SAP Co-CEO Says Small Business IT Is Based on a Bad Equation

Michael Vizard

One of the primary reasons that a small business succeeds is that it’s typically more nimble and agile than a large company, which accounts for why two out of every three news jobs created is done by a small business.

From an IT perspective, however, the vast majority of those small businesses are relying on manual processes, spreadsheets, accounting software and, in some rare instances, customer relationship management (CRM) software. SAP Co-CEO Bill McDermott thinks that’s all about to fundamentally change for the better.

Speaking at an SAP SME Summit in New York today, McDermott says small businesses via the cloud now have access to the same modern software that any large business has. More importantly, McDermott says much of that software is soon going to be running on in-memory computing platforms such as the SAP High Performance Analytics Appliance (HANA). That capability is going to allow small businesses to be more agile than ever because information about the business is going to be available in real time, versus trying to correlate information across spreadsheets, documents and general ledger applications to see what’s happening across the business once a month.

In effect, what McDermott is getting at is that the nature of the way a business operates is fundamentally changing. Planning meetings using the latest information will occur daily and for the first time many businesses will be able to change a business outcome by utilizing IT, versus merely using IT to discover what occurred after the fact.

McDermott refers to this shift as the “power of small DNA,” which he sees as being the new major driver for economic growth. That doesn’t mean that the power of small DNA can’t be applied in larger enterprises, says McDermott, but from a practical perspective, it’s a small business that is usually looking to use technology to drive a new innovative business model.

Unfortunately, about half of all small businesses fail within a few years. McDermott says studies have shown that the primary reason this occurs is because the small business never planned on becoming a big business, which means the processes and technologies needed to scale the business are not in place. To help address that issue, SAP is inviting governments around the world to deploy SAP software in the cloud, which small businesses could then use to manage their businesses at a fraction of the cost they now spend on acquiring and supporting systems and applications that McDermott says requires them to throw labor at a value chain that is based on a bad equation.

The degree and rate at which small businesses make the shift to the cloud remains to be seen. But what is for certain is that in a tough economy the race almost always goes to the swift. Most successful small businesses are based on performing a task more efficiently than the larger companies they serve. The trick isn’t so much how to manage that task on behalf of a few customers, but rather how to manage a range of related tasks on behalf of a large number of customers, which ultimately defines the difference between a boutique business and the next multi-million-dollar enterprise.

Add Comment      Leave a comment on this blog post
Nov 29, 2012 12:40 PM Nancy Beckman Nancy Beckman  says:
"for the first time many businesses will be able to change a business outcome by utilizing IT, versus merely using IT to discover what occurred after the fact." A small business that can make this last piece of the puzzle is only going to get more agile. When you act, as opposed to just react later, you can stay on top of business issues before they even become a real issue. Reply
Nov 30, 2012 5:59 AM Neil Swanson Neil Swanson  says:
Michael - you and I spoke briefly at the SAP SME Summit yesterday in Manhattan and I believe you captured the essence of the day very well in your write-up. I'm looking forward to reading more of the articles that you author. Regards, Neil Swanson Achieve IT Solutions Reply
Apr 15, 2013 6:48 AM SAP Consulting Services SAP Consulting Services  says:
Cloud computing for CRM software may help small business become large ones - they can have the infrastructure in place to grow with a less restrictive price. Thanks for posting. Reply

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