How SAP is helping SMBs grow in the midst of the pandemic
Greg Petraetis, SVP and Managing Director, Midmarket and Partner Ecosystem, North America at SAP
As businesses grow during the pandemic, they also encounter pressing challenges to maintain that success. Among them is the pressure to strengthen their digital backbone, which leads to the question: How can companies find the ideal technology provider suited to their evolving needs?
In the midmarket space, small- and medium-sized businesses (SMBs) often need support to buoy them through any choppy waters ahead. As a SaaS solutions provider, SAP has extensive expertise developing strategies to connect innovative companies with their customers.
“We’ve seen how so many SMBs want to become the next billion-dollar companies as they move from being innovators and disruptors to global leaders,” says Greg Petraetis, senior vice president and managing director, Midmarket and Partner Ecosystem, North America at SAP, in an interview with Protocol. “And we’re there to catch them along that trajectory and help them achieve that profitable growth.”
He added that front-burner priorities for future-ready businesses include environmental sustainability and effectively managing the supply chain crisis. These issues were highlighted in a recent Protocol-Morning Consult survey of small business leaders, presented by SAP. Close to half of the respondents stated it was very important to adapt production to meet sustainability goals and regulations during the current supply chain crisis.
Protocol sat down with Petraetis to discuss the challenges SMBs face today, how the right technology can help them leap over those hurdles and what lessons business leaders can learn from the pandemic’s impact on business processes and operations.
What are some of the key challenges SMBs face today?
What comes to mind is hypergrowth, which can be a consistent challenge and opportunity. Many SMBs are projected to grow nearly 60% in the next five years, and that can create tough situations for their businesses and their teams as their technology needs also grow.
I was talking to one CIO and found out their IT staff is five people, three of which work part time. There is this historical notion that SAP is for big companies but we can offer these CIOs the ability to grow with cloud solutions such as S/4HANA so they can get up and running quickly to get prepared for the future.
We have a strong track record for doing this with well-known brands such as Moderna and LIVEKINDLY, working with them when they were smaller companies and supporting their steady growth over the past few years. This is a testament to not just the way we simplified implementation and operational sustainment of these companies but also a testament to the ecosystem. They look at SAP, and think, “Wow, there are 3.5 million people surrounding the company!” There is comfort in knowing they can find the skills among our ecosystem to sustain and grow the technology they implement.
Another topic on our radar is how many SMBs are focused on sustainability. There are shifting global customer demands about the environmental impact of an organization and we see that as a challenge those companies will face as well.
How does SAP leverage technology to help those businesses overcome these challenges?
When it comes to hypergrowth, as these companies look to put in a digital core for their business and a platform to support them, a solution such as RISE with SAP is important. It allows midmarket companies to leverage SAP’s industry expertise and line-of-business expertise and radically reduces the overhead of running an ERP system. It also allows high-growth companies to focus on outcomes without worrying about keeping the lights on. After all, they are not in the business of sustaining technology; they are in the business of their business.
We are a partner-first organization because we recognize we can’t possibly do everything in-house. The walled garden always falls, in my experience, and so we have more than 22,500 partners worldwide to bring innovation and subject-matter expertise to the table. In a cloud-first environment where industries are becoming more connected, we’re investing in the cloud to enable future-driven business models but we’re also counting on innovation available across the partner and cloud ecosystem. We pride ourselves on supporting an open ecosystem of technologies to give them the benefit of choice, flexibility and scale.
When it comes to sustainability, we have invested in those areas in response to shifting global and consumer demands, and we constantly have an eye on that area from a development perspective.
In a recent Protocol-Morning Consult survey, close to two-thirds of small business leaders rated meeting their businesses’ immediate needs as a high priority when it comes to selecting a technology provider. What considerations should be top-of-mind for SMB leaders as they look for the right technology provider?
Industry expertise is an enormous differentiator. Does your technology provider come to the table with technology but also with expertise to get you up and running quickly? Is the provider situationally fluid in your business, business model and the processes you need to serve?
