Interestingly, Baitler, who started his career some 30 years ago as an assistant manager of purchasing with insurance company Prudential, says that although he sees little difference between how top-tier and mid-market companies use technology, he believes that large enterprises are somewhat "stickier." In the Fortune 1000 segment, an executive sponsor within an enterprise will have leapt through various hoops to establish a relationship with a solution provider or supplier like Staples, and they'll sign up for a multi-year contract because they'll view the barriers to switching to a different solution as being too costly. But for the mid-market, those barriers frequently are much lower, in part because the Internet has made it easier, in many cases, to identify and move to alternative sources of supply.
That has prompted solution providers that cater to both the mid-market and large enterprises to devise ways to keep their offering compelling for those fickle mid-tier companies. Staples Contract, for instance, has focused on providing tools that let mid-market companies capture the maximum amount of their office supplies spend within the agreed-upon contract, driving savings that can be shared back with customers and ensuring the ease-of-use of its online tool for the mid-market, StaplesLink Plus. Notes Baitler: "The mid-market says, 'You better please me on every order, or I'm out of here.' They perceive that they have a lower threshold to move, so we're really only as good as their next emergency."
SIDEBAR: Solutions for the Mid-market
With the mid-market constituting perhaps several hundred thousand separate enterprises worldwide, it comes as no surprise that a host of enterprise software companies are offering supply and demand chain solutions targeted at this segment.
Starting from the top, Katherine Jones, managing director within the enterprise business applications practice at technology consultancy Aberdeen Group, notes in a report from last year, "The Small and Middle Market Enterprise: Addressing Today's Business Issues Through Technology," that tier-one solution providers such as Oracle, PeopleSoft, SAP and Siebel have "down-market" programs to reach this segment. (PeopleSoft, of course, expanded its reach into this segment in 2003 when it bought mid-market manufacturing specialist J.D. Edwards.) What is driving these top-tier providers to look at the mid-market? Well, as Michael Topolovac, CEO and co-founder of PLM specialist Arena Solutions, says, "The biggest problem with the Fortune 500 is that there are only 500 of them."
Microsoft, which has traditionally owned the desktop in large and midsize enterprises alike, has more recently been building a portfolio of enterprise-class solutions for the mid-market with its own offerings through Great Plains and Navision. Navi Radjou, vice president at Forrester Research, believes that while Microsoft might not have the best overall capabilities for the mid-market, the company will be able to partner with select solution providers to fill blank spots in its own product lineup (for PLM functionality, for example), and the Redmond giant can bring to bear its vast value-added reseller (VAR) network to sell into the mid-market. In addition, Microsoft can lower the cost of acquisition for its offerings by providing financing to mid-market clients as well.
Beyond these big names, a number of companies are targeting the mid-market with a variety of solutions. Aberdeen's Jones cites the following players in her report: ACCPAC International, Unit 4 Agresso, Best Software, Icode, Lawson Software, NetLedger, SSA Global Technologies and Ultimate Software. Other players include those mentioned in the main article including Aras and Arena Solutions for PLM; Demand Management for forecasting, demand planning, and inventory and replenishment; and Epicor for enterprise business systems and many not mentioned, including Adonix and Made2Manage Systems (for ERP); companies like IQR International (for inventory management in manufacturing and distribution); HighJump, Logility and Manhattan Associates (for supply chain management); Aurorex, for spend management services; and Prorizon, Resources Connection and others for business process outsourcing.
In short, the market offers no shortage of solution providers stepping up to the plate for the mid-market. The challenge for mid-tier companies, as for large enterprises, will be in identifying the provider with the solution that best address their specific business requirements.