Confusion Clouds Introduction of SAP Business ByDesign

SAP announced May 17 that its long-delayed on-demand Business ByDesign application suite is "currently available." But with the next breath company officials said that a more advanced version of the suite with many new features will be released this summer, causing some confusion for market observers.

With the approach of its SapphireNow international user conference, SAP had been signaling for months that it would be ready to announce the release of the long-delayed Business ByDesign on-demand enterprise resource planning package for midsize companies.

But there was marked confusion as the SapphireNow conference convened May 17 in Orlando, Fla., and Frankfurt, Germany, with SAP emphasizing what prospective customers would find when the company issues a new release of Business ByDesign sometime in July.

In the meantime, SAP says that Business ByDesign is officially "currently available" and working at more than 100 "charter client" sites in the United States, Germany, the United Kingdom, France, China and India.

SAP has been developing and testing Business ByDesign since 2007. In May 2008 SAP announced it was slowing the testing and rollout of Business ByDesign because the company needed more time to develop the software-as-a-service package to run efficiently enough to compete with existing on-demand products.

With its release, SAP officials said customers will have a choice between running Business ByDesign under a "single-" or "multi-tenancy" model, which is fundamentally the difference between running the application as a single instance installation or accessing the software on the Web along with hundreds or thousands of users from many different computers at many different locations. Single-tenancy is more like the one-to-one on-premises application software installations that enterprises have been using for decades.

Multi-tenancy is an essential requirement for all true on-demand application services and is a model that has long been implemented by SAP's prospective on-demand competitors, such as NetSuite and Salesforce.com.

The fact that SAP is coming late to the market and is chasing long-established on-demand competitors means that SAP is going to have to make a long-term commitment to making Business ByDesign a market success, said Shawn Rogers, vice president of research with Enterprise Management Associates, a market research firm based in Boulder, Colo.

SAP is "certainly going to be meet, especially around the CRM side, with some solid competition," including Salesforce.com and others such as NetSuite, which markets an on-demand enterprise resource management package, Rogers said.. Both companies will directly compete directly with SAP in the midsize market.

SAP will also have to be careful about how it will market Business ByDesign without cannibalizing its existing on-premises business, including the business it has already established with small and midsize customers, he said.

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...