SAP's New Hosted Model?

SAP is being tight-lipped about its plans to unveil a new offering, possibly with a hosted option, within its mySAP CRM family later this year. The company's unofficial announcement last week might be a way to keep its installed customer base intact (read: out of the hands of hosted rivals) as that delivery model gains popularity, according to Chris Selland, principal analyst at Covington Associates. "The main read that I have is, [SAP is saying] they're going to have something so don't run off and buy the competition like Salesforce.com, because they want to protect their installed base," Selland says. "They're really trying to give their customers, without announcing anything, some reassurance that they've got something coming down the pike." "There are a lot of words being thrown around in terms of hosted, on-demand, [and] software-as-a-service, and it's thrown a big bubble around three very distinct concepts: customer needs, technology [which includes the delivery model], and pricing structure," says Ralf Von Sosen, vice president of solution marketing at SAP CRM. "In terms of hosted versus on demand, they're not all synonymous concepts. So, one of the things that we're focusing on is instead of just following the market momentum, taking a step back, going [to] our customers, and saying, 'What are the things you really need out of the solution aside from a certain type of payment arrangement, beside a certain type of delivery model [and] what do you need in terms of a strategic path forward?'" "Just like a business or a business division may need a software candy bar to be able to get a quick rush of energy to solve an immediate need, it cannot necessarily give you the sustenance that you need in the future," Von Sosen says. "It doesn't necessarily put you on a strategic path to grow that solution, but it can put you on a dead end. Eventually you'll hit a brick wall and you'll have certain data silos, duplicate databases, and redundant data entry, and it's critical that we work with our customers very closely to ensure that they take the strategic view of that." Selland sees SAP's "announcement" as a way to share the buzz surrounding hosted competitors like Salesforce.com and RightNow Technologies. The uncertainty, however, lies in when the company actually makes the announcement, he says. "They could buy a company pretty quickly, but that's not usually SAP's style. They tend to want to develop it themselves. There's plenty of hosted CRM companies out there for sale right now, but I don't think they will." Laurie McCabe, vice president of SMB insight and business solutions at AMI-Partners, notes that "some of the people at SAP are dismissive of the Salesforce.com on-demand model," she says. "The confusing part to me is, you can buy hosted SAP today, any kind of SAP whether it's the ERP or the CRM through a bunch of different people as well as SAP hosting. The question is, are they going to do something that would compete with Salesforce.com or Siebel CRM OnDemand, or something completely different?" Related articles: SAP Snatches Up Competitive Talent SAP Unveils Its BI Black Box SAP Goes Vertical