What really happened with SAP Business ByDesign?

Many of us who have been following the SAP Business ByDesign saga have used a combination of first hand accounts, intuition, inference and plain guess work to figure out what's been going on with the product. Or is it service? As far as I can gather, those commenting in detail have been reasonably accurate, in part helped by SAP's attempts at being transparent. Regardless of what others may think, I actually welcome this. Better to have your dirty laundry out in public rather than a piecemeal drip-drip of mis-information that comes back to to you. Inevitably, some things remain unsaid.

Recently, insiders have approached me with more detail about the train wreck BYD is turning into. Here is my summary of what I have recently learned:

1. BYD was not designed as a saas application - When BYD was kicked off, the product was defined for mid-sized enterprises and was meant to occupy similar positioning as All-in-One. At the time no one mentioned the company would try for an on-demand solution. Therefore, much of the infrastructure pieces were not designed for an on-demand application at all. That has helped create many of the TCO issues to which the company refers.
2. Overambitious scope - Unlike Salesforce.com, Workday or other SaaS vendor solutions which mainly focus on CRM/HR functions, BYD is a full business suite. The net result was that SAP was architecting complexity into the product development cycle from the get go. Internally, the company was conflicted as it saw Salesforce.com start to accelerate sales. Should they target CRM and build out? Well, we know the answer to that one. They waited and waited and waited...and still got it wrong.
3. BYD is too heavy as a SaaS application - At the backend, BYD leverages Netweaver and then includes another business process layer on top. However, Netweaver is too heavy for the SME market because a significant part of the technical pieces inside Netweaver are not designed for a solution like BYD. There is no final consensus on what should happen although it is suggested that a Netweaver 'lite' or new technical infrastructure should be built from scratch.
4. Collaboration failed - BYD was sponsored by Peter Zencke who has since retired. Internally it sometimes looked like the development team were building a competitor for other SAP products such as All-In-One or Business One. Net-net, Zencke's team did not enjoy the trust of other developers which created difficulty in leveraging certain technical components that could be used in BYD's development.
5. Prioritizing engineering excellence - SAP prides itself on engineering excellence but given the factors above, it was difficult for the team to achieve the levels of code quality the company insisted were needed to get the product out the door.
6. The RIF factor - Since Christmas, there has been a significant re-organization of the BYD team. Most of the developers remain, tasked with developing a "lean stack" for the current infrastructure and re-develop the UI layer for performance reasons. Most solution managers and other business analysts, sales and the go-to-market support team were either RIF'd or transferred to other teams. That means the current BYD team is about one third its former strength. From a market perspective, SAP is going to need a rebuild of that supporting organization if it is to have a hope of a good launch.

My sources stress that SAP is on the way to having a new version of BYD out, probably in time for SAPPHIRE 2010. While detractors will scoff, SAP should be given credit for recognizing the issues, going back to the drawing board where it makes sense and fixing the problems before the train wreck becomes reality. To that extent, the commitment to the product seems real.

While there is nothing terribly earth shattering about these latest tidbits, it provides insight to a company that is dominated by engineers over which senior management struggled to keep control and its failure to see the saas trend coming. SAP is not alone in this. Why is Oracle dragging its feet over Fusion? Engineers are notorious for disagreement but after 35+ years one would have thought that SAP management has a better grip on the development process.

And there you were thinking that software companies are well run?