I know plenty of SAP watchers who don't take SAP Business ByDesign seriously. Perhaps they think ByDesign's notorious early struggles render the solution irrelevant. Well, think again. Why should we care?
- Instructive product leadership via Rainer "don't bet against this guy" Zinow (and I don't say that kind of thing often).
- After Oracle acquired NetSuite, ByDesign took on increased importance inside SAP - as a viable way to counter the two-tier and midmarket cloud ERP plays Oracle can offer with NetSuite.
- ByDesign gives us a window into SAP's not-insignificant growth in SME/midmarket cloud ERP.
But in the midst of Sapphire Now, there is another reason to care. ByDesign can help us better understand what SAP's cloud platform is really aiming for: "intelligent" business services that can feed into all SAP cloud solutions, not just S/4HANA. In his December 2019 update on ByDesign, my colleague Den Howlett wrote:
It is clear that ByDesign is taking advantage of the much larger engineering challenges such as ML, IIoT, cloud platform and business intelligence efforts that SAP is putting into S/4HANA.
SAP's ambitious plan - one unified data model for ByD, Business One and S/4
SAP is now pretty far down the road on an ambitious plan: a partner can use SAP Cloud Platform as a means to map one product to S/4HANA, ByDesign, or Business One. Howlett: "This is what co-CEO Christian Klein means when he talks about a unified data model."
Talking to Zinow used to be frustrating in one regard. He would provide coherent plans for ByDesign, but: when we pressed for how this lines up with B1 or S/4HANA cloud, Zinow's answers weren't always all I needed to hear. I got the impression disparate teams weren't always on the same page. Customers would ask me the same. When in doubt, they would shift attention to S/4HANA, assuming this confusion meant lack of clarity or commitment to B1 and ByDesign.
In my view, that's mostly changed. Zinow is now SVP Product Development for ByDesign and Business One. Zinow is also in close contact with Uwe Grigoleit, who heads up the S/4 solution management team. In fact, they combined forces on product slides like these:
The exact delineation between SAP's products will always require some nuance, depending on the industry, geography, cloud vs. on-premise preference, etc. But - the type of clarity we see on this slide was, for years, sorely lacking.
"B1 forever and ByDesign forever"
After the recent (virtual) SAP Partner Summit leading up to Sapphire Now, I got the latest from Zinow. What does he want Sapphire Now Reimagined audiences to note? For those who think the pandemic eliminated on-premise software from consideration, Zinow doesn't agree. As he told me:
A key message here is that public cloud is growing in all directions. But there's still a strong on-premise market. B-1 has a run rate of 1000 net new names per quarter (70,000+ customers total). This is the key net-new customer engine for SAP.
Given's Zinow's long-held enthusiasm for multi-tenancy and public cloud via ByDesign - an enthusiasm I happen to share - this is a noteworthy view. As for partners wary of investing in B1 or ByDesign, Zinow says:
B1 forever and ByDesign forever.
Ahh, but isn't SAP's massive S/4HANA investment always looming in partners' minds? Zinow hits it head-on:
Will S/4 replace ByDesign? Or, as the ByDesign camp says, ByDesign will take over S/4. Neither is the case.
Why does Zinow take this position? Because of variation in customer needs. The two factors? company size and IT philosophy:
We have two kinds of customers. We have the super-large ones with deep process requirements, process variations, heterogeneous organizations and in-house SAP competency centers, whose reason for being is they are the ones who can do all of the black magic to make all of the different SAP and non-SAP components work together.
For those customers, we have the federated suite; we have S/4HANA... It's a best-of-breed approach. Obviously, if I don't like it, but if they decide, "Hey, my CRM is called Salesforce," so be it.
But there's another type of customer, mostly smaller, that want an ERP suite.
The other extreme are the smaller companies who say, "I don't want any geeks in my company. And especially not geeks who want a higher salary than the CEO and call themselves IT experts. I want to consume ERP like I'm consuming water and electric power." In my terms, give me a suite in the box and shut up.
