SAP embraces on-demand CRM with new software


3 Feb 2006

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SAP has moved into the on-demand software market with the launch of a customer relationship management (CRM) solution available through the internet using a subscription-based licensing model.

First in a promised series of products, SAP’s Sales on-demand solution is designed to help organisations to manage customers, contacts and sales pipelines with tools that are easy to use and configure. The software firm has promised additional on-demand CRM offerings for release later this year, addressing marketing and service areas.

In a statement announcing the news, SAP said its CRM on-demand solution would help line-of-business executives such as sales or service managers and marketing professionals to meet current business requirements to have a fast and easy way to adopt enterprise CRM. SAP’s hosting partner is IBM and both companies will sell the service to their customers.

SAP is using a model it refers to as ‘isolated tenancy’ model, whereby there will be a single master copy of the application, but each user organisation will have its own separate system that loads the master copy.

With this approach, every user organisation will have its own system, almost identical to the ‘isolated’ hosting services that Oracle and others offer, but using the on-demand pricing model, the cost of which starts at US$75 per user, per month. SAP said that users would be able to share data between the on-demand version and their on-premise systems. In its statement SAP criticised what it called the “narrow focus” of pure on-demand CRM systems – a clear dig at rival CRM provider Salesforce.com.

The IT analyst firm Ovum criticised SAP for launching the service too early and the fact that its capabilities so far are “limited”. Ovum principal analyst David Bradshaw suggested that the timing of the announcement had much to do with the fact that Oracle’s concentration will be focused for the next while on integrating the operations of the CRM provider Siebel, which it recently acquired.

However, Bradshaw that the launch will prove to have been a smart move for SAP in the longer term. “We ultimately believe that SAP is absolutely right to enter the on-demand market,” he said. “Offering a wider choice for ownership and payment models is the right way to go for the entire software industry.”

He concluded: “We’ve seen SAP stumble on the first outing of some of its other products before, only to eventually get it right some years later, and ultimately take a serious share of the market. We think that is what is likely to happen here, but the timescale will be several years.”

By Gordon Smith