SAP doubles down on CX - why SAP acquired Emarsys, and the issues to track at SAP CX Live

Profile picture for user jreed By Jon Reed October 7, 2020
Summary:
In the run-up to SAP Customer Experience Live, SAP announced the acquisition of Emarsys. But why this move? Here's what I learned on SAP's CX strategy from SAP's Esteban Kolsky and Adrian Nash - and my opinionated review.

SAP's Adrian Nash
(Talking CX with SAP's Adrian Nash)

Few topics are as divisive to enterprise pundits as SAP's CX pursuits. Whether you thought SAP had abandoned CX or was perhaps in stealth mode, SAP's plans to acquire omni-channel player Emarsys disrupted the narrative.

Now SAP has a big virtual show, SAP Customer Experience Live, coming up in just a week (October 14-15). Toss in a slew of SAP CX job title shuffles and new hires - that was reason enough for me to get on video chat with two of the chief instigators of SAP's CX pursuits.

SAP's ups and downs with CX - why pay attention?

I'm not going to hold back: I've been flummoxed by SAP's approach to CRM, and then CX, for more than a decade. And don't get me started on C/4HANA, an unfortunate product name that was officially (and wisely) jettisoned in June for the "SAP Customer Experience portfolio." (The names of the underlying products in the portfolio did not change, however). Not to mention that SAP's infamous co-located SAP CX Live show in Orlando 2019 (during Sapphire Now) was a logistical nightmare, depriving SAP of some needed CX visibility.

But my views shifted with the October 2019 hiring of Bob Stutz to run SAP CX (Stutz's official job title is President of Customer Experience, SAP). This October 2019 piece describing Stutz as an "enterprise software veteran," returning to SAP after stints at Salesforce and Microsoft, doesn't do Stutz justice. Though I don't know Stutz well, I know he is a very strong personality. Stutz is the last person who would take a figurehead job without real meat to it. Don't take my word for it, check Stutz's recent appearance on the CRM Playaz show, where he absolutely torches analyst firms for fostering CRM market confusion with self-serving scorecards, and quadrants that don't reflect customer needs.

Then Stutz recruited one of the most outspoken independent analysts to help drive SAP's CX strategy, Esteban Kolsky (Kolsky and I have been arguing about what the heck "customer experience" actually means forever). In the years I've known Kolsky, he's much more likely to bash a vendor like SAP than work for them, so this team gets more interesting by the day. Kolksy is also a vigorous cloud advocate, not someone who would put up with "lipstick on a pig" cloud architectures that, well, big ERP vendors are historically notorious for. So yeah, this hire got my attention.

Kolsky, now the head of product for SAP Sales Cloud and SAP Service Cloud, joined me on the video call with Adrian Nash, Head of Strategy at SAP Customer Experience. Nash is also an intriguing voice; he joined SAP as part of the 2017 Gigya acquisition, a customer identity and access management product that now plays an important role in SAP's Customer Data Cloud.

Behind SAP's Emarsys acquisition news - what's the appeal?

Let's start with Emarsys. Given the intent to acquire Emarsys is just announced, is there anything these two can say on the record yet? Nash told me:

If you look at Emarsys, they have that execution and engagement layer, which is very impressive -  they built out great capability there... One thing they've done really well is the tools they've been providing to marketers, who typically have to deliver more with less. 

One strength of Emarsys SAP is keen to take advantage of? More industry content than you typically see from a customer engagement product. Nash:

[Emarsys] is using industry accelerators that build tactics out of the box. I think these are really important, because if you're a marketer, and you start using Emarsys, it means that you can start at 60 or 80 miles an hour, rather than building it yourself.

Nash sees another Emarsys advantage: a boost to the elusive pursuit of personalization. When customers cross channels, the data doesn't necessarily cross with them. Emarsys is geared to change that:

They've been able to build personalization, based on the continuity of all the channels you work with. If you're in a digital commerce experience, and you're seeing a product recommendation, it should be the same one that you see as part of an email newsletter from that same brand - it shouldn't be completely different things.

Now we have a virtual event coming up - which raises the question I often provoke in my art of virtual events series - why should we care? (And no, celebrity keynotes don't count - at least for me. Sorry Ashton.). Why is SAP's vision of customer experience worth checking out? Nash says it comes down to: how can SAP apply its vast data to the pressing issues customers are facing?

We think there's a good opportunity for us to invest and grow based on the capabilities we have that are unique to SAP. We have an excellent foundation of data, and customer data. I think we manage close to 3 billion first-party profiles in customer data, and over 7 billion consent transactions.

Yes, that's a lot of transactional data, but it doesn't automagically make SAP's CX approach better. Nash responded:

Over the last twelve months, we've really been thinking about what is changing in our industry. And how do we build technology to meet those changes? The realization is that we have an excellent commerce install base and loyal customers in that space. Where do we look when those things are changing? Customers have the freedom to choose the channels they're engaging with, and that is not slowing down.

