On January 10, 2017, SAP announced a bundling of their IoT portfolio of initiatives to focus on business outcomes instead of technology while combining the set of emerging products and solutions under the brand name Leonardo – as in Leonardo Da Vinci, one of the most forward looking artists and innovators ever. This announcement substantiates SAPs commitment to invest two billion Euro in IoT over the next 5 years. The new portfolio will combine adaptive applications, big data and connectivity as packaged line-of-business solutions, covering a range of topics. It bases upon a rebranded – and repackaged(?) HANA Cloud Platform, enhanced by the micro services for machine learning that were announced earlier and which I covered here. This enhanced platform is now called SAP Cloud Platform. As per a blog post accompanying the Leonardo announcement, the high level architecture of SAPs new offering looks like below and covers, besides a set of existing applications

• an IoT adapter – SAP Leonardo for Edge Computing – which serves as a device independent data input layer, essentially a kind of middleware, probably built on or using HCI.
• a foundational layer – SAP Leonardo Foundation – which includes the IoT business services that are to be exposed, enabling rapid development of applications. This makes up the functional core.
• and a ‘bus’ layer – SAP Leonardo Bridge – which enables the combination of real time data with applications and processes

Leonardo High Level Architecture - Source: SAP Leonardo is accompanied by a jump-start enablement program to accompany this initiative. This program includes introductory pricing and is intended to help organizations identify and validate IoT pilots and use cases, including expert staffing and using design thinking methodologies, thus easing the first IoT steps. Of course there will be a launch event to bring together customers, partners, and experts, showcasing innovations and strategies. According to Tanja Rueckert, EVP Digital Assets and IoT SAP with Leonardo connects “things with business processes and with people”.

My Take

This was long overdue. Overdue not only from SAP, but from any and every vendor. IoT is a means, not an end! As Brent Leary very recently said in a podcast with SearchCRM, IoT is still trying to make its way to provide value for businesses. This is imho due to the IoT market being vendor- and technology driven. SAP now takes the lead in tightly integrating technology into business process, and to show a clear path to business value. This fits neatly into the core of SAPs overall value proposition as an enterprise software company and it nicely combines numerous technologies and services that have been developed by SAP in the past years into a holistic piece that can deliver business value. I see this mainly as a rebranding instead of something net new, although there are some new pieces to this solution portfolio. This is also a bit of a concern. SAP now needs to keep up the momentum and deliver new intelligent, IoT based business solutions. What is interesting is the (important) combination of IoT and machine learning, which is mentioned only in the blog post, and which has the potential to make a real difference, e.g., when it comes to distributed intelligence. As a final word of caution, SAP only announced introductory promotional pricing. This means that there are still important open questions about pricing overall, which should be a worry for customers. However, overall this is good news for customers, as with this portfolio of services and technology every IoT investment can be tied to a business case and then business value. I expect that other big vendors SAP clearly takes a thought leadership position here, if not a technology leadership position.

CRM Evolution 2016 - Conference at a Glance

CRM Evolution 2016 revolved around two main topics

• customer experience, customer engagement
• digital transformation

As part of these three main topics many speakers were about how to get there, which includes thinking and talking about machine learning, predictive analytics, and, of course, the Internet of Things. The CRM Evolution 2016 conference, organised by David Myron and chaired by CRM guru Paul Greenberg once more had an impressive lineup of speakers, starting with two highly impressive keynotes, held by Dennis Snow, formerly of Disney on Monday, and Brian Solis from Altimeter Group on Tuesday. As before it was co-located with SpeechTek and Customer Service experience, the latter chaired by Esteban Kolski. This combination guarantees a lot of high caliber attendance and a lot of networking opportunity, something that Paul Greenberg very strongly and actively supports. It is virtually impossible to not network … According to colleague Scott Rogers, although the conference appeared to be bigger than the years before it all seemed more intimate, but not crowded, which probably can get attributed to a good choice of venue. The event being vendor independent is only the icing on the cake. In my eyes this is the one CRM related conference that one must not miss. In contrast to last year I attended CRM Evolution only, which in retrospective was a mistake. But let’s have a look at the conference themes.

There is no CRM without Customer Engagement and good Customer Experiences

In the opening key note Dennis Snow told us about the Disney way of creating great customer experiences, which basically follows three simple rules

1. Design your processes with the customer in mind, not with internal/operational priorities; look through the lens of the customer
2. Pay attention to details
3. Create little “Wow Moments”. These add up to a lasting great experience and are easier to achieve than single “big” experiences.

