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SAP cuts back on development of Business ByDesign software unit

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SAP is halting development of its unwanted Business ByDesign hosted enterprise resource planning (ERP) service and swapping to services running on its HANA systems.

The ERP giant has confirmed reports that Business ByDesign will no longer receive any more major feature updates and that it’s now slipping into maintenance and bug-fix mode.

SAP will instead focus on hosted services running on its in-memory database system HANA.

Versions of SAP's software running on HANA are available for Amazon’s AWS and on the German ERP company's own data centre servers as a hosted service.

SAP said customers of Business ByDesign would still be supported and the service would not be turned off altogether. Their customers include Lufthansa and Siemens.

The company put a brave face on for issuing the news, saying Business ByDesign had “arrived functionally” and is where “we wanted it to be” – but that couldn’t be further from the truth.

SAP’s target for Business ByDesign was to scoop up mid-market customers from under the noses of Saleforce and NetSuite, giving those customers ERP through the browser while charging on a monthly basis, without the cost and complexity of on-premise installation.

The goal was for 10,000 customers, but the service has just 785 customers – down from a downgraded goal of 1,000.

Business ByDesign has always been on the sick list during its lifetime, not least thanks to SAP’s own tardiness and indecision.

Announced in 2007, Business ByDesign was put on hold in 2008 as SAP realised the underlying hosted architecture did not scale sufficiently, forcing their engineers back to the drawing board.

“It’s not a fantasy," said co-CEO Jim Hagemann Snabe in 2010, when the company downgraded the target number of paying customers tenfold.

Rumours that SAP were killing the service circulated in in May 2012.

An SAP spokesperson on Monday said the the switch to HANA, SAP’s new, chosen computing architecture, would “allow us to differentiate against the competition in the cloud space where our Extensible Platform will be the strategic differentiator and will better enable our partners and also empower our customers.”

News of the end of Business ByDesign came as the ERP giant announce third-quarter results that saw total revenue up two per cent to 4bn euros ($5.4bn). The company reported a profit of 762m euros ($1bn), up 23 per cent, and an increase in earnings per share by 12 euros to 0.64 euros ($0.87).

Sales of software were down five per cent to 975m euros ($1.3bn), while cloud subscriptions and support grew 203 per cent to 191bn euro ($261bn). Software and cloud subscriptions were up seven per cent to 1.16bn euros ($1.58bn) while support income was up four per cent to 2.18bn euros ($2.98bn). Software and software-related service revenue increased five per cent to 3.35bn euros ($4.58bn). ®

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