SAP's ace in the hole
So why would an SAP-hosted product matter? Salesforce has attributed much of its success with customers to people's disenchantment with the complexity and high cost of applications made by companies such as SAP, Siebel and Oracle.
The flip side is that Salesforce's critics claim the company's tools can't offer the same breadth and power of applications such as SAP's, potentially giving the larger company a chance to compete for the hosted market with some version of its more sophisticated software.
For Don Devost, director of finance and operations for worldwide sales at chipmaker Analog Devices, the answer for now is to use both Salesforce and SAP software. Analog is using the hosted company's applications to help manage its direct sales force, while its e-commerce operations use SAP's CRM tools.
The company also uses SAP's flagship ERP software to manage a number of back-end operations, such as financial and manufacturing systems.
Devost said that despite the fact that he is happy with the way Salesforce's hosted tools have integrated with SAP's systems, he would have to take a hard look at any new product from SAP.
"For us to consider [an SAP replacement for Salesforce], the question would become, what type of integration are we trying to do?" said Devost. "If we were trying to look at order lead times on SAP and see where inventory is in Salesforce, the real-time and in-depth integration that would require might make us consider a change."
But Devost said there would be other questions to consider before making any switch. "With SAP it seems like even the smallest (systems) change turns into a six-month project, and in the areas we're using Salesforce, for fast-moving sales efforts, that wouldn't cut it," Devost said. "Salesforce was designed from ground-up as hosted, throughout its architecture, and that shows in its functionality. SAP would have to deliver something like that for us to move, and they haven't approached us with any product like that thus far."
Other industry watchers said SAP is taking the same measured approach it's applied to other markets over the years as its business has grown.
"SAP won't ignore the potential of a hosted offering, but I believe they're looking very carefully at how large of a foray they need to make into that space," said Mary Wardley, analyst with market researcher IDC. "It's very consistent of them to stay quiet, move slowly and devise an intelligent plan."
Executives at Salesforce said any larger move by SAP into the hosted market will only serve to validate what their company has been doing all along.
"We've all heard the rumours, but for someone like SAP to push further into [hosted CRM] is a very powerful thing that can only help us grow our business," said Phill Robinson, senior vice-president of global marketing at Salesforce. "But if you look at the challenges [that SAP faces] we don't think we have anything to worry about."
