SAP Hybris exec Q&A – Creating a front-office ERP platform

SUMMARY:

Carsten Thoma, president of SAP Hybris, gives us his rundown on the company’s focus for creating an enablement and engagement platform.

Having attended SAP Hybris’ Global Summits in Munich the past two years, I can say with confidence that the company’s 2017 event, in its new location in Barcelona, certainly feels like a grander and more high-profile affair. More attendees, more customers, a bigger expo, more sessions and a flashy keynote.

There’s an air of confidence coming from Hybris’ executive team, which took to the stage to talk about the changing nature of e-commerce, omni-channel (or looking beyond channel, in their words), and the future of marketing. Declaring that the company now has over 3,000 paying customers, president Carsten Thoma looked comfortable in outlining SAP Hybris’ strategy.

To be honest, most of what was in the first day’s keynote was to be expected, Lots of talk about the subscription economy, the impact of Uber and Airbnb on traditional companies, the need to personalise consumer experiences and the impact of machine learning on retail.

However, in a Q&A with the executives following the morning’s session, we got a bit more flesh on the bones regarding SAP Hybris’ current strategy and its areas of focus.

Hybris’ strategy has been to create an SAP customer engagement and commerce (CEC) portfolio – which integrates its Commerce Suite, Cloud for Customer and its hybris Marketing Solution. However, today we got a clearer idea from Thoma and Marcus Ruebsam, SVP of Commerce, Marketing & Revenue Products Solution Management at SAP Hybris, on where their priorities lie in enabling companies to shift from the old world to the new.

Data and enablement

The question was raised to the executive team about how Hybris’ marketing solution is able to compete with established players in the market, given its relative infancy (released approximately three years ago). Thoma and Ruebsam were fairly honest that not all of its capabilities may be on a par with Adobe or Marketo, but added that where Hybris can differentiate – which is important in this new data driven world – is enablement and data management. Thoma said:

We want to focus on all the products that are enablement products. I’ve seen the marketing ecosystem change three times completely over the past 20 years, since I founded Hybris. Many features and functions are important. But we have also seen replacement of players all over the place. If you are late to the game, you have to focus. And I think we did focus and we are making the right moves there. Focusing on the enablement piece first.

In the end the question is, what becomes an API layer within an ecosystem and what do we need to offer as a product? It’s probably not black and white, it’s somewhere in the middle. We are investing, we have a lot of people on the marketing cloud, you can see release by release that the product gets broader. But we are also not sitting here saying that the marketing cloud is the broadest and greatest product since the invention of sliced bread. So we are trying to make focused moves on completing the customer view, that for us is one most important pieces. Next to the amazing process repository we hold.

Ruebsam agreed and added that the company’s recent announcement to acquire identity management solution, Gigya, will only help with this. He said:

I think if you take 20 critical capabilities in the marketing cloud today. I think we are probably in half of them already better, different, because it’s new. We are not trying to rebuild what’s already there in the market. I think we are trying to focus on the marketing data management piece, as a core. In this new age of where you combine online and offline data, where marketing is really results driven, I think that’s a huge differentiator. Because we already have the data capabilities to bring offline and online together. I think our great partnership with Gigya is going to bring a lot of additional data to it.

Future > Present

Another interesting comment to come out of the Q&A, followed a question regarding Hybris’ marketing email capabilities, when someone challenged the executive team on how poor they are compared to other players. Thoma disagreed that this was the case, but Ruebsam gave a more nuanced answer that may give some insight into how the company is focusing its investments.

The short answer is that whilst giving customers the capabilities they need now is important, Hybris isn’t willing to take its eye off what technology advancements are coming. And central to this is Hybris’ YaaS platform, which is essentially a cloud development platform for micro-services, which is pretty unique in the market. For a more detailed breakdown of its significance, read diginomica’s piece on it here and here. Ruebsam said:

You are always between the challenge of, do you focus on the next wave and how much you have to do today. From a product standpoint, you can focus and make the best email solution. I think we are at the brink of getting more and more of that functionality. Clearly, we have to focus on what we need to deliver, but at the same time we have to innovate. And really this API ecosystem, this data ecosystem that’s evolving, that’s key for us [Yaas].

I’m not saying we aren’t focusing on the email. It’s more like, yes we have to get to a certain level, and we are going to close the gap, but at the same time we want to invest in the right things for the future.

YaaS will play a bigger role in the future

Two of Hybris’ customers took to the main stage today during the keynote and spoke about the future importance of micro-services to their respective digital strategies, highlighting the role that YaaS could play as a central framework for the deployment of technology.

One analyst during the Q&A highlighted that YaaS hasn’t had the take up that Hybris might have hoped over the past couple of years. However, this didn’t deter Thoma, who believes that the company put the work in early to take advantage of a trend that is only now gaining traction. He said:

That’s not necessarily a product related issue. YaaS was very, very early. The ecosystem, other companies and the commercial model behind the scenes, this alignment is a lot of work. And the exciting thing is that once this is aligned, we are still going to be the most mature, the first ones.

You’ll have one framework, one environment, where you can log in, identify, create, deploy, co-innovate and monetise under the same thing. Everything is in there. And this is not so easy to translate into a commercial model.

We are already using it for our own purposes. We have high internal adoption. And the more we work out all the surrounding factors, you are going to see a steep increase in adoption. But we absolutely believe we are at the spearhead of innovation.

Targeting the SAP install base

Another interesting comment was that Thoma sees much of Hybris’ future success coming from SAP’s traditional install base, as it navigates a path to a new digital world. In particular, Thoma believes that the subscription economy – where selling products is less valuable than selling experiences – will drive buyers to Hybris, which has subscription and revenue collection modules to support this.

Thoma said that Hybris front-office capabilities combined with SAP’s back-office stronghold will make a compelling proposition for customers. He said:

I really see the greatest potential with the classic SAP customers. This is only the beginning. [This is even going to affect insurance companies]. Because if you use a car by the hour, you need to be insured. You have to completely change cashflow projections. Companies used to selling thousands of products per year, are suddenly selling none. You get a completely different wave of cash inflow.

And then last but not least, it only works if you provide the most innovative experience to the customer. It completely changes the attribution and the taxonomy underneath. I truly believe that it will be very, very hard for first and second generation cloud vendors to get there fast without having that critical footprint in their install base, that SAP has.

If you talk about experience, this is actually what we are focused on. The revenue cloud, how we approach marketing, how we approach YaaS – it’s almost like a front-office ERP that can drive the next generation of customers.

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