It turns out that the midmarket and large-scale businesses that use SAP technology may be more alike than one would think. That’s what we discovered after talking with Rainer Zinow, SVP of product management for small and midsize enterprises at SAP. Rainer leads the teams that deliver SAP Business One and SAP Business by Design to what SAP considers small and midsize organizations—which fall into the category of generating $1 billion in annual revenue or less. He also collaborates with the SAP S/4HANA teams at SAP, given that these systems frequently connect.
The SAP Business One Family
The organizations that use SAP Business One stray a long way from the concept of what many consider “small businesses” in North America—they aren’t your local restaurant or corner shop. What we do know about them is that they are a tight-knit group (Rainer frequently refers to them as “a family”) of vocal customers. They rely both on their value-added resellers (VARs) as their point of contact for their SAP solutions and on the partners who build the add-ons they use to customize their ERP systems.
ASUG had the chance to catch up with Rainer in advance of his presentation that will kick off ASUG Best Practices: SAP Business One on Oct. 27. We discussed some of the insights ASUG research gathered from SAP Business One customers this year, as well as the relationship between SAP Business One and SAP S/4HANA, and some of the latest innovations such as the SAP Business One native web client. We also discussed why innovation is just as important to midsize customers, as well as what the intelligent enterprise looks like for them.
Ann Marie: Can you tell me what you’re responsible for today at SAP?
Rainer: I’m responsible for the product management and road maps for our midmarket solutions, SAP Business One and SAP Business by Design. I also cross-coordinate with my colleagues on the SAP S/4HANA side of the house.
Ann Marie: ASUG did a study of SAP Business One customers early this year and found that only about 17% of the customers we spoke with are planning to adopt version 10.0 within the next year. For those who are not currently planning to move to the next version, what benefits will they miss out on if they wait to upgrade?
Rainer: The last thing our customers need in these difficult times is more stress related to new releases. We are doing everything we can to make SAP Business One 10.0 really compelling to adopt.
It starts with the partners who need to do the necessary work to make sure they have tested all of their add-ons to work with this new version—because, if there is a secret sauce in this business, it is all of the partner add-ons. I’m working with the global partner executive council to reach the partners in this space so they will be prepared to help customers move.
It is now the job of SAP, together with its partners, to explain the benefits customers will get out of version 10. These include a new web client for SAP Business One, enhancements to the user interface, support of SAP HANA 2.0, and integration with Microsoft Office 365, to name just a few.
Ann Marie: What business areas will benefit from the enhancements to SAP Business One 10.0?
Rainer: I expect a lot of interest on the legal and compliance side. I was on a call with a customer in Mexico who said the government is preparing a whole array of regulatory changes like we are experiencing in Germany these days, where the government dropped the value added tax (VAT) by 3% earlier this year. And, obviously, I can only do that for the supported releases, which currently are SAP Business One 9.3 and 10.0. Customers will benefit from having a good plan for when to move to the latest version before the version they are on no longer offers maintenance.
Ann Marie: Why should SAP Business One Customers run on SAP HANA?
Rainer: Because SAP HANA comes with a whole array of built-in capabilities, especially in the analytics area. The thing that SAP Business One has suffered a bit from is that its analytics were not quite where the customers wanted them to be. Obviously, we’ve made a huge step forward with the SAP HANA database because we are using a lot of its analytical capabilities. We also are using advanced capabilities when it comes to the enterprise search capability that is built into SAP Business One.
We have discussed this many times with Hasso Plattner and said, “Hasso, it’s only one part of the story what our super-large customers are getting out of SAP HANA. They love it. But SAP HANA is equally relevant for small and midsize customers because they need the same capabilities.”
Ann Marie: What kinds of advantages are SAP Business One customers experiencing when they run on SAP HANA?
Rainer: When I talk to my SAP Business One customers, I ask, “What does SAP Business One do for you?” One customer once said, jokingly, two important things. “Number one, it keeps our CEO out of jail.” In all seriousness, that speaks to what you said earlier about knowing that your business is legally compliant. “And, number two, we’ve collected data for decades. Now we are at a point where we are starting to make smarter decisions because the data is so much easier to get your hands around in an SAP Business One system.”
