Phil Wainewright is the influential commentator and strategist responsible for Loosely Coupled, a specialist website covering enterprise adoption of web services and business process automation. In the next few days, Phil will start sharing his insights on emerging software industry trends in his new ZDNet blog -- Software as services. Here's Phil's take on what you can expect from SAP's on-demand venture...
So SAP has finally decided to launch an on-demand CRM product, due out in the fall. Ho hum.
Darc Dencker-Rasmussen, the company's global vice president of CRM, says "its on-demand applications will address the shortcomings it sees in existing products, namely a general lack of sophistication and the inability to communicate effectively with other systems." Well I don't know what existing products in the market he's talking about, unless he's thinking of previous misguided attempts by now-defunct SAP partners. Or perhaps he's thinking of Siebel's lacklustre efforts to put its hosted applications on a par with the likes of salesforce.com and RightNow Technologies.
Like all the major enterprise software companies, SAP has a jaundiced and ill-informed view of the software-as-services market. Its main experience has been in the tiny application outsourcing segment, as pioneered by the likes of Corio (now part of IBM), BlueStar Solutions (acquired last year by ACS) and USinternetworking. Those companies host SAP software on behalf of clients, which, as I’ll outline in my forthcoming blog, isn't where the real action lies in the on-demand market.
It's only when applications are engineered from the ground up for delivery as an on-demand service that you start to break the mold and offer something really distinctive and beneficial to customers. While it may have been true in the early days that those pureplay on-demand offerings lacked sophistication and didn't integrate, five years later the market has moved on, and SAP is having to launch an on-demand CRM offering because it's falling behind.
But SAP still doesn't get it. Dencker-Rasmussen talks about its on-demand CRM being modeled on its on-premises product, and how customers will be encouraged to use it as an on-ramp to the on-premises alternative — and astonishingly he describes the latter feature as a "unique aspect," which suggests SAP is so out of touch it doesn't even remember the dismal failures that Siebel and Oracle have already had with that approach.
SAP's new offering is going to be nothing more than a defensive play, like the current version of Microsoft CRM — a half-hearted answer to customers who enquire whether the vendor has an on-demand option. All things considered, that's probably the best we can hope for from SAP, but it's not going to set the world alight — and it won't stop the on-demand pureplays from eating further into its customer base.