Products, P-14-1013
E. Thompson
Core Topics
Customer Relationship Management:
Creating Business Value for CRM; Sales
Leadership Strategies
Key Issue
Which vendors will emerge as leaders for
providing technology-enabled selling
applications?
Note 1
The Full Scope of mySAP.com
In brief, this comprises the following
technology enablers in addition to the
mySAP Technology architecture:
1. mySAP Workplace enterprise portal, from
SAP Portals
2. mySAP Marketplace public/private
exchanges, from SAPMarkets and
Commerce One
3. mySAP Mobile Business, for supporting
handheld devices plus the following
seven integrated application solutions:
• mySAP CRM
• mySAP Supply Chain Management
• mySAP Product Lifecycle Management
• mySAP E-Procurement
• mySAP Business Intelligence
• mySAP Financials
• mySAP Human Resources
Research Note
17 August 2001
SAP mySAP CRM 3.0: The Giant Awakes
CRM 3.0 can be run independently of R/3 and fills many
functionality gaps, but improvements will be needed to
expand beyond the SAP installed base.
In assessing customer relationship management (CRM)
applications, Gartner uses six primary evaluation criteria:
architecture, vision, viability, functionality, services partners and
deployment (including costs).
Vision and Architecture
SAP architecture and vision for CRM are closely linked. Until
now, mySAP CRM required R/3 to function fully. With mySAP
CRM 3.0, functionality can be bought and run independently of
R/3. This is true of the other mySAP.com products (see Note 1).
Although the products are separate, they still run within the same
overall integrated architecture and provide for integrated
processes across the products. The separation could
theoretically boost sales to enterprises not using R/3. However,
in striving to maintain tight integration, SAP will provide
compelling arguments for existing customers but may struggle to
keep pace with the most innovative CRM software vendors. In
practice, more than 95 percent of mySAP CRM customers will be
R/3 users through year-end 2004 (0.7 probability).
The key for a buyer will be the trade-off between the benefits of
integration against the desire for best-of-breed (e.g., Siebel
Systems, BroadVision, Exchange Applications, Selectica or
Kana) functionality. The benefits of integration depend on the
buyer’s vertical sector. For example, the much-vaunted
“availability to promise” capability has little relevance to financial
services but has high resonance in many manufacturing sectors.
Most existing SAP users want “good enough” CRM functionality
that works and integrates off-the-shelf with R/3. We define “good
enough” as if SAP can deliver 75 percent of the best-of-breed
vendors’ CRM functionality, it will appeal to about two-thirds of
the installed base of SAP users. However, SAP will still need to
prove the benefits of integration (reduced implementation costs,
Gartner
Entire contents © 2001 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is
forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the
accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information
contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended
results. The opinions expressed herein are subject to change without notice.

