{"id":879,"date":"2007-09-19T14:11:53","date_gmt":"2007-09-19T20:11:53","guid":{"rendered":"https:\/\/www.roughtype.com\/wp\/?p=879"},"modified":"2007-09-19T14:11:53","modified_gmt":"2007-09-19T20:11:53","slug":"bydesign_has_sa","status":"publish","type":"post","link":"https:\/\/www.roughtype.com\/?p=879","title":{"rendered":"ByDesign: has SAP unleashed a cannibal?"},"content":{"rendered":"

The business software giant SAP finally made its formal entry into the software-as-a-service (SaaS) market today, as it unveiled<\/a> Business ByDesign, a version of its popular business software that will be delivered over the Internet rather than installed on clients’ computers. SAP CEO Henning Kagermann called the introduction of ByDesign “the most important announcement” he’s made during his 25 years with the firm, underscoring what has slowly become clear over the past year: SAP’s leaders now believe that SaaS represents the future of business software.<\/p>\n

ByDesign, which was codenamed A1S while in development, is aimed at midsized companies, who will be able to subscribe to the package of applications for $150 per user per month. While details of ByDesign remain sketchy, SAP will, by dint of its size, customer base, reputation, and cash, be a force to be reckoned with in the market for supplying business software over the web. Zoli Erdos predicts<\/a> that the company “will become the dominant SaaS player in the mid-market.” That seems premature, but at the very least SAP will be a strong competitor for pure-play SaaS companies like Salesforce.com, NetSuite, and Workday as well as other mainline software companies, like Oracle and Microsoft, which are also moving, if timidly, into the SaaS market.<\/p>\n

But in the end the company most threatened by ByDesign may be SAP itself. Launching a complex on-demand service requires big investments in both capital and labor, and the economics of supplying software as a service for a company like SAP remain uncertain. The big risk is that ByDesign will begin to cannibalize SAP’s traditional and very lucrative software business – without providing similar revenues or profits.<\/p>\n

That risk hangs like a cloud over today’s ByDesign launch. SAP is bending over backwards to position the new service as appealing to a narrowly defined segment – companies with between 100 and 500 employees and fairly standardized processes. At the same time, though, it is promoting the dramatic cost savings and flexibility gains provided by the SaaS model. “ByDesign,” the company says<\/a> in a marketing document, “combines the benefits of integrated, end-to-end business applications with the low risk and low total cost of ownership of an on-demand solution.” James Governor notes<\/a> that the service is designed to cost customers one-tenth of what a typical SAP installation would go for.<\/p>\n

The obvious question that larger companies will be asking, either today or tomorrow, is this: Hey, why can’t we get those low costs and low risks, too? And that’s the question SAP doesn’t yet have an answer for.<\/p>\n","protected":false},"excerpt":{"rendered":"

The business software giant SAP finally made its formal entry into the software-as-a-service (SaaS) market today, as it unveiled Business ByDesign, a version of its popular business software that will be delivered over the Internet rather than installed on clients’ computers. SAP CEO Henning Kagermann called the introduction of ByDesign “the most important announcement” he’s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-879","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/879","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=879"}],"version-history":[{"count":0,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/879\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}