SAP and the Competition

1
SAP and the Competition
Contents

• Microsoft Business Solutions
• Sage Worldwide

2
SAP and the Competition Unit Objectives
At the conclusion of this unit, you will be able
to

• Characterize the competitor products of Microsoft
  Business Solutions and Sage and describe their
  advantages and disadvantages

3
Microsoft Business Solutions (MBS) Topic
Objectives
At the conclusion of this topic, you will be able
to

• Describe Microsoft's strategy for the SMB market
• List Microsoft's products for the SMB market
• Point out weaknesses in the strategy and product
  lines of Microsoft Business Solutions

4
Microsoft Strategy Messaging

• Become Market Leader in the area of standard
  business software targeted to small and medium
  sized companies in 2004
• Achieve 10 Billion Revenue in 2007
• Get the best in class regarding Return on
  Investment (ROI) and Total Cost of Ownership
  (TCO)
• Add value to the existing solutions
• Lower the Cost of Application Integration
• .NET reduces the need for custom integration,
  minimizing complexity, speeding deployment, and
  delivering a low TCO
• .NET as a standard platform makes investments in
  Software safe.
• Pay what you use and best value for money
• Threefold investment strategy
• Expand and enhance todays Solution
• Surround solutions with new product offerings
  (PSA, Retail etc.)
• Deliver a single global solution built on the
  Microsoft Business Framework

5
Partner Concept with MBS (1)

• The Navision Solution Center (NSC) is responsible
  for thefollowing tasks
• Sale of MBS solutions to end customers
• Development of industry-specific functions
• Adjustment of its industry standard to the
  individual needs of the customer
• Implementation and support
• Maintenance of tailored customer solutions
• Project management and outsourcing
• 100 indirect marketing

6
Partner Concept with MBS (2)

• According to Navision, only partners that have at
  leastfive employees with the status "Navision
  certifiedprofessional" (NCP) are permitted.
• Industry business solutions are developed by the
  partners themselves (in some cases with financial
  backing from Navision) and certified by Navision.
  
• Sales are effected completely independently of
  that of thebasic packet.
• All sales revenues go to the Navision Solution
  Center.

7
Microsoft Business Solutions Product Overview

• Main Solutions
• MBS Navision
• MBS Great Plains
• MBS Axapta
• MBS CRM
• Smaller Solutions
• MBS Small Business Manager
• Microsoft bCentral
• MBS XAL
• MBS Solomon
• Apertum
• MBS Enterprise Reporting
• MBS Professional Services Automation
• MBS Retail Management

8
MBS Strategy

• All products will be developed further (statement
  after Navision transfer)
• Example MBS Great Plains Will no longer be
  marketed in Germany. Support for existing
  customers is provided by two partners. Version 7
  is the last German version!
• Example Siebel Great Plains Siebel Front Office
  (GPSFO) will be withdrawn from the worldwide
  market. Collaboration to be cancelled!
• New functions are planned for all products. These
  functions include customer relationship
  management, business intelligence, Web services,
  mobile solutions, and reporting.
• Statement that all products are to be replaced
  by a common .Net product" is not clear!
• The .Net product wont be available until 2005!!!
  
• The first version will not contain all functions
  yet.
• Existing products will be continued in parallel.
• Solomen, eEnterprise, Small Business Manager,
  Attain, Axapta, XAL, MSCRMare all to be placed
  on the .Net???
• For Germany, Microsoft has announced its
  intention to invest in the training of Microsoft
  partners so they can also sell ERP CRM. Will
  they do that in all countries?
  Conclusion Competition among partners will
  increase.
• Microsoft sells financial services via Microsoft
  Capital, thus binding customers.

