New York (March 28, 2003) -- SAP AG, one of the world's largest developers of enterprise software for multi-national businesses, has recruited American Express Tax & Businesses Services to play a major role in its new effort to penetrate the small and mid-sized business market in the United States.

The Germany-based company on Thursday launched the U.S. edition of Business One, which it calls "an affordable and easy to implement' enterprise system for companies with as few as 10 employees. It also announced that AmEx T&B, ranked eighth on Accounting Today's Top 100 Firms list, will develop vertical industry versions of the product and develop and manage a national network of resellers for those versions.

"We will go to the market together to open up SAP's expertise in enterprise management to an entirely new segment of small and mid-sized businesses," said Bill McDermott, chief executive of the American operations for SAP, which has some 19,000 business customers worldwide, including 4,000 in the United States. "Together, we have big dreams," AmEx managing director Gerry L. Golub added during a press briefing at SAP's U.S. headquarters in New York.

New York-based AmEx, which has 54 offices in 16 states, will use some of those offices to handle BusinessOne and will recruit reseller/consultants not affiliated with it.  "We will have coverage in all the major markets," AmEx consulting operations managing director Harvey S. Goss said, adding that AmEx offices in Chicago, New York, Baltimore-Washington, D.C., and Ohio are already trained on the product.

An implementation of Business One for a company with three system users could be completed in a few weeks and cost $25,000-$30,000 for licenses and services, according to people familiar with the product. SMB market observers have contended that high-end vendors, such as SAP, Baan and Oracle, would be hard-pressed to develop solutions affordable to SMBs.

SAP first announced plans for a new, major SMB product a year ago, and since then has been rolling it out in other countries. "The moment is right in the United States and we have the right partner for this," McDermott said.

He added that SAP is expanding in the SMB segment because that market's purchase of software and related services has been growing 21 percent per annum, while high-end market sales have "shrunk."

The SMB software market is now dominated by business management software vendors, such as Microsoft Business Solutions, Best Software and Accpac International, who focus primarily on that segment and have well-established reseller channels. Those vendors have repeatedly said that SAP and other high-end vendors lack the expertise in building the channels needed to serve SMBs.

"SAP will eventually discover that you cannot serve the middle market without a good channel," Accpac chief executive David Hood said in a story in the April 8, 2002 edition of Accounting Today.

-- John M. Covaleski

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