IBM and HP Do SAP ERP Bundles for SMBs

May 12, 2008 Timothy Prickett Morgan

While application software giant SAP has made a lot of noise in recent months before and after the launch of its “A1S” Business ByDesign suite of online, SaaS-style applications, that software ramp is taking longer than expected and therefore SAP needs to double down with its existing licensed software products to attack the small and medium business space. And to do that well, SAP needs to rely on its key platform partners, particularly IBM and Hewlett-Packard.

Last week, at SAP’s Sapphire customer event in Orlando, Florida, the company announced bundling deals with both IBM and HP that will see those server makers bundle SAP’s All-In-One ERP suite on a variety of server platforms, making it much easier and faster for SMB customers to deploy this set of applications.

Such bundling of applications is not new to the OS/400 platform, of course, which was always driven by application bundling on systems to provide customers with what was in effect a turnkey accounting and manufacturing or distribution management system; the tight and transparent coupling of applications and the underlying system, and the ability to place the order for a system all at once, is one of the reasons why the AS/400 did so well in the midrange, where companies do not have the expertise, time, or money to do their own systems integration. The bundling approaches announced by IBM and HP last week with one of SAP’s four products–and the one clearly aimed at midrange customers–is just history revisited.

The IBM-SAP bundles announced last week are really previews of future offerings, and IBM did not say when it would get these out the door. IBM said that it is evaluating bundles of the All-In-One suite running three different hardware configurations: one based on the new Power6-based Power Systems, one based on BladeCenter blade servers (which could be Power6 or X64 blades, in theory), and the last one is Module Systems (formerly System x) rack-based X64 servers. On the X64-based machines, IBM and SAP are choosing Novell‘s SUSE Linux Enterprise Server 10 as the operating system and giving customers a choice between IBM’s DB2 Universal Data Base or SAP’s MaxDB database. On the Power Systems front, IBM and SAP are focusing on the i 6.1 operating system, and customers will be able to get a preconfigured Power6 box with i 6.1 and DB2 for i supporting the All-In-One applications through a program called IBM i Install Option for SAP. This program, which has been in development for more than a year and which I told you about last May, was created by IBM’s Rochester Lab through something called Project Kobi. In all three cases, SAP resellers will be able to sell the bundles, and IBM hardware resellers will be able to as well.

HP also announced its intent to deliver a bundle based on essentially the same X64 software stack as IBM–SUSE Linux, MaxDB, and All-In-One–but for now is only focusing on delivering the stack on its “Shorty” c3000 entry BladeSystem chassis. Significantly, the HP Shorty chassis plugs into normal 110/120 volt wall power, unlike most other blade server chassis, and includes an integrated SAN, tape backup, and more than enough X64 iron to host an SAP suite for a small or even fairly large midrange shop. HP is not offering support for DB2 databases in its bundle, but it would not be surprising to see HP offer All-In-One atop Oracle 11g.

While I think that these bundles are a good thing in that they get customers up and running faster and presumably offer them discounts because of the ease with which a sale and installation can be done by the reseller that actually is responsible for an end user account, I am not convinced that SAP’s All-In-One suite is in the price range of a lot of SMBs. I wonder why either SAP or server vendors think that SMB shops–by which I mean smaller companies and not just large midrange companies that buy IT like larger enterprises, even if the infrastructure is more modest–can afford SAP applications in the first place. There is a reason why so many midrange shops coded their own applications so many years ago, and there are equally valid reasons why so many midrange companies are looking forward to SaaS utility offerings for ERP applications, where everything is an operating cost and there are no capital expenses.

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