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Software // Enterprise Applications
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8/21/2003
06:46 PM
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Big Ambitions

Small and midsize companies have the same technology needs, and the same goals, as large ones

This time, the vendors say, they're more in tune with the small and midsize market. Many have revamped their applications to offer modular but integrated processes. PeopleSoft, for example, went back to its first 1,000 customers in this sector and documented the functions they used and, from that, built a blueprint for its products. These products now are configured by business processes--such as the procurement-through-payment cycle--automated based on best practices, and delivered on a fixed-cost basis.

Focusing on business processes can help small and midsize businesses become more efficient and adaptable to meet their large customers' demands. "They need to improve the processes involved with sell-side E-commerce, problem-resolution management, inventory availability, fulfillment, and the quality of products and services delivered," says Carl Lehmann, head of the midsize research practice and a VP at Meta Group.

Eric Parrott, senior manager of business systems at consumer-appliance maker Tilia Direct Inc., likes the fact that best practices for discrete manufacturing are built into SAP's applications. It's operating through the same retailers as bigger manufacturers do, and neither retailers nor consumers cut small manufacturers any breaks if, for instance, products aren't delivered on time. "The software is so sophisticated, so many business processes are built in, and you can go with the best way to do something," Parrott says. Tilia, a $200 million-a-year company, will wrap up its SAP deployment in January.

With best practices and processes built into the software, companies can limit the time and expense of implementations and upgrades. When Kvaerner Power Inc., an Aker Kvaerner subsidiary that makes power boilers and has $500,000 in yearly revenue, decided to upgrade its Oracle applications a few years ago and move to a hosted model, it redesigned all its business processes, taking only about a month using the software's built-in business practices, says IT director Woody Muth.

Not all small and midsize companies want to have another party host their applications, but neither do they have the time or business-technology resources to undertake conventional full-scale deployments on their own. "We have a small core of people in touch with everything the business does," says Crestron's Feldstein, whose company has an IT staff of 20. Large companies can usually assemble a core team of business-process owners to dedicate to an enterprise-applica- tion-deployment team, but in smaller companies, Feldstein says, "the business suffers if you take [those people] offline."

That's why most enterprise vendors have worked hard to strengthen partnerships with systems integrators and service providers that can further enhance their midmarket offerings with rapid deployment programs that cut the time and costs of implementing the technology. For instance, SAP counts a few hundred partners worldwide for its All-In-One business suite for small and midsize customers, ranging from brand names such as IBM to smaller services providers such as Osprey, a division of NIIT Technologies, which Crestron hired to implement a customized version of the All-In-One software for electronics manufacturers.

"Traditionally, the expense of [implementing] something like SAP would be beyond the reach" of companies such as Crestron, says Osprey president Tom Wilson Jr. "They could recognize the benefits, but it wasn't even a consideration."

The issue of who will be a trusted partner for an enterprise-applications deployment is clearly a concern for many smaller businesses. Crestron considered using a larger IT services organization, Feldstein says, but "it's hard to see larger companies' sincerity when all of their reference clients are huge conglomerate-type companies." One provider pitched Nike Inc. as a reference account. "They felt that telling me they did Nike makes me want to use them, as if I didn't recognize the difference in [required] skill sets--and as if they didn't recognize it, either."

Some global systems integrators admit they're not always the best bet. Without a certain scale, says John Matchette, a partner in Accenture's supply-chain practice, "it's difficult for us to put together a package that's mutually beneficial and economically viable for both of us." But other big providers say that trends such as business-process outsourcing using cheaper overseas labor will help them serve a price-sensitive market.

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