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CRM OnDemand to be launched

SAP will take a major step into the world of SaaS (software as a service) this week, when it is expected to launch its CRM OnDemand offering.

Initially, the service will target salesforce automation and contact management, with rollouts in other CRM areas later this year and in 2007.

Although refusing to put a date on the announcement during an earnings call last week, SAP CEO Henning Kaggermann confirmed that SaaS was part of the company’s future and that an offering will arrive next month. The weight of Kaggermann’s words was reinforced when he reminded his audience that SAP has more customers in the U.S. than Oracle has worldwide.

The entry of SAP -- the undisputed leader in enterprise applications -- into SaaS makes sense, according to industry analysts. Whereas much of CRM involves commodity-level functionality, SAP’s CRM OnDemand should benefit from deep linkage with SAP’s back-office financials, order entry, and the like. The lack of that coupling has arguably been SaaS’s Achilles heel.

“Tight integration with the enterprise suite is far more significant than the individual functions of the [CRM] service offering,” said Josh Greenbaum, principal at Enterprise Applications Consulting.

Salesforce.com, which is attempting to push its way into large enterprises, is likely to feel the heat from SAP. “This will raise the bar for all of the SaaS providers,” said Greenbaum.”

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