Vetco International Inc., a small supplier of safety equipment to petroleum titans such as Exxon- Mobil Corp. and British Petroleum plc, has launched a project whereby it's electronically connecting its product catalogs with the purchasing systems of its much larger customers. Vetco's hope: to capture more business by ensuring that its offerings are just a click away from the oil companies' purchasing departments. "We looked at who we were doing business with and felt there must be a way to integrate with these people," Vetco CIO Jose Barrios says.

Vetco is among a growing number of small-to-midsize businesses that are turning to enterprise software typically used by big business in an effort to project a bigger signature on their customers' radar screens. At the same time, many of the largest companies are pushing smaller suppliers to adopt sophisticated enterprise-resource-planning and supply-chain software to improve the efficiency of their commercial networks.

The result: A small-and-midsize IT market that's expected to grow to $490 billion by 2006, according to market research firm IDC. In response, a number of major vendors, including Hewlett-Packard, IBM, Oracle, PeopleSoft, and SAP, are customizing products and services aimed at helping smaller businesses bridge the last mile of E-commerce connectivity.

"The large enterprise market is saturated," IDC analyst Rebecca Segal says. "The midmarket has been a bit behind the curve, but it's growing faster." The availability of lower-cost yet sophisticated hardware and software is leading some small-and-midsize businesses to adopt new practices to meet growing customer demand to conduct business electronically, Segal says.

Vetco uses SAP's Business One suite, which has modules that automate purchasing, sales, and distribution; sales management; and other business functions. Barrios says he chose it because it's compatible with the SAP R/3 enterprise software used by many of the company's customers. It cost Vetco about $150,000 to implement the software, but Barrios is confident the investment will pay off quickly. "We're empowering our customers to buy our products directly," he says.

Big manufacturers benefit, too, since they can extend supply-chain visibility only as far as their suppliers' technology allows. That often means the view stops when it reaches the underequipped smaller company. Solectron Corp., a $9 billion contract manufacturer for the electronics industry with customers that include Cisco Systems, IBM, and Sun Microsystems, deals with thousands of suppliers. The designer and manufacturer of complex IT products works with companies ranging from sheet-metal and plastics providers to computer chipmakers.

To improve its supply chain, Solectron has joined--and taken a financial stake in--e2open, a hosted electronic marketplace. Still, not all of its suppliers are on board with e2open, CIO Bud Mathasiel says "Some of them are very, very small, and they don't have the IT capability." The main problem is that they haven't deployed automated source- or destination-information systems that eliminate manual processes that introduce errors into the data chain.

The buzz around bridging the gap between small and big businesses has caught IT vendors' attention. SAP just unveiled a version of Business One that includes materials-management capabilities. And along with HP, SAP has introduced a combined hardware, software, and hosted-services package geared toward businesses that generate less than $1 billion in annual revenue. The package is based on mySAP and covers enterprise applications such as customer-relationship-management and ERP software and includes integration, maintenance, support, and training. It's aimed at smaller companies that need to respond to E-business mandates from their larger customers, says Gary Fromer, senior VP for SMB markets at SAP America. "They live in the same ecosystems as some very large companies," he says.

At $325 per user, it's more affordable and gives small and midsize businesses an IT platform that can be scaled up as they grow, the two vendors say. The packages are customized for the consumer-goods, high-tech, and technical-services industries; support for other industries will be added in the future. Available in the United States, the offering will be rolled out to Europe and Asia in about six months.