Its time SAP brought the bear (SAP BusinessByDesign) out of Hibernation

(These posts are long over due, but better late then never)

The title of this post is directly from the keynote of the Co-founder and Chairman of the SAP board Hasso Plattner at Sapphire US 2009. Hasso's keynote was for most part technical, talking about in-memory databases and how its going to transform the "Transaction processing system" space. It was geeky and pretty interesting, but during the later part of the keynote - looked like Hasso went off script and focused the keynote / presentation to his management team rather than the customers/partners/others out there. And one of the clear things that he did mention that it was time to bring the bear(Business By Design) out of hibernation.

Lets look at BBD from a customer point of view. A highlight session for me at Sapphire 2009 was the session with the Business By Design customers. This session had two customers one recent , one who had implemented it for a year make presentations and had other customers spread around different tables discussing with various bloggers, media, analyst resources.

Customers who were at the event:

• Bendpak, US
• Research Point, US
• IntelePeer, US
• Envelopments, US
• Nag, England
• Prognosys, India
• Sundolier, US
• Suh'dutsing Technologies
• Skull Candy
• TAM Ceramics
• One Vision Solutions

So as a part of this session I was able to collect data/experience points of 4 of the above highlighted customers.

Common Characteristics of these companies:

• No CIO or dedicated IT Team, It was run primarily by the CFO
• Turnover of around / less than 75 Million$ Companies
• Between 25-50 system Users

Each of these customers have had very positive things to say about their experience buying, implementing and using the product. Will summarize some of the points I heard during the discussion and other research about each of these customers.

1. Outgrew earlier / rudimentary systems like excel, quick books etc
   1. Brent Walters CFO One Vision - "We outgrew our systems"
   2. Beth Siron, the ERP implementation coordinator at Skullcandy - “We were running on QuickBooks and Excel spreadsheets, which is standard for a small company,” she said. “With our rapid growth, we’re not going to be able to continue with our current systems very much longer,” she said. The QuickBooks accounting system wasn’t designed to scale up and is hitting its limits. Additionally, the company needs to do product demand forecasting and manage multiple warehouses. Outdated manual processes worked well in the first couple of years, but that has changed. For instance, currently, e-mail is the method of coordinating the workflow's between manufacturing personnel and the offsite warehouse. Need for future stability. The company realized it needed a standard, stable ERP system that could scale out and would receive incremental future enhancements with new technologies. Siron said, “We want to keep growing rapidly and don’t want to be faced with another implementation in a few years. We needed to find a solution that wouldn’t just fit our needs now, but also four or five years into the future.
2. Need to minimize manual processes and the need for hardcopy files to be passed around & ultimately have a 360 degree view of the start to finish process
3. No need for IT Team / Landscape , Implementation executed by Business Owners.
4. Time from Initiating discussion with SAP to having BBD up and running ranged between two to five months
5. Embedded analytics a big advantage
6. Ability to do some customer specific configurations
7. Quick ROI due to rapid solution deployment
8. SAP - A Brand you can trust
9. One integrated functionality suite

High level cost comparison between ERP in a box and ERP via the Internet options done by OneVision

This also got me thinking in terms of how BBD is a good financial fit for these companies. So I just did a quick back of the envelope calculation - A typical IT budget for an organization is around 1%, so if the typical turnover of the organization leveraging BBD is around 75 million, their IT budget should be around 700K. And If you see the cost of SAP as an integrated suite with no cost on servers etc is 149$ * 30/50 = 50K / 80K, Which is between 7-15% of the overall IT budget. This does seem to make a lot of sense. Thoughts??

Looks like SAP needs to quickly figure out the financial model on how they will make money in this scenario assuming they have addressed the teething technical issues that they had. One question that I did have about BBD is how do they plan to address the customer concern of data lock into this platform.

More on BBD to follow.

Tags: business+by+design - bbd - sapphire09 - sap - ondemand - saas

Source: 1

Prashanth Rai

(Cross posted from CIO-Reinvented)

Comments

[C]

The abbreviation for Business By Design is ByD and not BBD.... Thank you

[C]

BBD

[KK]

In your cost comparison why should your "Internet ERP Solution" implementation cost 25K less. Is there any cost component that you save in the implementation specifically.

Regards
KK