SAP shifts fo­cus to CRM

Multi­na­tional in big­gest pri­vacy makeover as it plays catchup with ‘front of­fice’ soft­ware

Global Times - Weekend - - TECH - Reuters – Global Times

Ger­many-based multi­na­tional SAP is unveiling its big­gest prod­uct makeover in years, rolling up its sales, mar­ket­ing and cus­tomer ser­vice soft­ware into a sin­gle suite of tools that it says will of­fer greater pri­vacy safe­guards, tak­ing aim at faster­grow­ing ri­vals like Sales­force.

On Tues­day, SAP, the world leader in “back of­fice” financial con­trol sys­tems, made its long-an­tic­i­pated move to bring to­gether all its “front of­fice” soft­ware – the com­bi­na­tion of a dozen sep­a­rate cus­tomer­fac­ing prod­ucts and recent ac­qui­si­tions – into a sin­gle in­te­grated of­fer­ing to be known as C/4HANA.

SAP ex­ec­u­tives said clas­sic sales-prospect­ing soft­ware is ready to be dis­rupted by a more joined-up ap­proach that deeply con­nects sales and mar­ket­ing func­tions with data from SAP’s “back of­fice” plan­ning tools to form a sin­gle soft­ware suite.

The new soft­ware covers not just sales and mar­ket­ing func­tions but also com­merce, cus­tomer ser­vice and con­sumer data pro­tec­tion tools, which SAP sees as a weak­ness in older, largely sales-fo­cused plat­forms as new European data rules take ef­fect.

“To­day, cus­tomers are re­belling against being treated as sales op­por­tu­ni­ties,” Alex Atzberger, pres­i­dent for cus­tomer soft­ware, said dur­ing a speech lay­ing out SAP’s new prod­uct strat­egy at its an­nual Sap­phire user con­fer­ence in Or­lando.

“They don’t want any emails they didn’t ask for,” Atzberger said. “Cus­tomers are done with creepy. With­out [cus­tomer con­sent], don’t per­son­al­ize,” he told an au­di­ence of soft­ware sales pro­fes­sion­als.

So-called Cus­tomer Re­la­tion­ship Man­age­ment (CRM) is an in­dus­try term for all-man­ner of sales, mar­ket­ing and cus­tomer ser­vice au­to­ma­tion soft­ware – plus on­line com­merce and an­a­lytic tools – that firms use to win and keep their cus­tomers.

CRM tools have surged to be­come the big­gest cat­e­gory of busi­ness soft­ware, data from US re­search ad­vi­sory firm Gart­ner shows. As such, CRM has be­come a mar­ket too big for SAP to ig­nore, financial an­a­lysts from Bar­clays said.

SAP is seek­ing to cap­i­tal­ize on ris­ing con­sumer pri­vacy fears as tough new rules kick in with Europe’s Gen­eral Data Pro­tec­tion Reg­u­la­tion (GDPR), which took ef­fect in May and threat­ens stiff penal­ties for firms that fail to keep up.

US-based Sales­force is the CRM leader with around 20 per­cent of the global mar­ket share, more than dou­ble SAP’s share, while ri­val Or­a­cle is No. 3, ac­cord­ing to 2016 data from Gart­ner.

They were closely fol­lowed by fast-grow­ing com­peti­tors Adobe and Mi­crosoft.

To step up its game, SAP said on Tues­day it had ac­quired CoreSys­tems, a Swiss firm spe­cial­iz­ing in cus­tomer ser­vice soft­ware, on undis­closed terms. It’s the lat­est in a string of re­lated deals in­clud­ing Cal­lidus, Hybris and Gi­gya.

CoreSys­tems helps man­u­fac­tur­ing, en­ergy, high-tech and tele­com firms to “crowd source” their field ser­vice op­er­a­tions, al­low­ing them to cut re­sponse times by field ser­vice tech­ni­cians or con­trac­tors for new in­stal­la­tions or main­te­nance calls, re­duc­ing the time cus­tomers are left wait­ing at home.

Evolv­ing ecosys­tem

Front of­fice CRM soft­ware has al­ready over­taken back of­fice en­ter­prise re­source plan­ning (ERP) tool­stools, where SAP is dom­i­nant. CRM will top data­base man­age­ment soft­ware in 2018 to be­come the big­gest sin­gle cat­e­gory of busi­ness soft­ware, Gart­ner pre­dicts.

The re­search firm has es­ti­mated the CRM mar­ket will dou­ble in size be­tween 2016 and 2021 to nearly $66 bil­lion, while ERP will grow two or three times slower to around $39 bil­lion over the same five years.

There are thou­sands of CRM apps, with more being re­leased ev­ery month, mak­ing it crit­i­cal that SAP’s all-in-one­suite ap­proach still al­lows cus­tomers room to tap the wider sys­tem of in­no­va­tion that is con­stantly re­defin­ing what busi­nesses can ex­pect CRM soft­ware to do to help them win and keep cus­tomers.

Gart­ner an­a­lyst Ed Thomp­son said SAP must show it can work with this con­stantly evolv­ing ecosys­tem, the way Sales­force, Mi­crosoft, Or­a­cle, Adobe and Pe­gasys­tems have done by cre­at­ing mar­ket­places of apps to plug into their own plat­forms.

SAP still must con­vince users it can de­liver on Chief Ex­ec­u­tive Bill McDermott’s re­peated boasts that it “has qui­etly been work­ing on a mas­ter plan to dis­rupt CRM” and “SAP is fo­cused on CRM big time.”

It pro­vided a de­tailed tech­nol­ogy roadmap at Sap­phire for the steps it will take through to the end of 2019 to fully de­liver on its C/4HANA prom­ises, seek­ing to ad­dress con­cerns over SAP’s patch­work ap­proach to its ex­ist­ing front of­fice soft­ware.

Fi­nal prod­uct de­liv­ery times for C/4HANA have slipped from this year into 2019, which financial an­a­lysts at Bar­clays said is likely tied to the need for SAP to in­te­grate its recent CRM ac­qui­si­tions such as Gi­gya and Cal­lidus.

The bro­ker­age ar­gues the full cus­tomer suite, when ready next year, could set in mo­tion ma­jor up­grades by some of SAP’s big­gest cus­tomers, which could sus­tain growth in the com­ing years.


VCG SAP CEO Bill McDermott (R) and chair­man of the firm’s su­per­vi­sory board Hasso Plat­tner pose be­hind the com­pany’s logo dur­ing an an­nual gen­eral meet­ing in Mannheim on May 17.

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