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SAP closes door to Business ByDesign services, hosting -- for now

SAP executives are courting partners to sell Business ByDesign but not giving them any opportunities to host the SaaS offering or provide additional services.

SAP wants to sell Business ByDesign, its Software as a Service (SaaS) offering, through the channel. But value-added resellers (VARs) won't have any hosting or post-sale services opportunities, according to executives at yesterday's SAP Influencer Summit in Boston.

Henning Kagermann, SAP's CEO, and Hans-Peter Klaey, president of small and midsized enterprises, delivered the same message during separate question-and-answer sessions: SAP will host and manage Business ByDesign, while partners will only resell it.

"It's a different model," Kagermann said. "You have to manage the [partner] ecosystem very carefully."

Klaey did say that partners will eventually be allowed to sell and host Business ByDesign, but they "have not decided on [when] yet."

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Business ByDesign includes customer relationship management (CRM), supply chain, sales and other functions aimed at small and medium-sized business (SMB) customers. SAP announced the SaaS offering in September and so far has 22 resellers in its partner program in the United States and Germany. The company plans to eventually have a global roster of about 1,000 Business ByDesign resellers, Klaey said.

"We are looking for partners of volume, not volumes of partners," he said.

Partners won't have post-sale services opportunities because Business ByDesign already has built-in configuration for customer use, Kagermann said.

"We will not allow modification of ByDesign [by partners], but ByDesign is very flexible," he said. "It's easier to configure, and it's easier to scale, but we want to avoid the negative modifications."

Klaey described the ByDesign partner program as a "franchise-like model" in which SAP takes the lead on sales and partners follow along until they are ready to take over. In the initial stage, partners will earn referral fees for sales, but later, sales revenue will go through the partners, who will receive discounted margins, Klaey said.

SaaS is a concern in all areas of the IT channel since many partners don't know how it will impact their role, and Klaey said SAP's model -- which requires "much closer collaboration" between the vendor and the partner -- could set a successful standard. Kagermann agreed with him.

"We have to have partners who buy into this change," Kagermann said.

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