SAP is following Siebel in providing an enterprise-class hosted customer relationship management service this autumn.
Analysts have said the demand for such a service is now higher than ever, due to faster implementation time, easy customisation and quicker return on investment.
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The move could signal a revival in the application service provider model popular in the 1990s and currently championed by Salesforce.com and RightNow Technologies.
Although details are sketchy, SAP said its service would be targeted at both large enterprises and smaller companies, and have both hosted and on-demand elements. Users will need to outsource their hardware but purchase a software licence from SAP. This is different from on-demand services, where users outsource both the hardware and software and pay for applications based on usage.
Robert Bois, senior research analyst at AMR Research, said, "The software-as-a-service model has changed the whole perception of customer management with faster implementations, quicker time to value, and easy customisation. AMR Research expects strong growth to continue in 2005, particularly as Siebel CRM OnDemand gains momentum."
Siebel had its "software-as-a-service" debut in 2003 with Siebel CRM OnDemand. It claims to have gained over 28,000 subscribers in just over a year.
Microsoft said its hosted services has 3,500 customers. It recorded 32% growth in its customer management applications business in 2004.