SAP Steps Into SaaS

It’s as momentous as when the Union Pacific met the Central Pacific and the final, golden, spike was driven at Promontory Summit, Utah, completing the transcontinental railroad — not that in high tech anyone would notice an event as significant. I can’t even predict for you all the innovations that will be generated from the recent developments, but I will give you my thoughts.

First things first. What am I talking about? SAP (NYSE: SAP) is expected to announce that it will offer on-demand CRM, or as it should be called, SaaS (software as a service).

Why momentous? For one, SAP is not some five-year-old startup with a few workgroup- and department-level enterprise  customers. This is a company with products embedded in the heart of most of the world’s major corporations.

The New Enterprise Suite
"It is the real silver bullet for the whole [CRM] offering, regardless of the individual details of features," says Josh Greenbaum, principal at Enterprise Applications Consulting, pointing out that until now, CRM has always been in a separate silo within the enterprise, detached from the rest of the suite.

Consider the possibilities. SAP’s move makes the customer directly available throughout the enterprise suite. Customers want to know where their orders are, why they are late, how they can be customized. The enterprise wants to know what the customer is thinking, feeling and buying.

Given its size and scope of applications — the entire enterprise suite — when SAP drives its golden spike, tightly linking CRM with finance, logistics, manufacturing and supply chain  for the first time, lightbulbs will start to go off for everyone from IT to the boardroom.

For me, customization of products is the most significant result. If you remember, in the mid-’90s a lot was written about the concept of BTO (build to order). From cars to Nike (NYSE: NKE)  sneakers, customers would be able to design products they wanted rather than having the manufacturers’ products stuffed down their throats. Companies’ sales would increase while inventory levels would be dramatically reduced. It would be the Dell (Nasdaq: DELL)  model for everyone, but with a difference.

Not Competing on Price
Dell is now losing ground to other worldwide manufacturers, competing on price because customers end up with the same "me too" products, anyway. With CRM tied directly to ERP  manufacturers, not in a separate silo, there will be a way to differentiate products in order to compete on parameters other than just price.

What if companies could tie together customer history, customer demand, order processing, and business intelligence with finance, new product development, supply chain and manufacturing? Then tie that to BPM (business process management)? Then the BTO potential would be real.

Some day, if I want to go online and order a Vette with doors that open like a 1954 Mercedes-Benz 300SL Cullwing Coupe, Chevrolet will let me know what it’ll cost and when they can deliver. Today, with BPM and the integration of CRM into the enterprise suite, we will indeed see a BTO world dictated and modified on the fly by customer desire and demand.

Don’t expect immediate miracles. My guess is SAP will offer some sort of sales force automation  and contact management solution at first. During the next few years, it will get much deeper.

By Ephraim Schwartz

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