Sorry, SAP (SAP), I am a great admirer but Business ByDesign (codenamed A1S) has a few problems. The name is too long, the beta set of users is too small, the price is too high, the reference implementations and demos are too much old SAP, and the channel strategy is too 20th century. The name issue is no big deal; letâ€™s just call it BBD. The others will require a lot of work to overcome because BBD is the linchpin of SAPâ€™s objective of 100,000 users by the end of CY 2010. SAP doesnâ€™t consider BBD to be in â€œvolume availabilityâ€ until 2008 so there are a few months left to work out the kinks.
SAP says the small/medium enterprise (SME) BBD solution is already helping â€œan inaugural group of 20 live customersâ€ in the United States and Germany. Iâ€™ll have to dig out some old notes but I think SAP had more beta users when it brought Pandesic to the same market with the same delivery-model/channel strategy10 years ago. Given SAPâ€™s estimate of 1.5 million prospects in the 100-500 employee market band (60,000 in the U.S. and Germany alone), 2000â€”not 20â€”is the reference threshold it needs to shoot for. SAP BBD is available today for selected early customers in the United States and Germany, with the â€œopportunity now opening for early customers in China, France and the United Kingdom.â€ Hopefully there is multiple-thousand-client business in that pipeline given the test marketing that has been ongoing this year. During 2008, BBD is planned for expansion to countries such as Australia, Canada, India, Italy, Mexico, the Netherlands, the Nordic region, South Africa and Spain.
There is good news in the fact that the solution was built from the ground up on SAP NetWeaver. Its host in the Software as a Service (SaaS) delivery model will reportedly use SAPâ€™s own MaxDB open source software database and Unix. But do companies with 100-500 employees even have someone that can use SAP BBD Business Designer?
The indirect channel is of course key to the SME market and the eventual success or failure of BBD. That is not the same as saying it will be sold indirect (such as via telemarketing). SAP needs to and says it will â€œrely significantly on its partner ecosystem strategyâ€ to drive the SAP BBD offering. The only ecosystem member announced or on SAPâ€™s website as of noon ET 9/19 is ADP. Some of its All-in-One-brand partners were shown on videotape at the press event but that makes channel overlap (SAP used the word â€œcannibalizationâ€ in the Q and A session) a real concern.
And most important, a minimum $4000-5000 per month price tag just does not feel â€œaffordable and easy to adopt.â€ I am not even sure per-user pricing is even the way to go but I need to do a little more research on that issue. I am guessing SAPâ€™s current SME installed base might be part of the pricing equation. SAP has a lot of customers in the 100-500 employee market band, especially outside of the U.S. That base could be used to build the BBD reference base quickly. But what would extensive customer migration from All in One to BBD do to the revenue flow from those current customers?
As Research 2.0 has discussed in its annual review of SAP, SAP BBD complements the existing Business One, Business All-in-One and SAP Business Suite (nee R/3) solutions. Business One is designed for the small business segment, while SAP Business All-in-One is built â€œspecifically for midsize companies that need deep industry-specific functionality,â€ what SAP calls microverticals (of which it has hundreds).
The offering puts SAP right up against offerings from its long-time partner Microsoft (MSFT) as well as Inuit (INTU), salesforce.com (CRM) and many others. It will not be just a matter of competing for customers, as SAP is used to. SAP will have to get its BBD ecosystem from Microsoft, Intuit, Lawson (LWSN), Infor, and so forth as well.