SAP: A Late Convert to the Hosted CRM Religion

Published: 20 Apr 2006

By Ian Jacobs, Strategic Analyst, Frost & Sullivan

When SAP announced this February that it was entering the world of hosted CRM applications, many SAP customers heaved a sigh of relief. After a decade atop the enterprise applications stack, SAP made recent strides in the CRM market, but its lack of a hosted offering was becoming more conspicuous by the day. Industry observers have been predicting for several years that SAP was planning to jump into the on-demand CRM fray, but SAP had steadfastly maintained that its focus was its bread-and-butter on-premise implementations. Every week that SAP was not in the hosted market, however, meant another week that Salesforce.com and Siebel battled it out for the hearts and minds of on-demand CRM suite customers and niche players such as RightNow Technologies and Salesnet gained ground. So, SAP’s decision to finally offer its own hosted CRM service was cause for celebration among customers and other SAP boosters, such as systems integration and technology partners.

But while SAP did have some interesting tricks up its sleeve as part of the introduction of the hosted service—most notably the "isolated-tenancy" model that combines the high availability and the single-tenancy approach with the deployment speed of a multi-tenancy architecture—the announcement left many observers wondering whether SAP had rushed the release of this service to meet some artificial self-imposed deadline. The service, for example, debuted with only basic salesforce automation functionality; SAP promised future releases would add marketing and customer service and support modules to the service. Even within the existing salesforce functions, there are notable holes in the line-up, most-notably quotation management. This hole in technology aimed at larger customers is even more notable because SAP has made it clear that, unlike its rivals in the hosted world, it is not interested in small deployments. SAP has created a 100 user minimum for its hosted service, placing its low end firmly in the higher reaches of the mid-market.

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