The Canadian subsidiary of SAP AG has signed a Calgary-based solution provider to help it sell mySAP All-In-One solutions into key vertical markets.

Matrix Business Solutions Inc., — a merger of Calgary-based isp3 and RMB of Denver — will develop a solutions template for asset

intensive industries such as manufacturing. Release date of thetemplate is scheduled in the latter part of 2005. Matrix is also working with IBM’s Montreal-based SAP Centre of Excellence to “re-market” IBM’s mySAP All-In-One solutions for wholesale and distribution, fabrication and assembly, consumer packaged goods and food and beverage industries.

With the Matrix signing SAP now has 11 partners developing industry solutions, giving it 42 mySAP All-in-One solutions in North America and 280 worldwide.

All-In-One is a slimmed down version of SAP’s enterprise resource management (ERP) application targeting small- and medium-sized companies.

“Our whole (SMB) strategy is around market segmentation, industry and micro-verticals,” said Jeffrey Watts, senior vice-president at SAP Canada Inc. “It’s the ability to provide industry-specific knowledge and expertise and templated solutions that allow us to be successful in the mid-market.

For that reason, SAP Canada is looking to partner with companies like Matrix.

“(Matrix) has got great people in terms of the skill sets and knowledge they have. Not only of the marketplace, but of their solution sets,” Watts added. “From a vendor perspective, they know how to sell, which is very important.”

With 14 years of combined enterprise resource planning experience between the two firms, Matrix president Russell Barnett said nearly three-quarters of the solution share some form of commonalties.

“If we pre-configure solutions so that we start off at 70 per cent complete then Matrix is an organization that’s able to deliver tier one functionality to smaller organizations quickly and efficiently,” said Barnett. “SAP recognizes that with their All-in-one product and we’re teaming up with them to take care of that market space.

“We are helping to flush out the solution to that 70 per cent pre-configuration of what we understand customers are requiring.”

Yesterday’s announcement marks the company’s first formal partnership with SAP for six-month old Matrix. It’s also a reseller of IBM’s IFA solutions.

“It’s kind of like the band got back together,” said Barnett of the merger that created Matrix. Barnett heads up the company’s 60 employees out of which 40 came from JD Edwards, including Barnett.

IBM has a similar SMB channel strategy when looking for companies to partner with. “We need to leverage partners with either industry specific skill sets or really good reach into local markets that we can use to enhance our position,” said Gord Townley, national SAP practice leader at IBM Canada.

Globally, 25 per cent of IBM’s total revenue in fiscal year 2003 came from small and medium business sales. In the second quarter of 2004 (ending June 30), IBM reported $5.1 billion in SMB sales worldwide.

“We see partners like Matrix providing us with the opportunity to do even more (SMB business),” said Townley. IBM defines SMBs as companies with fewer than 1,000 seats, Townley added.

Over half of SAP’s installed-base worldwide (approximately 43,000 customers) is in companies that are under the $500 million in annual revenue — a number that Townley says would surprise many people who still see SAP as a large enterprise player. Over the last decade, IBM has worked with SAP in terms of go-to-market channels and co-selling relationships to customers at the higher end of this segment, said Townley.

Watts said SAP Canada will do more business in indirect than direct sales in terms of business transactions this year. In Canada, SAP sells direct to companies with annual revenues of $250 million and above. Depending on the solution and partnering arrangement, SAP might choose to go to market with an All-in-one partner.

Companies below $250 million are all dealt with through the channel, Watts added. These businesses represent 66 per cent of SAP Canada’s customer base. All-In-One partners focus on customers from the $100 million to $250 million range but can go lower than that depending on the customer. SAP also has business partners that focus on smaller enterprises.

SAP’s vertical expertise differentiates it from competitors in the mid-market space such as Microsoft’s Great Plains ERP application and Peoplesoft. “It’s the knowledge of the vertical application, that industry segment that gets applied into the template that then gets delivered in a packaged solution to the mid-market,” said Watts.

The other differentiator, added Watts, is partnering with companies like Matrix that have a local presence and understand the needs of their customers and how to sell to them. “That’s the piece that the Matrix’s bring to this,” said Watts. “The customer gets the strengths of IBM, the strength of the local partner and the strength of SAP software all brought together.”

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