Say goodbye to “A1S.” It is now called SAP Business ByDesign.

CEO Henning Kagermann kicked off the much-anticipated, whirl-wind event with an almost-cameo 10-minute keynote.

“It is the most important announcement of my career I’m making today,” the not-usually-prone-to-hyperbole Kagermann announced to a packed Nokia Theatre in Manhattan.

Some details we’ve learned so far:

• Pricing will be $149 per user per month for a minimum of 25 users per company. A value pack-type option of a limited version will be offered at $54 for a set of five users.
• Designed to slot in between Business One and All-in-One in companies with 100-500 users.
• The product is currently in the pilot customer stage in the US.
• For more information, SAP set up a Website at www.sap.com/sme

Peter Zencke, an SAP board member kicked off his portion of the program by echoing the thoughts of many in the room: “Yes it was a journey.”

In fact, the real meat of the event should be Zencke’s keynote which promises to have “product demonstrations.” We brought our digital camera, so if lighting allows, we’ll have some screen shots.

Then it’s on to the customer panel, which is scheduled to run for all of 20 minutes before Léo Apotheker’s 10 minute keynote.

If no big news breaks, we’ll plan on posting later today with a wrap-up of the customer panel, Zenke and Apotheker’s thoughts, and said screen shots.

Jon Franke
News Editor

Truth is, we don’t know all that much about A1S yet. But that will all change on Sept. 19, when SAP has a big A1S bash planned. Another event approaching fast is the much-ballyhooed IPO of NetSuite, Oracle chief Larry Ellison’s baby. Some may debate the wisdom of an IPO in this market, but NetSuite CEO Zach Nelson isn’t one of them; he’s in a quiet period and can’t comment about it all. He can, however, take jabs at SAP A1S. Here’s what he had to say during a recent interview with Mary Hayes Weier:

SAP is saying A1S […] will be less customizable than SAP’s traditional software. That strategy amazes me. Midsize businesses need customization, just as every other company needs customization. Vendors like SAP will say SaaS is less customizable, but that’s just not true from a technology standpoint.

Interestingly, Nelson doesn’t see much competition with Oracle itself, adding that the Redwood City giant is busy “hammering SAP in the enterprise market.”

I’ll leave that without comment, but Nelson’s words on SAP’s lack of customization do raise some concerns. Indeed, as others have noted, SAP is a bit late to the party, and it better have some substantial bells and whistles to jazz things up. Stay tuned as news editor Jon Franke treks to New York City for the Sept. 19 event.

Matt Danielsson
Editor

With product code names, companies tend to lean more towards whimsical and creative. Take Microsoft. The company has used locations, like “Whistler” for Windows XP (Microsoft held design retreats in Whistler, British Columbia) or “Longhorn” for Vista (the Longhorn is apparently a bar in Whistler).

And then there’s SAP, which for its brand new, on-demand, game changing midmarket offering, went with… A1S.

In an interview with SearchSAP.com about the new All-in-One improvements, Tom Kindermans, senior vice president for SAP’s SMB in EMEA, speculated that the A1S code name might be behind some of the confusion surrounding SAP’s midmarket offerings. And it makes sense. Says Kindermans:

Some of the confusion comes from the codename we are using — A1S — for the new suite we announced. This created some confusion because some people believe A1S will be the successor of All-in-One, which is not the case. The real commercial name will be announced in September. And we have a very clear positioning for each of the three [midmarket products].

SAP doesn’t think the error is fatal, though, it will just require that much more investment in marketing to differentiate the products. Still, we might expect a more innovative nickname for SAP’s next new product. Perhaps “Sylt” after the German resort town famous for its clothing-optional beaches?

Kindermans went on to echo what other SAP executives have said: That even with the release of A1S and resulting confusion, he doesn’t expect All-in-One’s growth to slow at all, because the products address different markets.

It’s out of the question that A1S can replace All-in-One for several reasons. One of the reasons is that we’re addressing another type of customer, what we call an unserved market. It’s a hosted solution which we don’t have in the portfolio for the moment. So we are absolutely convinced that the business A1S will generate will not cannibalize All-in-One business.

SAP will, obviously, be relying on the midmarket, and its 3 products, to generate significant customer growth on its way to the company’s goal of 100,000 customers by 2010. So, while some analysts and industry watchers have questioned whether that goal is realistic, Kindermans thinks it is within reach, with the SMB products being relied on heavily.

