SAP & SaaS - some clarifications

TechMarketView ran a piece today about SAP and its SaaS (software as a service) products/initiatives. When I read the article, I thought this couldn't be right.

TechMarketView ran a piece today about SAP and its SaaS (software as a service) products/initiatives. When I read the article, I thought this couldn't be right. I was especially confused by this paragraph:

SAP’s flagship mid-market SaaS offering, Business ByDesign, announced in September '07, has been aimed at winning new customers. It has so far cost hundreds of millions of Euros to develop but is still very much in pilot phase. The new initiative is largely aimed at existing customers. There will be new functionality - strategic sourcing, expense management and CRM - compatible and interoperable with an in-house ERP system.

Business ByDesign was introduced a couple of years ago and it was a very expensive development effort for SAP. This product line is targeted for mid-sized firms, too. The product line though is still in a bit of controlled rollout though as SAP still has work to do in two areas: the multi-tenancy aspects of the product need some work as do the economics and composition of the channel ecosystem to implement these products.

When I read the quoted paragraph above, I thought I had missed some important dialogue re: Business ByDesign. So, I called Mike Prosceno at SAP to help me understand what had changed with this product line.

As it turns out, the initiative referred to at the end of the Business ByDesign comments is unrelated to Business ByDesign. It seems SAP is developing SaaS capabilities to supplement functionality in its Enterprise (think R/3) product line. SAP will move to the cloud certain functions/capabilities (e.g., employee self-service) that work well in a cloud environment.

Efforts to expedite the rollout of Business ByDesign are still underway but these are separate initiatives than those referenced in this report. As to the new initiatives, these may be a good thing for SAP. Cloud-based solutions are not only hot but may be needed if SAP is to continue to fend off newer competitors like Salesforce, NetSuite, Intacct, etc. Savvy readers will of course realize that some of these competitors aren't new to SaaS. Some of these SaaS firms have been around for a decade now. That, of course, begs the question, "Are SAP's SaaS initiatives timely?" That's another blog post....