SAP's On-Demand Vision

SAP AG unveiled its first on-demand solution in February, opening the doors for thousands of the company's current ERP customers to finally make the leap to CRM without the high costs or having to commit too much time. Analysts agree the German software giant's aggressive rollout plan helps feed the growing desire for hosted offerings. The SAP CRM on-demand application is designed for large and midsize businesses with a minimum of 100 seats. SAP plans a phased rollout with SFA and marketing tools made generally available by the end of the first quarter and service tools shipping in the second quarter. Additional rollouts will occur every 90 days. Prices start at $75 per user, per month, for a single module and expand to $125 per user, per month, for the entire suite. Once customers feel comfortable moving the solution in house, they can migrate to mySAP CRM, paying license and maintenance fees, which vary in price. "Our customers want to act immediately, but they also want to grow strategically," says Bill McDermott, president and CEO of SAP America. "They want a solution today that can be up and running quickly at an affordable price with low risks." SAP is fortunate in that it doesn't really need to look beyond its 30,000 customers, most of which have not yet deployed CRM, according to analysts. A 2005 AMR Research survey revealed that 31 percent of large organizations plan to purchase a hosted or subscription-based SFA solution within the next 12 months. But which customers stand to benefit the most, and which ones should stick with alternatives? SAP customers evaluating a departmental SFA project or that want to get up and running quickly should consider the offering, suggests Robert Bois, research director at AMR Research. However, it is important to keep in mind that version 1 is not a full-blown solution, lacking workflow processes like lead routing. "Simply outlining [SAP's] plans for hosted CRM will at least give SAP customers the road map they need to plan future investments in customer management strategies," Bois writes in a research note on the topic. Companies that have been reluctant to implement a full-suite CRM application can benefit from this first version. However, Bois says that companies using SAP on the back end and Salesforce.com for CRM should continue doing so until SAP further develops its offering. "Today, Salesforce.com has a much more elegant user interface, broader full-suite CRM functionality, and better customization and administrative tools," he writes. Siebel CRM OnDemand customers that use SAP on the back end also should stand still for now, especially as Oracle continues to express its commitment to the product line. "Siebel...has a good head start on SAP with regard to usability and functionality along with industry-specific versions." SAP did learn an important lesson from Siebel, however, which has to do with tapping into IBM's expertise to do the hosting. "It gives them that inside stamp of approval, powered by IBM. They are the Kleenex of on-demand infrastructure," Bois says. If SAP is going to succeed in the long run, it needs to secure buy-in from the right executives. "SAP has not done very well with delivering CRM to salespeople. That's where Salesforce.com has done well, delivering the relationship and explaining the value. That's the part that has yet to be proven, because it's not a CIO sale," says Rob DeSisto, research vice president at Gartner. "Once you get in the door, it's a matter of, can you support what they want to do? They need to spend less time talking about market share and more time giving value to salespeople. This on-demand strategy is clearly a step in that direction."

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