I haven't written anything "analytical" for a while. I was preoccupied with some things which I doubt I have to repeat to you – since you were and are too, but they left me with a severe writer's block. So, trying to ignore the writer's block and still be productive, I spent a lot of time working on video (CRM Playaz related) and also contemplating what I'm going to do with the CRM Watchlist this year (check the end of this post for that). But Monday, June 15, 2020, SAP CEO Christian Klein gave a keynote speech and, just like that, the writer's block crumbled and here we are.
What I'm going to go through is only his keynote, not the conference as a whole, since my primary concern is SAP's direction and normally, that is covered in the CEO's speech at major conferences. His job is to not just frame the proceedings but speak to the outlook and the direction and execution of that direction for the company for at least the next year. But in this case, because the pandemic forced us into a virtual universe that relies on digital production and viewing, I'm also going to discuss what SAP did to produce their virtual event and particularly the keynote session. There are lessons to be learned and practices to emulate – and the new standards are being set by a lot of the tech companies who have transitioned their live events to digital. Discussing what SAP did in this keynote, good and bad, content and production is what I think is instructive beyond just the norm of "What's new (or old) in SAP's direction as set by Christian Klein and SAP's board."
So, this piece will be broken down into three parts. The production, the content and direction of SAP are the first two and while not related directly, the third is an announcement that if you are a fan of the CRM Watchlist, you will want to hear. Sometimes the discussion of the content and the production will be intermingled, but I am going to do my best to deliberately separate the two.
Let's start with the speech itself. If you'd like to watch the whole thing – which I recommend you do – here is the link to it.
This was Christian Klein's debut as the sole CEO of SAP and all its entities. A big job on a big stage. While I don't have the numbers of attendees, I'm guessing his virtual stage was a LOT bigger than the normally substantial numbers that SAPPHIRE generates live. I know that for example, PegaWorld generated something like 68,000 "attendees" for CEO Alan Trefler's speech and normally they pull 15,000-18,000 live attendees. SAP's SAPPHIRE Reimagined dominated last week's vendor news, so the numbers I assume were immense. From what I gather, the technical difficulties they had at the beginning of the conference (we were unable to get on except via Twitter) were due to unexpectedly heavy traffic. Which at least anecdotally confirms a vast number of interested parties. I don't fault SAP for being more popular than they thought they were. Tech glitches now, with stretched bandwidth happen and SAP had us diverted to the alternate Twitter channel pretty quickly. So, ignore the whiners who were looking for something to complain about. Kudos to SAP to finding the "patch" really quickly.
Christian handled himself well – especially given that it was his debut and it was in an unusual environment dominated by green screens and videos, with an unseen audience. He was comfortable, casual, and addressing the hidden audience directly.
He focused on three themes that apparently are SAP's present and future. They are:
Before we get into the particulars, it might make sense to look at the big picture.
The overarching corporate narrative and message for SAP for the last three years has been "Intelligent Enterprise." It's an excellent story/message for them because they are truly one of the less than a handful of companies that can lay claim to it and support the claim, handling the operational needs and to a large extent, the analytical needs of both the front and back offices and what rests in between. The others are Oracle and stretching it a little bit, Microsoft. What makes this PARTICULARLY compelling and that aligns well particularly with their focus on resiliency has been SAP's long-term efforts with supply chain and logistics. Under the tutelage of former SAP leader Hala Zeine, currently CPO at Celonis they were able to build up a very strong digital supply chain solution, one that, to the best of my knowledge, remains top of its class. Due to the pandemic stretching the supply chain to the nth degree and now to the protests sheer mass and scope physically disturbing delivery, the message around resiliency and the SAP's already existing solutions make them important to the world for both business continuity, but also potentially in saving lives at least indirectly, through the use of their supply chain operations. SAP's very strength in this area supports business resiliency both in ordinary and extraordinary times and situations – and as norms change, SAP remains aligned to the change, even with their existing efforts.
If I'm to judge things (and I am a judgy New Yorker), I would say that there is a lot to like about SAP's direction but there was a certain amount of head-scratching tone deafness that showed up in places, even though in other places there was a crystalline sharpness to the that alignment with the world even if we are unclear of where the world is going.
The Themes: The Good, the Bad, the…Missing
The three threads were interwoven with the SAP "Intelligent Enterprise" corporate narrative. They are both strategies for SAP's approach to the market and signals on the direction that SAP has chosen to go as 2020 evolves.
