Major business-enterprise software makers such as IBM, Microsoft, and SAP have begun aggressively trying to tap the growing mid-size company market amid increasing competition and technological advances. As a result, the array of software options for mid-market companies has blossomed – from applications for niche vertical markets to middleware that lets disparate systems work together.
Mid-size businesses are increasingly an objective for software publishers in part because there isn't a dominant vendor. When you think operating system, you think of Microsoft Windows. Yet for business infrastructure software, "No one has really cracked that market yet — there really isn't a dominant vendor," says Joe Wilcox, senior analyst at Jupiter Research.
Large enterprises have generally made their investments in CRM applications, supply chain management software, and servers, so software publishers are looking downward to mid-size businesses that haven't adopted those technologies. Microsoft, for example, spent $2 billion in its last fiscal year on product development and marketing for this particular market, and the company forecasts that in the next four years, the market for business solutions products will be bigger than the market for its Office product.
Applications Go Micro-vertical
On the enterprise side, businesses increasingly want to depend on just one or two software vendors to meet all of their needs. "A lot of companies are trying to reduce the number of technology providers that they work with, so they need to standardize the type of applications and the underlying application platforms," says Albert Pang, director of applications research at IDC. Because of the expense and difficulty of maintenance, it no longer makes sense to support multiple technology platforms or multiple applications. "Companies have been using a hodgepodge of applications from third-party providers or homegrown, internally developed products," which is inefficient, he says.
While finding an off-the-shelf application to support all of a company's business niches might seem unlikely, another trend – a proliferation of "microvertical" enterprise applications – could mean there's software available no matter how obscure your niche. "Just name the vertical and someone has a solution for you," Mr. Pang says.
"There has been as increase in industry-specific focus," says Bill Wohl, vice president of products and solutions public relations at SAP. "When we can talk to a company in the language of their business, that gives us a distinct advantage."
Ready-made applications can help businesses more effectively deal with increasing regulations and marketplace demands. "We have seen companies more under pressure to deliver technology solutions because their customers require them to do something," Mr. Wohl says. For instance, Wal-Mart has demanded that its suppliers begin using radar-frequency identification. "This creates a cascading round of technology improvements," he said.
Or, a company may choose not to invest in installation of new software at all. Application Service Providers (ASPs) allow a company's employees to access software that a company doesn't own or maintain. Instead, the software is outsourced, available over the Internet. With an ASP, technical support, upgrades, and licenses aren't an employer's problem. The fees for ASP software are typically factored on a per-seat, per-application basis. So, for example, if an employer needs temporary access to 10 seats of CRM software for a short-term project, it can simply be accessed via the Internet – eliminating an investment of thousands of dollars in software that might not be used ever again.
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