Recent announcements by SAP that its long awaited BusinessByDesign SaaS product would be significantly delayed has got the commentators buzzing about the issues facing SAP. It’s been said a number of times in the past that there is a big difference between the business model, revenue stream and development cycle of SaaS versus traditional software. These differences are such that it becomes very difficult for traditional software businesses to reinvent themselves into SaaS businesses.

An interesting post over on this blog looks at the particular issues facing SAP in its quest to introduce a SaaS offering. Specific takeaways include;

• SaaS is designed to reduce complexity, but SAP spent nearly four years developing Business ByDesign — and precious little of that time apparently went to coming up with a workable license model (read big ugly expensive offering)
• SAP doesn’t seem to understand that SMBs don’t necessarily want an entire software stack from the same vendor (read SMBs like the aggregation of multiple services – they’re generally not looking for an all-in-one deal)

Bottom line is that reinventing a big bloatware producing ISV into a slim SaaS provider is a big ask – as much culturally as technologically – can SAP do it? I’m not putting any mney on it