Editor’s note: Seth Ulinski is a Senior Analyst at Technology Business Research.
HAMPTON, N.H. – SAP continues to evolve from its roots in back-office, on-premises ERP and supply chain management (SCM) software to a cloud-led, enterprise-wide solutions vendor that also supports front-office functions.
As the company evolves, so too do its capabilities, enabling it to better compete with leading cloud-native vendors, such as Salesforce, for opportunities in higher-growth areas such as CRM and marketing. Last year’s SAP Hybris Customer Engagement and Commerce (CEC) theme of “go beyond CRM” was a prelude to the 2017 focus of integration, unification and “cloudification.”
The SAP Hybris Cloud for Customer, SAP Hybris Commerce, and SAP Hybris Marketing suites are helping companies digitize their businesses, particularly in the transition to cloud-based CRM and real-time digital marketing tools. On their own, these platforms “check the box” for many clients, but their ability to tie into back-office systems run by SAP software, as well as nascent subsegments such as Internet of Things (IoT) and artificial intelligence, for which SAP also provides solutions, will ultimately provide long-term value for clients. This scenario whereby SAP drives improved business intelligence and delivers better customer experiences for enterprises helps it differentiate from enterprise software peers against which it may directly or indirectly compete. Last year, SAP Hybris became the umbrella for all SAP’s solutions across commerce, marketing, revenue, sales and service.
[VIDEO: Watch an overview about SAP omnichannel offerings in banking at https://www.youtube.com/watch?v=olK4iB-lIM8 ]
Consumer engagement continues to shift from traditional media to digital channels. An always-on digital paradigm enables consumers to dictate how, where and when brand interaction occurs, impacting brands that operate in both business-to-consumer and business-to-business landscapes. With consumers increasingly setting the rules of engagement, enterprises must embrace a digital-first, omnichannel mindset. Digitization is forcing enterprises to rethink core business functions such as marketing, sales and service.
In the digital era, these historically separate/disparate business units need to share common data as consumers move through various stages of purchase. Understanding touch points across paid, earned and owned assets is critical for brands that seek to deliver the optimal customer experience. Forward-thinking enterprises are undertaking business transformation initiatives that integrate front- and back-office systems, allowing them to fully capitalize on a consumer-driven, digital economy. SAP is one of the few technology vendors maintaining a breadth of solutions that can help enterprises transition to the fast-moving, consumer-centric business landscape
Legacy CRM platforms that have historically been used in silos by sales or customer service teams are giving way to next-generation CRM systems such as SAP Hybris Cloud for Customer that serve as a lynchpin for digital business orchestration, enabling data-driven activities across marketing, sales and service. A flow of consistent data between sales and support teams can be the difference between creating a brand ambassador or a social media nightmare. With data providing fuel for today’s enterprise engine, companies seek to drive additional value throughout the customer journey. By combining SAP Hybris Cloud for Customer, SAP Hybris Marketing and SAP Hybris Commerce suites, SAP is well-positioned to help enterprises integrate and activate historically disparate data streams integral to the front office. Meanwhile, SAP can provide additional operational efficiency to businesses by connecting front-office platforms with back-office solutions such as SAP SCM and SAP ERP. These capabilities set the stage for an SAP value proposition whereby its software helps orchestrate the omnichannel initiatives playing out across virtually every industry — a claim few IT vendors can make. However, SAP is not alone in the quest to drive adoption of its tools vertically and horizontally, as Oracle and Salesforce are going to market with comparable portfolios. Enterprise vendors such as Adobe and Google also compete, leveraging respective strengths and entry points in the digital customer experience.
To support omnichannel strategies, vendors must continue to innovate
As executives map out omnichannel strategies for business in the digital world, enterprise software investments that started with the back office are moving to the front office, requiring additional resources. To highlight this point, Volker Hildebrand, global vice president, SAP Hybris stated, “If CRM doesn’t come out on top [compared to ERP], you are doing something wrong.”
TBR views CRM, where SAP Hybris Cloud for Customer plays, as a core component of today’s $44 billion marketing technology (martech) market, which is expected to grow to $93 billion by 2021, according to TBR’s Digital Marketing Technology Vendor Benchmark. SAP is a key vendor in the Digital Marketing Technology Vendor Benchmark, positioned as a leader in the CRM segment. Companies’ needs for tools that plan, activate and optimize multichannel campaigns, as well as manage the accompanying deluge of data, fuel martech market growth. The result is segments outside of CRM (e.g., experience management, audience data management) are experiencing the highest growth rates. This creates opportunities for SAP Hybris Marketing, many of which will come from legacy SAP CRM or SAP Hybris Cloud for Customer relationships.
However, TBR believes there are gaps in the SAP Hybris Marketing portfolio, some of which SAP is addressing. For example, in 4Q16 SAP announced the acquisition of marketing attribution specialist Abakus, including its approximately 20 employees, for $20 million. Abakus will play a strategic role in SAP Hybris Marketing, as it will enable SAP to address the needs of CMOs tasked with measuring ROI for campaigns run by internal and external teams and to help clients align media spend with desired marketing outcomes. Additionally, SAP Hybris Marketing will gain a more complete view of engagements across the customer journey, allowing it to better compete with more established peers’ solutions such as Adobe Marketing Cloud and Salesforce Marketing Cloud.
TBR believes SAP will remain acquisitive in 2017 to keep pace with marketing cloud peers and may acquire tools that bolster its digital asset management capabilities, management of non-personally identifiable first-party data (e.g., cookies, device IDs) or digital ad buying. The latter two areas are being explored by SAP Exchange Media (XM), an entity headquartered in Germany and operating separately from the SAP Hybris business unit.