SAPs SaaS Strategy
June 24, 2009 by Raj Sheelvant
SAP unveiled their new strategy for delivering software over the internet, as the German software group struggles to respond to a market that poses a significant long-term threat to its business according to the FT.com article “SAP reshapes strategy for online software”. Also read WSJ article “SAP to make Online Software Push”.
SaaS (Software as a Service) has revolutionized the software delivery model. Businesses typically pay a hefty upfront fee to buy and operate Enterprise Applications themselves. They also for an ongoing product support. But online software (or SaaS delivery model) is accessed over the Internet through a Web browser. It’s run on servers operated by the vendor, which charges a monthly subscription fee for customers to access their software over the internet. This global recession has accelerated the push towards cost cutting by all organizations and SaaS is an excellent way to minimize the software overhead costs.
On demand software delivery (other name for SaaS) has been championed by Salesforce.com and for the long time large Enterprise Application developers like SAP, Oracle and Microsoft have downplayed the impact of this disruptive delivery model. In fact all of them have resisted providing SaaS option to their customers because it challenges existing revenue model. But now that concerns around the security and availability issues are put to rest, customers are asking for online delivery model from the large Enterprise Application Vendors. Slower growth and increased competition is forcing all the large software vendors to look into SaaS Delivery model. Microsoft has Software + Service model. Oracle is developing its own SaaS strategy (Read more about it in WSJ article titled “In Shift, Oracle plans more Online Software”.
All these moves have legitimized the SaaS delivery model. SAP, a behemoth in the Enterprise Application software, finally embracing online delivery model indicates that SaaS delivery model is the new ‘reality’ for software delivery model. Organizations that automate routine and mundane business process will be able to avail the facility of an ‘outsourced’ technology solution.
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