The hidden costs of SAP CRM on-demand

I think, SAP entered the CRM on-demand market with a bicoastal press conference last week. Executives trumpeted the flexibility of the product and the ability to integrate it into a company’s back end systems.

But customizing the software based on individual business needs and the ability to integrate data between on-premise and hosted locations adds complexity that some customers may find unwieldy, according to industry experts. That added complexity could increase costs in the form of consulting fees.

SAP also said it may test a new support model once the product is fully launched. For now the base per user prices include unlimited end user support and a service level agreement. But SAP will listen to early adopters and is considering breaking out a premium option for companies that need additional support.

Potentially, as more applications and more specific customer experiences are put in , they have to look at packaging services.

Customer feedback will also result in additional functionality and the use of composite applications that would made available at an additional fee.

In addition, new customers may have to purchase additional disk storage space from IBM hosting services, Martinez said. For example, a large number of attachment files or large images could bloat the amount of hard drive space a company needs, he said.

Additional disk storage space will be sold in 25 GB increments. SAP and IBM won’t release how much storage space it will give customers. In contrast, San Francisco-based Salesforce.com lays out how much disk space it gives its customers. The company’s enterprise edition offers customers the greater of 20 MB per user or 1 GB in addition to 250 MB of document storage.