SAP focus on SMEs

TIME Europe highlights the growing importance of the small- and medium-sized enterprise segment in an article on market leader SAP’s strategy:

Having sold its wares to most of the world’s largest businesses, SAP now believes it has to tap into the small- and midsized-business market to keep growing.

The small-business software market is estimated to be worth $10 billion a year worldwide, but SAP won’t corner it without a fight from more consumer-oriented rivals like Microsoft and IBM. As if that competition weren’t fierce enough, upstart companies like, Sage Group plc and UpShot (acquired last year by SAP rival Siebel Systems) are grabbing a piece of the small-business market with products they hope will squeeze SAP out.

SAP has other ideas. “Sooner or later the entire midsized company segment will be as important to our business as the Fortune 500,” says Leo Apotheker, the SAP board member in charge of global operations.

SAP expects software-license revenue to increase 10% this year to nearly 2.4 billion, largely driven by sales to small and medium-sized businesses. The strategy is simple: take SAP’s basic product, strip it down to small-business size, and sell it for a lot less to companies.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.