I said I would finish the Nils story, and so I will.
Why CRM sucks
First a declaration. I really hate the term customer relationship management (CRM), or at least how its used. Why does “CRM” have nothing to do with customers; its actually shorthand for salesforce automation (SFA).
I have always felt that CRM should be something to do with customers rather than cowboys on bonus for scalps though. Call me awkward.
Sure SFA can help you win a new customer, but it does little to sustain a relationship over time, and that’s the only CRM that matters. How do you deal with a customer incident? How do you deal with an exception, when your organisation lets a customer down? How do design a great experience in working with your business?
I recently received, out of the blue, 10000 airmiles from American Airlines, as an apology for a five or six hour delay at JFK. I appreciated the gesture, I felt appreciated as a customer, but I would bet that the process behind the points didn’t touch a Siebel/Oracle or salesforce.com application. But enough of my prejudices.
[I spend Tuesday and Wednesday in Walldorf with SAP. My first meeting was with Nils Herzberg, COO, Industry Solutions group (that means he is charge of operations for SAP’s vertical go to market strategy]
What I liked about Nil’s take on CRM, when we discussed it, was that it was all encompassing. Call center, customer incident management, order entry, analytics are all CRM functions. As he put it:
“Take insurance claims management. A classic CRM call center allows you to channel more problems to a call center, but it does nothing about resolution of the issues- can you bring the related paper files up, for example? Its about connected customer care.”
Connected customer care may sound a bit vague and motherhood and apple strudel, but sure feels great when you get it. To be fair to salesforce.com it is my belief that it loose coupling, driven through its AppExchange network, will in factl engender some successes in connected CRM. AppExchange is more interesting than the application functionality the software as a service provider has put forward so far. [Read Charlie and Woodrow if you want to put these last couple of sentences into context]
Blogs versus Automation
Transformative customer service, the kind that leads to brand loyalty over years rather than quarters, cuts across silos, can be achieved using enterprisey software, or lightweight approaches with employees able to take responsibility for their company’s actions and their customer needs. Some of the great “real CRM” stories of recent times come from people using blogs to track and respond to customer complaints, thrown into the web cloud (declarative living) rather than addressed to a call center. But my goal here is not address lightweight vs heavy, Web vs enterprise, automated vs enabled, but rather to argue the fact CRM means multiple touch points, and is not so much to do with salesforce automation. CRM should be about keeping customers, not winning them. Automated CRM is impossible without integration.
SAP is in the business of automating processes, and as such Nil’s vision makes a lot of sense. Will SAP in future need to include more collaboration and people-oriented software in the mix? Absolutely… Netweaver for Blog tracking and perception management is not as weird an idea as it might seem… [no I am not saying I have the inside skinny on SAP plans to offer such a function, merely that its not impossible, and might offer significant customer value… today’s adhoc collaboration is tomorrow’s repeatable, managed process. Just check out the SAP Developer Network to see a water cooler in action]
Software As a City
Extending one of Nils metaphors’ (perhaps, dear reader, you’re beginning to get a sense of how Nils communicates…) is a good way to explain what I am talking about here.
He said that a customer had recently told him Netweaver was “how you manage a city, a landscape of applications, with roads, traffic lights, power utilities and so on… R/3 is a very large building….” How do things change over time? If you build a bigger power station the city doesn’t need to change, according to this view.
While the metaphor makes some sense, it also serves to underline the areas where SAP is at its weakest, where the SAP story breaks down, and a great deal more work is required.
I must admit I haven’t read Jane Jacobs, sadly recently deceased …. But I have read Emergence, in which Stephen Johnson explains her theory about how cities work. It turns out that great vibrant cities aren’t based on roads, they are based on pavements (sidewalks), where people of different classes and colours meet every day (not role-specific, like mySAP ERP 2005, say). Great cities don’t separate residential from commercial useage – they are great and vibrant because, not in spite of the fact, they are a mishmash, or should I say mishmap. Command and control doesn’t work in a city. Cities, you could say, will manage themselves if they are left to do so. Accidental and change meetings create communities and communities create opportunities and so economic growth. Specialism and strict zoning laws can kill economic creativity…
No Answer to The Benefits of Sloppiness
I don’t think SAP has an answer to the potential economic benefits of “sloppiness” or emergence yet, although the SAP Developer Network (SDN) is beginning to look more like a sidewalk and less like a road in Los Angeles, where the cars are moving so fast no one ever talks to anyone else. Loose coupling is a start along the route. All kinds of weirdness is going on in SDN – Rails meets ABAP is a good example [of which more later – ask me about the New Hiring].
Whose Problem does NetWeaver solve?
As we think about the need for integration its time to get back to some of Nil’s anecdotes about SAP and its solution focus. Thus, while one narrative holds that SAP’s current focus on integration, in the shape of its Netweaver Process Integration tool and platform (a far better name than the earlier Exchange Infrastructure) is solely down the problems created by SAP itself in customer shops – namely version interface mismatches, and so on, there is another narrative that holds some water. Did SAP just pursue integration because integration software vendors were making hay in its customer base? On balance I think the answer is no (which is not to say that managing SAP isn’t a nightmare, but that there are other drivers to consider.) So what other narratives are relevant here?
