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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 is more partner friendly today than in the history of the company," said AMR Research Inc. analyst Rob Bois. "They don't want to become a data center, unlike Salesforce.com which just invested millions to build customer data centers."

Bois said customization and integration are two features people commonly believe SaaS can't provide. Technologies, such as composite applications and Web services, two development models SAP is very familiar with, are changing that. And given the toolsets vendors like Salesforce.com are delivering it's becoming less of an issue.

Salesforce.com developed a hybrid model where business components are delivered as a service from a third party through API and Web services. AMR Research believes the business model will evolve even further where composite applications will also apply to specific to a company's business unit.

Application providers now publish on the Salesforce.com platform through AppExchange.com. Salesforce.com, which has 18,700 customers, has had more than 1,800 application installations through AppsExchange since it launched in early January.

Kurt Cavano, TradeCard Inc. chief executive officer and a Salesforce.com customer, said the vendor is waking up the market to SaaS. How do you turn a company like SAP, which has a traditional software model, into one dependent on an SaaS financial model, where you sell the software, implement it and get paid over time vs. sell it and get paid, he said.

One firm designing applications for AppsExchange is wireless applications provider Sendia Corp., a Salesforce.com partner that launched WorkSpace CRM earlier this month. Sendia provides an on-demand mobile platform for wirelessly enabling any application built on Salesforce.com's AppExchange platform. "We integrate through Salesforces.com's Web services API," said Lara Fay, Sendia's vice president of product management. "SAP has started a program to develop applications [for CRM] and we are in dialog with them, but haven't started development yet."

AMR Research Inc. estimates the CRM applications market at $4 billion in 2004. Hosted applications accounted for approximately $403 million.