Early in his speech, Christian Klein set the thematic tone with this: "We can become more resilient and make sustainability profitable, and profitability sustainable."
NO!! ABSOLUTELY NOT!!
I've had this discussion with them in the past. Let me say it again. Equating sustainability's raison d'etre as profitability is LITERALLY the wrong message to send to EVERYONE IN THE ENTIRE WORLD except the most mercenary and crass business buttheads – which at last look wasn't an actual target market. The purpose of sustainability's evolution as a global concern is that it is a GLOBAL CONCERN. We need to do something that not only provides the support of our global economic engine but in the process saves the earth from ecological disaster. The message and focus of sustainability is NOT "support the global economic engine." It is "save the earth from ecological disaster." There is NO other message. The economics are implied, but they are not the purpose. Get it? Not…the…purpose.
To SAP's credit, and to my relief, when Christian Klein dug into sustainability, it was properly positioned for what the value really is – it helps the world be a healthier and better place for all of us. But, when a CEO speaks, and is setting the framework, not just for the speech, but for the direction of his company for the coming period – especially in the midst of dramatic uncertainty – it isn't wise to undercut your own position right from the start for the sake a glib phrase. I must assume that this SAP 2014 idea "sustainability = profitability" was thrown in there because it sounds cool – and thus would be a good social media soundbite. Sadly, this kind of thinking suborns vision, mission, and strategies. To be fair, this kind of digestible marketing is rampant throughout the industry, in all kinds of formats. Another example, just to give you some context, is the need for some obscure reason, to have your outlook defined by terms that all start with the same letter. Especially C. But even D's and P's get some play. Here's an example. Here's another example. Another. The last one, The Four Cs of Business Communication is particularly ridiculous because to meet the requirement of the 4 Cs the fourth one is Communication. One of the C's of communication is communication. I think that makes the point. Intelligent thinking eats glibness for lunch. Peter Drucker didn't say this. I did. You can tweet it.
Even though this was a faux pas for SAP, I know that they don't think of sustainability solely in terms of its value to revenue. As far back as 2018, SAP had gotten past that antiquated, and just wrong public message and situated their good work on sustainability especially around reducing the carbon footprint where it categorically and properly belongs – under the aegis of "good for mankind – and the earth." Look at this commercial they did with Clive Owens in 2018.
That's the SAP that I want to see. A business that is interested in doing good as well as doing business – and gets the relationship between them. And I don't mean "sustainability = profitability" when I say that.
Like anything else (see later) the key to focusing around these three themes are not the words spoken, but the actions taken. And it's not just the actions taken but also the purpose driving the actions. It goes to the heart of something I have been saying for the last several months to all businesses:
You will be judged later on what you do now.
Resiliency though is something that SAP can not only interweave in its messaging around intelligent enterprise but something that they can genuinely support the market on. They have the tools and the solutions as well as the experience and history to engage with companies at every level from business continuity to supporting a transition from a traditional to a digital supply chain.
I'm going to ignore this completely. It really needs little to no explanation.
I don't know if you noticed but I haven't made a single reference to SAP CX. Odd, wouldn't you say, since my actual wheelhouse resides in the land of CRM, CX and CE. You know why I haven't made any references? Because other than a brief arcane reference to C4HANA, THERE WASN'T ANY DISCUSSION OF SAP CX and that is an astounding and glaring oversight that is not just because I am a CRM/CX/CE guy. This complete and incredibly puzzling omission comes five years after their first pivot to customer experience and customer engagement (2015) and then what they called a pivot but was a 360-degree pirouette in 2018 to customer experience and customer engagement. Read this post I wrote in 2018 that covers both the pivot and the pirouette.
To show their commitment and good faith, they finally got rid of the SAP Hybris name and it became SAP CX. Then they went ahead and got industry legend, Bob Stutz, the Godfather of CRM Technology (I get to say that if I want to) as the President of CX, (here is his appearance on CRM Playaz about 45 days ago) and brilliant CX industry analyst Esteban Kolsky to be their CX strategist. That seemed to show that SAP was serious about their pivot/pirouette to the customer and to CX/CE and CRM in general.
Or so I thought.
