SWOT Analysis for SAP BusinessByDesign

SWOT Analysis on SAP BusinessByDesign

SAP launched its much-awaited Business software SAP BusinessByDesign in New York on 19th September, 2007, thus heralding a new business model in the ERP space. A quick SWOT on the product reveals that it is indeed going to live up to the expectations set by SAP top brass. However, SAP may need to have a re-look at the price points

Strength
• Brand SAP: The fact that SAP BusinessByDesign is an SAP product speaks much about its scalability, security, adaptability and flexibility
• Positioned as ERP+: SAP BusinessByDesign is not simply an ERP. It is an end to end solution. SMEs do not have to look beyond this solution for other needs, ex for Opportunity Management. SAP Business ByDesign caters to all business processes
• SOA Compliant: SAP has inbuilt its other innovation - SAP Netweaver into SAP BusinessByDesign. This means that the product has readily available services which can be interfaced with other applications. This also makes SAP BusinessByDesign future-proof, a major concern specially for SMEs who really are not IT savvy and neither wish to allocate budget for IT year on year
• Specific target customers: SAP has rightly targeted the SMBs, who actually felt their was not much in the market space to offer them. The product has a defined positioning which is very good and doesn’t promise too many things for too many customers. Bad targeting always proves a doom for product marketers
• Language support: SAP BusinessByDesign supports major languages. Though the product is yet to be launched all over the world, the language support feature makes it a global product already - markets where the product will be launched next year already have one of their fears alienated

Weakness
• Pricing: This is the major weakness for SAP BusinessByDesign. Priced at $ 149 per user per month, this is on the higher side. Though the idea would have been to simplify the pricing, it may backfire. Pricing should have been based on the number of modules the client wishes to buy. Ex A client may not want HR, may end up paying the same as a customer who decides to have all modules hosted.
• Functionality: SAP should have integrated the Duet functionality into SAP BusinessByDesign. SMBs work extensively on MS office and lesser on portals. If the idea is to "pull" users to SAP BusinessByDesign, as articulated by SAP, Duet should have integrated in this release

Opportunity
• Market size: By SAP's own admission, there is a market of approximately $ 15 billion. SAP will have the early mover advantage in this space, among other ERP vendors
• Marketing: As SAP continues to spend on marketing SAP BusinessByDesign, upto EUR 300-400 million by 2008, customers will be more educated about an SOA based ERP+ product from SAP. SAP BusinessByDesign already has about 20 customers. As more converts start joining the club, their will be more success stories and the mid-market segment will have lesser reasons to complain in terms of Business solutions.

Threats
• Cannibalization: The biggest threat is cannibalization by SAP Business All-In-One. SAP A1 potential customers may actually end up embracing SAP BusinessByDesign. Unless properly educated, the market may end up getting confused between positioning of SAP A1 and SAP Business ByDesign.
• Point solutions: SMBs have affinity for point solutions which were either procured or home-grown, and therefore, the shift may not be immediate.

Though the product has rooms for improvements, in terms of functionality and pricing, but it is bound to bring a revolutionary change in the market with its concept of subscription based pricing and a lower TCO.