SAP's Business ByDesign go to market

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SAP Consultants - The Midmarket Factor: This article by Sam Sliman, president for Optimal Solutions Integrations, Inc.,
recently posted on the Optimal SAP Blog [http://www.optimalsapblog.blog-
city.com] provides a pretty insightful perspective on what SAP's aggressive
midmarket push might mean for SAP consultants:

SAP Consultants - The Midmarket Factor

SAP's launch of its on-demand Business ByDesign midmarket solution is arguably
the most significant event of the past decade in the enterprise software industry.
It is only fitting to examine how SAP?s loud midmarket push might raise the
present SAP consulting boom to a deafening roar.

Sizing up SAP?s midmarket push

? SAP estimates that there are more than 60,000 companies in the size range of
100 to 500 employees in Germany and the United States alone and sees a
worldwide market potential of more than $15 billion.

? To put it in ?big-picture? context, SAP hopes to boost the size of the addressable
market for SAP solutions to $70B from $30B by 2010 with SAP BBD.

? It is important to note that presently 65% of SAP?s total customer count is small
to midsize businesses (SMBs). This translates to roughly 26,000 of its 39,000 total
customers. Small and midsize businesses spend about $1 billion a year on SAP
software licenses, which makes up about 30% of SAP's total licensing revenue.

? SAP is very serious about its new Business ByDesign solution. SAP BBD has been
under development for the past four years; one-fifth of the SAP's 12,300
developers are working on SAP BBD; and 95% of SAP BBD code has been created
from scratch. SAP plans to spend approximately $500M on SAP BBD through the
end of 2008, and expects to have 10,000 SAP BBD customers by 2010. Post 2010,
SAP aims to win 10,000 new customers annually and $1 billion per year in new
revenues from SAP BBD.

SAP midmarket consultant opportunities

To date, SAP has been fairly vague on market strategy details for SAP BBD, saying
only that it will rely heavily on resellers and independent consultants who advise
businesses on which software to buy and how to install it. Nonetheless, given the
depth and breadth of the midmarket, and taking into consideration the eventuality
that many midsize companies are on track to becoming large businesses, it is
reasonable to assume that opportunities will abound in the midmarket space for
consultants with the requisite SAP skills to facilitate growth.

Business process expertise

SAP consultants can play a vital role helping midsize clients with business process
transformations and redesigns, as well as with selecting the best SAP solution for
their immediate needs and future growth goals. Consultants with business
process expertise are particularly relevant to an SAP BBD deployment, as the
solution is specifically designed as an event-driven business process creation and
automation tool. While implementation of SAP?s midmarket solutions is a far cry
from the multi-month engagements that go along with a large-enterprise SAP ERP
deployment, skilled SAP consultants are still needed to guide installation,
integration and configuration. No question the projects will be smaller than those
with large enterprises, but there will be orders of magnitude more of them.

Vertical market expertise and experience with international operations

SAP BBD is essentially a hosted ERP system, and ERP (unlike CRM, i.e.
Salesforce.com) is complex, involving tasks such as supply chain management,
procurement and accounting, for which requirements and regulations can vary
greatly. Also, ERP is not standard across industries, nor even more importantly,
across geographies. The regulatory differences are profound. Lastly, ERP has deep
vertical content. Although SAP BBD is relatively easy to configure for smaller
businesses with relatively straightforward needs, this on-demand solution will
most likely require some degree of individual customization, particularly in cases
where vertical expertise and international operations come into play.

Customization for a competitive advantage

Industry analyst Josh Greenbaum hits the nail on the head with his assessment in
a recent blog post of SAP BBD's unique ability to help SMBs gain a competitive
edge -- a capability, according to Greenbaum, utterly absent in existing SaaS
solutions. To be sure, whenever there is a competitive advantage to be gained,
there is sure to be a need for consultants capable of unleashing a solution?s full
potential. The user interface for SAP BBD is decoupled from the business logic
which lets users (through consultants) design their own interfaces. It is perhaps
here, in customization for a competitive edge, where SAP consultants might
discover a sweet spot.

SAP NetWeaver and SOA skills

With the launch of SAP Business ByDesign, SAP has re-affirmed its commitment to
enterprise service oriented architecture (SOA). It is not incidental that SAP BBD is
based on SAP NetWeaver middleware and an SOA design. When asked what
happens when SAP BBD customers grow beyond 500 employees; and more
specifically, if SAP will suggest these growing customers move to licensed, on-
premise software, Apotheker responded: ?I think [SAP BBD] will scale, and will
continue to develop. It's not the final version. Partners will add to it. It's just the
beginning and not the end.?

As is well known, SAP is in currently in the midst of transitioning its large-
enterprise customer base to its new NetWeaver-based SAP ERP. Because SAP BBD
runs on NetWeaver, it can access all the services in the overall SAP Enterprise
Service Repository. Customers can expect SAP to fill in gaps and last-mile
solutions via composites from partners. With this strategy, it is pretty clear that
SAP has set fire to both ends of the SOA candle. Moving forward, SAP consultants
adept in NetWeaver and skilled in SOA will be well positioned to provide services
to a broad range of SAP cust; Posted by: Optimal SAP Posted on: 10/03/07 You are currently: a Guest | Members login | Terms of Use