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Analysts back SAP's decision to limit Business ByDesign roll-out

Warwick Ashford

Analysts have come out in support of SAP's decision to limit the roll out of its software-as-a-service (SaaS) offering, Business ByDesign, after it failed to meet early expectations.

The software company admitted Business ByDesign was struggling to make profit margin targets last week when it announced sales figures for the last quarter.

SAP now plans to concentrate on customers in the US, Europe, the Middle East and Africa in 2008, which means it will take 12 to 18 months longer than planned to meet its goal of 10,000 customers by 2010.

SAP also said it would make no further accelerated investments in Business ByDesign after this year, but would fund the product out of its normal operations.

Warren Wilson, research director at consultancy firm Ovum, said, "Business ByDesign is a long-term, strategic bet, and SAP can afford to take some time to get it right."

He said this was especially true given the market's early stage of development, the absence of a strong head-to-head competitor, and the strength of SAP's core business.

China Martens, an analyst at 451 Group, said, "It is better to pull back at this early stage rather than encounter these significant teething issues when the suite is globally available."

Wilson said although Business ByDesign's early results were disappointing, they were not surprising given the scale of the undertaking in both technical and business-model terms. "The slow launch is not good news, but it is way too soon to worry," he said.

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