But that went away if Christian Klein's keynote is any indicator. There was no sign at all that SAP was committed to their CX practice after former CEO Bill McDermott literally stated for the record that the customer and CX were SAP's most important initiatives. I know that SAP is going to say to me that "Hey we are still committed to the customer." I know that. I'm not equating commitment to customers as only realizable to CX solutions. So don't even go there, please. However, that said, how do you expect to serve the Intelligent Enterprise if CRM, customer experience and customer engagement solutions aren't a major part of the visible portfolio and platform? That doesn't seem apparent when there was NO emphasis at all on it.
"SAP CEO Bill McDermott is aligning his company behind a next-gen CRM platform that will take direct aim at Salesforce. Details about this effort are scarce--at least until SAP Sapphire in June, but McDermott's "we want CRM" mantra raises an interesting question: How vulnerable is Salesforce?
McDermott, speaking on SAP's first quarter earnings conference call, couldn't stop talking about CRM. Analysts played along and asked a bevy of CRM questions. In broad strokes, McDermott indicated the following:
CRM needs to be reinvented in a way that ties back end processes to the front end.
The cloud enables a company like SAP to be more line of business and front office.
SAP's acquisitions of Gigya and Callidus give it a big CRM opportunity.
Customers are becoming concerned about Salesforce's pricing and wallet share."
Ignoring the stupid #4 comment on Salesforce -- because the one thing I won't listen to vendors on is their opinions on their competitors -- this is what became the FOCUS of SAPPHIRE 2018 and now it seems to be erased. I know CEOs have to find their own direction. I get that. But to pivot 180 degrees again to something that ignores reality – CRM is the largest business software market in the world – CX and customer engagement only make that customer-facing market even larger – and that SAP has a considerable investment in it, is a major mistake.
If I was SAP, I would immediately deny what I am saying and then send out a justifiable case on their commitment SAP CX and thus to the customer-facing requirements that companies have. I don't say they aren't committed. I'm saying they showed no evidence of it in their current and upcoming direction.
That observation is a definitive one. We are living in a world that currently may be loosening the restrictions but has been through lockdown at home and severe limitations imposed on running any physical business. Digital efforts, while not full blown transformation which requires a lot more than use of more digital tools in volume (a subject for another day), are how we communicate with one another now and for the foreseeable future – and, honestly, beyond that. I don't think we are going back to the same paradigms and practices that we had – though that's probably stating the obvious.
What does that mean when a business presents itself to the rest of the world which may be watching and listening but is physically invisible or at most, virtually represented?
For several years, I have been making the point to my clients and to the market as a whole that, in the business technology industry, like it or not, we live in a world defined by the efforts that Salesforce and particularly Marc Benioff have been making. Their efforts are not only driving information to the market and to their constituencies, but they have built an engaging culture and a marketing machine that has been, to say the least, theatrical. Their success at doing it that way sets the bar, whether their competitors like it or not. Consequently, one piece of advice I have consistently told my clients (though not Salesforce since, well…) is "you have to be more theatrical." And, to the point, some of them were and it made a difference. The use of theatre – the acting, the elaborate, colorful, meaningful imagery, the motion all creates an exciting, if done well, to the point, effort that has emotional impact. Storytelling is part of theatre as much as the costumes, the sets and the actors so to speak. Sometimes it's just colorful openings to live conferences. One of the best ones I ever saw – done by Adobe in 2018 – was the live conference launch wall video to the Adobe Digital Marketing Summit in Las Vegas. I have a video of it that I took with my phone of 60 seconds of it that's not great, but it is instructive. Feel free to ask me for it and I'll send it to you (email me at mail email@example.com). Here's a screenshot in any case.
Six out of 10 people would rather watch online videos than television. (Google)
By 2022, online videos will make up more than 82% of all consumer internet traffic — 15 times higher than it was in 2017. (Cisco)
59% of executives say they would rather watch a video than read text. (Wordstream)
Viewers retain 95% of a message when they watch it in a video, compared to 10% when reading it in text. (Insivia)
72% of customers would rather learn about a product or service by way of video. (HubSpot)
Videos attract 300% more traffic and help to nurture leads. (MarketingSherpa)
85% of consumers want to see more video content from brands. (HubSpot)
71% of people watch more video than they did a year ago. (HubSpot)
These alone make a great case for video – and the other 47 just enhance it even more. Which is why cinematic is the order of the day.