9
MBS Financing Model
MBS
2.
Margin goes to partner
3.
MBS Partner
Customer
Customer pays
1.
Sold to customer
0 financing 1st installment after 3 months
Period 1 3 years (flexible)
Also available for partner industry solutions.
10
How to Beat Microsoft Business Solutions
Weaknesses

• The trust placed by partners in the sales
  strategy is in jeopardy. For example, Microsoft
  has hired 500 sales employees for direct sales in
  the USA. Is MBS to be sold there directly to
  commercial customers?
• Every industry solution is changed in the source
  code.(update problems!!).
• MBS Navision has changed the database
  structure.All partners now need to adjust their
  industry solutions(high costs, increased
  likelihood of errors occurring and so on).
• MBS Navision is not easily upgradeable (no tool
  available). (extra costs)
• MBS offers only low-performing search
  functions(context-sensitive).
• MBS Navision and MBS Great Plains are not as
  user-friendly as SAP Business One (usability
  study).
• Customers have expressed doubts about their
  ability to cope with the new portal.

11
Microsoft How to Compete Weaknesses
The products currently have an architecture with
limited deployment (thick client) Lack of
functional depth in B2B Procurement Microsoft CRM
integration into MBS
Navision Weaknesses
No multi-currency management in the Accounting module (limited to third party accounting9
Limited integration of numerous add-ons developed by Navision distributors in the standard software package
Addition of fields and screen customization more complex than in SAP Business One
Weak support by the software editor to the distributors in some countries (including France)
Lack of information about Microsoft strategy (future positioning of Attain vs. Axapta)
Additional costs in case of upgrade to Microsoft standards
More complex set up methodology and heavier implementation costs
Less usable solution
Business One Strengths
Approval workflow
Potential developments with SDK tool
SAP support to Distributors
SAP brand image
Recent technology solution, large investments from SAP
Synergy with subsidiaries of Groups running SAP
Simple set-up methodology, limited set up costs
Ergonomics, usability for a key-user, ans end-user, a system administrator
12
How to beat Microsoft Business Solutions Threats

• In spite of all the statements made, the product
  strategy for integrating MBS products in a .Net
  product is unclear. Investments do not appear to
  be secure!! ? Uncertainty, dissatisfaction
• The schedule for developing the .NET
  infrastructure and the products which are based
  on it is constantly being postponed!! ?
  Uncertainty, doubt
• When the .Net arrives, migration will require a
  lot of time and effort. Even if the new software
  is free of charge (maintenance contract), high
  costs will be incurred on implementation. ?
  Uncertainty about amount of effort and costs
• When will partner modules and industry solutions
  be available on the .Net? ? Uncertainty about
  time and costs
• Microsoft has a poor image as a monopolist and
  poor press coverage (court appearance in the
  USA). ? Uncertainty, doubt
• The partners will be consolidated it is known
  that the remaining NSCs will not beabove 200 in
  the medium term. ? Uncertainty, doubt
• MBS passes on the pressures of the market
  immediately to the partners.Prices will be
  forced down because the partners have to make a
  sale. ? Dissatisfaction, uncertainty
• Can a decision for MBS at the moment be a secure
  decision?

13
How to beat Microsoft Business Solutions
Arguments

• MBS plays down software costs.
• MBS plays down hardware costs.
• MBS promises software technology, which is still
  virtually unknown.

• Strategy
• Point out that additional features could have a
  high impact on the total costs.
• Point out that security of investment is an
  important factor in decision-making today and a
  new, previously unknown technology with all its
  possible teething problems is currently not able
  to offer this.
• Point out that software that is not easily
  upgradeable (or only at extra expense) is not in
  keeping with the times and is an insecure
  investment.
• Microsoft's financing scheme could be only a
  decoy in view of the uncertainty in the product
  environment.

14
Prices for Service and Support

• 16 of the license costs
• 18 for the basic service program (with a
  guaranteed response time of three hours)
• 28 for unlimited support with a guaranteed
  response time of one hour
• Quantity discount 2 with a license price of
  100,000 199,000
• Quantity discount 4 with a license price of
  over 200,000
• Premier Services Additional 35,000 includes
  100 hours technical support, 100 support cases,
  on-site training, including travel expenses

15
User License Fees for MBS Navision

• Session/each
• Session/10 users
• Session/25 users
• Session/50 users
• Web user/each
• Web user/25 users
• Web user/100 users

1,559.75 14,817.59 36,069.13 70,188.77
620.35 9,925.66 35,448.77
(5 discount) (7.5 discount) (10 discount)
(from Navision presentation dated December 4,
2002)
16
Navision Composition

• A Navision solution comprises the following
• Licenses for the application (depending on scope
  of functions)
• User/session ( 1237.35)
• Services (depending on scope of functions)
• Training (depending on customer requirement)
• Cost of license to cost of service (11 to
  11.5)
• Currently this calls for an overall budget of
  25,000 and higher.

