SAP Preps On-Demand BusinessOne Service

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Enterprise resource planning may be the last vestige of the “big iron” computing model that relies on expensive hardware and software, expensive direct sales and expensive maintenance.

But even ERP—where many companies are loath to trust their data and transactions to outsiders—is evolving to an on-demand world. SAP plans an on-demand version of its BusinessOne ERP offering for small- and midmarket companies although timing, packaging and delivery channels have yet to be worked out.

There is even talk—roundly denied by management—that NetSuite is weighing a pilot to sell its hosted ERP suite via Best Buy For Business.

Sources close to the San Mateo, Calif., company say channel chief Kristen Brown is backing a pilot to begin soon in the Northeast. CEO Zach Nelson said he is unaware of any such plan.

Such a tactic—by any ERP vendor—should not be considered beyond the pale, however. These suppliers are struggling to penetrate small- and midmarket companies that represent a huge growth opportunity. Many of those target companies now use shrink-wrap accounting products. Store-bought wares like Intuit’s QuickBooks and Sage Software’s Peachtree Accounting could be the stepping stones to ERP for these companies.

The difference is that “NetSuite deals can be $200,000, $500,000 depending on the number of seats,” said one NetSuite source. “Good grief, this isn’t an iPod,” said a longtime NetSuite partner. He said early on NetSuite, then known as NetLedger, tried—and quickly dropped—a similar promotion with Best Buy at retail.

SAP remains the ERP player to beat and the Waldorf, Germany-based company is working on an on-demand version of its BusinessOne offering. SAP has talked up its hybrid on-demand/on-premises CRM game plan but has been less public on plans for new delivery models of ERP.

“We’re going to offer [BusinessOne as a hosted service] but we’ll offer it in different ways. Maybe only the CRM functions, so ERP data will be on premise and CRM off. We’re looking for the right model,” said Gadi Shamia, senior vice president of solution management for SAP Labs LLC, Palo Alto, Calif. BusinessOne is SAP’s small- to midmarket ERP play.

SAP CEO Henning Kagermann said on-demand is a more difficult concept than hosted ERP, which SAP has offered for years. “For smaller companies—I think that can happen over time, if it’s only pieces of ERP that are administrative. For the logistics, the backbone, the less I believe in it. People want to own [their transactions]. I can’t say yes or no, it depends on usage,” Kagermann told reporters at Sapphire 2006 in Orlando, Fla., last Thursday.

Generally, ERP partners would be interested in on-demand solutions provided they’re not shut out of the supply chain.

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