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How SAP C/4HANA could transform the CRM market

Find out how C/4HANA is not only changing the CX game, but also transforming the relationship with CRM by combining front-office CRM apps with back-end transactional ERP systems.

Organizations have long looked to SAP for help with organizing their back-office functions. Now, they have a reason to consider asking for the vendor's help with perhaps the most challenging function of business: managing and satisfying customers.

SAP has had a presence in customer experience (CX) technology for more than a decade now, but four years ago, the company declared its intention to transform CRM from an isolated endeavor of managing customers to a holistic effort that enables all ends of a business to focus on customer service. SAP isn't the and won't be the last vendor to make such a declaration, but with its new C/4HANA platform, the software provider now has a lot of skin in a somewhat unique game: the merging of front- and back-office technologies.

The success of SAP C/4HANA will depend on how it fares on two ends, according to several industry analysts and consultants. C/4HANA will need to integrate well with SAP's newest ERP offering, S/4HANA, but its success will also hinge on how well its CX applications independently perform, because their failure could hurt public perceptions of the entire platform, they said.

SAP has a good chance at succeeding on both fronts, according to CRM analyst Paul Greenberg. The company has most of the necessary technology to transform CX, he said, but, just as importantly, its attitude aligns with what organizations want: a full view of customers. "They're doing the right thing," he said of SAP. "The pivot is right. They're aligning with the way their customers are thinking."

Five clouds to make one CX experience platform

The company has most of the necessary technology to transform CX, but, just as importantly, its attitude aligns with what organizations want: a full view of customers.

C/4HANA consists of five SAP cloud products: Commerce Cloud, Customer Data Cloud, Marketing Cloud, Sales Cloud and Service Cloud. Each one integrates with Qualtrics, an analytics tool that measures customer and employee sentiment.

Ilona Hansen, a senior director analyst at Gartner, said technologies from Gigya and CallidusCloud, two vendors SAP acquired, will shape the potential success of SAP C/4HANA. For instance, Sales Cloud, through CallidusCloud technology, gives salespeople upfront visibility of their sales quotas as well as progress reports on whether they're hitting those targets. "You'll hardly find that anywhere," Hansen said of competitors. "You might see pieces of that on other offerings, but Sales Cloud is more comprehensive and has things like territorial planning and a look at who on the team is working with each account."

That kind of insight motivates salespeople and puts them in the best position to serve customers, Hansen said. "You can see or hear a difference when they're motivated and happy. So, the philosophy of SAP is very wise. You just can't say you're putting the customer in the center of things without offering the tools to put them in the center."

Thomas Vetter, an SAP senior vice president and the head of C/4HANA, agreed. SAP's overall goal is to center the technology on the customer's vision, he said. "Customer centricity is really the key. Salespeople will not go away, but you'll see it's now much more about the omnichannel experience from the customer's point of view," Vetter said. Not long ago, when customers purchased something, they called a salesperson; today, they choose how they will purchase, compelling the salesperson to have the proper information to fulfill the order, he said.

Discussing customer information in a phone interview prompted Vetter to jump to data privacy and C/4HANA's attempt to integrate privacy safeguards into CX. Customer data, Vetter said, is now thought of as "the oil of the 21st century. It belongs to the customer, and the customer has only given us the privilege of using that data for his best interest." With the help of Gigya technology, Customer Data Cloud enables companies to follow the expectations of GDPR and similar rules by giving "the customer the authority to define what happens with his data," he said.

Hansen believes Gigya is another big edge for SAP C/4HANA in the CX market. "It is future-leading -- not just acquiring the company Gigya, but also making it the center of the cloud product," she said.

Of the remaining three clouds that make up SAP C/4HANA, Greenberg said Commerce Cloud is the platform's strong suit because of its back-office capabilities and functionality. Service Cloud also performs well, but the weak link in the quintet is Marketing Cloud, he said. "It's average," he said, noting that his assessment considers the strengths of Salesforce Marketing Cloud and Oracle Marketing Cloud. He predicts that a number of organizations will choose some of C/4HANA's five clouds and also rely on other CRM vendor products, like those for marketing.

Qualtrics will also shape how C/4HANA fulfills SAP's promise to deliver a complete omnichannel CX platform, several analysts said. "Qualtrics won't solve employee engagement and customer experience problems," said Luke Marson, an SAP strategist. But the task of gathering that data and offering it through C/4HANA will give users the ability to quickly solve CX problems as part of their larger work in CX management, and that's an advantage, he said.

The integration of front and back office

The elephant in the CX room is the one SAP wants companies to see: ERP. The promise of SAP C/4HANA is its eventual integration with the company's newest ERP platform, S/4HANA. Once working in sync, the two products will aim to merge a company's front-office and back-office processes. It's part of SAP's belief that the warehouse is just as critical to CX as a customer-facing app or storefront.

This confluence "has the potential of taking customer experience in a different direction," said Kate Leggett, an analyst at Forrester. "It's critical to answer when will an order will be in stock, or telling my customer that the product you want is not in the shop around the corner but just two miles away," she said. Integrating ERP and CX workflows will give customers "real-time visibility into the supply chain and that's important to delivering a great experience," she added. "It's not about interacting with a customer, but about providing information and advice at the right point in a customer's journey."

If done right, a CX and ERP tech marriage can be a lasting union, according to Leggett. "Oracle and SAP have the assets to tie this together, and they have the industry customers in CPG [consumer packaged goods], retail [and] airline that want to marry the front office and back," she said. "It's a lot of hard work, but they are in position to be able to do it."

Vetter said companies need to make good on delivery promises to customers, and they're facing pressure to improve after-sales service functions like promptly processing product returns. "Customer experience is not coming only from the front office," he said. "Yes, you need a front e-commerce side, where the experience is accessible and where it is tailored. That is an important aspect of CX. But you need the integration of front and back office."

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