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.

The News

The Bigger Picture

My PoV and Analysis

• SAP now is a considerable CIAM player
• CiAM adds important glue to the current offerings