Strategic Moves for SAP into the Mid-Market

Implications: SAP must more successfully penetrate the software market for medium and small businesses as the large enterprise software market continues to mature.

This mid-market focused push requires effective channel to market, and specific products for specific market niches.

SAP's new A1S product is aimed at filling in the holes that its existing mySAP Business Suite, mySAP All-in-One and Business One can't reach.


Analysis: SAP is facing an increasing number of challenges for it to maintain its leading and dominant position in business applications.

One of the main challenges is SAP's presence in the mid-market. SAP has had mixed success in the mid-market over the years and is once again in the middle of an internal reorganization with Hans-Peter Klaey taking over what SAP calls its SME channel and the departure of Donna Troy who previously headed up SAP's efforts in this area.

Like most markets, you generally need specific products for specific segments and SAP has found this to be true for certain segments of the mid-market - hence the announcement of A1S, SAP's new SOA based product. It's clear that SAP's mySAP, mySAP All-in-One and Business One products are not always relevant to smaller organizations; A1S will help address this as well as giving SAP an on-demand like offering to compete against salesforce.com and NetSuite.

SAP is setting up a separate 'business' for A1S hence the extra costs over the next two years; A1S will be sold via the Internet and telesales; a different approach to the traditional sales cycle for large enterprise and upper mid-market segments.