The German giant's "A1S" product -- officially known as SAP Business ByDesign -- targets companies with between 100 and 500 employees.
Posted Sep 19, 2007
NEW YORK -- After months of speculative buzz surrounding SAP's highly anticipated on-demand offering, code-named A1S, the German software giant finally lifted the curtain publicly on the midmarket-focused product -- a solution Chief Executive Officer Henning Kagermann described during a press and analyst conference here today as "the most important announcement I've made in my career."
Officially named SAP Business ByDesign, the on-demand product features a slew of functionality including:
SAP Business ByDesign leverages enterprise services-oriented architecture (SOA) and is built on SAP's NetWeaver platform.
Kagermann wasn't shy about underscoring the completeness of the solution. "From the beginning, the idea was to design it for end-to-end, flexible, adaptable business processes," he told analysts and the media, adding that SAP Business ByDesign represents more than just a new SAP product. "It's a new era for SAP," said the 25-year SAP veteran.
The SAP-managed, on-demand product is aimed squarely at new prospects with between 100 and 500 employees, moderately complex business processes, and moderate transaction volumes. SAP Business ByDesign will complement SAP Business One, the company's on-premise or hosted application for companies with fewer than 100 employees, and SAP Business All-in-One, its on-premise or hosted offering for companies with between 100 and 2,500 employees. Unlike SAP Business ByDesign, however, SAP Business All-in-One is targeted at midmarket companies with strong requirements for microvertical solutions.
SAP's client roster includes more than 28,000 companies that the software company categorizes as small and midsize enterprises (SMEs), accounting for more than 30 percent of its yearly software orders. During his keynote, however, Kagermann made clear SAP's ambitious goal for growth: The company wants to serve 100,000 customers by 2010.
- integration with Microsoft Office applications;
- executive management support;
- human capital management;
- project management;
- supplier relationship management; and
- supply chain management.
SAP Business ByDesign is the result of four years of development, according to Peter Zencke, a member of SAP's executive board -- and the company was eager to show off the results. Wednesday's event also included a compelling demo, highlighting the software's role-based aspects and a handful of features, including an integrated-telephony component that provides a company rep with a screen pop of each caller's information -- including the caller's existing sales order -- before the rep even takes the call. Among the other capabilities showcased Wednesday were document flow, drill-down functionality, and mash-ups.
Pricing in the U.S. will start at $149 per user, per month, including software, infrastructure, services, and support -- with a minimum of 25 users to be licensed per customer, according to Leo Apotheker, SAP's deputy CEO and president of customer solutions and operations. Meanwhile, group pricing for "efficiency" users -- classified by SAP as those requiring limited access to the software, such as self-service features for time-and-expense functions and purchase confirmations, is tagged at $54 per month for a set of five users. Prospects, however, can try the product for free for 30 days before buying it.
Twenty customers are live on the software in the U.S. and Germany including:
Each of those four companies had company executives on hand participating in a customer panel to discuss their business needs and experiences with SAP Business ByDesign.
SAP also stated that customers in the U.K., France, and China are validating the application, and that the product will be rolled out to other markets -- including Australia, India, Italy, the Netherlands, the Nordic region, South Africa, and Spain -- next year. The company also said it will include SAP Business ByDesign as part of the SAP PartnerEdge program in 2008; current SAP resellers will be invited to apply and qualify, the company added. By the end of 2008, SAP expects to have invested between 300 million euros and 400 million euros in go-to-market and service-and-support innovations, the company said.
Several analysts obsesrved that SAP Business ByDesign clearly represents the company's most significant push to date in courting the coveted midmarket sector -- a sector SAP has been notably late in providing on-demand products that are often called software-as-a-service (SaaS). The firm unveiled its first SaaS tool -- the SAP Sales on-demand solution -- in February 2006, announcing SAP Marketing on-demand three months later.
SAP Business ByDesign's success would add a much-needed credibility boost for SAP in the on-demand market, some analysts believe. According to Josh Greenbaum, principal at Enterprise Applications Consulting (EAC). SAP has had a CRM on-demand product for some time, he notes, but one that "has not necessarily taken the world by storm." Part of the blame for that failure, Greenbaum says, is that earlier SAP SaaS products "never benefited from the kind of launch that SAP is doing with [SAP Business ByDesign]." He also suggests that this announcement amounts to more than just the average, everyday, run-of-the-mill software release. The new product, he says, "is really a major stake in the ground for SAP in the on-demand space, in the midmarket, in the model-based development space, and in the services-oriented architecture space--all four of those converge with this one product. It's a huge statement for SAP. If it's successful it's going to change the market for on-demand in a pretty dramatic way."
That on-demand market is heating up. SAP must now contend with a host of competitors with much longer histories in delivering SaaS functionality, such as on-demand specialist Salesforce.com and NetSuite, a company that has been lauded for its on-demand integrated ERP, CRM, and e-commerce capabilities. SAP's announcement comes during the week of Dreamforce, Salesforce.com's annual user conference, and one day after NetSuite announced that manufacturer Asahi Kasei Spandex America replaced SAP R/3 with ERP functionality from NetSuite.
Not surprisingly, in light of the day's announcement, several of SAP's competitors in the CRM space were quick to point to the company's flaws.
"SAP sees their customers moving to NetSuite, and they are using a marketing push to try to stave off the defections," says Jay O'Connor, NetSuite's senior vice president of worldwide marketing. "They are about 10 years too late with their product, however. It will be very difficult from them to catch up with us. SAP is touting NetSuite's message--the future of the midmarket is on-demand, ERP-based application suites. So SAP will do our marketing for us, and when customers look for what SAP is describing, they will invariably compare NetSuite with [the SAP Business ByDesign] Version 1.0 offering. When they do, NetSuite will win the vast majority of those accounts given NetSuite is a much more complete and mature application than SAP."
Greenbaum, on the other hand, suggests that NetSuite has a fight on its hands. "SAP is a substantially larger and better-known company than NetSuite, so it really puts the onus on NetSuite to retain its market position." He also sees challenges ahead for Salesforce.com: "One of Salesforce.com's main problems is it lacks direct out-of-the-box integration with the rest of the back office, and for companies that have to weigh the choices of having a full on-demand suite versus a best-of-breed CRM solution that has to be connected to the back office, the [SAP Business ByDesign] story can be a very compelling one."
On-demand CRM player RightNow Technologies also came out swinging. "We are focused on delivering on-demand solutions that drive our client's customer-experience efforts," Greg Gianforte, CEO and founder of RightNow Technologies, tells CRM. "SAP faces a big challenge if they really want to deliver business applications on demand. It will be difficult to focus on their clients' success as they try to play catch up in the SaaS environment."
However, Steve Strout, president of Americas' SAP Users' Group (ASUG), is optimistic. "Business ByDesign creates a new business model that allows a whole new tier of companies to really focus on their business[es], and what differentiates them in their marketplace, rather than technology," he says. "We welcome the Business ByDesign customers, and we look forward to sharing our best practices with them and becoming an active source of information and support for this growing customer community."
Strout's optimism will have to borne out over the coming months. As Greenbaum says, "The real enduring question about how successful [SAP Business ByDesign] is going to be rests with the channel and how SAP builds its channel."
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- Judge Consulting Group, a business-technology consultancy;
- Mantz airmotions GmbH & Co. KG, a manufacturer of air fresheners for homes and vehicles; and
- Compass Pharma Services.
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