aheadCRM - Blog #Customer Engagement Management

Beyond the Call Center: Unifying CX, One Definition at a Time (Finally!)

Wed, 03 Sep 2025 17:59:04 -0400

Beginning of September 2025, the CRM Magazine published its 2025 CRM Industry Leader Awards on Destination CRM. This year, the awards nominate five outstanding companies across eleven categories. As in recent years, CRM Magazine asked some renowned analysts to chose Industry Leaders for 2025 using a simple question: “If you had to recommend a CRM solution—whether an enterprise suite, contact center infrastructure, or a customer data platform—to a client, what would they choose, and why?”

And, of course, the analysts – being analysts – gave their answers. And good answers they are.

But this is not the topic of this post.

What is it then? Glad you asked …

It is about the term “unified customer experience platform” and the corresponding award category. Looking at the winners and their corresponding descriptions, it turns out that there seems to be a clear dominance of customer service and contact center solutions in this area – with the exception of the honorary mention of Sprinklr, which has its origins in the social media sphere.

This dominance suggests that customer experience is somehow made equivalent to customer service. This shows quite some success of the narratives that CCaaS and customer service vendors are telling. This is especially true if very renowned analysts, who are in part thought leaders as well, follow it.

Which somewhat irks me. And it reminds me of how the term CRM got more and more appropriated by vendors of sales force automation, SFA, solutions, until CRM almost became synonymous to SFA, which it isn’t. And never was.

Again, this is not about the winners. They are great and very successful companies in their own rights. But, to me, customer experience platform is not equal to customer service or contact center. It is rather a term that describes a more holistic category. I’d argue that both, customer service and contact center are part of a customer experience platform – if there is one single solution that makes up this platform at all. Or can make up one.

Let’s decompose the term into its three main components, namely “unified”, “customer experience”, and “platform”.

I want to start with customer experience.

Using the definition of Paul Greenberg, customer experience is “how a customer feels about a company over time”. Bruce Temkin defined customer experience similarly as “the perception that customers have of their interactions with an organization”. So, let’s just roll with these.

Both, especially Temkin’s definition, are about multiple interactions. Neither limits the type of interactions. So, essentially, the customer experienced is a result of all interactions, across all channels and on all journeys customers are when interacting with a company. This is the complete customer life cycle. From a CRM point of view, this includes marketing, sales, and service. It also includes interactions with products or services themselves.

What both definitions implicitly include is the notion of measurement; so, it needs an analytics component.

The basis for all of this is data, reliable data. Data that covers all (digital) interactions that a customer has with a brand, which makes up a customer profile.

This brings us to the term “unified”

Customers interact with companies on a variety of channels. In order to make this interaction data really useful, companies must work on creating a unique profile of a customer, i.e., harmonize or unify customer profiles from several, potentially disjoint sources, to become a single authoritative one that enables the reliable identification of a customer.

The data coming from different sources also requires a governance process. How does the data need to look like, how can the underlying data structures be amended or changed, which data sources exist, and which take precedence, who owns it, who is able to change or interfere, how does data age? All these questions, and more, need to be answered.

Me being me, I will add that customer consent is an essential part of all this.

For a customer to have an individual experience, this data needs to be activated and be supplied to the downstream systems with which the customer interacts. I’ll call this an engagement. This requires omnichannel capabilities, if not even the ability to be channel agnostic. The customer interactions often, if not mostly, need to be personalized, at least to some degree. In some instances, interactions also require real-time capabilities. This is necessary e.g., when engaged in a chat with a digital agent or a customer service agent, or even when a promotion shall be served to the web site. In other situations, timing requirements are less strict.

To round this off, a notion of journey and journey orchestration is required. After all, customers are interacting with companies to get a solution to a problem or just some information. In any case, some steps, often across channels, are required to accomplish this. These steps need to be orchestrated to be most effective for both parties, customer and company.

Last, but not least, platform

According to Merriam Webster, a platform in a computer science sense is “an application or website that serves as a base from which a service is provided”. The service in this case is customer engagement with the goal of the customer having a good or better customer experience. Note, the systems do not “deliver” an experience. They allow the customer to have one.

The platform provides the scalability of the overall system. It also provides the APIs that are necessary to effectively and efficiently communicate with potential up- and downstream systems. Plus, it provides the foundation for storing and activating the data, so that it can be used for individual interactions. Technically, this is the strong analytical component that I referred to above, and which is also necessary for the journey orchestration component. As customer requirements change, the analytics component needs to be supported by an AI / machine learning solution.

And what does this mean?

In the first instance this means that the appropriation of the term unified customer experience platform by customer service and CCaaS vendors diminishes the value this type of platform can deliver. It also means that there is a sore lack of a definition. During the 2018 CRM Evolution conference, I spoke about rethinking CRM to become CEM. As part of this, I proposed a customer experience architecture, which I think is still relevant.

I defined this architecture an open platform that consistently receives customer signals and processes these data (legally) in a way that companies can serve customers with information that is relevant for them in context. One of the core objectives is to break down silos, department silos as well as data silos. Today, I will go a few steps further.

Unified Customer Experience Platform – a definition

A unified customer experience platform is an open software solution that enables businesses to engage in consistent and personalized interactions with customers, across all touchpoints and journeys, based on a unified customer profile.

This definition caters to all the points I discussed above.

On checking, it is also quite close to the definition of a delivery CDP by the Customer Data Platform Institute.

So, a unified customer experience platform might rather be a concept than a software category. This is actually what I do think.

But more importantly: What do you think?

SAP to acquire Emarsys in an aggressive move

Tue, 06 Oct 2020 04:32:25 -0400

The News

On October 1^st, 2020 SAP announced its intent to acquire Emarsys, a leader in the personalization area and omnichannel customer engagement management specialist. The transaction is expected to be completed in Q2/2020 and still subject to regulatory approval. The purchasing price is not disclosed. According to Crunchbase, Emarsys was funded with $55.3M US by Vector Capital in two funding rounds 2015 and 2016. Not being a financial analyst, I would expect a purchasing price of north of $ 500M US.

Emarsys positions itself as a customer engagement platform that combines omni-channel automation, personalization, loyalty management and reporting/analytics. The company has more than 1,500 customers, makes about 2/3 of its revenues in the EMEA region and has a pretty strong partner network including technology and agency partners. Key commerce integrations include Adobe (Magento), Salesforce, Shopify and, of course SAP Commerce. On top of this, the platform brings prebuilt industry specific use cases and analytics into the fold.

According to Christian Klein, CEO SAP, “once the transaction closes, SAP will enable brands to connect every part of their business to the customer, including experience data. We will deliver a portfolio for a ‘commerce anywhere’ strategy allowing for hyperpersonalized digital commerce experiences across all channels at any time”. Bob Stutz, president SAP Customer Experience, adds that “with Emarsys technology, SAP Customer Experience solutions can link commerce signals with the back office and activate the preferred channel of the customer with a relevant and consistently personalized message, allowing customers the freedom to choose their own engagement”.

The bigger Picture

The ability to segment in real time becomes more and more important, especially with increasing e-commerce and what I would dub commerce anywhere. It is key to be able to serve the right information, regardless of the communications channel, in milliseconds rather than seconds, using a database of millions of customers. The increasing trend towards headless commerce solutions as well as commerce functionalities built into store apps and messenger style or social media apps are a good indication of what is required.

This not only requires the ability of personalization at scale (which Emarsys delivers) but also to decide in real time where the interaction needs to take place, in other words, real time interaction management and customer journey orchestration (which is not the strong suit of Emarsys).

Looking from another angle, the overall CX business becomes more and more platform oriented, with currently four major platforms being around (Microsoft, Oracle, Salesforce, SAP), and Salesforce being the dominant player in the CX game, with some other players interfering on the last mile, e.g. Facebook, WeChat, Alibaba, or ByteDance.

My Analysis and Point of View

This acquisition came as a kind of a surprise for me as I did (and do) not see much of a chance for SAP to become one of the top two players in the marketing segment. My glass ball must have been slightly fogged up. Based upon this, the game plan that Bob Stutz has in mind, must be different.

Still, my first reaction was of the ‘what the …’ variety, especially as SAP already owns a functionally strong marketing solution. On the other hand, the SAP Marketing Cloud has a few drawbacks: It is strongly underrated and not cloud native, which admittedly is more a problem for SAP than for customers. In addition it lacks Emarsys ecosystem and has a strong focus on connectivity to SAP. Emarsys fixes most of this and already brings integrations into SAP Commerce and SAP Conversational AI. In addition, if played properly, Emarsys can remain a bridge head for SAP into accounts that are not using SAP Commerce. In other words, similar to Qualtrics, Emarsys can open up doors into other vendors’ ecosystems.

