SAP Business ByDesign delayed

by admin on May 1, 2008

in Cloud Computing/SaaS,General

Earlier in the week I wrote that SAP Business ByDesign will be delayed. Today’s earnings announcement confirms that will be the case. Information I received yesterday suggests that investment in the new on-demand suite is being cut by €100 million this year with no accelerated spend in 2009. That suggests the company is trying to come to market at a higher margin than originally planned. Given what we know about the economics of on-demand systems, I find that surprising. I could speculate as to the reasons but prefer to keep those opinions to myself until next week, when hopefully the position will become clearer.

The reasons for the delay remain clouded in mystery. On the one hand, Hasso Plattner seems to be saying that there is more work to do. Others (un-named) inside the company assert BBD has technical problems. The official line is:

Since last September’s announcement of SAP Business ByDesign, the Company has been working closely with early customers and partners to validate and fine-tune the solution. As a result of this process, SAP has elected to modify the rollout strategy for SAP Business ByDesign to ensure a more focused and controlled ramp-up process.

That’s PR fluff of the first order.

When I met with SAP executives last September, I questioned the company’s partnering strategy. It struck me at the time that SAP was very woolly about how it would bring partners on board. Leo Apotheker, co-CEO said at the time the company intended investing heavily to bring partners on board. That included financing the creation of sales ‘shops’ as opposed to consulting operations. It makes sense given what the company was saying at the time. That strategy now seems to be in tatters.

It is becoming increasingly clear that SAP’s target customers will require a degree of customization SAP is trying hard to avoid. Last year, the words ‘over my dead body’ were uttered by several SAP executives when that suggestion was made.

My personal take is there is no way to avoid the problem. Vanilla offerings will get them into the game but won’t take them far. There are techniques SAP could employ that would make life relatively easy. You only have to see how quickly CODA has managed to get out the gate with CODA2go to understand this. However, whether SAP has the appetite to embark on what for it would be a radical change in direction remains to be seen.

As my good friend Vinnie Mirchandani says:

…it will likely be the focus of many questions at Sapphire coming up this weekend.

In the meantime, SAP has given Salesforce.com, NetSuite, CODA and others a head start in seeding this important market. Further delays will put SAP on the back foot in the race to win market share.

This year’s SAPPHIRE could be a difficult event but full marks to the company for at least admitting difficulties. Getting them out the way at this time will be uncomfortable but as Josh Greenbaum says, if Leo Apotheker can provide solid answers and demonstrate strong leadership of the kind we’ve come to expect from SAP, then this week’s events will fade into insignificance.

Comments on this entry are closed.

Paul Wallis May 1, 2008 at 2:26 pm

Dennis,

I wonder if they are having trouble with the user interface?

Last November in a post called “Enterprise Applications and User Interfaces”, I wrote that:

"There are changes afoot in the way enterprise applications are sold. Enterprise applications get so ingrained within a business that changing to a competitor is a very unpalatable proposition. So in order to find new markets enterprise software vendors are seeing that by changing their message slightly and using newer technologies, they can move away from the big, clumsy monolithic applications of old and start appealing to Small and Medium size businesses – essential if they are to expand their client base. New business from new market sectors.

This forces a change in price point. And that changes the sale more towards the high volume, low cost software application sector. And that forces a change in user interface. The most high profile changes we’ve seen have come with SAP and Oracle. " For more visit, http://www.keystonesandrivets.com/kar/2007/11/ent…

It may be that that the time and cost of making SAP more user-friendly and flexible is making them think again about the whole project.

Dennis Howlett May 1, 2008 at 4:23 pm

The UI should not be an issue. They said last year it can be changed within 30 days. It's a separate layer.

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