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SaaS: SAP Targets on-Demand
SAP is planning an event in New York September 19th to announce code-named A1S, SAP’s answer to SaaS. A1S will allow SAP to begin to offer to middle-size companies business applications delivered on-Demand.
SAP is spending $500 million around the preparation and launch of the A1S initiative. SAP will be competing directly with IBM, Salesforce.com, Microsoft and Oracle. SAP hopes to be able to capture many thousands of customers in just a short period and that medium sized companies will agree that SaaS can be used to lighten their load of staying current with IT complexity and ever-changing trends.
Ovum’s David Mitchell said “SaaS is becoming the strategy of choice for new market entrants”. SAP’s success in morphing into an SaaS participant is likely to be critical in determining the long-term success of the company. SAP has been a powerhouse in the ERP market, but SAP systems have become notorious in their high costs and long implementation cycles with many customers reluctant to keep their implementations current with SAP upgrades because of the high costs.
The SaaS movement can trace its roots to on-Demand CRM applications, and in particular, to the success of Salesforce.com with CRM. CRM continues to be a major force behind growth in SaaS. Gartner reports that the CRM market grew from $6.5 billion in 2006 to $7.4 billion in 2007, and much of that growth is coming on the SaaS side.
