Comments on: Why SAP Business ByDesign Was Delayed

By: George

George — Sat, 21 Mar 2009 06:47:00 +0000

Everyone knows that the real investment in ERP is a) Consulting b) Organization involvement/ time of key personnel c) Life cycle costs of maintenance d) Infrastructure. License forms a small part of it. Providing a shared hosting model will reduce TCO over the life cycle by only a few percent. Multi-tenant models will suite very small companies and the price points have to be far lower (Salesforce.com may sell at 100$ per user per month but there are challengers like Zoho and K-Serve providing the same at 10-20$ per user per month). You can expect many more competitors like that appearing in this space forcing SAP to stay upmarket.

By: Ameed Taylor

Ameed Taylor — Mon, 12 May 2008 18:20:49 +0000

Dennis,

Thanks for stopping by

SAP appears to be on the right path with the mega/multi-tenant architecture approach especially since BBD runs on the relatively inexpensive MaxDB.

The key though to get that 10x reduction will be in how they handle customer initiated/requested customizations. If SAP charges a fee for BBD customizations they should be fine but if they include all the customizations you can eat in the $149 per user cost it may be tough.

By: Dennis Howlett

Dennis Howlett — Mon, 12 May 2008 08:25:23 +0000

To clear up the architecture discussion, SAP is going for a mega-tenant approach where each customer has their own ’slice’ or DB instance inside the data center. SAP is working out how best to automate the upgrades and customizations that will be required by customers to bring its provisioning and servicing costs into line with its goal of 10x reduction. That’s the principle reason for not going to general availability right now.

By: Ameed Taylor

Ameed Taylor — Fri, 09 May 2008 16:17:44 +0000

Patrick,

You are right, SAP has discussed BBD being available as a single tenant solution. But in my experience as we are developing a multi-tenant architecture for Applation OnDemand and back when I worked for an ASP, it is just to expensive to maintain single tenant for large numbers of customers.

SAP probably came to this realization with its current group of Beta BBD customers and this delay is good for them if they can find a middle ground between Single and Multi Tenant and still make a profit.

Also BBD is different in that SAP has to have large enough margins to make a profit when you add resellers to the mix.

As I mentioned, it took Netsuite a number of years to come up with a good business model and formula and to become profitable with its solutions and it will take SAP a while to get to that happy medium as well.

Chistopher and Harry,

$149 per user per month will indeed exclude a certain portion of potential customers but $149 per user per month is actually in line with what Netsuite and some of the other Tier 1 SaaS ERP providers charge for their solutions. But I am not sure that SAP makes any profit at $149 per month

By: Harry Milrose

Harry Milrose — Thu, 08 May 2008 23:04:11 +0000

Chistopher,

$149 per user per month is too high in my opinion for the typical SMB in today’s economic climate

By: Chistopher

Chistopher — Thu, 08 May 2008 16:32:36 +0000

$149 per month per user is probably too low of a price for SAP to support. Dont be surprised if SAP has multiple price points (Basic, Premier, Platinum etc)for BBD when and if it is launched

By: Patrick

Patrick — Thu, 08 May 2008 16:28:16 +0000

SAP probaby discovered that architecting single (or multi tenant) Software As A Service ERP is not as easy as it looks and or sounds.

There is a reason why Netsuite took a few years to get market share with its Saas ERP…it took that long to get a compelling product architected, developed, priced properly and marketed to the right audience.

18 Months might give Netsuite too much of a headstart for SAP to catch up.

By: Merchand Simon

Merchand Simon — Thu, 08 May 2008 16:19:43 +0000

SAP has added a lot of Spin to the reasons for the product delay. I wonder what the real reason behind the delay was?