And 1,500+ customers that come with Emarsys, is not a too small number, either.

On the flip side, SAP has to undergo another round of integrating third party software into its stack.

In addition, with the acquisition of Emarsys the future of the B2C flavour of SAP Marketing Cloud is in question now. This will make existing customers pretty nervous and will therefore require a good plan and good communication to existing B2C customers, of which some are pretty renowned.

Marshall Lager, a long standing CRM industry analyst, remarks that “every marketing automation system offers personalization, but they don't all do it equally well; too far in one direction and the messages are mistargeted, too far in the other and they become intrusive. The good news is that Emarsys has made personalization its focus, and bringing that expertise into SAP will be welcome. The not-so-good news is that SAP already has a number of marketing technologies at its disposal, and is still working on integrating them fully into its cloud, so this proposed acquisition adds that much more complexity to the equation.

German analyst Ralf Korb opines that "the acquisition was a surprise and cam faster than expected. Looking at past acquisitions the situation seems to have calmed down and integration seems to be on a good path. Esteban Kolsky and Bob Stutz and their teams are working hard on improving the already good reputation of SAP (which SAP also rightfully has in the CRM and CX areas) and strategic partnerships. In my point of view SAP has learned to first check in how far an offering fits to its strategy and actively supports customer needs (outside-in), which resulted in the going public of Qualtrics. I think that the Emarsys fit, be it human, contribution or added value for customers, is considerable. The delineation to existing offerings will be achieved by the team in a short time and likely, due to its proximity, in a more agile way than with other acquisitions. This way, SAP can offer a combination of best-of-breed cloud and on premise that does not confuse customers but opens up choice.

This has been a year of change for SAP, what sports fans might call a rebuilding year. The addition of Emarsys seems like a smart choice, like adding a star player, but it remains to be seen how well it plays with the rest of the team.”

Another positive for SAP is that it now owns a loyalty solution again, after needing to rely on a partner solution for some time.

The caution of Emarsys not having “native CX support” lacking “native survey creation capabilities” that the Gartner Group names in its 2020 Magic Quadrant for Personalization Engines is easily mitigated with SAP Qualtrics capabilities – given an appropriate pricing model.

Remains the question of SAPs upcoming Customer Data Solutions (aka CDP) that is supposed to be built around the SAP Customer Data Cloud and allegedly with a little help of a budding partnership with Thunderhead. Looking at Emarsys not being a strong RTIM player as per the Forrester Wave Real-Time Interaction Management of Q1 2019, I can see the following: SAP has understood that the customer journey is owned and controlled by the customer, not by the company the customer interacts with. Still, this journey needs to be orchestrated. This is where the strength of Thunderhead One lies. The Customer Data Cloud delivers the profiling, identity management and consent management parts. So, jointly, these three pieces of SAP software could deliver the what (the messaging as such) and the how and where (where to deliver it) in an orchestrated way, across channels.

This combination would be a true game changer.

I am now really curious about the next SAP Customer Experience announcements and what we are shown at SAP CX Live on October 14/15.

SAP CX - A Deep Look into the Glass Ball

Sun, 27 Sep 2020 03:38:02 -0400

Earlier this year, a few days after attending SAP Sapphire reimagined, I asked Quo Vadis, SAP. At that time industry legend Bob Stutz led the CX group already for 8 months, with Esteban Kolsky being his chief of strategy. At this event there was hardly any mention of SAP CX. This is in spite of the CRM market being the fastest growing enterprise software market and in contrast to then CEO Bill McDermott’s bold statements that SAP will take Salesforce heads on. Esteban meanwhile changed his role and has become Head of Product, Customer Service and Sales for the SAP CX unit, which indicates that there is an emphasis on execution. And then, there was the announcement that Qualtrics, the company that basically defined the experience management market and that SAP acquired barely two years ago, will be brought public. So, something is happening. But still, there is no word about a strategy or a vision besides a few hints that Bob and Esteban gave during various webcasts or a blog post, in which Esteban gave a glimpse at what he sees as the next generation CRM. It should not surprise you that his thoughts have to do with platform, as the overall market for business applications, and especially the market for customer experience, has morphed into a platform market. This void of communicated strategy was supposed to be filled in early May. This communication was cancelled in the wake of Jennifer Morgan leaving SAP and Christian Klein becoming the sole CEO. This void shall be closed soon, after it lasted far too long. This indicates some alignment challenges about how CX fits into the story of the intelligent enterprise, which actually is a story about intelligent enterprise networks, and likely the wish to be able to show some results of the new strategy. October 14, 2020 and October 15, 2020 are two big days for the SAP CX community. On these dates the SAP Customer Experience LIVE will take place. This is the event that shall be used to showcase the latest SAP Customer Experience solutions as well as information about SAP’s CX strategy and roadmap, plus some “exciting innovations”. Not unexpectedly, the event covers all five pillars of SAP’s CX portfolio, namely Commerce, Customer Data Solutions, Marketing, Sales and Service. But hold on: ‘Customer Data Solutions’. This is a new term, indicating that SAP has something up the sleeve, as this pillar was formerly known as the Customer Data Cloud, which was the new name of the (enhanced) Gigya solution. This alone is reason enough to look into what we can observe and what we can derive from this.

What we know and can observe

The most obvious thing to see is that Bob Stutz is still with SAP. And he has made Esteban Kolsky his Head of Product for Customer Service and Sales. Why is this important? These two are very high profile in the CX industry, and very driven by getting things done. The thing to get done here is making SAP a significant player in the industry again. If those two wouldn’t see a chance doing that … they would be gone. Especially Bob doesn’t need to do this anymore. He does this because he wants to, simple as. What does this in turn tell us? It tells us that SAP is serious about its CX line of business, even though analysts, consultants, and customers might not readily see this for a lack of communicated strategy. So, besides this, let us gather some facts and observations in random order, so that we can derive some conclusions out of this.

SAP is strong with B2B customers. Manufacturing, but also CPG companies are some of the biggest customers.
In the CX area, SAP is not particularly strong in with its Marketing Cloud (although the software is underrated in my eyes)
With SAP Commerce, SAP owns one of the leading E-Commerce solutions.
The Sales- and Service Clouds are pretty strong and do not need to hide.
Growth in the Sales Cloud seems to be declining.
The Sales- and Service Clouds are functionally adjacent to SAP’s core business, which is the ERP aka Digital Core. Marketing is not.
SAP is investing in the service area, especially in S/4. The customer service module in S/4 is also essentially the former CRM Service.
One of the four core processes that SAP has defined is lead to cash, which includes a lot of Commerce Cloud and Sales Cloud, augmented by quite some ex Callidus (CPQ, Commissions) and some Marketing Cloud.
SAP CPQ, the former Callidus CPQ has been moved organizationally towards the ERP group.
A good part of the on premise SAP CRM Sales and Service have been made part of S/4HANA.
SAP has invested a lot into integrating the acquired solutions into the own software; this to an extent that made customers worried about the further roadmap.
SAP has created a number of microservices on the SAP Cloud Platform that resemble business objects, in particular the business partner and with SAP Graph has introduced a business object orientated access model for its solutions, which abstracts away from the actual data layer.
The Commerce Cloud is undergoing some modularization and the storefront is getting disjoint with Spartacus; this essentially creates a headless commerce solution, which goes beyond E-Commerce but makes commerce channel agnostic.
In a recent investor interview (to which I wasn’t invited, so I took the quotes from a cloudwars post by Bob Evans), SAP CFO Luka Mucic made a few interesting statements about the SAP CX stance:
- So, first of all, customer experience is absolutely a key market in which we want to be a significant player but with a focus on those categories where we clearly see that there is potential for SAP to be a strong #1 or #2 player.
- There is a very obvious one in which we are leading the market and that’s the whole area of experience management, where we have Qualtrics, which is the category leader and that we are truly excited about and we are obviously looking at a partial IPO of Qualtrics to even further exemplify and magnify our growth opportunities.
- The other area as I mentioned before is e-commerce, where we have with Hybris a very strong cloud fit that is growing in the high double-digits and that is in huge demand these days in particular with the challenges introduced by COVID. We think this is one of the core investment priorities for many companies around the globe.
- And then also areas like customer data cloud, for example, where we also have a leading solution that can help customers manage the GDPR and triggers a digital sales motion in a way that is conducive to consumer preferences.
- In others that from our perspective more translate into commodity markets where the growth rates are coming down and admittedly there is clear market leadership by others, we might look also at one or the other partnership opportunities. And in the meantime of course we see that the rising tide lifts many boats in many of those areas and so we will continue to look practically at an opportunity to participate in this growth.
- But we don’t necessarily see it as an area in which we would dramatically double down on our investments. But clearly, CX remains a critical pillar of our cloud strategy, just in a little bit more of a focused sense.

