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Chuck Schaeffer SAP's Future From the Sapphire Tea Leaves

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Updates on SAP CRM, Cloud, Social & Technology

SAP SAPPHIRE NOW ended yesterday. In this post I'm going to pull together the company's updates and my own thoughts in the areas of CRM, gamification, cloud, social and the SAP Business Suite.

SAP CRM Updates

SAP has redefined the Customer as one of the four tenants of its cloud strategy. Whether this is the company's approach to innovation, product simplification or something other remains quite unclear. More on this shortly.

Sales OnDemand has increased its release schedule to quarterly. Helpful but trivial. There were also announcements that Sales OnDemand includes integration with (on-premise) SAP Business Suite and even the SAP CRM. Again, helpful, but something we already knew before SAPPHIRE NOW.

SAP did announce the general availability of the Social Customer Engagement OnDemand solution. This begins to bring social CRM into the purview of marketing and service staff by permitting engagement among social networks and online channels. While a start, SAP remains a laggard in terms of marketing and service in the cloud. At a time when competitors are delivering real marketing automation (digital lead tracking, lead scoring, nurture marketing, lead transfers, analytics and more) and multiple types of social customer engagement (Voice of the Customer (VOC), social listening, enterprise feedback management (EFM), speech analysis, online text sentiment, etc.) across many channels, SAP is announcing social network integration. Yawn.

The scope of the social software is not yet clear so maybe its more far reaching than described thus far. Or maybe I'm expecting too much. In fairness, the SAP CRM integration with NetBase enables basic social media listening and outreach engagement with can be powerful tools for service agents in responding to questions or mitigating rants in the social sphere. The analytics also show potential, but while NetBase possesses natural language search and sentiment analysis, these capabilities remain silent in the SAP announcements thus far.

In CRM mobility, SAP announced a Customer Briefing mobile app that delivers a dashboard to help sales pros prepare for customer discussions. This allows quick access to customer data in an easily consumable format. The app provides visibility to internal CRM data and external online resources. The company also displayed the new Customer Financial Fact Sheet mobile app, which permits sales reps to remotely check the financial status of their customers and is now available on iPad and Android 2.2 or later.

CRM Gamification

Okay, this wasn't a SAPPHIRE NOW announcement, but it's a topic that's bringing innovation to the CRM industry and SAP is doing some really interesting things. I was shown a CRM gamification concept application called Lead-in-One, which illustrated how a sales manager can distribute new leads to sales staff using a golf themed interface on an iPad. With golf balls labeled as lead names, and holes labeled with sales reps, the sales manager can inquire or drill-down on the golf ball depicted leads and then drag them to the desired sales person hole – for a hole in one with accompanying visual and audio effects. It may sound a little gimmicky, but it clearly illustrates how SAP is applying new thinking and the reward elements of game design to oftentimes repetitive or even trivial business processes such as lead distribution for an improved user experience, and ultimately improved software adoption and user productivity.

SAP has already applied gaming techniques in SAP ERP. For example, by applying gamification in accounts payable, voucher entry clerks are awarded points, ranked and displayed on leaderboards based on their data entry volume (number of vouchers entered) and data entry accuracy. The concept is shown to improve productivity.

SAP Labs U.S. also uses gamification in a real-world setting to reward contributors who create content in its SAP Community Network wiki—a technical forum used by more than 3 million customers, partners and members. Participants, who often tend to be developers and consultants, are awarded points based on the articles they author or the questions they answer. Point values are determined by the ratings of other participants and top score holders are recognized as experts in the various leaderboards. These recognized leaders may be called upon for special projects, or even called upon by customers seeking expert help.

SAPs Cloud Vision—Still Cloudy

Lars Dalgaard is the new cloud chief and presented both his cloud vision and his version of an enterprise software suite. Cloud solutions will now be subdivided into four lines of business to manage people, customers, money and suppliers. The intent of this four prong approach is to make the lineup more flexible and easier to acquire while not losing the opportunity for a seamlessly integrated ERP suite.

According to Dalgaard, while there is nothing wrong with SAP's Internet-based Business ByDesign software suite product, it isn't suitable for customers who only want certain single applications. "There are going to be mini suites," says Dalgaard, who goes on to say "Business ByDesign was a beautiful vision but it was too big. Everyone does not want to put all their apps out in the Cloud in one go. It was intimidating."

I suspect Dalgaard's Business ByDesign software suite assessment comes from speaking with SAP customers—certainly a good move on his part but incomplete and missed the bigger market for Business ByDesign—the non-SAP customers, or what I refer to as the broader market. SAP customers are likely to only want pieces of ByD because they are in no hurry to rid their existing SAP ERP investments. For them an incremental approach makes more sense. However, for the broader market, the single greatest value proposition of ByDesign is its ability to deliver a fully integrated ERP suite out of the box. If Business ByDesign becomes known as a best of breed, piecemeal solution, it will incur immense competition from more innovative cloud players and fail to be recognized for its primary value. ByDesign has other issues that also need to be resolved that I've written about in Business ByDesign, Why Good Products Fail to Launch.

In an SAP world, transitioning from HCM, CRM, Financials and SCM to people, customers, money and suppliers should look something like the following.

