SoftBrands to Institute Fourth Shift for SAP Business One Manufacturing Work-Plan Part One: Event Summary

Event Summary

At the National Manufacturing Week (NMW) event, held February 23-26, 2004 in Chicago, Illinois (US), SAP AG (NYSE: SAP), the leading provider of enterprise applications, announced the availability of new industry-specific solutions for small and midsize manufacturing companies with the aim of extending its leadership as a provider of solutions for an even broader range of companies from small enterprises via mid-market companies to the world's industry leaders.

SAP's two-tiered product offering for small and medium businesses (SMB)—SAP Business One and mySAP All-in-One solutionsaims at addressing the diverse IT and business requirements of manufacturing companies of varying sizes, resources, and complexity. Both solutions for SMBs are designed to be competitively affordable and easy-to-implement for adequate enterprises, and are delivered through SAP's partner network. While SAP Business One is designed for smaller companies with less complex business processes, SAP also offers its partners mySAP All-in-One turnkey solutions to meet the industry-specific needs of more sophisticated companies. Namely, this is for the "sophisticated" or the upper echelon SMBs with a high need for individualization and industry-specific functionality. SAP is globally expanding its existing strategy of offering industry-specific SMB solutions ranging from automotive supply to food processing. These are based on the flagship, top of the range mySAP Business Suite product and are tailored, configured, and complemented by SAP channel partners, and are also available on a fixed-price, fixed implementation time basis.

To that end, in 2003, SAP and its network of qualified business partners reportedly introduced 120 new manufacturing solutions, including such specialized offerings which range, for example from fabricated metals, construction equipment, and civil works to agro-products companies. SAP and its partners currently offer 180 mySAP All-in-One solutions for manufacturers globally, based on industry best practices from SAP's more than thirty years of experience serving the world's leading businesses. For example, to meet the needs of custom manufacturers, US-based N2 Consulting has leveraged its expertise as an SAP consultant to develop FastTrack, a pre-packaged, fixed-price and implementation timeline mySAP All-in-One solution that can be implemented in as few as sixteen weeks. Spanning the engineering, quality, sales and service, and finance functions for small and midsize companies, FastTrack is touted as an end-to-end, complex manufacturing solution to manage processes such as make-to-order (MTO) with product configurator, engineer-to-order (ETO), engineering change management (ECM), service management, and make-to-stock (MTS).

Other additional new mySAP All-in-One solutions would include BDO para Agroalimentos, offered by SAP partner BDO for agro-products companies in Mexico. The solution helps companies manage purchasing, production, bulk delivery, and sales administration processes specific to the manufacture of products for the agricultural industry. Last but not least, for high-tech and electronic manufacturers, South Korea-based BizTech Consulting Co., Ltd., has introduced the BizExpert solution, with industry-specific capabilities such as electronic manufacturing system management, bin management, and multiple planning scenarios.

As for the lower-end of the market, SAP has designed SAP Business One to meet the core management needs of dynamically growing small and midsize businesses, and is moving to better address the specific needs of small and mid-sized manufacturers through a planned strategic solution relationship with SoftBrands (, an established, privately-held, global leader in manufacturing management systems for SMBs, whereby the two vendors have initiated efforts to integrate SoftBrands' leading manufacturing software product Fourth Shift with SAP Business One. Fourth Shift is a renowned mid-market, web-based manufacturing management solution that has broad functionality and that facilitates many critical business functions including manufacturing, operations, financials, and customer and supplier relationship management (SRM).

The integration of Fourth Shift Manufacturing Edition with SAP Business One is scheduled to be released in two phases beginning in July 2004. It should give small manufacturers fairly comprehensive but easy-to-use capabilities for managing a variety of manufacturing processes to replace dated legacy systems and manual processes. The combined solution should enhance capabilities in SAP Business One to serve repetitive, batch, MTO, discrete, and mixed-mode manufacturers, as well as those that are on the path to lean or demand-driven operations. Namely, further down the track, the relationship with SoftBrands will also extend SAP Business One with Fourth Shift's DemandStream Lean Enterprise Automation integrated module, a specialized solution for managing lean manufacturing operations. The combined solution will be offered through SAP Business One partners worldwide, while SoftBrands will continue to support manufacturers in its key worldwide markets, including the US, Europe, Middle East, Africa, China, Asia Pacific, and India.

Prior to this announcement, in November, SAP announced the US launch of enhancements to SAP Business One that combine broader customer relationship management (CRM) capabilities and comprehensive business management tools in a single software solution. SAP Business One was originally launched in the United States in March 2003. The solution's award-winning Drag & Relate data navigation system, which encompasses good traits (i.e., "the best of both worlds") similar to both Microsoft Excel Pivot Tables and to typical report writers' querying capabilities, has since provided users with intuitive data access simply by highlighting and dragging pieces of information on the screen. Additionally, the product features strong integration with desktop applications, since users can drag information between different data sources and link them on the desktop. It also has integrated customer relationship management (CRM) system for pipeline tracking, opportunity management, strategic selling, and contact management, while other initial key functionalities also include comprehensive financial management, with multi-currency, budgeting, and bank reconciliation; a well-rounded inventory management system, with kitting and multilevel price lists; and a comprehensive reporting module that allows easy access to any data.

