In a recent interview with ComputerWire, Peter Kirschbauer, head of business solutions at SAP, explained SAP’s CRM strategy and outlined some of the areas the company will be concentrating on.
In terms of functionality the next 18 months will see the company focusing on vertical markets within the services sector starting with release 5.0, to be announced at SAP Sapphire in Boston this week, catering for the public sector, telco and financial services verticals. This move will intensify the pressure on Siebel who generates around 80% of its revenue from sales of its vertical versions.
While SAP is maintaining its vertical development strategy it is introducing a change to its historic approach because going forward, the company plans to lean more on ISV’s for vertical capability. The aim is to help accelerate innovation by using services provided by ISVs, Kirschbauer. They will accelerate innovation, breadth and depth of the overall offering.
In the past SAP carried out vertical development in-house but due to resource and expertise restrains it had to define just how deeply it could go into a particular vertical. Now it has decided that it cannot build it all itself. While still maintaining a major interest in vertical market development, its approach will be to provide a full range of horizontal capability on a scalable, reliable platform, on which third parties can deploy specialized vertical capabilities.
We see more partners on the vertical side. The platform will enable others to complete the solutions, he said. The platform will be more controlled and homogenous but still support vertical specifics.
Heavy reliance on partners may be new to SAP but it is a strategy Salesforce.com and Microsoft Business Solutions have been advocating for several years. Each is endeavoring to provide an underlying platform surrounded by an ecosystem of partners who will deliver specialized functionality.
There was an expectation that SAP might use its European or US Sapphire events to launch a CRM in demand solution but Kirschbauer said the company had no plans to do so because although SAP’s platform-and-service approach makes it technically feasible, it does not fit with the company’s CRM strategy.
Today on demand is very silo’d. If it was only used that way it would not be difficult but customers are looking for ways to integrate data across the enterprise. You need a safe and secure way to communicate with systems that are out of your control, he said. Although he did not refer to Salesforce.com and its sforce platform and multi windowing facility, SAP clearly has the hosted specialist in mind.
We are convinced enterprise CRM is the right approach. CRM is about being connected in the enterprise and that is the strategy we are implementing. We are doing three things. We are focusing on vertical industries where CRM has the potential to grow, including public sector, financial services and telcos; Enterprise Services Architecture to help improve flexibility and leverage the use of existing solutions; and improving user productivity. When compared to other applications, you need to win the end users because they key in the data about customers and need a payback. When you make CRM relevant to the end user it has lots of potential to users, said Kirschbauer.
In SAP’s view CRM needs to be at the center of the enterprise so everyone knows they only have a job because of the customers, he said. You need to make relevant customer data available to all and that needs a good user interface even though you are pulling data from all applications. SAP offers role based access but it is not granular enough yet.
Even though SAP is heavily engaged in promoting NetWeaver and its ESA initiative, CRM has not been sidelined. Yet, instead of getting bogged down in features and functionality it is playing a deeper game positioning CRM as a business process rather than an application, not just front office SFA but including integration and process capability too.
Kirschbauer believes that as a term CRM is redundant because the issue is not the customer relationship but having a customer centric strategy. He argues that even in its first incarnation CRM did not fit the name because its primary concern was delivering SFA, not delivering a solution and enabling companies to create strategic difference, as should be the case today.
In two to three years he thinks that talk of defined applications such as CRM will decrease in favor of business scenarios and the issue will be the implementation, not the product, where implementation is based on a core platform but tailored for vertical industries with processes designed to provide insight into the customer so they can be better managed. You would not discover that with classic CRM, he said.
