SAP disclosed new features for its still-nascent Financials OnDemand application this week amid speculation over why adoption has been so slow and what the future holds for the software. "I don't think anyone knows about it," said Paul Hamerman, analyst with the Cambridge, Mass.-based Forrester Research Inc. "There's been very limited adoption."
SAP Financials OnDemand debuted last November and marks the company's first foray into the financials-in-the-cloud market, joining competitors like Workday. The application was spun out from the financials component of SAP's flagship on-demand Business ByDesign ERP software.
Additions announced this week include tighter integration with such applications as SAP Travel OnDemand and SuccessFactors Employee Central, a human capital management (HCM) portal that allows companies to share one set of master data between the applications. SAP now owns SuccessFactors, which makes cloud HR software.
SAP also announced that this latest reiteration of Financials OnDemand now runs on HANA, SAP's in-memory database. Company officials also said they will now sync up the code bases of Financials OnDemand and Business ByDesign financials, which means the latter component will soon run on HANA as well, according to SAP.
Who is SAP Financials OnDemand really for?
Despite being on the market for a few months, there are no customers running SAP Financials OnDemand in a live environment, according to the company. Its first customer, Aasonn, a reseller of SAP on-demand and SuccessFactors software, is in the final stages of testing before going live, according to Paul Palinski, chief financial officer of the Naperville, Ill.-based company.
Aasonn was running QuickBooks for financial operations and had begun deploying Business ByDesign before learning about SAP Financials OnDemand. It decided to switch for the chance to deploy on-demand financials that didn't entail modules it wouldn't use. "When we got word about Financials OnDemand," Palinski said, "we decided to abandon the ByDesign implementation." Financials OnDemand is well suited to Aasonn's type of business, which is project-oriented and focuses on billable hours, he said.
Despite being the first customer to deploy the software, Aasonn -- a QuickBooks user still technically not running an ERP system -- is not exactly the type of company SAP is targeting. Financials OnDemand is intended for medium-sized and large enterprises because those companies likely have ERP applications in place and might need to shore up their financial operations, according to SAP.
"The robust capabilities of [Financials OnDemand] allows them to operate it as a standalone solution for their businesses," SAP said in a statement. "This is not to say that SAP is not going to have smaller customers looking at [Financials OnDemand] as an option; they just expect to see more interest from larger companies in the solution."
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SAP also announced an increase in the number of countries the software supports, adding France, China and Mexico to bring the total to 11. The localized versions can handle local accounting, taxation and electronic payment standards.
Corporations with subsidiaries -- especially ones in other countries -- that might have a two-tier ERP environment are the types of companies SAP should be targeting with SAP Financials OnDemand, according to Cindy Jutras, an independent analyst and head of Mint Jutras, a consulting firm based in Windham, N.H. In that situation, a company runs SAP ERP at the corporate level, but subsidiaries run non-SAP ERP software.
If a company is happy with its existing setup for subsidiary-level manufacturing and operations, but is looking for higher-level financial integration, it makes sense to deploy Financials OnDemand within those subsidiaries, according to Jutras. "If the underlying manufacturing is working really well, the big piece can be doing Financials OnDemand," she said.
An expanding market
Despite the slow start, Forrester's Hamerman said he expects SAP Financials OnDemand to pick up steam in the coming months. For its part, SAP claims other customers are in the sales pipeline. The number of on-demand applications for CRM and HCM has grown in recent months and years as demand has taken off. A similar trend is happening with cloud-based financial applications, he said.
"The market opportunity is there. Financials in the cloud is something that's starting to heat up," Hamerman said. "There's room in the market for more supply, and more competition."
Adoption of Financials OnDemand will grow as SAP introduces additional countries, something that will be critical for large multinationals, Hamerman said. The software is a work in progress that potentially could grow faster than its sister product, Business ByDesign, he said. "2013 will be a key year to get it established in the market."