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By Navigator • January 25, 2015

Cloud ERP Showdown to Heat Up with SAP Business ByDesign on HANA

*The following was adapted from Gartner's VP of Research, Robert Anderson, responsible for covering ERP for service industries and financial management and accounting applications*

[Robert Anderson] recently met with Dr. Michael Schmidt and Rainer Zinow, both principals from SAP’s cloud-based ByDesign ERP team and can only conclude that contrary to much editorial speculation over the last year, SAP Business ByDesign ("ByDesign") not only lives but is poised to thrive and become even more competitive from a product, marketing, and partnering perspective.  ByDesign is now bolstered by a new charter and organization and while it may not be the perfect solution for every company or situation, appears to finally have a solid and steadfast position in SAP's portfolio going forward.

ByDesign has been re-launched on SAP’s HANA in-memory data platform and will stand on its own complementing the S/4HANA enterprise platform that will eventually replace its SAP Business Suite.  According to Zinow, “there was no need to impose the heavier weight S/4HANA architecture on ByDesign. The whole reason SAP started from scratch with ByDesign was to reduce the level of complexity that becomes inherent in a solution starting out as a large enterprise solution, and grows more complex through evolution.” That said, while both solutions will be separate, there’s little doubt that the S/4HANA project will build upon, leverage and benefit from SAP’s experience designing and building ByDesign going back close to a decade.  Zinow states that “the two platforms can and will co-exist quite nicely.” 

While S/4HANA’s complete build-out will happen over time, ByDesign is available as a strong, competitive cloud contender today. Functionally it’s a mature midmarket solution (don’t think Version 1, think more like Version 5-10x) with a very friendly user interface that plays well to cloud users, combining transactional and analytical capabilities on many screens.

Expect SAP ByDesign to target upper-mid market businesses in distribution, manufacturing and professional services having 500-1000 employees and at least 50 active users.  ByDesign will fit between Business One and Business One Cloud on the low end, and the SAP Business Suite and Simple Finance on the high end.  SAP Business All-in-One will remain positioned as an upper mid-market on premise solution.  We advise SAP prospects to analyze which solution provides the best fit and deployment preference given their requirements.

In recent on-again, off-again forays into the market, SAP ByDesign hasn’t lacked capability as much as organizational commitment and fortitude. With SAP’s re-launching of the HANA version of ByDesign coupled with a new organizational structure, there’s a lot at stake.  SAP is in a position where sooner rather than later it must prove it’s a cloud software company that can execute. Through acquisition, SAP has acquired a handful of strong cloud best of breed cloud solutions such as Ariba, SuccessFactors and Concur, but has yet to find its sea legs via a full-fledged public cloud deployable ERP offering.  If SAP can’t be successful with ByDesign, questions will likely be raised about its ability to pull off the much larger scale evolution planned for its Business Suite as it evolves more fully to S/4HANA.  As midmarket companies and large enterprises seeking two-tier strategies start  warming up to cloud ERP, it could be now or never for ByDesign.

While cautiously optimistic, it’s hard not to be a cheerleader with respect to SAP’s ability to reinvigorate and go “pedal to the metal” with ByDesign.  A strong SAP ByDesign provides more choice to a market seeking alternatives while keeping competitors that have until recently had the Cloud ERP market more or less to themselves honest and on top of their game.

The unveiling of SAP ByDesign on HANA doesn’t require a big “coming out party” as much as a consistent and steady market drumbeat that gets louder quarter over quarter.  Talk is cheap. The only way to put doubters to rest is by seizing the day and maintaining consistent market execution via continuing product enhancements, an active motivated partner channel, and most of all, providing evidence of new users embracing the solution.  With SAP ByDesign and new cloud solutions either in market or making their way out the door from Infor (CloudSuites), Microsoft (Dynamics AX7), Unit4 and others coupled with “born-in-the-cloud” competition from the likes of NetSuite, FinancialForce, Plex, Workday, Rootstock, and Intacct, the next couple of years promise to be exciting!