's Benioff Slams SAP In Memo

In an internal memo leaked late Wednesday, CEO Marc Benioff ripped competitor SAP's plans to launch a software-as-a-service application and called SAP "an innovation-free company." (Courtesy: TechWeb)

February 2, 2006

2 Min Read
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In a memorandum to employees with the subject line "SAP on the defense," chairman and chief executive officer Marc Benioff slammed SAP's plans to launch a software-as-a-service application.

The memo was leaked to the media late Wednesday.

Benioff said he agrees with SAP chief executive officer Henning Kagermann that the German software maker's customers should explore the benefits of on-demand. "When rivals who have long dismissed our model finally embrace on-demand, minds and markets are opened to us," Benioff wrote. "Let's respond the way and make each one of these customers a success."

Benioff invited SAP AG customers to sign up for a free 30-day trial.

The lengthy memo addresses SAP's plans to launch a software-as-a-service (SaaS) customer relationship management (CRM) application on Thursday at media events in California and New York.Referring to SAP, Benioff assures employees that "Europe's most influential technology company is helping us make on-demand the global standard" and they "had better hope that their on-demand offering will win more fans than their on-premise solution has."

Benioff also calls on research from an analyst firm to support his argument. "Gartner noted at a recent conference that only 19 percent of SAP CRM customers actually use it. If less than a fifth of our customers used our service, we'd consider that a failure. At SAP, they call it a business plan. Even SAP's largest customers such as Dupont, DeutschePost, AirProducts, Autodesk, EFI, DeutscheBank, Analog Devices, and so many others use Salesforce for CRM."

Then Benioff takes a punch at SAP's research and development. "Let's state it simply: SAP is an innovation-free company. When reporters describe the great innovators of this industry, it's easy to identify the significant contributions of many of the leaders. For Oracle, it's the database; for Apple, the Mac, iPod, and iTunes; for Microsoft, the PC operating system; for Intel, the microprocessor. But for SAP? I struggle to think of a single innovation that SAP has contributed. Their code is as bulky and inefficient as it is expensive and unloved by its users."

Benioff claims SAP, similar to "Oracle and Microsoft, now risks cannibalizing its existing customer base. Can they actually afford to convert their billions of dollars in maintenance revenue into subscriptions?"

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