17
Sage Topic Objectives
At the conclusion of this topic, you will be able
to

• Describe the product lines of Sage worldwide

18
Sage Worldwide
Sage France
Sage KHK
Sage UK
Sage Spain
Best Software
Sage Middle East
Sage Australia
Sage New Zealand
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Sage Company key findings

• Founded in 1981 in Newcastle upon Tyne, England
• Floated on the London Stock Exchange in 1989
• Over 900,000 customers with an annual support
  contract
• Over 5,500 employees
• Annual revenues of 551.7 million (Financial Year
  2002)
• Profit before tax of 135.2 million (Financial
  Year 2002)
• More than 3 million customers worldwide, thereof
  more than 40,000 outside Europe, mainly
  throughout Africa and Asia excl. Best
• SageKHK over 250,000 small to medium sized
  companies throughout Germany
• Sage US/Peachtree 1.2 million small to mid-sized
  businesses in North America
• ACT! more than 4 million professionals and
  13,000 corporations world-wide
• SalesLogix Over 4,000 companies worldwide

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Sage Worldwide Acquisitions

• The companys growth strategy is through
  aquisition

1991 DacEasy (US)
1994 TimeSlips (US)
1999 Peachtree (US)
1999 Best (US)
2001 Interact Commerce and Platinum (US)
2001 Coala SA
2001 Connectsuite SAS
2002 Gandke Schubert
2002 Dynalog SA
2002 JSI FundRaising Systems, Inc.
2002 CPA Software, Inc.
2003 Concept Group
2003 Aquisition not yet finalized. Timberline Software Corporation
21
Sage Worldwide Best Software Enterprise
Strategy

• In April 2003 Best Software reorganized its six
  divisions into two

Small Business Division Peachtree, Timeslips,
DacEasy
The Small Business Division
CRM Division ACT!, SalesLogix
Mid-market Division MAS 90, MAS 200, MAS 500,
Business Works, Platinum for Windows
ACT! CRM Division SalesLogix
CRM Division ACT!, SalesLogix
Accountants Division CPASoftware, Best Software
Accountants Network
The Mid-Market Division
Specialty Products Division Abra, FAS, Carpe
Diem and TimeSheet Professional
Nonprofit and Government Division MIP, Paradigm,
Millennium

• Best Softwares strategy is to provide one face
  to customers and partners.
• The company is independent in his decisions from
  Sage Group plc.

22
Sage Partners

• Customization and local support is provided by
  partners who provide a pre-sales and an
  after-sales consultancy service.
• Network of over 400 distributors in more than 60
  countries and more than 20.000 active resellers
  worldwide
• more than 30 local distributors in Europe
• more than 75 local distributors in Africa
• more than 6,600 VARs in America
• Best Software
• Products are sold by a network of Value Added
  Resellers (VARs).
• The Small Business Division is primarily sold
  through retail.
• ACT! has a network of certified consultants in 19
  countries and a network of partners.
• The Mid-Market Division is sold through Bests
  partner channel.
• SalesLogix is sold through a reseller channel
  (that includes more than 500 business partners).

