SAP offers 'free' CRM for ERP buyers

SAP said this week that midsize companies that purchase the Business All-in-One suite or SAP ERP will also receive its CRM (customer relationship management) application.

The offer comes with a catch, however. Customers will get the CRM licenses at no charge, but must pay annual maintenance costs on them, a spokesman said.

In addition, companies must buy at least 15 “application professional” and 15 “application limited professional” licenses for the ERP (enterprise resource planning) applications. The offer is available until Dec. 18.

Business All-in-One is one of three lower-end ERP product lines sold by SAP beyond its flagship ERP application. It also markets Business One, which is for small companies, and is mounting an incremental rollout of Business ByDesign, an on-demand suite with a wide range of functional modules.

SAP's CRM discount offer is no doubt an effort to shore up slumping license sales amid the dismal economy. But it could also be an indication that customers aren't pleased with Business All-in-One's native CRM functionality, which SAP added in May 2008, said 451 Group analyst China Martens.

Overall, though, SAP's announcement was just the latest move this week by a major vendor to court midmarket customers.

Microsoft announced it had purchased a range of industry-centric technologies from partners to help it boost the vertical capabilities of its Dynamics AX ERP suite, and Oracle made a fistful of product and strategy announcements aimed at midmarket customers, including a new portal, midsize.oracle.com.

These concurrent events are no accident, given the vendors' fierce competition for these customers, not only from each other but SaaS (software as a service) pureplays such as NetSuite and Salesforce.com.

Vendors realize “that growth will have to come from the midmarket. It's a greenfield of companies with legacy or no ERP systems. The midmarket is the future,” said Altimeter Group analyst Ray Wang.

While vendors have certainly made some headway into the segment — Oracle's announcement claimed it had grown its midmarket customer base by 7,000 in the past three years — many midsized companies are slow to adopt new software.

An Aberdeen Research study issued in August found that only 28 percent of 313 respondents were on the latest release of their ERP system. Thirty-one percent were one release behind, 13 percent were two behind, and 13 percent were still three versions back or more, according to the study.