Then there are a few things that I learned talking with various people.

Not surprisingly, the CX team is incredibly busy.
There seems to be considerable effort spent into re-platforming the CX suite, moving it away from the underlying Netweaver, making it cloud native software.
The team is building something that they are calling a Customer Data Platform ++. This CDP seems to be built around the Customer Data Cloud as part of its core.
SAP has moved a few of its main business objects and engines into the SAP Cloud Platform and/or is breaking them down into micro services.
A strategic partnership with Thunderhead seems to be evolving, which is not overly surprising after Thunderhead’s partnership with Salesforce cooled down sudden- and rapidly and with Bob Stutz being the one who initiated the partnership at Salesforce
There is some B2B marketing functionality that currently makes its way into the Sales Cloud.

And now you surely ask yourself where all this does lead to?

This is a good question, that at this time only SAP folks can answer. But let me take a stab at it. These are my predictions that I of course will have to validate with what I will learn attending SAP Customer Experience LIVE. As a precursor: Knowing Bob Stutz, he does not keep people busy for sake of being busy. This means that the team follows a clear plan. This is also evidenced by Esteban Kolsky moving from a strategy role into an execution role. Just to be clear, this is an opportunity that one doesn’t get too often! Both know that they need to change the game in order to be successful against Salesforce. As indicated by Mr. Mucic, SAP will just charge the CX market all guns blazing. Instead the company will focus own efforts on areas where it can be a number one or two. This is clear by Mr. Music’s statements. It is also smart because it allows SAP to establish and strengthen footholds that it can use as beachheads to enable further growth. Looking at the Sales- and Service Clouds, I believe that these will stay part of the SAP’s investment portfolio, with the core SFA market clearly not being a main part of the investment as it is not a major growth market anymore. This is also confirmed by the Salesforce quarterly statements. That means, especially for the Sales Cloud, that the focus will lie on intelligent add-ons that make life easier for sales organizations, and everyone who is part of them. The basis for this will be the already announced refined and much sleeker user interface. Additionally, it is interesting to look at what Mr. Mucic did not mention. He mentioned three parts of the CX portofolio: Commerce, Qualtrics, and the Customer Data Cloud. In addition to not mentioning the Sales Cloud, the Service Cloud, there is a notable lack of the Marketing Cloud. Customer service is actually an investment topic for SAP, especially in the S/4HANA area. So, it will be interesting to look at what is happening there, and how this extends into the customer facing front end, where Salesforce is attacking. Looking at the Marketing Cloud, and combined with what I observe and hear, the Marketing Cloud will not make it into a top two solution anytime soon. It is also at the fringes of the Lead to Cash process, which is one of SAP’s four core processes. Which is a shame. Powerful as it is – and it really is – the reasons for this lie back in 2016 or even before when there wasn’t enough focus on marketeers’ immediate needs. Now, thinking about a budding partnership with Thunderhead, some of the weaknesses of the Marketing Cloud could be resolved, given that the integration will be out-of-the-box and at low cost. The Marketing Cloud is already strong in first data management and with adding Thunderhead into the mix, it can become leading in customer journey orchestration. One remaining missing piece then would be out-of-the-box integrations into leading content management systems. Looking into Mr. Mucic’s statements about the Customer Data Cloud and at the high level agenda of the SAP Customer Experience LIVE, SAP has built something that can be considered the central customer master data hub for all SAP solutions, which is something that is sorely missing for quite some time now. If what I hear is right, SAP finally put the $ 2.4 bn investment into Gigya to good use.

And finally, some suggestions

SAP migrates a good deal of SAP CRM into S/4HANA while Salesforce is digging into SAP’s CX lunch. It could be interesting to be more aggressive about informing especially new, but also migrating customers that S/4HANA has quite some of the CRM functionality that customers need. And that it comes for free. Playing this card would potentially help swinging some Salesforce vs. SAP Sales Cloud deals into the SAP direction. Not all of them, but some. And this would nicely tie into the story of the intelligent enterprise and strengthen it. Industry solutions is something that SAP lately focuses on again. Good. This should be continued as it was one of SAP’s strengths and as the current CX main competitor – Salesforce – invested into industry solutions. Thinking this a little further, removing the artificial boundaries between front office and back office by offering all business objects and processes as services would be a real game changer. Many of the necessary pieces are available. It would let the applications vanish and build upon SAP’s strengths. Properly done, it would also remove the need for a (visible) middleware to connect SAP to SAP. This may be a long shot, but SAP Graph points into this direction. And finally, as a partner, I would wish for more integrated, configurable, and affordable demo systems. Frankly, it feels like pricing for these is at least as high as it is for customers. List price, to be sure. Partners are helping SAP to make a lot of business. They are using demo systems for generating business for SAP, so it would be great to have a closer look at how partner solutions are offered and priced. A page or two out of the competition’s book might be helpful here.

SugarCRM supercharges its AI by acquiring Node.io

Tue, 25 Aug 2020 09:52:38 -0400

The News

On Monday, August 24^th, 2020 SugarCRM announced the acquisition of node.io. I had the pleasure to get pre-briefed by Craig Charlton, CEO SugarCRM and Rich Green, Chief Product Officer and CTO SugarCRM about this topic. Node was founded in 2014 with significant expertise, including ex-Google personnel and he creator of the Alta-Vista search engine. According to Crunchbase, the company has acquired $43.5M US to innovate around AI as a service. The company applies deep learning to help organizations make better predictions and decisions that impact their bottom line and focuses on delivering accurate predictions even with minimum CRM data. It does this by taking advantage of large data sets that it acquired or has free access to, including company and available business related personal information. That way, it is possible to hand over only a limited amount of SugarCRM data to Node in order to achieve accurate predictions. Instead, the prediction engine runs almost exclusively on Node data. According to Charlton and Green, SugarCRM itself also does not see any personally identifiable data (PII) but only meta data out of the Node system. One core idea behind the acquisition is that superior business outcomes need a combination of internal and external data. As Paul Greenberg gets quoted in the press release “now more than ever it is critical to leverage all available data and signals to work towards better outcomes for both customers and the business alike”. SugarCRM compares the result of combining CRM data with the data and intelligence provided by Node to the switch from a low fidelity to a high definition view on the own business and its customers. The outcome of this switch is predictability, which in turn leads to the benefits of more revenue, lower cost, and reduced churn. There is a clear go-to-market strategy. In the first three months after this acquisition SugarCRM will concentrate on driving awareness in the market and gaining deeper insights for productization. Then, in the next three months, the company will embed predictive, AI powered insights into the core product, based upon the existing value proposition. From then on, premium editions will follow. In future, the Node system will exclusively serve SugarCRM customers.

The Bigger Picture

The capability to infuse data and AI into business applications have become table stakes for CRM and CX vendors. The value of CRM and CX systems is a result of their ability to provide insight, help people focus on the right customers and activities, and to make accurate predictions about the future and suggestions of what to do next. All tier one vendors and a number of smaller vendors have built their own AI systems to accommodate for this. SugarCRM, in the process of getting its mojo back, needed to first concentrate on its platform to lay the foundation for building AI capabilities. The second step towards infusing AI capabilities into the business application stack is to make it easy to use. Most companies, certainly not those in the SMB market, do not have data scientists nor the resources to hire any. Instead they need systems with the ability to ingest data, train itself based upon this data and validate the training success, so that they can be used directly and without IT support. In other words: The AI needs to work out-of-the-box. Having a working AI is only one part of the picture. The other part is the availability of lots of data – and I mean LOTS of data – of different sources that help creating the models that allow the pattern matching necessary to generate accurate predictions. Primary sources for this data are the own transactional and associated systems, including voice of customer, DMP’s or profile building systems and server logs. Additional data comes via partnerships with data aggregators or search engines. This data covers anything from industry, company, people, market or any other public data, e.g. weather data.

