SAP knows big business. SAP knows small business. SAP now knows medium-sized business really well. At least, that’s what SAP hopes.

On Wednesday, SAP unveiled SAP Business ByDesign, a full suite of business applications delivered through the Software as a Service (SaaS) model. Unlike many big-iron vendors that dip their toes in the SaaS waters, SAP actually built this product from the ground up as a SaaS application, which should make SaaS evangelists happy.

If you look at this press information page, you’ll see that SAP is positioning this technology as the lower midmarket product in its SMB ERP product portfolio. It has SAP All-in-One, a vertical-specific suite of on-premise ERP software aimed at larger midmarket firms, with 100 to 2,500 employees. Then there is SAP Business One, a truly small business solution for companies with fewer than 100 employees. Now there is SAP Business ByDesign, aimed at companies with 100 to 500 employees.

As James Governor of Red Monk noted in an excellent blog review of Business ByDesign, SAP is one of those huge enterprise software vendors famous for complexity that is just plain poison for small and medium-sized companies. However, SAP likes to tell us that 65% of its customers are SMBs.

Last year SAP started airing television commercials during NFL football games. Clearly, these ads were aimed at rebranding SAP as a company that could serve SMBs. Every single enterprise software vendor you talk to says it’s going after the SMB market because it represents the best opportunity for rapid growth. With a three-headed monster of a product portfolio, SAP clearly means business. SMB business, that is.

Business ByDesign will feature on-demand software that will help medium-sized firms manage their finances, business analytics, human resources, projects, supply chains, customer and supplier relationships, and compliance.

Governor said SAP hasn’t hit a home run with Business ByDesign, but he thinks it’s offering a tool that may serve the medium-sized market well.

“I am pretty positive about BBD’s chances in the market, and it looks [like] a powerful set of apps for $149 per month per user. I do, however, feel SAP could have really smacked the ball out of the park had it driven harder on Web 2.0 front-end interaction. Time for SAP to get JavaScript religion.”

Dennis Byron, who says he’s a fan of the product, wrote on SeekingAlpha.com that SAP’s new product has a ways to go.

“Sorry, SAP, I am a great admirer but Business ByDesign (codenamed A1S) has a few problems. The name is too long, the beta set of users is too small, the price is too high, the reference implementations and demos are too much old SAP, and the channel strategy is too 20th century.”

I believe this is SAP’s first foray into SaaS. Companies like Salesforce.com and NetSuite have earned some well-deserved hype for their customer wins in the SaaS-delivered SMB ERP market. Now SAP is going to try to take them head on.

SAP is planning to sell this product through its channel partners, which is how most big vendors reach the SMB market. But will channel partners embrace this as an opportunity? New research from IDC suggests maybe not.

Hello. This is Jeff Kelly, associate editor at SearchSMB.com. I’ll be contributing to SMBlogger on a regular basis. 

After less than successful efforts in the past, SAP has decided to have another go at the SMB market. Timothy Prickett Morgan over at IT Jungle reports that the German uber-software vendor has committed up to $500 million “to market an SOA-enabled, easy to use set of application software that would be more economically and technically appealing to SMB customers.” 

The main thrust of SAP’s SMB strategy revolves around the company’s soon-to-be released A1S application suite, Prickett reports. But it remains to be seen if SAP will finally be successful in tapping the midmarket. Jim Schaper, CEO of would-be SAP competitor Infor, didn’t seem too frightened, as he made clear to Prickett: 

“One has to wonder if SAP truly understands the mid-market or whether this strategy is solely an effort to detract attention from the slowing growth of their Fortune 500 base … Medium-sized customers do not want all-in-one products that need massive customization efforts to address their line of business. That approach is a relic of the past, when ERP implementations were akin to corporate open heart surgery. Infor has built a strong growing company on delivering solutions with industry experience already built in. The bottom line is that customers want more functionality, less complexity, and the lowest total cost of ownership. That is not the plan we see from SAP.” 

Sounds like fightin’ words to me. Guess we’ll have to wait to see how this one plays out.

Hey there, this is Shamus McGillicuddy, news writer for SearchSMB.com. I’ll be a regular contributor to SMBlogger.

Last week I reported on research which suggested that SMBs go live with an ERP implementation much faster than large companies. Cindy Jutras, VP at Aberdeen Group, said SMBs use speed of implementation as a metric for success. She argued that this focus on speed leads many SMBs to stop short of getting the most out of their ERP system.

But an argument could be made that a slow, thorough implementation can be just as troublesome. For instance, this reader, an IT employee at a large multinational corporation, shared his thoughts on his company’s SAP project.

According to management, installing SAP has been one of the main number one priorities since around late 2002. We are due to go live with the first country in 2007. On current schedule, the last country will get the system around 2011 or 2012. The aim is to have a common platform in all countries of our operations

My one-liner to describe this is that installing SAP takes twice as long as it took to fight and win the Second World War. I believe that was quite a big project, and this time the Germans are on our side.

The annual fee alone for SAP (once installed!) will be several times what we currently pay for our old steam-driven accounting system… A lot of people on the SAP project at the beginning will have retired by the time it gets finished.

And new versions of SAP and other systems keep coming out. By 2010, Microsoft Dynamics may have a system which is faster, cheaper, and more flexible than SAP… So in IT projects, it is almost always a bad idea to even start a project which will take 5 years or more for payback. By then there will be something else available.

Perhaps there is a balance to be struck between speed and thoroughness. If you can find a vendor that can offer that balance, you’ll have struck gold. Good luck.