[The 100,000 customer goal] is definitely within reach. We haven’t changed our goals and there is no reason to change the goal. Our Business One product will contribute heavily to the 100,000 customers. But not only Business One, A1S will contribute. All-in-One has over 10,000 customers but we continue to invest in the product as before and we believe we will have the same growth in the next few years… so this 100,000 customers is within reach and we are very firm to confirm this number.

Jon Franke
News Editor

It’s easy to lose sight of SAP’s push into the midmarket beyond the never-ending hype/secrecy surrounding SAP A1S, the upcoming on-demand ERP solution slated for a 2008 release. Business One, the baby bear of the SAP family targeting the under-100 employee crowd, makes up a sizable chunk (15,000) of SAP’s <40,000 customer base. SAP All-in-One, the other current midmarket solution, makes up another 10,000 customers. And they’re not going anywhere, even though A1S tends to grab all the headlines.

With that in mind, it’s worth noting that SAP is pushing Business One forward with new CRM functions, financial tools, printing tools and general polish in the new release. Business One 2007, as the solution is called, is being tested by partners now and should be generally available in November or December this year, James Niccolai reports.

It’s also worth mentioning that SAP is beefing up the partnership network with another 26 Business One partners. All-in-One scored another seven partners of it own to boot. That’s on top of the nine existing software vendors were announced at its summer sales meeting July 30 in Washington, D.C., Barbara Darrow said. Don’t be surprised if you hear about additional strides in this space before TechEd in October either, as SAP is under increasing pressure to lay the groundwork for that lofty 100,000-customers-by-2010 goal they announced earlier.

Bottom line: There’s more to SAP’s midsize strategy than A1S, and with last year’s 19% growth rate for All-in-One alone, customers seem to realize this too.

Matt Danielsson
Editor

Earlier today, SAP released its Q2 2007 earnings results. Usually we leave coverage of that type of thing to the financial publications, but when we saw that some were expecting SAP’s profits to drop for the first time in three years, we figured we’d have a listen to SAP’s senior management roundtable.

As it turns out, SAP came out looking pretty good. Profits in Q2 were 449 million euros, compared with 415 million euros in Q2 of 2006. License sales checked in at 715 million euros, above the 676 million euro average forecast. For those interested, there are many more financial statistics in SAP’s press release.

Henning Kagermann also got into A1S a little more, saying we can look forward to learning the product’s real, market name, example customers and more details about the release schedule in September.

An interesting question that came up was if SAP expected its enterprise customers to see the on-demand A1S and say, “hey, we want that too!” Kagermann’s response was as vague as you would expect, but did give some insight:

Clearly we will leverage some of the innovations [of A1S] for large enterprise clients, as we leverage our experience from large enterprise clients in the set-up of the system because it’s a “suite in a box”… in our case, innovation goes top down and bottom up. So, you will see over time more and more how we are doing it, you will see more clarity at Sapphire. And, believe me, our large clients are pretty happy with the setup.

That comment seems to keep the door open for SAP ERP on-demand beyond the midmarket sometime in the future, right?

Robert DeSisto, a vice president at Gartner Inc., agreed that larger enterprises would be watching A1S with interest, and agreed with SAP that the original recipe A1S is not designed, or suited, for them.

“People in the higher end will want the usability and concepts that are used in A1S, but they will quickly see that this tool won’t work for them,” he said.

While the press conference lacked any of the thinly veiled shots at competitors that sometimes make these calls interesting, there was one question that generated a good quip from Kagermann:

Question: In what ways are you missing Shai Agassi?

Kagermann: “I’m missing him in my heart… but not in my business.”

Jon Franke
News Editor

We wrote about the increased crowding in the SaaS/on-demand space earlier this week, as NetSuite went public and announced ambitious plans to go up against Microsoft, SAP and others. But then there’s a financial detail buried in there that may play a role in SAP’s A1S plans even though it’s not immediately obvious.

As you know, putting the financial cards on the table is a key part of the IPO process. It turns out NetSuite, like Salesforce.com, is spending vast gobs of money on sales and marketing efforts. We’re talking well over 50% of revenue for SaaS vendors, versus 20-25% for traditional software vendors. InformationWeek’s Mary Hayes Weier summarized it pretty well:

Marketing and sales costs for SaaS vendors run high for a number of reasons. Because they’re typically pursuing small and midsize businesses that don’t want to pay high upfront costs for software licenses, a lot more outreach is required, both through online advertising and marketing and in person. SaaS vendors also spend money on not just marketing to new customers, but to replace those that have left.

