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Constellation Research

  • By Chris Kanaracus

    /cINSIGHTS

    Google's I/O developer conference kicked off this week and as in past years, it generated a lot of news spanning both consumer and enterprise-oriented scenarios (and of course, in some cases that line is a bit blurry). Here's a look at the top takeaways from the event's announcements for CXOs to consider.

    Not Mobile First, AI First

    Artificial intelligence has been the hottest trend in tech for some time now, and fittingly was the dominant focus of I/O. Put simply, Google wants to dominate the AI discussion and is making major moves to succeed in doing so.

    It introduced Google.ai, which ties together all of its AI efforts in one place. It's aimed at both private companies, individual developers and academics and will focus on Google's AI research, tools and applied AI. 

    Google CEO Sundar Pichai unveiled a new project called AutoML, a neural network capable of designing neural networks. This notion has been a holy grail of sorts in the AI field, and Pichai says Google will make major strides on the relatively near horizon, writing in a blog post:

    We hope AutoML will take an ability that a few PhDs have today and will make it possible in three to five years for hundreds of thousands of developers to design new neural nets for their particular needs. 

    AI is informing how Google evolves its products in a fundamental way, and the shift applies to the tech industry as a whole, Pichai added.

    We are now witnessing a new shift in computing: the move from a mobile-first to an AI-first world. ... Think about Google Search: it was built on our ability to understand text in webpages. But now, thanks to advances in deep learning, we’re able to make images, photos and videos useful to people in a way they simply haven’t been before. Your camera can “see”; you can speak to your phone and get answers back—speech and vision are becoming as important to computing as the keyboard or multi-touch screens.  

    There is still a long way to go before we are truly an AI-first world, but the more we can work to democratize access to the technology—both in terms of the tools people can use and the way we apply it—the sooner everyone will benefit.

    Google has its own commercial considerations for AI, of course, going beyond its core products. It is hoping to make Google Cloud Platform the go-to place for developing bespoke AI applications. Google's secret sauce for accomplishing that are its TPUs (Tensor Processing Units), specialized chips designed for machine learning workloads.

    The first generation of TPUs were introduced last year, but focused on running Google's existing machine learning models more efficiently. Pichai annnounced that the second-generation of the chips, dubbed Cloud TPUs, will be offered through Google Compute Engine later this year. Cloud TPUs not only run existing models but can train new ones. 

    Google is also clustering the TPUs into what it calls "pods," which provide huge performance gains over past approaches. A new large-scale translation module once required a full day of training on 32 high-end GPUs, but accomplishes the same thing now "in an afternoon using just one eighth of a TPU pod," according to Google. TPUs will work in conjunction with TensorFlow, the machine learning framework Google open-sourced in 2015 to considerable success.

    The company is running an alpha program for the TPUs and is also introducing the TensorFlow Research Cloud, which will make 1,000 TPUs available to researchers from both private industry and academia if they're willing to give back contributions to the open-source community.

    Instant Apps Go GA

    First announced at last year's I/O conference, Android Instant Apps are now out of preview and available to all developers. Instead of making users download and install an app, Instant Apps actually stream to devices from Google Play. Later on, users can decide to install them permanently.

    Naturally, Instant Apps aren't as powerful as installed ones, which have deeper access to the device, but they do include useful capabilities such as payments and location.

    Instant Apps provide a middle ground between websites and full-featured apps. That's a useful tool for enterprises to have in the toolbox, whether for internal users or outreach to customers. Constellation Research VP and principal analyst Holger Mueller noted earlier this year that Instant Apps have security advantages, since installed apps would involve MDM (mobile device management) issues.

    The question now is how much momentum Google can build for Instant Apps out of the gate. Instant Apps capabilities will ship with Android O, the next version of the mobile OS, but will also be compatible with previous versions—a must, given the rampant fragmentation in the Android ecosystem. 

