One of the most refreshing sessions we had at SAPPHIRE 07 was when SAP's Senior VP of Market Strategy, Pascal Brosset, dropped by the Bloggers corner. Pascal is a straight talking Frenchman, who SAP need to put in front of more people, because he absolutely understands the Software as a Service market, and did a great job of explaining SAP's strategy in the sector. Oh, and by the way, he is the first senior SAP executive I've heard use the term SaaS.

Pascal explained his view that SAP's A1S, SaaS based, configurable product approach is an absolutely welcome development, as deeply modifying applications is not particularly good for anyone. He said that SAP in the past were good at focussing on processes, and not so good at focussing on people. The new product brings back the balance. He also thought it was a welcome change to be thinking about business and not three letter acronyms like CRM. When we quizzed him about how fast it will be adopted, or how applicable A1S will be to higher end customers, he gave a Gallic shrug and said:

"The market will decide"

Out of the box the product is more restricted in terms of the functionality available compared to other SAP products, but in return you get better TCO. When asked about deployment options for A1S he said:

"I'm not saying A1S will be on premise, but we believe SaaS has tons of advantages"

At this point I checked his business card to make sure we weren't talking to someone who'd slipped in to the conference from another company. He went on to say that the A1S approach would:

"Bridge the fundamental divide between efficiency versus flexibility."

Obviously with A1S customers cannot modify the code, but the leading partners will realise they can still make money advising customers on their business and building composite applications which can connect to and enhance the product. Pascal said that it is SAP's intention to prove SaaS can work, and he went on to say that he was:

"religious about making SaaS happen."

Next he discussed that fact that a ratio of 1 to 10 of software to implementation services is not right, and he talked about how NetWeaver was integral to SAP's approach of being a good citizen to make their platform as open and easy to integrate with as possible.

Later on Tuesday, I was one of 5 bloggers granted an audience with Henning Kagermann, which in itself highlights how different SAP's attitude is to community and the new web 2.0 world compared to other big software players (or even some of the medium sized ones). I told Henning that I assumed they had considered separating out the A1S business unit as a standalone entity as the business model and cultural approach are so different from the normal SAP way. Why had they decided against that approach. His answer was that, to some extent they had done it, because Hans-Peter Klaey's SME division is a separate business focussed on volume. They had considered a separate legal entity, but so many parts of the process and the internal systems were the same:

"we have chosen this compromise situation, so we'll see."

We also asked Henning about competition with Salesforce.com. He agreed there was some overlap, and hence some competition in the CRM space, but that SAP is more of a suite. He's clearly not concerned in the slightest.

Although I am mightily disappointed that we only saw a "blink of an eye" demonstration of A1S, listening to Pascal and Henning, I can't help thinking that A1S has the potential to be a fantastically successful product. The only things holding it back will be, in my opinion, the fact that the new business model is so different from the traditional SAP sales approach that I can see operational problems ahead. In addition, like Dennis, I don't see this mid-market, 3 product strategy of A1, A1S and B1 working. They should drop B1 and wholeheartedly embrace the concept of SaaS deployment for the majority of mid-range customers, with the option of A1 for those prepared to invest in a more complex implementation to achieve particular differentiation for their business. One thing they must do is get the partner ecosystem fully on board with the benefits and opportunities of the new A1S product. We haven't seen enough evidence of that, and time is running out.

And they need to get Pascal Brosset and the others like him inside SAP more air time to spread the word. Let the market will decide.

Epilogue:
Charlie has more of Pascal's quotes here (and it's his photo of Pascal above with his jacket off, the rest are mine). Dennis's ZDNet post on A1S is here. The bottom photograph shows the Blogger team with Henning - (L to R) Charlie Wood, Dennis Howlett, Prishanth Rai, Henning Kagermann (SAP's CEO), James Governor, Mike Prosceno (SAP Global PR) and me (David Terrar).