It was a Tuesday again. This time Ralf Korb and I greeted Raj Balasundaram, Senior Vice President of AI at Emarsys as our guest - and had a second one, but more on this special appearance below.

Of course we were interested in both sides, Emarsys, the marketing automation company that was recently acquired by SAP, and in his deep experience with the implementation and use of AI based systems. We had lots of questions like:

Where is the marketing automation market headed? What is your view on marketing automation tools at the intersection of CDP’s, personalization, RTIM, Customer Journey Orchestration? Will these market segments merge? Will they jointly create another one?

What is the difference between Marketing Automation and Marketing Clouds? Is one used rather for B2B purposes and the other one more on the B2C side? Or is it different concepts?

What is the role of AI and M/L? What is AI after all? Is it just a vendor generated hype? Why should AI work now, after the previous hype cycles failed to deliver on the promise? What are promising applications of AI and machine learning in marketing?

Lots of ground to cover. And then we also touched pricing, which currently is a very hot topic. Raj has an interesting point of view - that I like a lot.

Last but not least, Ray Gerber, Chief Solution Officer at Thunderhead, who started to follow the CRMKonvo as an interested and active community member came in for some more in depth AI discussion. Things couldn't get any better, and of course we didn't stick to the hour that we gave ourselves. Too much high value conversation to be digested.

Enjoy this epic 1:30 h episode that is packed with expert information of two persons who know.

In this episode Ralf Korb, Marshall Lager and I had two very special guests: Bob Stutz, president of SAP's CX group, who shapes the CRM industry for more than 20 years now and Esteban Kolsky, former analyst, both independently and at Gartner. Esteban has deep roots and a passion for customer service processes and now leads the sales and service products at SAP CX. 

And then there was a special star, perhaps the youngest guest who we will ever have.

Again, and as usual for our CRMKonvos, we did not stick to one hour. Bob and Esteban actually shared their insights for a full 90 minutes, which is something for which we are deeply grateful.

We covered a lot of ground starting with how 22 years of experience in the military services can help in the software industry - and not ending with why it took him and his team that long to publish an SAP CX strategy. 

You are interested in the state of AI and machine learning? Ask Esteban - or listen to his statements in this episode. Same for what we are doing wrong in customer service for five decades now. And he needs to know, having a service centre background and having covered the service arena for 20 years now in various roles.

Did the acquisitions that SAP did in the past years make sense? Why did it take SAP that long to figure out some of the gems in their portfolio? 
How should pricing look like and why would make this pricing vendors build better software? 

Why Emarsys? Where does it fit into the stack - and why?
Ever wondered what the real purpose of a CDP is? Well, let Bob explain it. 
Will SAP go with Thunderhead? 

And why does Esteban think that SAP is actually the only(!) company around that can create CX the right way?

All this made up for a more than fascinating CRMKonvo with two of the most outstanding brains in the industry.

A little spoiler: Not surprisingly, the key success factors that matter in both environments - military as well as software industry - are "focus and execution".

The episode is in English, barring some introductory words in German - and after Esteban switched to his headset his sound quality went up considerably - so do not get disturbed by his first few statements.

It has been an intense 2 weeks. The CX or CRM or however you want to call it market got a serious makeover. After a long time without a tangible strategy, SAP announced a lot of things, starting with the intended acquisition of Emarsys, followed by an announcement about the release of a customer data platform as part of its SAPCXLIVE event, and then it also conducted its SAPCXLIVE online event in an impressive manner. I wouldn’t proclaim it ‘cineastic’, which is the current mot du jour, but still, it felt very much like a trade show, just virtual.

And the week before, SAP president of CX Bob Stutz shook the players during an executive roundtable (very good discussion, intense 2:40 hrs) with representatives of the big 5 held by the CRMPlayaz Brent Leary and Paul Greenberg. He openly questioned the enterprise software vendors pricing policies by asking why the industry does not go for a utility bases billing approach – or should I say utilization based billing approach.

