SAP Acknowledges Problems Of Monolithic SoftwareSAP Acknowledges Problems Of Monolithic Software

SAP called it one of its most significant announcements of the year. It leaked its announcement to the Wall Street Journal, which posted a story last night that referenced "Web-based software" and quoted a Salesforce.com executive. But today's big announcement didn't have much to do with SaaS at all. Rather, it was an acknowledgment that SAP's traditionally monolithic approach to software has created problems for customers.SAP announced Business Suite 7, an upgraded NetWeaver-based suite of applications that includes such things as supply chain management, product life cycle management, and customer relationship management. The upgrade is covered under customers' existing maintenance contracts. ERP 6.0 works with the suite and no upgrade for that is required.

While SAP stressed flexibility of its SOA-based NetWeaver platform in the suite, the announcement was more about what SAP is willing to do on the sales side than a significant technological change in its software. SAP says that with the new suite, customers will have more opportunities to buy modules over full applications, and choose specific functionality improvements over full upgrades.

While Business Suite 7 isn't SaaS, it's a nod to what SaaS proponents have said all along: buying and maintaining huge software packages isn't in the best interest of businesses. SAP execs are acknowledging here that the way they've sold software in the past has created problems for customers, and is even more problematic in this difficult economic environment.

However ... SAP CEO Leo Apotheker did say during this morning's press conference that SAP is planning to release on-demand components of Business Suite 7. This is the work that John Wookey, formerly head of Fusion of Oracle and newly hired at SAP, is leading. That is where we'll start to see pieces of SAP's SaaS strategy come together. But my take is that it will come in baby steps. There is no secret strategy under way at SAP for making a massive move toward SaaS.

Over the next few hours I'm talking to SAP executives and customers to gain a better understanding of Business Suite 7. Look for a full analysis of this announcement in a story to appear at information.com and plugintothecloud.com later today.

Update 02/04/09 6 p.m.: Read full analysis of SAP's announcement here, SAP Business Suite 7.0 Kills Usual Software Upgrade Process.