My Analysis and PoV

In the 2020 Magic Quadrant for Sales Force Automation, Gartner noted artificial intelligence, “advanced AI-based sales technology abilities” as “modest in scope” when compared to the leaders of the quadrant. Gartner exemplifies “AI-based prescriptive next best actions and predictive engagement scenarios” as missing. While Gartner is not that candid on AI in the 2020 CRM Lead Management Quadrant it still refers to lead analytics as being one of the main cautions. Consequently, SugarCRM was working on an AI strategy. Going the acquisition road certainly is targeted at increasing its implementation speed. Before proceeding with the acquisition SugarCRM conducted some tests on its own data set with node and found that node significantly outmatched SugarCRMs predictions for the conversion of marketing qualified leads to sales qualified leads and from there to the conversion to closed won. Similarly, the tool achieved a remarkable accuracy of 88 per cent for churn prediction. In Craig’s and Rich’s words the accuracy of node on SugarCRM data “is as close to having a crystal ball as anyone …” This test took all of 24 hours, which is testament to the simple API that Node offers, and quite remarkable, too. I have rarely heard executives being that excited about acquiring a technology as Craig and Chris were during our conversation. Given these figures and the ambitious roadmap, covering marketing, sales, and service, Sugar’s AI capabilities will certainly be delivered faster than originally planned. The SugarCRM story of combining internal with external data sounds very similar to the SAP story of combining transactional and experience data. The main difference is in the second data set. While SAP relies on data that is mainly supplied by customers and users, SugarCRM with Node relies on data that is mostly totally external to a company. The acquisition of Node pays well into the SugarCRM story of the time-aware data model and the no touch information management. The time awareness is brought forward to not only cover and analyse changes that occurred up to the present time but also now covers the ability to predict with what Node calls its Artificial Intuition™ technology. The no touch information management story is strengthened by accurate predictions returning from the AI subsystem that deliver value to the users by being immediately actionable. There is no further data entry needed. Of course, and that always needs to be said: The better the basis of existing data, the better the AI. There is no free lunch here. So, there is a lot to expect from this acquisition. SugarCRM customers will see a lot of exciting new capabilities through the course of the next twelve months. Last year, I asked whether SugarCRM gets its mojo back. This year, I can say, it gained a lot and is on its way to get even more.

Salesforce Q1 FY21 Numbers - Quite Good, eh?

Tue, 07 Jul 2020 11:04:41 -0400

The news

It is reporting season – and I am actually already somewhat late to have a look at Salesforce’s Q1 figures of fiscal year 20/21 and to think about some implications. The earnings presentation makes for an interesting overview, more details are in the quarterly filing, the earnings release, and the transcript of the earnings webcast. So, let’s get into it and look at some figures, concentrating on the company overview, result highlights, revenue and margin developments, revenues by cloud and region. Right on the first content page Salesforce states that it

Is #1 CRM software provider worldwide
Consistently delivers durable revenue growth
Is the fastest growing top five enterprise software company
Is uniquely positioned to help customer drive broad-based digital transformation

Revenue is up 31 per cent (at constant currency) to nearly $4.9 billion for this quarter, which is slightly below the Q4/FY20 guidance. Operating cash flow shrank slightly to $1.86 billion year over year. The company adjusted the revenue guidance from $21 - $21.1 billion as per the Q4/FY20 down to $20 billion. GAAP earnings per share are adjusted to ($0.06) to ($0.04) from $0.12 to $0.14. Growth of FY21 operating cash flow is adjusted to 10 – 11 per cent from 20 per cent. GAAP operating margin went down by 8.5 per cent points to a negative 2.9 per cent with the non GAAP operating margin going down by 5.1 per cent points to 13.1 per cent. On the revenue distribution frontier it shows that Salesforce’s growth happens in the ‘Sales Platform & Other’ category, which vastly outpaces the other clouds already since Q4 last year with a growth of 62 per cent points. The result of $1.4 billion includes around $300 million coming from the Tableau acquisition of August 2019.

The bigger picture

As usual, Salesforce reports about a month earlier than the competition. So, it will be interesting to have a look at the July figures of Microsoft and SAP, once they are released. This is the first Salesforce earnings report that can show some impact of the Corona crisis, during which Salesforce, fully in line with its values, showed considerable loyalty to its employees, customers and community. On the other hand, a lot of vendors strengthened its capabilities to support remote work early during this crisis, e.g. Microsoft improving Teams to compete with Zoom or Zoho with its Remotely suite that the company released early in the pandemic. The business applications market changes from a pureplay application market to a platform market. This is a trend that can be observed for some years now and which all major players, including Salesforce, cater for. Salesforce itself is fairly strong in three of four categories of what defines a platform, and has recently announced Salesforce Anywhere, to increase the capabilities of its productivity suite, which can also be seen as a reaction to Covid-19. However, as a platform market is a winner takes it all market, it is important to be positioned strong enough to be able to dominate the current oligopoly of Microsoft, Oracle, Salesforce and SAP as tier 1 vendors plus a number of smaller vendors with platform ambitions, plus the hyperscalers (Alibaba, AWS, Google, Microsoft), which partly do business applications, too.

My analysis and PoV

Salesforce, similar to SAP, is not in the infrastructure business. So, the words of SAP CEO Christian Klein’s “ we have to own the business platform, we have to own the application layer” hold true for Salesforce as well. Or else the company needs to invest into infrastructure. In addition, Salesforce concentrates on the front office and does not have significant ERP or any supply chain capabilities. I have written about the business applications market having turned into a platform play multiple times, not in the least in my ‘Clash of Titans’ series (Platform Play, Microsoft and SAP weigh in, The War Cry: Oracle and Salesforce, The IaaS Platform Providers). This shift has made the platform crucial – with platform not equating the technical platform. Salesforce has clearly understood the importance of the platform. Evidence for this is how the revenues are distributed, with the biggest gain by far being on the platform side. A grain of salt in this number is that nearly half of this growth figure is coming from Tableau, a 2019 acquisition. Still, this proves the point that platform is more than a technical platform but needs to include additional services, including AI and analytics. What is a little worrisome is the low operating margin, which is actually negative. This suggests that, to some extent, Salesforce is buying growth, with it being doubtful that an Amazon type of model works in this type of market. On the other hand, Salesforce shows growth that well outpaces the predicted CAGR of 14.5 per cent for the next years and with 18.4 per cent the company has a market share that is as high as the next for competitors hold jointly. Additionally, remaining performance obligations remain high, so that Salesforce can sustain its low profitability model for some time. What should be really looked at by SAP is that Salesforce’s biggest growth market is Europe, SAP’s home turf. While the Americas account for three times of Europe’s revenue, this is a clear sign that Salesforce makes inroads in Europe and shows an increased win rate over SAP. Lastly: Lots of kudos to Salesforce for how it acted in and reacted to the current crisis, especially when it came to providing financial relief to customers and supporting own staff as well as the communities surrounding the companies. I am very eager to see what numbers Microsoft and SAP have to report these days.

Customer Experience in Times of Remote Work

Wed, 20 May 2020 08:27:04 -0400

Many analysts, including myself, have repeatedly written about us having entered a new normal, which is enforced by a so-called green swan event – an event that according to BIS is “extremely disruptive and that could be behind a systemic crisis” (brackets set by Thomas Wieberneit). Supply chains are broken, employees need to work from home, stores were forced to close for prolonged times, and so on. This has the potential to seriously harm the base function of a business, which is helping their customers solve their problems. Looking at the pyramid of customer expectations, businesses are often barely, if at all, able to maintain its lowest level – the level of effectivity – and are far away from making it easy for their customers or even providing them with a joyful experience when interacting and engaging with them. Figure 1: The hierarchy of customer expectations Yet, we are in an era where products and services themselves get increasingly deprecated and the experience becomes the main distinguishing factor for continued success. Still not all organizations are set up to deal with this. Most are not resilient enough to fend off or at least mitigate the disruption caused by a crisis. Some organizations are affected more than others. So are the people who work in these organizations.

Salespeople cannot interact with their customers in the ‘usual’ way anymore. They cannot go out and visit them currently.
Customer service professionals need to change their ways of collaboration with their colleagues, they cannot just ask their neighbour anymore.
Marketing Teams cannot create and host offline events due to distance and meeting restrictions.
Finance departments see challenges in creating invoices in time due to inaccessibility of information, advice, data and documents.
Bonding between colleagues works different now, as there is no coffee corner anymore – nor the common smoke. Social interactions work differently now.
Stores can only serve a very limited number of customers, if at all, again, due to distance and meeting restrictions.

These are different problems that need different solutions. Not solving them results in both, employees and customers, not being satisfied. However, looking at the examples above, two common themes emerge:

People cannot interact with each other as they are used to.
Processes, that rely on siloed best of breed implementations, break down.

