At the recent Berlin SAP TechEd shindig, SAP’s long awaited, much heralded and plenty delayed SaaS product, Business By Design was barely mentioned. David Terrar reports that;
In this year’s keynote Business ByDesign appeared on one architectural slide diagram at the end of Leo’s pitch, but wasn’t even mentioned in the words. In a subsequent press and blogger conference, when asked about the product, Leo gave a primarily political sounding answer saying as little as possible and referring the questioner to announcements earlier in the year, and that there was no change. If I was a Business By Design customer or partner, I would be pretty worried by the lack of comment in the current strategy vision or compared to previous events.
SAP are the big boys in business software, and them committing to rolling out a SaaS offering was a real validater for the entire SaaS industry. What is really interesting to watch, since the delays to BBD were announced, are the reactions from commentators. Rather than claiming it’s an indictment on SaaS per se and, other than a few misinformed commentator who have been corrected, people realise that is much more about the ability (or otherwise) or traditional software vendors to change course to a SaaS model.
When the delays were first announced, I gave my opinion and to be honest nothing I’ve seen since then has changed the way I think.
To reiterate – it’s been said a number of times in the past that there is a big difference between the business model, revenue stream and development cycle of SaaS versus traditional software. These differences are such that it becomes very difficult for traditional software businesses to reinvent themselves into SaaS businesses.
An interesting post over on this blog looks at the particular issues facing SAP in its quest to introduce a SaaS offering. Specific takeaways include;
- SaaS is designed to reduce complexity, but SAP spent nearly four years developing Business By Design — and precious little of that time apparently went to coming up with a workable license model (read big ugly expensive offering)
- SAP doesn’t seem to understand that SMBs don’t necessarily want an entire software stack from the same vendor (read SMBs like the aggregation of multiple services – they’re generally not looking for an all-in-one deal)
Bottom line is that reinventing a big bloatware producing ISV into a slim SaaS provider is a big ask – as much culturally as technologically – can SAP do it? I’m not putting any money on it.
So what do the readers think – will SAP’s momentum within enterprise see them overcome the massive hurdles to bring a successful SaaS product to market – or is it just too hard a task for them?
CloudAve realtime, inline and up-to-the-minute update – CloudAve contributor Prasanth Rai was also at TechEd and gave some background to the Business ByDesign story here.
Hi Ben,
Thanks for the mention, and I agree with what you say here. I’ve thought all along that SAP should have put Business ByDesign in to an entirely separate business unit to be really successful. The cultural difference between developing, selling and supporting a SaaS offering and VERY traditional software like standard SAP is so great, I can’t see how it will flourish within the current business. I asked this question of Henning Kagermann directly a year ago and he admitted they had considered it, but that there were good reasons for keeping it inside the normal business. He didn’t sound convinced to me at the time, and I’m sure this is part of the problem now. It’s a shame, because functionally and architecturally, the product they have built seems very good, although they have definitely missed a trick by sticking with the old style, traditional looking UI.
@david is wrong in this. They haven’t stuck with a traditional UI but are using the new iterations. UI’s can be built within 30 days on the new stack so this isn’t an issue.
The real issue is that they haven’t figured out the economics.
TechEd is a BusinessSuite and BPX conference for developers so any talk about ByD would have been out of kilter with the conference aims.
And there is no other way to put this but the person at ITBusiness Edge is either horribly misinformed or an idiot. The business model has been worked out (though it’s not working in practice which is another issue) and I’ve never seen research that indicates anything other than SMB/E’s want a single throat to choke. They have the same problems as everyone else and prefer a single supplier for as much as possible.
The root problems with BDD, which are the cause for the expensive lisencing etc., are technical.
Instead of building new ERP software with SaaS in mind, it build yet another big-ass ERP using its old technology stack (e.g. ABAP + Java) and only decided to go for SaaS after the fact.
(the thinking behind it as explained by executives was that the software supports both on-premise and SaaS, and SAP chooses to distribute SaaS only at first so that it can find and fix all scalability issues in the product in-house before delivering to customers)
The fact that it only decided to go for SaaS after the fact meant that instead of going for a true SaaS solution (shared computing resources etc.) SAP went for the simplest and least effective form of SaaS avaulable – when a customer opens an account a new machine is setup as dedicated to him.
Ofcourse these machines are virtualized and there’s some management system that automates this process – hence SAP can call it SaaS when in reality its just a bunch of dedicated servers…
This model is not as cost-effective as real SaaS which seems to be making it hard for SAP to make it profitable…