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Why smart projects so often go wrong - SAP and Business ByDesign

In class, I’ve been using German software giant SAP’s foray into Software as a Service as a ‘living case’ example of a company venturing into highly unknown territory.  Without knowing more than what is available in the public domain, participants usually conclude from the analysis that the software maker’s ambitions for the project are highly ambitious, if not impractical.

Just today, then I ran across a most interesting blog on the topic of what went wrong with SAP and Business ByDesign, which they pulled from the market this year for a total do-over.  In reading it, I continue to be amazed at how the same mistakes keep being made with large, ambitious projects designed to take companies into unknown territory.

This one started out wrong, with the company initially designing the technology for one type of application, but then ending up using it in another.  A similar problem happened with Nokia’s N-Gage phone—instead of designing a phone specifically for gaming, they tried to adopt one of their existing technology platforms, with disappointing results. 

Secondly, the scope of the program was huge.  Rather than trying to operationalize a limited set of functions, the software was designed to be a full business suite.  We often see this with companies who think their existing capabilities will let them tackle a whole new challenge in its entirety, rather than breaking things up into more manageable pieces.  Big flops often result.

The project also suffered from a lack of internal cooperation, as existing business units feared (perhaps rightly) that if it succeeded, it would cannibalize their very profitable positions. 

So, it’s back to the drawing board for SAP and another entry in my growing “flops” file for Rita.

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