Let me start this with a strange and seemingly incoherent (but truly more inchoate) statement.
"If SAP marketed to the rest of the world, the way they produce conferences, they could arguably become the best technology company on the planet."
I'm not going to say anything more about this until considerably later in this post. Way later.
As always, I'm going to look at several things. For your edification (and in no particular order):
- The conference
- The themes that SAP is carrying into its future
- The products especially CRM
- What they do right and wrong.
The journey starts now.
A Bit of HistoryI have been in and around this sometimes enigmatic, very innovative, sometimes frustrating, always interesting company since 1998 when I built an SAP partnership. Back then, they were an important ERP company who had released their benchmark SAP R/3 product not long before and it was the best ERP product in the world at the time. The company itself was almost impossible to deal with - it had a culture that, honestly, no one could be proud of. The way that I got the partnership and dealt with the company was to find those individuals who were good human beings and deal with them at the level of individuals, rather than just corporate reps. Partially because its my nature to do so, partially because it's the way that things should be done anyway - and that hasn't changed a bit - and partially out of my dislike of the SAP culture in the 90s. I remember at Sapphire 1998 in Los Angeles, the CEO of my company and I had 42 meetings between us in 3 days. I didn't attend a single session. Not a one.
Over the years, as their business in the U.S. grew, there was a softening of SAP culture and it became considerably easier to deal with the company. They didn't make the partnership requirements a lot easier, nor should have they. But they became much more amenable to the idea of "partnership" than what had been a submission to the "rules" in order to have the relationship.
But my role in all this changed too. After the partnership was secured and we built a successful SAP practice at the time, I left the company I was with and went on to other things including doing what I do today when it comes to CRM. So ERP partnerships weren't a concern of mine - and there was a long hiatus where I had little to do with SAP at all, except to remain peripherally aware of their activities.
Of course, I monitored their CRM product. Until 2007, that wasn't saying much. Until then, what they called CRM wasn't really much of a CRM product - more a filler and throwaway for the company - because, as far as they were concerned at that time - they were an ERP company or more broadly back office focused.
But then along came 2007. At that point, they released the obviously (though not very cleverly) named SAP CRM 2007, which marked a new era for SAP both from how they thought of products to the beginning of a cultural transformation; one so dramatic, I wrote about it in the 4th edition of CRM at the Speed of Light (that chapter is available on request. Send me an email at email@example.com and you can have it.). The interface was a Google-like contemporary UI that accepted widgets and some user personalization; the culture was becoming far more open and friendly, and less suspicious of the "others" - i.e. the rest of the world. The messaging became more "cool" though mostly in a relative sense. After all it was a beginning. What didn't change was the marketing approach and method, though - it remained an engineering company's approach to marketing. To put the idea simply, it means 95% of your marketing is product marketing geared toward the explanation of features/functions; naming conventions that were unoriginal in any way; very little narrative or evocative presentation; little concern for the people who were actually going to have to use the products.\
It was - and is - to put it in a simple and mantra-like format:
Explanation, not evocation.
To be clear, this wasn't a problem that SAP had in the 1990s and since then has divested itself of this problem. This is still their biggest problem in every sense of the word. But it's a more complex matter than it had been, as we'll see.
