At its Sapphire ’04 international customer conference in New Orleans today, SAP rolled out several new packaged offerings for CRM, ERP and vertical industry applications. The software is designed to help mid-market companies address specific business processes, accelerate implementation and achieve return on investment (ROI).
Specifically, the new packaged offerings include software and services targeted toward mid-market companies in the automotive, chemicals, consumer products, high-tech, industrial machinery and components, and professional-services industries. These offerings are available both through the company and through its partners in key markets internationally.
The Sapphire news barrage also included an announcement that SAP has broadened and strengthened its relationship with another software giant, Microsoft, expanding the level of joint staffing, collaboration, sales and marketing between the two companies. The companies say their agreement will lead to deeper integration between the Microsoft .NET and SAP NetWeaver platforms.
Building on mySAP
SAP’s president for global solutions marketing, John Grozier, told CRM Buyer that focusing on selected business processes addressing specific needs is one way for a mid-size company to begin a customer-centric approach.
SAP’s new packaged applications, collectively called SAP Best Practices, are based on solutions from the mySAP Business Suite. The mid-market offerings include 16 packages that address key customer-centric processes, including marketing and campaign management, lead management, Internet sales, activity and opportunity management and service order management, among others.
Overall, the CRM Best Practice Solution builds on the latest version of mySAP Customer Relationship Management (mySAP CRM).
Grozier said most people are not aware that half of SAP’s 22,000 customers worldwide fall into the mid-market.
“It’s an increasingly important market for us,” he said. “This packaged approach is the result of hundreds of middle-market implementations, feedback from our partners and customers. It’s aimed at the middle-sized company that wants to get to a valuable, customer-centric solution quickly.”
A recent university survey of 192 SAP customers found that SAP Best Practices on average reduce overall project implementation time by 22 percent compared with other implementations.
“If a mid-market company can leverage the functionality to its advantage, it is certainly a good thing,” Technology Business Research software analyst Steve Trotta said in an interview with CRM Buyer. “However, it all comes down to management’s ability to execute and generate value from a software application.”
Off-the-Shelf or Not?
One issue to keep in mind is that, in the mid-market, success demands business agility — keeping pace with rapidly changing customer and industry demands while quickly seizing new opportunities to achieve sustainable growth. Although SAP Consulting provides its Service Select program, which allows customers to realize value quickly from mySAP CRM, it is not clear if this service is part of the offering announced today.
Beagle Research founder Denis Pombriant told CRM Buyer that he is skeptical of SAP’s approach because no mid-market vendor offers anything predefined that users buy and use off the shelf. Instead, customization is key. He noted that the business processes companies should focus on are not concentrated in a single domain, such as SAP’s proposed marketing and campaign management areas, for example. Real business processes, such as “lead to order” or “order to cash,” cross domains.
How About Hosted Apps?
For his part, Trotta noted that with its latest software release, SAP is simply following Siebel, which he called the CRM market innovator. He said Siebel did its homework and discovered that mid-market customers do not need the full breadth of enterprise CRM applications. Instead, they require depth in certain functions, such as help desk management or complaint management.
Additionally, Trotta said: “SAP will be challenged by hosted application providers, including Siebel, that make more sense as far as total cost of ownership is concerned. On average, hosted applications are running at $70 to $120 per user-month, with minimal up-front costs. This is certainly a net present value analysis many finance departments will be looking at for the next few years.”
Paul Greenberg, president of The 56 Group, agreed that SAP is entering a tougher market than usual because mid-market processes are not as well establishedas at large enterprises, nor are best practices as easily available as they are at Fortune 3500 companies. “SAP may be on bit of a slippery path here, but if anyone can figure it out, they can,” he said in an interview with CRM Buyer.
Pombriant questioned whether there is enough money in microverticals for any vendor to do them well. He also admitted that he is not a fan of fixed-price solutions or microverticals because they tend to mean business practices have been virtually standardized by a vendor.
“Best practices or not, the key issue is not whether a vendor can announce best practices but how easily the customer can make these best practices their own,” Pombriant said. “Rather than asking the ROI question, we need to spend more time on the question, ‘Does this fit my needs?'”