SAP is adding new e-commerce features to its Business One application, enabling small businesses to set up online stores and deploy CRM software.

SAP is simply bolting on a web store … This will limit the functional capability of the SAP solution when compared with NetSuite. Zach Nelson CEO, NetSuite Inc.

The new functionality fills a long-standing gap in Business One, and according to Boston-based Yankee Group, it could make the software more competitive against NetSuite — based in San Mateo, Calif. — which holds the lead in front- and back-office software for the small business market.

The technology was added through SAP’s acquisition last month of Minneapolis-based Praxis Software Solutions, a privately held software company and SAP Business One partner.

The new features were developed by Praxis and were originally aimed at companies in the manufacturing and automotive industries. The basis for SAP’s new e-commerce tools, Praxis’ NetPoint Commerce provides an integrated online sales framework that enables companies to create up-selling and cross-selling opportunities. The software includes search capabilities to track and find products.

In addition to NetPoint Commerce, Praxis developed NetPoint Focus, which extends CRM functionality in Business One through a Web-based user interface. The software will add campaign management and prospecting capabilities to the CRM sales force automation and customer service features in Business One.

The new Praxis features can be purchased as an extension to Business One. SAP said they will be integrated into the core development and available in future releases.

Related information: Small businesses mull SAP Business One, All-in-One choiceHandbag maker grips SAP Business OneJelly maker gets out of a jam with SAP

E-commerce tools and broader CRM functionality have been the main obstacles to SAP’s winning a greater share of the market among small businesses with fewer than 250 employees, according to Sanjeev Aggarwal, a senior analyst with the Yankee Group.

SAP’s Business One has been strong among discrete manufacturers, distributors and retailers. NetSuite’s Software-as-a-Service (SaaS) model is popular in the retail and services industries, he said.

NetSuite CEO Zach Nelson lashed out at SAP’s acquisition of Praxis, calling the software “stone age,” on-premise applications and an attempt to try to match NetSuite’s e-commerce capabilities.

“SAP is simply bolting on a web store,” Nelson said. “This will limit the functional capability of the SAP solution when compared with NetSuite.”

Meanwhile, Sage Software’s BusinessVision is also gaining traction among small businesses with its industry-specific expertise, Aggarwal said. Microsoft Dynamics NAV (Navision) also trails SAP Business One and NetSuite.

SAP Business One customers have had to use Praxis or other third-party products to establish an online presence or Web store, Aggarwal said.

“Working with an external partner can get complicated, especially for small businesses,” he said. “So whenever an order flows in from the Web, the data can flow directly into your system and you don’t have to use a separate product.”

In his recent report “SMBs Prefer an Integrated Business Applications Suite,” Aggarwal said a high percentage of small businesses will adopt an integrated suite of business applications over the next five years. NetSuite’s SaaS model has been the most popular, particularly because of its easy-to-implement front-office, back-office and e-commerce features.

“NetSuite automates all key business processes, including lead generation, sales orders and product shipment across the entire company,” Aggarwal said. “All data is held in a single system, so users can access one real-time view of all business metrics.”