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Sapphire Now 2018 - SAP turns tables on Salesforce with blueprint for end-to-end connected enterprise

Phil Wainewright Profile picture for user pwainewright June 5, 2018
SAP reveals its master blueprint for end-to-end connected enterprise with HANA-enabled data sharing at digital speed, turning tables on Salesforce

Bill McDermott and Now United Sapphire Now 2018
Bill McDermott and Now United

If anyone was still under any illusions about the death of the two-speed enterprise once popularized by Gartner, today SAP hammered a wooden stake into its corpse. The world's leading back-office enterprise software vendor now believes that business should operate as one unified office, with all components connected and able to perform at accelerating digital speed. This, much more than SAP's headline-baiting decision to take on Salesforce in the CRM market, was the big reveal at today's Sapphire Now conference.

And yet, it was not an announcement of any new product, more a public declaration of how SAP now thinks about data and application architectures. SAP did announce the SAP HANA Data Management Suite, but this too is just a new name for an existing set of products that bring data together, in particular the HANA in-memory database and Data Hub. What's more important than the products themselves is the underlying philosophy of reusable microservices which has now become pervasive across SAP, says Rob Eslin, president of the Cloud Business Group:

This is a breakthrough from an engineering point of view, from [the point of view of] internal productivity at SAP, ultimately [from the point of view of] the customer. This is a huge effort, it's not a new product, it's a massive engineering effort by an organization. The engineers clearly understand that this is a huge opportunity to be massively differentiated and be massively successful.

The point is to bring SAP into a new world of distributed data, where "master data as a service" is the foundation of how applications share data and expose it to new capabilities such as machine learning. Note that the data is shared, rather than simply exchanged. This is an API-based infrastructure that carefully manages how data is shared, instead of passing it around with few controls.

Turning the tables on Salesforce

All of this now gives SAP the ability to forge real-time connections between the valuable transactional data stored in what used to be called its back-office systems of record, and the faster-moving customer, commerce and marketing data handled by customer experience systems, formerly known as the front-office. SAP, of course, has both, and in this new world of the connected enterprise, the company believes that adds up to a competitive advantage for the new product line that it did launch today, the SAP C/4 HANA customer experience suite. As Alex Atzberger, President of SAP Customer Experience, puts it:

Only the strength of your digital core determines the depth of your customer experience.

This allows SAP to turn the tables on Salesforce, which for many years has talked up its ability to connect its customer-facing applications into SAP's less agile legacy systems of record. Now SAP CEO Bill McDermott portrays Salesforce as the "legacy CRM" system, unable to provide a rounded customer experience because it doesn't have those high-performance connections into the transactional systems that SAP now offers.

He cites a retail customer that has recently installed S/4 HANA and can now fulfil customer needs because the supply chain is directly plugged into the customer experience layer, and it all executes in the HANA database:

What the board cares about is, do I know about my consumer when they go direct at the Internet, when they go shop at a wholesaler or a retailer? Geospatial technology is essential in the database. [The customer experience] is completely unpredictable now, unless you have an in-memory database connected into the supply chain so you can get her the products she deserves.

Salesforce can't do that. It's not because they're bad people, it's because they don't have HANA.

Salesforce wasn't directly mentioned in the public keynote, but in a later question and answer session with media and analysts, McDermott couldn't have been more explicit about SAP's competitive strategy:

We will not waver, we will not bend, until we take over leadership of the CRM marketplace ...

There was a time Siebel Systems couldn't be beat. You're going to see history repeat itself in this new era. We have a new idea, a better idea, and the better idea always wins.

That better idea is the data sharing architecture working alongside its HANA database technology. Get that right, and the customer experience products themselves just need to be "good enough," he says.

Customers care more about connecting the end-to-end value chain.

My take

SAP outlined an alluring vision today but it has to show it can execute on the detail. While the integration is there in principle, it's currently out of reach for many customers, and much of it has yet to be turned into proven, deliverable use cases that work in the real world.

I would also be wary of lecturing Salesforce on how to do API-centric integration, especially in the wake of its recent acquisition of MuleSoft. Some of the people there may feel they know a fair bit about the topic.

Despite these reservations, I'm not going to side with my diginomica colleague Den Howlett's view that this was the 'don't be creepy' keynote. Perhaps Den didn't stay online long enough to catch the end, when McDermott invited pop impresario Simon Fuller on stage to introduce his latest venture — the world's first global girl/boy pop band, whose members hail from 14 different countries across four continents. Called Now United, the group chimed perfectly with McDermott's themes of integration and opportunity. As they brought the keynote to a rousing climax, my takeaway was that this was the SAP's Got Talent keynote.

I felt it marked the moment when SAP has put itself back in the game by delivering the end-to-end integration enterprises need to survive in the digital age. In doing so, it has fulfilled a prediction I made back in 2014:

At some point, organizations are going to have to upgrade their core systems to operate with the same agility and speed as their outward-facing systems in digital marketing, e-commerce and mobile. HANA is SAP’s answer to that quandary.

Over the next few days of Sapphire Now we'll find out more about how convincing that answer now is.

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