Business ByDesign: with a Little Help from my Friends?

Since the news of SAP slowing down its "accelerated development" around Business ByDesign (BBD), there has been little color added on the subject by the company and much in the way of speculation.

To add my view on the subject, it is important to keep in mind that with the addition of Business ByDesign (BBD), SAP is now trying to successfully manage both its traditional low sales volume (in the number of deals, obviously not total revenue!) / large enterprise / on-premise business, along with a high sales volume / SMB / SaaS business. If we consider the reverse for a moment: the high volume software sales king, Microsoft, has not been able to make a significant dent in SAP's traditional lower volume ERP business with Microsoft Dynamics, and has struggled to move up the value chain towards larger engagements (while I think they do themselves a disservice to mention SAP as their chief competitor, Steve Ballmer down to Kirill Tatarinov mention them almost every time these days!)

With this in mind, and countless other examples, it is no surprise then that the typically conservative SAP would like to take a more gradual approach to reaching a profitable business for BBD, having delayed its initial target of 10,000 customers by 2010, by an additional 12-18 months. While several executives at Sapphire mentioned that part of the issue was product performance, which should be addressed in future updates, it is also my belief that the services model of delivering a SaaS solution may also be partly to blame. While it is understandable that SAP would like to serve the initial set of BBD customers directly, why haven't they opened up this hosting business to partners yet? As of now, in the SAP SaaS model, the focus is to remove unnecessary services and have partners bring process knowledge, domain expertise, training, etc. Having a good understanding of typical Salesforce.com services partners, this amounts to services deals in the tens of thousands, not the hundreds of thousands or millions that traditional SAP partners are used...

I see an opportunity here for SAP to expand the service delivery around BBD, by allowing partners to take more of a lead for hosting services, which should allow SAP to focus on software development. SAP Americas, in fact, has already done this for the mid-market for SAP ERP 6.0. By opening up the hosting business, this will allow customers who may want more secure and separate data-centers (Federal Government, for example) to run the BBD SaaS solution. Or for that matter, many customers already have large services engagement in place, and may want run BBD through these trusted suppliers in the future. One shouldn't forget, while SAP has placed BBD into a very neat "100 to 500 customers" segment, it is worth noting that R/3 was also intended for the mid-market when first released to the market!