How SAP can mitigate competition from Salesforce

09/13/2012

By Srini Katta

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How SAP can mitigate competition from Salesforce

SAP CRM customers often express frustration with their sales executives who ask for a shift to Saleforce.com. Somehow, they seem to dismiss the fact that their company made a significant investment in SAP ERP and SAP CRM.  We’ve interviewed a ton of clients that faced this exact predicament.  In an effort to remedy this problem for our customers, we spoke with a multitude of sales managers and sales executives to try and identify not only what frustrated them about SAP CRM, but also what could be done to make SAP CRM their favorite SF application.  We took notes and here are the results.

Where SAP CRM scores: SAP CRM scores big when it comes to integration with other SAP products such as  SAP ERP, SAP BW, BOBJ , SRM and host of other SAP products.  You can use SAP CRM as a web store front and create a seamless flow of the order from the web into the backend SAP ERP for order execution.  In other words, SAP CRM scores big in terms of taking orders, managing both online and call center requests, and furthering order execution.

Where SAP CRM has challenges: SAP CRM has significant challenges in areas of marketing, pre-sales and sales.  It is easy to input data into SAP CRM, but not so easy to retrieve that data without several clicks. Let's admit it.  Sometimes SAP takes a lot of work to pull up some very simple information.

What should SAP do to make SAP CRM better than Salesforce.con?   Salesforce.com effectively markets their CRM as simple and easy to use.  With so much technology at our disposal and the ability to do what was unimaginable just five years ago, “ease of use” is the great equalizer.  Simply put, with so many user friendly devices and applications in the market, an application that is difficult to use will be thrown by the wayside.  Fair or not, Salesforce.com has built a reputation for ease of use while SAP struggles with the perception of being anything but “easy.”    

Why is it so difficult for SAP, who has been an undisputed leader in providing seamlessly integrated modules such as Materials Management, Inventory Management and Order Management, to provide an easy to use interface with SAP CRM? My theory?  SAP’s perception of business needs in the last 40 years has not evolved at the same pace as the reality of business needs. The speed of sales has increased exponentially. Deals are lost if your competitors get a better handle on who the prospect is and how to engage the contact persons!  Out of box, SAP CRM is just not aligned with the needs of today’s users.

Now this blog is not meant to knock SAP.  SAP is still innovative, but just falls short in a few key areas which seems to keep it behind Salesforce in the race for “user friendly” supremacy.   For example, SAP was the first to come up with Streamwork as a collaboration tool.  However, Salesforce.com is the one who popularized their collaborative Chatter tool among CRM users.  Even outside of Chatter, Salesforce just has a multitude of add-ons that directly meet the needs of today’s business users.  

How did this happen?  Despite having a ton of development partners throughout the globe, SAP didn't focus on App exchange like Salesforce.com did.  As a result of their success with App exchange, Salesforce.com always has an easy answer to customer questions about a feature or function.  Any customer question can typically be answered with, "there is an app for that."  Though the TCO of Salesforce.com is much higher when compared with SAP CRM, Salesforce continues to win because there is nothing like instant gratification and user satisfaction when compared to costs.  

Despite Salesforce’s momentum, if SAP incorporates an effective apps strategy, they can not only keep their existing SAP CRM customer base, but can also significantly win new customers.  SAP needs to create more excitement around SAP apps and at the same time incentivize more companies to develop apps for SAP applications.  For instance, our company developed 6 major apps inspired by Salesforce.com functions that simplify and automate the process around accounts and contact management, lead management, and opportunity management. These apps also add new functionality including a Salestips app and suspects app( http://www.iserviceglobe.com/sap-apps).  Despite releasing these easy to install apps which directly addressed many SAP CRM client’s frustrations with SAP, it was a slow go to market with the apps with the absence of an APP Exchange like platform. 

To this day, there is no streamlined forum or market to easily get apps in front of SAP customers.  Sure, we can publish our apps on the Ecohub, however, SAP customers are still not that familiar or comfortable with it.  Another bottleneck to innovation is that Ecohub is only open to SAP partners.  That means a developer who built a smart app can't have it published in the SAP eco system until he has partnered with SAP.  The partnership fee is prohibitive for many small companies.  The result?  SAP customers miss out because some very innovative apps either never see the light of day or never get developed for SAP applications.  SAP can take a page from Apple’s App Store and provide its customers access to a large pool of talent by building an effective App Exchange.  If SAP were to simply charge vendors a commission on app sales, rather than a large upfront partnership fee, more innovation and creative apps would be built for SAP applications.  Just my two cents, but with my long history with SAP, I’d love to see them put some energy behind an App Exchange platform.

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