SAP Goes Vertical

Looking to boost business processes for the telecommunication, public sector, and financial services industries, SAP unveiled its plans to release the latest version of its mySAP CRM 2005 at its SAPPHIRE '05 customer conference. The upgraded version focuses on enhancements in business capabilities like service management, marketing resource management, and mobile sales for handhelds.

For the public services sector SAP incorporated new case-management processes to improve the collection of individual case information to make it easier for case managers to determine entitlements, compliance, and service deployment. In the financial services sector the company added new enhancements to enable real-time collaboration across departments and credit bureaus. For telecommunication companies SAP focused on helping companies model, launch, and sell products to its customer base by unifying service functionality through one interface.

"'Industry-specific functionality' is SAP's catch phrase," says Ian Jacobs, analyst for Current Analysis. "They're extending the functionality in the verticals they've already tackled to the verticals they haven't focused on as much."

Competitors say that despite these vertical improvements SAP still does not dominate any vertical markets. "Every year SAP releases the next version of its CRM product that's supposedly going to cut into Siebel's market share. But nine to ten years after their first product introduction the reality is that SAP has at best 160,000 seats of its CRM in use, while Siebel has more than 3.2 million live users," says David Schmaier, executive vice president at Siebel Systems.

SAP also announced enhancements for mySAP's marketing, sales, and service functionality. A new resource management and an email response management system has been added to improve marketing. Mobile sales functionality includes new capabilities for field sales representatives to update information from mySAP CRM to wireless, handheld devices, including a new feature to enable field representatives to conduct surveys while they're with the customers.

"You're taking sales force automation and turning it into field service," Jacobs says. "That's a nice addition, because the best time to get feedback about your products from customers is when they're right in front of you."

Jacobs maintains the most important improvements in functionality are in the customer interaction and service components. Besides improvements in service contract, entitlement management, and complaints and returns processing, SAP also improved management flexibility. One new feature allows managers to run simulations to test the impact of changing business rules on email responses. This is a move that Jacobs feels positions the company against competitors. "A company like KANA is going to say they've done this all along," he says. "But this makes SAP significantly more competitive with a company like KANA. I think you can expect to see more management tools from SAP around this. It gives their customers a lot of flexibility."

Jacobs thinks one of the biggest pieces of news is what SAP hasn't announced: a failure to counter Salesforce.com's hosted model. "SAP executives are always very quick to point out that the midmarket is the growth engine of SAP at the moment," he says. "That's a market that would take very well from a hosted CRM model built from the ground up. I was expecting something this year in regards to that. That's a battle that SAP is going to have to fight sooner or later."

The 451 Group's enterprise software analyst Martin Schneider agrees that hosted applications and the SMB space are critical if SAP is to compete. "This isn't great news for Siebel. They're not sure what road they're going down with their product lines. As for Salesforce.com, it will be interesting to see how the hosted market, particularly among SMBs, will develop over the next year," he says. "As more people become comfortable with hosted applications, this will become an issue for SAP."

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