All Eyes on the SAP 'A1S' Global Announcement Event, September 19th 2007, New York

Implications: The enterprise software industry and business application vendors in particular will be watching closely the upcoming SAP 'A1S' Global Announcement Event in New York on September 19th, 2007. We all know that SAP's much talked about new product 'A1S' is aimed at small and medium sized businesses (SMBs), however it will have implications for all of the business applications industry including SAP's existing large enterprise customers, partners and competitors. SAP 'A1S' has been developed initially with smaller customers in mind, however it is also the opportunity for SAP to start to overhaul and modernize its application and technology platform, go-to-market, deployment and delivery strategies. 

Analysis: Conventional wisdom holds that most large enterprises have invested in some kind of Enterprise Resource Planning (ERP) capability over the past decade and whilst there is further scope for growth in this segment of the market, there is more potential for growth in the small and medium business (SMB) segment. To this effect all of the major business applications vendors have refined their strategies and developed or acquired products and technologies more appropriate to smaller businesses needs, budgets and resource requirements.

It's clear that as SMBs grow they mature from typically home-grown bespoke system developments to more off-the-shelf and industry-standard ERP and Customer Relationship Management (CRM) type applications to give them a platform for further growth and to facilitate working with their own larger customers and suppliers. Obviously, SMBs tend to have limited budgets and very small IT support resources available. It's also common to find a high-level of end-user expectation around ease of use with end-users not willing to put up with difficult to learn and use systems and demanding more modern web browser-based access similar to their favorite news, commerce and social networking web sites. If we add the much more pervasive and reliable Internet infrastructure then it's not a surprise that recent on-demand and Software-as-a-Service (SaaS) vendors such as Salesforce.com and NetSuite have seen relative success. It's even more appealing if you can make a lower financial commitment and pay more flexibly such as per user per month.

From a technology perspective, the gradual adoption of Service Oriented Architectures (SOA) is affording end-user organizations and their software vendors an increasing degree of flexibility in the deployment and development of business applications.

It should not be forgotten that many SMBs have very complex and sometimes unique business process needs requiring sophisticated and flexible business applications - after all the reason that they probably exist is because they fill a niche or specialism compared to larger businesses in their industries.

Given the above it's not surprising that business application vendors generally and SAP, being the market leader, in particular are honing their SMB product, technology, go-to-market and delivery strategies.

The initial short-term starting point for SAP 'A1S' will be SMBs, all of the above drivers and trends apply equally to larger enterprises and they will increasingly look to exploit them.
We could see that SAP 'A1S' is to SAP ERP and SAP R/3 what SAP R/3 was to SAP R/2.
The soon to be named SAP 'A1S' will have significant medium to long-term implications for the business applications market generally and the SAP market specifically.