SAP's SaaS strategy: On demand add ons, Business ByDesign starter packs

SAP will demonstrate the latest portion of its on-demand strategy: A focus on "orchestration" and additional capabilities added as a service to its core systems such as Business Suite.
Written by Larry Dignan, Contributor

Updated: SAP on Tuesday will demonstrate the latest portion of its on-demand strategy: A focus on "orchestration" and additional capabilities added as a service to its core systems such as Business Suite. Think of it as "on-premise on demand." In addition, SAP plans to launch "starter packs" for Business ByDesign and lower the minimum seats to get more customer volume.

In a nutshell, John Wookey, executive vice president of large enterprise on demand at SAP, will demonstrate on-demand software designed for line-of-business needs. The conundrum outlined by Wookey goes like this:

  • Customer installed big ERP suite;
  • Wanted to upgrade functions;
  • But didn't have the budget;
  • Customers got frustrated and went out and got software as a service to get that functionality.

Wookey, speaking at the SAP Sapphire conference in Orlando, said he doesn't blame these customers for going out and getting SaaS, but he does see an opportunity to "bring cohesion to the model." In some respects, Wookey's plan could be a cure for SaaS sprawl. The rub: Customers that already have gone with SaaS in addition to an on-premise suite may not swap out for on-demand orchestration.

Customers have come to SAP and "said it would sure be nice if you could provide these things on-demand so we wouldn't have to go to all of these other vendors," said Wookey.

SAP is trying to adapt to the changing state of IT spending. Simply put, the CIO isn't necessarily making the purchases. The chief marketing officer may be buying Salesforce.com and the HR head is going for SuccessFactors. Since the upfront spending is low for these on-demand apps, the CIO has been cut out.

Wookey, who is in charge of on-demand strategy at SAP, said the company plans to weave in collaboration throughout these on-demand add-ons. SAP's game is to sell on-demand software that maps well to a company's existing on-premise application. Tuesday's demo will revolve around a product dubbed Sales on Demand, which is designed to improve on communication in the sales process.

SAP's plan sounds a lot like Salesforce.com's Chatter, which weaves collaboration inside the enterprise application.

Wookey said SAP plans to "make it easier to update specific business functions" for line of business managers. SAP already has a few of these on-demand add-ons for strategic sourcing and supplier management.

SAP will manage support for these on-demand add-ons and partner for infrastructure and hosting services. Some on-demand services are available today, but the ones demonstrated on Tuesday will be available in early 2011.

Update: Doug Merritt, executive vice president of the premier customer network for SAP, talked more about the on-demand strategy. The biggest takeaway: Merritt said that Business ByDesign is now in general availability. However, the company isn't exactly screaming it from the rooftops and is looking for more viral sales.

Needless to say, Dennis Howlett, also in this meeting, wasn't buying it. Indeed, it was hard to see how SAP would make Business ByDesign without a sales channel effort like NetSuite launched.

Merritt said that SAP's on-demand parts taken as a whole can "reinvigorate the linkage with line of business," something that may have been lost given Wookey's comments.

SAP's Merritt said Business ByDesign will offer starter packs with lower prices to garner volume. Pricing for starter packs will be rolled out later---possibly tomorrow. Business ByDesign prices will remain $149 a month per user for the entire suite. The minimum number of seats for Business ByDesign will also drop from 25 to 10.

More Sapphire:

Editorial standards