Customer relationship management (CRM) is shifting significantly. In this interview, Volker Hildebrand, SAP’s Global Vice President, Customer Engagement Solutions, discusses where CRM is headed, the steps customers are taking to keep pace, and the SAP solutions that can help. He explains SAP’s transition from CRM to Customer Engagement solutions, SAP’s current and future direction in the cloud and on premise, and how companies are using a variety of technologies to turn customer insight into action and better engage with customers.
Q: What major trends in CRM are you seeing today?
A: Two related trends are significantly affecting CRM: Technology is changing the game, and customers are changing the rules. Yet these are more than just trends; we are witnessing a profound paradigm shift in how companies engage with customers.1 Today’s customers are digitally connected, socially networked, and always on, and with technologies like smartphones, social networks, and mobile apps, they are more empowered than ever.
Simultaneously, on the business side, we are seeing dramatic cloud, mobile, and in-memory innovations. By combining these technologies, companies now can engage with customers one on one, anywhere and anytime — whether they have only a few customers or millions.
Q: In light of this shift, what do organizations need to do to adapt?
A: Most business leaders with whom I speak report that their top priority is to better engage with customers to grow their business. According to a recent McKinsey global survey, more top executives are making digital customer engagement a high strategic priority, yet many worry about underinvesting in such programs.2
In this age of the digital customer, old strategies no longer work. An organization’s efforts to increase internal efficiency and boost front-office effectiveness may help it stay in the race, but they are no longer enough to win, let alone to gain a competitive edge. Companies must determine how to leverage innovative technologies to stay relevant to their customers. And they must act quickly to avoid losing market share and eventually seeing their market value decline dramatically.
Q: How is SAP enabling companies to adapt and act quickly?
A: SAP has taken CRM to the next level by using technologies such as SAP HANA, applying unique user interaction paradigms, and rapidly innovating in the cloud while leveraging on-premise investments. With a focus on building integrated real-time solutions that provide the right insight at the right time and support industry-specific business processes, SAP is redefining CRM and helping organizations rapidly adapt to changing customer demands and expectations and interact with customers in new ways. This is why we are now concentrating on solutions for Customer Engagement, rather than just CRM.
Driven by our customers’ business needs, our strategic direction for SAP solutions for Customer Engagement follows four guiding principles (see Figure 1):
Innovate in the cloud across marketing, sales, service, commerce, social, and mobile areas.
Leverage on-premise investments with hybrid solutions, private cloud, and end-to-end process integration.
Turn insight into action in real time with predictive analytics powered by SAP HANA.
“Verticalize” by building capabilities to support industry-specific requirements.
Q: In the CRM space, is there a strong focus on cloud solutions?
A: Absolutely. Less than two years ago, we started with SAP Sales OnDemand (now SAP Cloud for Sales) and today we have a comprehensive portfolio for CRM in the cloud. As a result, we have seen unprecedented growth in the cloud: The number of cloud customers in 2013 almost tripled, and cloud user adoption is 10 times higher than it was a year ago. The ease and speed of cloud deployments enable our customers to keep pace with emerging technologies and changing business needs by allowing them to innovate more rapidly.
Nespresso, for instance, needed a sales solution for its business-to-business sales organization. The company was running SAP CRM on premise and wanted to get its mobile sales force up and running quickly. Four weeks after purchasing SAP Cloud for Sales, the organization went live with it. Nespresso is impressed with the user experience, the mobile-first design, and the tight integration with its existing SAP ERP and SAP CRM landscape. The company also needed to have visibility into trade promotions in SAP CRM and to create orders in its SAP ERP system — features that are available out of the box.
Note: SAP solutions for Customer Engagement encompass SAP CRM on premise, SAP Cloud for Customer, SAP Customer Engagement Intelligence, the hybris enterprise commerce suite, and other applications.
