View from the Cloud: Success By Design?

SAP’s original aim was to achieve around 10,000 clients by late 2011 but its growth ambition has now been publically reduced to 1,000 customers. The reason for the setback was the need to take ByDesign back to basics – a brave but sensible move resulting in a product which is now bursting with functionality from the extensive second-phase research and development. Yet the question many are still asking is whether ByDesign can recover from its initial false-start.

 

SAP does not enter markets to take second place. In taking the product back to the drawing board it has produced a solution to more than rival the likes of NetSuite. Early success in China also shows there is clearly a vast potential market around the globe for its new cloud-based offering.

 

The biggest challenge SAP faces for the rapidly maturing ByDesign solution is not around opportunity but rather perception; many potential target SME customers will automatically discount the option of moving to ByDesign because they believe SAP is too expensive for them. While there is recognition that SAP is a quality brand, in this time of economic belt-tightening there is clearly a perception hurdle in the market that must be overcome – and only a limited amount of marketing volume being devoted to achieving it.

 

A further challenge is that, while the strength of the SAP brand is undeniable, many businesses will want to wait until there is more substantial take-up of the software and it is proven in more businesses. Although the volume of customer references is continually increasing, this widespread adoption will inevitably take time.

 

Earlier this year, SAP’s co-CEO, Jim Hagemann Snabe, summarised the perception issue the organisation is facing not on cost but rather communicating the potential that the software has for the SME, asking: “How do we convince companies that it is possible to actually run your business end to end in the cloud?”

 

In March, we agreed a partnership with the SaaS marketing specialist, Business on Demand (BoD) which took the form of Enterprise-On-Demand, a dedicated ByDesign reseller partner. Forming a company as soon as possible was a deliberate and strategic move for both firms. Recognising the huge potential that the offering has, we were keen to establish ourselves as an early-stage partner with SAP and utilise our joint skills as an experienced reseller and a specialist consultant to the fullest.

 

This type of partner-led approach is the most likely and most obvious route to market for SAP ByDesign. Using smaller resellers also lessens SAP’s liability, as ByDesign is sold on the partner’s terms and this reseller model continues to be an emerging trend.

 

So what of the future for ByDesign? In the UK, the market is likely to comprise new or growing businesses looking to tackle the pain points emerging from their existing solutions. ByDesign is scalable and reduces the need for support staff, upgrades and so on. The fact that cost is fixed per user is also likely to appeal in this time of continued economic uncertainty, as it makes it easier to determine cash-flow and budget ahead.

 

 

Just like the shift to 3G, many emerging markets have leapfrogged to cost-effective SaaS solutions. For this reason, ByDesign is ideal for China and Asia-Pacific and is already running in a growing number of countries. If it manages to get a foothold, the opportunities are vast.

 

In China alone, China Telecom estimates that there are more than 1m small and medium-sized businesses employing between 50 and 250 people. The announcement in May of a new strategic partnership with the telecoms giant to offer a cloud-based version of its business software suite to small and medium-sized businesses in China shows just how hard SAP is pushing to penetrate its fast-growing market. It also demonstrates that SAP recognises cloud computing will help it to reach new market segments.

 

The launch of SaaS technology marks a new era for SAP, with ByDesign likely to be just the start of its on-demand offering. In particular, the solution meets businesses’ growing requirement for flexible and mobile working as it makes it possible to connect with the business-specific information and work whenever and wherever.  

 

Another feature likely to be well received by mobile workers on SAP is support for all smartphones, including the iPad and BlackBerry, while the in-memory capabilities which power the product’s analytics functions have been extended to include sales and financial planning scenarios. Finally, a free dashboard app already available for the Mac platform could further help iPhone and iPad SAP users to arrange and organise reports, notes, email and voice notes.

 

Whether ByDesign marks the start of a rapid shift to the cloud for SAP remains to be seen. What is clear is that the solution’s sound infrastructure will provide a solid framework for SAP to build on in the future.