SAP's SaaS Is Dead. Long Live SAP's SaaS.

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It's easy to underestimate SAP when you write about technology, but if you start peering around, you realize how ingrained it is in business and government. My husband works with (NOT for) SAP's software at his job and volunteers for its ridiculously huge Americas' SAP User Group (ASUG) conference each year.


I guess you could call this a bias, though I don't actually feel any allegiance to the company. However, his involvement with SAP does make me aware of how pervasive SAP really is. Like Microsoft, SAP's products are embedded deep in corporate and government systems -- and there are a slew of workers from both finance and IT whose resumes are heavily invested in SAP training and expertise.


So I'm not quite so sure we should toll the death knell for SAP's Business ByDesign, the company's effort at SaaS. True, as IT Business Edge blogger Ann All pointed out, Business ByDesign hasn't done well with the small- and mid-sized markets SAP originally targeted ... but SAP already has a plan to recoup in the SaaS space.


The company announced last week it will continue with Business ByDesign, but also "reincarnate" the offering as a group of services targeting big companies. It's a hybrid approach that's similar to Microsoft's -- online tools or services that integrate with onsite software, according to InformationWeek.


The new offering will launch early next year and, unlike Business ByDesign's initial plan, the off-shoot will target large companies. These are SAP's bread-and-butter clients, whom SAP's co-CEO, Henning Kagermann, believes won't ever opt for on-demand over onsite solutions, particularly for essential business functions.


If the approach works, it will allow SAP to have its cake -- the lucrative onsite licensed software business - and the SaaS cupcake, too.


This is a smart move for SAP, and I'd even argue it's a safe bet. SAP's large clients already have demonstrated a willingness to pay for add-on tools and solutions. In fact, there's a veritable ecosystem of software vendors thriving in SAP's shadow -- they call my husband constantly after every ASUG conference. SAP is simply offering a similar product extension, but via the cloud.


The fact that the new services will integrate using the loose-coupling of SAP's SOA "platform" may also prove to be a selling point, particularly to large companies already invested in service-oriented architecture.


The real question, in my mind, is not whether SAP can sell its large clients on cloud services as an added tool for onsite solutions -- it's whether SAP's partner vendors will be affected by this move and how they'll respond.