SAP Makes Small-Business Push in Asia

By Winston Chai
Special to CNET News.com
May 9, 2003, 8:16 AM PT

Signing up loyal resellers is crucial for SAP, which is coming to the market after rivals such as Microsoft, Oracle, Siebel Systems and PeopleSoft.

To be funded jointly with its technology partners including Hewlett-Packard and IBM, SAP's planned investment will cover areas such "training, development of customized solutions, marketing, as well as cash incentives for our local channel partners", said Sun Whye Mun, SAP Asia-Pacific's director for small and medium-size businesses.

At the Singapore launch of its All-in-One set of business applications on Wednesday, the German software giant and its allies said they plan to invest $1 million over the next two years in each reseller they sign up.

To date, SAP has inked four such deals with IT services providers in Singapore: Encore Applications Services, Genovate Solutions, ISS Consulting and Unisoft Infotech. But SAP hopes to have six more by year's end, each focusing on a specific vertical industry, said Sun.

"For other parts of Asia, investments will be similar to what we have announced in Singapore," he added.

The company's All-in-One program, an effort to target businesses with less than $100 million in annual revenue, was already launched in Germany and China last year. The products under this umbrella, which vary by geography, are tailored to suit vertical sectors such as retail, chemicals and heavy equipment.

Instead of selling directly to customers, which has traditionally been SAP's practice for larger clients, these new channel partners "will be the face" to smaller customers, he said. "They will be responsible for solution development, implementation, as well as after-sales support."

While these vertically focused applications have already been customized by SAP, the resellers will customize them even further to suit the needs of individual customers, such as the adding or removal of specific functions and processes, Sun said. "The solutions will also be branded under the names of our... channel partners."

"It's critical that we don't go with market with a generic solution as a lot of business practices in the small-business market are unique," he added.

In Singapore, SAP's small-business package starts at $114,000 and is for Wintel computers only. The package supports 10 users and can be implemented in 150 days or less, though SAP said the user base can be increased to match the size of large accounts.

This stands in contrast to SAP's staple line of high-end Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) applications, which can cost millions of dollars and often involve lengthy deployment schedules.

"There are no hidden costs in our All-in-One solutions. The hardware and services needed to run them have all been factored in. Batteries are included," he quipped.

To lighten financial burdens in the short term, HP and SAP have also introduced a "buy now, pay later" scheme which gives small and medium-size businesses a repayment period of up to three years.

SAP's shift from large corporations to smaller businesses mirrors a path taken by most other software behemoths as they seek to broaden revenue beyond a saturated base of large multinationals.

Oracle also introduced a similar program in Singapore in November 2001 with its FastForward suite of applications, a set of shrink-wrapped e-business software. Microsoft also entered the fray with the acquisition of Great Plains Software and Navision and the launch of a small-business CRM solution earlier this year.

The rising interest in the smaller businesses isn't surprising; they are now one of the biggest IT spenders in Asia-Pacific.

According to market researcher IDC, technology spending in the regional small and medium-size business market grew by 4.1 percent last year, beating out other segments such as large corporations, governments and the education market. The small/medium segment spent more than $28.4 billion on IT in 2002, accounting for nearly half of the total tech spending in Asia-Pacific, IDC said.