SAP partners with Fourth Shift for manufacturing SME system

Giant SAP is partnering with Fourth Shift (strictly SoftBrands) to bring the latter’s manufacturing capabilities to SAP’s Business One system – the system it acquired a couple of years ago to provide an entry level solution for SMEs. The announcement came at the National Manufacturing Week event in Chicago, which opened its doors today. Under the deal, SoftBrands is to integrate its flagship Fourth Shift manufacturing ERP software into SAP Business One, and provide support for SAP’s channel partners and users around the world. It’s a big surprise given the choices before SAP. Few doubted SAP’s intention to develop Business One for manufacturing in due course, but most expected the development to spin out of SAP’s existing and very deep manufacturing-focused functionality. It probably wouldn’t come from SAP’s mainstream big league mySAP Business Suite (effectively R/3) – although it could, and there are SMEs running happily on what amount to templated versions of that. But it could come from SAP’s work with its All-in-One offering, geared to vertical markets through its channel partners. The fact that it’s gone outside the massive SAP empire is a difficult one to read: is it expediency, price, ROI, an admission of inappropriateness in SMEs? However, the fact that Fourth Shift has got the deal is quite clearly a seriously big feather in its metaphorical hat, given that many an ISV would have bitten SAP’s hand off for the opportunity. Randy Tofteland, president and chief operating officer of SoftBrands reckons his company will see a “dramatic increase in revenues” in the first year, and that thereafter it’s expecting growth through the SAP deal to be exponential. Why Fourth Shift? We’re unlikely to know, but Tofteland puts it down to the company’s existing solution for manufacturing SMEs, which is wide-ranging and covers push and pull lean-orientated manufacturing capabilities, the latter based on functionality in its DemandStream system – although that specifically isn’t included here. It means SAP Business One will instantly be able to serve repetitive, batch, make-, engineer- and configure-to-order, mixed-mode and lean or demand-driven manufacturing operations. It’s also the case that Fourth Shift systems have been integrated into SAP by the company for multi-national organisations that have needed ‘smaller’ systems for some of their sites – but then which hasn’t? Tofteland also points to SoftBrands’ coverage of the United States, Europe, China, Asia Pacific and India – where it will also be able to offer both indirect and direct support if required. And there is some value in that – although again, the firm is not alone there. What’s certainly true is Tofteland’s observation: “This relationship will create a powerful solution for thousands of small-and-midsize manufacturers… “Potential customers of both companies stand to gain from Fourth Shift’s functionality and SoftBrands’ successful record of short implementation time, rapid ROI and value for money performance – coupled with SAP’s experience, strength of resources and global presence.” Another thing is for sure: SAP is also expecting good growth from this in a bunch of markets that it’s been working at penetrating for years. Says Hans-Juergen Uhink, senior vice president, SMB with SAP: “Manufacturing companies have weathered the economic downturn and are now poised to seize on opportunities for growth. “With our selection of affordable, easy-to-implement solutions, SAP and its partners offer SMBs proven technology, unrivaled industry expertise and the ability to increase efficiency across the entire business ecosystem to maximise competitive advantage and growth.” In a world where mid-market serving organisations are being acquired, absorbed, consolidated and the rest, up pops another one with considerable muscle and potentially appeal. It’s not difficult to see SAP-buying firms turning to the extended Business One in the knowledge that it’s got the best of all worlds: the SAP brand, proven complex manufacturing capability and global support. Incidentally, Tofteland tells me that the Fourth Shift product line will still be available as a separate system and will continue to be developed. The jury is out on which system will see most sales.