Before they make their decisions, they look up the data in SAP Business One. It may be to find straightforward answers like the 10 most profitable products over the last quarter, or the 10 most profitable customers. Decision-making based on rock-solid analytics is one of the key reasons why customers should be on SAP HANA.
This does not mean that you will be unable to get reports from SAP Business One if you are not on SAP HANA. I know that a lot of customers are doing great things with Microsoft SQL server and Microsoft Power BI in context with SAP Business One. But we have put so much into the analytical capabilities from SAP HANA that are available through SAP Business One.
Ann Marie: How does SAP Business One work together with SAP S/4HANA?
Rainer: We have approximately 7,000 customers who use SAP Business One as a subsidiary solution and also have SAP S/4HANA. This is a huge and vocal audience. I always like to say the SAP Business One German user group is like a “who’s who” of the German private stock index.
We do everything to make sure that the customers who transition from SAP ECC 6.0 to SAP S/4HANA enjoy exactly the same level of connectivity. This is not a heavy workload for the SAP Business One team because we are using standardized protocols when we integrate with our SAP S/4HANA environment.
When a customer moves from SAP ECC to SAP S/4HANA, they have no appetite to rework the entire ecosystem around them. We benefit from B1if, or the SAP Business One integration foundation, which is the integration layer into the SAP Business One world. Where required, we can also do customer-specific mapping so that SAP S/4HANA and SAP Business One will work hand in hand.
Ann Marie: What can you tell us about the web client for SAP Business One that was announced at the 2020 SAP Global Partner Summit?
Rainer: This is the single biggest and most important ask that I have gotten from my North American and U.K. partners. They tell me that they need a state-of-the-art SAP Fiori user interface on top of SAP Business One. Again, it has a lot to do with SAP S/4HANA because we are harmonizing user interfaces across all of SAP.
We have one product standard that we all need to meet by the middle of next year, which is the user experience (UX) consistency standard. SAP Business One will be among the first products to meet that standard. We built the SAP Business One web client, which is an alternate user interface that looks quite different, though the content is similar to what customers are familiar with using.
The value proposition is that if you have a browser and internet access, then you have access to your SAP Business One system. This is obviously a journey because it is a huge system. We worked closely with the partner council and said, “Here is a long list of all the SAP Business One capabilities. In which sequence do you need these in the web client?” I’m really grateful for all the work that the partners put in on this. That’s the great thing about the SAP Business One family. You can reach out to them and say, “Are you willing to help me with the decision-making process?”
Ann Marie: What features are available in the web client today?
Rainer: From a sequencing standpoint, we started the web client for those people who are predominantly on the road. We started with the sales capabilities. We will continue with purchasing capabilities, and we will provide enhanced analytics for both purchasing and sales. And then we have an execution plan with our partners. I don’t plan to transition the entire UI, especially the areas that are less used.
It’s mission critical now that the partners transition their add-ons to the SAP Business One web client. So, I would say, ladies and gentlemen—thanks a lot for pushing me hard. I’ve put the web client forward. Please join me in adopting the web client. I would like to see your plans to make the most popular add-ons available on the SAP Business One web client.
Ann Marie: We also learned in our research that about a third of SAP Business One customers are exploring a move to the cloud. What is SAP doing to help customers move to the cloud with SAP Business One?
Rainer: Whenever I meet SAP Business One customers, they typically ask me, “Hey Rainer, what’s your plan with the cloud?” And then I ask them, “Well, what does the cloud mean for you?” I come from a very technical development background and I think of things like service-oriented architecture and multitenancy, for example. My customers have a different view of the cloud. When I ask this, they typically describe, “It’s the cloud if I can get it on a subscription basis. I don’t want an upfront payment. I want a monthly rental fee.” The second thing they say is, “It is cloud when I don’t see the box.” The third thing they say is, “Cloud is if I never hear the word upgrade again.”
