The scandal of SAP's idle CRM seats
The dirty secret why SAP had to launch an on-demand CRM offering is that its on-premises product is too hard to implement, reveals SearchSAP.com:
"SAP customers couldn't get mySAP CRM up and running quickly, said Adam J. Klaber who oversees CRM consulting in IBM's Business Consulting Services division ... 'There were a lot of quick pieces but it required a set of infrastructure that you add on to what you have today,' he said."
The result is that as many as two thirds of the CRM licencesAs many as 2,000 customers who’ve bought licences from SAP aren’t live yet SAP has sold are lying idle, according to one estimate. Robert Bois, research director at AMR Research Inc, says, "SAP claims to have 3,000 customers using CRM, but we believe only about a third of those are in full deployment."
Yesterday I posted a note about six distinct characteristics of on-demand applications. One of the most crucial on that list was the 'pay as you go' model, which means that on-demand vendors get paid for live seats. The difficulties customers have had getting started with SAP's on-premises CRM offering underline how significant this is. Based on AMR's estimate, as many as two thousand customers who've bought licences from SAP aren't live yet. An on-demand vendor would have earned no revenue from those customers. Perhaps SAP should start offering refunds?
No wonder customers have been signing up for on-demand alternatives from other vendors. But will SAP's new hosted CRM offering stem the haemorrhage? According to analyst Joshua Greenbaum, quoted in the same article, SAP customers "are lured to hosted CRM because of intuitive interfaces and easy set ups" (that's another characteristic from yesterday's list, by the way). Those attractions are likely to remain just as strong, since SAP's own hosted CRM product is based on its difficult-to-implement on-premises stablemate.
Another obstacle is SAP's spurning of a multitenant architecture for its hosted product. I'm intrigued to see that the SearchSAP article doesn't even bother mentioning the 'isolated tenancy' label that SAP dreamt up for the launch, instead describing it as simply 'single tenant'. The economics of hosting each customer on their own separate server and database mean that any implementation has to have at least a hundred seats to be viable. That's a big commitment from the get-go, one that only the most loyal of SAP customers will be willing to make. It's inevitable that the rest will continue to buy alternatives from other vendors, until SAP learns its lesson and properly embraces the on-demand model.