Can the elephant learn to dance? SAP have launched "Business by Design," the real name of the A1S project that we have been nearing about internally for some time. Denis Howlett does a good write up here, and others are less enthused here.
It is a hell of a gamble at one level.
There is a lot to recommend it, just that there are, to be blunt, transition issues. The target with the Business by Design is to make SAP practical and affordable for small and medium organisations, which means a TCO (Total Cost of Ownership) running at about 10% of what it is now. Thing is, that means that you have to cut a lot of costs, because the typical implementation in my experience of industrial SAP implementations tends to run at about 1:1:4 for hardware, software, and implementation effort respectively. You may have some differences, but the big deal is to reduce the implementation and go live costs, and that's a real effort. That seems to be what the major effort on the "by Design" project has been.
Hardware you can get economies of scale on, so bring that down is OK, and the software, well, once its written, its effectively free, so the question is how quickly you want to recuperate your R&D spend.
So, then you have a product that you are going to sell to the mass-market. That's a new game for SAP. The classical SAP sale has been very "high-touch" with the CEO of Nestle or Total meeting their peers on the board. That ain't going to happen for Wichita Tool and Pipe, in fact, it would be ideal if it was buy off the web, real, real, low touch, although we will need some kind of channel.
So, that's issue one right there, ramping up for the mass market. SAP is generally pretty competent, but this is a new(ish) game, with huge targets for customer numbers. The board are serious, and its been in focus for a long time, but I can't help but wonder if the people who make their living in SAP right now, the SAP consultants internally, and the experienced high end implementers, like Accenture and IBM, see their personal future in doing these small implementations and familiarisations. If they don't, then there is a need to find the group of people that do, and train and educate them, and at a hell of a lick too.
Second, how do you defend the pricing model for ERP, when you are hell bent on disproving it for the other end of the market? If you are talking about specialised functions like banking software, or insurance claim systems, then sure, that still has a premium, but if I were implementing SAP I would want to be paying less per seat for the big installations, not more than the little guy. We have to surf that.
One thing maybe to move the whole model to on-demand, after all what is the difference between that and outsourcing in a more conventional sense? Still, if we do do this, then I think that rather than merging with Microsoft, we might be better off merging with Google. (I laughed out loud when someone speculated about a potential link up with MS in the olden days, so you can guess how good my information about these things is.)