SAP Walks Tightrope Selling Business ByDesign
SAP has to get customers excited about a new product that's all about change--without harming its traditional brand.
Selling Business ByDesign was never going to be easy for SAP.
Even before SAP co-CEO Jim Hagemann Snabe announced at Sapphire 2010 that the on-demand ERP suite was not a "fantasy" anymore, that Business ByDesign general availability was set for July, and that vexing multi-tenancy issues had been fixed, there had always been a whiff of reluctance about SAP's advances toward a Web-based software business model.
Like pleading with your child to give a hug and (possibly) a kiss on the cheek to Great Aunt Eunice who's in a nursing home and smells of onions and tuna fish. (SAP is the squeamish child in this analogy, by the way.)
SAP's marketing challenge is immense: How do you "RAH RAH!" market a new product that, in comparison to your current products' underlying business model, could be considered blasphemy? Heresy? Sacrilege?
For instance, by pointing out Business ByDesign's greater "ease of use" and overall lower "headaches of ownership" as opposed to SAP's suite of enterprise applications—what has enriched SAP and its shareholders for decades—just what message will current and prospective customers hear?
Well, here is one attempt by SAP:
After watching the advertisement, one might be left contemplating the business and IT logic of larger ERP installs—by SAP or any other enterprise software vendor. What with those: beastly ERP integration scenarios; nearly impossible upgrade decisions; abundance of complex user interfaces; array of head-scratching licensing options; expensive maintenance and support issues; growing data-management nightmares; and challenging application portfolio questions.
This is all not to say that SAP's Business ByDesign guiding strategy is not sound. A Web-based application offering is, of course, imperative to SAP's future because it's what customers want and expect.
Nevertheless, the whole episode is eerily reminiscent to SAP's ill-fated purchase of TomorrowNow in 2005—a provider of third-party software support offerings for Oracle's enterprise software offerings. That troubled business trapped SAP in a nightmare lawsuit—and is still racking up legal bills for SAP even today.
More significant, though, is this: TomorrowNow's business model, which aimed to make Oracle customers question its exorbitant maintenance fees, cast an unflattering light not only on Oracle's stiff annual support fees—but also on SAP's fees! SAP was playing the same game as Oracle, and TomorrowNow exposed that failing.
SAP's accompanying "Safe Passage" program, which promised to safely migrate Oracle customers to SAP's mothership, was a dud.
That's not business diversification; that's business disaster.
With Business ByDesign, SAP is once again navigating similar territory. With great care and finesse, SAP marketers must get customers excited by a new product that fundamentally blows up the value proposition of its "money maker" and, when compared, points out many flaws in said money maker. (For guidance, perhaps SAP execs could look at how Coca-Cola sold the virtues of its bottled water product, Dasani.)
SAP executives now have to sell big change while ensuring the status quo. It'll be a neat trick—if they can pull it off.
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