Timely reality check on a strategic imperative for SAP
What makes A1S such a departure for SAP is that rather than running on a firm's own computers, it is delivered as a service via the web. SAP is a latecomer to this “on demand” or “software as a service” approach, but A1S is the first fully fledged ERP suite available in this way. This may signal a shift in the nascent market for on-demand software, away from single functions such as customer-relationship management (CRM), and towards integrated suites. The current market leader is salesforce.com, a CRM provider, with 35,300 customers and expected revenues of $730m this year. By contrast, the figures for NetSuite, a rival firm that provides a suite of services, were only 5,300 and $67m respectively in 2006, and the firm has yet to make a profit. (This has not stopped it from filing to go public.)
A1S is also meant to be more flexible than traditional ERP software, since it has been built in a new way. Rather than being a collection of separate applications, it is a set of dozens of building blocks that can be assembled and rearranged like Lego pieces. This approach also allows companies to adapt business processes to make them more efficient, or when markets change—something that is very hard to do in the old ERP world.