The good news is that they have two common denominators: culture and technology. About the role of culture I have written a while ago: Employees make, and want to make, customers happy. Therefore, it needs a relentless focus on the customer and it is the role of management to make employees happy, so that they can do what they want to do. Culture is the foundation for a business to be an integral part of the solution of the problem facing its customers. Then, there is the question of technology. The ability of employees to provide customers with a good experience requires powerful applications, built upon a strong platform, which big companies like Microsoft, Oracle, Salesforce or SAP, but also emerging players like Zoho provide. Wisely selecting a platform and gradually integrating processes and data on it to serve people – employees and ultimately customers, is key to business resilience. Figure 2: The building blocks of a customer experience platform This platform provides four elements:

A strong technology platform that holds and exposes the main capabilities that all enterprise software needs in order to be able to create a great experience: Analytics, integration, machine learning/AI, IoT services, blockchain, database access, security, no-code/low-code development services, to name just a few of the more important ones. The ability of organizations to innovate and while maintaining a stable core is depends on this.
Insight, i.e. actionable information with the objective of achieving an outcome. Insight is what enables companies or individuals to turn raw data into actions that yield positive results for customers and therefore for themselves. This data may be structured or unstructured, transactional or behavioural, etc. Data may be first party, second party, or third party data. Through the use of analytics, data can be turned into information and through the use of advanced analytics and AI into insight. The services to enable this are delivered via the technology platform.
Productivity is about the effective and efficient process automation, where possible combined with an efficient way for people to get their jobs done. Especially within a business, but also across businesses, people need to collaborate easily and efficiently. This requires a lot of tools, services, and a strong data sharing ability. It also requires people to interact with computers not in the computer way but the same way people interact. This is one of the main reasons for the rise of speech and voice interfaces. Efficient collaboration, based upon insight, is not only necessary for people, but for interacting software systems as well; it is crucial for an effective process automation.
And finally, an ecosystem of customers and partners, that enables scale. This scale is achieved by building and nurturing an ecosystem of partners. Partners are developing solutions that augment the core ones; other partners implement solutions across the ecosystem. To be accepted, it needs to distribute the value it generates fair and transparent to all involved parties.

As said above, only few software vendors are capable of providing this platform, along with the relevant business applications and a culture that bases on being part of the solution, not the problem. One of them being Zoho, which recently invited me to their analyst briefing 2020. Many thanks again to Sandra Lo for inviting me to this enlightening event. You want to learn more about how you can set your business up to be able to deliver the same high customer experience in a post Covid-19 world? Then join me in a webinar on June 4 at 2 pm CET and discuss how you can leverage the opportunities created by this crisis. I am looking forward to discussing with you!

Zoho - A True Unicorn

Mon, 02 Mar 2020 11:06:18 -0500

End of January Zoho held its 2020 Zoho Days, an analyst summit, which I was happy to attend, along with more than 60 colleagues, as the only analyst from Germany, as it seems. Sadly, it took me quite a while to complete this – Zoho deserves a faster commentare. But hey, let’s look forward and get rolling. Zoho is a privately owned enterprise software company that has quietly evolved from a small software company in 1996 to an ambitious global player that serves the SMB- and enterprise CRM market with cloud applications. The company has a set of 45+ business apps with more than 50 million users, 10 data centres and counting, and is available in 180 countries. The company is profitable and maintained a CAGR of more than 30 percent over the past five years. But why quietly? Because Zoho managed its growth pretty unusually (almost) fully organically with only very minor acquisitions. Crunchbase lists one. Following this unique approach, which defies the traditional law of going big fast, the company managed to build a solid platform with a unified data model that allows it to crank out amazing software at an incredible speed, and with a track record of growth that is well in the double digits. Zoho offers a suite of business, collaboration, and productivity applications, supported by development environments, services and infrastructure. Besides CRM, the applications cover a good part of the value chain, including some ERP type of applications, like order management, warehouse management, or billing and project management, HR and accounting. These apps are built upon a services oriented soft- and hardware stack that is purpose-built by Zoho towards enabling a good user- and customer experience and that allows for extensibility from a no-code up to a full coding level. These apps are bundled into the current flagship product named Zoho One, which has a price point that other vendors do not consider profitable. Zoho, a long time ago, has decided that ‘our customers should not find us to be a costly input’. This business code is key to understanding Zoho and it has a number of implications that the company relentlessly pursues:

There is no costly sales organization. The own sales happens purely inbound. Channel partners may have an active sales force, but Zoho itself works inbound (at least for the SMB market, more about this topic later).
Zoho is relying entirely(!) on its own infrastructure. Not only is the company running own data centres with custom built servers – instead of following the rush to use a hyper scaler – but it also owns the complete software stack, including all services such as machine learning and database, to name but two. Historically, the company also can do monitoring of services, which comes in quite handy following this (at the outset not so intuitive) strategy.

A word about culture

Zoho co-founder and CEO Sridhar Vembu is not the one who seems to be fond of current neo-liberal thinking. Instead, he conveys – and lives – an outside-in thinking of ‘doing right as being the best for a business’s success. This was also the main theme of his keynote that followed the very positive ‘State of Business address of Chief Strategy Officer Vijay Sundaram. The main key words are ‘values’, ‘humility’ and ‘frugality’, followed by ‘efficiency’ and ‘independency’. And do not forget: Zoho is a fast-growing, profitable business. Vembu started his keynote off with the (real life) example of a rural economy of farmers, where suppliers as well as customers demand a price. The farmers are supplying a commodity and are sandwiched between these more powerful entities. They are in a dilemma. Cloud business software is such a commodity, too. It has some costly suppliers like electricity, hyper scalers, real estate, healthcare, etc., which need to be tightly controlled. Part of Sridhar Vembu’s answer to this dilemma is to give back to the communities. As a consequence he himself moved into a rural area of southern India and grows Zoho teams in rural areas. Why does he do this, as it contradicts common ‘wisdom’? Because the cost structure for businesses as well as for people grows too high in the centres. He uses the allegory of ‘top soil erosion’ for the movement of people into areas where they think they can build a fortune for themselves. Currently this is abroad, outside India; a poor practice for an economy – Vembu is convinced that Zoho’s goals are better achieved in rural areas, therefore supporting the local environment and economy. For the individual, there is more actual income in rural areas than in towns, and this income serves to grow the local economy as it is often spent locally, too. From a company point of view it also supports the company objective of not becoming a cost factor for customers but offer value at a low price. He is not about individual greed but about growing together. Another striking point was made by Raju Vegesna during day two. He talked about how privacy and ads do not really fit together and how Zoho refuses to sell its users data to the ad industry (he names this industry ‘surveillance industry’). Apparently Zoho has gone to great lengths to remove 3^rd party data capturing code from its sites.

And a word about strategy

There are some key aspects to Zoho’s strategy:

Zoho has developed its whole soft- and hardware stack. The software is not running on a public cloud but in own data centres. Except of a few open source libraries that it uses, the company develops all its code itself and builds the necessary skills (e.g. when it comes to data science and machine learning).
Zoho does not position itself as a software company but as a platform company
Zoho wants to provide value at low cost and ‘not become a cost factor’ for its customers

One could say that these aspects are all consequences of the overarching strategy of being in control of the own destiny. To achieve this, the company provides an integrated suite of applications that base upon the same data model, architecture and base services. This suite of applications is currently marketed as Zoho One and covers most parts of CRM plus some ERP functionality, like accounting or HR, or operations. Similar to Microsoft’s goal of being ‘the fabric that ties businesses to their customers’ Zoho wants to provide the ‘operating system for businesses’. Having an SMB legacy, Zoho has a very strong inbound sales channel and also, which prepares it for enterprise business, a growing channel sales. One can say that Zoho really mastered inbound marketing and sales. This makes sure that investments can be made where they matter: to the products and solutions. Zoho, first of all, is a technology company and therefore strives to keep the cost of sales low. Being on a growth trajectory, Zoho tackles the double challenge of addressing new regional markets and larger enterprises by relying on own experienced personnel to build and lead these markets and to hire local talent. Zoho starts to see wins against the top tier players in the CRM arena, which proves this strategy. The strategy of challenging own personnel to build and grow a market is in contrast to the usual strategy of hiring local leadership and support this new staff with own personnel. Being able to do this also shows how the company is able to retain and grow talented personnel. Establishing and growing a new regional market is not easily done, especially not for an engineer. Still, it works well for Zoho.

Finally, a word about people

The people I have met share a number of common traits. They are passionate about what they do, and they give their all. This rings through every conversation that I had with Zoho representatives. For me the first contact is analyst relations, where this trait shows particularly strong (after all you are normally not too much an introvert in this role). The analyst days have been organized and run admirably by Sandra Lo and her team. One does not see this passion too often, and it is good to see. They are interested in the outcome for the customer, not in positioning themselves. They want to do the right things, and do them right. This shows right from the CEO level. The Zoho founders are totally unassuming persons who do not put themselves upfront but what the company does. They are part of the team, instead of having a team. This is in stark contrast to the usual image of a CEO. The people are proud of what they achieve. And they should be, because they do it the right way, by looking outside-in. They know their stuff. While this doesn’t seem particularly surprising, it is combined with an eagerness to learn. Throughout the event there was a desire to learn more, look at things from another angle and to find out how to possibly blend the learnings into the Zoho strategy. There was as much roll-out of valuable information to us as there was the wish to get information and opinions.

