The conventional wisdom in the enterprise software market these days is that key ERP and other application decisions have been made within many large manufacturing companies. As a result, purveyors of these software products, in search of new growth opportunities, are shifting attention and resources to the so-called small and medium-size market, a segment defined variously, and inconsistently, by revenue, by number of employees, or even by type of manufacturing.
The question faced by many of the software vendors, though, has not been whether to go after the SMB market. They clearly understand its large size and potential. The issue for them continues to be how to approach the market organizationally: how should they structure themselves internally; how do they employ, in some instances, third-party distribution channels to reach this very large and diverse market; and what form of product do they offer?
In January, for example, SAP, which has been plowing the mid-market for years, said that it needed to "accelerate" its efforts and would set up a new organization and devote up to €400 million to sell to companies with between 100 and 500 employees.
But several months before the SAP decision, another notable player, Glovia International, Inc., a subsidiary of giant Fujitsu Ltd., put its organizational stake in the SMB market. The company announced the formation of Glovia Services, Inc., a new company that would offer applications to electronics, automotive, and other discrete manufacturers based on the software-as-a-service (SaaS) model.
The new company, which will target manufacturers with between $10 million and $50 million in revenue, launched GSInnovate, an SaaS-based manufacturing application that is based on Glovia's glovia.com ERP product. GSInnovate includes inventory management, bill of material/manufacturing resource planning, order management, procurement, sourcing, and financial functions. T-Systems, a Deutsche Telekom division, provides the hosting infrastructure.
But in order to address the particular needs of the SMB market, often characterized by limited IT resources, strict budgets, and less tolerance for lengthy implementations, Glovia Services has devised a service model that emphasizes deployment within a 90-day time period.
"We're focused on the implementation methodology, to get it in quickly and at an affordable price point," said Bill Lyons, VP of sales and marketing for Glovia Services, in a briefing. He says the cost of GSInnovate consists of a $5,000 per month user fee (covering 10 users) and a $75,000 fee for training and implementation during the 90-day period. "There is no commitment in terms of timeframe but companies must pay for implementation and training."
Will SMB manufacturers warm to the SaaS model? Only time will tell, but Lyons says he is pretty excited about the opportunity. He's identified some 6,800 companies in the U.S. on whose doors he intends to knock.
This article originally appeared in the March 2007 issue of Managing Automation.