SAP's Very Big Small Biz Challenge

The German business-software giant wants to extend its global reach and reach out to small and medium-sized companies with new products

by Michaela Schiessl

The man is a true linguistic marvel. Léo Apotheker switches effortlessly between German and French, converses in Hebrew and gives presentations in fluent English.

But now this cosmopolitan executive faces a true trial by fire. "I have to learn the language of small to medium-sized businesses," he says. This is no easy task for someone running a global company.

Léo Apotheker has been the second-in-command at software giant SAP since March, and he is widely touted as being destined for the top spot at SAP when the contract of its current CEO, Henning Kagermann, expires in 2009.

Apotheker, 53, spent 19 years in his Paris office helping to make a global player out of the company, based in the southwestern German town of Walldorf. His efforts have clearly paid off: Today SAP is the global market leader in the business software industry, employing almost 42,000 people in 50 countries.

A born salesman, Apotheker has been a member of the SAP board of directors since 2002. He is intimately familiar with most of the world's major corporations, including companies like Volkswagen, Aventis Pharma, Siemens and Deutsche Bank.

But now Apotheker will have to learn to think on a small scale, putting himself in the shoes of German ball bearing manufacturers, Indian textile producers and French purveyors of luxury foods. "We must develop solutions for the problems that keep owners of small- and medium-sized businesses awake at night," he says.

It's an enormous task, and for SAP it means nothing less than completely reinventing itself: its technology, it distribution channels, its marketing and its consulting. Hardly any aspect of SAP's business with major companies is relevant to smaller businesses with 50 or so employees.

These sorts of companies don't need fine-tuned, customized products, but a reliable, easy-to-use and inexpensive program. SAP has already developed a uniform and robust platform for these new customers. Starting with this platform, the customer can develop special programs specific to his industry. "This is essentially a major step toward the industrialization of software," says Apotheker.

The new product is so different, so foreign, that although it was developed within SAP, a separate subsidiary was set up specifically for it. This approach is meant to prevent a potential dilution of SAP's traditional values. "We are still practically religious when it comes to quality and reliability," says Apotheker.

The new software for mid-sized companies, which is currently known by its working name, A1S, and which SAP will unveil in New York on Sept. 19, undoubtedly marks the most radical shift in the company's 35-year history. Unlike SAP's corporate software packages, which are sold under license and modified by SAP consultants, a process that sometimes takes years, the new product will be available for download by mid-sized companies in early 2008. The company is pursuing an "on-demand" model in which the product is leased instead of purchased and where software can be updated, modified and maintained online. "It has to be as easy as downloading music from Apple's iTunes," says Apotheker. "I want to create a cool platform for companies."