James Governor's Monkchips

On SAP, real CRM, Nils by Mouth, and Metaphors driving a software culture

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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.

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  1. “CRM should be something to do with customers rather than cowboys on bonus for scalps though” – lol! Well put, and at last somebody says it…

    Thanks James for a thoroughly enjoyable post – again!

    Looking forward to spend time with the SAP boys on Mt Ventoux now… too bad you’re not in perfect shape for it… maybe you could come down anyway, family and all (we have room and wine ready of course), as a correspondent? Hugh could do the illustration 😉

  2. As a side note, BEA was using the city metaphor for it’s SOA/AquaLogic stuff at the analyst gig a few months ago.

  3. You’re absolutely right about the disconnect between the intent of CRM, which is to help the firm manage its relationships with its customers, and CRM in practice, which is heavily weighted toward SFA. The sales force is only one of many touchpoints between the firm and the customer, including marketing, professional services, and customer support, among others. The emergence of new channels of communication (e.g., blogs) means that the numbers of such touchpoints is increasing, as should the scope of CRM.

    But I would argue that Nils’ analogy of software as a city is extremely apt, and that cities with no planning whatsoever are disasters. Spend some time in Houston, Texas to see what happens when you can build a skyscraper–or a strip club–in a residential neighborhood. That kind of “economic creativity” is not beneficial. On the other hand, master-planned “communities” like Disney’s Celebration, Florida are so rigid and sterile as to be completely unnatural and alien.

    In my view, SAP, starting from the high end of the scale and working downward, is taking exactly the right approach: build solid building blocks (R/3), supply the framework–including both software (NetWeaver) and people–within which those blocks can be built into something that’s customized for each customer’s requirements, and nuture a fecund environment (SDN) for unanticipated innovation at the edge.

    Salesforce is doing the same thing, but starting at the other end of the scale. Their basic building blocks are salesforceSFA, supportforce, etc. Their framework is AppExchange. And their enivronment for innovation is the AppExchange Developer Network (ADN).

    Yesterday I spoke with Bob Stutz, SAP’s SVP of CRM Products and Technology, and asked him about the recent consolidation among CRM vendors. He described the same hype-conslidate-hype-consolidate cycle you describe. The cycle isn’t over; we just happen to be in a consolidation phase.

    While much work is yet to be done to fully realize the promise of CRM, SAP has laid the necessary groundwork.

  4. “Why does “CRM” have nothing to do with customers; its actually shorthand for salesforce automation (SFA).”

    Right on.

    That’s a keenly perceptive statement – the tools commonly lumped under CRM seem definitely more around operational optimization behind the scenes, even though they are commonly called the front office tools.

    I appreciate your automation and integration comments, but tools in this area IMHO always need to come back to supporting not replacing human contact – think OnStar. Sure there are certain customer interactions that can and should be automated, but I think there is sometimes too much focus on that. CRM/SFA tools should be about retaining customers by enhancing relationships, not replacing them.

    BTW – your coverage of SAP has been fantastic, keep it up. I’m done reading trade pubs! 😉

  5. thanks Charlie – and thanks very much for the trackback link!!

    Scott- you know i greatly respect your opinion, so the praise is greatly appreciated. do you touch ERP in your role at all?

    really cote? you have links in that regard, or can you suggest who at BEA to talk to in that regard?

    thanks sig- that reminds me i need to post on ventoux trip today

  6. Many of the issues you raise are exactly the same in the public as private sector, although our driver being to better meet the needs of our customers as central to our goals as driving demand (but equally driving
    organisational efficiency as well as service outcomes).

    Your point re integration and SAP is also key to where we are, taking a step back to better understand our systems and information landscape prior to pinning down our vision as to how to CRM ourselves.

    Above all for us in the business we are in, we are looking to ensure we have a joined up and meaningful understanding of people and places in equal measure in relation to how we deliver our services going forward.

    And trust me – local authorities are the original mash up but that seems to only further fuel the business case for CRM and SAP as a means of managing the complexities we face.

  7. hey James,
    thanks for the comment on my blog. in response, here are some thoughts on the above:

    – agree on the term “CRM.” when I was “a cowboy on bonus for scalps” i.e., software salesman, I used CRM products like Maximizer and ACT!(painful UI) but the contacts I entered were certainly not “customers” but rather prospects. Had they been customers I wouldn’t have needed to talk to them; that’s why we had Account Management- who by the way was using a different system.

    – “motherhood and apple strudel” – nice touch on the “strudel”

    – Agree that AppExchange (referring now to the app repository) is very interesting. What a great way to extend system functionality at low risk and cost to SFdC. Managed correctly they can build a loyal ecosystem of developers that will not only increase the stickiness of their core product, but evangelize for them as well. Of course they could easily screw it up too; they must resist the temptation to compete with their partners and/or poach partner functionality and incorporate into theirs.

    – to the point about automated CRM being impossible without integration – think this is why your seeing SFdC flog their ability to integrate to incumbent, on-premise ERP pretty hard. I’ve been hearing a lot of pitching around the SAP Connector. My sense is you won’t see them moving towards building (organically or thru acquisition) a monolithic CRM/ERP solution, but rather will continue to build an ecosystem of products and partners around CRM (CRM as the nucleus with these complementary products as electrons buzzing around).

    – Interesting point on blogging and NetWeaver – another social media example would be with wikis. I exchanged a few emails with some folks at Socialtext recently. They’re helping us develop a competitive intelligence wiki. Now that they released their API, what would be the benefits of maybe integrating that with NetWeaver? I’m not sure, need to think it through, maybe nothing. (Disclaimer: this idea is the furthest thing from official SAP or Socialtext policy/strategy; rather this was some off-the-cuff brainstorming thru email).

