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SAP: Business ByDesign needs more work in process execution, profitability

SAP claims its on-demand ERP is available now, to the right type of customer, but it needs to iron out end-to-end process scenarios.

SAP's Business ByDesign suite needs more work in process execution and still isn't profitable enough to sell in the general market, according to an SAP executive.

In order to overcome these roadblocks, SAP is now focused on selling its Business ByDesign product to customers willing to try out all of its components, in order to test how well the software executes end-to-end business scenarios. It's less focused on selling to customers that want to use simply the FI or CRM functions.

SAP Business ByDesign will be released to the general market when SAP can get its operating costs down and it's confident those end-to-end process scenarios work, according to Rainer Zinow, SAP's senior vice president for strategic solution management for midmarket products.

"It is generally available. You can buy it," Zinow said. "We basically think twice before we sign a customer. We are not yet at a profitability level where we want to be."

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SAP debuted Business ByDesign -- its SaaS ERP, targeted at small and medium-sized businesses -- two years ago to much fanfare, only to declare subsequently that it was reworking the product based on customer feedback.

SAP has more than 40 customers that have gone live with the software and another 40 that are set to go live within the next few weeks, Zinow said. These customers are in the United States, United Kingdom, Germany, France, India and China.

Now, the tipping points for go-to-market are two.

SAP needs to decrease the operating costs by leveraging the latest trends in IT infrastructure, such as virtualization, and by automating all of the administrative tasks needed to complete an upgrade, Zinow said.

Contrary to public perception, the system has always been architected for multi-tenancy, he said. Business ByDesign is built on the NetWeaver technology stack, which has the multi-tenancy concept built into it. But for the first couple of iterations of the software, SAP was running productive customers off one blade server each.

Going forward, that will change. Using virtualization software, SAP can cut a physical machine into several slices. With the latest generation of blades, for the first time there's hardware in which SAP can run multiple customers off a single blade, Zinow said, while accounting for security and performance concerns.

SAP also needs to make sure the end-to-end process scenarios in the software work. When Business ByDesign debuted, SAP gathered plenty of customers that wanted to run standalone FI or CRM, Zinow said. Now, they're working with and recruiting customers that want to run all or several of its functions -- financials, human resources, projects, procurement and the supply chain.

"I need to see how [well] the end-to-end integration really works," he said. "Once I can say at least 10 customers are using each of these scenarios, I feel sufficiently confident this really works."

Customers running Business ByDesign have received several upgrades so far -- coming in the form of "Feature Packs." These are bundles of functionality similar to the SAP enhancement packages available for its on-premise, Business Suite customers.

Customers had been asking for more capabilities in logistics and Web services, Zinow said.

To that end, SAP announced yesterday that it has integrated Web services into its Business ByDesign software and is including mashups with Google, MapQuest and BusinessWire, among others.

This will ease integration concerns, Zinow said.

"Traditionally, one of the expensive parts of implementing ERP was to do the integration with other systems. That sometimes blew the bill," he said. "[With Web services] it's an easy way to integrate with an existing architecture, in a very cost-effective way.

For example, say a company that produces boilers needs to send a service technician to three customers in one day. While still working in the Business ByDesign system, clients can feed these three locations into Google Maps, and it will plan the optimal route.

Customers, depending on geography, will also have access to Hoover's, MorningStar Inc. and Navteq/Map24, in addition to Google, MapQuest and BusinessWire. German customers will also have access to Falk Online, a mapping service, and, which is directory assistance.

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