SAP Flubs SaaS
SAP Runs Into a Rollout Problem with Its On-Demand Business ByDesign Widgetry - ByDesign Isn't Properly Automated
May. 2, 2008 03:00 PM
SAP has run into a nasty little rollout problem with its new
on-demand Business ByDesign widgetry, the stuff that’s critical to its future
growth and competes with, oh, say, Salesforce.com, NetSuite and Microsoft.
Seems ByDesign isn’t properly automated and so SAP’s grand
plan to get 10,000 small to mid-sized companies up and running on the stuff and
generate $1 billion in revenue by 2010 has fallen by the wayside.
It’s going to take SAP another year to 18 months to hit
those targets while it uses the time to figure out how to make it cheaper.
“Otherwise,” SAP CEO Henning Kagerman said, “the cost base will be too high and
the profit will not be good enough.”
He’s looking for margins at least as good as what he gets on
its conventional business.
So as it stands ByDesign will be limited to six markets this
year and is expected to see less than 1,000 customers.
The news came when SAP posted weaker-than-expected results
for the March quarter, the same quarter that gave SAP’s great rival Oracle
problems with selling applications, suggesting to observers that there may be a
SAP complained of the US slowdown – customers are slower
to cut checks and the deals are smaller – and the strength of the euro. US sales were
down 1%, while European sales were up 22%.
The company’s Q1 earnings were down 22% to $377 million
thanks to the cost of acquiring Business Objects and a $62 million investment
in ByDesign on revenues up 14% to $3.8 billion, but still below Wall Street
It said it would cut back on its ByDesign investment.
Impacted by exchange rates software and software-related
services were up 15%, less than expected.