Managing Automation - May 2008 - (Page 30)

Smaller Vendors to SAP Oracle: Bring it on , t would be hard for competitors not to notice that SAP and Oracle are ratcheting up their focus on the small- and medium-sized enterprise market. All they have to do is walk through any major metropolitan airport where billboard ads touting the large vendors’ devotion to the SME space are plastered across every terminal. Still, despite the high-profile SME marketing campaigns of SAP and Oracle, many enterprise applications vendors that have long targeted small- and medium-sized manufacturers — providers such as CDC Software, Epicor, Glovia, IFS, Infor, IQMS, Lawson, and Microsoft — seem to be doing just fine. That’s, at least in part, because many of these smaller vendors have managed to carve out niches for themselves in manufacturing industries by adding deep vertical-specific functionality to their products. “SAP and Oracle, so far, haven’t posed that much of a threat to the Infors and Epicors of the world, because those vendors have done a good job of building best-of-breed, industry-specific stuff into their products and establishing themselves in given verticals,” says Ray Wang, an analyst at Forrester Research. “If you are an auto parts supplier, Glovia has the best functionality. If you are in life sciences and you need to conform to CFR Part 11 [regulations], IFS has really good products.” A good example of a smaller SME-focused vendor successfully pursuing a vertical strategy is CDC Software, whose Ross Enterprise suite targets process manufacturers in the food, specialty chemicals, and biotechnology industries. Ross Enterprise includes formula-based production control and product-costing features that let process manufacturers go beyond standard costing approaches supported in many morehorizontal application suites, says Scot McLeod, the company’s senior marketing vice president. BWA Water Additives, a $125 million maker of water treatment products for industrial applications, recently chose the Ross Enterprise suite over SAP’s All-in-One because employees found it easier to use and the product did a better job of helping BWA stage the movement of materials into and out of its plants. The Ross system aligned with BWA’s business better than SAP’s, which “was designed to fit a very horizontal set of businesses across many different spaces,” says Paul Turgeon, BWA president and COO. If anything, smaller vendors say, the increased focus on the SME space by SAP and Oracle — particularly their high-profile marketing — has helped all vendors in the market by getting smaller manufacturers to think seriously about updating their older systems. “We see their advertising focusing on the value of solutions helping us,” says John Hiraoka, senior vice president and chief marketing officer at Epicor. “If you want to call this a battle [with SAP and Oracle], it’s one we were looking to fight.” I Oracle’s serious focus on the SME space, Kender says, is that “I report directly to the president of the company [Charles Phillips].” Software vendors that have long made the SME market their primary focus say they are increasingly competing with SAP and Oracle. “More and more, we see SAP and Oracle shortlisted on an account,” says Scot McLeod, senior marketing vice president at CDC Software, the vendor of Ross Enterprise and other applications for mid-market companies. “This is adding another level of complexity to the market. It hasn’t changed our win rates, but decision cycles are taking longer because of it.” ERP: A VOLUME BUSINESS? ciency and regulatory compliance. And both SAP and Oracle are concentrating hard on winning in that space.” In fact, SAP officials have made it clear that attracting SMEs will be a major component of meeting the company’s growth goals. CEO Henning Kagermann has said that, by 2010, he wants SAP to have at least 100,000 customers, more than double its current customer count of 46,000. Much, if not most, of that growth will come from SMEs, SAP officials say. “We already enjoy a ver y high market share among large enterprises,” says Eric Duffaut, who is in charge of SME sales channels globally at SAP. “But, in order to grow this company, it means we need to go deeper and address customers of all sizes.” SAP is pushing to grow SME revenue from 30% of the total today to 45% by 2010, Duffaut says. Oracle’s goals for the SME space, while not quite as public, are no less ambitious. “We have aggressive growth targets [for the SME space] internally,” says Tony Kender, senior vice president in charge of Oracle’s Accelerate program globally. One indication of The presence of SAP and Oracle in the mid-market is really nothing new. Seventy-five percent of SAP’s customers fit in the SME space, Duffaut says. (SAP defines SMEs differently in various geographies. In larger economies, companies with revenue of up to €1 billion are defined as SMEs. In smaller economies, SMEs are companies with revenue of €500 million or less, according to SAP.) Oracle figures two-thirds of its customers overall are SMEs, with revenue under $500 million per year, Kender says. Now, however, both are making a major push to raise the mid-market stakes. To do so, both companies have realized they need to find a way to change the way they sell and support the implementation of enterprise applications. In the large enterprise end of the market where Oracle and SAP have excelled, selling and supporting the implementation of applications is an expensive, low-volume, highly services-dependent process. SMEs, on the other hand, typically want lower-cost, quicker deployments that don’t require lots of implementation services or end-user training. So both Oracle and SAP have been looking for ways to move to a high-volume, low-touch way to sell and deploy applications for SME customers and to overcome the widely held perception that their applications are too expensive and complex for SMEs. SAP, in particular, suffers from that perception. According to a recent Nucleus Research survey of 29 SAP SME customers and 27 Oracle SME customers, 45% of SAP customers said their deployments had stayed on budget, and only 41% said they had managed ma May 30 2008

Table of Contents Feed for the Digital Edition of Managing Automation - May 2008

Managing Automation - May 2008 Contents Take 1 Award-Winning Shoe-Maker Otabo Alters Course, Shifts Production to China IBM Partners with Universities for Cloud Computing Getting Noise in Production Under Control Incuity Embarks on a Vertical Market Strategy Foundation Intensifies OPC Standard Testing Mailbox Notes PM Roundtable Cover Story: The Business of Going Green Special Report: Night and Day Delivering on Promises Finding the Right Fit for Wireless Driving RFID Product Scan Advertiser Index Next

Managing Automation - May 2008

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