SAP is planning to make major additional investments in Business ByDesign, the cloud ERP suite it first launched in 2007, hoping to make the product finally reach the critical mass it originally expected.
Business ByDesign has had quite a history. Developed at high cost, it was first launched with much ado in 2007 as the company's entry into cloud-based ERP, and at the time, company officials expected it to have 10,000 customers by 2010 and be generating $1.4 billion in revenue.
Needless to say, those lofty goals weren't met. One reason was the initial architectural choice, which didn't scale in a cost-efficient manner. SAP pulled back on the ByDesign rollout in order to re-architect it for true multitenancy.
Other problems were internal. Some of SAP's sales force wasn't keen on pushing the new, untested solution to customers and prospects, fearful it would cut into sales of established products such as Business One and Business All-in-One, which carried more lucrative commissions.
By the same token, ByDesign suffered from an identity crisis, as SAP struggled to clearly define and differentiate it from those other ERP suites, which like ByDesign are aimed at small and medium-sized companies.
In subsequent years, ByDesign was the subject of repeated rumors of its demise, ones SAP consistently denied. It continued to develop the product and it is now used by customers in 120 countries. Sales were up 43 percent year-over-year in the first quarter for "new and upsold bookings," SAP said in a statement.
The customer count for ByDesign is now closing in on 4,000. While far short and past SAP's original hopes, that figure is not insignificant, and one SAP believes it can now scale more rapidly:
SAP has goals to significantly increase SAP Business ByDesign development resources, ramp up marketing spend by 10X to deliver demand to partners so partners can focus on differentiating their offerings, and aggressively raise partner capacity with a firm commitment to achieving growth goals.
“SAP Business ByDesign is SAP’s lead offering for mid-market customers. Our customers often share how the solution enables them to run more effectively as they grow and thrive,” said Robert Enslin, president of the Cloud Business Group, SAP.
Enslin's description of ByDesign as SAP's "lead" option for the midmarket is no accident. While it falls in line with the company's overall cloud-first strategy, that type of wording is a far cry from ByDesign's years in the wilderness, when it received little public mention from SAP officials.
In one sense, the new investment in ByDesign isn't a surprise, since SAP needs a cloud ERP for the SMB space, says Constellation Research VP and principal analyst Holger Mueller.
S/4HANA, the successor to SAP Business Suite, isn't ready to serve the needs of both large enterprises—its core market—and SMBs, although that is the eventual goal, he notes. "No ERP vendor has spanned large and SMB enterprise with the same product," he says. "It won't happen right now either, especially with Oracle buying NetSuite and running on two platforms."
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