To me the most important message that Dennis conveyed is that the simple things and consistency are what matters. Consistently provide little experiences throughout the customer life cycle. He underpinned this with some examples from the ‘ordeal’ of getting out of the park and back into the hotel. Everybody is exhausted, kids may be edgy, riding the bus is usually not fun. What about the bus driver singing some songs or doing a little trivia? The rooms showing some little surprise, like specially folded towels? Another of his core messages was that a company gets loyalty and advocacy only by creating those “wow” moments mentioned above. For this to be effective, however, it must not fail at base priorities. Customer expectations can get mapped to a pyramid. Every customer expects accuracy and availability. These are just the baseline, however. If a company fails at these then there will not be a good customer experience. There is also no chance to create wow moments in these layers – only negative ones. Opportunities for wow moments lie at the top of the pyramid, where a company can become a partner or ultimately become a trusted advisor. The latter was also emphasized upon by other speakers and during the panels; e.g. when it comes to selling it is now paramount to become a part of the customer’s network of trust. Michael Fauscette provided some survey data showing that vendor sales professionals are about the last ones to be influential to purchasing decisions and they nearly 2/3 of all surveyed companies agree that they engage with a sales person only to seal the deal after the decision has been taken. On the other hand, even more would appreciate being engaged by sales persons with relevant and contextual information. This currently does not come from vendors. Denis Pombriant had some good words to say about this from a loyalty angle. He started off with the observation that due to poorly implemented loyalty programs around 6.2 trillion dollar get wasted per annum due to customer churn etc. His basic conclusion was that a company cannot buy customer loyalty anymore but needs to earn it via superior engagement and providing a superior customer experience.

Go Digital or Die

The second big topic was digital transformation. Digital transformation can be defined as ‘the realignment of, or new investment in, technology, business models, and processes to drive new value for customers and employees and more effectively compete in an ever-changing digital economy”. The consensus opinion can be summed up as ‘go digital or die’. This message was hammered home in his usual refreshing style by Ray Wang and, from a more organisational maturity point of view by Brian Solis during his day 2 keynote. Brian Solis looked at digital transformation from organisational maturity and people points of view. He started off stating that one is on the wrong end of innovation when waiting for someone else to tell what needs to get done. Innovation, also digital innovation and innovation in customer experience, starts from within: Observe, believe in it, act! Similar to Dennis Snow the day before Brian Solis makes it a strong point that innovation in customer experience is about making the company “conform to expectations and aspirations of people instead of making them conform to assumptions or legacy investments and processes”. If people look for shortcuts, then the designed experience is wrong. Ray Wang stated that digital disruption is not about a technology shift but that it is about transforming business models and how businesses engage with their customers. In his opinion products and services will become less and less important. Business models will shift to sell outcomes or customer experiences, which are fed by data that is converted to insights. This will also allow for developing business models that couldn’t be imagined before. He provided a few examples like Symmons Industries who built a business model around sensor driven shower heads. These shower heads help hotels mitigating a derailer of the experiences they provide while allowing Symmons Industries to move competitors’ parts and services out of hotels that use their shower heads.

Tying it Together

The connection between customer engagement and customer experience on one hand and digital transformation on the other hand is insight. Insight is data converted to actionable knowledge. In so far predictive analytics, machine learning, and Internet of Things are the glue. The ability to meaningfully engage with relevant, timely, contextual information (at every touch point, if it is allowed to add yet another buzz word) requires data and the ability to do real-time predictive or, in the words of Ray Wang ‘anticipatory’, analytics. Ray Wang defines anticipatory analytics as predictive analytics plus machine learning. Personally I’d rather think that this is an unnecessary distinction that probably will vanish soon. Predictive analytics will embrace machine learning instead of relying on static models. The necessary data comes from all types of sources, traditional ones as well as from an increasing number of sensors – the Internet of Things. How to strategically put all this together was covered by various speakers, including Barton Goldenberg, who places the CRM system as the hub of a number of systems that jointly implement a coherent strategy. Sheryl Kingstone looked deeper into how to use especially predictive analytics to achieve better customer engagement by delivering contextualised and personalised experiences consistently across channels. Volker Hildebrand from SAP succinctly said that “marketing has become a weapon of mass distraction” and that companies need to deliver reliable, contextually relevant, and timely information in a way that is convenient for their customers – or else they face the risk of getting out of business. A path of getting step-by-step to a very consistent and successful customer engagement in the retail world that combines online- and offline behaviour was also presented using the CRM approach of General Mills as an example. I found this one very impressive. Amy Halford and Molly Hjelm who presented also emphasised that “CRM is responsibility”, meaning that CRM is not only about getting customer data but also about giving back to customers, which nicely ties into Denis Pombriant’s findings that customer loyalty needs to be earned. They also put an emphasis on one theme that I haven’t heard much about in other tracks: Data Quality! Data needs to be invested into in terms of quality and tagging in order to be really useful for CRM processes.

the Future of Retail is, well, interesting. Retailers today face an increasingly fierce competition. This competition is both, between brick-and-mortar retailers as well as between online-retailers and brick-and-mortar. Amazon, for example, is eating an increasing share of department stores’ lunch. It already now is the second largest apparel retailer in the US. According to Morgan Stanley research, quoted in a recent business insider article:

“Internet retailers (led by Amazon) have added $27.8 billion to their apparel revenue since 2005, while dept stores have lost $29.6 billion,” … “This share loss appears at risk of accelerating given 1) Amazon’s bigger push into fashion, and 2) consumer willingness/acceptance to shop fashion through Amazon.”

