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SAP takes Praxis swing in its on-demand warm-up

Deal gives more tools to existing SAP Business One customers, but will it lure in new ones?

Business software giant SAP has acquired Praxis Software Solutions as it attempts to weave on-demand applications into its offerings.

Technology from Praxis will be incorporated into SAP Business One, a business management product aimed at small and midsize companies, to help them set up online stores and deploy customer relationship management (CRM) software via the Internet.

The two key elements that SAP is gaining from its longtime partner are Praxis' NetPoint Commerce and NetPoint Focus applications. The first is an e-commerce package that offers customizable shopping-cart and customer support functions, designed to handle data access for both business-to-business and business-to-consumer needs on a single Web site. It integrates pricing and inventory data originated from the SAP Business One System. The Focus package expands Business One's CRM capabilities by integrating campaign management and prospecting functions.

According to a Gartner analyst, given that the NetPoint products will come folded into Business One, the new offerings are really more for keeping existing SAP customers in the fold than for acquiring new ones.

"Praxis' client base is about 100 SAP customers. What they bought here was products to up-sell to existing Business One folks. Will they take it out to the greater market? My belief is, no," said Gene Alvarez, Gartner's vice president for CRM.

Companies that already use Oracle's J.D. Edwards products, for example, may question the value of trying to integrate the SAP offering with their existing back office, he said.

Alvarez also pointed out that businesses looking for Web storefront or CRM tools have a lot of choices.

"There is a growing number of those coming on the market: Demandware, MarketLive, NetSuite, Venda and Access Commerce, to just to name a few," he said.

A major force to be reckoned with, meanwhile, in on-demand CRM front is

SAP chief Henning Kagermann had mentioned an expansion of SAP products when he spoke in May about the company's rather hesistant switch to a services architecture. Currently, SAP is the market leader in the CRM industry, which grew 13.7 percent to $5.7 billion in 2005, according to Gartner. In June, Gartner also predicted a continuing consolidation in the CRM sector as companies hoping to become one-stop shops seek to fill gaps in their services.

Praxis was a privately held software company. The terms of the deal with SAP were not disclosed.