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Article

Title: SAP's SaaS Effort Falls Short of Design

Author: Weier, Mary Hayes Article Type: Company
Source: Information Week, n1184 p17(1) Publication Date: May 5, 2008
  ISSN: 8750-6874
URL of Publication: http://www.informationweek.com

SAP will drastically reduce its investment in Business ByDesign, its enterprise resource software offering for mid-market companies due to problems it has faced in extending the on-demand model to ERP. The decision is raising concern about the impact of the slowing economy on the SaaS industry. The company also lowered its revenue projections for Business ByDesign, hoping to reach $1 billion in annual sales by 2011 or 2012 instead of 2010. The service will remain limited to Germany, the U.K., the U.S., China and France, with availability in India planned for late 2008. The service has suffered from poor performance over the Internet, and from slower adoption rates due to the wish of many customers to integrate its functionality piecemeal instead of in one package. According to Technology Business Research, this has resulted in Business ByDesign becoming a more costly, less scalable business than SAP had designed. CEO Henning Kagermann cited the decline of the U.S. dollar against the euro, the slowing U.S. economy and the cost of integrating the newly acquired Business Objects among the reason for the companys recent performance decline. Technology Business Research believes the new strategy is a more realistic approach for SAP. The analyst firm believes it will take the company time to learn how to build momentum for its on-demand ERP service.

Companies:
SAP AG Technology Business Research Inc (TBR)

Products:
SAP Business ByDesign

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