SAP to Offer On-Demand CRM

But the competition for on-demand customers is fierce. Smaller niche players like Salesforce.com, NetSuite and RightNow Technologies have all been in the on-demand game for half a decade—and each has seen tremendous growth.

At the same time, ever-growing software powerhouse Oracle is expected to close its acquisition of Siebel Systems Jan. 31, after a 2 p.m. ET shareholder vote, where Siebel owners are likely to approve the deal.

Oracle unveils more of its plans for Siebel. Click here to read more.

Siebel, which started out as an on-premises customer relationship management provider, has a formidable on-demand offering that's been built from the ground up to be hosted, with capabilities for multitenancy. The company also culminated a three-year development project last October that resulted in a composite application development platform, for better Web services integration capabilities.

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Oracle has said it will use Siebel's technology as the basis for its next-generation Fusion CRM platform, and as eWEEK reported earlier in January, it will also maintain the company's on-demand code.

The question is, with so much competition—and mounting success—from established vendors, what could SAP bring to the table that's different?

While SAP is hyping its upcoming on-demand release as "a new model that will fill the void left by today's offerings," few details have emerged. Analysts suggest, however, that SAP's biggest asset is its Enterprise Services Architecture strategy and the work the company has been doing to service-enable its own applications.

"Shai [Agassi, SAP's executive board member in charge of application development] spoke at our conference a couple weeks ago. He spoke of this notion of SAP wanting to take a more pragmatic approach; he hinted they were looking at a hybrid strategy to on-demand CRM," said Rob Vois, an analyst with AMR Research, in Boston. "Hybrid to me is one where you have certain pieces of application functionality delivered as a service, tied into your back-end applications."

Vois also suggested that SAP will tap its partner network for on-demand application functionality, similar to Salesforce.com's approach.

The key to on-demand services is the ability to integrate application components using Web services—an area SAP has been working on for the past three years with its ESA strategy and underlying NetWeaver integration platform. The company's ESA road map is expected to be completed sometime in 2007.

In an August 2005 interview, Darc Dencker-Rasmussen, senior vice president of CRM at SAP, dodged questions about an on-demand CRM offering but hinted at a hybrid approach.

SAP lays out its plans for 2006—and beyond. Click here to read more.

"Our customers are telling us that just automating the sales force is not the answer," said Dencker-Rasmussen. "SAP just decided to take a very sober approach [to on-demand] based on customer feedback. That's exactly the position we are taking now."

Dencker-Rasmussen said that a key element to CRM is that it has more touch points across the enterprise than any other application, so the ability to have a number of integration points is important.

"That's why CRM was in the leading edge of service-oriented architectures [SOA]," said Dencker-Rasmussen. "That open technology base Web services enablement is such a key factor in what customers are telling us. When they call and are dealing with order process, 60 percent of the touch points happen outside the front office."

SAP's notion of ESA, or what SAP is calling its SOA, is "the story that makes an on-demand announcement more powerful, that likely becomes their integration story," said AMR's Vois. "It fundamentally removes the question of how they're going to integrate Web services."

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