SAP is attacking the small- and medium-sized market to win new customers and develop its brand, writes Eamon McGrane

Want to know SAP's best-kept secret? The German business software company has been successful in the SME market for some time now. Okay, not the world's most mind-bending, tectonic plate-shifting announcement but, in the context of the information technology space where SAP operates, it's quite important.

Business people will think of the products of Systems Applications and Products as belonging in the preserve of the corporate. Indeed the name of its most popular type of software, Enterprise Resource Planning, suggests the same.

Nevertheless SAP is big with small- to medium-sized businesses. At its recent annual European conference in Vienna, the company was at pains to push its SME strategy and talk up its approach to the mid-level market.

Chief executive Henning Kagermann's keynote address didn't really tell his 8,000-strong audience anything new other than SAP is being embraced by the mid-market, it was doing well financially with some successful financial quarters behind it and it was the leader in the market (although Oracle might disagree).

Léo Apotheker, deputy chief executive, joined in the proselytising in his keynote speech, claiming that SAP was the trusted partner for more than 39,000 companies of all sizes and industries throughout the globe. It had the right engagement model, the most innovative products and services and the strongest ecosystem. "SAP delivers business value via innovation and a deep commitment to each individual customer," said Apotheker.

In a special session dedicated to the SME market, Hans-Peter Klaey, president of global SME business, said that 65 per cent of SAP customers worldwide were SME customers - more than 26,000 accounts. Thirty per cent of all software orders were from the SME sector which was about €1 billion of software licences in the SME market.

The same session looked at key countries for growth in the next few years, with Ireland featuring prominently alongside France, Britain and the CIS region (11 of the former Soviet Republics).

Over the course of the Vienna conference, Oracle (SAP's main competitor in this space) was mentioned many times. SAP was keen to stress that it had 2.5 to three times more market share than Oracle and that the aggressive nature of the competition was more down to Oracle's "strong-arm" tactics in the market rather than any SAP manoeuvrings.

Having said that, Tom Kindermans, senior vice-president small- and mid-sized enterprises, said SAP was attacking the market to win new customers and increase its brand. Kindermans noted that in Europe, the Middle East and Africa, 75 per cent of SAP's customers were SMEs and had seen about 20 per cent growth from the first quarter of 2006 to the first quarter of 2007.

"Most of that growth is coming from new customers - we are attacking greenfield sites, in other words, companies that SAP does not currently have on its books."

Kindermans pointed to many companies that were originally Oracle users that had changed to SAP, but underlined the need to continue building its capacity and ensuring its product portfolio was right for the market.

Klaey told The Irish Times that SAP's success was down to bespoke products for SME market segment. "I think we always said, 'what is the ingredient of the success of SAP in the mid market?' It's actually that we have brought not a 'light' version of the products or a slimmed-down edition of an SME product.

"What we did was package a complete suite to the needs of the mid-market. This market is not just defined by size but defined by industry and the needs of the customers. Many times the customers need sophisticated functionality and that is what we can bring to them. Our new product, SAP A1S, fits in to an area we didn't address in the past - the mid-range of the SME sector.

"So now our different products address the lower end of the SME sector, the middle end and the upper end, so we have an overall strategy."