SAP's hosted conundrum
Published: 05 Jul 2005 11:15 BST
Perhaps even more impressive, the company said it added over 40,000 new subscribers during the quarter, which represents more than an 80 percent increase compared with the same period in 2004.
The company currently claims over 265,000 subscribers at more than 15,500 companies in total.
A recent survey of 200 companies in various industries found that some 40 percent of the businesses are already using hosted CRM applications. Additionally, AMR's findings challenged assumptions that SMEs represent the vast majority of hosted-application customers. According to the report, 28 percent of companies with more than 5,000 employees use the tools, while 39 percent of companies with between 1,000 and 5,000 employees have purchased hosted CRM licenses.
Earlier this year, Salesforce also announced a deal to provide its software to 5,000 employees at financial services giant Merrill Lynch, defying perceptions — and SAP's claims — that the hosted specialist's offerings appeal only to smaller companies.
Yet, a recent report published by investment bankers JMP Securities claims that Salesforce has struggled with at least one of its larger accounts, a 10,000-subscriber deal with Cisco. JMP reported that Cisco scaled back its plans to adopt Salesforce's tools based on integration and employee-adoption problems.
In June, another of SAP's closest competitors, Siebel Systems — a rival the company has battled since long before Salesforce and hosted applications came to market — introduced the eighth version of its own hosted offering to be released in the last 18 months.
As Siebel has fought back against analyst and investor criticisms of its short-term prospects, company executives have repeatedly pointed to on-demand CRM as the company's best bet for recruiting new business.
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