SAP CEO signals limits of on-demand ERP

SAP is unlikely to offer full-blown, on-demand versions of its Business One or All-in-One enterprise resource planning (ERP) products in the future as a follow-up to its hosted offering, Business ByDesign, according to co-CEO Henning Kagermann.

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SAP is unlikely to offer full-blown, on-demand versions of its Business One or All-in-One enterprise resource planning (ERP) products in the future as a follow-up to its hosted offering, Business ByDesign, according to co-CEO Henning Kagermann.

"There is no reason to do it," he said during a press conference Tuesday at SAP's SAPPHIRE conference in Orlando, Florida.

Kagermann highlighted ways SAP is meeting customer deployment needs, including a Fast Start rapid implementation programme for Business All-in-One. SAP this week announced partnerships with HP and IBM around hardware-software packages incorporating the product.

Business One is on-premise software aimed at companies with fewer than 100 workers. All-in-One, also on-premise software, provides greater functionality and customisation options, and is meant for companies with 100-2,500 employees. Meanwhile, Business ByDesign is a hosted service geared for the middle of the SME space, or enterprises with 100-500 workers, according to SAP.

In a subsequent interview, Kagermann said the company may make incremental moves towards a more rounded SaaS proposition.

"I guess we can, over time, offer some of the services to run and to support the application which we developed remotely for ByDesign for use in All-in-One," he said. "It might not be a complete software-as-a-service, but some pieces could be done by SAP remotely," he said.

One analyst said SAP may not be pursuing the most effective strategy.

"Obviously, SAP's worried about possible cannibalisation of its Business All-in-One and Business One customer bases by Business ByDesign - one way to potentially guard against that happening could be to offer SaaS versions of those ERP, CRM suites," said China Martens, an analyst with the 451 Group.

"Should SAP change its mind and offer SaaS versions of either Business One or Business All-in-One, we'd expect those to first appear in India and/or China," she added.

Meanwhile, SAP said last week that it has scaled back its ambition to reach US$1 billion in revenue and 10,000 customers for Business ByDesign by 2010. The company will take a year to 18 months longer to reach those goals while it fine-tunes the product to make sure it will turn enough of a profit, SAP said.

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