Sap Takes A Modular Approach To Crm
Sydney Morning Herald
Tuesday February 8, 2000
The big makers of business software tread in fear of the minnows, writes David Braue .
THE German business software maker SAP is breaking with its tradition of building all-in-one solutions by taking a modular approach for its new 16-part customer relationship management (CRM) solution.
It debuted in December with the release of six modules and will be completed by the end of the year with the staggered release of the other 10.
The software giant's mainstay enterprise resource planning (ERP) application, R/3, has been widely adopted for standardising, automating and integrating a company's financial and other back-end processes.
Although it provides a wealth of functionality, the software's all-in-one architecture copped customer criticism for being so complex that getting R/3 to work could take years and cost 10 or more times as much as the software itself. Although the ERP market continues to grow steadily, high levels of penetration within their core market - large companies - have forced ERP vendors to fight tooth-and-nail for new contracts.
Many small- and mid-sized companies are choosing alternative ERP applications that are seen as being easier and faster to implement, leaving SAP and its main rivals - Oracle, Baan, JD Edwards and PeopleSoft - looking for new market opportunities as they scramble to continue their heady revenue growth.
Tipped by AMR Research to grow at 49 per cent annually from $US5.4 billion ($8.5 million) this year to $US16.8 billion by 2003, the CRM market offers considerable promise as a means of extending ERP's discipline to customers and business partners. Yet while there has already been some convergence between ERP and CRM vendors, such as PeopleSoft's $US433 million purchase of Vantive in October and the $US275 million Baan paid for Aurum in 1997, intense competition from established CRM vendors like Siebel Systems and Remedy will mean ERP giants are the ones fighting to catch up in this new market. SAP officials are hoping the company's more open, modular approach to CRM (its relationship intelligence layer architecture is designed to integrate with any other ERP platform and can be implemented piece-by-piece) will help win over customers stung by painful R/3 implementations in the past.
Barbara Althoff-Simon, SAP's lead global manager for CRM, is counting on the solution's flexible design and tight integration with back-end business data to compensate for the fact that SAP is a relative newcomer given its CRM rivals' years of experience.
"CRM revenue will be very significant and the technology is moving very quickly," she says. "But we would like to go beyond traditional CRM and include functionality that traditionally resides on the back end but can be pushed to the front end, such as being able to do real-time customer commitments and using the same engine for the modules to ensure that we get consistent results no matter where a customer places an order."
The verdict is still out, however, on whether SAP's build- everything approach will allow it to catch up with better- established CRM vendors.
An SAP rival, Oracle, has also been building its own CRM solution from the ground up, but acquisitions by PeopleSoft and Baan, and a strategic partnership between JD Edwards and Siebel, could give those vendors a much stronger CRM position.
Grant Greentree, the managing director of the CRM consultancy james martin + co, says the complexity of integrating information from dozens of legacy systems into a complete CRM solution could make success harder for SAP and other late entrants.
"This is a game where winner takes most," he says, "and if you're a late entrant to the market you can forget market share because you're playing catch-up. There's a total greenfields for the first mover, and whoever can get in there and pick it up will absolutely make a killing." braue@ozemail.com.au
© 2000 Sydney Morning Herald