Mark Smith's Analyst Perspectives

At the SAP Global Influencer Summit (Twitter #SAPSummit) that I just assessed the company addressed, among many other things, its SAP CRM vision and recent advances. SAP has shifted its focus from standard customer relationship management (CRM) to the customer lines of business where professionals increasingly see that the enterprise customer experience should span channels and processes in marketing, sales and customer service. SAP now is focusing on specializing its applications for a customer-focused set of business processes, which can be differentiated in its vertical industry solutions more than its horizontal CRM applications. This industry approach makes sense for SAP, which has not been able to tap into the new energy and applications in marketing, sales and service but is aware of multichannel customer requirements. Let’s start by looking about what SAP is focusing on in the customer lines of business.

SAP is presenting its efforts as customer experience management but in a broad and comprehensive approach. SAP is focused on the broad dynamics of information and interactions across all channels and departments; managing that is not easy because organizations usually have dozens of applications across customer touch points and at least some not provided by SAP. To integrate them is a herculean effort, and it is not clear how fully SAP can address it. For many organizations the customer experience is created in the multichannel customer service areas, particularly customer self-service on the Web and interactions with customer service agents; both of these additionally require customer feedback management. I personally believe it is necessary to ensure a good customer experience in marketing and sales as well, but many organizations are fixated on their service efforts at the expense of a broader more expensive and encompassing perspective.

Measuring activities across customer interactions requires analytics, and SAP has introduced the ability to analyze customer sentiment across channels in the enterprise and in social media. SAP’s Customer Value Analytics has useful functionality if you are an analyst and know what steps to take; otherwise it could be difficult to know what to act upon and why. SAP does have some impressive examples of customer analytics that improve the science with whalebone curves and ways to determine profit destroyers. Our latest research into customer analytics exposed the lack of maturity in this area, and SAP will be able to find interest in its efforts. Deepening its customer-focused analytics at many levels could provide a competitive counter to the marketing sizzle of salesforce.com, which recently has done little to improve its capabilities.

SAP is focusing on enabling consistent interactions and efficient decision-making and has expanded its CRM solution portfolio strategy to include both on-premises and on-demand deployment. This spans from SAP CRM and part of SAP BusinessByDesign to new solutions that will focus on specific lines of business. SAP sees an advantage in having enterprise resource planning (ERP) to go with CRM, rather than offering only CRM like salesforce.com. Without this combination, SAP says, companies cannot build a 360-degree view of their customers and interactions with them. I agree, but the fact is that the vast majority of organizations will not have one integrated set of customer processes and applications any time soon. To get there would require a massive transformational effort. More practically, SAP is helping customers’ existing efforts with SAP CRM enhancement pack 1, which will bring analytics from SAP Business Objects along with dashboards that present charts and basic information selection capabilities. At the conference I did not see workflow or collaboration built into the demonstrations, although the SAP StreamWorks technology could be used for this and to help compete against salesforce.com. SAP has been working to upgrade its interaction technology, and SAP Business Communications Management will support a unified approach to these areas.

I mentioned that SAP needs to deepen its horizontal efforts in marketing, sales and customer service, where the lines of business have been buying point solutions. In the area of marketing, the concept of multitouch lead nurturing has been driving sales for applications vendors such as Marketo, Manticorp, Eloqua and Unica. In this area SAP now has to deal with IBM which invested a $1 billion in acquiring Unica, Coremetrics and others to provide more value to the CMO. In sales, sales forecasting, quotas, compensation, incentives and coaching come together in sales performance management. SAP has not developed or acquired products to compete in this market, while Oracle recently introduced its first version of Oracle Fusion for CRM that I analyzed. This market is dominated by the likes of Callidus Software, Merced Systems, Synygy and Varicent which have been competing with little resistance from SAP or Oracle. In customer service the focus on the agents and interactions includes coaching, first-call resolution, scheduling and routing and has produced a new wave of applications for customer experience management and agent performance management. There are dozens of vendors marketing and selling into customer service departments, as our research coverage demonstrates, and this will be an area in which we expect to see consolidation in the coming years. SAP is not currently in the market for these application areas, which are among the fastest growing of those for the front-office lines of business.

Despite being slow to embrace some of the new dynamics in the front office and applications, SAP is deepening its capabilities in what it does well and pursuing vertical industry markets even deeper than before. SAP is bringing analytics into this arena to do a better job than in the past with areas like sales analytics and providing customer sentiment analytics. These efforts will help SAP continue to grow, but it will have to decide whether its wants to be at the center of discussion and sales for the range of customer-related applications and determine if it has the muscle to acquire as needed to grow its portfolio. Recognizing the technology ecosystem here, which includes salesforce.com, NICE Systems, Verint, Aspect Software and many others, SAP will have to decide whether to go it alone like Oracle or arrange to be part of the larger solution framework moving forward.

SAP is leveraging its technology stack from mobility to analytics as my colleague has assessed from being at the SAP Summit. In the meantime I hope they can spice up their marketing as it is a little drab to be honest. This would help provide some better awareness of what they can offer in the market. Only time will tell if SAP can claim broader market share and convince you they have a better approach than others for your customer success.

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Regards,

Mark Smith – CEO & EVP Research