Altra Industrial Motion has been through two CRM implementations in eight years, so it considered sticking with Oracle’s Siebel despite consolidating on SAP Business Suite. But when SAP told the Braintree, Mass., manufacturer of power transmission equipment about its upcoming Rapid Deployment option, the migration path suddenly became clear. “We saw that it could get us very quickly online with what we wanted to do with SAP CRM,” said David Brooksbank, the company’s director of marketing.
The five Rapid Deployment applications that SAP just unveiled are designed to give Altra and other users of on-premise SAP software some of the pricing and deployment advantages of Software as a Service (SaaS). SAP admitted the packages are a response to long-standing customer complaints that SAP Business Suite is too expensive and time consuming to implement.
“A lot of customers do understand the value of the end-to-end suite,” said Vinay Iyer, vice president of global marketing for SAP CRM. “But the approach to getting there is by no means fast, cheap, etc.”
The initial wave of offerings for sales, marketing, procurement, customer service, and call centers are based on the SAP Business Suite applications for customer relationship management (CRM), supplier relationship management (SRM), and business communications management (BCM). Modules for analytics, manufacturing, mobility, recruiting, supply chain, sustainability, and treasury operations will follow within a year, the company said.
The applications have the same program code as SAP Business Suite, according to Iyer, but employ pre-configured templates and best-practices content to provide essentially a “phase 1” implementation of basic CRM features and back-end integration with ERP customer and price data.
“Because it’s the same underlying product, you can turn on more modules as you go along,” Iyer said.
SAP responds to SaaS threat
The economic downturn has driven companies to look for faster, cheaper solutions to immediate problems, Iyer said, and some SAP customers are delaying on-premise projects so they can consider other vendors’ packaged applications.
Analysts view the announcement as an attempt to keep the business of such frustrated SAP customers who are tempted by the quick deployments and flexible pricing of SaaS. “It’s a very good move on their part because it addresses some key customer concerns that have been in place for quite a few years,” said Bill Band, vice president and principal analyst at Forrester Research in Cambridge, Mass.
Band said the initial focus of the SAP Rapid Deployment efforts appears to be SAP CRM, which became a serious marketplace competitor after a rewrite several years ago but has been held back by deployment concerns, something SaaS vendors like Salesforce.com have been quick to exploit. Band said previous rapid-deployment options from SAP have not caught on with companies that Forrester tracks.
“Anytime there’s a serious cost overrun, it tends to be SAP getting the black eye,” said Peter Russo, managing director at Pierre Audoin Consultants in New York. SAP had to do something to reduce the stigma surrounding SAP Business Suite, and the new solutions appear to bring some of the advantages of SaaS while reducing the risks of on-premise deployment, according to Russo. “There’s a huge amount of SAP CRM shelfware out there,” he said.
SAP tried a similar approach with its Business All-in-One, a “pretty broad, pre-configured SAP Business Suite 7,” Russo said. “Now, they’re trying to take a much, much narrower set of functionality that’s pre-configured. By taking that narrow approach, it makes a smaller project.” The downside? “There’s a little less wiggle room to customize things.”
The new solutions could establish “a benchmark for how companies should look to consume on-premise software,” said Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif. “If you’re considering SaaS but you have some good business reasons for staying on premise, this could be a good solution.”
Although SaaS is easier to implement than on-premise CRM, it still has to integrate to the back-end ERP where customer records are kept, or reconcile incompatible record types, Greenbaum said. With the Rapid Deployment solutions, SAP is minimizing these concerns for its existing customers.
“The choice gets a lot easier when the rest of the portfolio starts to come out,” he said. “Some of the future modules are not available in SaaS from well-known developers, so people will look at the Rapid Deployment version first.”
On-premise yet SaaS-y
SAP and its partners will offer the packages under traditional, hosted, or subscription licensing, guaranteeing implementations of less than 12 weeks and a nine-months-or-less return on investment, Iyer said. In return, customers must commit the necessary personnel and infrastructure. Iyer later clarified that the guarantee isn't contractual. "Our methodology is designed to deliver this on time as communicated, and has already been proven in a number of customer implementations," he said, citing a recent SAP CRM deployment by the German window manufacturer, VEKA.
“The client is kind of agreeing that they’re not going to be able to customize it,” Band said. “Once you have it in, you can expand and go from there.”
Companies can get the CRM Rapid Deployment package for a one-time license that tops out at $1,500 per seat, Iyer said. “The other option is you can rent the product, similar to a SaaS product, at around $70 per user per month,” with volume discounts bringing that price to around $25. “The cost of the investment, we said, should not be greater than a few hundred thousand dollars.”
Customers who have already bought a license for the equivalent SAP Business Suite application get credit toward the Rapid Deployment license. “It’s an investment they won’t have to throw away or write off,” Iyer said, noting that there is a separate charge for services for configuring the application and integrating it with the ERP. “If companies have their own services, they can simply download the content and implement it.”
Altra Industrial Motion hopes the data integration from Rapid Deployment will give it a 360-degree view of its customers. “By going to the SAP CRM platform, we will have one customer master,” Brooksbank said.
Altra plans to deploy a fully licensed Rapid Deployment CRM package at a hosting provider early next month while it continues with an SAP ERP implementation designed to consolidate eight legacy systems. The company received credit for its SAP CRM license, Brooksbank said, which “made it a good financial decision to move forward.”
It became clear that the more limited functionality would suffice when Altra performed a “day in the life” analysis of customer service and realized that Rapid Deployment could handle most of the workflow. Altra also expects to benefit from the knowledge transfer enabled by the training and best practices components. Brooksbank said: “SAP has done a very good job of doing their homework [on] the needs of their users and including all the features that are fundamental in doing business.”