SAP’s recent launch of its Business One OnDemand solution, which moves to software as a service (SaaS) and a cloud-based model for its Business One application, looks to be a landmark move by the German-based company into the cloud computing space. SAP recently highlighted cloud services as one of its five market categories, which also comprise mobile, analytics, applications and database.
Following this week’s SAP Forum event, held in São Paulo, it is clear mobile and cloud are currently the most important issues to SAP. Both will change the way people use its software and are why the German giant is focusing so much on those efforts. The company noted that 10% of its employees are focusing on these areas and over the last six months the company has spent about $4 billion in acquisitions in cloud verticals.
One of those acquisitions included SAP paying $3.4 billion to acquire SuccessFactors, a provider of cloud-based human capital management solutions. That purchase reinforced SAP’s cloud strategy and is expected contribute to boosting the number of SAP users. SAP recently set a goal to reach 1 billion users by 2015.
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The move could also clear up SAP’s somewhat cloudy perception in the cloud space. Some SAP partners RCR Wireless News talked with during the event agreed that Business One OnDemand could drive SAP towards the cloud and help the company to position itself as a provider to small and mid-size enterprises. This could be most apparent across Latin America where SAP has faced a difficult battle with local providers, specifically Brazil’s Totvs, which currently dominates the SME market with about 60% market share.
The most compelling aspect of SAP’s Business One OnDemand was to base it in the cloud, allowing corporations to reduce their infrastructure cost and speed up the implementation. Compared to the traditional and very-time consuming ERP deployments, which also requires a huge amount of investment, the new solution could be heaven to the SME market.
Focused on firms with up to 50 users, Business One today counts 30,000 costumers globally (about 1,000 in Brazil). Going to the cloud model is expected to boost client numbers. “It can easily double over the next few years,” explained Greg Tomb, SAP’s head of global cloud sales, in an exclusive interview.
Revenue expectations are also high. In Brazil revenues are expected to jump from the current $3.5 million to $12 million by the end of this year, though SAP would not confirm those numbers.
The Business One OnDemand service will eventually be offered by qualified partners, while in the meantime SAP plans to host the solution in its global data centers.
“We will use SAP facilities to start,” Tombs noted, adding that SAP is considering building a data center in Brazil, though he did not provide details.
The recommended concept to partners for the offering is a monthly subscription fee per user. Initially, the solution is planned for availability in 18 countries, including Australia, Austria, Brazil, Canada, China, Czech Republic, France, Germany, Hungary, Italy, Mexico, the Netherlands, Singapore, South Africa, Spain, Switzerland, the United Kingdom and the United States.
Not the first time
Although Business One OnDemand was highlighted in SAP’s strategy, it is not the first move to the cloud for the company. Less than two years ago the company launched an enterprise management solution called Business ByDesign that was also cloud-based, but focused on enterprises with between 50 and 700 users.
Greg Tomb noted the solutions meet different needs, so it would make sense to upgrade from one to another before implementing a more robust ERP system.
Among Latin American countries, Business ByDesign is available in Mexico, and according to Tomb it will be launch in Brazil. “I can’t tell you when, but we are localizing the software to be in compliance with Brazilian rules.”
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