SAP plan to offer hosted applications

by Oliver Long

There is no planned delivery date and no product name and but SAP announced last Wednesday that it was in the process of developing a new hosted suite of business applications aimed at the mid-market. During last weeks SAP press conference to announce the companies financial results, CEO Henning Kagermann announced that the new applications will offer mid-sized enterprises quicker implementations and reduced costs of ownership.

Kagermann recognized that SAP "have to change the business model for this segment of the market” adding that the main “cost driver here is not the software but the services."

The applications are expected to cover both CRM (customer relationship management) and ERP (enterprise resource planning) applications and like most hosted applications they will be managed remotely, including all day to day operations and upgrades; although bigger companies will also be able to host it themselves.

In a new initiative SAP plan to give potential customers the ability to set up and test the software themselves before committing to purchase the software in what has been dubbed the "try, run and adapt" model. The application will be offered on a monthly subscription basis.

"There is no such thing on the market now and SAP is going to write a bit of software history," Kagermann said and the company aims to attract 10,000 new customers to the service each year by the year 2010.

The hosted applications market, which is currently dominated by Salesforce.com Inc. and others, will certainly not be an easy market to crack and SAP will no doubt be attempting to surpass Salesforce.com by offering a more complete business suite. The software, which is being tested at present, has been developed from scratch and will not simply be a hosted version of SAP All-In-One and the company plan on introducing a new business model to support them. SAP plans to use telesales and the Internet to sell the software and it also plans on hosting the application itself in the short term.