Ask a group of 12-year-olds where their software or database resides and they'll emit uncomprehending stares.

Whether viewing YouTube videos, FaceBook pages or Instant Messenger chats, "technology natives" could care less about what's under the hood of their favourite computer application. Nor do they trouble their little heads about details like software licences, version control and patch management. They just get stuff done.

Business is starting to learn from the kids. More and more of us are reading our e-mail from a website in airport lounges, blogging at coffee shops and IMing on cellphones and PDAs.

Companies such as Salesforce.com offer on-demand customer relations management for as little as US$10 per month. So travelling sales drones can look up the name and birthday of that big client's daughter or dig around in product catalogues, all from the comfort of a hotel room laptop.

Michael Sotnick

The Road Warrior can even file an expense report online. The tech industry abhors a name vacuum, so this concept has been christened software as a service (SaaS.)

But it does sound kind of piecemeal and haphazard. After all, the salesperson's company undoubtedly runs an accounting system that ultimately needs to chomp on that expense data.

Updates to the product line should be instantly reflected in online catalogues. It all cries out for the Holy Grail of business process software - enterprise-wide integration.

Love them or hate them, big enterprise resource planning (ERP) systems such as SAP Business Suite and PeopleSoft Enterprise excel at moving information around a company. The problem has been the cost.

It's not uncommon to hear of ERP project budgets in the tens of millions of dollars, when you add up the software, new hardware, consultants to make the thing fly, extensive staff retraining, consultants to fix what the first consultants did wrong, etc. It's enough to scare off many organizations that might actually benefit from the beauties of enterprise-wide integration.

SAP AG, which leads the ERP industry in market share, took a swing at the small- business market in 2002.

It purchased an Israeli software developer and followed up with other acquisitions that were blended into its SAP Business One offering.

The company claims more than 15,000 customers for this product, including Calgary-based Datalog Technology and Keen's Pump Shop of St. John's, Nfld. But the company also agrees that it tops out at about the 100-employee level. SAP Business Suite, the behemoth of the SAP stable, is generally for firms with more than 2,500 employees. There's a lot of business in between.

On Sept. 19, SAP announced a new SaaS product called Business ByDesign. It comes with very un-SAP-like pricing, as low as $149 per user per month, with a minimum of 25 users. And that includes having the application hosted on an SAP computer.

According to Michael Sotnick, senior vice-president of SME, SAP America, the company has made a strategic decision to stick to its knitting. "Clearly, we are financially positioned to be able to acquire or invest or grow outside of our core in adjacencies," he says.

"You can look at middleware, databases or infrastructure software and other places. And we've resisted that and really decided we're going to stay true to core, maintain our leadership position in our heritage and strength as a business application and business management software leader, and we're going to expand our footprint ... into small and mid-size customers."

Anyone who follows SAP may experience a sense of déjà vu since the company already has a product for firms up to 2,500 employees called SAP Business All-in-One. It's really a preconfigured version of the heavy-horsepower SAP system.

In a remarkable piece of PR writing on the company's website, it poses this doozey as a frequently asked question. "We just licensed an SAP solution; did we make the right choice by not waiting for SAP Business ByDesign?" Then SAP gives the hearty if not totally reassuring reply. "Absolutely. SAP Business ByDesign is just one of several offerings to meet your needs. You made the right choice by selecting an SAP solution that can immediately address your needs."

The company pledges to keep investing in All-in-One, though this now gives it four different platforms to take care of. Sotnick explains that All-in-One is still the right choice for companies with "requirements to take deep industry expertise and apply it into their environments."

In other words, firms whose IT needs require serious thinking.

"But," he says, "there is a group of organizations that is less interested in deep industry functionality, but just wants to connect their call-centre operations and (demand-generation) operations and salesforce into their core financials and out through their supply chain, and there has not been a Tier One solution that's integrated end to end until Business ByDesign."

Competitors such as NetSuite might disagree, but it's clear that SAP is now the elephant in this room.

Sotnick hopes to pry loose some new market niches.

"SAP has historically not had a huge footprint in professional services in the midsize," he says. "If you look at some of the early adopters of Business ByDesign you see a lot of service providers embracing SAP and embracing that solution, which is really exciting to me.”

As examples he gives the Pennsylvania-based Judge Consulting Group and The Birchman Group Ltd., a London, U.K.-based management consultancy.

With pricing in the hundreds rather than millions of dollars, there won't be room for many lavish lunches for customers and frolicky trips to SAP conferences.

The most recent SAP-fest, SAPPHIRE '07, took over Atlanta's Phillips Stadium for a private concert by singer-songwriter John Mayer. He was vaguely visible through the alcoholic haze of computer consultants gone wild.

To get traction in the SME market, SAP will clearly have to rely on its network of partners.

Thando Moyo is president of Calgary-based Open Business Process Inc. He says Business ByDesign opens up a whole new customer base for him to chase. "It's a pretty exciting offering because it offers the customer more flexibility and takes a lot of the operational pressures off the business," he says.

This allows companies to "focus on their business and let the SAP part be run by SAP."

He hasn't played with the new product yet, but says its business practice templates should "help people get up to speed very quickly."

Moyo figures that product is suitable for companies as small as $25M in annual revenues.

Instead of an ERP project being measured in months, Moyo expects to be able to go into a company, do a gap and business process analysis and "come back in a few days and say here's a process using your data that we think is best for you."

He also says it will require far less training, is more intuitive and has a "softer look and feel" than SAP's previous offerings.

The real challenge, according to Moyo and others, will come when SAP's fatcat customers see what you can now get for $149 per month and start clamouring for it, too.

They may even forgo the nice lunches and trips to SAP headquarters in Germany in the interest of driving down costs.

A few insiders even suggest that the cannibals are at SAP's door, "and they are us."

Web Watch: www.sap.com

www.salesforce.com (Tom Keenan is a professor at the University of Calgary and an expert on technology and its social implications. He can be reached at keenan@businessedge.ca)