    Enterprises should take a look at how Instant Apps can fit into their overal mobility, marketing and internal IT strategies. Beyond the potential use cases, Instant Apps give IT leaders a new way to balance development resources; currently supported, full-blown apps could be replaced with lighter touch Instant Apps requiring less overhead for IT.

    Google Steps Toward HR with Google for Jobs

    There has been much speculation about which directions Google will head in the enterprise application market since the arrival of former VMWare head Diane Greene as SVP of cloud. While it's not clear that Greene's fingerprints are on it, a new Google service called Google for Jobs brings the company into the orbit of HR and HCM software. Pichai described the new service in a blog post:

    [A]lmost half of U.S. employers say they still have issues filling open positions. Meanwhile, job seekers often don’t know there’s a job opening just around the corner from them, because the nature of job posts—high turnover, low traffic, inconsistency in job titles—have made them hard for search engines to classify. Through a new initiative, Google for Jobs, we hope to connect companies with potential employees, and help job seekers find new opportunities.

    As part of this effort, we will be launching a new feature in Search in the coming weeks that helps people look for jobs across experience and wage levels—including jobs that have traditionally been much harder to search for and classify, like service and retail jobs. 

    Google has already worked with companies such as LinkedIn and Glassdoor to integrate them with Google for Jobs. What will be interesting to watch for are potential partnerships down the road with enterprise HR and HCM vendors. 

     

  • By Steve Wilson

    After spending two years researching blockchain and the evolution of advanced ledger technologies, I still find a great spread of understanding across my clients and business at large about blockchain.  While ledger superpowers like Hyperledger, IBM, Microsoft and R3 are emerging, there remains a long tail of startups trying to innovate on the first generation public blockchains. Most of the best-selling blockchain books confine themselves to Bitcoin, and extrapolate its apparent magic into a dizzying array of imagined use cases.  And I’m continuously surprised to find people who are only just hearing about blockchain now. 

    For all sorts of specialists, it can seem that everyone is talking about blockchain and ledger technologies, but the truth is most people are not yet up to speed.  No one should be shy to ask what blockchain is really all about. 

    Many blockchain primers and infographics dive into the cryptography, trying to explain to lay people how “consensus algorithms”, “hash functions” and digital signatures all work.  In their enthusiasm, they can speed past the fundamental question of what blockchain was really designed to do.  I’ve long been worried about a lack of critical thinking around blockchain and the activity it’s inspired. If you want to be able to pick the wheat from the chaff in this area, you really only need to know what blockchain does, and not how it does it.

    So I’ve tried to write a fresh and uncomplicated explanation of what blockchain can do and what it cannot do.  You can down load the report Blockchain Explained in Plain English here.

     

  • By Doug Henschen

    Teradata simplifies pricing, executes on business consulting and hybrid cloud strategy. A look at next steps in the company’s ongoing transition.

    “Business outcome led, technology enabled.” This was the theme at the May 8-10 Teradata Third-Party Influencers Summit in San Diego, and it reflected a two-to-one ratio of consulting-oriented presentations to technology updates.

    Teradata has been expanding already robust consulting and implementation offerings in part because mass migrations to cloud computing and open-source big data platforms like Hadoop have reduced demand for Teradata’s on-premises racks and appliances for data warehousing. Even as data volumes have continued to grow exponentially, Teradata’s revenues have declined in recent years from a high of $2.7 billion in 2014 to $2.3 billion in 2016.

    Teradata compared it's old (at left) and new (at right) pricing scheme and cloud managed
    services options at its May Influencers Summit.

    Last year’s Summit was held shortly after the company replaced its CEO, announced plans to sell off its Aprimo marketing business unit, and introduced a more aggressive path to cloud and consulting services. At this year’s Summit we learned that Teradata has not only executed on that strategy, it has gone further to transform itself by pursuing simplicity, flexibility and control in four areas:

    Pricing: Responding to feedback that its licensing approach was too complex, with too many licensing models and too many a la carte options, Teradata has devised a consistent, subscription-based licensing approach that will apply on-premises or in private or public clouds. The model is based on two dimensions: T Cores and Tiers. T Cores measure compute cores and disk I/O, but there are discounts if you’re using less than maximum input/output capacity.