Once SAP Cloud for Sales was up and running, the Nespresso team identified the need for “retail execution” capabilities to support their sales force with on-site execution of trade promotions and related sales activities. SAP shipped the requested functionality in the August 2013 release of SAP Cloud for Sales because we saw the need for retail execution capabilities across the Consumer Packaged Goods industry vertical.
Q: In addition to SAP Cloud for Sales, what else does SAP offer in the cloud for CRM?
A: Our SAP Cloud for Customer development team has built a comprehensive portfolio of solutions not only for sales but also for service, social customer engagement, and — with our partner NetBase — for social media analysis.3
SAP Cloud for Customer is now also based on SAP HANA Cloud Platform. Leveraging SAP’s in-memory technology, this platform comes with next-generation database services to accelerate both data analysis and transactions; provides streaming, spatial, and text mining services; and includes powerful predictive analytics capabilities. In addition, SAP HANA Cloud Platform provides SAP HANA app services for real-time integration, advanced analytics, security, and mobility (SAP Mobile Platform is part of SAP HANA Cloud Platform), as well as a portal framework and a collaboration environment (see Figure 2).
Q: Is social customer engagement another area of focus in the cloud?
A: Yes. We look at “social” in three dimensions: Listen, engage, and collaborate. First, the SAP Social Media Analytics application by NetBase allows companies to track consumer conversations on social media channels and to monitor the social sentiments of these conversations — whether they are positive or negative. As a result, companies can better understand what customers are saying about their brand, products, and services. Second, SAP Cloud for Social Engagement enables companies to interact with customers via social media channels such as Twitter or Facebook. Using the solution, companies can identify relevant tweets or posts and respond immediately through the same channel. Finally, SAP Jam allows users to collaborate with colleagues on sales and other activities via tight integration with SAP CRM on premise and our cloud solutions.4
All of our social-focused cloud solutions complement SAP CRM on premise. SAP customers can take advantage of these innovations in the cloud while leveraging their on-premise investments.
Q: You’ve touched on sales and social. What is happening with marketing?
A: Marketing is the area in which I see the most dramatic changes. Because of cloud, mobile, and in-memory technologies, companies can now engage with customers one on one, in context, and when it really matters. For the first time, companies can interact with consumers directly, via social media channels and through mobile devices — it is no longer a one-way street. Not only can marketers target their offers more precisely to the right customers at the right time, but they can also get immediate feedback. For example, a marketer can immediately know whether a particular customer, while in the pasta aisle of the grocery store, has accepted a special offer for marinara sauce using a mobile phone. This is a game changer.
Consider this example of innovative customer engagement for marketing: Société de transport de Montréal (STM) is the fourth-largest public transit organization in North America. Using the cloud-based SAP Precision Marketing application, a mobile customer loyalty solution powered by SAP HANA, STM provides up-to-the-second updates on public transportation schedules and connects customers to several hundred retailers in real time. Consumers can find shops, restaurants, and other businesses and attractions in the vicinity (along with personalized promotional offers), right on their mobile devices, based on their up-to-date profiles, individual preferences, and current location.
Q: How is SAP HANA driving innovation for CRM?
A: SAP CRM on premise runs on SAP HANA, our SAP Cloud for Customer solutions run on SAP HANA Cloud Platform, and next-generation analytical applications like SAP Customer Engagement Intelligence are powered by SAP HANA.5 Paired with powerful predictive analytics, the ability to turn insight into action in real time drives competitive differentiation. That’s why SAP HANA has become not only an integral part of, but also an underlying platform for, all of our CRM solutions.
Q: How does SAP HANA affect SAP CRM on premise, specifically?
A: SAP HANA is opening up new opportunities for SAP CRM on premise. Take HSE24, for example. As a live TV shopping channel, HSE24 is very dependent on time. It showcases and sells various products 24/7, taking orders online or via phone. With SAP CRM powered by SAP HANA and SAP Customer Engagement Intelligence, HSE24 can instantly get a complete picture of its customers. The company can gain detailed insight into sales in real time to deliver personalized offerings to customers while they are on the phone to increase cross-sell and up-sell opportunities. In addition, by combining the transactional data of incoming orders, the customer profiles and purchasing history of its current audience, and data from social media channels, HSE24 can adapt the content of its TV program on the fly, increasing sales significantly.