When SAP CRM 7.0 came out about a year plus ago, it was an important evolutionary nodal point for the company. If the scuttlebutt was to be believed, the UI drove the company to transform the UI of all their products to a look-alike design that gave it a contemporary sheen. In addition, as always, SAP remained among the most internally innovative companies in the world with its SDN enterprise social network reaching over 3 million members and providing a paradigm case study in how to do it the right way. We also saw the beginning of SAP, before most other companies, starting to investigate and create the core required parts for enterprise gamification and taking a leadership role in that with Marco Herger at the helm. This innovation was characterized in so many other ways I can't begin to chart it here. At the same time, the company continued to undergo profound transitions to its products, transitions to its leadership (with the very welcome ascension of Bill McDermott and Jim Hagemann Snabe to co-CEO status at the company); and a substantial cultural transition. But, as with all large institutional transitions, it was a slow go. That kind of haziness in the process, leads often to a struggle with the messaging that made the important themes that would characterize the company puzzling at times, nice to see at times and just plan horrible at times. Again, we're talking about message here, not the approach to marketing. For example, SAP came out with a series of products that were built around sustainability - and they were good products that did things like monitoring your carbon footprint - and in the cloud as a big value add at the time. But the company's messaging was horrible! It focused around the economic benefit of sustainability, and if my memory serves me correctly (and it does), it was said by someone that (in effect) "we don't care about the other benefits of sustainability, only the efficiencies it will bring to your company when it comes to cost and the financial benefit it will bring." The message, which could have been the corporate stewardship that companies of SAP's size not only should feel obligated to carry as part of their activities, was ignored completely, while all their competitors in their conversations around green technology, were like IBM's Smarter Planet initiative focused on the stewardship. SAP looked like cold, unfeeling dickheads. Which actually is so NOT the company. But it seemed that way.
Despite this oddly converse messaging, the SAP cultural transformation continued with a brilliant SAPPHIRE 2010 benchmarking the way for the increasing openness of the company and a continued explosion of innovation that was in sync with a sound understanding of the way the world was going. Not just the business environment, the world. But no one really knew how innovative SAP was (and is).
Fast-forward to 2012....
We have a whole new ballgame in most ways, but some of the teams are still playing the same old way in the same old stadium in other ways. Regardless, the company is not at all the company I dealt with in 1998. They celebrated their 40th anniversary with an organization that is firmly seated in 2012, and ready for the next several years as the business world and the rest of the world transforms.
That said, the old ballparks and the same old way of playing is going to need to be fixed once and for all or they will be relegated to the position of an almost winner - and there isn't that much more time to correct the course. While we'll see what that course is soon, let me put it this way. I hope that next year at this time I won't have to write about this issue again. Because if I do, I'll be lamenting their decline, rather than celebrating their success.
Keep in mind, their chief rivals - at this point - salesforce.com, Oracle and Microsoft are all getting their acts together now, where they weren't in the past. And while there are places where SAP is unrivaled and will be so next year, the speed to resolution necessary is getting greater and greater and SAP isn't in a position even now, to afford to play catch up. Yet, to some extent, this amazing company is playing catch up.
Again, all will be clear, grasshopper, by the end of this piece.
SAPPHIRE 2012In order to begin to understand SAP, its innovative present, its well focused future and its one glaring contradiction, we have to look at how SAPPHIRE 2012 played out and how it was organized.
As you know, when it comes to companies I cover, I pretty much cover not just the messaging or their products or their stability or their customer base, but the nature of the conferences they put on, because they are so important to the company's direction, perception and impact, I study and speak of how the conference looks and works because these conferences are so critical. Rather than talk about the universal whys of conference dynamics from me, (you can get those here in my discussion of Microsoft Convergence 2012), let's see how much impact these conferences have. Here's a quote from a Business Week article on SAP by Cornelius Rahn on May 14. He quotes Leon Cappaert, a fund manager at KBC Asset Management in Brussels (the dude handles 400,000,000€ including SAP shares. Hats off to him if he's good at it.). Cappaert said:
"SAP is one of the few stories within the European technology sector that investors are really excited about because they have these specific new product cycles which should help them support their growth. If HANA disappoints again and we don't get positive signals from the conference, then the stock may be under pressure." (emphasis mine)
Exactly my point. The impact of these conferences can't be underestimated.
SAP at Sapphire this year was incredibly well prepared with their messaging. They were absolutely dead on with their events management and planning. They were, with a couple of relatively significant lapses, brilliant in their execution of the whole thing. They handled their attendees with enough specificity and personalization to at least identify segments like customers, premier customers, prospects, influencers, media, and partners to satisfy the very different requirements for each one. They even orchestrated the energy levels of the conference - keeping it, let's call it, "maturely energetic." (Give me a minute, I'll explain). They, as they have done frequently in recent years, pulled off a brilliant conference.
