SAP scores own goal with Business ByDesign

Analysts argue that SAP is misleading customers

SAP unveiled its Business ByDesign product around two years ago, but it is still not ready for wide-scale customer deployment.

The company claims that the service is generally available in the UK, but customers may have been denied access to the software because SAP cannot afford to host the suite due to its underlying virtual architecture.

SAP said that this predicament should change by the summer of next year, but some analysts doubt this claim, and argue that the company is misleading customers and the press.

The 40 current customers of Business ByDesign in the six countries where it is available are being used by SAP as good practice case studies, or what it calls "referencing accounts", for when the firm is ready to encourage more businesses to sign up, according to Rainer Zinow, Business ByDesign innovation vice president.

"With the budget we have, we can only allow a certain number of customers to deploy the solution. We are specific about who we sign," he said.

"Everyone wants to buy it, but the issue is how we can make money. The cost of operating the system is so high that we can't meet the profitability targets that our chief financial officer assigned to us."

SAP describes Business ByDesign as a complete on-demand enterprise resource planning (ERP) suite for the mid-market that includes software for financials, human resources, supply chain management, business analytics and compliance management.

The company announced the launch in 2007, and has since been trying to solve the scalability issues inherent in running the solution through a virtual blade environment.

Stefan Ried, an analyst at Forrester Research who used to head up the product management division for SAP's Netweaver infrastructure, said that Business ByDesign is unlikely ever to be scalable because it is not based on a multi-tenant architecture.

"SAP said that the architecture of Business ByDesign is multi-tenant, but it can't be because SAP has also said that it is powered by Netweaver, which I know is not multi-tenant," he said.

"And if SAP wants to sell a software-as-a-service [SaaS] solution at a competitive price point, it has to be scalable."