SAP is expected to release A1S on 19 September. A1S is the first major software-as-a-service (SaaS) offering that SAP has released, and is the result of an estimated investment of over $500m. A1S will be used as the platform for a major push into the mid-market. Comment: SAP is not an entirely new player in the mid-market. It has many thousands of customers based on existing SAP products and services, and has gone to market with the neat tagline 'great companies rely on SAP, not just great big companies'. A1S aims to inject a very substantial growth to SAP's mid-market activities - aiming to capture many more thousands of customers in a relatively short period of time. The mid-market has been identified as a potentially fruitful expansion ground by many enterprise software and services companies. Many large companies operate in the mid-market, including IBM and Oracle. However, Microsoft has traditionally been the mid-market giant among the international players, with other very strong companies e.g. Sage on a national or regional basis. The mid-market does represent a large potential market, but it is also a congested market with many existing players. The continued focus on the mid-market by companies such as SAP will inevitably change the dynamics of that market, as it is certain that SAP and other international players will progressively win market share.
A1S is a SaaS offering. SaaS is a sensible way to address the needs of mid-market companies, since it offers the ability to reduce complexity, reduce initial expenditure on software and hardware, and enables on-going expenditure to be much more predictable than traditional IT deployments. SaaS offerings from pure-play companies such as Salesforce.com have experienced rapid growth and adoption, and new players such as Workday have also entered the market. In many ways SaaS is becoming the strategy of choice for new market entrants.
Traditional companies such as Oracle, Microsoft and SAP have taken a wider approach to the on-demand category, mixing on-premise and off-premise approaches. A1S takes SAP much closer to a more purist model of SaaS than it has previously attempted and is likely to become a very significant part of the SAP portfolio in the years ahead.
