SAP's A1S pricing is the key

Summary:As Salesforce rebrands Apex and consolidates a bunch of other stuff to Force.com, SAP is gearing up for its A1S global launch here in New York tomorrow.

As Salesforce rebrands Apex and consolidates a bunch of other stuff to Force.com, SAP is gearing up for its A1S global launch here in New York tomorrow. A1S is SAPs much anticipated saas offering for ERP applications. There are a number of key questions. At present, price is exercising the minds of my Irregular colleagues.

In setting Force.com licensing cost at $25 per month, Salesforce.com is throwing down a gauntlet to other enterprise players. As Phil Wainewright says:

By making the platform available at such a low monthly price it can reach a mass market across every seat in an enterprise and achieve penetration that wouldn’t have been possible at earlier price points. Japan Post, the company’s first significant platform deal with 45,000 seats, shows the kind of potential that opens up.

In reviewing SAPs SMB play, Mike Krigsman discusses the evolution of SAPs efforts to drive down the cost of complexity:

Despite efforts to become small-friendly, SAP has been unable to shake its reputation for being big, rigid and difficult to deploy.

By implication, Mike's observations add up to one thing: Big Ticket. Whatever SAP decides, it will have to address some difficult issues. The A1S tale to date is one of simplicity and configuration rather than complexity and customization. Vinnie Mirchandani sets up events here well when he posits:

I suspect my EI colleagues may get a glimpse on how A1S will better control TCO around core SAP modules. But there is so much more that makes up SAP TCO. And even around A1S, not really sure what SAP is ready to discuss.

But there's a much bigger set of questions. With Salesforce having drawn CODA into the development ring, for financial applications, how long will it be before SFdC is able to position a broad range of both general and vertical market offerings at competitive prices? What impact might this have on market economics in the 'M' part of the SMB market? What impact will this have on SAPs other lines of business and the TCO that larger enterprises have to bear?

Over the course of the next 36 hours we may get some answers.

Topics: SAP

About

Dennis Howlett has been providing comment and analysis on enterprise software since 1991 in a variety of European trade and professional journals including CFO Magazine, The Economist and Information Week. Today, apart from being a full time blogger on innovation for professional services organisations, he is a founding member of Enterpri... Full Bio

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