SAP unveils Web software

by Georgina Prodhan

SAP AG unveiled a long-awaited line of Web-delivered software on Wednesday that will radically change the company's business model and may shake up the Internet softwarearena.

Called Business ByDesign, the software is initially a one-size-fits-all, subscription-based package aimed at mid-sized companies and is a crucial plank in SAP's strategy to more than double its customer base to 100,000 by 2010.

"It's not just a new product for us," Chief Executive Henning Kagermann told journalists and analysts at a company event in New York. "It's a new era for SAP."

SAP, the market leader in complex suites of software for large enterprises, is the first major software maker to enter the market for so-called software as a service delivered over the Internet.

It said it will have invested up to 400 million euros ($559 million) in marketing and ramping up Business ByDesign by the end of next year. One-fifth of the company's 12,300 developers are working on the project.

Business ByDesign, which integrates management of areas including financials, human resources, supply chain and customer relationship management will cost $149 per month per user and $54 per month per five users for a pared-down version.

The offering is both more complex and more expensive than competing products from the likes of Internet software pioneer Salesforce.com Inc, which has 35,000 customers and whose prices start from $60 per user per month.

Salesforce and privately held NetSuite, which deliver their software over the Web, have seen their business grow faster than SAP and its big rivals Oracle Corp and Microsoft Corp, which usually install their software on customer computers. NetSuite has 5,300 customers.

"I hope they will make it. That would be good for the industry," said Dan Sholler, a software analyst with Gartner. "But they are promising to do something that has never been done ... I am very uncomfortable with the goals they have set."