SAP: More on-demand, new prices are coming

SAP executives promise more on-demand, new prices and a wider variety of user interfaces.

More on-demand products, new price schemes and a wider variety of user interfaces are among the many offerings coming to companies running business applications from SAP, senior executives said in interviews at the company's Sapphire customer event this week in Orlando.

Despite SAP's early reluctance to provide its business applications on a subscription-based on-demand model, the company is now catching up fast.

This week the software maker unveiled SAP CRM 2006, which will allow businesses to choose between either an on-demand subscription-based pricing model or an on-premise licence model or even a combination of both.

"It's the first hybrid model of its kind," which will be gradually extended to the vendor's other business applications, including its core ERP (enterprise resource planning) software, said Leo Apotheker, SAP board member and president of customer solutions and operations.

The needs of customers differ depending on their stage of development and the industry sector in which they operate, according to Apotheker. Some companies may use the on-demand model "to use a sliver of a [core] application, such as sales force automation" or "to get people to adopt quickly," he said. But for those who want to use, say CRM (customer relationship management) software as a strategic tool, "they'll want to bring it on-premise to get a full 360 degree view of their customers."

SAP's hybrid model gives customers greater flexibility and greater choice without "locking them into the one or other model," Apotheker said.

In July, SAP will begin rolling out a new pricing scheme that incorporates aspects of the value-based pricing concept Apotheker unveiled at last year's Sapphire in Boston. The new scheme, which has been tested in two industry sectors, will give customers a range of options based on the industry in which they operate and their use of a core application, such as ERP, in that industry sector, according to Apotheker.

"With this per-industry approach, we have tried to detect those value points that make sense for each industry and make pricing very simple and transparent," Apotheker said. "It's not a revolution but an evolution of our pricing."

This week SAP also unveiled its new interface known as Project Muse, developed over the past year through a close partnership with Macromedia and Adobe Systems, which acquired Macromedia in December.

Project Muse will allow users to access mySAP Business Suite applications from their Macintosh, Linux or Windows desktops and from mobile devices. The move is part of SAP's strategy, which includes the Duet product jointly developed with Microsoft, to simplify access to its enterprise applications and attract more users.

"With Duet, Analytics and now Muse, we're building access to SAP that puts us in touch with a community of business users that haven't been using us heavily before," Apotheker said.

How deep that footprint will eventually extend "depends on what people want to do," he said. "We'll be very happy to help 80 million business users have an easier life when they travel" by allowing them to automatically capture data along the way to avoid later having to do an expense report.

Customers still running the vendor's earlier R/3 ERP software should start the migration to its new technology soon because SAP plans to pull the plug on standard maintenance support by 2009 at the latest, Chief Executive Officer (CEO) Henning Kagermann said in an interview.

Currently, SAP has between 4,000 and 5,000 R/3 contracts, according to Kagermann. That number should drop to between 400 and 550 by 2009 at which point SAP will discontinue standard maintenance support completely, he said.

"It's time now," Kagermann said. "Our new ERP technology is significantly better, and the upgrade is pretty simple."

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