SAP’s industry cloud, as the open-innovation space for SAP customers and its partners, provides the environment to build differentiating solutions for the core businesses of our customers. You should expect more than just great technology with the businesses you work with, but also expect that subject-matter expertise around the technology, business process expertise and soft science.
Also important is the ecosystem. Is the technology provider engaged with the ecosystem in order to come to the table with thoughtful best-in-class recommendations? That doesn’t mean to focus on just those who implement the technology. An example is looking at stakeholders surrounding the SMB and often the big ones can be private equity or venture-backed organizations. We figured out that one out of every three customers we are working with are either private equity, growth equity or venture backed, and we are looking to service the needs of that community because they invest in these organizations with a disciplined investment thesis and profile.
In addition, we have become a leader in the business process intelligence space. When we acquired Signavio, we folded that business into our solution RISE and we offer business process intelligence into that suite to allow midmarket customers to continually evaluate day-to-day business operations and benchmark them against peers in the industry. Going that route can help them make decisions about their end-to-end processes not based on emotions but based on facts.
In the same survey, nearly half of small business leaders said it was very important to adapt production to meet sustainability goals and regulations during the current supply chain crisis. How does SAP confront this challenge, and how can SMBs best manage the supply chain backlog we’ve been seeing in the past two years?
If we look at the supply chain backlog, SAP can assist to ensure transparency across the supply chain. Among SAP customers, the first ones affected by the pandemic were businesses dependent on supply chain manufacturers in COVID hotspots, and they experienced sudden swings in demand and supply. So, we opened access to our software, such as SAP Ariba Discovery and SAP Integrated Business Planning for Supply Chain, making it available for free for 90 days. Our customers were able to predict demand shifts and deal with dynamics caused by supply chain disruptions. They could switch suppliers quickly and keep critical production lines running. We’re proud that we can lead with our software, and we did what we could to help make a tremendous impact in this area.
Looking at sustainability goals during the supply chain crisis, we more broadly help SMBs to create sustainable supply chains by effectively managing the creation and exchange of the data that’s needed to account for the full value of carbon emissions and material use. We want to support companies’ achievements of zero-emission goals, and we launched a program called Climate 21 to help companies minimize and disclose the full carbon footprints of their products and services. We also built capabilities into our core analytical systems to help customers analyze all the greenhouse gas emissions across their operations and supply chains so they can determine the carbon footprint down to individual product level. For us, it’s not just words. We are investing heavily in this as a discipline.
What lessons can SMBs glean from the pandemic’s effect on employees, systems, analytics and leadership?
What we’ve seen is so much resilience in the SMB market in the past two years. We have also seen a lot of investments, and the number of companies that chose to work with SAP in 2020 went up compared to the year before. That type of investment is making these companies react and quickly adapt because many of them had to shift to entirely new business models, with ecommerce being a major consideration.
The adoption of technology has grown exponentially as companies embraced new ways to work. We saw the constraint with employees, and that’s where the partners and ecosystem relationships we have developed become important. At end of 2020, we built a consortium with SAP and SAP partners in conjunction with the Association for Corporate Growth to create SAP Mergers and Acquisitions Ambassadors, a select group of partners with specializations across industries to respond to and support the needs of CEOs and private-equity operating partners and venture capitalists. As a function of community, we’re trying to bring everything together so these SMBs can receive every benefit possible.
What are the investments that SMB leaders need to make today in order to be future-ready for tomorrow?
Everyone has a different point of departure, and I think that for SAP the reason we are doing so well with these customers is due to the breadth of our portfolio, ecosystem and industry focus.
I talked to a CEO and told him his CFO said he needs a new finance system in place. He said, “I do, but I have a site that doesn’t work and a procurement strategy that is broken and business processes that are sub-optimized and I also have HR-related issues. I have seven priorities and have money for four and resources for two and patience for one.” I told him, fine, let’s get started, and we began dealing with his ecommerce issue first and then dovetailed to look deeper into a broader ERP transformation project. This was a more consultative process than a selling experience. We worked with that company to create a blueprint around their requirements for today and the foreseeable future. We didn’t sell them a spot application, but a framework supported by SAP’s transformation platform to support their future growth and provide them with agility as their business evolved.