Vendors Think Small

Software vendors see big opportunities in the small-business market. In fact, Microsoft, SAP, Oracle and others have all been focusing on ways to make it easier and more cost-effective for smaller businesses--many of which don't have an IT manager or staff--to purchase and use technology.

Of that pack, Microsoft has been among the most aggressive. In October, the software giant launched the Small Business Desktop Platform, which makes it easier for small businesses to procure software. The platform, with an estimated retail price of $922 per PC, provides a license for every PC in a company for Microsoft Office 2003 Small Business Edition, a Microsoft Small Business Server 2003 Client Access license and a Microsoft Windows XP Professional upgrade.

Microsoft also introduced Microsoft Office Small Business Accounting 2006 and Microsoft Office Small Business Management Edition 2006, two products designed to help small businesses manage their sales, marketing and financial processes. Small Business Accounting, priced at $179, is financial-management software available as a standalone offering or as part of Small Business Management Edition, which costs $669 and includes Outlook 2003 with Business Contact Manager Update, Word 2003, Excel 2003, PowerPoint 2003, Publisher 2003 and Access 2003.

Microsoft acknowledges that going after smaller businesses won't be easy. "You have to consider that the market is large and diverse--more than 40 million small-business entities worldwide--and the challenge remains how to effectively reach this market in a way that's meaningful to them vs. targeting them in a broad brush-stroke fashion," says Cindy Bates, Microsoft's general manager for U.S. small business.

The company is looking to its channel partners--a "vital linchpin," according to Bates--for help. Microsoft partners, in turn, applaud the vendor's efforts to help them better address the market.

"The tools and resources we have as a partner have been of tremendous value," says Frederick Johnson, president of Ross-Tek Information Systems, a Cleveland-based Microsoft Certified Partner that specializes in the Small Business Server. "It's critical for us to really understand the business aspects of [small companies'] operations first and then help them leverage the value of the technology."

Johnson says the small-business market is challenging, in large part because those companies typically don't have the technology resources of larger enterprises.

"If you look at most small businesses, the one common denominator is they don't have the internal IT staff and, for the most part, they don't have the IT budget," he says. "More often than not, purchases are made directly out of the operational budget--and sometimes out of the owner's pocket. It's important for us to understand what they're trying to achieve."

Another Microsoft partner, Ed Lohman, vice president of Affordable Computing Enterprises in Havre, Mont., says he was initially skeptical about the vendor's commitment to the small-business market because other IT vendors have fallen short on promises to serve the market through the channel.

But Lohman says Microsoft has delivered through its product offerings, price promotions, training and a new small-business certification program (see "It Takes a Community," below).

One of Affordable Computing's clients, C&C Excavation, also in Havre, purchased the server-based Microsoft Office XP a year ago to run many of its business processes. Carol Bachini-Wood, owner of C&C, says the company relies heavily on Lohman and his knowledge of Microsoft and IT in general.

"The growth of our business is a reflection of the service [Affordable Computing] provides," Bachini-Wood says. "Ed is the IT department. He keeps us abreast of what's out there."

Competing Strategies

Other key software vendors are also forging small-business strategies. SAP offers two key products for small businesses--SAP Business One and mySAP All-in-One--through its global channel of SAP business partners. The SAP systems are interoperable with other SAP business products, as well as with Microsoft .Net and J2EE environments.

SAP Business One is an integrated business-management application built especially for growing SMBs. It supports core operations, including CRM, accounting, reporting, sales and distribution, purchasing, and warehouse and partner management. An SAP Business One software-development kit allows business partners to both customize and upgrade the system.

The other SAP offering, mySAP All-in-One, is based on the core components of mySAP Business Suite, including ERP, general ledger, sales, purchasing, inventory, costing and order management.

For its part, Oracle also has a slew of initiatives and partner programs aimed at the small-business market. For example, this past fall it announced in conjunction with IBM a new IBM eServer solution for Oracle's JD Edwards EnterpriseOne and JD Edwards World application suites to manage SMBs' core business operations.

Earlier in the year, Oracle had also announced OPN Access, an initiative aimed at partners that want to sell the company's Oracle Database 10g Standard Edition One and Oracle Application Server 10g Standard Edition One to small and midsize businesses.

In addition, Oracle expanded its partnership with Avnet Technology Solutions in an effort to broaden global distribution and accessibility of Oracle E-Business Suite Special Edition, JD Edwards Enterprise One and JD Edwards World offerings to SMBs. The companies say the alliance will make it simpler and less expensive for VARs to deploy solutions based on the software, and will help channel partners better serve SMB customers.

Finally, Salesforce.com offers a version of its on-demand CRM software for small businesses. Called Team Edition, the software enables up to five people to collaborate and manage customer relationships in real time via the Internet. Companies can upgrade to other editions of CRM as their businesses grow.

Bob Violino is a writer based in Massapequa Park, N.Y.