Oracle, SAP rush to cloud: Can SaaS sprawl be too far behind?

Summary:SAP and Oracle build out their cloud portfolios. Customers on both sides of the ERP equation may get confused.

SAP this week outlined plans to offer Business One as an on demand version through partners. The repositioning is long overdue, but customer confusion is likely to ensue. What about Business ByDesign?

To be sure, SAP is scurrying to build out its cloud portfolio. It has acquired SuccessFactors and will sell that service as the go-to cloud human capital management tool. SAP has an on-premise HR suite. Now Business One OnDemand is on deck in a move that realistically could push Business ByDesign to the back burner for smaller companies. SAP couldn't sell Business ByDesign at scale for companies with less than 50 employees.

SAP is positioning Business One OnDemand as a cloud ERP system for smaller customers. These implementations will be delivered via partners. "SAP said "Business One OnDemand is intended to complement the currently available SAP Business ByDesign solution for midmarket customers."

Howlett: Oracle talks up Taleo | SAP sense tests its SME messaging at CeBIT

In other words, Business ByDesign isn't penetrating companies with less than 25 employees. As a result, Business ByDesign will move upstream.

Ultimately, SAP customers are going to be confused. SAP for Business One OnDemand is talking multitenant. For Business ByDesign multitenant isn't much of an option. The story about how these two blend together is sketchy as the narrative doesn't hold together well. Cindy Jutras has a long post on how SAP's cloud efforts go together.

At least SAP isn't alone. Oracle's cloud lineup is also being bolted together. There's Taleo, there's Oracle HRM, there's RightNow and there's on-demand options for Fusion apps.

In other words, Oracle customers are likely to be just as confused as their SAP counterparts. Ideally, these cloud efforts would somehow become integrated. The reality is a series of point applications delivered on-demand. Sure, there's integration talk from SAP and Oracle about being a one-stop cloud shop, but we'll see how it plays out. Fortunately cloud applications are supposed to be easier to integrate than the on-premise apps right? Right?!?

The game plan is obvious for both Oracle and SAP: Just sell baby! If customers want cloud give them cloud. On-premise is fine too. Just keep customers in the fold. It's all about the customer relationship (and the recurring revenue that goes with it).

More:

  • Oracle buys Taleo for $1.9 billion; SaaS consolidation ramps
  • SAP and SuccessFactors: All about Workday?
  • The cloud shopping list: Assessing the next SaaS takeover targets
  • Enterprise software giants start great cloudify effort
  • SAP acquires SuccessFactors for $3.4 billion: Cloud consolidation accelerates | SAP acquires SuccessFactors: a first take | Oracle acquires RightNow for $1.5 billion, aims turrets at Salesforce.com

    Topics: SAP, Cloud, Data Centers, Oracle

    About

    Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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