The solution initially supported only the Microsoft SQL Server database and the Microsoft Windows operating system, which was recently extended with the support for the Sybase database. Its open architecture has reportedly allowed integration with the flagship mySAP Business Suite giving companies the adaptability to scale their applications with the growth of their business. In addition to the US, SAP Business One has meanwhile become available in twenty-six countries and twenty-five languages as of first quarter 2004, and the product has nearly 3,000 customers and over 500 partners worldwide. The newest version of SAP Business One is available to SMBs in the US, through SAP AG's subsidiary SAP America, Inc. and its SAP Business One distribution partner channel.

This is Part One of a five-part note.

Part Two will continue the event eummary.

Parts Three and Four will discuss the market impact.

Part Five will cover challenges and make user recommendations.

CRM Functionality and More

With these most recent enhancements, SAP Business One has made CRM functionality an intrinsic and fundamental part of core business automation, as opposed to a discrete silo of customer information in the shape of a customary add-on module. This relieves small businesses of the need to purchase separate products; maintain costly, patch-work integrations; or utilize different user interfaces (UIs). The vendor believes it is important that small businesses view CRM not as a mere mechanism for increasing front-office data gathering but as a core part of their business system, targeted to immediately improve the company sales and service performance. To that end, the new version of SAP Business One provides built-in CRM functionality across the entire spectrum of business information. In other words, information from customers, the sales force, suppliers, and business managers is tied to other business information, so that chief financial officers and other managers can drill down into sales information; a sales person can avoid risks by exploring customers' debt; while buyers can plan purchasing according to real demand, based on the sales opportunities managed in the software.

Thus, within a single application, SAP Business One allows business managers to run their entire business from their desktop, viewing customer, partner, sales, and inventory information as they relate to other business activities and not merely as a freestanding silo of customer preferences.

Further, the new version of SAP Business One now offers service management capabilities that provide support for company service operations, including service contract management, service planning, tracking of customer service use, and support and management of service sales opportunities. In addition, new employee relationship management (ERM) capabilities should strengthen a company's ability to manage employees by providing efficient tools to track information about employees, their roles and activities. The ERM capabilities should also allow companies to organize information on service technicians, such as their labor rates, in order to support field service management activities.

Also, new contract management capabilities track customer equipment, service contract agreements, and customer use, since SAP Business One automatically updates customers' equipment records upon purchase so that users can track whether products are under warranty or special service contracts. Finally, the embedded knowledge management (KM) offering should help customer service representatives by recommending solutions to service call issues and greatly reduce the training and ramp-up time of new customer service personnel. These enhancements build on the solution's original CRM capabilities, which, as mentioned earlier, enable business managers to track sales opportunities, view pipeline opportunities, and follow customer activity.

With the above new features of SAP Business One, SAP believes small businesses can now address most of their business needs in one out-of-the-box solution. And for those businesses hoping to integrate SAP Business One with additional systems, or to add functionality to the system, SAP is now offering the SAP Business One Software Development Kit (SDK), which is touted as one of the most advanced development environments available in the SMB space that will allow SAP partners to facilitate SMB requests such as connecting to a third-party system, extending the capability of SAP Business One by integrating a very specific functionality or integrating to other company-specific software. The development environment of the SDK will supposedly allow partners to create custom solutions for customers in a timely and cost-effective way. The SDK supports all commonly used development languages, including Java and Microsoft .NET, allowing partners to migrate their solutions quickly to the SAP Business One environment.

Consequently, at CeBIT 2004, which was held in Hanover, Germany, March 18-24, SAP announced that its solutions for SMBs were gaining market traction as large companies in numerous industries seek the advantages of transparency, real time reporting and business process integration with their subsidiaries, trading partners, and suppliers. Namely, companies around the world have recently entered agreements to deploy mySAP All-in-One or SAP Business One solutions at operating affiliates across the globe, such as BioMer C.V., Broring, Clever Stolz Lebensmittelwerke, Dongguan Jin Yuan Electronics Co. Ltd., Edding, Endress+Hauser, Hangzhou Hualong Technology, Heicko Schraubenvertrieb, IBS Filtran, Kohler Company, Lapp, Metro Richelieu, Oase, OMYA, Rosenthal, Schaap & Citroen (part of Vendex KBB), Sigma Kalon, Sparkice Inc., Super Bright Photo Electrics, and VEKA AG.

As there is still a significant percentage of small and midsize businesses that are affiliated with a parent company, while others engage with larger companies as customers, partners or suppliers, SAP believes its value proposition emanates from the fact that its solutions for SMBs integrate fully with the solutions of mySAP Business Suite and other SAP solutions used by more than 21,600 SAP customers, enhancing reporting and information sharing; streamlining business operations; and increasing efficiency between parent companies and their operating affiliates. This seamless integration becomes an increasing competitive advantage as businesses demand more transparency across their operating networks to meet new regulatory reporting requirements and seek enhanced collaboration and efficiency with their affiliates, partners, and suppliers to achieve growth.

This concludes Part One of a five-part note.

Part Two will continue the event summary.

Parts Three and Four will discuss the market impact.

Part Five will cover challenges and make user recommendations.

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