SAP: Its all about the Pilot
I didn’t know that late 90s SAP CEO Hasso Plattner was a pilot, and as such often used aerospace and shipping metaphors with employees, and vice-versa (it helps to know what floats one’s boss’s boat when making a business case.), but here is a story that has the ring of truth, if only in its class exective high handedness.
“In 2001 Hasso came and scolded us for the infrastructure we had. He said how come Airbus is able to create a jet built with inputs from a range of different suppliers, different geographies and time zones and so on, and yet we can’t do that with our software?
What SAP’s CEO neglected to say to his reports in the meeting was that he was of course responsible for designing the architecture that he was now criticising, but that is perhaps the boss’ prerogative. So began the beginning of the long march to NetWeaver, with SAP as integration player.
Of course making SAP more flexible, and less monolithic, is helping to make customer experiences of upgrades and so on less painful. But R/3 was never going to cut it in the Flat World, so change it had to be.
Nils explained to me that the industry goes through periodic hype and consolidation phases, with hype defining a category (say, ERP or CRM), followed by a period of retrenchment where vertical industry specifics are seen to be more important again.
“Its about processes and scenarios. We believe the knowledge is different whether you’re a bank, a telco or a yoghurt manufacturer.”
Hard to argue with that. The SAP solution focus really began with its first customer in 1974 though, Imperial Chemical Industries (ICI). We know SAP now has massive dominance in that sector – process industries – but what of the shape of the rest of the business?
SAP has good coverage in consumer packaged goods and life sciences, is making a significant investment in retail (note the recent acquisitions of Triversity and Khimetrics to counter Oracle’s acquisition of Retek) and financial services, and really began a serious march to the public sector about two years ago.
The Problem of an industry-based Solutions Focus
Its worth pointing to some problems with a vertical customer segmentation. The fact is customers don’t fit into neat categories… many businesses are mashups.
Thomas Otter, who you can blame for my generating all this SAP coverage by inviting me to Walldorf in the first place (Mike Prosceno and Stacey Fish made it formal) told me about one of his SAP HR clients, a scent company.
The company makes scents for perfumes, cosmetics, but also foods. Its always on the look out for a new high note to take raspberry to new heights. But is it really just a chemical company, with a chemical company’s HR needs? Perhaps its more like a talent management outfit, that needs to hire the most sensitive noses in the businesses-they really need to get that guy Grenouille from Perfume (read the novel it will blow your socks off, and Thomas- buy a copy for your client). Given its perfume customer base, perhaps the firm should be viewed as a luxury goods company in its HR needs. Or is it about brand management. Its not just a chemicals company – that much is sure.
Today in business we see more and more category confusion. Business mashups are commonplace. So when CA sells its Clarity Project and Portfolio Management software to video games companies and they use it for new product management what does that say? Why aren’t these firms going to SAP for new product management functionality? Because they are new movie studios, or the new software development companies?
Taxonomy has its limits, and SAP is lucky enough to have smart people like Thomas, working to ensure that customers and prospects are made to feel like one in a million, rather than one in 20, just another notch on an industry segment bedpost (are you listening Oracle advertisement copywriters?).
What does this requirement say? Resource planning software must be more flexible that ever, and people are the most important element in any customer engagement process. I have to say I met some nice and very bright people in Walldorf. Thomas says SAP was the first of the suck up all the talent companies (later Microsoft, then Google took this strategy on). Back in the day IBM used to say it was so good that it could make poor employees productive. SAP on the other hand is a culture of excellence, and has been from the outset.
Barnet Council’s innovative vision for public service provision
One vertical that is quite clearly bounded, and changes more slowly than the private sector, is public sector at the local level. And it too can fosted a culure of excellence.
Some monkchips knowledge here- Barnet Council, north of London, is beginning to establish an enviable reputation for public server provision, in areas such as recycling management and revenues collection. Its an end to end SAP shop, and because it now has a solid foundation in place, it can start to concentrate on innovative service delivery vehicles to local people, using for example RSS (I know, I know, when I met the folks from Barnet I could barely contain my enthusiasm.) where citizens can begin to engage using push rather than pull models.
City management has to span both managed and unmanaged spaces. Sometimes tearing down the old doesn’t create more value, but less. That’s why you need integration software, that’s why customers that want to use older software architectures in conjunction with new should be helped to do so.
There is no such thing as a perfect infrastructure. There is no such thing as a perfectly documented process. But there is such as thing as a great software company, and love it or loathe it, SAP is one of those.
disclaimer: SAP is not a client and paid me nothing for this trip, not even travel expenses.
Personal note: Thanks for taking the time Nils, I appreciate it. If you ever want to talk blogs, wikis, and IT-driven straßenpflaster encouragement, let me know.