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Sage How to compete Strengths

• Strengths
• Large Customer Base
• Strong product brands
• Extensive partner network
• Strong financial position
• Core competency in Sales Force Automation
• Strong CRM division with ACT! and SalesLogix
• Has the resources to be a major force in the SMB
  market
• Offers well targeted applications to meet the
  needs of small and mid-sized businesses
• Fast Implementation
• Implementation with other third party application
  is possible.
• Applications offer good up sell and cross sell
  opportunities.
• Subsidiaries are independent in their sales
  strategy, because they have better insights on
  the markets in their areas.
• IBM Alliance to deliver leads
• Key Influencer and consultant program
• Channel Improvement Program
• IBM/Indirect model
• Development of vertical solutions makes the
  integration between front and back office
  application a key priority.
• Good Mobile Support

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Sage How to compete Weaknesses

• Research and Development (RD) is under invested.
• Line 50 program is 20 years old.
• Lowest investment in industry.
• Line 100 product is migrated to SQL.
• Integration of CRM business (Interact) is poor.
• Lack of integration
• Lack of or no inter-country strategy
• KHK, Sage UK, Ciel and Best Software all act
  independently.
• No global strategy
• Vertical solutions are mainly targeted for
  accounting applications.
• Not ready for .NET
• Limitations in functionality (Sales Force
  Automation capabilities are more evolved than
  marketing and customer service)

25
Sage How to compete Opportunities

• Acquisition of Timberline (business management
  software vendor) to expand products and services
  for verticals
• Timberline will become part of US business and
  will expand Bests product range in construction
  and real estate industries
• Independency of Sage subsidiaries
• Subsidiaries know their market best and are able
  to recognize further growth potential for the
  company
• Large customer base to cross sell products
• Partnerships
• Microsoft Adopt Microsofts technology, because
  own products are not ready for.NET. Take over
  Great Plains/Navision customer and reseller base
  to help Microsoft manage the transition

26
Sage How to compete Threats

• Sage wants to rationalize channel Potential for
  new SBO partners?
• Unclear contract status with partners
• Sage sell their products partly direct to
  corporate and strategic customers (channel
  conflict)
• If SAP goes after Sage business partner in each
  region this could have an impact on Sage business
  (SAP already has the business partner for Sage
  Line 500 in the UK)
• Microsoft as a competitor in the SMB market
• Microsoft has a hughes install base to cross sell
  products
• No Inter-Country product strategy
• Sage subsidiaries act independently and so are
  the products. SAPs Business One, for example, is
  a worldwide solution and can be implemented in
  any subsidiary of a corporate company

