SAP, IBM Pair On 'Hybrid' CRM

As expected, SAP on Thursday unveiled its hosted CRM game plan. Somewhat surprisingly, its partner in the endeavor is IBM.

The new CRM offering is designed to suit hosted and on-premise use. SAP executives touted what they called a new "isolated tenancy" model that will foster both high availability and low risk. Multitenancy architectures used by true-hosted solutions enable the host to provision and maintain multiple customers on shared server infrastructure in a secure way.

However, recent outages at Salesforce.com, the San Francisco-based pioneer of CRM on demand, may have dampened public fervor for "pure play" hosted systems. NetSuite, San Mateo, Calif., and Salesnet, Boston, also offer hosted CRM capabilities. And late last year, Microsoft acknowledged to CRN that it’s working on a multitenancy CRM solution, code-named Titan. Microsoft currently emphasizes on-premise CRM.

SAP, which had planned to unveil hosted CRM last year but then pulled back, is now offering SAP Sales, a solution for managing customers, contacts and pipelines. Marketing and service services will be added later this year, the company said Wednesday at dual events in Palo Alto, Calif., and New York.

The news comes days after SAP heartened solution providers and other partners with a new, channel-friendly "comp-neutral" sales model and opened larger accounts to channel participation. The new hosted CRM, though, will be sold direct.SAP previously hadn’t mentioned IBM as a partner in its hosted CRM effort. IBM and SAP already were longtime allies, and their allegiance seems to have tightened since Oracle bought PeopleSoft/J.D. Edwards last year. For example, IBM fields an SAP-optimized version of DB2. IBM had already partnered with Siebel Systems on hosted CRM, but last week Oracle completed its acquisition of Siebel, leading many industry observers to question the longevity of a Siebel-IBM hosting alliance, which was announced two years ago and met with a lukewarm response.

Anticipating SAP's news, Salesforce.com CEO Marc Benioff took the offensive by sending out an employee letter and providing it to the media as well. In it, he painted SAP as a non-innovator and likened its hosted CRM effort to what he called Siebel's failed attempt at CRM as a service.

"Siebel tried to sell an admittedly inferior on-demand product as an on-ramp to its on-premise system. It appears that on-ramps make road pizza out of your business model,” Benioff said. “That strategy sent an entire company slouching toward Redwood Shores [Calif., Oracle’s headquarters] this week. Will SAP make the same mistake?"

Zach Nelson, CEO of NetSuite, which fields a suite of CRM and ERP services, said SAP needs to do more than CRM. "SAP is making a surprising mistake by thinking software as service is a CRM-only phenomenon,” he said. “The important question is, where is ERP as a service from SAP?"

Yet most observers agree that SAP, with its power in ERP, will be a force to be reckoned with in that application arena.SAP’s new CRM offering is priced as a monthly service, starting at a list price of $75 per user per month. Salesforce.com's high-end product is about $125 per month.