SAP Readies On-Demand CRM Offering

According to sources close to the company, SAP in the next four to five weeks plans to introduce a subscription-based CRM application that will be delivered over the Internet.

SAP originally expected to unveil the application at its Sapphire '05 customer conference in Boston earlier this month, they said.

The move will pit the enterprise software giant against, Siebel Systems and Sage Software as each company attempts to convince customers of all sizes to use its respective on-demand CRM offering. It also could have ramifications for how the channel delivers software as a service, given that Salesforce, as an example, remains firmly committed to a direct-sales model even as SAP ramps up its indirect efforts.

"The question about on-demand CRM came up [on] the analysts' call for our [first quarter], and we referred them to Boston and said we would say something around on demand then," SAP CEO Henning Kagermann told CRN before the event.

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SAP, Walldorf, Germany, declined to comment on the upcoming CRM product, pricing or the reason for postponing the announcement.

But most observers say SAP is eyeing San Francisco-based Salesforce's traction among enterprise customers. The latter revealed just last week that Merrill Lynch has signed on for 5,000 seats of its hosted software.

SAP's latest CRM offering is expected to span its entire customer base from enterprises to small businesses, observers said. SAP has two major advantages in the enterprise space: It can tout the tight interaction of front- and back-end business processes, and it shares many customers with its well-publicized rival, Salesforce.

"A lot of SAP customers are Salesforce customers," said Rebecca Wettemann, vice president of Nucleus Research. "It would make sense for SAP to have a competitive platform to Salesforce. The question is how SAP executes because there's a lot more to on-demand than just workflow. There are also things like analytics and built-in sales coaching."

SAP midmarket partners said they would welcome such a product.

"In the past, many [smaller companies] would buy Salesforce and keep CRM separate from SAP—knowing the sacrifices of not connecting to the back office," said Philippe De Smedt, vice president of Ki Solutions, Irvine, Calif. "SAP already has CRM sales methodologies, and it already has created processes that bridge between CRM and ERP."

For its part, Salesforce questions whether SAP can make the necessary business model adjustments to successfully offer software as a service. "They have a licensing model where they expect companies to pay upfront. You can't take that revenue stream and collapse it overnight into recurring revenue," said Phill Robinson, senior vice president of marketing at Salesforce.

Also last week, Salesforce said it signed Accenture as a reselling partner that will work with Salesforce's direct-sales organization.

Separately, it quietly revealed that Pat Sueltz, president of marketing, technology and systems, has left. Also, Bobby Napiltonia, formerly of BEA Systems, has been brought it as senior vice president, worldwide channels and alliances.