    The four-tiers reflect how capacity is being used, ranging from the free Developer tier to progressively more feature-rich (and most costly) Base (simple production), Advanced (production with mixed workloads), and Enterprise (mission-critical, enterprise workloads) tiers. The pricing is designed to be simple, predictable and consistent, with no penalties for choosing or moving between on-premises, private cloud or public cloud deployment. What’s more, pricing is more aggressive, with the Base Tier taking on cloud rivals like Amazon Redshift.

    Portfolio: Where Teradata previously offered as many as nine systems in its portfolio, in now offers just two. IntelliFlex, the company’s new flagship, separates storage and compute decisions to support multiple workloads within a single rack. Customers can add different types of storage and compute nodes, ranging from archival retrieval to the ultimate in in-memory query performance. Customers can also add capacity in smaller increments than previously available and they can quickly reconfigure as needs change.

    IntelliBase is Teradata’s entry-level appliance. It costs approximately 15% more than commodity hardware. IntelliBase is designed for more balanced data warehouse workloads. IntelliBase is designed for more balanced data warehouse workloads. It is not as flexible as IntelliFlex, which can be reconfigured to address high I/O or high CPU requirements..

    Cloud: Teradata has made over and recast its managed cloud services as IntelliCloud. The offering combines the new T-Core- and Tier-based pricing scheme with three flexible infrastructure options behind the cloud services. Teradata previously offered only appliance-grade (2800 series) capacity behind its services, but you can now choose IntelliFlex or IntelliBase as the platform for managed services in the Teradata Cloud, which has data centers in Las Vegas and Frankfurt. The third option is Teradata-managed services running on carefully selected infrastructure services in the Amazon cloud (and, later this year, the Microsoft’s Azure cloud). Consumption options are more elastic with the public cloud options, but it won’t be as performant as IntelliFlex-based capacity, and service-level agreements aren’t available because Teradata has no control over the infrastructure. The intent it to give customers choice, with a fourth choice being bring-your-own-license and managing Teradata Database on AWS or Azure yourself.

    Consulting: Teradata has consolidated its growing consulting offerings under the Teradata Global Services umbrella, and it has formalized three service lines to avoid overlaps and confusion. Think Big Analytics, the big data consulting business Teradata acquired in 2014, continues as the business-outcome-focused unit, offering industry-focused expertise in data science, data visualization and big data solutions. Enterprise Data Consulting focuses on technology, offering expertise in architecture, data management, data governance, security and services. Customer Services helps customers get the most out of their systems and people, applying proactive and reactive expertise in systems and software management and change management.

    MyPOV on Teradata’s Ongoing Transformation

    Disruptive market forces have dealt Teradata a tough hand to play. There’s clearly disillusionment with complex open source platforms like Hadoop these days, but that doesn’t mean we’re going back to Teradata’s heyday of enterprise data warehousing. Companies are still pursuing high-scale data lake approaches on low-cost, distributed platforms, whatever flavor prevails (whether that’s HDFS, objects stores like S3 and Azure Data Lake, or the next open source fad). Companies will also continue to rationalize their comparatively high-cost data warehousing infrastructure expenditures.

    Teradata acknowledged last year that we’re in a “post-relational world,” but this year’s Summit shows signs that it’s truly adapting to a changed market. The company has not only delivered far more flexible hardware, it has gone further with the simplified, hybrid subscription-based pricing and more flexible cloud-deployment options.

    Teradata is becoming more of a software and services company and less of a hardware vendor. That shift should eventually improve profitability, even if revenues continue to slide as deployments shift to the cloud.