Okay, now go to the top of this post and refresh your memory of my opening statement. Again, all will become clear soon. I know I keep saying that, but it will. Promise.
Oddly, the conference itself began with one of the biggest faux pas. The first three speeches were effectively giant ads for ASUG, the SAP monster (100,000+ member) user group. Granted, SAP has a tight partnership with them - one of the closest relationships between a parent software company and its represented users that I've ever seen. But opening speeches at a conference are meant to be either inspirational and/or the framework setter for the conference. While there is no disrespect intended for ASUG here, they didn't belong on the stage at the time. As a result, the analyst buzz right after those speeches was, to say the least, not all that positive. Thus, first impressions of the conference were not good. There was some discussion that this was because Bill McDermott needed to change his speech to the afternoon, and that is somewhat mitigating, but there were 50 other things that could have been done e.g. Jim Snabe's speech could have opened the conference. Even Lance Armstrong (inspirational) could have opened the conference. Just not a big ad - or three.
But by the end of May 15, all of that was past history - a mistake to not make with SAPPHIRE 2013. The themes of SAP going forward were clear and had a subtext that reflected what was a much deeper and more mature cultural transformation of the company. They were clearly retooling for the largest change in their history and doing it generally well.
SAP Going ForwardSAP established its new direction clearly at the conference in a number of ways. Here's the simplest way I can put the multi-faceted but coherent directional themes:
- Product: in memory, a.k.a. HANA
- Product: Not ERP, end to end for the enterprise, fast
- Technology: Simple, Social, Mobile,
- Technology: Cloud, cloud, cloud, cloud, cloud
- Company: Customer facing in all respects
- Company: Co-innovation
- Company: Contribute to the social Good.
- Partners: valued member of ecosystem, not program per se
As Caeppart points out, they are banking on HANA. They are also going all in on the cloud. That is the defining direction for the products and technology for the future of SAP. Period. No ifs ands or buts. This was made evident by former Successfactors CEO and current SAP Executive Board member Lars Dalgaard who, in what was the most aggressive speech of the conference made it quite clear that SAP's acquisition of Successfactors was not driven by its HR pedigree but by its cloud architecture. The SAP commitment to cloud leadership by acquisition was punctuated this past week by the purchase of Ariba for $4.3 billion. SAP is projected to hit about $2 to $2.5 billion in cloud based revenues this year thanks to Successfactors and some of their Business By Design products and now Ariba.
However, there were some inherent difficulties in this all in on the cloud theme.
First, there was a mixed message around Business by Design, the SAP effort at cloud based applications and platform over the past 4 years or so. Honestly, I've always truly disliked the Business by Design products - because I thought they were poorly designed and kludgy and functionally illiterate, so to speak. But it has a lot of promise as a platform. For example, the heretofore-best SAP cloud product, SAP Sales on Demand, was built on the By Design platform.
What seemed to be the case was some politics were being played around BBD's future. Lars, in his speech, took a swipe at BBD that was clearly political but at the same time later on, according to Michael Krigsman in his must read post on the SAP cloud, had to clarify that BBD was a big part of SAP's future in a tweet.
So, its still unclear on how BBD is going to play out. If I were SAP, I would lay that out point by point somewhere. Is it here to stay? If so, is it the products or is the platform the foundation for future, much better built products? Or is it being phased out? Or what? There is no room for any lack of clarity when it comes to SAP's cloud strategy.