  • People—SAP payroll software is offered as a cloud service integrated with SuccessFactors core human capital management (HCM) solution, Employee Central. The People solution is planned to be available in 10 countries. The company has more than 200 resources throughout every region in the world to help ensure local regulations and complexities are addressed and updated within its payroll software.
  • Customers—SAP Sales OnDemand now delivers SFA and social selling with a social suite and integration to (on-premise) SAP Business Suite and SAP CRM.
  • Money—SAP announced the planned availability of the SAP Financials OnDemand, targeted for enterprise customers and designed to manage their core financials, including order-to-cash and invoice-to-pay processes. It will also be integrated with SuccessFactors core HR solution, Employee Central. SAP also intends to deliver a new release of the SAP Travel OnDemand solution with additional integration and mobile capabilities, including the ability to capture and route expenses directly from a mobile device. Somewhat interestingly, Financials OnDemand is actually a decoupling of Business ByDesign in order to extract this component for standalone use. The long term wisdom of this decision is unclear to me.
  • Suppliers—SAP plans to further build out its Sourcing OnDemand and Information Interchange OnDemand apps. SAP Sourcing OnDemand includes strategic sourcing, vendor management and contract lifecycle management and is delivered from the cloud but with integration to the (on premise) SAP Business Suite, as well as its business networks solutions, which includes the SAP Information Interchange OnDemand solution, for networked-based invoice management and information exchange for the procure-to-pay process.

SAP has incurred starts and restarts with cloud solutions. Now, on its 40th anniversary, it also has for the first time a credible leader who brings cloud success. With Dalgaard at the helm of the new and consolidated Cloud business unit, SAP has amassed more than 5,000 resources to design, build and deliver its multi-tenant cloud solutions as a loosely-coupled suite of best-of-breed applications. However, whether Dalgaards approach in "extegrating" (that's SAP's word, I think it means the opposite of integrating) Business ByDesign to componentize or modularize the suite will reverse the stall seems unclear.

Social CRM & Social Media

Dalgaard is clearly a social advocate, commenting that social tools deliver an "amazing opportunity to leverage the entire workforce […] we need that everywhere in the suite."

Beyond the Social Customer Engagement OnDemand solution already discussed, SAP shared social collaboration scenarios based on SAP Streamwork and the SuccessFactors Jam. While both are good tools, overlap is clearly present and this exposes another area in need of technology rationalization. Dalgaard said that SAP is building the core engine for social collaboration that will combine these technologies but left the door open for Jam. How these social technologies really come together may be determined by industry influencer and VP/GM Sameer Patel, who was hired last year to champion these technologies. On the first day of Sapphire, Patel discussed creating a common foundation for social profiles and other social data that could be used by many different social apps. Much more to come here.

SAP Technology Updates

On the SAP technology front, the company suggested it will improve user interfaces across its software using HTML5 as the standard going forward—in addition to native mobile client interfaces such as iOS. This is a welcome change from the Microsoft Silverlight presentation layer technology which has failed to deliver the promised UX and is about to be sunset by Microsoft.

SAP also announced its plans to deliver SAP NetWeaver Cloud as its unified Platform-as-a-Service (PaaS) solution. It will be powered by the HANA in-memory platform and include application design and runtime capabilities as well as extensible services for security, mobility and collaboration. NetWeaver Cloud will partner with and be compatible with competing PaaS offerings such as VMware's Cloud Foundry.

To accommodate the heterogeneous IT landscapes used by SAP customers, the company intends to deliver a cloud-based integration technology, comprised of on-demand solutions for process integration and data services, with out-of-the-box content to connect the loosely coupled LOB on-demand solutions to other SAP products whether on premise or in the cloud. For integration to third-party products, SAP plans to offer its own cloud-based integration technology as well as enable an ecosystem of partner solutions such as Dell's Boomi, IBM's Cast Iron and Mulesoft. This integration approach is comprehensive, but at this point more of a vision statement that any type of practical or ready-made solution.

Ending Thoughts—SAP Business Suite

Ironically, the SAP product that represents the most revenue to the company received the least executive discussion and media coverage. SAP Business Suite and the on-premise SAP ERP application still account for the lion's share of company revenues. However, the last major version for this software was released in 2009, and no new version is slated. Instead the company treads water with periodic enhancement packs.

Certainly, on-premise ERP remains a viable market for a few more years—at least for laggards and existing SAP customers. Even though growth declines, enterprise software products at the end of their useful lives often generate their highest margins for the company. SAP may be choosing to under-invest in this legacy technology in order to maximize those margins with a lucrative maintenance stream.

But not withstanding high margin maintenance contracts, a cash cow product whose better days are clearly behind it and innovation which lies only at the edges of a core ERP system, customers look to the future. Software product road maps and succession plans are critical in aligning and supporting IT strategy with top business objectives.

From a business development perspective, this is a less significant issue for existing SAP customers who are far more captive to their existing investments and less likely to defer a new product purchase with SAP. However, for new (non-SAP) customers, purchasing an enterprise ERP system that received its last new version in 2009 and for which no new version is scheduled, possibly ever, is a decision more easily made—by acquiring a competitor's solution.

At one time Business ByDesign was the talk to eventually become the new flagship SAP ERP solution. However, Business ByDesign has failed to launch and neither a technology refresh or a truly new innovate ERP solution is within sight. I would hope this dilemma would be addressed no later than SAPPHIRE NOW 2013. End

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SAP has incurred starts and restarts with cloud solutions. Now, on its 40th anniversary, it has for the first time a credible leader who brings cloud success.


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