Why the SAP BusinessOne multi-tenancy discussion matters

by admin on March 13, 2012

in Industry

Tom Wailgum, who runs ASUG News says:

But it is the ambiguity of this “cloud deployment model,” offered by SAP in its announcement, that is troubling to some industry watchers and cloud purists. As pointed out by ZDNet’s Dennis Howlett, there was no official mention of “multitenant software” in the press announcement. True multitenancy is an important distinction to SaaS purists and persnickety analysts, though apparently less important to customers and certainly of no care to end users who just want to get their jobs done.

Tom is referring to a bunch of ambiguities I raised in the discussion around SAP BusinessOne being repurposed for subscription based pricing. He is quite right to say that end users don’t care. They just want to do ‘stuff.’ However, multi-tenancy matters a great deal to providers and for good reason. Ultimately, it also matters to buyers. I’ll explain a few good reasons.

Be aware though there are plenty of debates around this topic and SaaS/cloud vendors often use it as one of the weapons they wield as part of the sales process. The problem comes when you start asking about flavours of multi-tenancy. Then there are the naysayers who often get it hopelessly wrong.

One of the principle reasons that Naomi Bloom insists on true SaaS (multi-tenancy) is because it has a direct impact on operational cost. She cites many other examples. Many of the vendor cases I see talk about direct operational cost running at 5% of revenue. That is a low number. One vendor I know has it down to 2% and wants to get to 1%. Think about it – you’re generating £10 million in revenue. The difference between 1-5% is £400,000. That’s a sizeable chunk of change. One of the principle reasons SAP re-architected SAP Business ByDesign (BYD) was because their ‘mega-tenant’ architecture could not operate efficiently and at a cost point with which SAP could live. From everything I have been told, BusinessOne is not fundamentally different from earlier iterations of BYD. The difference is that the cost problem has been schlepped over into the hands of third party operators.

Another good reason for multi-tenancy is that upgrades become a thing of the past. Everyone is (more or less) on the same version of the software. It is rare to see customers get more than one release out of step. It is much easier to maintain one set of software than umpteen variations. Anyone who remembers the days when we had to support dozens of UNIX versions knows what I mean.

Then there is the question of add on modules or complementary applications. A smart vendor will use multi-tenancy as the basis for creating a platform from which developers can build new applications and modules and to which third party stand alone systems can be easily attached. Even in the SME world we see a lot of that happening. Check out any of the Xero, FreeAgent, Freshbooks or Kashflow sites to see what I mean. The platform in turn provides third party developers the chance to reach much larger markets than are possible with on-premise systems. In the on-premise world, we see a LOT of duplicated effort which disappears in the multi-tenant world.

There are many other reasons (see Naomi’s post) but I’ve just highlighted a few. So – do customers care? Sure they do. Why? Because they get access to a much richer set of applications than is otherwise possible and often at highly competitive prices. Anyone who thinks otherwise is not living in a transformative world. They’re living in a world of older, tried and failing models.

‘Persnickety analysts’ will continue to make those calls. Why? They  impact the likelihood that one vendor will be around longer than another. Apart from what I have stated above, the economics alone help ensure that. Another reason? Those of us who have direct influence on the buying decisions will point customers to the issues because they are important in the context of transformational change. That, above everything is where the real value of these systems lays.

Comments on this entry are closed.

(@dahowlett) (@dahowlett) March 13, 2012 at 6:15 pm

@twailgum < right back at ya: http://t.co/RG5ekMpX

Naomi Bloom (@InFullBloomUS) March 13, 2012 at 6:22 pm

@dahowlett nails #SAP’s BusinessOne’s lack of multi-tenancy and the importance of same. http://t.co/EGzoWR40

Joe DeFilippo (@SaaSAccounting) March 13, 2012 at 6:22 pm

Why the SAP BusinessOne multi-tenancy discussion matters: Tom Wailgum, who runs ASUG News says: But it is the am… http://t.co/GHiP6XTI

(@SAP_Jarret) (@SAP_Jarret) March 13, 2012 at 6:25 pm

Why the #SAP BusinessOne multi-tenancy discussion matters http://t.co/jTSqKyBS by @dahowlett ->VG on importance.

Small Business Apps (@BusinessApps) March 13, 2012 at 6:26 pm

Why the SAP BusinessOne multi-tenancy discussion matters AccMan http://t.co/cH0DfGly #erp #smallbusiness

Jamie Oswald (@oswaldxxl) March 13, 2012 at 6:29 pm

RT @dahowlett: @twailgum < right back at ya: http://t.co/VcmQTp0F >> Well said, Dennis.

Martijn Linssen (@MartijnLinssen) March 13, 2012 at 6:35 pm

So, @dahowlett, does multitenant http://t.co/BA0UvyUj also mean much, much less annual support fee than, say, 22%?

