For SAP, it's turning out to be a long, strange trip to the software-as-service delivery model it sees as the key to winning new customers in the SMB market.
SAP's SMB-oriented Business ByDesign platform (codenamed A1S) has generated intense media interest, largely because so many observers seem to think that SAP will experience problems in modifying its traditional ERP software -- which is heavy on customization and expense -- to the more streamlined SaaS model.
As some experts have pointed out, ERP does not necessarily lend itself well to SaaS because it tends to involve lots of company-specific processes. Yet at the same time, SMB interest in on-demand ERP is growing, as evidenced by the success of new entrants like Workday and NetSuite's December IPO.
SAP has appeared to struggle with the execution of its Business ByDesign product. One of the biggest issues it will have to overcome to win acceptance by SMBs is the reputation that its software is difficult to use. So common is this perception, writes IT Business Edge blogger Loraine Lawson, that both Microsoft and IBM are building tools that allow users to interact with SAP data without actually launching SAP.
Alluding to the issue, a Yankee Group analyst says in a recent Boston.com story that full SAP implementations can cost "hundreds of millions of dollars and take significant parts of a decade." The story discusses SAP's latest bid for SMB business, a reported partnership with high-end storage vendor EMC.
Some observers see EMC's late 2007 purchase of Berkeley Data Systems and its Mozy online data back-up service as a major endorsement of the SaaS model. Such moves "put(s) pressure on the old guard and put(s) more power in the cloud," says Aaron Levie, CEO of Boxnet.com, in a January IT Business Edge interview.
Partnering with EMC would seemingly help squash any lingering security concerns that companies might have over the loss of sensitive data outside their firewalls. Of course, rumors of the possible partnership are still "only speculation," says a SAP spokesman in the Boston.com story.