SAP to expand hosted service to more countries

PARIS – SAP aims to have 1,000 customers for its hosted midmarket ERP service, Business ByDesign, before the end of the year by expanding availability from five to 20 countries.

“We will go after the biggest markets first,” said deputy CEO Leo Apotheker. “India is a very important market for a product like Business ByDesign,” he said.

The subscription-based enterprise resource planning service launched in September, and is now available in the U.S., France, Germany, the U.K. and China.

SAP will expand service in new countries each quarter. The Indian launch will happen in the second quarter, according to an SAP spokesman. “For the year, we would like to reach 1,000 customers,” said Apotheker. “That’s enough to show we are a true player in this business.”

Apotheker declined to say how many seats the 1,000-customer target represents, noting only that Business ByDesign is aimed at customers with between 100 and 700 employees. Business ByDesign costs US$149 per user per month in the U.S., with a minimum of 25 users.

Business ByDesign is not the only SAP product for small and mid-size companies: there are also Business All-in-One, a version of its full mySAP suite for companies with fewer than 100 employees, and the Windows-based Business One. Both run on the customer’s own servers.

In some regions, the notion of an ERP “service” can be a hard sell for cultural reasons. “China is a market where the pure on-demand model is still viewed with conservatism,” Apotheker said. “Many people have been worried about the potential for cannibalism, but that isn’t happening,” said Apotheker. “Business All in One is very strong, and Business One had a very good year. We grew the number of customers significantly. There are no issues with cannibalization.”

With that confidence that it won’t eat its own market share, SAP plans to offer Business ByDesign to smaller subsidiaries of existing Business ByDesign customers, Apotheker said.

This week SAP reported a 10 percent rise in revenue for the fourth quarter, but earnings fell six percent compared to a year earlier, dragged down in part by the cost of launching Business ByDesign.

Revenue for the fourth quarter totalled

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