SAP Business ByDesign delayed
May 1, 2008
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.
SAP Business ByDesign delayed
April 29, 2008
Just as I am preparing to head off for meetings with SAP at their annual customer conference in Orlando and with representatives at a gathering of Business for Social Responsibility, news has come in that general availability of SAP Business ByDesign is almost certainly going to be delayed through 2009.
Details as to why the delay has occurred are thin on the ground but I am speculating this has something to do with the way in which the product has been designed. SAP has adopted what is known as a ‘mega-tenant’ design. This allows it to ensure complete separation of customer databases on data centre ‘blades.’ This is good news for customers concerned about security, but means it is more difficult to scale the service compared to ‘multi-tenant‘ designs where all customer data usually resides on a single database instance.
Competitors like Salesforce.com are bound to make a meal of this news but it need not be fatal to SAP’s aspirations in the mid-market. 18 months is a long time in software and while it gives CODA a head start in terms of deliverables, SAP is still the brand to beat. The fact SAP claims 150 beta customers is indication enough the product is in the works. My real concern though is that Peter Zencke, who led the development effort is scheduled to retire at the end of the year though he is said to be retaining a consulting role with the company.
More details to follow once I’ve had the opportunity to discuss the issues with SAP executives. That will be in the next few days.
NetSuite on BT Business: will it work?
April 29, 2008
I’m somewhat late on this not that it matters. Stuart Lauchlan has the details of a deal which sees NetSuite (and SugarCRM) get a distribution leg up using BT Business. According to Stuart, Zach Nelson, NetSuite’s CEO is bullish about the arrangement while acknowledging the difficulties of the past:
Frankly it was too early for such a venture in the market. But this is the right idea at the right time now, given the fact so many of the IT services SMBs consume are in the cloud. It was probably too early for both of us. We were just learning how to sell this thing ourselves and it was unclear then that SaaS would definitely be the future. It was unclear that the integrated suite approach would be the future. In some respects, it’s a blessing in disguise that the relationship didn’t go forward. The opportunity that we have now with BT is to have a much broader relationship. BT is well positioned and has a strong relationship with every SME in the UK.
I’m a lot less enthusiastic. BT Business is attempting to become a one stop shop for a variety of services, of which these are but two. (I know of several other deals in the works but under non-disclosure) So far, I see no signs of what I would call life though I can fully understand the allure of going with the UK’s bandwidth wholesaler. The problem is not a question of service offering maturity but BT’s culture. It’s not a marketing organization at heart, it flogs bandwidth and airtime. That’s its core business and one it understands very well. As for the rest? How many times have we seen it attempt to become something it’s not?
When I see the current crop of BT TV adverts, they give me no clue that they’re in the apps business. They continue the belief that the company’s focus is elsewhere.
Given what I know about NetSuite pricing (all the reports are silent on this point) and the need for it to be implemented in the tradition of other mid-range applications, I really can’t see this partnership working. But then I have been proven wrong more times than enough in the past so never, say never.
Consolidation leads to a new load of dopeyness
April 10, 2008
Consolidation among the accounts production software providers sparked off the latest load of dopey thinking over at AccountingWEB about where the market is going.
Some practitioners seem to think the world of saas isn’t happening, presenting all kinds of outdated and ill-informed arguments. Nicholas Myles lobbed the old ‘reliability’ chestnut in my direction. <sigh>
What I find truly disturbing is not the argument but the failure to understand just how much the world is changing around practitioners. Last week in a separate conversation, one partner said that he was alarmed at the way consultants are setting up shop doing the kind of advisory business that should be the natural hunting ground for CAs.
I’ve said it before: staring at the train’s headlights isn’t going to stop it becoming a wreck. The profession desperately needs an injection of fresh DNA if it is not to suffer the fate of the dinosaurs. Right now, it doesn’t seem to have much appetite for change. Too bad.
As a closer I’d like to mention that CODA will be launching an on-demand offering in early May. I’m getting a heads up later this month and will let readers know what I think.
