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Chuck Schaeffer SAP Business ByDesign—Why Good Products Fail to Launch

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SAP Cloud Strategy Begins to Take Shape

At yesterday's SAP SAPPHIRE NOW, Lars Dalgaard articulated the company's go-forward cloud strategy. It was in large part a call to modularize or deliver cloud apps a la carte. It's unclear whether this strategy is a compliment or alternative to the suite approach used with Business ByDesign, but there was scarcely little talk about cloud suites and wholesale cloud ERP systems. The strategy is still high level, and more specific execution and go to market remains cloudy, but Lars has been in his role for only three months so the market will allow a few more to put some meat on the bone.

SAP is in a different boat when it comes to cloud strategy. While the cloud delivers accelerated time to value, business agility and on-demand scalability, which can be derived from any type of business application and offers exponential value when delivered as a suite of fully integrated business applications, SAP customers have additional factors to consider—not the least of which is their existing investment in SAP that they are in no hurry to write off. SAP does indeed run many of the largest companies in the world and this customer base is for the most part not looking to incur the investment, disruption and risk to replace complete on-premise systems with cloud applications. The benefits of cloud apps are material, but often do not outweigh the anticipated fear of replacing the apps that defined pain.

However, fear and resistance among the SAP install base to adopt a wholesale cloud-based ERP system doesn't explain the failed take off for Business ByDesign. ByD is targeted at the SMB as well as divisions of enterprise companies seeking a Tier 2 ERP strategy. For this target market an integrated, enterprise-wide suite generally delivers significantly more value than a multi-vendor, best of breed strategy that requires expensive system integration and IT resources to rationalize overlapping constructs (i.e. security, master data management, workflow process automation, mobility, reporting, etc.), perform maintenance for upgrades and new versions, and manage the inevitable trouble shooting.

IMHO, while recognizing the needs of the SAP install base is essential, positioning ByD as a modular or piecemeal application will satisfy some existing SAP customers but take a major step backwards in providing the greatest value proposition to the largest target market.

A Failure to Launch

For its early level of maturity, ByD is an impressive cloud ERP system in terms of breadth and depth. SAP has organized an indirect channel to sell and support ByD, and for the most part the channel is truly impressive and has invested heavily in ByD.

So why then has Business ByDesign failed to launch? In short, 3 reasons—people, product and promotion.

Until the close of SuccessFactors in February 2012, SAP had no point man or public face for cloud apps or Business ByDesign. That's now changed with Lars Dalgaard being appointed to chief cloud guy. The appointment was well deserved and a good move, however, for Lars to be successful this sales-driven entrepreneur must both navigate what is still an engineering-run software company and he must surround himself with a team that demonstrates equal parts ERP, cloud and business development expertise. At this time I don't see that team. He has his strong confidants from SuccessFactors which are key, but lacks cloud ERP expertise with the entrepreneurial spirit needed to disrupt an industry.

In terms of product, ByD is impressive as an operational/transactional ERP system. And while these capabilities are required, they are also table stakes and no longer control the buying decision. The factors that do influence and tip cloud purchase decisions are UX, social, mobile, analytics, tools (PaaS) and ecosystem. ByD has a fair UX, but is not impressive and lags competitors. Social is a hole, however, one that could seemingly be at least partially plugged with Sales OnDemand. Why Sales OnDemand (with its stellar social capabilities) which was created using the ByD architecture is not already integrated with ByD is particularly odd. Much more work including a social strategy is clearly needed. Mobile and analytics are present, but that's about it. They are at par with the industry but more needs to be done if they are to achieve competitive advantage. SAP can't create all the industry-specific and micro-vertical solutions necessary, nor fill white space or product voids that are always a part of ERP systems which is why the company must dramatically pump up the volume with a PaaS-type toolkit and ecosystem. In fairness, the company is moving on these items, but the pace must accelerate if ByD and SAP cloud products are to achieve their quotas let alone their upside potential.

In terms of promotion ByDesign is failing to deliver a message that resonates. I'm told from internals that outside the ByD ranks, ByD struggles to maintain a voice and presence within the company. That would seem apparent as the company has similarly failed to achieve a voice and presence in the marketplace for this solution. In fact for nearly all SAPPHIRE NOW attendees this year, the most pervasive message they heard regarding ByD was the buzz that SAP was killing off ByDesign. The buzz was seemingly unfounded and born from a string of partial and haphazard statements, but nonetheless shows what can happen when you don't stay in front of the messaging.

I talk to cloud apps buyers every day and when I ask what vendors they are considering, seldom does SAP even get mentioned. When the largest enterprise apps company in the world fails to have top of mind awareness among software buyers it has clearly failed to articulate a message that resonates, a message this is heard or be associated with any type of thought leadership in the space.

At the end of the day and the beginning of a new cloud strategy, offering ByD in more modular components may make the application easier to consume for some existing customers. However, should the company eventually craft a message that does resonate, but which fails to articulate the most significant value proposition of a vendor-managed, enterprise-wide, out of the box, fully integrated business system, it will only accomplish short terms objectives—at the expense of a long term market opportunity—and further fail to get the product into the largest target market in any significant way. SAP R2/R3/BS didn't make it big by selling LOB apps, and nor will ByD. End

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 Tags Tags: SAP ByD, Business ByDesign, SAPPHIRE NOW
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Author  Author: Chuck Schaeffer
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Positioning Business ByDesign as a modular or piecemeal application will satisfy some existing SAP customers but take a major step backwards in providing the greatest value proposition to the largest target market.


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