SAP has designs on on-demand software

20 Sep 2007

German business software giant SAP revealed yesterday that it plans to spearhead a foray by large software giants into the on-demand software business currently dominated by players like

The company revealed a new suite of what insiders say are the most important products to come from in the last two years.

Developed around what it describes as four key principles — completeness, ease of use, adaptability and reduced cost of ownership — SAP Business By Design is currently being trialled by pilot customers in the US and Germany.

The product will then initially be made available for US$149 per month to the UK, France and China. Group pricing for the product is envisaged at US$54 per month for a set of five users.

A spokesman for the company in Ireland said that because the company’s Irish division is a subset of the UK division availability of the product will be “imminent”.

SAP estimates that the market for on-demand software among companies in the range of 100 to 500 employees is potentially worth US$15bn.

The entry of SAP into a market currently dominated by software-as-a-service (SaaS) players like puts the company in the vanguard of a broader move envisaged by other major business software vendors like Microsoft.

“With SAP Business By Design, today we are adding a completely new business model to our successful, established one and are changing the on-demand marketplace,” said Henning Kagermann, CEO, SAP AG.

“SAP Business ByDesign is designed to dramatically simplify IT for midsize companies by substantially reducing the cost of ownership and combining efficiency with business flexibility.

“The technical advantages of SOA enter the level of business processes and allow customers to exploit the full potential of new business trends without becoming IT experts. Such an affordable, easy-to-use and complete offering has been missing for midsize companies in the sweet spot until today,” Kagermann said.

IDC senior vice president for Worldwide Software and Services Henry Morris described the move by SAP as a bold initiative but incorporates years of experience and learning acquired by the company in the applications business.

“This unveiling is a promising start for SAP, with these challenges to be addressed before product release: firming up the go-to-market model with wide reseller support, demonstrating needed application scalability for midsize companies who intend to grow and solidifying linkages between existing applications and the new solution,” Morris explained.

By John Kennedy