SAP says medium-size business strategy pays off
By Staff -- Manufacturing Business Technology, 10/1/2005 12:00:00 AM
In spite of the skeptics who said SAP could never effectively sell into the midmarket, the software giant seems to be making serious inroads to a space once dominated by smaller, supposedly more flexible and vertically targeted software companies.
Ralf Mehnert-Meland, an SAP director of business development, says the company now has 7,000 customers for Business One, its small-business offering; and another 8,000 for mySAP All-in-One, a product for midrange companies with more than $200 million in revenue.
The success is based on a strategy of using a select channel of partnerships to acquire expertise in specific verticals, and allowing these partners to integrate with SAP. "We made a conscious decision to go to specialists for both applications and resellers," says Mehnert-Meland. "We do what we do best—improve business processes—and still offer a tailored solution for specific markets."
SAP has partnerships in automotive, retail, manufacturing, and wholesale distribution—with plans for others.
The latest example of this strategy is SAP's move into the $250-billion U.S. automotive aftermarket through partnerships with e-commerce solution vendor Praxis Software and Valogix, a supplier of inventory management applications.
Praxis' NetPoint Commerce online selling application and the Parts Planner forecasting and planning tool from Valogix have been integrated with SAP Business One, creating a bundle that addresses key issues for aftermarket manufacturers: data spread over several unlinked systems; tracking large quantities of disparate parts; and a growing demand from customers for an online presence, including ordering capabilities and electronic catalogs.
Scott Toll, sales manager for Translectric, a Jackson, Mo.-based manufacturer and distributor of aftermarket parts for construction equipment, was attracted to the system because of its integration capabilities. "Our biggest problem was we had five or six packages that didn't communicate. [This system] allows us to tie our manufacturing and distribution businesses together," he says.
Toll estimates 30 percent of all Translectric orders will be taken online by the end of the year, and that the company will reduce stock levels by some $400,000. "Even if we get half of that, I'll be happy," he says.
The vendor partnership seems to be a win/win, not only for Translectric, but also for Valogix and Praxis.
"It gives our young company some strong market penetration and access to global markets," says Rich Vaccaro, CEO of Valogix. "It also gives us a lot of stature to be associated with one of the largest software operations in the world."
In September 2004, SAP announced it would no longer sell its own Internet sales software, and instead, Business One customers in North and South America, Australia, and New Zealand should look to the Praxis NetPoint Commerce solution for e-commerce add-ons.
The global vehicle parts market in 2004
| Source: Automotive Aftermarket Suppliers Association |
|
| Top 12 aftermarket countries | $316B |
| U.S. | $176 B |
| All other countries | $21B |
| Global automotive aftermarket | $337B |
| Total original equipment | $811B |
| World parts market | $1.1T |
