Apologies for the hiatus. SAP's new on-demand service now branded as SAP Business ByDesign (BBD) takes a lot of digesting and I was kept rather busy over on ZDNet. Just keeping pace with the unfolding of opinion was hard work but we now have a comprehensive body of opinion on the topic:
Links to all the ZDNet coverage can be found here.
Jeff Nolan grabs all the best links.
While SAP limited the on-stage customer sound bites to US and German examples, I found The Birchman Group, an IT services and consulting company based UK customer that is working with the product. Details are thin but the company says:
The company will use this integrated solution to streamline its customer relationship management, HR, financial, procurement, and project management business processes. For example, the solution will help Birchman maintain uniform data about each project, improve billing processes and employee utilization, and handle sales opportunities more effectively.
That sounds like a lot of process reach to me. Business ByDesign will be rolled out in the UK in early 2008.
While plenty of people are speculating about its long term success (check those links), there is no doubt in my mind it will disrupt the mid-market. Up until now, saas/on-demand has been a relatively small part of the UKs applications landscape. SAPs entry is a major point of validation in what a number of my peers believe represents a long term shift in the way solutions are both developed and delivered. It's not without challenge and the brand alone will not provide the market momentum required to achieve the volume market play SAP desires.
While SAP execs were rock solid that BBD won't cannibalize its existing product lines, most serious commentators think this is wishful thinking. When I asked CEO Henning Kagermann that exact same question regarding BusinessOne, he shrugged and smiled coyly. Leo Apotheker, another board member and deputy CEO says B1 can attract 15,000 customers a year. I don't believe that, even though others think there are burgeoning markets for such a solution. Check what Bob Warfield has to say:
The company most threatened by the new product will be SAP itself. Their problem may be the success of SaaS itself, particularly if, as James Governor suggests, it replaces the core product with 1/10 the revenue. I've said it many times: SaaS is an extremely disruptive business model. Conventional ISV's can't switch over on a whim. Making the change is much like amputating a limb in civil war days because it was preferable to dealing with the infection that might otherwise result from a gunshot wound.
Is BBD worth the risk? I say yes. At a minimum user count of 25, most knowledge based firms could give BBD a whirl without knocking the business off track. This is contrary to Zack Nelson, CEO of Netsuite opinion implied during a discussion with Dan Farber where he said:
"You can try it for free but it's not proof that it will run your business. We've been doing this for ten years and trial by Web isn't the way. Selling into this market is the same as SAP in the enterprise, it's just missing a few zeros in the purchase order,"
I disagree. Having seen an admittedly short demo and knowing something about SAPs go to market, there is no reason why a company might not look at this via the web (umm - that's what it is built for Zack) and do a some parallel running to get a measure of how it will look, feel and operate. That's a LOT more than you get in a demo, boardroom pilot and 'by faith' purchase usually associated with on-premise software. The risk is mostly with SAP because there is no multi-year lock-in.
A 100 person knowledge business that negotiates say a 3-month paid tilt is risking what? Top line amounts to €9,975 at list for the de-minimus number of users. Add a wee bit of consulting say x1 the figure and we're talking €20K or about £13K. Not a huge amount. Bolt on a few of the $54/5 user types (those who are only looking at data and not transacting through the system) and it is pretty easy to see how firms of this type could easily kick the tyres very hard at low risk.
SAP has not specifically targeted professional firms but of you look at Birchman's profile, it is not a million miles away from the average mid-sized practice or legal firm. How tempted might those firms be? And what sort of challenge might this present to incumbents like Sage, MYOB, IRIS and Digita. In the short term very little, but in the medium to long term? It will only take one smart reseller to work out some DM/KM add-ins, tack on ADPs world class payroll services and I can see all sorts of potential scenarios for collaboration out of the box both across and through into client systems.
All this is speculation because as yet, I've not had the opportunity to have a good poke around the system. Even so, on the basis of what I have seen and the explanations given by SAP execs, the company has put a big stake in the ground. And while the company has plenty of detractors, especially over its B1 product, this is a different ballgame tied to a huge inward investment. Companies like SAP don't do that kind of thing unless they are pretty sure there will be a payback. That will only come from users prepared to help it recoup the €400 million it plans to invest through 2008 in making Business ByDesign a success.
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