SAP's Line in the CRM Sand: SaaS vs. 'Closed Loop'

Ann All

In an effort to drum up more interest in its CRM software, introduced in 2006, SAP is revamping it with a new interface modeled on Google's iGoogle portal application, which lets users populate a homepage with widgets and other goodies relevant to them. According to Computer Business Review, new functionalities include the ability to drag-and-drop items across the desktop and make screen changes on-the-fly.


It seems likely these changes came from SAP's Imagineering unit, which IT Business Edge blogger Loraine Lawson wrote about in August. She referred to it as "a Web 2.0 startup that happens to have SAP as an incubator," with a task of finding ways to incorporate Web 2.0 technologies into SAP's flagship software.


SAP's recent product changes -- and the creation of the Imagineering unit -- appear to be tacit admissions that its software -- and CRM software in general -- is difficult to use.


"Organizations tended to suffer in silence," according to Computer Business Review, until the introduction of user-friendly alternatives from on-demand companies like Their success forced the hands of traditional vendors like SAP and Microsoft, which are now trying to introduce on-demand versions of their software without eating away too much at their license-based revenue streams.


In SAP's case, it created a "hybrid" concept, in which users could switch between on-premise and on-demand versions of its CRM software. Problem is, reports eWEEK, "the initial hybrid model did not see the pick up in sales SAP had wanted." A SAP executive attributes the lack of interest to SAP customers' expectations of "a closed loop from lead to execution," which is difficult to produce in an on-demand environment.


The ability to pull information from ERP and other systems to use in CRM is obviously important to some customers, such as a VP at Siemens who says in the eWEEK article: "If you don't have ERP integration, you have sales force automation."


SAP apparently feels it must offer an on-demand option. However, as Computer Business Review notes, despite the shared code base and user interface, SAP appears to be trying to establish a more obvious functionality gap between on-premise and on-demand versions of its CRM software.


Perhaps most notably, it will offer industry-specific functionality for verticals such as financial services, telco, utilities and public-sector life sciences and pharmaceuticals -- but only in the on-premise version. Interestingly, began introducing industry-specific applications back in February.


It's worth noting that Microsoft is experiencing struggles of its own with its introduction of on-demand software such as its Dynamics CRM. A big part of the problem may be that customers appear to view on-demand and on-premise software as distinctly "either/or" options. But according to a recent Forrester Research report, vendors like Microsoft and SAP are also hampered by slow development cycles and by linking their on-demand offerings to their established infrastructures.


All of the widgets in the world can't change that.

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