Shattering the SAP myth

By Michael Burns published in the CAmagazine August 2004

These days the biggest accounting software battles are being waged over small and medium-sized businesses. You probably know Microsoft scooped up Great Plains and Navision, and has since become a major force in the SMB market. Best has also been on a buying spree, acquiring ACCPAC and BusinessVision. Microsoft and Best have plenty of good competitors out there, but none as fierce as the one that entered the Canadian SMB market in November 2003: namely, SAP.

Target market
SAP wants to shatter what they consider the SAP myth - i.e., that their systems are only for the largest of companies and are too complicated, too costly and take too long to implement. SAP says even their existing suite of solutions "mySAP Business Suite" does not deserve the bad SMB rap. Yes, it's for large companies, but they claim 38% of their customers bring in less than $250 million. SAP now has two more offerings for SMBs:

1. MySAP All-in-One is targeted at companies with revenue of $100 million to $250 million. It's the mySAP Business Suite scaled down and preconfigured for specific industries.
2. SAP Business One is meant for companies with revenue of $5 million to $100 million. SAP Business One is not mySAP light - it is a completely different solution acquired from an Israeli software company called TopManage Financial Solutions Ltd. in 2002.

Here, we will focus on SAP Business One.

Cost
The list price for SAP Business One is $4,250 per user. SAP claims it takes 25 days on average for implementation; the average cost of an implementation, including licence and services, will be between $50,000 and $75,000 -- depending on the number of users.

The product

Assets	Liabilities
Extensive functionality. SAP Business One is more than an accounting system. It has all the basics, including financials, distribution and light manufacturing. It distinguishes itself by also including customer relationship management, work flow and human resources.	With SAP Business One you get it all whether you want it or not. The only exception is that you can get just the CRM component without the rest.
The vendor. SAP is the biggest ERP software vendor in the world and is committed to making SAP Business One a success. It has 60 developers - mostly out of Israel, where the system was first created - enhancing and maintaining the system. It has 40 product managers in different countries ensuring that local requirements are understood and built into the system. SAP Business One is integrated with its big brother and if you outgrow SAP Business One, the company claims you can easily upgrade.	The question is whether SAP will ever convince people that its systems are suitable not only for the Fortune 500 but also for SMBs.
Architecture. The system now supports the Microsoft SQL Server database and the Microsoft Windows operating system. Soon it will also support IBM's DB2 database. By providing SDK (software development kit), SAP makes it easier to integrate with other systems.	SAP Business One is not yet a web-based system, which provides a number of advantages (including better remote access). SAP will offer a web-based version in the future. In the meantime, a product such as Citrix is a good way to improve remote access.
Customer relationship management (CRM). Business One's CRM system includes contact management, salesforce automation and a very impressive service management system that includes dispatching, contract management, warranty tracking, knowledge management (track problem resolution) and billing for services. SAP Business One CRM is not an add-on - it seems to be interwoven throughout the system, making the terminology commonly used to describe CRM (as front end) and ERP (as back end) obsolete.	To handle marketing automation in Business One, you will require integration into Outlook.
Financials. You get up to 10 segments, each with up to 20 characters. The system also offers analysis codes (project base and cost centre) that can be attached either to account segments or transactions. Analysis codes are a great way to keep your chart of accounts slim. Other financial features include allocations and unlimited budgets.	The standard reports are fixed and there is not a lot of flexibility unless you use a third-party product called Vision from Lasata Software. Also, Business One does not support inter-company transactions - although this is scheduled for later this year. Consolidation functionality is scheduled for release in 2005, but is currently supported via Lasata Software. Another limitation is that there is a maximum of two analysis codes.
Distribution. Business One includes quotes, returns, flexible pricing (multiple price lists, contract pricing, quantity breaks, group pricing, etc.), multiple warehouses, serial number tracking, landed cost, alternative items, vendor and customer item number cross-referencing and an automatic summary wizard that allows you to summarize multiple shipments onto one invoice.	Business One does not include Available to Promise which allows you to see a time-phased view of what items are coming or going, and when. SAP Business One provides just the basics for the warehouse. If you want multiple bin locations, bar code scanning, radio frequency (RF) updating and optimized picking, you will need a third- party product such as Radio Beacon or N'ware. The automatic summary wizard seems useful but at this point it is not easy to link each line on the invoice to the customer's PO.
User interface. It looks good and relatively easy to use. Features such as drag and relate make it easy to find additional information about anything.
Customization. You can add fields and even tables of information. These changes are outside of source code so that upgrades from SAP will not require you to redo the customization.
Work flow. With work flow you are able to route transactions such as requisitions to the appropriate person for approval. You can also create alerts for cases where, for example, inventory falls below a threshold.
Manufacturing. With SAP Business One, you get what is often called light manufacturing, which includes bill of materials, work orders, kits and assembly. With the next version scheduled for August 2004, the manufacturing system will include many enhancements, including material requirements planning (MRP) and back flushing.	If you want more sophisticated manufacturing such as tracking labour on the shop floor, you will need N'ware.
Report writer. This has many features, including the use of wild cards in the launch of a report so that you can select a subset of the information based on many criteria. It also has good drill-down capability.	The report writer is proprietary. Many of the other accounting systems have chosen industry standard tools such as Crystal Reports for reporting. With SAP Business One, you can still use Crystal Reports to create new reports.
Enhancements. Several significant enhancements are scheduled for release during 2004.	Although it's great to see new functionality, it can be difficult to maintain high levels of quality control with so much change.
Install base. SAP Business One has more than 3,500 customers worldwide.	Not surprisingly, there were no Canadian references at the time of writing. Since a number of implementations are in progress, you should be able to speak to a Canadian reference by the time of publication.
The resellers. SAP has taken the approach of letting resellers (also called VARs – value-added resellers) implement the system. SAP has already signed up 18 resellers across Canada. The company has high standards, so the resellers will probably be very competent.	In the beginning, the resellers will be learning the tricks and traps that accompany any system. However, SAP is backing up the implementation with direct SAP involvement at no charge to the customer. When the resellers are ready to do it on their own, SAP will still be involved in a project management capacity.
Fast implementation.  SAP claims SAP Business One can be normally implemented in 25 days.	Given all the functionality and flexibility of the system, it seems a stretch to complete an implementation in 25 days.
Payroll.	SAP does not offer Canadian payroll but is expected to offer integration with third- party solutions.
Cost. The costs for SAP Business One are competitive with those offered by other vendors competing in the SMB marketplace.	When looking at costs, you should consider the total cost of ownership (TCO), which includes licence, maintenance, hardware, communications, services and internal costs. There may be additional costs, including higher implementation fees if the 25-day estimate is low or if Citrix or payroll is required.

Bottom line
It's still early days for SAP Business One in Canada. Be prepared for a major marketing campaign aimed at winning you over and shattering the SAP myth.