SAP is planning to enter the mid-market with a range of new business applications.
Details are sparse but CEO Henning Kagermann has been talking publicly about the plan to offer a complete set of hosted and on-demand applications for mid-market customers who want to get applications up and running quickly with very little customisation.
SAP is hoping to attract an untapped segment of customers with the promise of faster implementation and lower ownership costs. "We have to change the business model for this segment of the market," Kagermann said while announcing the company's financial results. "The main cost driver here is not the software but the services."
The applications will cover "the entire business of a company", Kagermann said, suggesting they will encompass both CRM and ERP applications. They will be able to be managed remotely, including day to day operations and upgrades, he said.
Customers will be able to set up and test the software on their own before deciding to make a purchase, using a "try, run and adapt" model, he said. "We assume customers will set up their own test system and play around with their own data," he said. "We want to eliminate risk altogether."
The software will be offered on a monthly subscription basis, although bigger companies may also be able to host it on their own premises, said Leo Apotheker, an SAP board member and president for customer solutions and operations.
"There is no such thing on the market now and SAP is going to write a bit of software history," Kagermann said. By 2010 the company hopes to attract 10,000 new customers to the service each year, he said.
For now, however, many questions were left unanswered, including a delivery date and even a name for the product. SAP has been slow to enter the hosted applications market. It announced its first on-demand product only last year.