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SAP OnDemand: More Unanswered Questions

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I recently wrote about the launch of SAP CRM, wherein I wrote that it appears to be a defensive move by an enterprise software vendor, SAP. While earlier predictions of an end of traditional software are wide off the mark, there is a certain appeal in certain quarters that some businesses will hand off the task of managing their own servers and software applications to companies like this that deliver software on demand over the Internet.

SAP’s street pricing is said to be $75 per month (salesforece.com starts at 65$/month). SAP calls the new application a “hybrid.” SearchSAP finds that SAP is targeting its new on-demand CRM product to its upper mid-market and large enterprises rather than aiming at the most visible competition, Oracle-Siebel and Salesforce.com. SAP is acknowledging that it is partially trying to address lagging adoption rates for its products and also trying to build a barrier against Oracle’s Siebel acquisition.

When you get started with a CRM implementation there are different requirements and those requirements weren’t capably met by its enterprise offering, SAP claims. For many SAP customers, CRM adoption was scheduled in the second and third phases of an ERP project and by that time, customers were either worn out or not willing to undergo system disruptions to fully implement mySAP CRM. Clearly CRM is seen as one of the strongest business strategies around, but the problem is that the big bang didn’t work. AMR research believes that only one-third of the SAP CRM licenses are being put to use. Even existing SAP customers needed new infrastructure to run SAP –CRM. With on-demand offerings, clients can put something up quick and then decide over time when to integrate it together.

SAP’s tenancy model (don’t miss this excellent review by Phil Wainewright), which hosts each customer at an IBM data center on a unique server and database, is viable for only the largest customers. It is different from SalesForce.com and Oracle-Siebel on demand CRM software, which is based on a multi-tenancy model. Salesforce and Siebel are aiming at small and the lower end of the midmarket by grouping customers on a shared server and database. I repeat : SAP/Oracle’s foray into ondemand is not fired by Ray Lane’s innovate-dominate paradigm or as recognition of changing framework but purely as a defensive mechanism. It’s the same as hedging bets vs survival & growth mantra.
Edited: [GH]

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