Note 2
The SAP R/3 Installed Base: Siebel
Systems vs. SAP
In July 2001, 15,000 organizations were
running 30,000 SAP software installations.
Siebel has more than 3,000 customers, of
which we estimate more than 1,000 are
also SAP customers. As SAP has signed
more than 1,000 contracts for mySAP CRM,
the two vendors have about the same
percentage of the installed base —
somewhere between 6 percent and 7
percent. To meet the target of 400 million
euros ($348 million) for 2001, using
average deal sizes of $280,000, SAP will
have to sell to approximately 1,000
companies — a further 7 percent of the
installed base in the second half of 2001.
Note 3
mySAP CRM Platform Support
Web Servers: Microsoft Internet Information
Server, Netscape iPlanet Enterprise Server,
Apache
Application Servers: Windows NT 4.0,
Windows 2000, Linux, OS/400, OS/390
(limited), AIX, Tru64, HP-UX, Solaris,
Reliant Unix
Database Servers: Oracle, SQL, Universal
Database, DB2/400, DB2/390, Informix,
SAP DB. Same hardware platforms as
application servers, but full OS/390 support
Mobile Databases: Mobile Sales and Mobile
Service are both running on Microsoft SQL
Server 7.0 SP1; MS SQL Server 2000 and
Microsoft Data Engine.
Clients Supported: SAP GUI for Windows
on Windows 95, Windows 98, Windows ME,
Windows 2000 and NT 4.0; SAP GUI for
Java on Apple Mac, OS/2, various Unix
versions, Linux; SAP GUI for HTML;
mySAP Workplace Portal, Enterprise
Information Portal, Enterprise Collaboration
Portal, Enterprise Unification Portal. These
all run the above three client types.
Development Language: C++ with
conditional compiling, ABAP Objects, some
Java. Users can develop own code in ABAP
Objects and Java.
Copyright 2001
reduced time to implement and additional process-related
functionality) for R/3 users with industry-specific requirements.
Viability
SAP’s overall financial viability is extremely strong but the key is
the viability of the CRM functional area within SAP. This can be
judged using three variables: customer numbers, R&D
commitment and revenue.
SAP had 883 CRM customers with contracts at the end of 1H01
(5 percent of the SAP customer base — see Note 2). At that
point, about 100 of them were live on some area of functionality
within v.2.0 of mySAP CRM. All CRM customers were already
R/3 customers. EMEA represents 60 percent of SAP’s CRM
customers and the Americas only 24 percent. Most customers
have bought a mySAP suite contract that includes CRM. There
are a small number of customers that Gartner believes have
bought mySAP CRM and are unaware of it. SAP believes that
customers must be aware of their ownership because of the
nature of the contract. However, we expect more than two-thirds
of existing mySAP CRM owners will begin some form of
deployment during 2001 (0.7 probability). The largest four vertical
sectors have been service industries (26 percent), consumer
industries (18 percent), process manufacturing (19 percent) and
discrete manufacturing (26 percent). Financial services represent
only 2 percent of CRM customers.
R&D spending is hard to isolate, given core architecture
investment and the commitment to vertical sector R&D by SAP.
However, there are 803 programmers working on core CRM
functionality. The extent of R&D spending allows SAP to support
a wide range of platforms (see Note 3).
SAP’s mySAP CRM generated revenue of 171 million euros
($149 million) in 1H01. SAP is on target for new license fee sales
of 400 million euros ($348 million) in calendar-year 2001. This
compares to estimates of $1,000 million in new license fees for
Siebel Systems.
Functionality
SAP made significant improvements in functionality in the first
half of 2001. The opportunity management system and analytics
have improved most. Campaign management and sales
incentive and compensation remain the weakest areas and still
appear to be heavily focused on business-to-business (B2B)
rather than business-to-consumer (B2C) needs. Figure 1
illustrates how Gartner scores SAP on the main functional areas
of CRM. The scores compare SAP not only with the main CRM
P-14-1013
17 August 2001 2
 suite vendors but also with best-of-breed specialists in each of
the functional areas, such as Siebel Systems, BroadVision,
Incentive Systems, Exchange Applications, Selectica and Kana.
It should be noted that SAP also provides a great deal of order
processing, billing and other transaction processing functionality
(much of which was taken from the old R/3 sales and distribution
module) that is not assessed under these CRM criteria.

Figure 1
Gartner Ratings for mySAP CRM
Marketing Functionality
Analytic — Data Mining
Web Content Management
Campaign Management
Event Driven
Personalization
Business Intelligence Tools and Web Measurement
Sales Functionality
Opportunity Management
Interactive Selling System
Sales Configuration
Sales Incentives and Compensation
Partner Management
Sales Content Management
Call Scripting
Service Functionality
E-Service
Call Management
Field Service
CRM Suite Functionality
Configuration Tools
Unified Data Model
Single Administration Environment
Extraction, Transformation, Loading Tools
Data Cleansing Tools
Data Mart
Key
No Capability
Some/Limited Capability
Competes at best-of-breed level, missing some requirements
Competes at best-of-breed level, meets most requirements
Leadership
Source: Gartner Research