My Analysis and Point of View

Everything I have described above, and probably a lot more, is only possible because Zoho is a privately owned business that follows a strong ethics. This strong ethics also serves as a moral compass that helps the company stay on course. And following a moral compass is building trust. Strong trust. In my eyes, this trust is the biggest asset that Zoho can build upon on its way forward. While this statement is true for every company, maintaining and increasing customer trust is even more important in the cloud applications industry that gets increasingly commoditized. With its approach of owning the full stack, providing a strong technology platform to support a strong suite of relevant and easy-to-use apps at a compelling price point, Zoho has strong answers to this commoditization challenge. Being in the position of addressing the enterprise market from the SMB side helps as well, as success in the SMB market is only possible by offering the right solutions while being able to scale efficiently and keeping the price point low. This way it is possible to disrupt the incumbents from below, which are geared to operate at a much higher price point. In brief, Zoho is an admirable company that cannot really be measured with the tools businesses are usually measured with. Yes, the company strives for growth and needs to be profitable, but both seem to be rather a consequence than the main objective. Zoho has a very competitive set of integrated apps that reside on a common software platform and architecture. The apps predominantly cover the wider CRM arena. These apps get enhanced and augmented by additional apps at a very fast rate. To be able to do this, the company must have a strong systems architecture and a highly efficient development process. Being on a completely own hard- as well as software stack makes the company pretty unique. Focusing on business apps on their own infrastructure makes Zoho a kind of hybrid between Oracle and Microsoft, and I say this with the best of all meanings – both, Oracle and Microsoft, are great companies in their own rights. However, running an own IaaS stack and offering infrastructure services also places the company in competition with the likes of Microsoft, Amazon AWS, and Google. To maintain the trust that the company established, it is crucial that these services are available, reliable and performant. Regardless whether this was a choice right from the beginning or whether this strategy emerged, owning the full stack sets Zoho apart from the other vendors. This, additionally, is in complete alignment with the desire of being the master of the own destiny. Further, it enables a strong software- and data architecture that allows for tight integration as well as for extensibility. It also limits growth to organic growth, as all software needs to follow the same architectural rules to not break the object model. The exception here are partners who develop software utilizing this object model. Not having one set of architectural rules is a challenge that all other software vendors do face. it makes integrating acquired software into a consistent and holistic business process hard work. Vendors who grow by acquisition need to build an abstract object layer on top of the various software components and then make sure that all software is properly interfacing with this layer, instead of architecting the software around a given set of principles right from the outset. That Zoho is right with this approach is evidenced by the fact that the company makes inroads into the enterprise market from having been an SMB player before. But then the enterprise market is where a threefold challenge lies that the company is already addressing and needs to continue to address.

From an organizational point of view the strong focus on inbound sales needs to be augmented by an outbound sales channel that focuses on selling to enterprises.
Functionally the company needs to improve upon its end-to-end support by increasing its ERP footprint in order to stay credible as a platform player
Already having an ecosystem of partners, this might get even strengthened to support overcoming the above challenges

The organizational challenge

Currently, Zoho is rightfully proud of its mastery of the inbound marketing and sales processes. At the same time the company has realized that the enterprise market needs to be addressed differently, while staying true to ‘the Zoho way’. This involves more active marketing and an outbound sales organization. Part of this way is a focus on PR/AR work, to increase reach and get out of ‘stealth’ – Zoho is still a little-known entity in the enterprise market. Events like the Zoho Days and Zoholics events are addressing this. An increased attendance of trade shows is testament to a push into strong visibility, which also will result in at least departmental purchases of Zoho solutions, which can act as a beach head. Zoho has a strong story to tell; and it needs to boldly tell it across channels – or even better have industry influencers, analysts and customers tell it – especially when standing up against the tier one vendors. These are currently owning the industry narratives. The establishment of solution consulting and enterprise business solutions groups provides the ability to showcase and then implement solutions, and therefore demonstrate the credibility that larger enterprises desire. Extending on these groups and capitalizing on their achievements is important for a successful organic growth into enterprises – which is something that Zoho has acknowledged and is actively working upon. A challenge is enterprise sales. The enterprise customer sales journey is different from the SMB journey. While it shares some touch points with the SMB journey, it has some different ones – like the regular requirement to contact an empowered and knowledgeable sales person. Sales cycles also tend to be longer (means more expensive and less scalable) than in the SMB market. This directly contradicts the current model. From a lead generation point of view there seems to be a focus on CIOs, which is important and should get augmented by addressing business unit heads. While CIOs of progressive enterprises assume a role of internal consultants, business unit heads are the key players who ultimately need to be convinced.

End-to-end processes

At this time with Zoho One, Zoho has a strong suite of 45 apps that mainly support CRM type of processes, plus operations, productivity, HR and some finance. This solution also has a highly attractive price point. Extending the footprint of these apps, plus adding additional solutions to Zoho One, complementing it to support more ERP type of users will vastly improve Zoho’s credibility as a business software vendor that supports the complete business – a vendor that provides a complete operating system for the business. Doing this, a challenge that needs to be overcome is the combination of the brand promise that Zoho One makes (operating system of the business) with its very attractive price point. Adding functionality to Zoho One likely does not scale the business enough. To avoid ending up with the unwieldy pricing of other vendors, this to me seems to require a careful change of the existing messaging during the addition of additional solutions or a similarly careful rebranding of the existing solution. The concept of an operating system of the business itself is convincing and a theme that really catches; maybe it can get extended by using CRM as a kernel to emphasize upon Zoho’s strong outside-in approach to delivering value.

Ecosystem

Zoho is on a good way to become a leading platform player, combining a technology platform that enables AI supported insights and productivity with a growing ecosystem. With the availability of Catalyst, Zoho offers an environment that helps ISVs, developers, and customers with a strong IT department to rapidly build and deploy applications at scale. This can become part of the solution for the first two challenges by providing partners with the ability to build own applications within the Zoho stack. These, in turn, help to increase channel sales, without harassing the overarching objective of being self-sufficient. But then, a strong ecosystem of ISVs, consulting partners, and customers is key to having the breadth and width of solutions, expertise, and services that are necessary to successfully compete the incumbents in the enterprise market.

Famous last words

Maybe an own, dedicated enterprise sales force that is augmented by partner solutions and channel sales, is the way to solve the dilemma of attracting enterprise customers while maintaining both, the ability to scale, as well as staying in control of the own destiny. After all, serious and fair partnership is one of the Zoho core values. Looking at potential customers, including enterprise customers: I encourage you to have a closer look at Zoho. Although the company’s upmarket move is not yet completely in place, companies of all sizes that are serious about their digital transformation will find value in Zoho’s offerings. Zoho might not yet be able to run the enterprise back end but if the company wants to get there, it will get there. And this will be followed through with an utter commitment to the customer. I think, this quote sums it up: ‘When you choose Zoho, you get more than just a product or a tightly integrated suite. You get our commitment to continuous refinement and to improving your experience. And you get our relentless devotion to your satisfaction.’ Disclosure. Zoho paid for my travel and accommodation to attend Zoho Days 2020

Clouds, Data Models, and Experiences - Three Entities, One Topic

Mon, 02 Dec 2019 12:00:47 -0500

After having covered some press releases about new releases and commenting some interesting organizational changes it is time to have a look at another topic – the need for consistency in a suite of cloud products. Consistency not only in the most obvious part of a family of products and solutions – the user interface – but the more important aspect of consistency, namely the data model. If you wonder how this relates to customer experience I invite you to read on. This post is actually spurred by a brief conversation that I had with Jon Reed of Diginomica about this very topic during one of the recent CRM Playaz episodes. Btw, if you do not yet listen in to the LinkedIn conversations of CRM Playaz Paul Greenberg and Brent Leary, discussing important developments and current events in the world of CRM – then you should. Really! But I digress. Back to the topic. The question is about whether it is necessary to have a unique data model or not. And this question might be answered differently, based upon the definition of ‘data model’. There is no doubt that a unique data model across applications is very helpful, actually a necessity. Where there is doubt, is whether this data model needs to be defined on database level or not in order to be really helpful. My point of view is that it does not need to be defined on database level. This point of view might be contradicting some ‘common sense’ wisdom and the strategy that some very successful companies are pursuing, including Oracle – as it seems – and Zoho. In the good old days before the advent of the ‘New Dimension’ products, SAP had one, too. On top of it sat R/3. Just to be sure: Having a common ‘data model’ across applications is a huge advantage. There is no doubt about this. But let’s dig into the two main possibilities on how to achieve and implement one. One possibility is to model and fix it on database level. To define and model it in a way that every attribute and relation has its one-to-one representation on the database. This model most certainly has some advantages. It offers one consistent and unique model of describing what is important for and about organizations and (business) transactions. It gives utmost control and precision about semantics and it makes it very easy to understand what a business concept is about. It is also performing well – if not normalized too far. This is the winning model, if it is correct and thought through – and can be kept stable. As I said above, it is the concept that Oracle and Zoho are pursuing. And I am not the one to say that either of these example companies has not thought through this approach of defining and implementing an enterprise data model. In fact I am very sure that they did! And they did even more. They did something that other companies, including SAP, and as far as I see, Salesforce, omitted to do for too long after the cloud and therefore silo’ed solutions emerged. The advantage of cloud solutions and best-of-breed solutions is that they focus on solving few problems, but these very well; and the customers without the necessity to buy much functionality they neither want nor need, get just what they want. However, with this comes a challenge, the challenge of diverging data models. Each of the applications, even within the same family of cloud applications, often has different data models. This is due to the fact that they are optimized for different tasks, so can be viewed as being quite natural. Just that it isn’t. It is the easy way. And it doesn’t work in a platform economy. Not at all. As I have written before, a platform constitutes of four pillars:

The technology platform
Tools that enable and provide insight
Productivity tools
And an ecosystem

The latter three pillars suffer, if the former does not provide for a unique, yet extensible, data model with well-defined semantics If the latter three suffer, so will business applications built on top of the platform. As ecosystem players provide own applications and extensions to existing applications, it is necessary to have a common language that describes how business entities look like, how they relate to each other and how they are governed. In times of make or buy decisions frequently being decided towards buy the right way to go is to offer a business meta data model that fulfils three main conditions:

It provides a definition of the main business objects from a business point of view.
It is extensible.
It allows for centralized maintenance across applications within an ecosystem.

Now, it should be documented as well, but that is another story … At SAP, in ancient times sincerely, this was a job done by the data dictionary (minus the documentation); partly done, to be honest. The data dictionary was an abstraction of the physical data model to describe business entities. Just that it was more geared towards abstracting from the database, as opposed to defining a business language. There are different ways to implement this business meta data model in a cloud first world. Microsoft developed the common data model, which enables no- and low code development across its ecosystem. Also providing the development tools and its own environments, Microsoft is essentially leading the pack. Salesforce promotes its own Canonical Data Model with industry flavors. Salesforce’s challenge is that it is a CRM company and not covering the full value chain. And there is another one, which I’ll mention a bit later. Zoho has gone forward similarly, staying in full control of their own destiny by not having acquired a single vendor so far (which makes up for an admirable strategy and success story). The company builds its apps around the concept of what they call data pillars, which are controlled by some apps that act as a database. Other apps use this database. Within its ecosystem these apps can be enhanced by means that stretch from no-code to professional coding. One of Zoho’s challenges is that the ecosystem still needs to get strengthened to be really on an eye-to-eye level with the big four. SAP is currently working on SAP Graph, which is a wrapper around the APIs of SAP’s existing products, creating a harmonized, business oriented API layer that can and should be used by application developers. They are coming bit late, but with a good and important approach. Additionally, SAP is working on SCP based micro services that manage the access and usage of business objects across applications. Done right these services could also have the ability to extend the business objects of the underlying and connected applications. One challenge is to keep these services in synch with SAP Graph. Ideally they are the same. The combination of SAP Graph and the micro services can be a real winner if the services do not only allow the management of data access but also the customer/partner specific extension of the data model and with it the corresponding web services. It cannot be overestimated: With the help of a common data model and semantics customers, vendors and partners can easily and consistently extend application families to serve their customers and users. This is the foundation for any attempt at providing positive and lasting experiences. On top of their own models, and jointly, Microsoft, Adobe, and SAP, together with a growing number of additional partners, are working on the Open Data Initiative ODI, which is ‘a common data model, and a common data lake’ that helps avoiding data silos and their integration. Having this data lake, based upon a well-defined semantics, and a well-defined API as given by a single data model across all applications of an ecosystem, is what enables the creation of engagements that can result in memorable experiences. Everything, and I mean everything, that creates insight and enables corresponding action powering engagements and experiences, depends on a data model like this. The power of ODI cannot be underestimated. The strength of ODI lies in its being cross ecosystem as it spawns across at least two major ones, therefore bringing the concept of a unified data model to a whole new level. Its weakness lies in not covering some more important ecosystems. But then this post is not about deficiencies of an initiative. It is about the importance of having and offering a joint data model and API for ecosystems. The importance of this cannot be underestimated as well. And decision makers need to have a hard look at where platforms are moving with regards to this topic.

Clash of Titans - The War Cry: Oracle and Salesforce

Tue, 11 Sep 2018 09:29:28 -0400

More Food for Thought

In the last article Clash of Titans – Microsoft and SAP weigh in of this little series, I discussed the strategy of two of the big four and how they are positioned in the platform play of the business software titans – and others. This article covers the other two: Oracle and Salesforce. These business software vendors are competing in a market that is changing – commoditizing – at a fast rate towards an experience market, and probably beyond, if I follow the argumentation and thoughs of CRM godfather and friend Paul Greenberg. Business application vendors can stay really successful only if they morph into platform players. And this platform is more than just a technology platform, but encompasses four dimensions. The four dimensions that are paramount to be able to deliver great engagements that result in lasting positive experiences are

Platform (IaaS/PaaS)
Ecosystem
Insight
Productivity

In this article I look at Oracle and Salesforce and how they position themselves in this game of thrones. But now, without further ado, let’s dig into the topic.

Oracle

Since the launch of what originally was project Fusion and now is Oracle CX, the company has done a remarkable pivot from being an on premise company to becoming a cloud company. The company has its strength in being a full stack provider with a full range of business applications. However, its main strenght is owning the gold standard database engine that runs the majority of business workloads worldwide. From its overall technological profile one could position Oracle somewhere between SAP and Microsoft as it with Open Office also owns a full fledged office suite that helps on the productivity side. However, Oracle is not a public cloud IaaS player although, at its core, it is rather a technology company than a business software company. The main purpose of the Oracle cloud is running Oracle applications, and running them efficiently. And to further reduce the resulting risk of customers defecting to other vendors Oracle introduced its Cloud at Customer back in 2016, which was actually a pretty good idea. This is also evidenced by Microsoft copying it with the Azure Stack. Ecosystem-wise, Oracle appears to be trailing Microsoft, Salesforce, and SAP. While the company owns significant assets that have their roots in the open source community, like Java, or Open Office, Oracle does not have the reputation of being much of an ecosystem player, but more of a kind of bully. Still, Oracle has a good number of implementation partners. Insight is one thing where Oracle has strengths. For one there is a full stack of business applications that are capable of delivering a lot of important data into Oracle’s machine learning algorithms. But there is more. The database. Especially since the introduction of the Autonomous Oracle Database Service. This service promises to bring down cost, while increasing performance and delivering unprecedented scalability and security. And it delivers data that can be used for improving one of the most worrisome challenges: It delivers the insight on security problems and is capable of acting on it. This is a value proposition that currently none of the other vendors can claim to have. Although it is only a temporary advantage, as so frequently in this business. Oracle owns a good number of productivity tools, namely the above mentioned Open Office. It has also intelligence built into the business applications – and the administration layers – that increase staff productivity. So, they are playing fairly well in this dimension, too. In my eyes Oracle should work on becoming more approachable, and getting rid of the image of being a bully. Improving on the ecosystem frontier while using the great database asset that the company has could make it an even more formidable player than it already is. Oh, yeah, and do not set your sights too much on AWS. Microsoft is your real opponent.

Salesforce

Salesforce surely is the current synonym for CRM software, and this not only because the company wisely chose this acronym as its stock ticker symbol. Evolving from its origins the company has evolved its portfolio into a wide variety of customer facing applications. The company also has realized long ago that business applications will get commoditized and that there consequently is a need for a platform, which can get used by its vast ecosystem of ISV’s and implementation partners. The platform that helped Salesforce starting their ecosystem is Force.com and, in combination with being an ecosystem player at its heart it was able to create one that is probably rivalled only by Microsoft’s. Salesforce’s Trailhead education platform is even better than what Microsoft offers. While the technical platform is (mostly) limited to customer facing applications, which also has a challenge on the data side, discussed below, the thriving ecosystem is Salesforce’s biggest asset. The combination of ecosystem and relentless focus on customer facing applications resulted in Salesforce taking an undisputed leadership position in the wider CRM market. Well, a strong sales strategy and execution helped to get there, too; still helps. However, as mentioned above, the company’s focus on CRM-like applications and then e-commerce results in limited access to data. And data is the raw material for insight – which is actionable information. From an insight angle, Salesforce has created its Einstein layer, which is embedded into the applications. Embedded intelligence is what can create immediate value for business users. It provides predictive analytics and recommendations, sometimes even prescriptions to users and/or takes away tedious tasks. And this is exactly where Salesforce’s data challenge lies. Salesforce has a lot of customer and order data, but none of supply chains or relations outside a company realm. This is where Oracle, SAP, and especially Microsoft have an edge. This was also an important reason for Salesforce attempting to acquire LinkedIn and looking at acquiring Twitter. The company finally acquired Mulesoft, which can alleviate the data weakness to some extent, while also serving as an improved glue between Salesforce owned applications and Salesforce to non Salesforce integrations. Mulesoft connects processes and therefore gives access to business data which it can also feed into Einstein’s machine learning capabilities. The main productivity tools that Salesforce offers, are Chatter, the embedded analytics applications including the Salesforce Inbox and the Lightning UI. With these the company covers business productivity but still trails the ability that e.g. Microsoft can offer with the office suite of products. In summary, Salesforce is a formidable player. Right now, no competitor can afford ignoring them in the wider CRM area. It, however, is not all hunkydory in downtown San Francisco. The company is in need of getting more access to data and better access to the supply side of businesses instead of focusing on the demand side, where it is undoubtedly very strong. Another facet is the need to staying perceived as the innovator of the industry. This one is particularly important as it helps Salesforce command premium prices, which keep it profitable. While, from a customer experience point of view one cannot go around Salesforce, the company’s low profitabilty is an achilles heel that the competition does attack and will continue to do to. In order to not run into the risk of getting sidelined, Salesforce needs to continue playing its strength in innovation while improving on its profitability – without increasing prices.

