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Some Answers about SAP’s Products for the SME Market

One of the reasons for writing this blog is to answer a question I have been asked a few times by customers and prospects and that is “Is SAP Business ByDesign replacing SAP Business One?” In short, the answer to this question is “No.” There are clearly defined roadmaps for each product and this blog will aim to highlight a few of the key product differentiators and also to examine the target market for each.

I work for an SAP Business One re seller and have also been hands on with SAP Business ByDesign at the SAP InnoJam event in Madrid last year so I have a good idea myself on the key product differences. I have also been lucky enough to catch up with some key people within SAP to give their comments on the subject. I would like to thank Eric Duffaut (President of Global Ecosystems & Channels), Greg Chase (Senior Director, Marketing for SAP Business ByDesign) and John Appleby (SAP Business Analytics & Technology Lead at Bluefin Solutions) for their input.

Let’s first look at SAP Business One. B1 is a single integrated solution designed for small to mid sized companies from 5 – 100 users (although there is no upper limit). It incorporates Financials, Sales, Service, Purchasing, Stock Control, Manufacturing, CRM, Reporting and MS Office Integration. The core system is designed to work with a number of Complimentary Modules that offer additional functionality and sit within the core system rather than being separate bolt on’s. These are developed by third party organisations and can be accredited by SAP.

SAP Business One suits organisations in Wholesale Distribution, Manufacturing, Retail, eCommerce and Services. It is licensed on a per user basis and currently runs on a Microsoft SQL Server database although SAP Business One in The Cloud is planned for later in 2012 hosted via partners. The plan is for SAP B1 to run entirely on HANA in release 9.x – See my blog: SAP Business One to Run Completely on SAP HANA

With over 35,000 installations worldwide, Business One is a very stable and affordable solution for businesses looking to enter in to the world of ERP Software. Organisations can benefit from some of the key functionality that has made SAP the Global Market Leader in ERP Software for a fraction of the cost of “Big SAP”.

John Appleby has been heavily involved with SAP HANA and had this to say: “B1 on HANA provides a very simple value proposition which will benefit every B1 customer: Simple affordable hardware, simplification of SAP and fantastic performance – plus no need for Microsoft or Oracle database licenses. Combined with the ability for B1 providers to provide Cloud solutions and licenses to customers, B1 strengthens its position in the SME ERP marketplace”

SAP Business ByDesign is a complete On Demand business solution aimed at mid sized companies. You pay for what you use and available modules include Financials, CRM, HCM, SCM, Project Management, SRM, Compliance Management and Executive Management. It is licensed on a per user per month basis and accessed though a web browser meaning the customer doesn’t need costly servers or internal IT support. As with any On Demand solution, you are entirely dependent on your internet connection so a Leased Line with service level agreements is recommended.

Greg Chase says: “ByDesign’s target market has shifted to larger companies as the feature set has filled out and scalability has been proven. We are seeing customers with user counts between 50 and 500. These kinds of companies also tend to be gazelles, growing and changing frequently, so better able to make use of the adaptability that is a design principle of ByDesign. Skull Candy and Pink Berry are two notable examples. ByDesign is highly focused on services companies, distributors, outsourced manufacturers, and subsidiaries of large companies that fit these parameters.”

So it seems both products have defined target markets with minimal cross over, this is what Eric Duffaut had to say on the subject: “SAP Business One, ByDesign and Business All-in-One are all successful SME solutions in which SAP continues to invest. SAP Business One is a complete ERP solution for small companies – available both on-premise or (new this year) through partners in The Cloud. SAP ByDesign is a complete suite for midsize companies in SAP’s Cloud and largely resold by partners. SAP Business All-in-One is primarily an on premise solution ideal for midsize companies with deep industry-specific or micro-vertical needs. Please see the below slide that does a nice job of graphically, and simply depicting this.”