Maybe it was just a challenge, as SAP applies usage based pricing with the indirect pricing model for its ERP software and intends to offer it for (at least parts of) its CX software.

Pre event some pundits, e.g. Bob Evans of Cloudwars and myself, dared a look into the glass ball, interpreting the SAP world differently.

What can be said is that any allegations of SAP withdrawing from the CX market, succumbing to the 800-pound gorilla that Salesforce is, should have been wiped out latest after the first few words of SAP CEO Christian Klein’s keynote of SAPCXLIVE.

The opening video to the keynote directly sets the scene by stating “you don’t own your customers’ decisions – you enable them” (around 10:50).

Klein makes things pretty clear by saying that “SAP CX customers are growing twenty percent faster than their competition” and that this is no different for SAP, as “CX is the fastest growing category in our portfolio”.

This is followed by the commitment that CX is “an integral part of the Intelligent Enterprise”, which is even stronger as it is combined with his face, and later naming CX a “key element of SAP’s holistic strategy”.

Figure 1: SAP commits to CX; source SAPCXLIVE

Klein supported this by quoting many conversations and with an example of a retailer who needed to react to the Covid-19 crisis, and didn’t ask for technology but for end-to-end solutions that revamped the whole customer journey while accelerating the digital transformation of the company. “A fancy online store is worth nothing, if you are running out of stock, have long delivery times or cannot offer flexible payment terms”.

Net, net, he says, only a harmonized data model and a connected customer journey can deliver the seamless experience that is expected by today’s customers.

Because of this, one “cannot think of CX as a separate entity; it needs to be considered as an integral part of an intelligent enterprise”.

Combining this with the already published information about the four core enterprise processes that SAP sees – one of which is lead to cash – this means that they are pretty much all in to the CX battle, albeit likely with some focus.

In a subsequent tweet that is not less clear he said that SAP regards customer experience as a cornerstone of digital transformation and as an integral part of an intelligent enterprise across every industry.

During an executives’ Q and A, Thomas Saueressig also emphasized that “customer experience is super strategic for SAP, as it is center of stage for the end-to-end intelligent enterprise”.

Boom. Broadside delivered. The glove has been thrown, and the sound of it hitting the floor resounded.

One thing is for sure, the void about the CX strategy has been filled.

This was a statement that was long waited for, but one that at least for me did not come totally unexpected. After all, industry leaders like Bob Stutz or Esteban Kolsky would not have stayed without knowing that SAP is serious about this market.

Klein combined this commitment to CX with the narration of SAP helping to make businesses sustainable, profitable, and resilient at the same time; a story line that we already heard in his keynote of the annual SAPPHIRE event in June this year.

Which begs the question: What is SAP CX?

The answer to which is: Personalized, seamless, everywhere.

What?

Well, these are the three words that SAP uses to describe how it distinguishes itself from the competition.

Figure 2: SAP CX according to SAP; source SAPCXLIVE

According to SAP “truly meaningful customer experiences have three key characteristics: They are hyper personalized, they are seamless, and they are delivered across all channels your customers opt for at the center of these experiences is one key ingredient: data. ”.

SAP CX, with the existing solutions, plus the newly announced SAP Customer Data Platform, plus the planned acquisition of Emarsys, is supposed to be exactly what delivers to this “truly meaningful customer experience”, with the CDP at its core – and Emarsys providing the ability to engage a person using the right channel and the right messaging.

A reality check

Now, the question is, in how far all this changes the view that my glass ball provided me with.

Another, perhaps more interesting one is, in how far do the news about SAP CDP and the Emarsys acquisition set SAP apart from Adobe, Microsoft, and Oracle, which have a similar market share – and bring the company closer to Salesforce.

As I already said and wrote before, the intended Emarsys acquisition came unexpected for me. My assumption was that SAP rather partnered, therefore strengthening the ecosystem, than purchased. According to Bob Stutz Emarsys delivered the missing piece, namely the omni channel engagement platform.

Still, it makes sense and I will certainly observe what is going on.

