German software giant SAP Monday partnered with Chinese software firm Red Flag Software Co Ltd and computer server-maker Langchao Group to strengthen its efforts in developing the small and medium-sized business (SMB) market.

The company has gained more than 30 percent of the enterprise resource planning (ERP) software market in the country, a major enterprise management software solution, but since many big companies already use ERP, SAP began to pay more attention to smaller enterprises.

SAP (China) President Klaus Zimmer said revenues from SMBs will account for 10 percent of his company's total this year.

How to make SAP products more attractive to price-sensitive SMBs has become a major task for Zimmer to achieve that goal.

"Today's partnership marks a milestone for SAP." Zimmer said.

"It will bring the total cost of ownership (TCO) down to our customers and build a platform for our future."

The total cost of ownership not only refers to the cost of buying software, but also include the costs of related hardware, maintenance and training.

Linux, an operating system based on open source code, is believed to save 50 percent more than counterparts like Microsoft Windows and Unix operating systems in terms of purchasing and maintenance costs. It has also won over considerable support from the Chinese Government, as it is believed to be more secure. Red Flag is the first Linux partner for SAP in China, according to SAP Labs China President Shang-ling Jui.

The two companies will develop applications like database servers, e-commerce and customer relations management on Linux and promote the operating system's maturity.

SAP also joined China's Linux standard working group last month to gain a favorable position in tapping the local Linux software market.

Zimmer expected 30 percent of the installations of SAP software will be based on the Linux operating system in 2006, while it is less than 5 percent at the moment.

A partnership with Langchao Group is another effort on the part of SAP to make its presence felt in hardware.

Langchao, one of the biggest computer server-makers in China, has achieved certification from SAP on its SP3000 server, which helps elevate Langchao's product image.

At the same time, the low price and high quality of Langchao products will also cut down the TCO for enterprises in their information systems and help the two companies win over more SMBs.
 
(China Daily June 15, 2004)