SAP co-CEO: Business ByDesign 'not a fantasy'

SAP's on-demand ERP (enterprise resource planning) suite Business ByDesign "is not a fantasy," CEO Jim Hagemann Snabe said during a press conference Monday at the vendor's Sapphire conference, which is ongoing in Frankfurt, Germany, and Orlando. "It's a real product. We wanted to perfect the infrastructure. You only get one chance."

Snabe spoke as SAP gets ready to make Business ByDesign more broadly available in July in Germany, the U.S., the U.K., France, China and India.

SAP originally hoped to have 10,000 customers and $1 billion in revenue for the application in 2010. But in 2008, SAP realized it couldn't run Business ByDesign at scale in a cost-effective manner and slowed down the product roll out while figuring out a fix. To date, only about 100 early customers are using the application.

But now SAP says the necessary plumbing and rewiring work is complete. The upcoming Business ByDesign version 2.5 introduces an option for multitenancy, a key factor in making the software profitable. With multitenancy, a number of customers share the same instance of an application, with their data kept separate. This cuts down on overhead for equipment and simplifies system management for the vendor, particularly upgrades, which can be delivered to many users at once.

A single-tenant option will remain available, but at a higher cost. Pricing information was not disclosed.

The update, which is set for release early in the third quarter, also includes in-memory analytics that can be tapped via Microsoft Excel; mobile device support; a user interface built with Microsoft's Silverlight technology; and a development toolkit that will enable partners to build extensions. SAP said it intends to build a robust partner ecosystem around Business ByDesign.

Beyond building out a channel, one of SAP's biggest challenges for Business ByDesign is positioning: How can it attract customers without cannibalizing its own ample SMB-installed base for the on-premises applications Business One and Business All-in-One?

This is the official story: Business One is aimed at companies with 10 to 100 employees, said Rainer Zinow, senior vice president of SME strategic solution management. "These companies are at a size where they need a certain level of business processes, such as order entry, but don't need advanced planning and scheduling algorithms." Business One provides a "simple, server-based solution in-house, with support from a local partner."

Business All-in-One is essentially a packaged subset of SAP's high-end Business Suite, and is meant for companies with 1,000 to 2,500 workers, Zinow said. "They are at the same level of business process literacy as most large companies."

SAP is therefore pointing Business ByDesign at companies with 100 to 1,000 employees. These companies "are growing fast, and what they need most is a business process library," he said. "At the same time, these companies say 'I don't want an IT organization.'"

But they do want an application with the same responsiveness as one run on-premises. To that end, SAP has worked closely with telecoms to ensure working with Business ByDesign is a zippy experience, according to Zinow. Users should expect average response times of a second to 1.2 seconds, or "human interaction speed," he said.

In-memory processing in the upcoming release supplies another jolt of performance. "We're keeping all transactional data at any time in main memory," Zinow said. He demonstrated how a user could quickly drill into various aspects of a transaction, examining data from various viewpoints, with the application rarely appearing to write back to or read from the database.

Other improvements, such as to system management, will be less apparent to users. "We've worked a lot in the last two years to get all of the upgrade processes, data migration, backup and recovery, to automate this as much as we could."

Meanwhile, although multitenancy is a big theme for 2.5, customers will still have a single-tenant option. But it will cost more, Zinow said.

Speaking of money, SAP is no longer using revenue as a yardstick for Business ByDesign's success, co-CEO Jim Hagemann Snabe said during a press conference Monday. "We will measure our success in the number of customers running the software," he said. In addition, it is too early to provide numbers regarding future customer growth, he said.

SAP needs to be more aggressive, in an "un-SAP-like" way, if it hopes to gain new customers for Business ByDesign, given all the "loud guys in the SaaS market" like and NetSuite, said 451 Group analyst China Martens, before the conference began.

Moreover, non-SAP customers who are kicking the tires on a variety of SaaS (software as a service) applications may also "have a very negative connotation and view of the company," Martens said. "How do you change that?"

At the same time, SAP could also position Business ByDesign at "unhappy SAP users who have one foot out the door," she said.

Initial Business ByDesign customer BendPak, a contract manufacturer of jacks, lifts and other garage-related tools, resides in the "switcher" camp.

BendPak moved to the software from a Sage ERP system, two CRM (customer relationship management) systems and spreadsheets for tracking inventory, said CTO Sina Moatamed in an interview last week.

"We're not a multibillion dollar company or anything, but from a logistics point of view, we do a lot of [product] movement," he said. "We needed one single system to operate out of with intelligent reporting."

BendPak has seen "tremendous improvements" since first engaging with SAP, he said. "There's a lot of maturity [in the product]. Is it perfected? no."

SAP's decision to hold back on the product's roll out amounts to "a philosophy difference" from other vendors, he said. "Financially, they have that luxury as opposed to someone else who would say 'No, no, get it into market' and so you get more people into an infrastructure that isn't ready for it."

Copyright © 2010 IDG Communications, Inc.

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