Their commitment to the cloud is unmistakable. It's being presented in a rather aggressive and spectacular way. Because they are so late to the game, acquisition is one of the better strategies to get to a leading if not dominant role, but when it's not in your DNA to be a cloud company, it is not a comfortable thing for a company to make that transition. For example, the ease with which one can get and lose customers; the pricing models and how revenue gets recognized; the messaging and marketing; the sales cycle; - all different in cloud services companies than in big enterprise on premises companies. SAP, by taking the same approach that Oracle and Microsoft are taking around hybrid models because of the vast investment many of their clients have in the on premises applications of the last few years, is doing what is reasonable and right but at the same time entirely difficult. How do you explain an "all in with the cloud" perspective to a company that's invested $50 million in your on premises software over the past 5-6 years? Not the easiest thing to explain. What do you sell them next? Keep in mind, while the cloud, cloud cloud perspective plays well with an audience of analysts and pundits, the bulk of the 15,000 plus people hearing this in the audience were SAP on premises customers who had to be wondering "whaaaaaat? What about my investment? What am I supposed to do?" This is a part of the discussion that was missed and customers were overheard remarking on this. So as good and welcome as this message is, there are other considerations of its real world impact that weren't addressed well enough.
Despite that, this is still a very wise move by SAP and, even with the issues, their cloud refrain at Sapphire was handled, for the most part, very smartly and presented as if it were in their DNA, even though it isn't. Successfactors is an SAP company, not the other way around.
They did the same thing with HANA. (For those of you who don't know what HANA is, read this). Interestingly, while there were a few product announcements including the SAP Social Customer Engagement application (for the SCRMers amongst you) at the conference, what really was the product story of the conference was HANA and the commitment to in memory computing - which is in SAP's DNA. They have developed a market-leading product that's forced companies like Oracle to try and catch them. They have been consistently incorporating HANA and it's lightning speed in memory capabilities into their products - with more and more available to run using HANA.
Even though HANA directly targets them against Oracle in the database market, at this conference, unlike any of their competitors, they took no shots at their competitors, which is entirely refreshing. They are letting their products and strategies speak for themselves. A big hat tip to SAP for this one. It's about time that a company attempted to gain market position against its competitors on the merits of its offerings.
The cultural transformation of the company was another significant part of their memes at Sapphire. There were two that were apparent - we are not ERP anymore and we are customer-facing a.k.a. we love our customers and listen to them and co-innovate with them.
They never explicitly said "we are not ERP" but they never really mentioned ERP at all more than parenthetically. Plus, in their paean to their 40th anniversary as a company, they spent considerable time emphasizing how much they've changed over the four decades - to a customer loving company. One that is focused, as a world citizen, on being good to those customers and to the world that they live in.
Their customer facing warmth was expressed with a "you don't need a hero because you are one" kind of show. The customers they brought to the stage like Angela Ahrendts, CEO of Burberrys and Ron Dennis, Executive Chairman of McLaren Group for example, told compelling well-articulated stories about their relationship with SAP in a conversation with Bill McDermott that comprised the bulk of his delayed keynote.
In the course of those conversations, I guess there was one implied competitive shot that I thought was very interesting. Angela Ahrendts, the brilliant CEO of the luxury retailer Burberrys, spent a good deal of time being interviewed about the initiatives that she is taking at Burberrys to bring Burberry, as a "young" uberlux brand into a leadership position with its use of contemporary digital technologies in service of knowing and valuing the customers - one at a time.
What makes this tealeaf reading interesting is that this very same CEO was shown as a poster child for salesforce.com at Dreamforce last year. It turns out that 90% of Burberry's IT infrastructure is SAP. I have to think this was as close to a competitive swipe as I saw SAP make. Regardless of the reason, the Burberry story was fascinating and the mutual fondness of Burberry and SAP almost palpable.
In fact, speaking of SAP customers, the customer videos that were shown at this conference for companies like McLaren (Formula 1 racing etc) were easily the best produced, most effective customer videos I have ever seen, bar none. They were all built around the story of what the company does, not a testimonial to the conference host. The vast majority of customer videos are mind-numbing exercise in disguised self-congratulations which have the format of a few brief pics of the company and then somebody blah blah blahing about how great (fill in technology vendor) is. This was the real work being done by real people and how the tech vendor supported that - with fabulous hi-def production values.
