Gartner is widely regarded as the world’s pre-eminent research organisation. That is not my opinion but that’s for another post. SAP is widely regarded as the world’s leading business applications vendor. To date, all SAP efforts to penetrate the small business (SMB) market have failed.
Imagine my surprise when I came across this email flyer that brings vendors and channel players together under the umbrella Small Business Vision – a Gartner Event. SAP is a bronze sponsor and the only apps vendor I recognised among the pretty thin list of participants. None of the new social computing companies as far as I could tell. Certainly none of those earmarked as the up and coming Web 2.0 candidates. (corrections welcomed for my laziness.)
Ok – I am cynical and given what I know about Gartner costs (think instant nose bleed – I know – I was once flown super business class to New York, housed at a totally mad deluxe Manhattan hotel with personal limo and driver and paid $5K a day for the pleasure. At the time – 2001 – I was very low down the analyst pecking order.), it’s hardly surprising that any of the bootstrapped Web 2.0 companies would bother when they’ve got ready made social networks to hand? Like tech.memeorandum. But there’s a flip side.
SAP knows it has to move downstream to ensure it is able to grow revenues under its current business model. Despite a lot of work going on inside the company, SAP is wedded to the ‘on-premise’ mindset, which immediately implies upfront cost heavy apps – which are no longer cool. In any market. SAP also has a definition of SMB which starts at revs of $250 million. (last time I looked) Which kind of says it.
This makes more sense if you believe SAP is quietly redefining its market segments to support appropriate pricing in what is the UK’s mid-range. My reasoning is simple. SAP has most, if not all, of the technology to offer a seriously robust modern collaborative platform for small business segments. Rather than individual companies.
Consider what that might mean for UK public sector, where Oracle dominates. What might that mean to 3rd party manufacturers in automotive – especially as SAP already controls large lumps of that market? Or in any of the other 23 industry segments where it has deep domain expertise?
To achieve that, SAP has to rethink the business model but I think it can be rationalised through the concept of shared services. If SAP was able to re-engineer its business model to reflect this hybrid reality, then imagine how many other vendors would be faced with innovation against which they could not hope to compete? I won’t name names but I can think of five vendors, whose total UK revenues in this segment are around £160 million that would be at immediate risk. That’s not a number to be sneezed at. Especially when you realise just how good SAP has been in partnering with consultants it made extremely wealthy and powerful. Like Accenture.
So now I’ll let you into a secret. If SAP could decouple more of its processes so that it could in turn easily assemble the components necessary to not only run my business but also seamlessly mesh with my business ecosystem, I’d give it very serious consideration. Especially if it was run as a shared service. Can you see the potential for a 100 fee earner practice? How about a 250 fee earner practice? The crunch would come in the pricing model where SAP enjoys nose bleed entry fees – at list. But I don’t think it has to. If it’s not in the plan then for goodness sake Jeff – get SAP with the programme. the cost would be a fleabite out of SAPs R&D. Why do I say that? We need what SAP has the potential to offer. (My other clients will kill me for saying this but hey – it’s a point of view based on speculative thinking about a trade show. I know it’s a thin starting point.)
In the meantime, I can only assume SAP and Gartner must know something to which the rest of us are not party. Yet.
Technorati Tags: Gartner, innovation, Oracle, SAP, tech.memeorandum, web 2.0