In conclusion, SAP Business One is ideal for Small to Mid Sized companies needing an easy to use, customisable solution to meet their business needs. ByDesign is great for companies who are expanding rapidly or changing in their dynamic frequently and offers the flexibility of an On Demand solution. The released product roadmap for Business One is detailed and it will be very exciting to see how On Demand B1 and B1 on HANA are received in the marketplace. I also think 2012 will be a very exciting year for ByDesign as Cloud Solutions are accepted in the wider marketplace.

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  • This is an interesting area where whilst SAP’s strategy is quite clear, it is confusing to customers. Hopefully this blog helps clarify for them.

    It’s easy to forget that B1 is SAP’s fastest growing product, and your 35,000 installations is a good reminder of this. I think there are two trends that are worth bringing out a bit further:

    1) B1 is likely to trend to being both a cloud-provisioned and on-Premise provisioned ERP platform. For customers this means being able to procure B1 either as a subscription model, or a traditional license model.

    2) For both license models, B1 will be able to be bought with SAP HANA in-memory database technology rather than with a legacy RDBMS like Oracle. For the on-premise model this will be a compact server from Dell/IBM/HP and for the on-demand model you will get a share of a much bigger multi-tenant HANA platform appliance.

    I can’t think that this can only strengthen B1’s position in the market. I’m not sure I agree that there’s only minimal crossover – that’s a pipe dream.

    There are customers where B1, byDesign, AIO and Full Fat ERP are obviously the right solution. But many others e.g. Bluefin, where we implemented Full Fat ERP with 50 employees. Or B1, where they grow to a much bigger size. SAP could definitely do better to clarify which solution to use based on current and future anticipated needs.

    • Thanks John, I do agree there should be some clearer distinction between solutions. The confusion has been that ByD has evolved since launch and is now aiming at a different market.

      Hosted B1 is an interesting solution. Typical B1 customers are on ADSL rather than leased line though, what are your views on a hosted solution with no internet connection SLA?

  • Tim, good blog post. I posted on Ggogle Plus about ByD versus B1 after the Influencer Summit, as SAP is attempting to provide more clarity on this. I think they have succeeded in that attempt. Here is what I have heard from SAP that largely coincides with your blog:

    Under 25 users: B1. 25-500 users: ByDesign. It’s a bit of a simplistic division and there are surely some high growth startups – I’ve videotaped some of them for – who want ByD even if they are under 25 employees for the high growth flexibility. But overall, that is what SAP is holding to currently to distinguish the products. Note that this is different than saying “one is cloud and one is on-premise” as hosted B1 breaks down that distinction except for the multi-tenancy purists.

    Reading between the lines, I think what SAP has found is that in the end B1 is just more affordable to offer to users under 25 than ByD. Note that a big part of the B1 market push will hosted B1 by partners. Hosted B1 is just in its infancy but SAP believes that this will result in ultra-competitive pricing and that the customers in question will not have an issue with the lack of multi-tenancy and will care more about price.

    The SMB market in China is also influencing SAP here, look for China to be a key market for “hosted B1 via partners.” Here’s the short writeup I did on B1 versus Byd:

    Thanks for the post…

    – Jon

    • Thanks for the comment Jon. I will take a look at your post on G+.

      Hosted B1 will be a great solution, my concern is with reliability of partners who host. With ByD you are using SAP’s data centres so I think there needs to be some strict vetting of partners before they start hosting customers systems! If the partners fails to deliver, all the customer will think is “SAP is not working again”.

      • Tim – agreed re: hosted B1. It’s really in early stages as a strategy and there are many issues to conquer there. You could also make the argument that hosted B1 is really on a collision course with ByDesign as well but SAP doesn’t see it that way. 🙂 In particular because of the potential lower price points of hosted B1.

        I do think it will be difficult in the end to maintain two products in this space, my gut is that the future belongs to ByD but I give SAP credit for being much more clear on how they are defining the differences than a year ago….

        – Jon

  • Great article Tim. The fact is that you can find SE with more than 100 users using B1 because some partners allow this as well as B1. As Tim said there are no limits.

    So, If there is not user limitation and customers can decide to go for B1 as on-premise or on-demand model including  SAP HANA technology, I don’t see any difficulty for SAP to maintain B1 given the true that it is the fastest growing product all over the world