SAP: On Demand, the Preferable Approach to Rapid Innovation

At the start of SAP's annual (except for last year!) analyst event in Boston, it is clear that SAP is looking to play catch-up on the SaaS market, while also leveraging their previous investments.

The big news thus far?

For the SME (small and medium-sized) business layer, the SAP Business ByDesign ERP SaaS solution has successfully launched version 2.0 across 100 customers, and the offering is now scheduled to go GA, or as SAP stated today "will be volume ready" in early 2010! More on this in coming posts...

For the large enterprise, which SAP continues to segment differently within their SaaS strategy, SAP will increasingly offer new, "narrow" solutions on-demand for "rapid innovation." While in my mind, this seems to compete with the "enhancement pack" strategy that continues to be used to promote the on-premise Business Suite 7, the SaaS solutions include the current:

• SAP CRM On Demand (does it really still exist???)
• SAP e-Sourcing (via Frictionless acquisition)
  
• SAP HCM On Demand (through a partner: NorthgateArinso)
• SAP BusinessObjects On Demand (a pre-existing offering that was gained through the BusinessObjects acquisition, with a particularly large presence in the Salesforce.com customer base)

And now, some new solutions that are currently in development, but soon to come:

• SAP SCM On Demand
• SAP Travel & Expense Management On Demand

It is clear that through SaaS, SAP is trying to leverage its large investment into Netweaver and Business Suite 7 as a differentiator... how? According to SAP, they started over 6 years ago by developing a SOA layer with Netweaver, and now deliver a comprehensive business suite with best practices, integrated processes, delivered on-premise. The change in strategy, related to SaaS, is that they will now focus on building out the on-demand delivery layer for "rapid innovations," extending all systems (SAP/non-SAP) through Netweaver, to offer a consistent data layer, integration and process orchestration.

Will pre-integration make SAP a more attractive SaaS supplier?

Again, SAP's original foray into CRM On Demand a couple of years ago was pretty disappointing, and actually, I haven't met a customer using this solution in a couple of years... nor has SAP shown in much at events. So much will need to be done to the actual SaaS solutions, their flexibility and ease of use, their functional coverage, before calling this a winning game plan.

Additionally, for the large enterprise, it seems now that BS7 adoption is a requirement for customers to truly take advantage of the SAP SaaS solutions. How many customers have adopted ECC 6.0 or Business Suite 7? According to SAP today 18,720 customers have made the move. While this represents +50% growth year-over-year; according to my calculation, this represents roughly 1/3 of SAP's ERP customers... so there's lots of work left to be done to convince the majority of customers to move forward!

I will be attending SAP's large enterprise SaaS deep-dive later today, so be sure to check back for more on the event!