SAP started talking about A1S in January this year. The release date was initially set for the first quarter then pushed out to the second, backed by a marketing campaign scheduled to begin in May. As the quarter slipped by, SAP said the launch would move to September.

The company has always said it was not only bringing a new product to market, but also a totally new architecture and business model. A1S is what it describes as SOA by design. It is also its first serious move into the subscription-based on-demand market. Its previous efforts, most notably its CRM service, enabled it to explore the technology and the model, but were not large-scale operations.

Although SAP is not new to the mid-market, the role of A1S is to bring large numbers of new customers into the SAP fold and enable the company to claim more market share in the SMB segment.

David Mitchell, senior vice president of IT Research at Ovum, said: Traditional companies such as Oracle, Microsoft, and SAP have taken a wider approach to the on-demand category, mixing on-premise and off-premise approaches. A1S takes SAP much closer to a more purist model of SaaS than it has previously attempted, and is likely to become a very significant part of the SAP portfolio in the years ahead.

The A1S business is being built from scratch. The application will be an integrated business suite that will include ERP, CRM, SRM, plus other functionality, and is expected to use SAP’s isolated tenancy architecture.

A significant portion of SAP’s pre-launch efforts have been directed at the business side of the operation, setting up the telephone and online sales channels, along with the software download, set-up, and support mechanisms. After the launch, SAP will kick off a major marketing effort.

A1S will have plenty of competitors in the SMB SaaS market, including Oracle, but the most directly comparable products are those from NetSuite, Sage, and Microsoft.

The mid-market does represent a large potential market, but it is also a congested market with many existing players, said Mitchell. The continued focus on the mid-market by companies such as SAP will inevitably change the dynamics of that market, as it is certain that SAP and other international players will progressively win market share.

A1S is the code name for the new suite. Its formal name will be revealed as part of the launch.