Is SAP Business ByDesign affordable and would you choose it anyway?

SAP has a reputation for being expensive. Even at $149/user/month for a minimum of 25 users Business ByDesign still weighs in at $44,700 per annum or £30,900 (give or take) at today’s exchange rate. That still sounds like a lot until you hear that SAP is prepared to go down to 10 users. At this level, we’re looking at $17,800 or £12,300. Could a 10 user system be practical?

Let’s say we have one CEO, two accounting types and eight sales or project people then the answer is possibly yes. You’re buying into the notion of an integrated suite. It is much more than financials, CRM and project management. SAP has embedded analytics – a frequent afterthought in many financials applications. There is mobile support. As we go down the line, SAP plans to release an SDK for developers and while the current roster of suppliers is hardly sparkling, the fact SAP has hoisted its flag to Microsoft’s Silverlight and VisualStudio.NET technologies will be a comfort for many who worry about other proprietary technologies. One developer colleague who usually works on the SAP Business Suite has expressed interest in learning more. That’s a surprise. there will be more.

Where are the immediate comparisons? The obvious challenge comes from NetSuite that has been doing this far longer than SAP. Pricing is a tad difficult to compare because NetSuite offers the ability to customize which invariably requires scripting which comes as an add-on. How that impacts the final price depends on what you want to compare. SAP – at least for now – is not offering customizations but process tweaks via functionality you either turn on or off. That doesn’t sound particularly interesting until you realize there’s a mass of process underneath the hood. NetSuite on the other hand offers a deal which it believes is price competitive. I need do a bit more research on this element to be certain where the chips fall.

More important – which would you likely choose?

• SAP’s market brand equity is second to none. Most buyers I meet are buying on the SAP promise. In the pre-launch period, the company had horrible problems making the solution work and customer churn reflected that. Today, customers are a lot happier. Even so and despite the brand, it has not been tested at scale.
• NetSuite has been in the market for years and while it once had a reputation for less than great service, it has done a lot of work to make up for the sins of the past. Several analysts I’ve spoken with instinctively prefer NetSuite to SAP if for no other reason than the CRM functionality is considered superior. (check the second half of this video where CRM expert Paul Greenberg draws the comparison.) NetSuite’s bigger problem is brand recognition.For all its years in the market, it hasn’t really managed to take the SaaS/cloud high ground for integrated applications. SAP can bulldozer over it (and pretty much anyone else with the exception of Salesforce.com) anytime it chooses.
• Both companies are challenged by channel issues. SAP doesn’t have a discernible strategy, NetSuite is figuring this one out. By and large therefore you’re going to be buying direct which puts you at the mercy of their services capability. That will require careful parsing at the due diligence stage.
• In our market, both companies offer professional services automation but we have yet to see a shoot out to compare the two. That will be something of a litmus test around maturity.
• Others are playing in this market. Salesforce.com plus FinancialForce.com make an interesting combination and will be price competitive. In our imaginary 10 person scenario, pricing should be of the order of $12-13,000 pa. Included might be some social features like Chatter and CRM will be strong but reporting will be thin on the ground. FF is addressing that but now would not be soon enough.
• Pearl could be a competitor. Last year I recorded a video with customer Allparts. Pearl pricing is very low but I question whether its reporting will be up to regulatory snuff and it suffers from the start up’s problem of not having enough funding to make a marketing splash. That’s not necessarily a negative but it does make life really tough in competitive situations. Even so, Pearl makes a credible alternative for that 10 user market at fractional cost.
• You could argue that at 10 persons, a company might cobble financials and CRM together from existing vendors, some of which appear in the Sponsored Posts area plus a CRM like say Javelin. That will get you so far but not far enough and especially not in a growing market situation. You’d be sacrificing short term cost advantage for all sorts of other problems like integration and different interfaces for different users with multiple upgrade paths to wrestle.

Those are the players that come immediately to mind. There will be more. The main thing to note is that cloud computing is no longer relegated to a single function. Suite plays almost always win for larger customers. There is no reason to think a suite play will be any less attractive for the SME market. That’s the place SAP will play hardest and make what seems premier pricing look worthwhile.

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• SAP developing collaborative CRM app (infoworld.com)
• NetSuite vs SAP … Round #n. A Game Changer? (cloudave.com)
• SAP pushes Business ByDesign at mid-sized firms (v3.co.uk)
• Are Suites Really Sour? The Best of Breed vs. Integrated Suite Debate. (cloudave.com)

Tagged as: Business ByDesign, ERP, netsuite, Salesforce.com, SAP, SAP Business Suite, sapphirenow