SAP Business ByDesign and BusinessOne on a collision course?

SAP BusinessOne is little known in the wider world but has garnered 31,000 SME customers. But does the recently announced subscription based hosting offer represent the right thing or a direct competitive threat to Business ByDesign.

Bringing a new product to market is never easy for even the most seasoned of vendors. SAP's Business ByDesign is a classic example that will go down in the text books as one where navel gazing produced the wrong result which was only righted when the company took one too many kicks to the groin. Today, ByDesign is a rapidly maturing solution that is hitting its delivery marks and racking up customers at a fair clip. The company reports some 500 customers so far with a target of 1,000 by year's end. If they achieve that then they will have done well.

Not to be eclipsed, SAP BusinessOne is not so shabby either. With a current customer count north of 31,000, some 300 solution partners and 500 solutions plus 22,000 downloads of an app from the iTunes store it represents a relative success story for SAP. But...

Yesterday, a group of SAP Mentors were treated to a quick skim over the B1 surface, with the effort concentrated on two things: market presence and an outline of what's coming in 2012. The market presence data is interesting. A number of big name brands like Land Rover use B1 in subsidiaries. Hang on - where have I heard that before? Oh yes - that is an integral part of SAP's BYD story with high expectations coming from the big SIs both on the domestic and Indian fronts.

Then there was the B1 starter pack story that allows potential customers to get going for under $10,000. SAP counts having sold to 75 net new customers on the starter pack version in two months. But again - there is a similar starter pack story for BYD though at least one reseller reckons it is closer to $15,000 to get going.

Then there was talk about professional services organisations as being SAP's best market for B1 based upon sales made so far. Hmmm...BYD version 3.5, due for release in 2012 is planned to major on PSA functionality.

And then if that wasn't enough, there is talk of seamlessly shoehorning HANA, the BIG, expensive high speed data analytics appliance into B1...and yes, there is a similar story around BYD.

But the real nut comes in the fact SAP is currently rolling out a program that will allow resellers to host B1 and resell access to the system on a subscription basis. The reseller holds the license and packages up a service program. Resellers have to shell €5,000 for the pleasure plus invest in infrastructure but they hold the ownership of the relationship with the customer and the all important license. Kolanot is already out there with this solution branded as BusinessNow.

During the Q&A, I along with colleague Jon Reed peppered the SAP team with questions about how this is going to work when to us it seems like BYD and B1 are on a collision course. The frightening response was - and I paraphrase - 'We don't know about BYD.'

The problems are more than theoretical. SAP likes to position BYD and B1 as alternatives that cater for different deployment preferences. That doesn't wash. B1 is far richer than BYD at this point in development as you'd expect from a relatively mature solution. Yet, as the Kolanot example shows, it is being offered at a lower price point than BYD: $125 plays $149 per user per month. That will not be lost on buyers although to be fair it is unclear how precise the comparisons work out once you take into account any technical requirements for subscribed B1.

More important, as the functional gap between BYD and B1 narrows, it will be harder for SAP to sustain a line that puts the two solutions side by side without drawing the inevitable head scratching from buyers. Similarly, I have problems with the hosted subscription model run by resellers because it is inherently non scalable. Resellers may understand code but running a data center is best left to experts.

But the most troubling problem is that SAP doesn't see the problems. Or if it does then they are locked into the minds of one level of management and not communicated at the SVP/VP level. If it was otherwise then we would have got answers beyond the sometimes uncomfortable silences.

Past analysis has been very much focused on whether ByDesign represents a direct long term threat to the Business Suite, largely because the senior level messaging behind it is that the BYD architecture IS the future for SAP. To me that has always been a long time into the future - a good five or more years out.

In a year's time, I reckon those internally competitive problems are going to be focused directly on BYD and B1. This is one train wreck SAP cannot easily deflect without some very sharp thinking that is not currently in evidence.

Expect an update when we get to SAP TechEd in mid-September.

Show Comments