Additionally, customers are increasingly demanding, which is fuelled by being better informed and by the willingness to leverage this information. As a result of both of these trends retailers are losing relevance. One of the main challenges facing retailers (and brands, btw) is that big scale online retailers can very strongly compete on price. They also have a strong edge in data, which fuels their online experience. But here is also the chief weakness of online retailers like Amazon: They are online retailers, which confines the experience that they can offer to, well, online. Consumers used and use stores for showrooming to get a physical experience of the product and/or service. This is a clear indication that online is not everything! Which is one of the reasons why Amazon experiments with Internet of Things devices like their Dash button, which they recently enhanced with an SDK; it does also explain why Amazon is experimenting with kiosks and retail stores. The chief differentiator of a brick-and-mortar retailer is that they have physical presences, retail stores. In these stores it is possible to interact with product and with people. This is something that an online retailer has a hard time to offer, and something that still matters. It is also an asset that needs to be tightly integrated into the customers’ experiences. This asset can also prove to be a treasure trove of data on customer behaviour and –intention. Given this it can be argued that the ability to gather and work with data is nothing that sets an online retailer apart from their offline competition. On the contrary, in an app, AI, and Internet of Things world retailers can get an edge over online behemoths again – by providing a superior and holistic customer experience and a customer engagement, across touch points that online retailers cannot offer. Traditional retailers have far more possibilities, click and collect and personal service only being the simplest ones. Here we are back to the triple play of CRM, CEX, and CEM that I wrote about in a guest post for friend Paul Greenberg a short while ago. What does it take? Apart from making sure that store employees can dedicate quality time to their customers? What it takes is as a first step is using the data that is readily available in every retail company, data that is provided by the PoS, that is provided by the membership/loyalty program that might exist, by reactions to marketing campaigns, etc. And to analyse and use it. Even without predictive analytics and other advanced technologies it is possible to derive valuable data from it. Add a few simple survey questions, at relevant times, e.g. directly after the customer did a checkout, and improve experience and engagement from there. Especially smaller retailers can benefit from platforms like Epikonic, that provide an easy integration of loyalty system, PoS, CRM, campaigns and analytics, even beacon support, with experience and superior engagement. Key to getting, analysing and using this data are the concepts of value (to the customer) and, more importantly, relevance. Relevance is always in a context of needs, time, place. Let me use an example, a NZ men’s fashion retail chain. Ask me for a homewares retail chain or a department store I worked with, if you wish. The fashion retail chain is fairly upscale but not top end. I will not name it but rest assured that I bought quite some shirts there. They are doing well with varieties in good quality, an interesting web site and very forthcoming staff. They also have fairly upmarket store locations. And they know about me, should know what I bought where and when. They have my phone number and my e-mail address. I consequently regularly get an e-mail with the shirt of the week or another campaign which, frankly, goes away unread. They even recently did a survey that indicates a desire to find out where they could do better. Now, what could they do better?

• The e-mails are not personalized but very product centric. Which also means that the offers are not personalized. So, in essence, they are doing mass marketing
• I am passing by via one of their stores fairly regularly. After all there is a supermarket as well, where I often get some groceries

It is about offering value and being relevant. With the data that they have about me they do know that here is a person who seems to prefer not overly formal business wear. Fine. You know the style, colour, and size of shirts that I purchased. How about offering matching trousers, blazers, shoes? Or offering me a new seasonally adjusted combination, addressing me with my name, ideally along with a personal greeting of the store manager. This is not that difficult. A personalised offering would have far more potential to draw me into the store. This would be a start. Going on from there we can add simple technologies. The first two that come into mind are my mobile phone and beacons. Offer an app or, better, hook into an existing one that offers wallet functionality – maybe even payment functionality. This can be used for proximity- and hyper-real-time marketing. Make me a compelling, personalised, offer when I am nearby. With a PoS integration I could easily redeem it. Send me the receipt to the app along with a brief thank you note, or a very brief survey about my experience. Value, relevance, and convenience for me, valuable data for the retailer. Without a big cost outlay! Step the game up a notch. Add a beacon at the store entrance. Now you know who is entering, preferences, size, name. These are valuable information for the store personnel. Who does not want to be greeted by name? Add a few more beacons around the store and you easily know where customers walk, and where they stay. From here on we can get fancy. Offer some more information on the merchandise, e.g. by providing a QR code that I could scan or by directly scanning the product. Make me virtually wear a shirt using an electronic mirror – that might even help my wife giving her opinion fast. Marketing messages can get personalised by showing the clothes on my own shape, with my own face, given that I gave permission for it. This might even extend to the web site. Fancy? Yes! Possible? Of course! Necessary? Not yet, but likely soon.