    Will customers trust Teradata to provide impartial, “business outcome led” consulting services? Customer Gerhard Kress said he chose Teradata in 2013 in large part because “the company understands that the world is a lot bigger than Teradata.” Director, Data Services at Siemens, Kress presented at the Summit on the train manufacturer’s global IoT deployment, and he noted that other vendors (mostly big platform vendors) asserted that they could address all challenges within their stacks. Teradata, meanwhile, suggested a heterogeneous approach reflecting technologies already in place at Siemens.

    This “Blended Architecture” slide, from a Teradata Ecosystem Architecture Services presentation,
    captures the vendor’s realistic sense of its place within enterprise environments.

    Teradata has also become more realistic about its cloud ambitions. Two years ago Teradata talked about pursuing midsize businesses with the Teradata Database on AWS service. At this year’s Summit Teradata said it’s no longer pursuing that idea. Instead, executives said the company is focused on the needs of the 500 highest-scale and most sophisticated customers. That’s where Teradata’s technology really shines.

    Teradata thrived in the past when it focused on delivering data-driven business outcomes at top of the market. It appears that focus is back.

  • By Chris Kanaracus

    Constellation Insights

    In January, SAP moved to bundle its offerings for IoT under the brand name Leonardo. Jump forward just several months later to this week's Sapphire Now conference, and the vision has already grown much broader. 

    What you might call 'Leonardo 2.0' now encompasses IoT, machine learning, analytics, big data, design thinking services and blockchain, all built atop SAP's cloud platform. Customers who adopt SAP Cloud Platform won't be tied to SAP data centers for the underlying infrastructure, as the company has inked partnerships with Amazon Web Services, Microsoft Azure and Google Cloud Platform as well.

    The new Leonardo is SAP's "digital innovation system," and the basis for the company's drive into digital transformation projects. Digital transformation was the central theme of this year's Sapphire, and where SAP sees ample opportunity for growth as customers not only migrate older ERP environments to the new S/4HANA, but look to adopt the leading-edge technologies targeted by Leonardo.

    SAP is shipping a number of industry accelerators—fixed-priced products composed of services and subscription licenses—for Leonardo, aimed initially at retail, sports organizations, consumer products and discrete manufacturing. 

    For sure, Leonardo is an apt title for what the product set stands to offer customers, with its evocation of renaissance man Leonardo Da Vinci. It also raises the bar high for SAP to deliver customer success, of course, given how much Leonardo projects will depend not only on technology but professional services from SAP and partners. 

    Some may question whether quickly broadening Leonardo's remit so far beyond IoT could create market confusion, but Sapphire provides the biggest platform of the year for SAP to educate customers on its product strategy. In any event, it's far from clear how much penetration the original Leonardo vision had made among the installed base. 

    SAP is making the right move with the new incarnation of Leonardo because it sketches out a clearer picture of what a digital business ought to be, says Constellation Research VP and principal analyst Andy Mulholland.

    "There will be a lot of CIOs who will be grateful for the clarity this new version of SAP Leonardo provides towards potential a proof-of-concept deployment of IoT and AI in the enterprise," he says. "Describing SAP Leonardo as adding systems of intelligence to to the traditional SAP systems of record will help the general market confusion as to exactly how to view the role of IoT and AI in enterprise digital business, as well as positioning Leonardo as an architecrure and a platform for ongoing development."

    "The numbers and importance of the partners who have expressed commitment to supporting SAP Leonardo suggests that they too feel this is an important and radical move in the marketplace," Mulholland adds. "Constellation Research advises SAP customers to take a detailed look, and suggests non-SAP customers may also find the platform interesting too."

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  • By Chris Kanaracus

    Constellation Insights

    SAP CEO Bill McDermott took the stage for the Sapphire Now conference's opening keynote this week, and after a few minutes of audience engagement and banter, launched into his first core topic. No, it wasn't about a new product or strategy, but rather something that affects many SAP customers: Indirect access.

