BBD or not; Larry Ellison is in no hurry

Larry Ellison never shoots from the hip. He is quite level headed and makes sure that he’s never caught with his pants down. I am referring to his casual dismissal of SAP’s SaaS offering – Business By Design (BBD) – by saying that it’s not going to make a lot of money.

But the fact is that he owns NetSuite, a SaaS ERP provider that is prepping an IPO. If Ellison really thought there would be no money in SaaS ERP he wouldn’t own NetSuite. But Ellison’s comments, which were delivered (transcript) after the company’s solid earnings report, do reveal Oracle’s strategy. Oracle isn’t going to try and replicate what SAP has done. Here’s Ellison’s strategy: Let SAP figure SaaS out and crow if the rival fails. If SAP is successful–it probably will be over time–Ellison buys NetSuite from himself.

Here you got what Ellison had to say about the growth strategies of Oracle and SAP and the SaaS market.

Simply put, Oracle will just buy NetSuite when the time is right. Sure, there are corporate governance hackles to be raised since Ellison is basically buying his own venture, but that’ll be worked out with some independent committee and a healthy premium. So when folks figure out this SaaS thing, Ellison will answer with another acquisition.

If BBD fails, he can start a grapevine and say Henning Kagermann, CEO of SAP was a daffy professor who bullshitted his way into a project that never made any sense in the first place, and predictably failed. But I have this question for you Mr.Ellison - costing a tenth of your economics, why would you think BBD will fail...? Wouldn't you agree it'll make up in volumes what it loses in the width of its margins...?

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Thank you, Mr.Kagermann

So, SAP has unveiled its Business By Design (BBD) program – the latest on-demand offering from its stable aimed at small businesses, that runs on SAP's own servers and be accessible over the Internet for as little as $54 a month.

Now it remains to be seen how soon or long does it take for CEO Henning Kagermann and his team to leverage BBD for his $13 billion company's efforts to expand its customer base from the current 42,000 to 100,000 by 2010, in particular customers with 100 to 500 employees.

They say it carries a new risk. I am not sure how much of a risk it is even if partners, VARs, SIs, and others get less enthusiastic, since end users can download and install BBD by themselves. But then, that’s also the idea – to eliminate middlemen and cut some costs in the process. In the final tally, it isn’t how MANY partners someone has, but how good they are at supporting their customer’s goals that count. I’m a lot more impressed with vendors who have a few hundred of the right partners than with the “army of ants” strategies, where the number of partners is very high, but it turns out there are thousands included in the count with minimal skills and very thin relationships to their partner.

Customer first, any day. Thank you Mr.Kagermann... hope BBD leads to customer delight !

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