Service Partners

There are 891 certified individual external consultants for mySAP

CRM worldwide. However, the most influential — the major
consultancies — have committed only small numbers to SAP
CRM so far. For example, Deloitte Consulting has 150,
PricewaterhouseCoopers only 60 consultants worldwide, with
100 scheduled for training and Cap Gemini Ernst & Young have
similar numbers. Most large consultancies claim to be aiming to
train 500 to 700 consultants on mySAP CRM by year-end 2001,
but this will be driven by the number of projects they win. The
lack of experienced mySAP CRM consultants outside of SAP will
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Copyright 2001 17 August 2001 3
 Product Strategy:
• Three-year strategy: Select industries
where the advantages of R/3 integration
can be leveraged, starting with
manufacturing-based industries. Use any
element of mySAP to drive sales of the
entire family of mySAP products.
• Five-year strategy: Catch Siebel for
depth of CRM functionality but focus on
additional benefits from integrated
processes across the enterprise and
partners.
Strengths:
• Integration for SAP R/3 users and for
future users of SAP Advanced Planner
and Optimizer, Business Information
Warehouse and mySAP Financials, HR
and Product Lifecycle Management.
• Pricing e-business bundles that make
CRM comparatively inexpensive.
• Resources — both R&D budget and
numbers of developers.
Challenges:
• Deployment consultants — lack of
experienced external consultants in the
market
• Understanding of CRM needs in existing
SAP core markets, such as banking and
insurance
• Siebel penetration of the SAP installed
base
Consider This Product When:
• Already an SAP customer
• In a core SAP B2B vertical market
• Seeking benefits from tight front- and
back-office integration
Consider Alternatives When:
• Looking for best-of-breed functionality in
a specific area of CRM
• SAP is one of many (more than five)
systems with which CRM must integrate
• Seeking a simple point solution to a few
elements of CRM only
SAP
Headquarters: Walldorf, Germany
Web Location: www.sap.com
Founded: 1972
Ownership: Public
Employees: More than 23,700
Financial Data: Total revenue for 2000 was
6,265 million euros
Copyright 2001
be the main limiting factor in SAP implementations through year-
end 2003 (0.8 probability). SAP’s answer to this challenge will be
to build an internal team of 300 to 400 consultants (as it did with
HR) within its own service organization who have experience
working on the first 100 to 150 early-adopter customers and use
this to drive initial deployments. SAP customers insist on heavy
SAP involvement in implementation because it is still a new
product that may need development involvement if deploying
before mid-2002. However, customers must also be aware that
SAP’s consultants will tend to have stronger technical knowledge
than business knowledge and, therefore, must be carefully
interviewed on their depth of vertical expertise.
Deployment and Costs
Existing SAP R/3 customers tend to be interested in more than
just CRM applications from SAP. The other new product family
members are beneficial and SAP tends to bundle products when
negotiating — the final price per seat of CRM software is
extremely competitive. Whereas Siebel customers will pay
$2,500 to $3,000 per seat after discounts have been negotiated,
SAP customers are paying closer to $1,500 for all sales channels
(for more information on licensing see E-12-5995, “mySAP.com
Licensing: Catching Up With B2B”).
Total deployment costs are hard to gauge, given the limited
metrics at reference sites. Some customers have been given the
CRM software for “free” and the degree of customization applied
by users varies heavily. SAP signed about 200 customers in
1Q01 for revenue of $56 million, so average license fee deals
were only $280,000. In 2Q01, SAP signed about 150 customers
for revenue of $93 million so the average deal size leapt to
$620,000. By year-end 2002, as SAP’s functionality depth
improves and the number of deals grows, we anticipate that
these averages will stabilize close to the $400,000 that Siebel
Systems achieves.
Implementation times are highly variable despite the benefits of
integration and the unified system architecture. In verticals where
heavy customization is required, such as consumer packaged
goods and banking, projects can take nine to 12 months. In
smaller projects (fewer than 200 seats) in more-traditional SAP
vertical sectors, deployment times are closer to three to four
months. SAP aims to speed implementations through its Solution
Manager offering — a predefined service package for efficient
low-cost setup and rollout. This offering looks promising but is
still at an early stage of deployment in only a few enterprises. It
will take another six months to assess its effectiveness.
P-14-1013
17 August 2001 4
 Bottom Line: By year-end 2001, SAP will be the second-largest
CRM application vendor in Europe (0.8 probability) and the third-
largest worldwide by year-end 2002, behind Siebel and Oracle
(0.6 probability). However, SAP will not be suitable for everyone.
Enterprises without some existing SAP investment will be hard-
pressed to justify the investment. Existing SAP customers in
traditional vertical sectors with a particularly B2B or business-to-
business-to-customer transactional CRM focus and an interest in
“good enough” CRM functionality with strong integration will be
best suited to mySAP CRM. These verticals include aerospace,
automotive, chemicals, consumer packaged goods, construction,
engineering, hi tech, mining, oil and gas, and utilities.

P-14-1013
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