SAP Customer Experience Live - serving customers as channels blur

The channel lines are blurring - not just for consumers, but for enterprises as well. Building new marketplaces, adding new channels for customers to purchase directly. And in some cases, doing it quickly, while you still have a business at all. And: customers must be able to move easily between channels new and old. Yes, I have big issues with the abuse of the word "experience," but to me, that's the essence of the proper customer experience. Dealing with brands and their representatives across online, phone, store - with no degradation of service, and no weak links. Nash wants SAP to build solutions for this world:

What we really want to do, and the area we want to focus on, is supporting the continuity between those channels.

That means equipping customer-facing humans with much better data, with visibility into communications and purchases across those channels. SAP has been talking up omni-channel for a while, but Nash thinks Emarsys will help SAP "accelerate" that customer experience vision, into a different level of personalization.

I don't expect SAP will be able to touch on the specifics of Emarsys as part of SAP CX during next week's SAP Customer Experience Live. But: the data silo problems Emarsys aims to solve will clearly be central to the program. Kolsky added: this is not just about CX. SAP needs to fulfill its core CRM product missions also: 

We're being very aggressive about CX; we're being very aggressive about core CRM. That's why I am running Sales and Service Cloud... We are invested in making this successful, and we put it in the dream team in order to do that. That's going to be showcased next week.

As for that leadership team, beyond the folks I've already named, we now have:

  • Joanna Milliken, Head of SAP Marketing Cloud, who joined over the summer from Salesforce.
  • Nuno Pedro, who also recently joined SAP as Head of SAP Commerce Cloud.
  • As for Adrian Nash, he'll continue to wear two hats - and remain Head of Product at SAP Customer Data Cloud in addition to heading CX strategy.

My take

We talked about that dreaded buzzword "Customer Data Platform," which all CX vendors are blustering about. In truth, there is some logic behind the CDP hype train, as absurd as that hype is. It's about moving from a static database where you manually update a customer record, to an active profile, automatically updated from online sources and social channels.

That type of active profile can, in theory, be acted upon in real-time to make a customer's life better. Either by a human, by a so-called smart machine, or both in concert. Of course, taking the proper actions is even harder than building the real-time customer profile - something that should keep CDP handwaivers humble.

I'm not a big one for vendor pros and cons; every customer has a different buying criteria. But given the privacy stakes, and potential for stringent regulations, particularly in Europe, I do think SAP has something to offer here with their GDPR compliance efforts. Committing so deeply to GDPR has honed SAP's privacy chops, and not every CX vendor can say that. Now to see if SAP can properly embed that know-how into their emerging line of CX products - without losing the opt-in data such systems need, if they ever want to get close to the "intelligent" moniker marketers like to toss around. Oh, and without mucking up the user interface either, which is what happens when identity management gets too clunky, as my use of Google frequently reminds me.

Likewise, I'm not big on judging acquisitions; I believe most acquisitions are 90 percent execution (and product integration). Emarsys fills an SAP CX product gap. However, it also adds to the integration burden of a deep collection of products. Stutz is definitely right: analysts foster customer confusion based on moving-target CX product categories. But in the past few years, SAP has added to that CX confusion via a slew of leadership and product name changes of their own.

Whatever you think of the current names, SAP's lineup of customer experience products appear to be well-delineated now. If this team can settle in for a stable pursuit of its vision, we'll see. To do so, I believe they'll need both cooperation and autonomy with SAP's Walldorf-based agenda, where S/4HANA adoption remains priority one, and for good reason.

Before Stutz came on board, I was getting pretty sick of SAP executives bashing the market-leading CRM/CX player. To me, it was silly to tag a vendor with such a foothold as legacy. Why pick ridiculous fights when there is so much work to do, getting your own house in order? But this leadership team has taken a different tone. To Stutz's point on pundits defining markets: who cares about which CX vendor is winning some mindshare battle to brand the phrase CDP more thoroughly?

Some say SAP's CX opportunity has passed them by. But if the customer in question trusts SAP to help them, and they perceive SAP to have relevant products - isn't that all SAP should be concerned with? Handing out market share trophies and chest-thumping about quadrant placement is brochureware. Making a difference for customers - that's all the rationale a team needs. And that's the chance Kolsky sees:

We're having conversations - that's 450,000 customers. We have plenty to go into with customers, where we can find areas to actually do this. I can only speak for my area, sales and service. With a quick back-of-the-napkin evaluation of the market, looking for opportunities, I found $15 - $20 billion dollars of completely unaddressed needs in the market of things we can do.

Let's continue this at Customer Experience Live next week - and see what customers have to say.

Image credit - Screen shot of SAP's Adrian Nash during our video chat by Jon Reed.

Disclosure - Salesforce is a diginomica premier partner.