I am intrigued by the variety of comments about the recent release of SAP’s Business ByDesign (BBD, or A1S as it was previously known). It seems to be a potentially disruptive technology, but no one is quite sure by how much and how long it will take to see an impact.
On the doubting side is AMR’s Bruce Richardson (now requires subscription):
I’d love to get our CFO to switch to a new single-vendor, integrated SaaS architecture, but it’s too much of an uphill sell.
and discussing a problem in SAP’s marketing message:
SAP Business ByDemand is sandwiched between its two on-premises products: SAP BusinessOne for companies with less than 100 employees and SAP All-in-One for firms with more than 500 employees.
Another AMR analyst is reported making the following comment:
we have yet to see whether the market for SAAS-based ERP products is viable. Overcoming the skepticism of CIOs to have all their enterprise data hosted outside their firewall is no small undertaking. Demonstrating to partners that there is a profitable reality to participating in the evolving ecosystem to support this new application will not be easy.
Larry Ellison is also negative, reckoning SaaS and the SMB market isn’t a good place to make money
You spend a lot of money developing a whole new product for the low end. But you also need an all-new sales force because we don’t call on those customers. We don’t call on small businesses, and it’s very expensive to call on small businesses. It’s very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support.
“We just haven’t figured out a way to make a substantial profit in that market. We think it’s hard to make money.”
Somewhere on the fence is Nick Carr.
Even if SAP falls short of its ambitious goals for BBD, the onus is on its competitors to upgrade their vision and positions and products to meet and/or exceed SAP’s positioning. That competitive struggle alone will make the BBD launch more important than anything else that happened this week in the market, and, potentially, for a long time to come.
Phil Wainewright comments that SAP is prepared to take its time building the BBD business
SAP knows that in Business ByDesign it has something powerfully explosive on its hands and the last thing it wants it to have it blow up its face. It would rather risk burning the fuse so slow that it might even blow out altogether
For me, Dennis sums it up
Once again, SAP gives us all pause for thought about a story that will run and run.