    The term refers to scenarios in which a customer uses a third-party application, such as Salesforce, to tap into SAP system data. The problem arises when a user doing so isn't also a licensed SAP user. In the course of a software license audit, companies can find themselves on the hook for substantial penalties for unpaid license fees, whether the violation was intentional or not. 

    Earlier this year, SAP won a landmark court victory against drinks distributor Diageo, who could pay up to $68 million in penalties. Diageo had developed two Salesforce-based systems which it connected to its core SAP system through SAP Process Integration. The court rejected Diageo's defense that PI served as a "gatekeeper" license to SAP. 

    SAP has also sued Anheuser-Busch InBev, the world's largest brewer, regarding both alleged indirect access violation and unlicensed use of SAP software. It is seeking $600 million. 

    Invoking the notion of "empathy" toward SAP customers—a theme he first introduced at last year's Sapphire—McDermott referred to the indirect access issue and said SAP had come up with "simplified pricing," which he briefly described.

    "Procure-to-pay and order-to-cash scenarios will now be based on orders, which is a measurable business outcome for any business," McDermott said. The more significant statement came next. "In addition, static read access in third-party systems is your data," McDermott said. "Competitors charge you for static read in third-party systems, SAP will not."

    SAP corporate development officer Hala Zeine elaborated on the topic in a blog post. During discussions over pricing and licensing with user groups, indirect access came up repeatedly, Zeine wrote:

    We decided to tackle this topic first through the lens of pricing modernization. Our objective was to make pricing predictable, linked to unit of value, transparent, and consistently applied.

    We looked first at the areas that would have the greatest impact on the greatest number of people. We found that approximately 80 percent of our ERP customers will benefit from our changes to just these three scenarios: Procure-to-Pay, Order-to-Cash, and Indirect Static Read.

    Indirect static read access reinforces that a customer’s data is yours. Just because the data was in the SAP system, does not mean you should pay to view it when it is outside the SAP system. Indirect static read is read-only that is not related to a real-time system inquiry or request and requires no processing or computing in SAP system. Indirect Static Read will now be included in the underlying software license – i.e. free of additional charge when a customer is otherwise properly licensed. SAP leads the pack in addressing customer expectations related to this scenario.

    Does this address every indirect access scenario in the age of devices, IoT, and collaborative networks? Not yet. There is much more to do and we are eager to keep updating pricing scenarios to bring you greater value. It is, however, a step in the right direct toward pricing modernization.

    However, SAP in turn wants customers to help avoid an unpleasant audit experience by proactively examining their current landscapes and usage:

    If you’re fully licensed, there’s no action for you. However, if you’re questioning whether you are under- licensed, let’s talk about it. ... SAP assures customers who proactively engage with SAP to resolve such under-licensing of SAP software that we will not collect back maintenance payments for such under-licensing. We will look at your specific circumstances when resetting your licensing agreement, including providing you the opportunity to receive credit for certain products you may have already licensed so you can update to the new metrics.

    Analysis: A Measured Step In SAP Customers' Favor

    The UK ruling against Diageo should have been a wakeup call for any SAP customer using third-party software in conjunction with it—which is obviously a large percentage of the overall base. SAP's case against Anheuser-Busch InBev is in arbitration, meaning the details—in particular, any defenses the brewer may have—won't become public. 

    While SAP is offering back maintenance indemnity for under-licensed customers who come forward willingly, doing so could still result in additional license fees, which then carry maintenance going forward. There's no sound argument to be made for willingly using SAP software without required licenses, but it remains to be seen how many customers take SAP up on its offer. In any case, Constellation has seen a significant uptick of late in inquiries regarding indirect access and related SAP license audits—in short, this issue is not going away.

    Meanwhile, the concession SAP offered on indirect access is limited in scope. Indirect static read means just that—nothing that requires processing within the SAP system. Still, indirect static reads are part of many valuable use cases.

