".
Among the Business One features is an alert system that SAP said has already saved SMBs thousands of dollars, preventing small mistakes from becoming large problems. And industry analysts agree that SAP has done a good job of building a SMB product – and not trying to squeeze its product for Fortune 500 companies into a new package for small businesses.
Now the challenge for SAP and other large ERP vendors is to develop strong channels, said Joshua Greenbaum, principal analyst at Berkeley, Calif.-based Enterprise Applications Consulting.
"The real factor in all these SMB products is having the right channels, the right partners," Greenbaum said.
SAP is facing a slew of competitors, from smaller players such as Intuit, Inc. to Microsoft's Solomon, Great Plains, and Navision software.
"A lot of SMBs are already Microsoft customers," Greenbaum said. "Obviously, that's the company SAP wants to compete with here."
Earlier this week, SAP announced a new partnership with Automatic Data Processing , a payroll processing outsourcer with a well-established presence in the mid-sized market. The ADP partnership was designed to boost Business One's credibility with those customers.
Eventually, SAP would like Business One to provide full NetWeaver capabilities, Greenbaum said, and that could give the company a strong advantage in the SMB space.
The pre-configured business scenarios in Business One were a big selling point for The Barrier Group.
"We did not want to try to customize Business One to meet our needs," Sahl said.
In then end, Sahl said, "SAP wasn't as expensive as I had feared."