Two buying behaviors inform SAP's product and deployment options
This isn't the market cloud ERP purists like me might envision. It's not a multi-tenant religion I might subscribe to. It wasn't made up by SAP marketing either. It's the market as it is. Zinow:
These are the two buying behaviors. It has nothing to do with SAP politics or technology. There's simply a demand in the market for both a multi-component suite, and for a suite in a box.
It's the same for Oracle - they have Oracle Cloud ERP and NetSuite. Our equivalent is S/4HANA and ByDesign. So that was the key message which I gave the partners.
So, for the partners attending Sapphire Now Reimagined, take note: this isn't Zinow going rogue from the comfort of his home office:
Thomas Saueressig already signed off on this slide. And we also discussed it quite intensively with Uwe Grigoleit, so that we are telling one story to all of our partners.
The scope of cloud ERP now includes supply chain
I won't get into ByDesign's roadmap detail; Den provided a view in December. But given that SAP CEO Christian Klein told media and analysts today that supply chain is a top issue on customer's minds, Zinow's ByD supply chain plans should get a mention:
I'm moving the ByD investment money into supply chain management. ByDesign always had a supply chain management kernel, right from the very beginning, from the days of Peter Zencke. He said, "You can't bolt on Supply Chain Management components later. You do it in the first minute, or you're toast."
But now, demand has surged:
For the first ten years of ByDesign, there was no demand for supply chain management in the cloud at all. This has changed big time. We now have 7.3 million production orders in ByDesign. As a result of the activities in the MRP engine, we have 46 percent growth here, and 25 percent of my install base are now using supply chain management as part of their configuration.
Cloud ERP isn't stopping at FI/HR:
So what we discussed a couple of years ago is: will cloud ERP stop with financial and human resources and CRM? No, it will cover the entire ERP stack, from financial to human resources to purchasing, to production to full-blown logistics and quality management. There's no end to public cloud here.
I could write a whole different article on the ambitious tech direction of ByDesign. Den Howlett hits on much of that in his piece, including the shift from ABAP into Node.js and TypeScript - a move needed to attract talented young developers.
This also fits into a "business application factory" roadmap, with ByDesign jobs and workflows run as containers on Kubernetes:
Frankly, I'd have more confidence in SAP's overall cloud ERP direction if I received similar briefings on the S/4HANA Public Cloud side. On that front, leadership has shifted so many times that it's been a chaotic blur of product visions and ideas.
But if we take Zinow's best-of-breed explanation for S/4HANA large enterprise, then surely a similar component-based architecture is needed for customers to truly plug-in and run. That fits right into Christian Klein's unified data model plans - a topic on deck this week.
It's not Zinow's job to sort all of that. However, I like that Zinow's team is working closely with other SAP product teams to solve collective problems. Example: Zinow told me Business One partners asked for, and received, a B1 web client. That web client was built via the Fiori paradigm. Now, Zinow says, even experts "need to look twice" to discern the difference between B1, ByDesign, and S/4 screens. I hesitate to bring up the much-maligned phrase "Run Simple," but isn't that what it was supposed to mean?
I continue to struggle with Zinow's report on customer demand for on-premise editions, particularly in the small business market, where pure SaaS solutions offer so many possibilities for rapid growth and avoidance of IT headaches. But if Zinow says he has the numbers to back up that demand, I'm not going to argue. That's a debate for another time.
That leaves us with the need for SAP to enable its partners to bring customers forward - despite the difficult business circumstance we now face. At today's media Q/A, Klein addressed this topic, via a question from ASUG News:
We've made some great progress on the App Store. But still, there's always some room for improvement even inside SAP. I will not stop pushing the transformation of SAP until the day a partner can put a solution into our web store, we can sell it digitally. In the next moment, it's provided on our platform, it's seamlessly integrated, this partner solution, with the rest of our solutions to really give our customers a seamless experience.
And that we can also completely digitize the contracting and the pricing, the billings of the customer, and of course, also the provisioning of that solution.
Klein says he won't stop until all of this is a one touch solution, completed in one day. He also told the press that SAP has made "great progess" here. Hmm - seems like it's time for a partner view on this, eh? That will be my next post.
For now, Zinow has one event regret: after a vigorous day of sessions, beer o'clock just isn't the same on the home front, without comrades to raise a toast with. And on that, I think we all agree.