SAP throws its hat into on-demand CRM space

SAP AG has entered the hosted, subscription-based customer relationship management (CRM) on-demand market with the release of SAP CRM On-Demand.

Companies like and NetSuite currently play in the on-demand CRM space, but Peter Weitzman, director of national CRM sales for SAP Canada, said SAP won’t be going head-to-head with those companies.

While the competitors focus on the small and medium-sized business market, Weitzman said SAP is targeting its new offering at the mid-market and its traditional large enterprise customer base. “This is something our customers have been asking for,” said Weitzman.

The offering focuses on sales force automation functionality. Basic customer service and marketing tools will be released later in the year. The hosted, Web-based system is aimed at allowing customers to rapidly roll out CRM functionality to new users and departments.

The service is priced at US$75 per user a month and requires a full-year payment. However, the customer can opt out at any time and get a refund for any unused months. SAP is also guaranteeing 99.5 per cent uptime.

Weitzman said the offering won’t replace a customer’s existing SAP platform but rather enhance it, adding SAP feels the enterprise space has been underserved by the other on-demand vendors. “Our initial focus is going to be on our customer base in the large enterprise, which is where the other products generally don’t play,” said Weitzman.

He added the new offering fits in with the trend of companies looking to standardize all their enterprise applications on one platform. Now SAP shops won’t have to go to another vendor for an on-demand CRM tool.

“It allows organizations to stay within their IT guidelines, which is trying to go more to a single unified application source,” said Weitzman.

Beta site Du Pont Co. in Wilmington, Del., has already deployed the sales force automation service, called Sales On-Demand, in its global operations, said Michael Michlovich, director of marketing and sales for Du Pont IT. Michlovich said Du Pont is using the service to complement the packaged CRM systems already in use at the company.

The Sales On-Demand service offers a common set of business processes to the significant part of Du Pont’s sales force that relies on manual processes, Michlovich said. Over the long term, DuPont hopes to integrate the hosted system with its SAP ERP software and retire some of the legacy CRM applications.

Canada Post uses SAP’s ERP and CRM suites. Aaron Nichols, Canada Post’s general manager of IT in Ottawa, said while the hosted service will likely be reliable, he’s not interested. “For a company of our size, with 10,000-plus full-time users, hosted solutions are not on the radar screen. I tend to view hosted solutions as more applicable to small and medium businesses,” he said.

The hosted service appears to be aimed at SAP’s install base, which should help the firm staunch efforts by competitors to poach its customers, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif.

He noted that SAP is facing strong efforts by vendors of hosted CRM systems, including Oracle Corp., to replace SAP’s CRM software.

“SAP needs to be defensive about that,” said Greenbaum. NetSuite CEO Zach Nelson said SAP is making a mistake by thinking software as a service is a CRM-only phenomenon. There needs to be an integrated suite of on-demand applications to run a company’s core business pro-cesses, said Nelson, adding CRM isn’t the place to start.

“You must start with ERP (as did NetSuite) as the base and branch out from there,” said Nelson, asking where SAP’s ERP as a service suite is. “But I’m fine with SAP not addressing the back office, because they will be leaving the fastest-growing segment of the on-demand market — the ERP market — to NetSuite.”

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