That makes a lot of sense when you think about it. A Fortune 50 company or a public works behemoth has money to spend, and it won’t just jump ship at the drop of a hat. That’s SAP’s bread and butter right there. Now they’re going after considerably more fickle game. Of course, SAP has been chasing smaller fish for years through its Business One and All-in-One products, but A1S is seen as the big kahuna that’s going to bring SAP the 60,000-something new customers it needs to hit the 100,000-customers-by-2010 mark.

Is SAP equipped to handle this kind of churn? There’s a lot of smart people working at SAP so I’m assuming they’ve thought of this already in terms of customer support, retention programs and so forth. Of course, the biggest impact of the different models will be felt by the number jockeys on Wall Street; a profit-per-customer number based on Business One and All-in-One obviously won’t translate well to a considerably more expensive SaaS customer win. Let’s hope SAP manages those expectations as well, since investor backlashes rarely lead to good things for the company or its customers, and especially not the product line that triggered the backlash.

Matt Danielsson
Editor

SAP A1S, the new on-demand ERP solution we’ve been hearing about for quite a while now, is something of a tease when it comes to actual specifics. We know a few basic facts, like that it’ll be for the 50-500 user crowd, feature a try-before-you-buy option, and general tidbits about how industry-specific configuration will be a snap. Beyond that, there really hasn’t been much on the news front beyond some hemming and hawing about whether it’ll cannibalize the existing Business One and All-in-One markets.

Frustrating as the secrecy is (especially in combination with SAP’s continuous pre-hype), there’s little doubt in my mind that A1S will indeed make a bit of a splash when it comes out in Q1 2008… Or whenever the final launch will be. SAP is betting big bucks on this one, and most analysts agree it better be the silver bullet SAP thinks it is if the company has a chance of hitting the 100,000 customers-by-2010 mark. The move to an on-demand model may seem strange for a company like SAP, but it’s in line with the general SOA push the company has been espousing over the past few years.

That’s why this latest article from Computer Business Review Online caught my eye. Says Angela Eager in her article:

With its new release, NetSuite is moving up in the market, taking it closer to the SMB ground covered by SAP, Oracle, and Microsoft, through the addition of features designed to automate complex operations and make processes simpler for growing mid-sized companies.

In a nutshell, NetSuite, which registered for an initial public offering (IPO) today, is upping the ante with easier installation, multinational sales support and new BI functionality. Now, Ellison’s baby isn’t going to drive the SAP juggernaut into retreat anytime soon, but it does make the SMB space just a little more crowded.

We’ve written about the upcoming face off with Microsoft Dynamics before, and the ongoing war with Oracle is hardly news either. But what I want to hear is your take on the midsize market by this time next year. How do you see this playing out? Will SAP crush the midmarket with technical superiority, or will Microsoft sucker-punch the German giant with its many SMB beach heads? Will Oracle’s grand plans hit the big time?

Send your thoughts to mdanielsson@techtarget.com by July 10 and you’ll be entered to win an SAP book bundle:

• Succeeding with SOA, by Paul Brown
• SAP Enterprise Portal: Technology and programming, by Arnd Goebel
• Inventory optimization with SAP, by Marc Hoppe

Good luck!

Matt Danielsson
Editor

Most IT workers I talk to have trouble getting up to speed with Web 2.0. Isn’t it asking for trouble to start talking about Web 3.0 in that case? Apparently, SAP doesn’t seem to think so.

ZDNet’s Dan Farber reports a “dog and pony show” surrounding the opening of SAP’s new Palo Alto lab, where SAP execs predictably talked about stuff like the importance of collaboration, the upcoming SAP A1S ERP on-demand solution, and of course, Web 3.0. From Farber’s post:

“If you look to the services that we are defining with our enterprise SOA and things a bit beyond, we know that these type of enterprise services over time, in collaboration with many customers, associations and partners, a kind of standard can bring the Internet of business services,” Kagermann said. “We don’t have the semantics today that go beyond Web 2.0 and will allow software to to speak to each other.”

There’s the keyword: Semantics. The oft-cited example of Web 3.0 is a “smart” scheduling app that handles the eternal back-and-forth between meeting participants automatically. Problem is, beyond that, Web 3.0 is rather fuzzy. How can you look at a product and say: “This here piece o’ software is Web 2.0, while that app over there is Web 3.0″? More importantly, what does this concept really mean for SAP shops, and what practical benefits vs. costs are we looking at?