    Constellation backs the generally accepted industry parameters of indirect access, which should include the ability to process batch data; aggregate information into a data warehouse or other data store; access data for use in another system via data integration; and to enter data from a third party system. On its face, SAP's new policy would only prohibit the last. 

    However, another telling passage in Heine's statement was this: 

    Does this address every indirect access scenario in the age of devices, IoT, and collaborative networks? Not yet. There is much more to do and we are eager to keep updating pricing scenarios to bring you greater value.

    That's a bit opaque, considering how important those workloads are now and will be in the future. Digital transformation is the predominant theme of this year's Sapphire event, which featured the unveiling of an expanded product strategy called Leonardo, a "digital innovation system" that brings together machine learning, IoT, blockchain and other leading-edge technologies on SAP's cloud platform. 

    SAP, of course, sees digital transformation projects as its major growth engine and wants customers to come along for the ride quickly. To that end, it will hopefully provide a broader explanation of how indirect access will work in this new landscape soon, preferably before the next Sapphire rolls around. That would be the empathetic thing to do.

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  • By Chris Kanaracus

    Constellation Insights

    Independent enterprise software support provider Rimini Street will soon be a publicly traded company, but via a merger and not with a long-expected initial public offering. The move stands to give Rimini the capital it needs for expansion. 

    Under the arrangement, Rimini Street will merge with GP Investments Acquistion Corp. The latter will be renamed Rimini Street and continue trading on NASDAQ, but with the ticker symbol RMNI. The deal will have an initial enterprise value of $837 million. Rimini Street founder and CEO Seth Ravin, who will lead the combined company, laid out the rationale for the deal in a statement:

    "The combination with GPIAC will provide Rimini Street additional growth capital to expand service offerings and capabilities, strengthen our balance sheet and fund potential acquisitions," said Mr. Ravin. "We believe that having a public company structure will further fuel our growth by facilitating additional sales opportunities and providing additional capital market access."

    Rimini is the most prominent third-party support vendor in the market. Founded in 2005, the company has offered software support for Oracle, SAP and other products at half the price of vendor-provided maintenance, while claiming superior service.

    It has experienced steady growth even while battling litigation brought against it by Oracle, which alleges Rimini's business model infringed on its intellectual property. That case, as well a suit Rimini filed against Oracle aren't yet resolved, but the specter of litigation apparently wasn't a deal-breaker for GPIAC. (Nor has it been for customers, given Rimini's advancement in the market).

    Third-party maintenance appeals to customers with stable systems and little desire to upgrade to newer versions as vendors release them. The option has long been a pillar of Constellation Research's Software Bill of Rights. 

    While Rimini has reported annual run-rate revenue of $196 million, that remains a tiny fraction of the total addressable market for on-premise maintenance, which the company estimates at $81 billion.

    "I think this [merger] gives Rimini a huge opportunity to expand," says Constellation Research founder and CEO R "Ray" Wang. "More importantly, they can increase their speed in go-to-market."

    Rimini's emergence as a public company could have a ripple effect, emboldening more players to enter the business, while prompting competitive responses from incumbent software vendors. Overall, the move looks like a good one not only for Rimini, but enterprise software customers. 

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  • By Chris Kanaracus

    Constellation Insights

    SAP is getting its app store act together, with the unveiling of a new App Center that brings together partner offerings for its entire catalog in the same place. The move gets what had become a growing problem with app store sprawl under control, as SAP's Steve Ache writes in a blog post:

    In the first generation of the SAP App Center we focused on applications that were designed to run on SAP Cloud Platform. The SAP App Center developed into great resource for customers who were looking for applications to extend their digital core.

    At the same time, SAP continued to run other marketplaces, particularly those that are associated with our cloud applications like – SAP SuccessFactors, SAP Analytics, Concur, SAP Ariba, and others. The marketplaces continued to grow, and we uncovered a problem. We had partners who developed applications that had to list and maintain their applications on multiple marketplaces. And we had customers who had to visit multiple SAP marketplaces to find what they were looking for.

