SAP's hosted conundrum
Published: 05 Jul 2005 11:15 BST
What's SAP's next move?
The business software maker has been particularly guarded about its plans for a new, on-demand version of its CRM software.
So far, despite several strong hints and a wealth of industry speculation, SAP hasn't committed to a plan. Regardless, Salesforce.com — which pioneered hosted CRM — and other competitors are keeping a close eye on SAP and its intentions.
If SAP does jump into the on-demand CRM market, it will instantly change the balance of power in the industry. Salesforce has grown rapidly in recent years — it reported just more than $176m (£99.9m) in revenue for fiscal 2005 — and it has become nearly synonymous with on-demand business applications.
But it has done so in the absence of a rival product from SAP, the overwhelming giant of the business software market with more than $1.7bn in sales.
Few observers expect SAP to sit by idly as others continue to win on-demand CRM deals.
"SAP has put a bull's-eye on Siebel, Salesforce.com and other CRM leaders as it wants to make sure it has every deployment model that customers want to buy or rent," said AMR Research analyst Bruce Richardson.
SAP's official comment is that it continues to evaluate market opportunities but has no plans to introduce new hosted CRM applications anytime soon. At the company's Sapphire customer conference in Boston in May, Bill McDermott, the chief executive of SAP America, attempted to downplay the need for SAP to launch a new product.
"Hosted is really only relevant in the small-business space, and Salesforce isn't delivering the same sort of integrated products we already offer," McDermott said. "The question for Salesforce is, when these newer CRM users they have attracted need more capabilities, will they move to SAP?"
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