SAP Shows up Late to Omnichannel Commerce Party

SAP made its move into ecommerce last week, acquiring hybris for what some have estimated at $1.2 to $1.5 billion.

While the move came just a day after Salesforce.com plopped down $2.5 billion for ExactTarget, SAP officials denied this was a reactionary move to Salesforce.com’s email marketing efforts. Rather, they insist there are new opportunities in ecommerce as mobile and social customers become ever more connected with, and informed about, the companies with which they’re doing business. Those customers are beginning to demand a consistent experience across all the channels -- from brick and mortar stores, webstore, to mobile to call center. That means a unified system that brings together back office
orders and transactions with physical stores, front-end webstores and call center systems is increasingly a strategic imperative.

That’s a message NetSuite has been preaching for more than a year with its SuiteCommerce initiative (as has Oracle with its acquisition of ATG). Whether hybris will indeed be the transformative acquisition that brings true omnichannel capabilities to SAP’s customers or, as with the cloud, SAP will struggle to adapt and keep up with fast-moving market dynamics remains to be seen. Pundits across the web suggest a number of reasons it may lean toward that latter.

First and foremost are the integration challenges that stand to stymie and delay any sort of omnichannel momentum.

As Holger Mueller writes on the Constellation Research blog, SAP has multiple product lines and roadmap plans it needs to address and integrate with hybris:

The challenge for SAP is that it does not have a viable integration platform. HANA Cloud Platform is too young and faces many other challenges. NetWeaver PI is coming around these quarters - but the main question is - where to integrate to - the Business Suite classic or any brand new HANA based products. 

On the press call there was even the hint that hybris may be re-platformed on HANA. Putting hybris on HANA may be straightforward for hybris - but will create even more integration needs for SAP - as the data to run a multi channel e-commerce system like hybris - will have to come out of the Business Suite. Which technically could run on HANA -- but even in that case, data needs to be accessible for hybris, and not only will data flow to hybris, it will also need to be written back. 

That’s a point Craig Sullivan, senior vice president of international products at NetSuite, echoed when talking to v3.co.uk about the SAP-hybris deal, noting that SAP is again creating a “hairball” integration nightmare.

"They know they are ill-equipped to make a meaningful impact in the cloud market," Sullivan said. "They’ve resorted to their standard practice when they don’t know what to do: make an acquisition to plug a gap rather than supplement a core strategy."

Call that competitive bluster if you like, but it’s no different than SAP co-CEO Bill McDermott on the press call announcing the deal boasting that, “this is the piece that we have to have to complete the puzzle. We’re going to unleash our will like never before on the CRM marketplace and the competitors that decide to go against us.”

However, before unleashing their will, McDermott and SAP still need to confront the problem of what SAP does with its own existing and overlapping ecommerce functionality. As Courtney Bjorlin of ASUG news writes:

But big questions remain about how exactly SAP will rationalize its existing CRM functionality with that of Hybris, particularly with its Web Channel Experience Management product, a completely revamped e-commerce platform SAP rolled out only last year.

One SAP customer interviewed called the two products “a complete duplication.”

It’s no secret that e-commerce has certainly not been SAP’s strong suit. The move represents a reality check that building e-commerce on top of SAP’s existing CRM platform simply wasn't resonating in the market, [Forrester Principal Analyst Peter] Sheldon says. That’s something evidenced by the fact that half of Hybris’ more than 500 customers are SAP shops, including Nespresso and Grainger.

SAP confronts another problem as it seeks to rationalize its cloud and on-premise plans for ecommerce. Jon Reed, writing at diginomica, writes:

It’s hard to knock the motivation behind the purchase: serving the real-time customer with an omnichannel approach. The problems occur when you dig. SAP still seems to perceive CRM as a ‘hybrid’ market, whereas most observers believe CRM moved to the cloud a long time ago.

SAP’s commitment to its own cloud CRM products has not been clear either – at least to me. This is another area where customers will have to dig further.

SAP is promising a range of deployment choices, but which functionality is available on-premise, which via the (hosted) HANA Enterprise Cloud, and which through the Cloud for Customer LOB SaaS offerings?

Rather than seeking to ‘impose its will,’ SAP needs to address these questions.

Finally, there is one piece missing in SAP’s omnichannel strategy – the brick and mortar retail location. Increasingly, customers seek to buy online and pick up in store, buy online return in store, shop online but buy in-store, or any number of such combinations. Furthermore, retailers want the ability to track and move inventory across stores and websites. NetSuite addressed this scenario with its acquisition of Retail Anywhere early this year.

While it’s early in SAP’s omnichannel endeavors, the company has myriad challenges to address and the market is not inclined to wait.

Meanwhile, last month’s revelation that Lars Dalgaard, the man SAP claimed would be the company’s “cloud DNA and leadership” when it bought Successfactors, his cloud-based HR company for $3.4 billion, left after a year on the job to become an investor doesn’t signal good news on the cloud front either.

 -, Content Development Writer/Editor at NetSuite

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