SAP to introduce pay-as-you-use model software

SAP to introduce pay-as-you-use model software

Bangalore: German business software maker SAP AG said it will compete with smaller rivals in cost and value with its pay-as-you-use Business ByDesign software when it is launched for small-and medium-sized customers later this month.

The software will be SAP’s strongest product in the so-called cloud environment, where customers rent the software through the Internet and pay for it according to usage, as against the traditional model of buying the software and running it on their own servers.

“We believe it is a game changer," said Ferose V.R., managing director of SAP Labs India Pvt. Ltd, the largest research unit of SAP outside Germany. “It can add value to thousands of small and medium customers."

Business ByDesign creates a workflow of information across an organization, helping reduce costs and improving decision-making. SAP introduced it in 2007, targeting more than 100,000 customers by 2010. But it failed due to technical glitches and an inability to attract more customers to rent it online.

“The technology is more stable and robust now. The TCO (total cost of ownership, including maintenance and repairs) issue has been addressed," said Ferose.

Some doubt if the pay-as-you-go model will work for business softwares in India.

“For a cloud-based model to succeed, you need thousands of customers, not few hundreds," said Bharat Goenka, co-founder and managing director at Tally Solutions Pvt. Ltd, a local accounting software firm that entered the business software segment last year. “In the Indian context, will this model get so many users? That is a big question."