Thursday, May 18, 2006

SAP CRM Moving to Hybrid Model (AMR)

Following last week’s release of the second wave of CRM on-demand that added more sales and marketing functionality to the product, SAP unveiled CRM 2006s at SAPPHIRE. The new release is billed as a “hybrid” on-demand/on-premises CRM suite. It’s the first step in the company’s strategy to move the entire mySAP CRM product to an on-demand mode.

What’s new in 2006s

Here’s a quick rundown of enhancements SAP has added to its CRM product:

  • Web service enabled (the “s” in 2006s) to help move data in and out.
  • Rolling the on-demand user interface across the entire on-premises CRM suite.
  • A user interface (UI) configuration tool based on the on-demand configuration tool designed to let non-IT people configure the look, feel, and layout of the screens.
  • More business-to-consumer (B2C) functionality (loyalty management and point management for travel, airlines, and hospitality), as well as campaign management, higher volume call center, and personalized e-commerce.
  • Pipeline performance management, which SAP’s president of the product and technology group, Shai Agassi, demonstrated during his keynote. This includes a visual tool to manage the pipeline, conduct simulation, and perform other analysis activities.
  • Improved marketing funds and configurable case management that can be more easily tailored (not just an industry version).
  • Trade promotions management (TPM) and claims management for consumer products companies.


As announced with the original on-demand launch, SAP will continue to use the “isolated tenancy” architecture in which each customer will have their own individual instance of the CRM application. However, SAP and IBM (the hosting partner) will continue to roll out quarterly upgrades though a template so that all instances are always kept on the latest version.

However, not all functionality for 2006s will be available on-demand. Areas in which tight back-office integration is required will likely remain only in the on-premises version. However, SAP remains committed to rolling out enhanced features each quarter for on-demand, and it will gain a larger portion of the on-premises footprint over time.

Keeping it in the family

SAP’s moves to on-demand were much anticipated as companies increasingly seek on-demand options for their customer management needs. In manufacturing, for instance, many companies have highly fragmented or custom-built customer management applications.

For these businesses, a jump right into a million dollar on-premises CRM project doesn’t sound particularly appealing, thus software as a service (SaaS) has become a popular option. If SAP was to maintain these customers for CRM, it needed to offer something comparable to The popularity of’s SaaS model is evidenced in its latest earnings, posted the same time SAP was unveiling its CRM on-demand enhancements. For its first quarter, posted $104.7M in revenue, a whopping 63% leap from the same period last year, with paying subscribers growing from 45,000 the previous year to 444,000.

The move to a common interface should help SAP hold on to customers that might otherwise flee to options like The first on-demand launch’s promise was that the application shared the same data model as the on-premises application. This let customers move from one to the other with minimal data transformation.

However, the two applications still had different UIs. Moving sales people from one UI to another can be a difficult process, and is one reason many companies have stayed on their temporary, on-demand CRM applications much longer. SAP CRM 2006s removes this objection, a much bigger advantage than simply having the same data model. While other competitors might have a broader functional footprint (at least for another year or two), none can say they have the same UI as CRM 2006s.

© Copyright 2006 by AMR Research, Inc.

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