Summary

SAP recently announced that midsize companies purchasing the SAP® Business All-in-One ERP solution or SAP® ERP will receive the SAP® Customer Relationship Management (SAP CRM) application at no cost, subject to qualification terms and conditions.

Analysis

The catch is that customers must pay the annual maintenance fee on the no cost CRM licenses, which usually runs 22% per annum of the regular license fee.
On-premises business software vendors, including SAP face declining license revenues ranging from 20% to 40% below previous year sales.
Most growth potential for ERP / Business Software vendors is in the midmarket where competition is fierce amongst many more vendors including Software as a Service (SaaS) vendors who have no initial license fee.
Since most on-premises business software deeply discount license sales and get over 50% of revenues from annual maintenance fees, the offer from SAP is aimed at getting more midmarket customers to increase the volume and product base of customers paying annual maintenance fees.
Anther factor may be that SAP is trying to overcome the less favorable ratings from Industry Analysts for the CRM application by getting more midmarket CRM customers. See 'The 2009 Market Leaders - Enterprise Suite CRM' for details: http://bit.ly/ielvr
Giving product away is a slippery slope - see my blog for more comments on this marketing tactic: http://bit.ly/463RUj
 

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Analyses are solely the work of the authors and have not been edited or endorsed by GLG.