SAP CRM could have big year ahead

These are heady days for SAP AG and the CRM front is no exception.

As SAP gears up for its Sapphire user conference, May 17-19 in Boston, local research firm AMR Research released a report that predicted Walldorf, Germany-based SAP will overtake the combined Oracle-PeopleSoft in market share for ERP. The report also notes a huge first quarter for CRM, saying it will be a market to watch throughout the year.

Meanwhile, San Mateo, Calif.-based Siebel Systems Inc. has run into a tough stretch,  replacing its CEO and posting disappointing earnings. Last year, AMR predicted SAP would  overtake Siebel as the leader in revenue for CRM. Siebel executives understandably question SAP's CRM revenue, noting their company's 3.2 million CRM users to SAP's 160,000.

For more information Catch up on SAP's partnership with Microsoft from its European conference   Read about SAP's attempts to steal customers from Oracle

Additionally, Oracle finds itself trying to integrate its PeopleSoft technology into an Oracle product,  while customers are confused about what PeopleSoft applications are still for sale.

"Whether they've done it or their competitors have done it for them, they have positioned themselves as a stable force in the industry," said Chris Selland, principal analyst at Boston-based Covington Associates. "Certainly within the existing SAP customer base, they've been building out their functionality. Once you get out of the base, which is very big, some of their advantages become less apparent."

While SAP has plenty of customers using its ERP system without the CRM side, there are far fewer who are just running CRM, Selland noted.

In terms of functionality, SAP has made up some ground but still lags behind Siebel and while SAP is prepared to make some CRM announcements at this year's conference, the question remains just how important is functionality these days.

"A lot of customers are asking for less functionality," Selland said. "At this point, Siebel's still ahead, but SAP has enough. Customers are not going to throw away SAP because they don't have enough functionality."

SAP has taken aim squarely at Oracle instead. Executives have traded barbs in the financial press, and SAP has announced a major U.S. push to take on Oracle on its home turf after falling short in the acquisition battle for retail software maker Retek.

While the price would not be cheap and it seems unlikely, Siebel would be an attractive takeover target for SAP given its current situation, Selland said. It would bring SAP the functionality it needs, as well as a large CRM customer base, solidifying its leadership.