In the "advanced" SMB space, SAP offers Business One, a nuts and bolts platform for wholesale, distribution and service companies, says Allen Brault, SVP of small and medium-sized business at SAP. Business One, not yet integrated with mySAP.com, is drawn from SAP's acquisition of technology from Israeli firm TopManage and includes accounting, logistics and sales force automation.

In the "sophisticated" SMB space, which includes small to medium-sized manufacturers with needs extending into the supply chain, SAP is offering up mySAP All-in-One, a pre-configured version of the enterprise-class mySAP.com, which runs on a single database and single instance of SAP's application server. "The more you get to a manufacturing supply chain scenario, the more you need my SAP.com functionality," says Brault.

In the case of the latter, the SMB evolution is natural, says Brault. "We're coming as a tier one vendor looking back, not the bottom up approach," he says. A key differentiator for SAP is experience in several verticals which allows it to package repeatable solutions, in this case for 11 distinct vertical markets. "If you go through the evolution of what we've done say, in pharmaceuticals, we've dealt with clients on a grand scale. [For the SMB client], the implementation costs go down because we decrease the guesswork."

Business One, on the other hand, fills a void SAP has been trying to address for some time, beginning with a 1994 effort called "Project Heidelburg" to dumb down the flagship R/3 product. So says AMR Research SVP of strategy and research Bruce Richardson. "They've been looking at this space forever. They looked at an AS400 vendor, they looked at QAD, who can we buy with a product better suited to small companies."

While SAP will sign small companies from time to time, Richardson says the real target here is subsidiaries and divisions of SAP's installed base. What "drives SAP crazy" he says, is to try and create an end to end solution for a large client like Gillette, which runs R/3 at the backbone, but another product like QAD at its plants. "They say, why don't you go all SAP? But the customer doesn't want to go through a 20-month implementation cycle and they don't want to spend 20,000 per user to get the thing integrated. SAP wants to say, 'For a small price and no consulting, we can solve this in a day, you'll be live within a week.'"

Brault sees the same scenario, but from the benefit view of a unified solution. "The subsidiaries often choose their systems, one might be home grown, another is Lawson, a third is [Microsoft] Great Plains. Files are consolidated once a month. They have no way of looking at inventory, what's available, price quotes, what you'd expect."

Initially, says Richardson, SMB clients will stick to simple functionality like financial reconciliation and simple sales force automation. "Over time, SAP wants to have a beachhead so they'll be able to sell the internal collaborative applications."

SAP defines the profligate U.S. SMB market as companies with $500 million in revenues or less. In EMEA, SAP defines SMBs on a smaller scale, revenues up to 130 million euros. Brault says 50 percent of SAP installations are with companies with $500 million or less in revenue; both Business One and All-in-One target companies with several dozen up to 2,000 employees. "We'd rather distinguish this market in terms of business process complexity rather than number of employees," says Brault.

No pricing information was made available for Business One, which is to debut in Q4.