Business ByDesign: SAP Preps SaaS Partner Program

SAP is preparing a channel partner program for Business ByDesign, the company’s fledgling SaaS (software as a service) platform for midsize customers. Here are details, which The VAR Guy gathered at the SAP Sapphire conference in Orlando.

First a little background: SAP Business ByDesign is hosted entirely by SAP, and targets businesses with roughly 50 to 500 seats, notes Chrysoula Christopoulou, senior director global go-to-market and channel strategy for SAP Business ByDesign.

According to a press release issued today, SAP Business ByDesign is currently available for midsize charter clients in the U.S., Germany, the United Kingdom, France, China and India, with further geographic expansion planned for early 2011.

On the upside, SAP says more than 100 charter customers have embraced SAP Business ByDesign. But on the downside, PCWorld reports that SAP originally hoped to have 10,000 customers and US$1 billion in revenue for the application in 2010. But in 2008, PCWorld adds, SAP realized it couldn’t run Business ByDesign at scale in a cost-effective manner and slowed down the product roll out while figuring out a fix.

SaaS Partner Program Coming

Still, it’s clear SAP has been studying the SaaS market — and hoping to avoid partner program missteps that tripped up rival software giants.

A case in point: Christopoulou says SAP Business ByDesign will have a partner program that allows solutions providers to manage customer billing and other ongoing end-customer interactions. In stark contrast, The VAR Guy notes, Microsoft’s Business Productivity Online Suite (BPOS) triggered some constructive criticism from partners because Microsoft handled all the billing for Exchange Online, SharePoint Online and other Microsoft SaaS applications.

SAP’s Christopoulou didn’t discuss specific SaaS margin or revenue opportunities for partners. But she indicated the partner program is expected to launch in mid-2010, and it will reward partners that (A) sign up new customers and (B) partners that retain SaaS customers for SAP. Separately, toward the close of 2010 SAP will potentially launch an agent partner program that pays partners a referral fee for directing customers in SAP’s SaaS system. Within the agent model, SAP will handle billing.

Also of note: SAP VP Kevin Gilroy, the company’s North American channel chief for SMB partners, says he’s receiving weekly progress reports on the Business ByDesign effort. (The VAR Guy will share some more thoughts from Gilroy shortly.)

Longer term, SAP is thinking about launching some type of App Store so that independent software vendors (ISVs) can promote and sell applications that integrate with SAP Business ByDesign Christopoulou added.

Also, SAP Business ByDesign is not to be confused with traditional SAP enterprise applications hosted by nearly two-dozen partners in the U.S.

Competitive Landscape

Of course, SAP isn’t alone with its SaaS ambitions. The company must battle growing upstarts like Salesforce.com and NetSuite — which has attracted investment dollars from Oracle founder Larry Ellison.

Also of note: Oracle continues to position itself as an arms dealer in the SaaS market, promoting databases, middleware and applications upon which SaaS companies can build their own business.

No doubt, SAP has some SaaS ambitions. But The VAR Guy will be watching closely to see how SAP ultimately designs the Business ByDesign partner program for solutions providers.

Sign up for The VAR Guy’s Newsletter; Webcasts and Resource Center; and via RSS; Facebook; Identi.ca; Twitter and VARtweet.