When I ask customers who are running SAP Business One on-premise today what they want to do, about 90% say they have no appetite to stop using it They like their SAP Business One, and it does what it’s supposed to do. But they want a future-proof platform, and they want to go with the cloud trend. Many of our partners have put packages together for customers that offer SAP Business One as a service at a subscription rate. That is typically a reflection of the license portion, the maintenance portion, and the operations portion. They may even bundle in certain other services—all to offer SAP Business One as a full service to customers.
Where we are not yet exactly where I would like to be is that the partners are not bundling in upgrades. At the moment, a good 70% of all new SAP Business One deals are cloud deals, either operated by SAP or by the partner. That trend is happening and has accelerated quite a bit because of SAP HANA. The customer is saying that they would not want to have an SAP HANA box in their data center or on-premise. They would rather leave that to the partner.
Ann Marie: You mentioned that net-new SAP Business One customers are leaning toward cloud implementations. What are some other factors that either encourage customers to adopt the cloud or that act as barriers to the cloud?
Rainer: The smaller SAP Business One customers were very hesitant in the beginning about the cloud. They would say, “The box is safe in my basement.” But the SAP basement or the partner basement is probably better than their basement. Also, it’s not about the lock on the door, but rather about how good you are at defending a piece of network cable. Many SAP Business One customers aren’t equipped to fend off a cyberattack. That has accelerated the trend toward the cloud quite a bit.
Ann Marie: How does the SAP Partner Delivery Quality Framework apply to add-ons from the VARs for SAP Business One? How are you working with the VARs to make sure they’re delivering the highest quality service to SAP Business One customers?
Rainer: I hear close to no complaints from customers about the quality of the add-ons. From time to time, something does not work—but it’s the exception. Why is it the exception? What we see for SAP Business One is a high level of specialization in the partner ecosystem. For example, you have approximately 200 companies called software solution partners, or SSPs. They intentionally decided not to sell or implement SAP Business One, but only to build extensions at the highest possible quality because they sell their add-ons to other SAP Business One partners.
So, the majority of the VARs are weaving together solutions comprising an average of seven add-ons from different SSPs. That whole model only works if the add-ons are built to the highest quality standards. These SSPs put a lot of testing into their solutions to meet the quality standards SAP has established for this program.
Ann Marie: How do customers and partners know they are getting the best SAP Business One add-ons?
Rainer: Let’s say a customer has a burning need for a new handheld scanning capability to support the new generation of handheld scanners in their warehouse. Typically, that customer would call up their trusted SAP Business One partner and say, “Hey, what should I do?”
In the SAP Business One world, the ecosystem is so highly specialized. They know each other, they trust each other. And if somebody does not deliver high-quality software, then they would be out of that family one release later.
Ann Marie: In your opinion, what does the intelligent enterprise look like for small and medium size businesses? How is it the same or different than it is for bigger enterprises?
Rainer: The intelligent enterprise is at least as relevant for small enterprises as it is for large enterprises. The SAP Business One customers really push the envelope because they need to compete against big companies in the market. When it comes to their areas of expertise, they are really leading.
You can really see that in the book we’ve published on intelligent scenarios. We went to the SAP Business One customers and found those who are doing machine learning projects, Internet of Things (IoT) projects, or advanced statistics. And we have gathered 150 customer stories about these scenarios. Yes, we have more work to do when it comes to pricing. Some of the SAP intelligent enterprise offerings are not exactly priced for midmarket customers. But we have more than enough evidence that the intelligent enterprise story is as relevant for small enterprises as it is for large enterprises.
Ann Marie: I appreciate you catching us up on all that’s available for SAP customers in the midmarket.
Register today for the complimentary ASUG Best Practices: SAP Business One, Oct. 27–29. You’ll hear Rainier present at this virtual event on the outlook for small and midsize businesses. You’ll also hear stories from SAP Business One customers and partners, who will share tips, tricks, and recent innovations.