SAP Gap, or Overlap?

Nov. 14, 2007
SoftBrands VP illuminates the business strategy, and target market, for BusinessByDesign -- could it be you?

Plenty of critics, skeptics and people who simply aren't ready for change have suggested that the new SAP Business ByDesign ERP system will "cannibalize" a significant portion of the customer base for existing systems such as SAP Business One. While some small overlap in the target markets for each of these products is inevitable, SAP's intent for Business ByDesign makes the distinction clear.

SAP Business One is built for companies with up to 100 employees and SAP Business ByDesign for companies with 100 to 500 employees. But the targeting doesn't stop there. SAP has made clear that, at least in the near future, Business ByDesign isn't appropriate for companies whose processes require deep functional customization. Additionally, for facilities in developing areas without fast, reliable Internet access, a hosted Web service such as Business ByDesign doesn't make sense.

Perhaps most significantly, SAP Business ByDesign is not a good choice for any organization that isn't comfortable being an early adopter of new technologies. SAP Business One, which has been on the market for four years, is relatively time-tested and stable, an attractive quality for some businesses. All of those factors, combined with SAP's intent to target Business ByDesign to specific industries, makes a clear-cut distinction between an SAP Business One customer and a Business ByDesign customer.

Manufacturers would be well advised to explore the potential of software-as-a-service ERP systems like Business ByDesign sooner rather than later. It's certainly not something every manufacturer will adopt in the next few years, but the model will let manufacturers reduce their investment in information technology while ensuring their business-management software is state of the art. For manufacturers, hosted software becomes a utility, a service that's ready to be pumped into the building at the flip of a switch. Just like facilities have electricity without employing an electrician or running water without employing a plumber, manufacturing operations will run without a dedicated IT staff, or at least one that's dramatically reduced.

But if SAP Business ByDesign isn't a fit for companies whose businesses require significant customization, will it work for companies that are growing and need a system that will scale accordingly? The limit on functional customization is an issue that will fade over time. As Business ByDesign matures, customization and scalability will likely be handled with ease. At the same time, SAP will start to open its doors to developer partners building applications that will work alongside Business ByDesign. This will further complement the functionality of ByDesign much like SAP's partners have added to the robustness of Business One.

In the end, any potential overlap caused by the introduction of SAP Business ByDesign is likely worth whatever slight struggle might come of it. Software-as-a-service is the future of the industry, one that's focused on efficiency and profitability for both provider and user. The market needed a giant company like SAP to put this shift into action, considering the tremendous investment needed to disrupt the entire current business model for developing and delivering ERP software. There certainly are obstacles on the road ahead, but with the potential this new model holds, it's going to take more than a few potholes to stop this truck.

Diane Palmquist is vice president of SAP products at SoftBrands, which develops the FourthShift Edition for SAP Business One, an ERP system specifically for small and midsize manufacturers. SoftBrands was recently named as one of 22 "early partners" around the world to help SAP bring Business ByDesign to the market.

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