SAP Pays Price for SaaS Maturation - InformationWeek

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Commentary
12/1/2008
08:36 AM
Rajan Chandras
Rajan Chandras
Commentary
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SAP Pays Price for SaaS Maturation

SAP CEO-in-waiting Leo Apotheker's recent comments on the company's SaaS ERP solution were very illuminating, and highlight one of the key challenges ahead for cloud computing vendors (and hence customers). SAP's Business ByDesign is "the coolest app ever written," according to Apotheker. Yet, he admits, it's a bad time, financially, for doing a big market push - "hurting our margin, and hurting our stock."

SAP CEO-in-waiting Leo Apotheker's recent comments on the company's SaaS ERP solution were very illuminating, and highlight one of the key challenges ahead for cloud computing vendors (and hence customers).

SAP's Business ByDesign, the newly introduced SaaS version for ERP, is "ready and done" and "the coolest app ever written," according to Apotheker. Yet, he admits, it's a bad time, financially, for doing a big market push - "hurting our margin, and hurting our stock," is how he describes it.The implication is that the product is ready (in fact, version 2.0 of Business ByDesign is apparently waiting in the wings), but getting customers to sign up for it will be a bit of a challenge, and in these troubled financial times, it's probably better to spend conservatively rather than splurge on a big market push.

Recent reports from Forrester Research seem to confirm this.

In a report that came out this summer, Forrester lists three indications that SAP was putting the brakes on Business ByDesign:

  • Funding for the project is scaling back (reduced by approximately €100 million in 2008)
  • Initially, the rollout of the product will be limited to six countries (Germany, USA, UK, France, China, and India)
  • Customer and revenue targets are being extended by 12 to 18 months (it will take 12 to 18 months longer to reach the projected targets of $1 billion in revenue and 10,000 customers)

Forrester sees SAP as well ahead in the game, rating it at level 3 on Forrester's SaaS Maturity Model. Forrester calls Level 3 "single app SaaS," described as follows:

At level 3, software vendors create new generations of business applications that have SaaS capabilities built in. Web-based user interface (UI) concepts and the ability to serve a huge number of tenants with one, scaleable infrastructure are typical characteristics. Customization is restricted to configuration.

Apotheker's assertion is more apodictic than apocalyptic (and this allusive alliteration is atrociously artless). It is also ironical that a business solution that promises savings to customers is too expensive to roll out... for one of the software giants, no less.

Nevertheless, this investment and maturity in SaaS positions SAP well for the future, and customers can look forward to getting a more mature product from a more mature vendor.SAP CEO-in-waiting Leo Apotheker's recent comments on the company's SaaS ERP solution were very illuminating, and highlight one of the key challenges ahead for cloud computing vendors (and hence customers). SAP's Business ByDesign is "the coolest app ever written," according to Apotheker. Yet, he admits, it's a bad time, financially, for doing a big market push - "hurting our margin, and hurting our stock."

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