SAP will continue to release new versions of its Business ByDesign cloud ERP suite, despite some recent indications to the contrary, according to the vendor’s head of development.
“ByDesign is continuing, yes,” said executive board member Vishal Sikka in an interview this week. “We are refactoring the product to run on HANA,” SAP’s in-memory database platform, he said.
A team will remain in place to support the current version, which runs in an ABAP (Advanced Business Application Programming) application server, according to Sikka. “The product is going to be redone in HANA,” he said. “We’ll move every customer to this refactored ByDesign when we have it.”
SAP continues to land new customers for ByDesign, “including some very big ones,” Sikka said. A number of these are longtime customers of other SAP products, and SAP would never betray them by inking a contract for ByDesign subscriptions only to mothball the product, he added.
Sikka’s remarks seem to cement a healthy future for ByDesign, in contrast to recent reports and a statement from SAP itself.
The German news magazine Wirtschaftswoche reported on Saturday that SAP had moved development resources away from Business ByDesign and would essentially put the product into maintenance mode.
In a subsequent statement, SAP said ByDesign would be rolled into the HANA Cloud product line and would “continue to be supported and actively promoted in its current scope.” That wording left open the question of whether entirely new versions would be created moving forward.
What’s hard to dispute is that ByDesign has been a bit of a problem child for SAP. Developed at reportedly great expense, the product was initially expected to have 10,000 customers by 2010 and be generating €1 billion (US$1.4 billion) in revenue for SAP.
Instead, ByDesign has about 1,100 customers today, according to a spokeswoman. Details on how much money it is making weren’t available.
“It’s sort of been a bust for them,” said Forrester Research analyst Paul Hamerman. “Back when they started developing this thing, [software as a service] was new to them. They didn’t really understand the SaaS business model.”
SAP pulled back on the rollout of ByDesign in 2008 in order to give its development teams time to rewrite the application’s plumbing and make it profitable when run at large scale.
“I have to give them credit for staying with it,” Hamerman added. “They’ve been fixing a lot of the mistakes they made, adding functionality and so on. They’re not abandoning it.”
Another issue was a lack of interest from SAP’s sales teams in selling the product, fearing it would cannibalize sales of on-premises software product lines that could make them more money, said analyst Ray Wang, CEO of Constellation Research.
The biggest interest in ByDesign has been from large SAP ERP customers who are looking to use it in a “two-tier” deployment, with ByDesign run in a new division or subsidiary and tied back to the core system, according to Wang. “The sales teams worked very hard to keep those customers from buying,” he said. “They contributed to its failure.”
As it stands now, ByDesign faces a mixed future, according to Hamerman. On the one hand, most of SAP’s cloud software revenues are coming not from ByDesign, but from companies it acquired, such as Ariba and SuccessFactors, he said.
That said, “I think there’s a play in the market for SaaS ERP,” Hamerman added, pointing to products from Kenandy, Rootstock, Plex Systems and NetSuite.
Hoping to capitalize on any unease within the Business ByDesign installed base, Kenandy and NetSuite have both quickly moved to announce migration programs to their products.
Don’t count ByDesign out, however, according to Wang.
“The product will be reincarnated on HANA, and hopefully that will put it on the right path to customers who seek a ByDesign footprint and functionality at a reasonable price point,” he said.