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1/31/2006
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SAP Preps Software Services Announcement

If the company does announce what observers are expecting this week, SAP will go head–to-head with Salesforce.com, a leader in the CRM software-as-a-service market.

SAP AG appears poised to announce a software-as-a-service (SaaS) customer relationship management (CRM) application on Thursday at media events in California and New York.

Company officials declined to discuss the business model ahead of scheduled events. If SAP reports it will launch the service as expected, the German enterprise software giant will go head–to-head with Salesforce.com, a leader in the SaaS market.

George Hu, Salesforce.com senior vice president of applications, said the CRM company welcomes the news because it validates the market. "We've been saying all along that applications will move to on-demand, starting with CRM," Hu said. "This is defensive move by SAP. They've seen our momentum. We're penetrating some of their customers."

SAP's model will likely look similar to most SaaS applications today, "a simpler user interface sticking to the basics, quick to rollout, pay-as-you-go pricing," said Liz Herbert, analyst at Forrester Research Inc. "If I needed a solution this month, SAP's in a tight spot if they don't have an on-demand option that would take up to a few week to roll out, compared with an on-premise application that could take months, sometimes years."

An SaaS CRM product allows SAP to serve small-and-medium size businesses, as easily as larger enterprises. It would give companies that don't need a huge complex CRM system to jump in easily.

Bill McDermott, chief executive officer at SAP Americas Inc., in an interview late last year said the ultimate SaaS platform is a "business process CRM" application that is easy to use, quick to deploy, competitively priced and, if required, available as a stepping stone to SAP myCRM. "Customers are not comfortable with their precious data in the hands of a small company that has a multi-tenant data center," he said. "They lack the functionality and specific features."

A clue as to the partnerships that might be formed to watch over customer data might reside in McDermott's comment that "customers are not comfortable with their precious data in the hands of a small company that has a multi-tenant data center." McDermott said customers should have options, laying several that might include SAP, customers, or a third-party, such as IBM Corp. or Hewlett-Packard & Co., hosting the data.

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