SAP targets SMEs in enterprise software sales

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SAP targets SMEs in enterprise software sales

SAP Korea, the local affiliate of the German-based enterprise software provider, is expanding its sales target to small and medium-sized companies in an attempt to move beyond its image as a high-end provider catering mostly to conglomerates.

“A third of SAP India’s revenue comes from small and medium-sized enterprises, but in Korea, they only account for about 7 percent of sales,” Hyoung Won-joon, CEO of SAP Korea, said Tuesday in a press briefing. “Moving forward, we plan to offer various enterprise solutions customized to SMEs using our cloud-based software so they can make use of our products more easily at a lower price.”

SAP provides enterprise resource planning software that can be used on-site or through a cloud. This software lets companies observe all processes of its business from manufacturing to sales and delivery, and helps them quickly address bottlenecks or disruptions that can harm business efficiency and customer satisfaction.

Enterprise software for SMEs include S/4HANA and Business ByDesign. The latter allows SMEs to buy only the components they need for their company. While many small and medium-sized companies in Korea have started implementing such software to digitalize more of their business processes, only a few of them have expressed satisfaction.

According to data released Tuesday by market research firm IDC, 38.5 percent of Korean SMEs have adopted enterprise software, the highest rate among 13 countries surveyed, but only 3.3 percent said they saw improvement, the lowest satisfaction rate among countries.

Chang Soon-yul, a research director at IDC Korea, said this was because many local SMEs adopted cost-effective software from time to time when a specific problem or demand arose.

“SMEs should implement an integrated system over all business divisions and factories to see benefits from implementing such systems,” Chang said. “Now the time has come for Korea and the industry to seriously think about how to enhance the competitiveness of SMEs so they can survive this digital transformation.”

SAP Korea is targeting SMEs with annual revenue of 20 to 250 billion won ($17 to 218 million) and a workforce of over 50.

“We are seeing cases where SMEs install cloud-based solutions such as ByDesign in less than 12 weeks,” CEO Hyoung said. Before, such systems took about six months to implement.

“Backed by our aggressive pricing, we will take a big step into the local enterprise solutions market this year.”

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