SAP Struggling with SaaS Versions of ERP, CRM

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Just last month I wrote about an ERP implementation so painful that the client company, Waste Management, sued SAP for $100 million.


While suing for damages is not common, failed ERP deployments all too often are. ERP's reputation for inflated costs and complexity has spurred interest in ERP delivered via a software-as-service model, from the likes of NetSuite and Workday. In fact, while Workday has positioned itself as an SMB solution, it has signed up some pretty large customers, including Lifetime Fitness (17,000 employees) and Chiquita (25,000 employees). According to a recent report from AMI Research, 39 percent of larger midsize companies (500-999 employees) plan to purchase SaaS solutions this year.


That demographic looks attractive to lots of tech vendors these days, including SAP, which was hoping to reach out to the SMB end of the market with a new SaaS platform called Business ByDesign. According to an internetnews.com story, SAP was counting on SMB business to help it grow its overall customer base from the current 39,000 to 100,000 by 2010.


The German software giant has to be disappointed in the performance of Business ByDesign. It reportedly expects to sign fewer than 1,000 customers this year and will limit its rollout to six countries. Customers have also been less than receptive to SAP's hybrid concept in which users could switch between on-premise and off-premise versions of its CRM software, as I wrote back in December. Maybe the problem is, as Forrester Research speculated, that traditional software companies like SAP are hindered by their slow development cycles and their efforts to link their on-demand offerings to their flagship products.