Business Management

SAP bids to outfox NetSuite with SMB push

When Edward ‘EJ’ Jackson first discussed plans with his team for a new SAP business management program for small businesses he displayed a sketch of the respective market capitalisation values of cloud application pioneers NetSuite and While NetSuite has been an undoubted success, it is Salesforce that has become emblematic of the cloud application era and the company has been rewarded with soaring revenues and a valuation to match.

Jackson, an ERP and startups veteran, wanted to make the point that you can take off quicker if you swerve the heavy lifting of coding software with deep accounting and back-end ERP capabilities. That insight informed SAP’s latest attempt to woo small businesses, SAP Anywhere, a pure cloud offering designed to provide sales, marketing, e-commerce, analytics and inventory management to companies with up to 200 staff.

Of course, the idea of SAP touting another offering for smaller businesses is bound to meet some scepticism. The German giant has been knocking at this particular door for many years with only limited success as companies like NetSuite and Sage have enjoyed solid growth. Jackson admits that SAP’s record outside its enterprise heartland is spotty but says that the SAP Anywhere approach is very distinct from previous efforts.

In what ways?

This is a new, ground-up, public SaaS offering with a very clear demographic: the micro-business that has grown, or is growing, to become a bona fide business, for example selling via multiple channels and using tools to sell over social networks and analyse buyer behaviour to make appealing offers.

With developers in China and Europe, mostly recruited from outside the SAP empire of acquired cloud businesses, Jackson says SAP has been able to build a very contemporary, social and mobile-friendly service where companies will be up and running in days and users can quickly get to key data. And as mentioned earlier, SAP Anywhere is very much focused on the front-office because, as with the example of Salesforce, “that’s where we see the hockey stick opportunity for growth”, says Jackson.

On previous SAP pushes, Jackson says there have been some big inroads but also some education.

“There’s definitely lessons learned,” Jackson says. “The company has scar tissue [and] we’re not a dominant leader in the front-office space.”

But by being able to address today’s challenges “with a white sheet of paper” two years ago, SAP has been able to come up with a modern solution in the same way that NetSuite and Salesforce disrupted bigger rivals when they started in the late 1990s. Also, SAP benefits from being part of one of the world’s largest software enterprises. “Even though [SAP Anywhere] is a startup, it’s a fat startup,” as Jackson puts it.

Jackson sees NetSuite potentially leaving room in the market as the Californian company collects more large customers.

“NetSuite has been in the market a long time but they’re moving upstream,” he says. “They’ve had an accountants’ view and then the e-commerce is an extension to that core. We’ve done the opposite. Making ERP your first focus takes a considerable amount of time.”

Toby Davidson, VP of the SMB solutions group at SAP, is himself a former NetSuite employee and he suggests that while NetSuite offers a powerful service it has become tougher for firms to deploy.

“If you look at NetSuite, the foundation is [ERP] and it’s then extended to commerce and the front office,” Davidson says. “The cost of implementing the rest of the application is not an insignificant cost.”

NetSuite did not immediately reply to a request for comment.

It’s a very plausible strategy but can SAP execute?

Even here, the company is interesting in its approach. It launched first in China last year, launches today in the UK and plans a US launch in May. China went first because Jackson says that it has become an earlier adopter of new technology than the US.

Although he refers often to NetSuite, Jackson says the far bigger opportunity is in addressing small companies with not much more software in-house than an accounting system.

“’Kill NetSuite’ is not really our rationale,” says Jackson. “The market is so big and it’s more about us having the best solution to get in front of as many customers as we can.”

So what does success look like?

Jackson says he wants to have thousands of customers this year and China already provides 500 of those. The service will be mostly sold direct with some assistance from resellers and there are three pricing packages. Further out there may be the chance to appeal to other types of organisation and add services to what Jackson says is a purposely extensible architecture. One near-term opportunity might be franchisees where small companies need to plug into services of large organisations.

SAP has taken various approaches over the years to addressing the huge market for small businesses. This one looks the most convincing yet.


Related reading:

No longer fugly, SAP makes a surprising UXP splash
Is SAP back on track?
SAP takes aim at Salesforce



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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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