With industry giants like SAP pushing deeper into the enterprise resource planning midmarket, Vormittag Associates Inc. has moved to broaden its reach with smaller customers by partnering with Berbee Information Networks. The deal, inked on July 24, could potentially lead to VAI’s S2K software being distributed through CDW’s catalog, and as a hosted application for Berbee’s data center customers.
While SAP recently beat the drum about its forthcoming midmarket product, code-named A1S, including its availability as an “on-demand” service, VAI and Berbee are focusing initially on a much more tried-and-true delivery vehicle for smaller businesses: in a hardware-software bundle with low-cost IBM System i servers.
The deal initially will bundle the S2K ERP software with IBM 515 server hardware, to be sold through Berbee’s IBM systems group. “We’re initially targeting 3,000 SMB [small and midsize business] customers with the bundle,” said Michael Grone, the System i product manager for Berbee, headquartered in Madison, Wis. “We’re focusing on the low end to medium-sized SMB customer base.”
Grone also acknowledged that a software-as-a-service or managed service offering of VAI’s software was also under consideration. “Obviously, [SAAS] is someplace we’d like to go. It’s not something we’re doing right out of the chute.” But, he added, the software would be available to Berbee’s existing hosting customers as a managed service if requested.
Berbee, which was acquired by CDW in September 2006, is currently being run as a separate subsidiary company, Grone said. But as the company is further integrated into CDW, he said, “the long term goal is to get [the bundle] into the CDW model.” That includes extending Berbee’s reach from its current 4,000 customers to CDW’s over 350,000 customers.
“We’re hoping that CDW has the reach to get us new business,” said Dan Bivona, sales director of VAI, based in New York. “We’re not sure if we’re going to get in their catalog yet, but it should get us more attention [from potential customers].”
Currently, VAI has about 850 ERP customers, according to Bivonaonly a small fraction of which are using it as a hosted application through VAI’s existing partners. “We have maybe a dozen customers doing it that way now,” he said.
Aberdeen Group Vice President Cindy Jutras expressed skepticism about whether anyone would ever buy an ERP package out of a catalog. But she said that while getting a software and server bundle into CDW’s catalog might not result in many direct sales, it might help VAI get considered by customers who would have otherwise never heard of the company.
“We’re starting to see people doing more online research, and downloading demos on their own without [talking directly to vendors], at their own pace,” Jutras said. “In the past, they would contact a lot of ERP vendors, and then work it down to a short list of options. Now companies are working it down to the shortlist themselves. Now, does anyone believe that someone is going to buy something online? Not really. But it might be a starting point.”