The Rest of the Conference StuffSo I think that you can ascertain from what I said, that they were doing a great job of getting across fundamental themes in the appropriate fashion - except for that one glitch at the very beginning of the conference.
But there were other things that Jonathan Becher and his team did that reflected how brilliantly they pulled off this conference - and set a tone. Which will lead me to what they don't do so brilliantly.
Some of the Other Factors....The Exhibition Hall was a paradigm for how all large exhibition halls should be done. SAP had hundreds of partners exhibiting at the conference in conjunction with showing off their same stuff.
In direct contrast with all other major conferences, this one was laid out so that:
- You could walk through it without bumping into 8 million other people or booths/kiosks
- Sound proofed so that the ambient noise which reaches ear-splitting dins at other conferences, wasn't there. It was actually quiet
- Miked under every seat in the theatres so that the voices you did need to hear you could hear clearly
- Organized in a way you could FIND THE BOOTHS/KIOSKS YOU WANTED TO FIND including those of partners.
In addition, the influencers/analysts/journalists had, as they have for the past three years, the Global Communications Center, that provided power, great connectivity, food, and access to SAP senior management in a single area so that you didn't have to travel across vast expanses of conference steppes and tundra to get to 1 on 1 meetings. Additionally, the senior execs just would sort of roll in at times and hang out with whoever - an always important added plus.
Again, all in all, a brilliantly produced conference that was designed with a clear understanding of the impact that these conferences have on shareholders, analysts, customers and the business world in general.
A Few Other Non-Conference Things...I think if you read what I've written so far, you'd think that SAP is getting its act together from multiple standpoints. I didn't even mention social or collaboration, but they have Sameer Patel on top of that now, so it's in good hands and I think will be much better in the near future than it has been. It's never been bad, just not sufficient. They have a social engagement product that I would say is geared strongly toward the customer service side as a product - and kind of similar though not quite as deep as Lithium's new Response product in terms of what it can do. What makes it more interesting is going to be its use as a platform/layer integrated into other products. But SAP has a long way to go to reach the rather exalted levels of integration that say Oracle has with its Fusion products and social collaboration. But it's working on that.
The reason I'm being so short with the product side is that I've already I think made it clear that SAP can be a real innovator and at the same time will address the product gaps it has and adjust its budgets, personnel, investments in time, etc. accordingly. So I don't worry about that.
Their marketing approach, beyond what they do at Sapphire, year after year, is still so product focused, so retrograde, as to be dangerous. And I say this year after year and it doesn't change. Yet, SAPers wonder why they always lag in areas that they could be leading.
They continue to come at marketing from an "explain rather than evoke" engineer's perspective.
What do I mean? Okay, here's an example. Remember the product I just mentioned, oh about 2 minutes ago? "SAP Social Customer Engagement"? Remember the product I said it was similar to in part? "Lithium Response?" That's the issue. Look at the names of SAP products - they explain the product but don't evoke the kind of metaphors that allow for a narrative, provide some foundation for imaginative thinking by business customers around it. Lithium Response is a far better name than SAP Social Customer Engagement. Lithium Response evokes scenarios; SAP Social Engagement explains what it does. The poor naming conventions are just indicative of the feature/function product marketing that is still the hallmark of the company and has been the last thing to change.
Why should this matter? Isn't this all about measurable business outcomes? Why should poetry, so to speak, matter.
Because it does.
Because those creatures making business decisions are thinking human beings who in fact think like all other human beings. For example, if its all about measurable business outcomes and not anything else, why does a vision statement of a company matter. Because its something that evokes the future of the company in ways that make people emotionally involved with that future. That's also why the best presenters - and none of you reading this can deny that - are those who can highlight an important point with a story that supports the point - not just the statistics.
We are talking about marketing here. Marketing is based on the ability to capture the attention of someone who then becomes interested in you because of the things that you did to capture that someone's attention. Yes, of course, they need to be apprised of and convinced of the value of the offerings to them when it comes to measurable business outcomes. But even, there it has to be outcomes that are in their self-interest, not just the company's interest. Which means they have to relate to what you are telling them.
