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Inside SAP's Idled Business ByDesign Suite

The company's first big SaaS effort may need major reconstructive work before SAP can bring its ERP suite to market.
By April 2008, however, it was clear there were problems with the suite and that SAP shareholders would not be supportive of large amounts of money to fix those problems. At the close of a difficult financial quarter, SAP said it would slash by half what it previously planned to invest in Business ByDesign in 2008 -- down to about 100 million euros -- as it worked to "fine-tune" the service for its first customers. It also tempered its revenue goals for the product, estimating it would take until 2011 or 2012 to hit $1 billion in annual sales for the service, originally a target for 2010.

On Tuesday, 13 months after that estimate was made, Apotheker said in an InformationWeek interview, "We're on track for our plans for Business ByDesign. We want to make sure we can deliver service 24 by 7 by 365, by providing the only holistic suite out there. We are progressing well.

"Hopefully early next year, we will provide the service on a broader basis," Apotheker said, while adding, "but that decision hasn't been made yet."

Some questions remain unanswered about the suite. If parts of it need to be reengineered, then why did SAP reduce its workforce on Business ByDesign to 800 people from 2,600 and provide in a March e-mail its explanation that "as large parts of the software are already developed ... SAP will transfer most of the programmers to its flagship project Business Suite." (Business Suite is SAP's core product: an on-site, licensed suite that includes its ERP applications.)

Apotheker also refused to say whether Business ByDesign is being served to customers in a multitenant architecture or single tenant.

"Who cares?" Apotheker said in Tuesday's interview. "What matters to customers is SAP has solved some very interesting technology challenges with Business ByDesign."

The multitenant question does have relevancy, though. Some SaaS companies, such as Salesforce and Workday, insist that multitenancy (meaning groups of customers "share" an application, yet keep their data separate) is the only way to profitably offer SaaS, since it requires less investment in hardware and storage than a single-tenant approach.

When Business ByDesign was introduced, it was single tenant. Platter indicated Tuesday that the Business ByDesign development team may be working to move the suite to a multitenant infrastructure, but it's unclear how much, if any, of that work has been done.

Twenty months later, the high-profile launch of Business ByDesign, and its subsequent delay, will be remembered more for its poor execution than how it marked SAP's willingness to try something different.

Still, the delay may not have lasting damage on SAP's SaaS efforts. Perhaps its typical customer base still isn't convinced a SaaS ERP suite is the right way to go. Several CIOs interviewed at Sapphire, from companies big and small, said they still have concerns about the perceived lack of security and control they would have with SaaS, but that it might work with some applications.

Indeed, SAP already offers several on-demand applications in such areas as CRM and procurement. It's also working on a software-plus-services strategy, in which it'll offer hosted software modules that plug into customer's on-site ERP systems. More information will come out on that in coming months, Apotheker said.


InformationWeek Analytics has published an independent analysis on increasing application performance. Download the report here (registration required).

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