An 18-month delay in the launch of SAP's Business ByDesign project will push prospective customers and partners into the arms of rivals such as Coda, Twinfield and of course NetSuite -- whose CEO tells me Larry Ellison saw this coming years ago.
The news that SAP has pushed back the roll-out of Business ByDesign by twelve to eighteen months should be music to the ears of its SaaS competitors, especially on SAP's home turf in Europe. By announcing its own SaaS product for the midmarket late last year, SAP put its stamp of approval on the on-demand model. Now that it has said customers will have to wait another year or more before they can buy it (due to scaling problems, no less), the company has created the worst of all worlds: it has validated a market and then vacated it, giving competitors a free run. Even SAP can't spin FUD (fear, uncertainty and doubt) for as long as 18 months — especially not in the on-demand market, where customers can be up-and-running within weeks of placing an order.
Whereas prospective customers and partners might have taken a wait-and-see approach if Business ByDesign were due later this year, delaying it until late 2009 or into 2010 will drive both camps into the arms of competitors (perhaps we should rename the product 'Business ByTwoTen'). I suspect this will especially help smaller local players whose marketing and partnering efforts in the European market would previously have been overshadowed by SAP's looming presence.
It's certainly welcome news for UK-based CODA, which next week at Dreamforce Europe releases phase I of its on-demand CODA2go application, built on Salesforce's Force.com platform. "Of course we're not looking to deliver as broad a portfolio as SAP, but we have designed a truly international, sophisticated accounting system that will support not just small and mid-sized companies but also enterprises. That space is going to be a lot clearer without SAP in the market yet," commented group marketing director David Turner by email yesterday.
Andre Kwakernaat, CEO of Netherlands-based Twinfield, probably Europe's most established on-demand financials vendor, was more cautious, but saw SAP's move as an inevitable setback. "SaaS has to be in the DNA of the whole organisation — development/sales/support etc," he told me by email. "Twinfield has got now eight years' experience and has cracked the code for delivering a stable and fast SaaS accounting platform with more than 60,000 live administrations."
No one, however, is more overjoyed than Zach Nelson, CEO of NetSuite, which earns almost a fifth of its revenues from outside of North America, the largest slice of that total being generated in the UK. NetSuite last week announced a sales and marketing partnership with UK telecoms giant BT, which will further help raise its profile this side of the Atlantic. After announcing NetSuite's Q1 financials late yesterday — to an inimpressed Wall St — Nelson found time to send me a note revealing that Oracle boss and NetSuite majority owner Larry Ellison long ago predicted this week's events:
"We have always said SAP announcing their intention to come to market would be good for NetSuite, because SAP would create demand for an on-demand integrated suite. That indeed has happened, and guess what: there is only one such product available — it's called NetSuite. Years ago Larry Ellison told me that either SAP or Microsoft would do something like this — pre-announce a product to compete with NetSuite years before they could actually deliver it. This is what has happened. So we love it."
Over the next few weeks, I'm going to be putting more of a spotlight than usual on the European market, with several Europe-focused posts coming up next week to coincide with Salesforce.com's Dreamforce event in London, which I'm attending. I'll keep up the focus until June, when I'll be giving the closing keynote at SIIA's On Demand Europe event in Amsterdam. In between, I'm even going to be at SAP's European conference SAPPHIRE Berlin, although what I'm going to find to do there for three days now that Business ByDesign is apparently off the agenda, goodness knows. If you have any suggestions, drop me a line.