Many years ago, I used to have to deal with fundraisers and they tended to be cause related. Some of them were quite young and not all that savvy when it came to how to do all this. These were the lessons I taught them:
- Money is the byproduct of your discussion. If your discussion is successful, they will want to support it and money will be the minimal way they will.
- To be successful you have to get across your point in their metaphor. That means that you have something important to say, but each of those individuals you talk to, are self-interested singular human beings who think in a unique way from all others. It's the job of the fundraiser to get across the important point that they have to make in the metaphor of the person they are talking to. Stories are the key to that.
It's hard to do this. If you are confident enough to understand that your point is important - tough enough - you have to figure out who you are talking to and tell them stories that they can relate to that reflect your point. That's how you convince.
The irony is, unbeknownst to me, the 21st century would demand this kind of marketing, with the increasingly strident demands of customers for a more personalized kind of interaction with a company. Companies like salesforce.com succeed wildly at this because Marc Benioff paints a picture of a vision that is exciting to the audiences that he addresses and the story not only makes sense (even if there are holes in the immediate reality at times) but makes the individual want to be part of it. And he does it enmasse. This forced all other companies of the Big Four - Oracle, Microsoft and of course the heroes of this particular tome, SAP, to respond to salesforce.com, even though in terms of revenue, size and lifespan, is by far the smallest of them.
But SAP, with all its innovation and its willingness to make the cultural transitions and evolve its product, when it comes to marketing, still hasn't figured that part out.
Its actually ironic, because they have a brilliant CMO in Jonathan Becher who if allowed to unleash their mad skills in the way he and his teams are able to at Sapphire, would be able to change the way SAP is perceived in the market. THAT'S what I meant when I said in the first paragraph of this piece "If SAP marketed to the rest of the world, the way they produce conferences, they could arguably become the best technology company on the planet."
They would be. But they are lagging in perception because they don't do the things they are capable of doing when it comes to establishing thought leadership; or providing jobs based thinking around their ecosystem. Or telling a story.
They need to have a more narrative "ecosystem-based" marketing approach. What do I mean by that? Let me use my favorite example.
The best piece of product marketing in the world has been viewed on YouTube over 18 million times. Its Corning Glassware's "A Day Made of Glass" (I think Corning is an SAP customer.... though don't hold me to that), I'm embedding it here. Okay, now watch it.
Note the key characteristics- it evokes; it tells a story about an ecosystem of existing products and how they support a visionary view of a family's life. While you are watching this, and the reason for its popularity isn't just because its cool but because it could be real in your lifetime and is something that you can see for yourself in your mind's eye. It appeals to self-interest in a metaphorical way with a narrative. Yet, stripped down, its product marketing.
SAP has the ecosystem for the enterprise or, because they are now also looking at the small and midsized business market more seriously, for business. Get out there and show me how it helps MY life or the life of your future customers at an individual and corporate level, just as you did with the customer videos at Sapphire. Stop telling me about the features and functions of your product. Show me how it appeals to my self-interest, my life. Change my behavior. Make me believe it can do what I need it to do.
I wish SAP could do this easily but I've been urging them to do it for years and they really haven't. I'm not saying listen to me. I'm saying you're 40 years old now and you're old enough to listen to the world of 2012, not the world of 1972 anymore. You're making the adjustments you need to make given the business trends and communications trends you see out there. You have leaders inside the company who are entirely attuned to the contemporary marketplace (e.g. CRM leader Anthony Leaper and the other CRM senior management like Vinay Iyer and Volker Hildebrand, who truly do get it). You have the products to compete and lead with. You are an innovative company and have been for years. You pulled off a superbly done conference and set some themes for your present and near future that can resonate. Now take all of that, change your approach to marketing in general, not just at conferences and you can be the force you want to be.
Now do you get the no-longer incoherent or even inchoate statement?
"If SAP marketed to the rest of the world, the way they produce conferences, they could arguably become the best technology company on the planet."