Update: SAP rolling out cloud-savvy version of Business One

Partners will now be able to sell a multi-tenant version of the ERP software for small companies

SAP has created a multi-tenant version of its Business One ERP (enterprise resource planning) suite, which will be sold exclusively through partners as Business One OnDemand, the company is expected to announce Tuesday during the Cebit conference in Hannover, Germany.

Multi-tenancy is a software architecture commonly used by SaaS (software as a service) vendors, wherein multiple customers share the same instance of an application, but with their corporate data locked away from each other. This allows for operational cost savings over traditional hosting, and provides the ability to apply general product upgrades to many customers at once.

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"It's great to see that SAP realizes that multi-tenancy is an important part of a cloud solution," said analyst Ray Wang, CEO of Constellation Research. "True multi-tenancy gives customers the lowest-cost delivery model and the quickest way to consume innovation."

SAP partners have already been selling Business One in hosted form. Last year, SAP instituted a policy change that made it easier for those companies to offer hosted Business One via subscription pricing. SAP is encouraging partners to sell Business One OnDemand by subscription as well, according to a statement.

The engineering work on the multi-tenant version is complete, and it will become available from partners in the second quarter, according to SAP spokeswoman Angelika Pfahler. It will initially be offered in 18 countries, including the U.S., U.K., France, Germany, Australia, Austria, Brazil, Canada, China, Czech Republic, Hungary, Italy, Mexico, the Netherlands, Singapore, South Africa, Spain and Switzerland.

Only SAP-certified hosting partners will be able to offer the application directly, although resellers that lack such qualifications can subcontract with a certified company, SAP said.

Business One will continue to be available through traditional hosting and in on-premises form, under perpetual license agreements.

Also Tuesday, SAP announced a version of its Business ByDesign cloud ERP suite, which is aimed at small and mid-sized companies and more recently, divisions of enterprises. SAP announced a version of ByDesign on Tuesday that includes industry-specific functionality for manufacturing, distribution and professional services companies.

SAP partners have now created some 120 "micro-vertical" add-ons for ByDesign, according to a statement.

In addition, the company has started a pilot program centered on a deeper integration between ByDesign and corporate human resources systems.

SAP has also improved the ByDesign experience on iPads and iPhones, adding tools for managing expenses, accounts and sales leads, among others.

Some potential for customer overlap exists between Business ByDesign and Business One OnDemand. But one differentiator lies in the deeper array of industry-specific functions built by partners for the latter application, which has been in the market much longer.

SAP has passed the 1,000 customer mark with Business ByDesign, which is now available in 11 countries, with five more planned for this year, co-CEO Jim Hagemann Snabe said during a press conference at Cebit on Tuesday, which was webcast.

He downplayed the suggestion that ByDesign sales have been slow. SAP had to rework the underlying platform for ByDesign to gain needed efficiencies, before it could go for higher-volume sales, he said. "We are where we want it to be."

ByDesign's sales are picking up even better than SAP's hugely sucessful on-premises systems have been at times, according to Snabe. "We're at double the pace R/3 was in 1992," he said, referring to the earlier version of SAP's core ERP suite.

SAP has no plans to offer ByDesign in on-premises form, but is talking with some large customers about ways they can manage the system alongside SAP, according to Snabe.

Also Tuesday, SAP announced versions of its Sourcing OnDemand and Sales OnDemand applications.

Those releases are among a series of products aimed at large enterprises, which have invested heavily in on-premises SAP systems but could be enticed to buy specialized applications delivered from the cloud.

However, SAP recently decided that organic development wasn't enough to become relevant in the SaaS (software as a service) market, and paid $3.4 billion to acquire SuccessFactors, which sells a variety of human resources-related applications. The company's CEO, Lars Dalgaard, is continuing to run that business as an independent SAP subsidiary and has also been tapped to lead SAP's broader cloud strategy.

One of Dalgaard's tasks will be to convince the more conservative members of SAP's ample customer base that SaaS is safe and secure.

"We think you can have better privacy in the cloud," Dalgaard said in response to a question at the press conference. "A company like SAP can invest more in security than any single company can. We pour all of the resources into one code base."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's email address is Chris_Kanaracus@idg.com

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