The CDP makes even more sense. For one, this is a market segment that currently cannot be ignored, and secondly especially not if there are a bunch of solutions in the portfolio that can assume this role, given a little TLC (tender, love, and care for the inaugurated amongst us).

SAP decided to implement its new CDP on the Gigya platform, which I think is a very good move. This gets proven by the claim that it took only a bit more than half a year to implement it far enough to be releasable.

Which makes the question why it took SAP that long to realize what they had at their hand interesting. Bob Stutz’s reply to that question, when I asked him in a recent CRMKonvo, was “ focus and execution”. But then I, myself, was admittedly a bit short in my initial analysis of the Gigya acquisition; still, both Gigya and the then emerging SAP Marketing have been great candidates for morphing into a CDP. Just that only the Gigya platform had the elements identity and consent management that are crucial for a CDP. This is something that I only discussed about 9 months later… well, in part; sometimes I am really slow. Given that I find some time I will write an analysis of SAP’s CDP approach in the next few weeks.

So, in summary I (luckily) was wrong about marketing and at least partially right about the customer data platform, CDP. The good news about CDP is that SAP even took it considerably further than its original definition by the CDP Institute, which claimed ownership of a CDP for marketing (which is a notion that it luckily changed). SAP still goes further than the current definition of a CDP by making it actionable, and by explicitly opening it up for supporting customer service.

The CX strategy in a nutshell

Which brings me to the strategy behind SAP CX that supports the intelligent enterprise, which consists of 6 elements that build upon and extend each other.

Figure 3: Elements of SAP CX strategy; source SAP

It is clearly visible that this is already being executed upon, e.g. by pushing Spartacus or the CDP and by making Esteban Kolsky responsible for both, Sales and Service capabilities of SAP’s CX stack. Although Qualtrics will have its IPO it gets ingrained into the stack deeper and deeper.

Marketing we already covered.

My Take

In Germany we have a word that, literally translates to “What takes long, finally gets good.”

During our CRMKonvo on October 20, Bob told us, when he was asked about why it took so long to vocalize a strategy to the market that there was “no hurry to rush it out”. He wanted to be absolutely sure that he and the team were able to execute on the commitment and be able to deliver. And with the introduction of the CDP and the Emarsys acquisition, the timing turned out to be perfect.

I cannot but agree.

I think that, with the story that SAP told as part of the SAPCXLIVE event, the company has shown that it is serious about the market. It puts a holistic view on businesses that makes CX part of a bigger whole by emphasizing CX being part of the complete value chain of a business. SAP is deliberately blurring the lines between front- and back-office. This is in contrast to Salesforce, who by design focuses on the front-office.

If SAP manages to get rid of visible middleware between its solutions, if enhancements to business objects in one subsystem are transparently carried over to other subsystems and if the new CDP becomes the golden customer record not only for front-office solutions, SAP has a very strong and compelling story line.

The remaining topics then are creating the trust and rectifying the image that SAP is hard to work with, which is an effort that has already started.

My prediction is that with this integrated CX strategy SAP has a good chance to set itself apart from the immediate competition and can start to close the gap to Salesforce.

May the games continue.

#CRMKonvos #17 - The dark side of the Cloud - danger, hope, liability, subscription, privacy ... are they all gone? Quo vadis on premise and managed services? We are looking at the dark side of the cloud, its effects, chances and possibilities.

We are also analysing the acquisition of Emarsys by SAP, do a little breakdown of the Microsoft cloud services that got announced last week (MS Teams anyone?) and general perspectives. Is the coveted 360 degree on the customer an illusion? And there is some harsh reality facing some suboptimal corporate structures. Fair play, as lived by Zoho, is another topic to be covered ...

Expectations towards SAP and its Customer Data Platform CDP++ are going towards the next level. Is SAP planning to destroy the silos to create more transparency? Is CDP really some BS (hint: not really) or can it be used in a valuable (for the customer) way)? A CX platform or at least a #COTP (Customer oriented Transaction Platform) are possible ways.

Lots of ground to be covered.

This episode is in German

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.