SAP has coolest app ever...but can't afford to sell it!

SAP reckons that it has the "coolest app ever written" waiting in the wings. Shame it can't afford to ship it yet...

SAP is putting the brakes on its Business ByDesign SaaS offering that was announced with a great fanfare over a year ago and has since ground to, if not a halt, certainly a stagger. SAP CEO in waiting Leo Apotheker insists it is "ready and done," Version 2.0 is in the wings and ready to go and that overall "it's the coolest app ever written."

There's only one problem: SAP can't afford to release it in case it's enormously successful.

Hurting the margins

The SaaS revenue model that Business ByDesign represents would erode the traditional revenue model and margins that SAP is used to with its on-premise offerings – something that the likes of pureplay SaaS vendors such as Salesforce.com and NetSuite have claimed would be the case for a long time.

“We would be hurting our margin, and hurting our stock," Apotheker admitted. "We are releasing it slowly because we are aware of the economic situation out there," he said. "And if we were to release it right now... just compare the profitability of many on-demand vendors... and you'll see that if you are an enterprise vendor that is running at the margin we are running at, if we release it now, we would be hurting our margin.

Apotheker insisted that SAP remains committed to giving its customers a choice of either on-demand or on-premise computing – just not at the moment! “It’s arrogant to dictate to customers. Better to ask them and respond to what they need,” he said. “What we can do is to combine the two worlds, there are certain things you can’t run in the cloud because it can collapse. No consumer company is going to run billing for 50 million customers in the cloud. It doesn’t make sense. We’re giving people the opportunity to run the two things together. Try to give everyone a choice. People will do what they always do. They’ll do return on capital and what makes more sense.”

A unified approach

SAP also plans to create a unified user interface for all its applications in a bid to make them easier to use. "There's one thing that all of us in the enterprise software business didn't do well, for lack of trying," Apotheker said. "We focused on functionality at the expense of figuring out how to make software easy for people to actually consume. We understand that, and we will make sure that you can actually consume real software."

Apotheker currently shares the CEO role at SAP with Henning Kagermann, but from January onwards it's going to be increaingly just him at the helm as Kagermann's contract winds down towards his retirement in May. It's a tough time to be taking over the top spot. “There's a real storm out there. It's pretty bad. It's basically driven by a shortage of liquidity. It happens to be a global problem,” he added. “I don't know how bad it's going to be. Sometimes you wonder if there's some masochistic streak in talking about recessions.”

For more on SAP and SaaS, check out the following stories at MyCustomer.com: