SAP joins the On-demand movement

By pandu

SAP, the world’s largest business software company has joined the on-demand software movement with the launch of Business ByDesign, a web-based, hosted suite of applications aimed towards mid-size companies that are between 100 and 500 employees. SAP has geared Business ByDemand towards growing companies that have not yet invested significantly on their IT needs. SAP estimates this market to be worth $15 billion globally.

Pricing within the US starts at $54/user/month. In comparison, Salesforce.com charges an average of $60/month/user. SAP is relying on partners to push the sales of Business ByDesign and is partnering with complementary players such as ADP. Business ByDesign has been designed from the ground up independent of SAP’s existing business software. This is a better strategy than trying to webify an existing software designed for the client server model.

Does this mean that soon we can look forward to on-demand enterprise class software? Most likely no. Enterprise class software requires so much customization, maintenance and training, that large companies might as well have complete control over the hardware and software to get the most bang from the buck. If you are going to spend $200 million dollars to put in place a world class ERP system, do you think you will skimp on building a $10 million datacenter so that you host your system and have complete control? The only other value proposition of on-demand software could be that it is exceedingly simple to customize. But such simplicity is quickly lost due to the complex processes involved in today’s large enterprises.

However on-demand software will bring benefits to the small and medium businesses. Now these smaller players can expect to reap the same kind of efficiency and business control that the big guys have enjoyed. Again, the Internet will further level the playing field between the smaller and larger businesses.