I'll be at the SAP Palo Alto offices for the introduction of its hosted CRM solution. Phil Wainewright speculates on SAP's challenges as a hosted service provider. As expected, Marc Benioff is in front of the parade with a note to salesforce.com employees and the rest of the world, claiming that he has never met a salesperson who uses SAP CRM, that many of SAP's customers use salesforce.com, that the company risks cannabalizing its customer base, and that SAP is an "innovation-free company." At the Merrill Lynch IT Software and Services conference in Las Vegas today, Benioff said, "As usual SAP is the last to respond, the last to do almost everything, and its hand has been forced by us." The rhetoric won't do much to protect salesforce.com from a frontal assault by some large entities. With Oracle closing its Siebel acquistion and SAP moving slowly but surely, and lots of revenue at stake as hosted applications shift into a higher gear, Benioff and the other upstarts will have their hands full.