Mississauga-based Lynch Fluid Controls was one of the SMEs selected by SAP to talk about their business and use of SAP solutions at the SAP event.

NEW YORK — Last Thursday in New York City, SAP held its fourth global SME summit, an event the company puts on to demonstrate its commitment to smaller companies, with many of the company’s senior leadership in attendance.

“We are only known for big companies but 80 per cent of our customers are actually small companies,” SAP CEO Bill McDermott told the event. “60 per cent of GDP and 90 per cent of job creation come from SMEs.” SAP has a fairly loose definition of the SME market, recognizing that while it is nominally the sub-1000 space, with a billion in revenue or below, you can have a thousand person construction company with minimal IT needs, and a 10 person hedge fund with high IT needs.

SAP’s recent success in the SME space stands in stark contrast to several failed initiatives in the last decade to penetrate this market, which were unable to overcome SAP’s reputation among SME customers for selling expensive, complex products.

“What changed that was in part better SME products,” said Kevin Gilroy, senior vice president and general manager of global indirect channels and SMEs. “The Business One product is a very powerful product. SAP ByDesign and Crystal Reports are also built and designed for the SME customer, not enterprise products jammed downstream.”

In addition to having the right products, Gilroy said SAP got serious about building a strong channel team.

“Bill brought in a lot of SME-focused talent, who understand transactional selling and the channel,” he said. “The result was a much more robust channel. With channels, there are always some bumps in the road, but in the last five years our channel has become very powerful.”

“VARs are the main part of our partner ecosystem,” said Anton Feig, COO, Ecosystems and Channels in North America. “We have been recruiting a lot of new ones for the cloud, and our inside sales managers work with them. In North America, we have also invested strongly in the channel business this year, and grown the channel business organization further.”

“You cannot talk about SME without talking about the portfolio,” said Rodolpho Cardenuto, President SAP Global Partner Operations. “We are continuing to develop portfolio for the SME. He noted that while SAP Business Suite and SAP Business Suite on HANA are direct products, the rest sell through the channel.

McDermott issued several clarion calls during the summit for SAP to make their solutions even simpler for SMEs.

“We aren’t trying to dummy down the sophisticated things that SAP does,” he said. “However we are going after complexity as the biggest enemy of business. You have to fight that complexity each and every day… If we can radically simplify business, we change the world.”

Channel chief Gilroy said SAP still needs to get better at both the procurement and consumption experiences for smaller businesses.

“The procurement experience and consumption experience need to be better every day,” he said. “We need to fine tune our channel to understand specific industries. SMBs tell us their procurement experience needs to be easy and flexible.”

“There are still too many management layers, too much separation between the customer conversation and boardroom conversation,” McDermott said. “Why do we have to fill out expense reports today? Why can’t ERP do this?”

In a roundtable of SME entrepreneurs which dominated the morning at the event, participants discussed the SAP solutions they used and how they came to use SAP

Gavin Lynch, Chief Information Officer at Mississauga-based Lynch Fluid Controls, which makes custom hydraulic manifolds for motion control systems, initially thought SAP was too big for them, although their VAR partner, CONTAX, with whom they have a strong relationship, helped them implement SAP Business All-in-One on-premise.

“We looked for a new ERP system in 2007-8, but that was shelved by the recession, and when we revisited it in 2011, we took one last look at SAP,” he said. “Up to that point it was too big for what we were. But looking at tier two solutions which were more in our budget, we didn’t think they were going to be a future-proof decision. Some software packages we were looking at got acquired, and we didn’t want to have a solution that got shelved if it was acquired, and that won’t happen with SAP. We also didn’t want to have buyer’s remorse in a couple years with a tier two solution.”

Lynch said that they are also planning to implement SAP SuccessFactors cloud HR Suite.

“We have an aging workforce, with an average age of 45, and have to deal with an educational curriculum change in 1990s where they moved away from a hands-on to a service-based curriculum,” he said. “Unfortunately the world can’t run just on services, and there is a constantly shrinking pool of technically educated people, so we will be fighting for them to replace people as our workforce ages. We are looking to implement SuccessFactors in the next 12 months to avoid getting in a position where we have five people retiring and no one to replace them. It is in the discovery and evaluation phase now, and is something we can’t live without.”

Lynch also said that they may implement SAP HANA, but aren’t there yet.

“Before we can implement HANA, we need to collect data on data lifespan, to be able to have access to it in as close to real time as possible,” he said. “We have some ramp-up to get to before we can make use of it.”

Meg Gill, President and co-founder of LA-based craft brewer Golden Road Brewing, acknowledged that their investment in SAP Business One was a big investment for their 40 person company, but said that it makes sense long-term. Their VAR partner, Orchestra Software, designed a custom solution for them, OrchestratedBEER, based on SAP Business One.

“Our previous brewmaster said getting SAP was crazy, but our new CFO has worked with SAP and knew how big our long term goals were,” she said. “It’s a big investment now but it will pay off. Bringing it in when we were small and having the user base embrace it as they did is a tribute to our CFO. Moving to HANA will help us integrate all the distributor data as we move to multiple locations. The platform we have is great for the current brewery, but as we add more locations and restaurants we can just use one platform for the entire business.”

Gill said their goal was to use SAP Business One to get beer off the shelf in 30 days as opposed to the 60-90 days which is common in the industry.

“Freshness means getting it off the shelf as quickly as possible, which requires putting beer in the right places in the right accounts to move it quickly,” she added. “For next year, we will integrate a VIP system which distributors use to track retail level depletions to track retail SKUs selling in local areas. It needs to be very granular to get the sales team to sell the right beers and put them in the right position on the shelf.”