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SAP Targets High-end Customers with SMB Offering

SAP's Business ByDesign has always suffered from a perception problem: SAP has said pretty much categorically that it will be only sold into the SMB market. This position has been stuck to steadfastly, despite lots of evidence that high-end customers would love to have some or all of BBD's functionality somewhere in their enterprise, either as an adjunct to the existing MySAP suite or as a stand alone system running in a subsidiary operation.
Written by Joshua Greenbaum, Contributor

SAP's Business ByDesign has always suffered from a perception problem: SAP has said pretty much categorically that it will be only sold into the SMB market. This position has been stuck to steadfastly, despite lots of evidence that high-end customers would love to have some or all of BBD's functionality somewhere in their enterprise, either as an adjunct to the existing MySAP suite or as a stand alone system running in a subsidiary operation.

Well, it's now official: SAP is going to sell BBD to those customers, precisely for those adjunct operations and subsidiaries that have seemed to be such a natural fit.

In order to have heard what may be a truly momentous shift in SAP strategy, you had to listen carefully to the last minute of CEO Henning Kagermann's opening statements during Wednesday's fiscal 2007 financial results call. Right there at the end, just when normally eyes glaze over or start moving to the next slide deck, was Kagermann's statement: "We can now start offering [BBD] for small subsidiaries of large groups...We can take certain pieces and reuse them to bring new innovation and extend them to the large enterprise as well."

Attacking the high-end of its core market may well be the way in which SAP is able to reach the ambitious goals Kagermann laid out during the earnings call of 1000 BBD customers by the end of 2008 and $1 billion in revenues from the new product by 2010. It's clear from my conversations that BBD has a lot of appeal to SAP's core high-end customer base, and it's also clear that SAP will have its hands full finding enough channel partners to sell 1000 units of BBD by the end of the year. But if the direct sales force were to be enlisted to sell BBD to the existing customer base, those numbers would suddenly seem to be relatively achievable. Not a slam dunk, by any measure, but I believe the road to 1000 customers will be a heckuva lot easier if some -- or even most -- come from the 40,000-plus existing customer base.

It's still a long road from concept to $1 billion in revenues -- that's 560,000 end users at the official $149 per user per month pricing guidance SAP gave at the September "launch." But at least we know one way in which SAP can achieve those numbers, one way that leverages existing strengths, as opposed to strengths that have yet to be discovered and that are, in every way, extremely hard to achieve.

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