SAP wants to own the real customer relationship. You should care.

Profile picture for user gonzodaddy By Den Howlett September 17, 2015
Summary:
SAP's recent hybris announcements are the tip of a very big iceberg. At stake is ownership of the real customer relationship.

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Regular readers will know I am usually all over SAP on important announcements. On this occasion I've taken some time out to collect a bunch of conversations before firing the gun. Here's the scoop.

SAP wants to own the real customer relationship. If it succeeds, then it can push back against Salesforce in ways that Salesforce cannot match. It is in good shape to do so but it will only succeed if it gets out of its own way and figures out the messaging.

When CRM became the three letter acronym du jour I recall looking at the technology and saying "This has nothing to do with managing the customer relationship, it's all about internally managing people in the sales process." That was somewhere around 1996. My position has never changed largely because the technology has remained static the last 20 years. I sense that SAP just threw a fastball across that thinking. Here's how.

To little fanfare and less public attention, SAP announced the 'simplified front office' this week. I winced. SAP lards all announcements with 'simple' to the point where it is almost meaningless but the meat behind the announcement is much more interesting. It is not restricted to the front office either.

First of all, drawing the distinction between the internal, back office CRM and customer facing front office is important. It focuses the mind on the nub of what CRM should be about as a starting point. Perceptually, it changes the nature of the current technology discussion to one that demands you pay attention to customer need.

Second, the technology play is interesting in its own right. ZDNet explains this very well so I won't rehash it except to quote SAP Hybris APAC senior vice president Graham Jackson from the story on the topic of single view of the customer:

Unless you can provide that view across multiple touch points, you're not going to get there. A view of a customer is not a single view, and that word every business aspires to -- single view of inventory and single view of customer -- are the two major things that are required to actually deliver an omni-channel strategy, and those are the two extremely difficult things to achieve.

A cursory reading implies this is all about marketing and customer experience at a superficial level but that is only a fraction of the story. Customer experience is often equated to service as in the manner in which customers and business interact with one another. Even that is a limiting description. I'll explain why shortly.

Third, check what Larry Dignan had to say about Dreamforce this week:

Salesforce this week made a series of moves that aim to expand the role of customer relationship management software and reinvent it into something resembling a business operating system.

He is right up to a point but Dignan is flat out wrong when he concludes:

SAP and Oracle are more about enterprise resource planning, databases and applications. Critics would say those two companies are really about maintenance revenue.

Salesforce has no chance of achieving the goal it has set for itself, in its current form. Why? Because it doesn't own all the pieces needed where SAP (and arguably Oracle) does.

If you consider that a customer relationship is as much about things like the efficient making and moving of goods, fulfillment and the ease of payment or settlement then SAP wins hands down. It's not even a fair contest at that point. Add in the fact that SAP (or Oracle) often own the money in that they process the all important transaction then this topic becomes easier to understand and much more sensible.

Right now, SAP is concentrating on talking up ownership of the relationship master record. In that scenario, it doesn't really care who owns the back office master record and if that is Salesforce then so be it. But that is not the end game. John Appleby, business development lead for SAP HANA at Bluefin Solutions nailed it when he posited that:

SAP reckons that the customer master might end up in the integration layer between SAP technologies.

This is the piece that probably matters more than anything else in this discussion because that is the glue that orchestrates the most effective customer service delivery. Salesforce cannot do this because, its own technologies are defined as silos. And that's before we get to the rest of the story as I envisage it.

Is this a reality today? No. SAP has a lot of heavy lifting to do in order to get the necessary integrations baked into the technology stack. Then there is the thorny question of how this gets done in as pain free a manner as possible, including the licensing. My preference is for SAP to bundle those integrations as the amuse du bouche before they get into the appetizers we see today and tomorrow's main course. It won't be easy given SAP's proclivity of attaching Dom Perignon pricing to everything with a SKU. But it is essential if it is to win the hearts and minds of the business buyer who could care less about such trivialities.

There is one more issue SAP has to address. In its storied history, SAP's sales playbook has always been about appealing to the technology buyer. The hybris lead is a business buyer story. This is all about understanding the problem the customer is trying to solve. It is a fundamentally different mindset. In that context, SAP will have to dovetail the business and technology conversations while carefully parsing consultant engagements geared towards problem solving and not technology buying choices.

That process started yesterday when SAP held an event to open up the discussion about the 'real' front office. I am told that while the webcast was a tad dry (I checked in for some of it and yes, it was dry-ish), the corridor and demo conversations were much more interesting. Even so and in the slivers I caught, I could see that customers are focusing on important questions like the disconnect between the rhetoric about personalized offerings and the reality of today. Those are good conversations to have.

Finally, I am convinced that tech life just got a lot more interesting. But it will be SAP's job to figure out how this is communicated back to the market.

Disclosure: SAP, Oracle and Salesforce are premier partners at time of writing