Ostensibly, SAP is the loser as Oracle moves past it in mid-market enterprise software [Sub'n required]. But the real loser in this is Microsoft, which has owned the consumer through SME market for many years. Microsoft has won this market through savvy distribution and (comparatively) easy-to-use software. SAP and Oracle have approached this market in different ways, but for the same reason: they have largely s SAP and Oracle have approached this market in different ways, but for the same reason: they have largely saturated the large enterprise market. They need new hunting grounds, as the WSJ reports:How the two fare will be crucial to their growth. The large corporations that installed SAP and Oracle products in the 1980s and ’90s already have much of the basic software they need, so SAP and Oracle have had to develop new products and strategies to reach smaller customers in a business-software market that could be worth $15 billion to $30 billion by 2010. Oracle has broken into the midmarket by buying companies that already sold products tailored to smaller firms. Germany-based SAP, meanwhile, mainly is developing software for the midmarket on its own and has built its customer base mostly from scratch. “It’s the classic debate over whether it’s better to buy or build,” says Brad Reback, an analyst at CIBC World Markets.The research released by Nucleus Research is hardly conclusive, tracking only 27-29 customers of Oracle and SAP, each, but it’s significant that either company is creating software that appeals to the mid-sized enterprise market at all. Oracle has, to me, the better strategy, because if it does its acquisitions well (no small feat), then it already has the DNA required to go after the mid-market whereas SAP must try to culturally retrofit its company to appeal to this same demographic. This is non-trivial for any company, but particularly one like SAP that has been so successful at defining customer requirements in big, complex, and expensive ways. Anyway, it will be highly interesting and entertaining to watch Microsoft and Oracle butt heads in the mid-market space. Both are fierce competitors with a huge array of weapons in their respective arsenals. It will also be interesting to see if any open source companies take the opportunity to draft off these larger competitors as they teach the mid-sized enterprise market to expect a certain kind of software/solution. Let the big, proprietary companies define the solution, and then bring in the open source artillery to disrupt the market with a free offering that is easier to use, and much cheaper to deploy. That’s the opportunity. Not easy to fulfill, but it’s how open source has succeeded in many other markets…. Open Source