Has SAP converted to SaaS?

It seems Nick Carr was premature in outing SAP CEO Henning Kagermann as a true SaaS believer. But the word about the new A1S product suggests SAP has looked closely at the business models of successful midmarket SaaS vendors and learnt some important lessons.

The consensus appears to be that Nick Carr was premature in outing SAP CEO Henning Kagermann as a true SaaS believer. As Dan Farber reported on Monday, our colleagues in the Enterprise Irregulars group picked over the evidence and found it far from convincing. Not least the fact that Kagermann studiously avoided ever uttering the terms 'SaaS' or 'on-demand', as David Terrar points out.

Nevertheless, the information that's beginning to emerge about the new A1S product is intriguing. SAP clearly seems to have looked closely at the business models of successful midmarket SaaS vendors and learnt some important lessons. The go-to-market model, for example, sounds like textbook SaaS, according to this description from Computer Business Review's reporting:

"The sales channel and deployment model are being designed for volume sales. Telephone sales has been identified as a key channel and initially the product will be offered as an online service. [O]n premise deployment options will be available later on."

Of course it's difficult to know from this description whether this means SAP has taken to heart the full on-demand sales model of self-service online sign-up with a free trial period, supplemented by telesales. SAP may feel that's too much of an 'Americanism' that won't go down so well with target markets in Europe, but it would be wrong to make that assumption.

I was particularly impressed, though, by the implication that A1S will launch first as a SaaS offering and that the notion of also offering an on-premise alternative, while still in the roadmap, seems to have been put on the back burner, where if SAP has any sense it will leave it to shrivel up and die.

Another feature that impressed me was the use of a variety of online, contextual help tools to get users started. This from InfoWorld's coverage:

"'A huge effort' went into designing a simple, intuitive, and uniform user interface, said SAP board member Peter Zencke, who heads the A1S product development team.

"A 'help' icon appears on every screen. When clicked, users are shown a list of options, including 'frequently asked questions' or a video link if they want to see how to perform a task. For technical problems, users can click another icon and send an e-mail to the SAP service team, which will be able to provide support.

"The application conducts a dialog with users, asking them what type of business tasks they need to perform and how they would like to manage them, offering examples in simple language. Some businesses will be able to set up A1S on their own, others my need some initial coaching, according to Kagermann."

This bodes well for the ease of uptake of the product, which is an essential attribute for any successful on-demand offering. But there were some warning notes in the coverage, too. In a quote at the end of the InfoWorld story, Kagermann seems to imply that A1S will be limited in its feature set so that it won't trespass into territory held by SAP's current midmarket offering, All-In-One:

"Let me make a comparison to the car industry," Kagermann said. "You can buy a basic car that transports you from point A to point B. But if you want to have other special features, you pay for them. That's the difference between All-in-One and A1S."

I think if you take all these pointers together the conclusion you come to is that A1S will actually have a lot of 'wow' features. People like me will have to take it seriously as a SaaS competitor. But chances are that it will still be held back by being sold and supported by exactly the same infrastructure that sells and supports SAP's licensed products — in much the same way that Microsoft's hosted Dynamics products are held back (in addition, in Microsoft's case, to being designed by the same product managers — at least SAP seems to have avoided falling into that trap). You see, Kagermann is only a SaaS convert to the extent that he has seen a segment of the midmarket turning to SaaS and is therefore prepared to bow to market demand. But in all other respects he's a conventional licensed software guy through and through. Whether a SaaS product like A1S can thrive in that environment will be an interesting test for A1S and for SAP.