Partners are reporting a surge of interest in SAP Business One, its solution targeted at small businesses. Freya Purnell found out why customers are jumping on board.
SAP’s Business One (SAP B1) solution has been on the market for more than a decade, but it seems improving business conditions, as well as investments in product development by SAP, have breathed new life into the product. There are now more than 45,000 customers of the solution globally, with a significant number buying the product over the last three years.
In March 2012, SAP began offering the SAP Business One OnDemand solution to provide small businesses with a cloud-based ERP solution. At the time, the company said it was designed for customers seeking to implement their first holistic ERP system.
More recently, customers also have been able to choose a version of SAP Business One powered by HANA, with version 9.0 on HANA released in March. The capabilities of HANA have enabled features in this version only possible with the use of in-memory technology, such as the rapid analysis of structured and unstructured information. The predictive analytics capabilities also enable SMEs to optimise business planning, operations, and decision-making, while gaining insights into new customer trends and behaviour.
But despite these rolling improvements, as well as the addition of other functionality such as mobile-enabled services through the SAP Business One app, it is only really this year that partners have seen a surge of interest in B1.
Sarah Poole, director, Enabling, says that while 2014 got off to a slow start, the second half of the year has delivered considerable activity.
“I think we are currently seeing a number of people back in the buying cycle and out looking for ERP systems again. I think there is some great functionality around Business One, particularly around mobile, that is leading the way on a lot of the opportunity we are seeing come through at the moment,” she says, adding that there is strong brand recognition in the small business space, ensuring B1 is definitely on the radar when new solutions are considered.
Tim Charman, business development manager at NZ SAP partner REALTECH, agrees, saying that while B1 has suffered from a lack of product awareness in New Zealand in the past, consistent marketing has helped turn this around, creating a more robust sales pipeline. Charman reports consistently strong customer interest in B1 during 2014, except for a quiet period around the time of the NZ election.
He says that this interest level is also translating to decisions to move forward with a B1 implementation – which isn’t always the case.
“Sometimes we get a lot of interest and no decisions, or quite often, the decision is to do nothing, because [the business] thinks in a particular climate it’s not worth it or too expensive, but now that doesn’t seem to be the case,” Charman says.
Part of this confidence in investing in new solutions could be attributed to better economic conditions and a need to position for expansion, as the latest Five-Year MYOB Business Monitor report has shown that New Zealand’s small and medium businesses (SME) are experiencing their highest growth rate in more than five years. In the latest survey, released in September, almost twice as many NZ businesses reported revenue growth (39 per cent) as did losses (19 per cent).
The picture isn’t quite as good in Australia, with only 21 per cent of Australian SMEs reporting growth. The proportion reporting falling revenues, however, has declined from a high of 41 per cent in May 2012 to 31 per cent in September 2014.
UXC Oxygen, having evolved its business over the last 18 months, believes much of the interest in B1 stems from the choice to deploy on-premise or in the cloud.
Patrick Saundry, general manager, SAP Business One solutions, UXC Oxygen, says, “Traditionally, we would have always positioned an on-premise sale. More recently we have developed a very strong focus around cloud, and I would suggest that our strength is that we can propose both on-premise and cloud solutions, which makes for the ultimate buyer experience. I think that it’s allowed us to take a unique competitive position against traditional ERP providers and emerging cloud partners.”
For SMEs, the benefits of the cloud-based solution are that it can be connected to existing solutions, and requires a much smaller footprint internally.
“Our customers are holding us even more accountable to the delivery and management of the solution moving forward in a managed cloud environment,” Saundry says.
Interestingly, the cloud option isn’t resonating as well with NZ customers, according to Charman.
“I’ve had three CFOs in a row that said they wouldn’t entertain having a cloud-based system, preferring it on-site or at the most, hosted somewhere locally. Some of it is doubt about the security or control of their own data,” he says.
Charman believes another factor is that the cost equation is still not a slam dunk for cloud.
“If you are going to implement the system and keep it for just five years, then you are probably still better off to have an on-premise solution.”
Also driving demand for B1 is that it is simply a better solution than it used to be, with SAP’s investment in product development paying off, both Charman and Saundry believe.
“SAP’s product maturity is critical to the buying decision. The confidence in the consultant and customer delivering to the outcome is our highest priority, but most importantly the customer can tangibly see the improvement in the product and how much better it is than many of the other products in the market,” Saundry says.
Source of demand
The strongest demand for B1 at present seems to be coming from the manufacturing and wholesale distribution sectors, and service-based organisations.
Generally new B1 customers either haven’t implemented a fully integrated ERP system before, or they have an ageing system.
“Most of the business we have got this year comes from companies that are experiencing growth and they want to move up from something like MYOB, because it doesn’t give them the auditability or the good platform for growth,” Charman says.
Poole reports a shift in interest from only the core finance aspects of the solution, which was the main focus two years ago, to its integration with CRM.
“The market really does seem interested in the extended capability of their core finance system and how they can get additional functionality for the rest of the business, so the sales team or the customer services team are also able to use the same platform to perform their role. Certainly across our customer base we are seeing that interest in CRM as well,” Poole says.
For service-based organisations, Saundry says a common theme is the need to integrate the solution to a much larger labour force or connected network.
“For example, the desire for mobility, the desire for work portals, the desire for automation, the desire for business process outside of ERP have become increasingly important to them.”
Are you ready for B1?
Investing in SAP B1 is not a trivial matter – with licensing and implementation costs and time to have it configured properly. And while there might be a few rules of thumb about how big businesses need to be to really get the value from the system, the maturity of the organisation in other ways may be more important.
“I think the key for us is the customer must understand the value of IT and business systems in their business strategy and their growth. So they really have to understand that investing in systems like SAP Business One actually is going to add a huge amount of value and enable them to take that next step, because if it is only seen as a pure cost centre and that every single dollar that goes into implementing a system is taking away from something else they could purchase in the business, that’s a challenge,” Poole says.
Saundry agrees.
“You can’t be too small that it’s going to swallow you up and consume all your time. If you have got your business to a point where you have an established market, you have an established process and that end-to-end ERP process will add significant return on investment to your bottom line, then you are on a winner,” he says.
Common benefits
For those organisations that do make the leap, across sectors there are some common benefits – such as strong audit trails, solid reporting, and having a single data entry point, which improves accuracy of information.
Other benefits can be increased productivity through better process design, and reduced costs through more efficient purchasing.
Of course, the core benefit of integrated systems – providing a holistic view of all aspects and divisions of a business – is certainly one that that B1 provides, according to Poole.
“It’s that central version of the truth where the sales team member is looking at the exact same information as the financial controller, or the warehouse manager, or the MD who is travelling around. Suddenly all parts of the organisation are able to be connected in one place, and that certainly makes for far better and faster decision-making.”
And as small businesses continue to try to do more to stay competitive, the ability to deliver these benefits bodes well for B1 into the future.
This article first appeared in Inside SAP Yearbook 2015 (published November 2014).