While SAP is driving significant innovation with SAP HANA, we are innovating in other areas as well. For example, we recently released the first SAP Fiori apps for SAP CRM with a completely new user interaction paradigm, similar to the apps on your iPhone or iPad. These consumer-grade apps provide convenient and easy mobile access to key SAP CRM objects and transactions, such as opportunities, activities, and orders, and to functionality such as instant pipeline analysis.
Q: With the myriad developments on premise and in the cloud, what guidance do you have for SAP customers?
A: It depends on companies’ needs. They should look at their business requirements first; the question of on premise versus cloud is secondary. What’s important to understand is that all our cloud innovations are integrated with SAP CRM on premise and SAP ERP.
Cloud solutions allow SAP to innovate faster, and they allow our customers to adopt these innovations faster while leveraging their existing on-premise investments. Many on-premise customers move to the cloud in incremental steps. For example, they want to monitor social media conversations and sentiments, so they add SAP Social Media Analytics; or they want to add collaboration capabilities, so they deploy SAP Jam in the cloud; or they want to provide their sales reps with easy-to-use mobile apps that work both online and offline, so they choose SAP Cloud for Sales.
Q: A conversation about CRM wouldn’t be complete without mentioning e-commerce and the hybris acquisition. What can you share about the momentum in e-commerce?
A: Customers have been clamoring for the hybris e-commerce platform since the acquisition. At the time of the acquisition, there were more than 150 joint SAP and hybris customers — and that number has skyrocketed. Combining the hybris omni-channel platform and its e-commerce capabilities with SAP ERP order management capabilities and SAP CRM is redefining the future of commerce and provides a unique solution in the market. SAP completely replaced its own
Web Channel Experience Management solution with hybris and put a huge effort into productizing the easy integration with SAP ERP and SAP CRM that many companies have already leveraged.
Change the game and invest in CRM to turn insight into action and engage with your customers like never before.
Q: What is SAP’s future direction for CRM?
A: I can’t disclose everything, but I can tell you that we are firing on all cylinders. We are innovating in the cloud and on premise, leveraging the power of SAP HANA and utilizing the new SAP Fiori user interface technology to take mobility and usability to a new level across multiple devices. SAP HANA Cloud Platform will allow us to design new applications with embedded predictive analytics so, for example, sales reps will be able to identify the most promising deals, find new sales opportunities based on information gathered from the internet, and get recommendations on what to do next and who to engage in their “circle of influence” to increase the chances of closing a deal.
In addition, we will focus on industry-specific capabilities in the cloud, building on our strength in vertical solutions. In 2013, we released a mobile retail execution app for companies in the Consumer Packaged Goods industry, and in 2014, we are focusing on more industries, such as Retail, Industrial Machinery & Components, Utilities, High Tech, and Financial Services.
Q: What is your final advice for our readers?
A: It is simple: Change the game and invest in CRM to turn insight into action and engage with your customers like never before.
1 For more on how customers are changing the rules of engagement, see "From CRM to the Customer-Managed Relationship" in this January-March 2014 issue of SAPinsider. [back]
2 McKinsey, “Bullish on Digital: McKinsey Global Survey Results” (August 2013). [back]
3 For more details on the SAP Cloud for Customer portfolio, see "Turning Cloud Innovation into Business Value with SAP Cloud for Customer" in this January-March 2014 issue of SAPinsider. [back]
4 To learn more about SAP Jam, see the Social Collaboration special report in the October-December 2013 issue of SAPinsider. [back]
5 For more on SAP Customer Engagement Intelligence, see "Customer Engagement Intelligence: Your Tour Guide to Interacting with Customers with Precision" in this January-March 2014 issue of SAPinsider. [back]