SAP AG yesterday launched a hosted customer relationship management service, finally following its traditional rivals and upstarts like salesforce.com Inc into the software-as-service space.
Blandly titled The SAP CRM On-Demand Solution, it is aimed at any sales organization with over 100 account representatives. That equates to large enterprises and the upper end of midsize business.
The service, which will be hosted by IBM Corp on banks of virtualized pSeries and xSeries servers, will initially focus on the obvious starting point: contact management. Other functions in the initial release will cover activity management, opportunity and pipeline management, calendar and task management, as well as sales analytics.
Like its highly vocal rival salesforce.com, SAP will issue new releases quarterly. Next on the roadmap is marketing, which will cover promotion and campaign management; followed by service, which will encompass setting up dedicated call centers and web-based self service.
Not surprisingly, SAP used yesterday’s announcement to trt to show why its approach is different and better than salesforce.com and Oracle.
We’re going after different market with a different twist, said Rolf Von Sosen, vice president of solution marketing for SAP CRM. We’re not looking to deliver the next $29.99 per-month offering for a handful of sales reps. We’re going after a much broader enterprise.
Noting service interruptions that have recently plagued salesforce.com, SAP said its on-demand offering would follow a different hosting model. With Oracle’s need to integrate its array of acquisitions, SAP claimed that it will be far better positioned to respond to customer demand. And SAP claims that it can get customers up and running in a day.
The new service will follow what SAP calls an isolated tenancy model, which is supposed to be a blend of the single-tenant model employed by first generation ASPs like Corio, and the multi-tenant model utilized by salesforce.com.
Specifically, that means that there will be the same kind of master software model used in multi-tenancy hosting, but separate customer databases that are more along the line of the single-tenant model.
SAP claimed that this model provides the economies of scale of the multi-tenant model, minus the peak-period slowdowns and service interruptions, plus the security of the single-tenant model.
Not surprisingly, given that SAP has the largest conventional back-office system installed base, the company is also promoting the integration of on-demand services with on-premises CRM installations.
Specifically, there are provisions for two-way data replication, to keep the hosted system with the same version of the truth as the customer’s existing on-premises installation. Eventually, when SAP gets around to issuing the next update of its on-premises CRM application, the business object models will also be harmonized.
Because SAP CRM On-Demand is being built on the same foundation as the company’s on-premises mySAP CRM family of products, Von Sosen sees no real danger of account conflicts.
Our On-Demand solution not a separate line of business and we won’t have salesforces competing for the same CRM customer, Von Sosen said. We’re encouraging our customers to forge a long-term relationship with us in CRM. This might start with the on-demand solution or it might start with mySAP [CRM].
SAP claims that it is on a roll with CRM, with revenues for the product line having increased 20% last year, and nearly double that rate in the Americas. Of new CRM sales, 30% have come from customers new to SAP. According to Darc Dencker-Rasmussen, senior vice president of CRM solution management at SAP, the company anticipates a similar proportion of new customers with the on demand offering.
SAP trotted out a couple customers who will be early adopters of the on demand CRM solution.
It was an easy decision for us, said Tim Gallagher, vice president of customer care at American Standard, which as been an SAP enterprise customers since 1999. On the wholesale side of our business, our representatives did not have the tools to get information from our back end systems.
According to Marc Lautenbach, IBM’s general manager for the Americas, a survey of IBM customers indicated that 85% are talking about CRM implementations in the near term. IBM will resell the SAP on demand service, making the obvious hint that it has 5,600 consultants ready if customers want to integrate their new SAP on demand CRM offerings with other systems.
The service will be priced at several tiers, depending on the amount of functionality. There will be no requirement for a minimum subscription period — it can be terminated or transitioned to the conventional on-premises version at any time.
For basic contact management the entry price is $75 per user per month; for the complete bundle, the price goes to $125.
SAP is clearly taking aim at San Francisco-based on-demand CRM pioneer salesforce.com, whose CEO Marc Benioff slammed the German software giant in an internal memo entitled SAP on the defense this week.
According to that memo, which was intended for salesforce.com employees but leaked to the media yesterday, Benioff welcomed SAP’s move to the on-demand model, which he said the company had long dismissed.
[SAP] is helping us make on-demand the global standard, Benioff wrote. But he also took a vicious swipe at SAP’s track record in CRM.
[They] had better hope their on-demand offering will win more fans than their on-premise solution has, Benioff said, and pointed to recent Gartner research that shows only 19% of SAP CRM customers actually use the system. If less than a fifth of our customers used our service we’d consider that a failure.
Benioff also invited SAP customers to sign up for a free 30-day trial of salesforce.com’s service and make their own judgments.
With SAP now a player in the on-demand CRM space, it remains to be seen what plans Oracle Corp has for Siebel Systems Inc’s own On-Demand CRM offering going forward. Siebel shareholders OK’d the merger with Oracle earlier this week.
With the colorful characters involved, the on-demand model certainly has all the necessary ingredients to once again liven up the currently dull CRM market. Expect to see more sparks to fly between these three main antagonists this year.