I was asked about the couple of days I spent at the SAP CX event in Barcelona last week, and my response was “afternoons were better than mornings”. True enough, given the body was jet lagged.
But even in content, the morning keynotes and press conferences were subdued. In contrast, the small group analyst meetings with execs and customers in the afternoons were much more animated and informative.
Subdued? Well, SAP did raise expectations for this event by giving C/4HANA plenty of attention at Sapphire this summer. It raised expectations even more when CEO Bill McDermott stood shoulder to shoulder with Shantanu Narayen, CEO, Adobe and Satya Nadella, CEO of Microsoft to announce the Open Data Initiative last month. Salesforce raised expectations for SAP with its blowout Dreamforce event a couple of weeks ago. When you use the same venue as the Mobile World Congress, you beg comparisons to the over 100,000 that event attracts – CX attendees, only 4,000 strong were in comparison rattling around in the giant setting.
There were few customers on stage compared to many SAP executives. In fairness, Christian Klein, COO of SAP joined Alex Atzberger, President of SAP’s CX unit and described SAP’s own impressive digital transformation. And there was Robotech, a fictional company which reminded me of the Adidas Speedfactory. It was used to describe a company which is moving to agile development and outcome based business models. Both were relevant but would have been so much more powerful if SAP had used live, external customers.
Two overriding themes pervaded the event. The consistent ethos at SAP is “the suite always wins” so there was lot of conversation about the 5 clouds it is bundling in C/4 and the 7 common attributes like common UX and extensibility it is striving to deliver across these clouds. And of course, this led it to the mandatory comparison to competing CRM suites. The second theme was about trust. In the privacy backlash against social media (and what SAP calls “digital natives”) and in the GDPR influenced world, SAP believes customer-centric activities will have to behave far differently than they have in the past. Indeed a guest speaker, Nir Eyal, author of Hooked, went about discussing how modern technology can be used to influence consumer behavior, and ended with a plea for using the power to design healthy habits.
To me, the second theme may have some marketing legs – though there is always tension between the compliance and creative side of an enterprise, and in a revenue and growth hungry world, I would personally bet more on the creative side. But SAP is not going to easily convince customers to buy the complete C/4 suite, or even many of the components just because it has incumbent ERP relationships. It has tried in the past and not sure why it will do so this time.
On the other hand, it has lots of new features, especially through its acquisitions of CallidusCloud, CoreSystems, Gigya and hybris. And this is where the afternoon sessions really helped in the drill down.
Moritz Zimmermann, Chief Technology Officer (and co-founder of hybris) described how SAP is re-invigorating the sales function with revenue recognition and sales commission functionality. How CPQ functionality is much more relevant for newer outcome-based business models and a world where digital and physical are merging. How marketing is evolving beyond a traditional world of too many emails and cookies. Volker Hildebrand, GVP, Strategy & Solution Management, SAP Service Cloud described how SAP is redefining field service. The CoreSystems acquisition offers customers an Uber-like platform to find available field service technicians in real-time. So, a customer like Siemens can use SAP functionality on a per user bases for its own techs and this marketplace for crowdsourced techs and pay on an occurrence basis. Leonardo IOT capabilities allow for a new service models as industrial assets get smarter and allow for more predictive versus scheduled maintenance. Jackie Palmer, Global VP Strategy described SAP capabilities in a world of consent based marketing including the role of Gigya, with its customer identity and access management capabilities and in the world of open data that SAP is pushing with Microsoft and Adobe.
It was nice to spend some time with Lorenz Gan, CIO of New Era who uses hybris and Concur functionality, and is still on the on-prem Apparel Footwear version of R/3. It was a refreshing conversation about how he makes decisions on individual applications in his portfolio. He is not a “suite” buyer (he uses PLM software from Centric and may have his outsourcing partner, EPAM custom develop revenue recognition functionality). He does not automatically plan to upgrade to S/4HANA till he is comfortable with quality (the AFS version has had a checkered history) and economics. (BTW, Gen was also on stage but just did a cameo, and went into very little detail compared to what he shared in our breakout) Similarly, it was good to spend some time with Hans Lui of the US sub of Bandai Namco, the Japanese gaming company. They use RevSym from CallidusCloud for revenue recognition and ASC 605, ASC 606, and IFRS 15 compliance. The Japanese parent uses plenty of other SAP software the US sub has not been required to adopt.
The elephant in the room was the market leader, Salesforce. SAP wisely chose to not publicly take potshots but clearly would like that market leadership. I think it needs to follow a different path. Before it pushes extensibility too hard, it should take a hard look at what the platform around Salesforce has delivered. The reality after a decade is lots of features, very little vertical functionality. Salesforce is also being cavalier hyping up its Trailblazer and services ecosystem forgetting that adds to customer costs. It is pushing values that many of its customers wish it would low-key. Those values play better with younger consumers and workers, less so with corporate executives who buy enterprise software. SAP runs the same risk if it pushes trust and other value statements too hard. Also, SAP itself is under pressure to change its own customer facing posture. It said the right words like “It’s our customer’s data, we don’t own it. It’s not ours” but it needs to become much more comfortable answering questions about Indirect Access and why customers will allow it to come close to even more of their data.
SAP will continue to talk about how the “suite always wins”, but to me it is specific, differentiating features which will allow it to win in the trenches, bottoms up, cloud by cloud. And there it is building a formidable portfolio of features. My hope is it continues to invest heavily at that layer not just in bringing consistency across the clouds. And that it starts to mine its vast customer base for digital transformation stories, particularly across industries it has dominant presence in.
Circling back – now that I have returned to the US, mornings should be better or certainly more productive than afternoons, especially with my new found recipe from Barcelona. I was impressed at the many fruit markets that dot the city. And the plentiful sangria!
(Cross-posted @ Deal Architect)