Small and medium-sized businesses constitute the bulk of the economy, it's no surprise that enterprise software and hardware vendors have been going crazy trying to figure out ways to market to them.

Take the case of SAP: Just over two years ago, it began efforts to target medium-sized businesses with MySAP CRM, its customer relationship management (define) product, which it offered as a hosted service.

Since then, Salesforce.com (NYSE: CRM) and Oracle (NASDAQ: ORCL) have grown to dominate the market with their products, leaving SAP behind in the dust; Microsoft is emerging as a real threat as well, with its Microsoft Dynamics CRM 4.0 available both hosted on-premises and in software as a service (SaaS) (define) form; and SAP has been forced to push back the rollout of Business ByDesign, its SaaS suite, by 12 to 18 months.

Undaunted, SAP (NYSE: SAP) announced new CRM functionality in its Business All-in-One solution for medium-sized companies at SAPPHIRE Europe, its user conference being held in Berlin this week.

The new CRM functionality in SAP Business All-in-One borrows from the Web-based SAP NetWeaver integration and application platform.

Here's the kicker -- Business All-in-One is a customized, on-premises solution -- meaning the business customer hosts applications on his or her own server, which is quite the opposite of the SaaS approach.

So which approach does SAP think will work? SaaS, or customized and on-premises?

The more successful players in the CRM arena, Salesforce.com and Microsoft (NASDAQ: MSFT), both follow the SaaS approach, but SAP may be taking a different tack because it's looking to upsell customers.

LATEST NEWS

Macs Get Enterprise Management Help
XP's 'Last Day' Less Final Than Gates'
Yahoo Lobbies for Investor Confidence
Merchants Cope With PCI Compliance
Investors Bid Adieu to June Swoon

"I think SAP's appeal with All-in-One is primarily going to be to the company that wants more than CRM," Josh Greenbaum, principal at Enterprise Applications Consultancy, told InternetNews.com.

SAP's strength is a back-office enterprise resource planning (ERP) system, and "most companies, particularly in the SMB space, want good CRM -- they don't necessarily want a tremendous amount of back-office functionality," Greenbaum said.

That's where Microsoft is going to be strong, because Microsoft Dynamics CRM "is very much focused on an Outlook-like experience that is a stand-alone product, although it has integration capabilities with back-office products," he said, adding that the "largest part of market demand" is for a stand-alone CRM product.

The move also seems at odds with recent market trends. A recent survey by Access Market International Partners found that 21 percent of small businesses and 31 percent of medium businesses used SaaS in 2007, twice as many as in 2004. Their drivers were lower cost and ease of use.

Yet SAP sees its All-in-One product line finding a market, targeting users too high-end for Microsoft Dynamics and too low-end for Oracle.

Go to page: 1  2  Next