SAP Mines SMB Space
Yet, Dallas-based GEMS was one of more than a half-dozen customers SAP announced this week at its TechEd 2003 conference in Basel, Switzerland. That fact that SAP chose to highlight a customer with less than 100 employees reflects the importance the world's largest business software maker places on its smallest clients.
No longer ignored by the high-tech industry, small and midsize companies are aggressively courted by IBM, Microsoft, Oracle, PeopleSoft, SAP and others to counter flagging sales among large enterprises. Analysts believe there's billions of dollars in pent-up demand within the SMB market.
In highlighting GEMS, SAP touted the company's use of its applications that enable workers to retrieve and send customer, sales or personal data from the field. But the reseller is also using SAP's customer relationship management system and plans to turn on its financial and human resources applications by the end of November. The "end-to-end" cost, including software licenses and installation, is $300,000, said Suresh Ketha, president of GEMS.
While that may be chump change to a multibillion-dollar manufacturer, it's real money for GEMS. But the efficiencies from the software are expected to significantly reduce GEMS's cost of doing business with its 40 customers, located in Texas, California, New York and New Jersey.
To see the potential savings, one only needs to consider GEMS's current system. Its business operates on Microsoft Excel spreadsheets and Intuit's QuickBooks. Most of the billing information coming in from the company's 60 or 70 remote consultants has to be processed manually, which means invoices can take as long as four weeks to mail and several weeks longer before they're paid.
Therefore, GEMS must keep a large amount of cash on hand to cover payroll once a month. Once SAP's applications are running, GEMS expects to have a weekly billing cycle, which should improve cash flow and lessen the amount of money needed in the bank to support the company's operations.
"Most professional services companies cannot expand or grow because they have to have so much cash sitting out there to support the operation," Ketha said. Besides selling software from Microsoft, SAP and Mercury Interactive, GEMS also provides technical services, such as application integration.
Beyond cash flow, QuickBooks is not built to run a professional services company, which adds even more problems. "Our biggest pain point has been in missing a lot of revenue," Ketha said. "In QuickBooks, you have no way of reconciling revenue versus cost in a professional services environment."
GEMS finished deploying SAP's CRM and mobile applications in the end of July. Consultants in the field now use handheld devices from Toshiba to send spreadsheets with billable hours and expenses, and notes on work status. The information is sent by dialing in to GEMS's virtual private network.
The SAP software runs on Microsoft's Windows Server 2003 and SQL Server database.
Filing the spreadsheets electronically rather than by fax saves each consultant about 30 minutes per week, Ketha said. Once all of SAP's applications are deployed and integrated, Ketha estimates he could double his staff of consultants while adding only one or two people to his current support staff.
Before settling on SAP, GEMS seriously considered Siebel Systems' software, but found it couldn't automate enough of GEMS's processes, Ketha said. Siebel didn't have the financial or human-resources capabilities of SAP.
"We couldn't see [in Siebel] the whole flow between sales, operations and financials," Ketha said. "We've been lucky with SAP, because we haven't had to do any customization."
Besides customer wins, SAP also announced at TechEd the general availability of Master Data Management, the latest product in SAP's NetWeaver application and integration server. MDM establishes common reference data, such as definitions for customers, suppliers, products and parts, and acts as a data hub to multiple computer systems.
This story courtesy of Internet Week.