27
Sage - Product Overview I
Country Product Name Product Description
Australia/New Zealand Sage Instant Accounting (A) single-user bookkeeping solution for small businesses. Ideal for sole traders or start-ups
Australia/New Zealand Sage Line 50 (A, NZ) core accounting functions for a more established business that is still experiencing growth
Australia/New Zealand Sage Line 100 (A) fully customisable business suite suitable for a wide range of businesses in terms of turnover and number of employees
Australia/New Zealand Sage Line 200 (NZ) Advanced business suite
Australia/New Zealand Sage Line 500 (A, NZ) (formerly known as Sage Enterprise and CS/3) web- enabled, financial, distribution, services and manufacturing software designed for mid- range and larger organisations
Australia/New Zealand Sagepay (A) payroll solution available with the option of a multi user module
Australia/New Zealand Sagepos (A) point of sale system designed to suit small to mid-sized retailers
Australia/New Zealand Sage Job Costing (A) companies of all sizes and in all industries able to track and evaluate all the costs of a job or project
Canada Best Software Canada Ltd. Fixed Asset Accounting Automating fixed asset management
Canada Best Software Canada Ltd. Abra Suite human resources and payroll management For companies of all sizes no pricing information available
Canada Best Software Canada Ltd. Best! Imperativ Analytics budgeting and planning tool For companies of any size
Canada Best Software Canada Ltd. ProvideX business application development environment
28
Sage - Product Overview II
France Ciel Ciel Comptabilité accounting solution
France Ciel CielGestion Commerciale management solution
France Ciel Ciel Paye payment solution
France Sage Coala Ligne Production (par Coala) applications de production, gestion interne, et pilotage administratif, commercial et marketing
France Sage Coala Ligne Conseil (par Gescap) couvre les différents domaines de conseil aux entreprises
France Sage Coala Ligne Relation Clients (par Sage) CRM solution
France Sage France Sage Ligne 30 business management solution for small businesses
France Sage France Sage Ligne 100 business management solution for small and medium sized businesses
France Sage France Sage Ligne 500 business management solution for medium sized and larger companies
France Sage France Sage Ligne 1000 business management solution for large companies
France Sage France Sage CS/3 ERP solution
Middle East Middle East Sage Line 500 financial, distribution, manufacturing and services solution designed for mid-range and larger organisations
Middle East Middle East Sage Line 200 financial and distribution solutions for medium sized organisations
Middle East Middle East SalesLogix mid-market customer relationship management software offering sales, marketing, support and e-commerce functionality
Middle East Middle East ACT! contact management software
Middle East Middle East Sage Line 100 fully customisable business suite suitable for a wide range of businesses in terms of turnover and number of employees
Middle East Middle East Sage Line 50 accounting solution for small and medium-sized businesses
Middle East Middle East Sage Line Instant Simple single-user bookkeeping solution for small businesses. Ideal for sole traders or start-ups
29
Sage - Product Overview III
Germany GandkeSchubert GS - AUFTRAG, GS-AUFTRAG Professional SQL, GS KFZ logistics/Billing logistics/Billing
Germany GandkeSchubert GS-Shop Online-Shopping Online-Shopping
Germany GandkeSchubert GS-Fibu, GS-EAR Accounting Accounting
Germany GandkeSchubert GS-Lohn, GS-Reisekosten, GS-Brutto/Netto Human Resources Human Resources
Germany GandkeSchubert GS-Adressen Office Organization Office Organization
Germany GandkeSchubert GS-Verein Club management Club management
Germany GandkeSchubert GS-Termin Contact management Contact management
Germany HR Software HR Personal Manager Personal HR management solution
Germany HR Software HR Personal Manager Payroll Payroll solution
Germany HR Software HR Personal Manager Reisekosten Travel management solution
Germany HR Software Best! Info Plan HR management solution for the Public Sector
Germany HR Software HR Zeit Time management solution
Germany Sage KHK PC Kaufmann commercial software
Germany Sage KHK Office Line business administration software for medium-sized businesses
Germany Classic Line modular business administration software for smb
Germany HWP-WIN business administration for manufacturing and service industry
Germany Sage Personalwirtschaft HR Management for all industries, public sector and health
Germany Sage Kundenmanager CRM tool
Germany Sage WebTrader Homepage, Shop, Content-Management-System and communication platform
30
Sage - Product Overview IV
Spain Spain Sage Contabilitad 100 accounting solution
Spain Spain Sage Gestión comercial 100 management solution
Spain Spain Sage Caja descentralizada 100 payment solution
Spain Spain Sage E-commerce tool for creation and administration of online shops
Spain Spain Sage Informes 100 tool for creation of analytical statistics
United Kingdom/ Ireland Sage CRMsolutions ACT! small office/home office (SOHO) as well as small and medium businesses
United Kingdom/ Ireland Sage CRMsolutions SalesLogix Mid Market CRM solution
United Kingdom/ Ireland Sage UK Sage AccountingFinance Line (Sage Instant, Sage Line 50/100/200/500) range of Accounting Suites for different sizes of businesses
United Kingdom/ Ireland Sage UK eBusiness solutions range of e-business products for e-commerce strategy
