SAP Gets On-Demand Religion
At last, Europe's biggest software maker is making a tentative — too tentative? — push into the on-demand CRM market occupied by rivals — Marc Benioff, the boisterous boss of Salesforce.com (CRM), has been heralding the end of software as we know it ever since …
Context & Ripple Effects
Europe's biggest software maker has spent years watching Marc Benioff campaign for "the end of software as we know it" while Salesforce.com built a hosted CRM franchise on his home turf. With this report, SAP finally answers — confirmed as a push into the on-demand CRM market Salesforce occupies, though Business Week frames it as tentative and openly asks whether it is too much so.
First-order effects
- Salesforce.com now faces direct competition in hosted CRM from an incumbent with far deeper balance-sheet resources and an installed enterprise base to cross-sell into.
- SAP has to sell a subscription product inside a business model whose economics rest on upfront licenses and maintenance — a conflict the report itself flags via the "too tentative" framing.
Second-order effects
- A credible on-demand entrant gives enterprise CRM buyers negotiating leverage against Salesforce.com just as Benioff's rhetoric shifts from challenger talk to defending an occupied market.
- The move pressures SAP's own license-and-maintenance franchise: every on-demand seat sold cannibalizes the packaged model, forcing internal clarity on which revenue stream it is protecting.
Third-order effects
- If the pattern holds — incumbents following the challenger rather than leading — enterprise application delivery drifts structurally toward subscriptions, with the vendor who commits earliest setting the price and switching-cost terms for everyone else.
The trend: Enterprise software is migrating from perpetual licenses toward on-demand subscriptions, with incumbent vendors like SAP entering only once a challenger such as Salesforce.com has proven the model.