While not SAP-specific, David Siegel provides a pretty good explanation on his blog. Everything in the future will be smart, he says, not just scheduling apps but mundane stuff like chasing down the best flight (enter your preferences and let the computer run the two dozen searches on Orbitz). He also uses an example of a team of construction engineers working a lighting challenge to highlight the potential collaboration benefits of Web 3.0.

The key to getting there is enabling computers to interpret “human-readable” phrases rather make a loose guess based on just keywords. For a SAP shop, this could be a boon to areas like analytics and reporting, or bringing truly personalized CRM into the world. Other areas that could use a boost of “smarts” would be logistics, SCM, or pretty much any scenario where you need to tap into multiple heterogenous solutions.

That’s the benefit portion. Cost and maintenance remains largely an unknown at this point. Of course, time will tell how far these theoretical scenarios will play out in reality, but we’re going to dive deeper into this in the weeks ahead. Stand by for a comprehensive Web 3.0 for SAP overview by Eric Samuels!

Matt Danielsson
Editor

The peculiar SAP-Microsoft partnership continues to deepen. We’ve written about this in the past, but I think Jon Reed summed up the situation best with the image of “one set of hands shaking and another set in a thumb war“. In the upper end of the market, SAP and the ’softies are best buds, as evidenced by their solid Duet commitment. Last I heard they were well past the 300,000 user mark and it was one of the big stories at Sapphire Atlanta last month.

This week was Sapphire Vienna, and sure enough, another big SAP-Microsoft story dropped: SAP and Microsoft are setting up a joint German lab to marry SAP’s Business Suite with SQL Server 2005. That makes a lot of business sense, and it doesn’t take much imagination to see this as another way of teaming up and sticking it to Oracle. Ellison had a pretty big week too by the way — the Agile acquisition alone is enough to keep SAP on it’s toes.

But then there’s this midmarket business, the elephant in the room neither company seems to want to talk about. Microsoft is serious about Dynamics, and they’re starting to get nods of recognition. But SAP is betting hard on A1S, the upcoming on-demand ERP solution targeting the niche of customers that fall between the already existing SMB solutions BusinessOne and All-in-One. Furthermore, SAP made the public commitment that it will nearly triple its customer base by 2010 — a goal that puts it squarely on a collision course with its friends in Redmond. Indeed, as 2010 and the inevitable SMB surge SAP needs in order to hit the magic 100,000 customer-mark draws near, I predict considerable friction at just about the same time Duet 2.0 rolls out.

But for now, everything is peachy. Kumbaya, and so on.

Matt Danielsson
Editor

There have been whispers about SAP’s new ERP on-demand offering for quite some time, but precious little official information was available. Now the cat is out of the bag… Almost.

SAP CEO Henning Kagermann and the top execs all mentioned it in their speeches and interviews at Sapphire 2007, but the product is still largely an unknown. AMR Research and others have nailed down some basic facts:

• It targets the 50-500 user crowd.
• It is based on the NetWeaver platform, adhering to the SOA by Design mantra.
• It shares services repository with the Business Suite.
• It has a set of unique application process components for common business tasks such as order entry and invoicing.

So far so good. But why the sudden change to an on-demand model, especially in light of the luke-warm reception of last year’s CRM on-demand? And what’s the deal with the “try before you buy” feature Hasso Plattner and others were talking about? We asked Jeff Stiles, senior vice president of Solution Marketing at SAP to clarify three basic questions:

1. Why hosted? Did people ask for this, or is there a bigger strategic vision behind this move?

The new solution […] will be targeted to serve customers who have not traditionally been buyers of enterprise suites. One key barrier for these midsize companies has been the lack of or limited number of IT staff to implement, configure and manage enterprise applications. Customers with this profile have clearly told us that an on-demand delivery model will serve them well.

2. Is SAP planning to make more products available with this model?

SAP, along with our partners, provide a number of products that feature various hosting options, including traditional hosting, on-demand and outsourcing. We offer a broad range of on-demand offerings today, including CRM and SRM. We see on-demand as one viable and important delivery topology along with traditional on-premise approaches, and we intend to continue making the right products available with this as a deployment option.

3. How extensive is the “try before you buy” feature going to be?

We’re working actively with early customers to understand exactly what they’re looking for in determining the scope of evaluating “A1S” as well as how to best enable them to do so. We expect to offer a fully functional system configured to individual customer needs for their evaluation. Customers have also told us that it is very important for them to then be able to move that system into production once they’ve seen it, tried it, and bought it.

Matt Danielsson
Editor