In Summary

Salesforce is sitting on the throne that the other three companies are after. However, it is not a stable position. Salesforce owns the definition of CX, but it is dangerously limited in its scope. Looking at the big four, Salesforce for SAP and Microsoft is the enemy’s enemy, that keeps them in a carefully balanced alliance … which probably gets instable if Salesforce shows signs of being dethroned – by either Microsoft or SAP. Having said this, I do not see Oracle as being one of the top three vendors, rather a number four. This is in spite of its tremendous database force, which already is attacked, too. Oracle is lashing out at Amazon, both Microsoft and SAP have Salesforce in their sights, for time being. The company that should get into the sights of everyone else is Microsoft. Microsoft has all it takes to become the number one, including the most compelling strategy for small and emerging companies. Then we see some smaller players like e.g. Freshworks or Zoho that have the chance of disrupting the big players from below. But is this a fixed outcome? Not by far. All these companies are playing their strengths. And then we have the big infrastructure players, too. Amazon, Google, and Alibaba. And then there is Apple. These companies, plus the likes of Facebook and Netflix, sit on the one commodity that becomes more valuable by the minute: Data. Alea iacta est! Non tacitus!

SAP acquires CallidusCloud - A Snap Analysis from Down Under

Thu, 01 Feb 2018 13:23:40 -0500

The News

On January 30, 2018 SAP announced that its subsidiary SAP America, Inc. has entered into an agreement to acquire Callidus Software Inc., a leader in sales performance management and CPQ software. With a price tag of around $2.4 bn this is the most expensive acquisition SAP has announced in quite a time. With this acquisition SAP gets closer to the target of assembling the “most complete and differentiated portfolio to manage today’s customer experience” and claims that the combination of the CallidusCloud Lead to Money suite in combination with its own (Hybris) customer engagement suite creates a “leading solution portfolio”. SAP intends to consolidate the CallidusCloud solution set into its Hybris portfolio, with the sales cloud being the technical integration point of the software. As usual, the existing management team will stay on board.

The Bigger Picture

According to the most recent Gartner Magic Quadrants for Sales Performance Management (dated 15 January, 2018) and Configure, Price, and Quote Application Suites (dated 29 January, 2018) SAP catapulted itself into the leadership position of Sales Performance Management and into a visionary position in the CPQ market. Forrester Research already in their Forrester Wave: Configure-Price-Quote Solutions, Q1 2017 placed CallidusCloud into the leader section of their wave. With SAP’s Hybris solutions, including Gigya, SAP already has a powerful customer engagement suite, albeit with some gaps, a significant of which got plugged with this acquisition. While SAP CPQ is fairly capable on the C and P there is some deficiency on the Q. And it bases on grandfather IPC – not a bad engine, but one that is getting tired. Friend Paul Greenberg’s reaction to this acquisition is: https://twitter.com/pgreenbe/status/958668991182057472 According to Paul, CallidusCloud would have been a good acquisition for Oracle, Salesforce, or Microsoft, too. Definitely for Microsoft, which does not have a significant CPQ that I know of. For Oracle and Salesforce this in my opinion is more of a perhaps, which then would have been more around making life difficult for the competition. Both already have a strong CPQ, and both are doing well in the Sales Performance Management area. The onus was on Microsoft and SAP in this case. Now Microsoft, as in the case of e-commerce, is the last one without owning a solution. It also should not be forgotten about the good Contract Lifecycle Management (CLM) capabilities of CallidusCloud. CLM is an important addition to CPQ, as contracts are negotiated as well as prices for product configurations, especially in large enterprise B2B environments. Just look at a contract as a configurable product. While CLM does not sound anywhere near as sexy as CPQ, I know of cases where the CLM is as important as the CPQ itself. And it is one of the portions of a deal that takes considerable time, where speed and convenience, combined in a powerful tool, are crucial. CallidusCloud has been a long-time partner of Salesforce, which in 2016 acquired Steelbrick. Likely as a reaction to this, CallidusCloudCloud entered into a strategic agreement with SAP to integrate into SAP Hybris Cloud for Sales in January, 2017. This agreement had its first real tangible result in September 2017 when CallidusCloud announced the first version of an integration into SAP Hybris Cloud for Sales. Last, but not least, while I do not buy the “reinvention of the front office”, this acquisition shows the importance of end-to-end processes. Integrating CallidusCloud sales enablement and CPQ into the front office software (SAP Hybris) facilitates efficient integration into the more transactional oriented back end. It is part of the back office of the front office, so to say. We are closing a circle here: There is no clear cut differentiation between systems of engagement and systems of record. This is especially true in times of channel agnostic commerce.

My PoV and Advice

This was an important, even a necessary, move for SAP. SAP, for quite a while, had a gaping hole in the cloud based CPQ area, which could be filled in a reasonably short area only by an acquisition. Possible targets for this have been companies like CallidusCloud, FPX, or companies dedicated to the SAP Cloud Platform, SCP, like Inmind Cloud, which is a CPQ solution built on SCP with a focus on manufacturing industries. As said above, this acquisition plugs some gaping hole in SAP’s solution portfolio. Remaining holes include a more manageable standalone ‘experience platform’ to augment Hybris Marketing, a competitive standalone CMS and DAM, better functionality around sales contracts (e.g. renewals), a story around the conversion of web sites and e-commerce, to name but a few. Regarding the ‘experience platform’ CallidusCloud might have a thing or two that can help augmenting it. Being integrated into SAP Cloud for Customer CallidusCloud’s CPQ very nicely augments SAP Cloud for Customer by enabling a set of important processes to an extent that probably only Oracle is able to deliver: With a seamless integration into the ERP back end. Further, this acquisition rounds off sorely missing functionality in the SAP Revenue Cloud. Revenue Cloud is strong where it comes to (repeatedly) bill for electronic products. It lacks in the ability to configure products, other than fairly simple subscription products. In other words, it is weak where CallidusCloud is strong. The combination of CallidusCloud CPQ & CLM and SAP Cloud for Sales is a good value proposition already now. While it may appear less as one piece than Salesforce with Steelbrick the round story delivered by this combination is able to convince customers not going the Salesforce route. With Salesforce currently being the perceived gold plated standard of all things CRM, this is quite a feat. CallidusCloud’s ability to directly include incentives and commissions as well as give a margin health indicator for a quote may sound like a small thing but in fact is a powerful tool. The integration of CallidusCloud into SAP is a priority for CallidusCloud for quite a while now, as is the integration of its own solutions into a coherent one. While back in October 2017 it was still visible that this integration is early stage, it also showed a huge potential. Businesses that chose CallidusCloud as the CPQ working alongside SAP Cloud for Sales now have a validation for their choice. CallidusCloud has some The bottom line is that for SAP customers the topic of CPQ is no reason anymore, whatsoever, to look outside the SAP ecosystem. Also, with this acquisition SAP also bought itself a good number of net new customers, especially in the Salesforce world. The combination of the facts above should throw some wrench into Salesforce’s gear and somewhat limit its growth options. And growth is essential for Salesforce, which delivers good solutions, at a high price point, and with low profitability. Salesforce is not an Amazon that can sustain a low profitability situation eternally. In closing, there is an interesting kink. CallidusCloud is built on .Net. While this supports the openness story it somewhat weakens the SCP story until there is a .Net runtime and development environment available for it. It will be interesting to observe what happens here. Reprogramming CallidusCloud on SCP is hardly an option.