    SAP's first move was to consolidate the SuccessFactors app store into App Center last year. The latest iteration of App Center goes much further, bringing together all partner applications. There are now 1,405 applications in total on the site, the vast majority of which were developed by partners. It also features Ariba technology for payments, along with billing and provisioning capabilities.

    Meanwhile, SAP Store will remain in place for software and services sold by SAP directly. 

    Analysis: One-Stop Shopping Makes Good Sense

    It's good to see SAP recognize the problem that had formed due to multiple app stores, and the move to consolidate them is one that should especially please partners, who will benefit from greater visibility compared to what was possible in the previous siloed structure.

    The combined store should also appeal to customers thanks to the improved navigation and buying experience—in particular the benefit to procurement of having purchasing, billing and partner vendor communications through a single portal. 

    It also represents an example of SAP living up to its pledge in recent years to become easier to work with on both a partner and customer front. That being said, the standard in enterprise app stores has long been set by Salesforce's AppExchange, which has been unified from the beginning and remained so through dozens of acquisitions. In that sense, SAP's new App Center is playing catchup, but it's still a welcome, if overdue move.

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  • By Chris Kanaracus

    Constellation Insights

    SAP is planning to make major additional investments in Business ByDesign, the cloud ERP suite it first launched in 2007, hoping to make the product finally reach the critical mass it originally expected. 

     Business ByDesign has had quite a history. Developed at high cost, it was first launched with much ado in 2007 as the company's entry into cloud-based ERP, and at the time, company officials expected it to have 10,000 customers by 2010 and be generating $1.4 billion in revenue.

    Needless to say, those lofty goals weren't met. One reason was the initial architectural choice, which didn't scale in a cost-efficient manner. SAP pulled back on the ByDesign rollout in order to re-architect it for true multitenancy. 

    Other problems were internal. Some of SAP's sales force wasn't keen on pushing the new, untested solution to customers and prospects, fearful it would cut into sales of established products such as Business One and Business All-in-One, which carried more lucrative commissions.

    By the same token, ByDesign suffered from an identity crisis, as SAP struggled to clearly define and differentiate it from those other ERP suites, which like ByDesign are aimed at small and medium-sized companies. 

    In subsequent years, ByDesign was the subject of repeated rumors of its demise, ones SAP consistently denied. It continued to develop the product and it is now used by customers in 120 countries. Sales were up 43 percent year-over-year in the first quarter for "new and upsold bookings," SAP said in a statement.

    The customer count for ByDesign is now closing in on 4,000. While far short and past SAP's original hopes, that figure is not insignificant, and one SAP believes it can now scale more rapidly:

    SAP has goals to significantly increase SAP Business ByDesign development resources, ramp up marketing spend by 10X to deliver demand to partners so partners can focus on differentiating their offerings, and aggressively raise partner capacity with a firm commitment to achieving growth goals.

    “SAP Business ByDesign is SAP’s lead offering for mid-market customers. Our customers often share how the solution enables them to run more effectively as they grow and thrive,” said Robert Enslin, president of the Cloud Business Group, SAP. 

    Enslin's description of ByDesign as SAP's "lead" option for the midmarket is no accident. While it falls in line with the company's overall cloud-first strategy, that type of wording is a far cry from ByDesign's years in the wilderness, when it received little public mention from SAP officials. 

    In one sense, the new investment in ByDesign isn't a surprise, since SAP needs a cloud ERP for the SMB space, says Constellation Research VP and principal analyst Holger Mueller.

    S/4HANA, the successor to SAP Business Suite, isn't ready to serve the needs of both large enterprises—its core market—and SMBs, although that is the eventual goal, he notes. "No ERP vendor has spanned large and SMB enterprise with the same product," he says. "It won't happen right now either, especially with Oracle buying NetSuite and running on two platforms."

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