25 July 2005 Henning Kagermann, CEO of German enterprise-software superpower SAP, has said that it will launch a web-hosted version of its customer relationship management (CRM) suite, contrary to earlier statements made by executives.

The announcement came last week after SAP’s financial results for the second quarter were published. SAP’s CRM division was the only one that did not grow its revenues in that period.

Kagermann denied a link between the CRM application’s below-par performance and the tactical volte-face. “We are in preparation [for hosted CRM],” Kagermann said. “You’ll see something soon. We’re making our business models right at this time.”

Hosted CRM companies such as Salesforce.com, NetSuite and RightNow have quickly grown successful businesses with the software-as-a-service model. The option to have CRM software delivered without having to undertake mammoth integration projects has appealed to many businesses looking for limited rollouts.

And while the popularity of on-site CRM implementations has waned in recent years, the hosted market has taken off. Indeed, the success of these application service providers (ASPs) drove erstwhile CRM market leader Siebel to relaunch its own hosted service, Siebel CRM OnDemand, in 2003. It had initially abandoned plans for a hosted version, believing there was little appetite for the service. Until now, SAP has maintained it was not interested in releasing a hosted version of its CRM software.

Last year SAP overtook Siebel as the market leader in CRM applications, as measured by licenses owned. However, by Kagermann’s own admission, many of these licenses are owned as part of the mySAP application suite, and may not be in use.