SAP’s SaaS Strategy Becoming More Clear — or Is It?

I  find the talk from big enterprise software companies regarding their software-as-a-service offerings often confusing, sometimes contradictory and occasionally downright frustrating. I understand their dilemma, of course. They need SaaS to avoid losing business to companies like Salesforce.com and other SaaS specialists. It might help them gain entry into market segments, like SMBs, that weren’t well addressed by their existing products. But (and as Pee Wee Herman would say, it’s a big but) they do not want to cannibalize revenue from their flagship software.

I felt I had experienced a few rare moments of clarity when I spoke to some SAP executives regarding some of the company’s SaaS products during last year’s Sapphire show. (I didn’t attend the show, but SAP kindly set me up with these folks on the phone.)

When I interviewed Nicholas Cumins, Solution Management, On-Demand Solutions for Lines-of-Business at SAP (current LinkedIn bio says he is SVP, Product Management, On-Demand), he told me On-Demand’s true differentiator was SAP’s plan to offer "true synergy between multiple solutions." In other words, On-Demand could ultimately function like a suite when used with other on-demand software from SAP. An example he offered: Companies might want to pull data from a talent-management application so they can get sales people with the right skills working on different deals.

He also pointed out SAP’s ability to create products that should function well in the hybrid software environments that will likely become common at many, if not most, companies. There will be "no loss in translation if you decide to use one application running on a device, another running on-demand and another on-premise," he told me. He mentioned a Sapphire demonstration that involved SAP’s Sourcing On-Demand interacting with ERP software from its flagship Business Suite and an application running on a BlackBerry.

I got a similar story when I chatted with Jeff Stiles, SAP’s global marketing lead for ByDesign, who predicted integrated suites would be "the next wave in on-demand." Stiles told me a software development kit (SDK) would be a "first step" in SAP’s planned strategy of "leverag[ing] the capabilities we have around BI (business intelligence), around collaboration and StreamWork, in creating structured transaction processes in cloud-based applications and delivering them to partners and customers as a coherent platform they can build on top of and deploy."

Josh Greenbaum, who attended a recent demonstration of SAP Sales On-Demand and wrote about it on his Enterprise Matters blog, came away with a conclusion that seemingly echoed some of mine. He said:

The secret sauce for Sales OD comes in the form of an even tighter connection to SAP’s Business ByDesign than had been previously intimated. ByD has become not only the platform for Sales OD and SAP’s other present and future on-demand applications, but the functionality in ByD – all the non-CRM, ERP stuff that ByD is designed to do – will be made available via a forthcoming software development environment that is similar to the SDK SAP released last year. That makes it possible to extend Sales OD to include direct process and data integration with the rest of the ByD stack’s individual on-demand processes, making it the kind of deeply integrated CRM/ERP application that Salesforce has to partner to deliver. This on-demand integration will be in addition to direct integration to the on-premise SAP Business Suite.

Though SAP will initially sell Sales On-Demand as a standalone product, Greenbaum said the enhanced functionality, including a development kit, will be included in a future iteration of the product, probably next year.

Writing for Enterprise Irregulars, Jon Reed commented less on Sales On-Demand’s integration to other SAP products and more on the social design approach that he predicts SAP will use for future applications. Though SAP (and other software giants) are sometimes derided for their late entry into social software, Reed opined it turned out to be an advantage. He wrote:

SAP clearly needs to pick up the pace with its LOB on-demand releases. However, the late start could pay off in this respect: the socialization of the enterprise is now in a “test case” phase, giving SAP a chance to bake proven collaboration techniques into the design and tie Facebook/Twitter like activity feeds into re-envisioned “enterprise roles.” In the case of Sales OnDemand, this meant designing an application around the constant pressures and interruptions of today’s salesperson, all the while rethinking the meaning of sales from a “solo hunter” to a team concept that is increasingly impacted by collaborative software.

SAP isn’t the only traditional software company trying to make sales a more collaborative activity. Oracle recently added the Accept360 product innovation management application to its CRM On Demand and CRM On Demand for partner relationship management.

In the few weeks since Greenbaum and Reed wrote about their impressions of Sales On-Demand, John Wookey, the Oracle veteran SAP hired to lead its on-demand strategy, announced he is leaving the company. Writing on ZDNet, Dennis Howlett worries this may signal a possible lack of commitment from SAP. Perhaps some answers will be forthcoming at the upcoming Sapphire event scheduled for next week.