Managing Automation - May 2008 - (Page 32)

[ SPECIAL REPORT ] snap shot 18% ERP LICENSE REVENUE GROWTH BY CUSTOMER SIZE 2005-2006 Less than $30 million $30 million-$250 million $250 million-$1 billion 14% Over $1 billion 18% Source: AMR Research aspects of their SME strategies differ markedly. Take their product strategies, for example. SAP has decided to buy and develop enterprise application suites that specifically target SMEs. Oracle, meanwhile, has elected to offer SMEs the same core applications that it sells to larger companies — E-Business Suite, JDE Edwards, PeopleSoft, and Siebel — augmented by the Accelerate tools and extensions. “We believe that one size does not fit all,” SAP’s Duffaut says. “We are addressing the market with three different solutions: Business One, All-in-One, and Business ByDesign.” Business One, SAP says, covers the core operations — financials, sales, customer management, and operations — of small enterprises with up to 100 customers. Acquired by SAP in 2002 from TopManage Financial Systems, Business One is designed to be implemented in less than one month. SAP’s All-in-One suite, based on the company’s ERP 6.0 product, is targeted at companies with up to 250 employees, and it can be implemented in four to 16 weeks, SAP says. Unlike Business One, All-in-One includes industry-specific, pre-configured business scenarios and verticalindustry extensions provided by SAP and partners. Also, unlike Business One, All-in-One uses SAP’s NetWeaver services-based infrastructure. Business ByDesign, SAP’s newest product for SMEs, targets companies with 100 to 500 employees and is im27% plemented online as an on-demand service. SME customers subscribe to Business ByDesign at $149 per user per month. While SAP officials acknowledge that Business ByDesign’s target market overlaps that of All-inOne, the new on-demand offering is aimed primarily at organizations that may lack the internal IT resources needed to deploy and support an onpremise enterprise suite, but need more functionality than spreadsheets can provide. “With Business ByDesign, you can’t go as deep in terms of functionality as you can with something like All-in-One, but you can try before you buy, and the deployment is as short as a few days,” Duffaut says. Compass Pharma Services LLC, a contract packaging manufacturer serving pharmaceutical companies, is just the type of SME for which SAP created Business ByDesign. Sixteen months ago, Caraustar Industries Inc. sold the small company to its management. Systems, networks, and an IT staff weren’t part of the deal, so Compass needed to find en- terprise applications it could deploy quickly and at minimal cost. Rather than hire an IT staff, evaluate software packages, and wait for deployment, Compass Pharma President Kevin Flanagan decided his company would be among the first to sign up for Business ByDesign. The company switched on Business ByDesign for its financials, order management, inventory, production management, and customer management in early February. “This makes a whole lot of sense for a small business, like us, that is essentially starting from scratch,” Flanagan says. Compass is still waiting for SAP to customize Business ByDesign to meet some of its specific requirements, Flanagan says. For example, the company needs to manage its inventory by batch, lot numbers, and expiration dates. Flanagan expected Business ByDesign to support that effort in May. Meanwhile, Business ByDesign is meeting Compass’ basic needs, Flanagan says. “It doesn’t have everything that the controller would love, but it has things that the sales administrator can’t believe he’s getting,” he says. “So everybody had to compromise a little.” Rather than creating discrete products for specific SME niches, Oracle is essentially repurposing its large enterprise suites for the SME market, using the Accelerate tools and extensions to make them easier to configure and deploy and tailored for vertical industries. Unlike SAP, Oracle doesn’t segment its products for SMEs of different sizes. Instead, the company attempts to leverage vertical industries and geographies where each Oracle product has a healthy installed base. JD Edwards, for example, has a strong following among agribusinesses in Latin America, so Oracle and its partners tend to pitch that product to agribusiness SMEs there, Kender says. Often, Oracle officials will suggest which product to propose to which SME on a case-by-case basis, resellers say. “We allow mid-sized organizations to use the same software that GE uses,” Kender says. “We chose not to create separate software systems for down-market environments that end up not having the functionality that customers need We allow mid-market companies to only buy and pay for the software bundles that they need.” The advantage with Oracle’s approach, Kender says, is that, as SMEs grow, they won’t need to swap out enterprise suites built for smaller companies. In some cases, that can happen surprisingly fast. Take Graceway Pharmaceuticals, which launched in 2006 as a seven-person start-up. The company quickly grew ma May 32 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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