Cailin Yates (@dxs_1) March 13, 2012 at 6:36 pm

reading: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/P9XYxNiP via @dahowlett

Jason Currill (@ospero_JasonC) March 13, 2012 at 6:46 pm

Why the SAP BusinessOne multi-tenancy discussion matters – Tom Wailgum, who runs ASUG News says: But it is the ambig… http://t.co/W02etn1K

Pete The Tax (@petethetax) March 13, 2012 at 6:48 pm

RT @dahowlett: Fresh content: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/jRWJMWRV #industry

(@jonerp) (@jonerp) March 13, 2012 at 6:51 pm

Re: @dahowlett’s http://t.co/kAilpO34 Why the SAP BusinessOne multi-tenancy discussion matters -> yup – not just a fussy analyst concept

Mrinal Wadhwa (@mrinal) March 13, 2012 at 7:09 pm

RT @dahowlett: Fresh content: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/jRWJMWRV #industry

Helge-Frank Zimpel (@hzimpel) March 13, 2012 at 7:27 pm

RT @dahowlett: Fresh content: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/jRWJMWRV #industry

Naomi Bloom (@InFullBloomUS) March 13, 2012 at 7:39 pm

RT @dahowlett: Fresh content: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/jRWJMWRV #industry

Rod Drury (@roddrury) March 13, 2012 at 7:43 pm

Fascinating watching the incumbent on-premise software companies deal with SaaS http://t.co/JvgAZTfF

Naomi Bloom (@InFullBloomUS) March 13, 2012 at 7:47 pm

RT @jonerp: Re: @dahowlett’s http://t.co/kAilpO34 Why the SAP BusinessOne multi-tenancy discussion matters -> yup – not just a fussy analyst concept

NOLA Web Creations (@NolaWebCreation) March 13, 2012 at 8:05 pm

RT @BusinessApps: Why the SAP BusinessOne multi-tenancy discussion matters AccMan http://t.co/cH0DfGly #erp #smallbusiness

Chris Renda (@crenda) March 13, 2012 at 8:46 pm

RT @dahowlett: Fresh content: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/jRWJMWRV #industry

DenisPombriant (@DenisPombriant) March 13, 2012 at 9:35 pm

Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/PYMmVI0G via @dahowlett

DenisPombriant March 13, 2012 at 9:40 pm

Well said. Multitenancy matters for lots of reasons, but I have always believed the economics alone would be enough to move us in that direction.  BTW, I think Oracle saw that too and the company’s latest hardware seems well suited to centralized multitenant systems that support millions of users. The world is now moving in that direction, retrograde motion in the direction of what Benioff calls the “false cloud” are efforts by some vendors to stay somewhat current with solutions that were architected for another era and customers from that era too.  There are still many of them out there.

Naomi Bloom (@InFullBloomUS) March 13, 2012 at 10:21 pm

Thx for the shout-out: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/EGzoWR40 via @dahowlett

rduffy March 14, 2012 at 12:59 am

Hi Dennis

When I return to a location with better coverage than the Marlborough Sound I will put together a full post to see if I can provide more clarity and I will actually record a full end to end demo for everyone to watch where I will show you how we address the issue of multitenancy with SAP Business One.

I am always a believer in show and tell as I think it’s an easier way to explain how we do the multitenancy piece with SAP Business One.

Our Cloud Control Centre, which we specifically built for for the hosting providers and multitenancy provisioners actually addresses each of the points that both you and @fscavo addressed which the ability to host multiple companies securely from a single database instance and a single instance of the application code. I’ll take you through he SAP Business One architecture as well and explain in detail how we manage the multitenancy and deliver the scalability that hosters want in order to drive down the infrastructure costs.

Our SAP Labs team in China have also done a great job of giving providers the ability to offer one or more Software Solution Partner (ISV) apps in this environment.

I have been working with the architecture in its current form (that we call Wave 1) and that’s what I will focus on when I build the demo video walk though for you but I will also talk about more of the things we’ll be covering in our Wave 2 release.

I’d love to do it now but I am on leave hiking the Queen Charlotte Track in the Marlborough region of New Zealand for the next 2 weeks so I’ll knock it over for you as soon as I get back.
In case anyone cares here’s a pic from where I am writing this -http://pic.twitter.com/C4y9EjG5

admin March 14, 2012 at 1:55 am

I very specifically asked Jonathan Becher if B1OD means running multiple databases – he said each customer has its own database. You are saying something very different. I’m happy to hear what that is about. Like you I will be traveling through the end of the month. What was particularly confusing is that the multi-tenancy aspect was not addressed in the PR, automatically raising concerns.

studentforce (@studentforce) March 14, 2012 at 1:57 am

RT @DenisPombriant: Why the SAP BusinessOne multi-tenancy discussion matters http://t.co/PYMmVI0G via @dahowlett

ASENIUM Conseil (@ASENIUM) March 14, 2012 at 8:47 am

Why the #SAP #BusinessOne multi-tenancy discussion matters @AccMan http://t.co/i1cLkcx9

Xelis consulting (@XelisC) March 14, 2012 at 8:47 am

Why the #SAP #BusinessOne multi-tenancy discussion matters @AccMan http://t.co/hsLbmqM5

STerp (@STerp_) March 14, 2012 at 8:47 am

Why the #SAP #BusinessOne multi-tenancy discussion matters @AccMan http://t.co/RZ7V0EOc

Richard Duffy March 27, 2012 at 3:40 pm

Hi all,

Heres an overview I have put together specifically to help explain how we deliver multi-tenancy with SAP Business One.

http://www.youtube.com/watch?v=FtsDnUdNZXU

Cheers
RIchard Duffy
SAP Business One Product Evangelist

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