SAP Dips Toe in On-Demand CRM Ocean

SAP's first tentative step into on-demand customer relationship management services has analysts and competitors wondering why it didn't move sooner.

SAP,one of the last major holdouts from the on-demand applications market, on Feb. 2 finally announced an online customer relationship management service called the SAP CRM on-demand solution.

SAP described its on-demand CRM application as a hybrid system that it will provide on an "isolated tenancy" model, which it said combines the high availability and lower security risks of single-tenancy, on-premises applications with the rapid deployment and user efficiencies of a multi-tenant on-demand model.

SAP officials said this model would enable current and new customers to set up a combination of on-premises and on-demand CRM application services depending on their business needs.

This would give customers greater flexibility in their application architecture than if they worked with pure-play on-demand CRM applications, according to company officials.

The company also announced that it would work with IBMs Applications On-Demand Platform to provide hosting services based on the IBM DB2 database and on IBM eServer hardware. IBM will also provide consulting deployment services for SAP CRM.

The first product in its on-demand CRM lineup will be SAP Sales on demand, which is available immediately and will allow users to manage customers, contacts and sales pipelines.

The company plans to introduce additional CRM applications, including marketing and customer service modules, later in 2006.

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Click here to read more about the competitive challenges SAP faces in launching its on-demand CRM service.

SAP is offering the service at a monthly rate that starts at $75 and doesnt require customers to sign long-term contracts.

SAP officials said its business model will also enable customers to transition to an on-premises CRM application if it decides that needs "more robust CRM capabilities."

With the Feb. 2 announcement it is really too early to tell how serious SAP is about offering comprehensive on-demand CRM service, said Denis Pombriant, founder of CRM market research firm Beagle Research Group, in Stoughton, Mass.

After the announcement, Pombriant said he was left wondering how soon the company is going to expand the product. "They need to broaden their offering to make it competitive with what Oracle-Siebel has and what Salesforce.com and NetSuite has," he said.

SAP needs to indicate how it is going to provide integration with back-office technology and how it will provide a technological path forward for partners and corporate IT departments, or how it will enhance the basic offering over time, he said. "They alluded to that, but we needed much more information," Pombriant said.

Six years ago on-demand SAP CRM "would have looked really cool. But there are barriers to entry now and this is not quite up to those barriers," he said.

"Technologically it sounds like a throwback to simple facilities management," he said. The announcement suggests that SAP plans to hand out a blade server configured with SAP CRM to every customer it signs on. "I dont think thats a highly scalable model" for on-demand CRM, he said.

Next Page: Too little, too late?

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...