SAP thinks it is bringing something to small and mid-sized local governments that most of them don’t have good options for: cloud-based enterprise resource planning (ERP) software.
The company has retooled one of its existing products, the commercially focused Business ByDesign ERP, to meet government’s functionality and reporting needs, according to SAP’s Elizabeth McGowan. And they’re specifically shooting for the cities and counties that don’t have huge budgets or workforces — in fact, they’re specifically looking at governments with fewer than 1,500 employees.
“Right now, my understanding is that there really is not a whole lot traction yet for cloud ERP,” said McGowan, the company’s global cloud strategy lead for public services. “We know that there are some other vendors in this space — not necessarily pure cloud, somewhat hosted.”
ERP is a well established corner of the tech market, with well-known vendors like Oracle and Tyler already serving lots of public-sector customers. But a lot of those customers bought ERP more than a decade ago — many of them in response to the Y2K scare — and need to replace their systems, McGowan said.
And SAP is seeing more of those customers asking about cloud ERP in their requests for proposals.
“They want to have a more stable cost structure,” she said. “The cloud offers them predictable, low-cost solutions so they can budget out one, five, 10 years.”
The software offers many of the traditional functionalities of ERP, including human resources, project management and finance features, according to Ingo Feucht, senior director for Business ByDesign product management. By the end of the year, the company plans to release grant management functionality too — something it thinks will be especially appealing to education, research institutions and nonprofits.
But there are more specific functions that can be built into the software as well. SAP’s partners have built up an array of add-ons for specific needs.
“It’s a very strong product in terms of extensibility. I think it’s over 2,000 add-ons that the partners have developed over 20 years,” McGowan said.
Business ByDesign also includes built-in analytics.
“It’s not that you have analytics outside or something like that; it’s in the solution from the beginning, it’s in every transaction when you want to see something, the visibility is there,” Feucht said.
The kinds of governments Feucht sees turning to SAP’s new software will likely be working in legacy, siloed systems with high levels of customization that have proven burdensome over time, he said. They will be looking to dedicate less time and resources to on-premise IT infrastructure and nail down a less volatile cost schedule for ERP.
They will also likely be looking to emulate successful strategies from their peers.
“They are saying, ‘We’re really not that special, we want to use the best practices we are seeing in a lot of other cities,’” he said.
With the ERP announced this week, SAP has no government clients for the project. Rather, it’s sold the project to public-sector-like organizations in Canada and Europe.