SAP Takes Hybrid Approach to CRM Delivery

Published: March 1, 2006

by Alex Woodie

SAP this month introduced the industry's first hybrid delivery method for CRM software. The software giant, which has lagging behind the CRM software-as-a-service (SaaS) leader Salesforce.com, is now giving users the option of buying access to a version of SAP's CRM software hosted on iSeries and pSeries servers running in IBM data centers. As the customer's needs grow beyond the capabilities of the SaaS delivery method, SAP gives customers the option of upgrading to an enterprise-strength, in-house CRM solution.

There is no doubt that SAP, the world's largest business software developer, is late to the on-demand CRM party that Salesforce.com has ridden so well over the last few years. But rather than copying that company's successful on-demand CRM strategy, SAP is delivering a hybrid approach that gives users more flexibility to grow their CRM implementation. The fact that SAP is giving customers the capability to have their CRM solutions hosted on a stand-alone iSeries or pSeries server managed by Big Blue also gives SAP advantages over Salesforce.com, which runs CRM software for multiple customers on a single server, which increases the risk of outages.

SAP's strategy incorporates two different flavors of CRM product. Organizations looking for a quick SaaS CRM implementation to satisfy tactical needs can be up and running with the Web-based SAP CRM software. As their needs grow, the SAP CRM implementation hosted by IBM can be upgraded to SAP's enterprise-strength CRM solution, which is called mySAP CRM.

The first component of the SAP CRM suite available for delivery via the SaaS mode is SAP Sales, a sales force automation (SFA) application designed to help organizations improve customer relationships, shorten sales cycle times, boost revenue and profit, and promote customer loyalty. Specific SAP Sales functionality includes management of customer and contact information, task and calendar coordination via integration with Notes and Outlook, sales planning and forecasting capabilities, and analytic tools for monitoring revenue shortfalls and other changes in real-time. Integration with existing ERP and supply chain management applications is another plus in SAP's on-demand CRM book, as is the fact that software is available in multiple languages and currencies.

SAP is selling subscriptions to SAP Sales for $75 per user per month, and because SAP isn't requiring customers to sign long-term contracts, customers are relatively free to cancel the service. The SaaS delivery of SAP Sales will be followed by additional on-demand CRM offerings later this year, including solutions for marketing and service products, the company says.

As organizations outgrow they SaaS delivery model, require more robust CRM functionality, or otherwise decide to bring the application in-house, they can upgrade from the hosted SAP CRM offering and run the mySAP CRM applications in-house.

The secret sauce that allows SAP to accomplish this little magic trick is its NetWeaver middleware, which provides a common architecture and data model for the two applications. SAP says NetWeaver "enables a seamless growth path" and minimizes down-time, the potential for data loss, and the duplication of work. The two CRM applications also share a common user interface, making the transition easier for users.

It is unclear if NetWeaver can hide the fundamental differences that exist between the different platforms, including Windows, OS/400, Linux, and Unix. If customers are free to choose whichever platform they want when moving from an outsourced SAP CRM implementation (on OS/400, AIX, or Linux-based IBM eServers) to an in-house version of mySAP CRM, history suggests many of them would choose Microsoft's Windows Server, which is by far the most popular platform for SAP applications. However, representatives from neither SAP nor IBM were able to provide an answer to this question by this newsletter's deadline.

The on-demand strategy is already popular with some users, including American Standard, a manufacturer of bathroom fixtures and faucets. "What made our decision to go with the SAP Sales on-demand solution easier to make is that we share the vision that SFA will eventually be connected to a more robust CRM business process, that will include marketing and service and more, as our company's needs grow and mature," says Kenneth Damato, senior vice president of sales at the Piscataway, New Jersey, company, which employs about 8,000 people.

While SAP claims to have more than 3,400 CRM customers, there is still room for growth: the new on-demand offering is targeted at customers with 100 or more users.