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SAP aims at ISVs with on-demand model

SAP is planning on-demand products for customers in 2006, but its first foray could be aimed at independent software vendors.

LAS VEGAS -- SAP plans to launch software in an on-demand model in 2006, but according to executives at a recent SAP analyst summit here, the model would be quite different from that of and other on-demand CRM vendors.

To succeed, on-demand applications need to be developed to function in a distributed Web-based environment through the support of Web services, XML standards and SOA concepts.
Sanjeev Aggarwal,
senior analystYankee Group
"We will come out with a product when we are ready to come out with [one] that actually answers the needs of customers, scales and integrates," said Shai Agassi, a member of SAP's executive board, who serves as president of SAP's product and technology group. "All the base functionality of an enterprise solution needs to be in place. … We have plans that will be clarified when we are ready to clarify them."

SAP executives at first brushed off the idea of an on-demand model for small and midsized businesses (SMBs). But SAP CEO Henning Kagermann told financial analysts earlier this year that the recent success of and NetSuite Inc. caused SAP researchers to focus on an on-demand model for SMBs.

Agassi said the focus will be on simplicity for small businesses, and a resulting product would be different from the on-demand products currently on the market.

"We believe the issue is about simple products with a simple way to ramp up into the product, with the need for it to still be integrated into backbone systems and the ability to actually take it anywhere you want to go to," he said. "It [asks] a much more complicated set of questions than just do I have my data on my data center or some other data center."

SAP could be timing its on-demand release with Microsoft, which is planning on-demand products by making the applications support Web services and service-oriented architectures (SOAs) and adapt to customer-specific processes, said Sanjeev Aggarwal, a senior analyst at Boston-based Yankee Group, in a recent research brief to clients titled, "Appeal for On-Demand Solutions Is Expanding."

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"To succeed, on-demand applications need to be purposefully architected and developed to function in a distributed Web-based environment through the support of Web services, XML standards and SOA concepts," Aggarwal said. "This is a key requirement for collaboration, data sharing, mobile/remote workforce, multi-location enterprises and supplier-partner collaboration."

SAP is also planning a model that could be aimed at small independent software vendors, according to Klaus Kreplin, a member of the SAP extended executive board, who focuses on NetWeaver development. In his briefing to industry analysts, Kreplin said up to 90% of ISVs are small businesses and they don't have the systems to support major development on NetWeaver.

"We want to provide a hosted sandbox development system for ISVs," he said.

Kreplin called the new system the "mySAP Sandbox," and said it would support ISVs by providing the tools necessary via the Web to test modifications in a real-world environment. The development could speed new NetWeaver development from SAP partners and boost the time it takes to bring new products to market, he said.

The sandbox could be used to build composite applications, called xApps, which draw data from several sources to solve a specific business problem.

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