United Kingdom/ Ireland Sage UK Sage Personnel(Instant Payroll/Payroll/Payroll Professional/Payroll Bureau/P11D/P11DPro) range of Payroll and HR Suites for different sizes of businesses
United Kingdom/ Ireland Sage UK Sage Forecasting/Costing (Job Costing, Job costing Pro, Forecasting, Winforecast Pro) Forecasting and Costing Suites for different sizes of businesses.
United Kingdom/ Ireland TAS Software TAS Books 1 Accounts, Invoicing and flexible Reporting for start-up businesses
United Kingdom/ Ireland TAS Software TAS Books 2 Accounts, Invoicing, Job Analysis, Project Costing and Flexible Reporting
United Kingdom/ Ireland TAS Software TAS Books 3 Accounts, Invoicing, Job Analysis, Project Costing Flexible Reporting with Full Stock Control businesses where buying and selling physical products is the main focus. This includes wholesalers, distributors and manufacturers.
United Kingdom/ Ireland TAS Software TAS Payroll suitable for companies with 1 to 1000 or more employees ,
31
Sage - Product Overview V
United States Best Software Inc. Abra Enterprise human resource and payroll solution for mid-sized to large middle market companies
United States Best Software Inc. Abra Learning Action eLearning solution for small and mid-sized businesses
United States Best Software Inc. Abra Online Internet-based HR and payroll service for companies with 50 to 1,000 employees
United States Best Software Inc. Abra Suite HRIS solution offers comprehensive payroll processing recruiting training and benefits administration for small and mid-sized businesses
United States Best Software Inc. ACT! CRM solution for small and mid-sized businesses
United States Best Software Inc. Advantage NonProfit Series fund accounting to mid- to large-sized client environments. The system is designed for nonprofit organizations with 10 or more concurrent users, 10M or more in annual budget
United States Best Software Inc. BatchMasterPFW and Platinum for Windows by Best process manufacturing software for companies with 10-500 employees
United States Best Software Inc. Business Works business management solution suited for growing small and medium-sized businesses
United States Best Software Inc. Carpe Diem time and expense tracking system for corporate enterprises like law firms and finance companies
United States Best Software Inc. FAS Gov Solutions fixed asset inventory, asset accounting and depreciation, and custom reporting challenges for organizations managing 50 to 100,000 assets (government, schools, and non-profit organizations)
United States Best Software Inc. FAS Solutions fixed asset management tools to businesses of all sizes, managing 50 to 100,000 assets
United States Best Software Inc. Government Series (Advantage/Pro) fund accounting for mid-sized/growing/larger government agencies
United States Best Software Inc. MAS 90/200/500 (formerly Best Enterprise Suite) accounting, distribution, manufacturing and e-business management software solution for small to medium-sized companies with 10 to 500 employees/enterprises with 20-1,000 employees
32
Sage - Product Overview VI
United States Best Software Millenium enables organizations to manage campaigns and events, track donors and create reports quickly and easily larger nonprofits with 25-100 employees
United States Best Software NPS Intro fund accounting solution for smaller nonprofits (less than 1M in annual budget, 3 or fewer users)
United States Best Software One-Write Plus accounting software for small businesses with 1-3 employees
United States Best Software Paradigm manage the entire fundraising process for smaller nonprofits with up to 25 staff members
United States Best Software Peachtree Accounting line of Products (Peachtree 2003, Peachtree Accounting 2003, Peachtree Complete Accounting 2003, Peachtree Fist Accounting) accounting, business administration and Internet presence software for small businesses from 1-50employees
United States Best Software ePeachtree hosted online accounting solution for small businesses
United States Best Software Platinum for Windows by Best financial software solution for small to medium-sized enterprises of 20 to 500 employees
United States Best Software SalesLogix CRM solution for smb
United States Best Software TimeSheet Professional accounting for time and expenses related to projects
United States Best Software Timeslips time billing solution for service professionals, companies with 1 to 50employees
33
Sage - Product Overview VII
United States Best Software ACT! 6.0 Accounting solution
United States Best Software SalesLogix sales-driven customer relationship management (CRM) solution
United States Best Software DacEasy this product line includes Accounting, Payroll, Order Entry, Point of Sale and Job Costing
United States TeleMagic TeleMagic Enterprise build a database to fit any business needs
34
Sage - Product Positioning
Sage AccountingFinance
Sage HRPayroll
35
Sage Line - Pricing

• Sage Instant Line
• Sage Instant Accounts 109.79 (Excl. VAT)
• Sage Instant Business Suite 203.40 (Excl. VAT)
• Sage Line 50
• Sage Accountant 395.00
• Sage Financial Controller 925.00 (Excl. VAT)
• Sage Line 100
• available via an approved reseller only
• Sage Line 200/500
• dependant on functionality and the number of
  users requiring access to the software

36
SAP and the Competition Summary
You are now able to

• Characterize the competitor products of Microsoft
  Business Solutions and Sage KHK and describe
  their advantages and disadvantages