    – NetWeaver – I think in addition to what was mentioned about integration it’s interesting to think about breaking down monolithic applications into smaller pieces of application logic. Taking these pieces (business and application services) and rebuilding them into composite applications that are more customized (and customizable) to the needs of an industry vertical, a customer or an end user. Hopefully this will allow for the increased flexibility (flexibility at a reasonable cost I think is the real goal) that you rightly claim is a requirement.

  8. Hey James,

    Totally grok this post. We’ve been evaluating various CRM systems over the past couple months, and yes they are largely designed for customer acquisition vs customer relationship management over a customers purchasing lifetime. Kind of like picking a girl up at a bar vs getting married and raising a family, different gig;-) They are mostly designed to sell to new customers, although most do have a support or service piece included. Although support is generally when things are not going well from the customer. One of the big things your blogs and comments points allude to is that current CRM technologies don’t cover all the channels that we communicate with our customers. For example on a given day I interact with our customers via phone, in person, email, IM, skype calls, phone, online forums, knowledge base aticles and comments, blogs, support emails and trouble ticket systems…and I might have missed some. Basically all these interactions and communications, plus the customers experience with the product and marketing add up to the relationship. How do I capture all that? Designing a system that could wrap all that up into one nice little view would be kick ass. And what about what the customer sees? Do they get any control over this? At best they get some miserable ticket number that does nothing for them:S My 2 cents.


    PS. You’re comment writing textbox should be bigger:P
    PPS. Sorry it took so long to comment.

  9. SAP spins a great story, but it hasn’t delivered on transforming customer experiences for its clients. After 5 years since the ramp-up of CRM3 in 2001, most companies are still implementing a simple 50 seat or less call center. SAP’s success stories at Brother and Canada Post are tired and have been riden more than the whores at a Nevada brothel.

    I loved SAP R/3. It really transformed my business. SAP’s other products are benefiting from the halo effect; however, when you install an application like CRM you find out it really isn’t integrated out-of-the-box. When you have to spend a min. of 30-50 days getting the CRM middleware, which isn’t even the standard SAP XI, to work it isn’t OOTB. As a side note, I still don’t know why cusotmers have to pay for mySAP ERP after having paid maintenance on R/3. Sneaking Netweaver junk into the license doesn’t justify the cost. The conversion costs along with the “engines” are a crime against business.

    As for Oracle, their CRM product was poor with the exception of Service Mgt, which is very solid in Depot Repair. PeopleSoft was a smart acquisition not only for its customer base, but also for its expertise in SOA. With the Siebel acquisition, it wasn’t just CRM. Oracle got both the eDocs product and Siebel Analytics along with a CRM product that is tailored to different verticals.

    For me, ERP is a push. Even in CPG and Oil & Gas. (It is amazing to discover that many O&G companies are running more of their systems on JDE than SAP.) The differentiator is CRM. When it comes to transforming companies with its applications for CRM, which expands beyond SFA into customer loyalty, Oracle-Siebel has many more customers and consumers. SAP should have purchased Siebel when it had the chance to join the two best-in-class applications.

    Finally, SAP has been able to license CRM, but it is amazing that many customers go on to purchase/rent other applications such as Salesforce.com and Oracle-Siebel. The #1 on premise CRM application for SAP customers is Oracle-Siebel while the #1 SaaS application for SAP customers is Salesforce.com.

  10. I’m currently bringing SAP CRM into our business. Biggest mistake of my business life. The previous comments regarding OOTB promises and the delivery deltas are dead on. CRM out-of-the-box has been as useful as a car frame and a pile of parts laying on the side.

    I’m optimistic about the final product, but my project timeline was a joke and SAP’s sales reps were total jokes. We experienced similar software load times…45 days I think. Call me a sucker, we actually had two demos because the first guy botched it so bad. The second doofus showed up with an “Easy Button” from Staples or Office Depot or whatever in an attempt to be cute. I’d like to do something with that thing I can’t repeat here… He made lots of promises about what SAP CRM could do for my business, but by the time I realized it was all a farce the deal was done.

    I am extremely sensitive to my customers and our outbound reps build relationships the old-fashioned way so true CRM was my hope. To be honest, I don’t even really have SFA at this point.

    In general, CRM’s Interaction Center is a navigation nightmare for the end-user and the marketing piece offers all kinds of segmentation, but did you know you can’t sort customer lists by anything other than alphabet or customer number? Want to call customers with the highest household income first? Sounds like a reasonable marketing attack plan, right? Forget it. Sure, you can build a nice little group of customers and segment all day long, but try to manipulate the order in which they are called.

    SAP claims to have consulted their customers in designing their CRM…must be some of the worst-run businesses on the planet.

    Maybe it’s sour grapes, but I want it known that if you believe as I do that user-adoption is key to CRM success, run from SAP CRM.

  11. I am a sales rep in the field for a fortune 250 company that went live on SAP and salesforce.com over a year ago. We still have massive problems with the system, our product delivery times have been pushed back by about 3-4 days, we are still invoicing customers for the wrong pricing, and no one uses salesforce.com because after being at work all day, the last thing someone wants to do is sit on the computer for an hour updating everything in salesforce.com. Our upper management is not even using the tools that are provided in salesforce.com.

    Exactly what is good about these systems again?

  12. “CRM should be something to do with customers rather than cowboys on bonus for scalps though” I think people from 37signals will agree with you here. One of their CRM products( Highrise ) is geting rave reviews from everyne.

  13. hey Levon – we actually use Highrise at RedMonk. its ok. rather than mind-blowing software. its easier to get useful data in then out (i really like dropbox). I am sure that’s partly us, but i am just sayin….

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