SAP Influencer Summit 09: SAP Moving toward Hybrid-SaaS Model, Away From Their Image As An On-Premise ERP Vendor

SAP is holding their Influencer Summit in Boston this week, and it goes without saying that as a major ERP vendor, attendees are paying very close attention to what they have to say about on-demand solutions. Not surprisingly, SAP has taken to offering non-ERP products this year, in a conscious movement away from their reputation as an on-premise ERP vendor.

This newfound focus on helping companies acquire a network of on-demand tools is a good start at diluting their on-premise standing, and several SAP executives noted in their keynote speeches that their move to the cloud is going to be a structural overhaul. One of SAP’s board members, Jim Hagemann Snabe, spoke of the eventual demise of the three-letter acronym—SAP doesn’t want to deal in ERP, CRM, and the like anymore, and wants to move away from the isolation implied by these divers platforms. This is part of the reason SAP’s latest offering, Business Suite 7, has a non-acronymic name, and the intention is to lower the total cost of ownership and provide enhancements without necessitating a costly upgrade. Snabe also acknowledged that the short-term goal would be a platform through which users can interact with back-end, ERP data, and also be able to work collaboratively via social networking platforms.

Another reason SAP cannot continue as it once did is that large enterprises are finding they can no longer afford the costly upgrades required by on-premise solutions. John Schwarz, another SAP board member, stated that SAP will continue offering on-premise products, but that SAP’s newest enterprise software innovations will be web-based additions to help customers adopt a SaaS-hybrid model. As noted on this site before, the SaaS hybrid model is gaining lots of ground with companies wanting to get more use out of on-premise investments.

Below is a video of ERP pundit Brian Sommer (filmed by Asuret CEO Michael Krigsman), and in it he suggests that on-premise ERP will soon be extinct. The hubbub surrounding the SaaS hybrid model certainly supports this theory, as entirely web-based ERP solutions would be the next logical step. Sommer argues that on-premise ERP systems being slow to change was fine when improvements weren’t occurring at light speed. Now ERP platforms have to keep up with the speed of innovation, and hybrid models support this; yet SaaS hybrid models aren’t for everyone. Sommer predicts that many more large enterprises will move their ERP to the cloud, but entirely cloud-based systems aren’t right for everyone, and the hybrid model provides a nice limbo for companies wanting the security comforts of on-premise solutions. Signs point to on-premise going extinct, but this wipe out may take longer than people expect.