SAP's A1S: love, not pricing, is key

SAP's A1S: love, not pricing, is key

Summary: SAP's announcement of A1S, it's software as a service (SaaS) product for small business, will take place tomorrow in New York City. Speculation is running high whether this product will succeed or fail, and the impact A1S will have on SAP as a whole.

SHARE:
TOPICS: SAP
2
SAP's announcement of A1S, it's software as a service (SaaS) product for small business, will take place tomorrow in New York City. Speculation is running high whether this product will succeed or fail, and the impact A1S will have on SAP as a whole. On the stock market side, Bloomberg reports that:
"Investors should take profits on any A1S related hype over the coming weeks,'' [Societe Generale] wrote in a note to investors today. "A1S related costs will continue to ramp throughout 2008, with no noticeable revenues likely until 2009, putting pressure on the core business.''
Closer to home, Dennis Howlett, fellow ZDNet blogger and among the sharpest enterprise software analysts out there, believes that "pricing is the key" to A1S' success, given the availability of low-cost alternatives. While Dennis is correct to assert competitive pricing is necessary, he is wrong to emphasize it. A1S' biggest challenge is the massive psychological and organizational shift required for SAP to truly make friends, and get cozy, with small companies. Change is hard, and SAP must overcome its big company history, tradition, and DNA to make this transition. [I've written previously about this issue here and here.] The success of A1S actually depends on love. Yes, love. You know, that special bond and connection, where you feel respected and appreciated by your partner. SAP can fiddle, tweak, and change features, pricing, business model, and everything else, but that's not enough. In the end, A1S depends on many small companies feeling SAP's love. If SAP can successfully accomplish this transition, its competitors have much to fear. On the other hand, if SAP is unable to overcome corporate inertia and rapidly make the transition, A1S will eventually fade, like the memory of any other failed love.

Topic: SAP

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

2 comments
Log in or register to join the discussion
  • Trust is important, but there are other factors

    Some of us have worked for both global enterprises and smallish companies too.

    Big enterprises seem to be prepared to spend so much money on IT that one is sometimes overcome by the fear that the shareholders one day will find out how much money is being squandered on computing and break into the building and run amok.

    SAP are used to dealing with big enterprises and big budgets. Smaller companies are, necessarily, much more careful with their money. One big mistake could put you out of business and that big mistake could be trying and failing to implement an expensive software package.

    So SAP need to get used to this.

    SAP have the advantage of being a well known name and a stable business. A lot of the players in the SME software sector are smaller less well known companies, whose long term viability may be questionable.

    However there is this lurking fear for small companies who buy SAP SME software. At some point you grow to a certain size and then SAP will pull out all the stops to sell you R/3. At which point I would be very, very afraid.
    jorwell
    • Business One (B1) is the start.

      As you grow you leverage your investment (in data and software costs) to upgrade to A1. Then if you grow more you move up the ladder into All-In-One. Eventually you move into SAP ERP. I believe that SAP ERP has replaced R/3 and R/3 will not be sold.
      nomorems