VENDORS GO FOR A WIDER AUDIENCE
Because the market for such systems is worth an estimated R250m/year in SA alone, and growing fast, software vendors are eager to develop solutions that give small businesses a single means of managing their computer systems.
Microsoft, which is a relatively new entrant into the business software applications market and which is specifically targeting small and medium enterprises (SMEs), sold solutions to more than 100 companies in SA last year. SAP, whose software is already used by many of SA’s largest corporations, sold solutions to 143 SME sites.
It is easy to understand why technology companies are taking an interest in small business. The top end of the market is maturing and so the opportunity to repackage and simplify their products for a wider audience is attractive. Simpler software designs mean that vendors can offer one-size fits-all solutions rather than niche products that have to be customised.
SAP and Oracle are both building applications that are smaller and quicker to install.
The big vendors think the small enterprise sector is a market there for the taking, not least because it is so fragmented. No one company dominates.
There are other advantages in the SME space. Companies such as SAP and Oracle rely on a few large contracts to keep their revenues rising. If they are able to sell to SMEs, too, they should enjoy a more reliable and constant revenue stream.
Also, the often quick rise and demise of emerging businesses means that, unlike large companies that buy in cycles, there is a always a growing pool of businesses in need of software.
But large vendors expecting an easy ride may be deluding themselves, says BMI-TechKnowledge IT services research manager Roy Blume He says the SME segment is not new and is already well served by myriad smaller software companies. What is new is that SAP and Oracle are in it for the first time.
Smaller technology companies, such as accounting firms Accpac and Pastel, have been quick to take advantage of demand among SMEs for more sophisticated software packages that help them run their businesses.
Companies such as Oracle and SAP need to succeed in the SME market. In their traditional markets, the software they sell is rapidly becoming a commodity, not unlike off-the-shelf packages, such as accounting applications.
Most agree that the software is maturing but say there are still big advantages to companies deploying it. Business management software is no longer a niche application, especially in the SME market, says Oracle SA director Andrew Krause
Microsoft concurs. “We will absolutely commoditise the software . so as to remove the cost barrier,” says Derek Kudsee, who heads Microsoft’s Dynamics business software line in SA. “This software should not be for the select few,” he says.
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