What SAP did here was hit one out of the park to the point that the cinematics of the keynote literally set the standard for all conferences to come. They did a BRILLIANT job of producing the content they needed to reach the hundreds of thousands who were likely to be either viewing the event live or would be watching in the coming weeks.
Think about it. It was a few actual people, a lot of green screens in a remote environment, with a lot, if not all the shooting of the video being done in excellent bandwidth optimized high definition – from remote locations across the world. Yet, the quality of the cinematics was off the charts superb and the story being told using them with the green screens brilliantly done. I'm not speaking to the content – which is what I address above. I'm speaking to the narrative supported by the cinematics. That is at least so far, given that we are all trying to find our way in this new (hat tip to Phil Fersht) abnormal , which is becoming a new normal – though not there yet. But SAP nailed it. And all their competitors need to watch the keynote and some of the other sessions (not all of them) and learn how to present something.
But…and there is a "but" here…that leads to one of the great conundrums of the direction of SAP. The combination of the brilliance of the cinematics with a head-scratching move that was so severe that I needed to put Neosporin on my scalp.
The Great Conundrum: I can't HEAR the ocean, but I can SEE the currents
During the keynote I saw what may be one of the greatest case studies I have ever seen in terms of what a case study in this era needs to be. What are the characteristics of producing a great case study, you ask? Okay, maybe you don't ask, but I'll tell you anyway.
It needs to show the use of the vendor's solutions, tools, services but in an unobtrusive way – with the focus squarely on the customer's activities.
If in a video format especially, it CAN'T be a senior executive at the customer's company talking about the greatness of the vendor.
If in a video format, it CAN be a day in the life of the company – and ideally – the course of that day (using the vendor's solutions being implied and explicit where needed) in the company's customer/company ecosystem.
It needs to be able to resonate with the lives of those watching or reading it. Meaning, even though it's a particular customer, the universal nature of the activities needs to be presented in a way that makes the reader/viewer say, "I can see that." Because in other ways, they do "that."
It needs to show the value of the products/services but here it veers a bit depending on the type of format. If it's in readable form, there needs to be some data to show the "provable" value of the solutions/products/services etc. If it's a video, it needs to show the effectiveness of the solutions/products/services in supporting the frictionless operations of the business and interactions with the customer and the subsequent improvement in the experience of the customer with the case study's subject company. Graphical data can also be a part of it.
There is more to this, but I'll leave it at that.
SAP did this with their customer. They showed the customer of their customer's experience from the consumer side on their mobile device for the most part and showed what happened when the customer/consumer, using that mobile device, made customized choices for what they wanted to buy. Then they showed the workflows, operational requirements, production cycles, supply chain activities, logistics, shipping and delivery and the consumer taking delivery of their product and the follow up and feedback from the customer/consumer to the company etc. The end to end ecosystem in action and SAP's back and front office platform supporting it.
Fantastic. Truly. One for the ages.
But…again with the buts.
You'll notice that I left out the customer. The reason was that the customer is the conundrum. The brilliance of the case study was marred by the choice of the customer. The customer was Porsche. And the consumer, who was identified as Christian (again, what the…?) was buying a custom-built Porsche.
Watch the case study. You'll see what I mean both on the extraordinary quality of the concept and the production and the just wrong choice of customer.
Which is a real shame because the format and execution of the case study shows that SAP is thinking in ecosystems and platforms, it bodes well for their future when it comes to the intelligent enterprise but it also goes to the heart of why they sometimes just don't gain the traction that this brilliantly innovative company could gain. They trip on their own feet.
As tough as I'm being on SAP, I think that despite the major shortcoming, they have begun to define a "sustainable" direction for themselves. Because they have behaved admirably in the course of the crisis both on the pandemic and on taking actions against racism and for diversity (for one example, listen to the opening statement of the Q&A with the SAP Executive Board), their actions during the crisis, support their commitment to sustainability and especially to resilience. These themes only resonate if you can show the actions you are willing to take and the investments you are willing to make. Just saying things doesn't make you great. They are acting on behalf of the commitments that they make.
The good news this year is that they solidified the intelligent enterprise as their core narrative, and it aligns truly well with their core offerings. They interwove meaningful themes around sustainability, resiliency and profitability – themes that as we uncertainly go back to work – or at least those surviving elements of what work was – necessarily, they are concerns that businesses and their customers have about the lives they live, the world they live in, and the business that they conduct.
The tone deafness of the customer choice – its bad but not earth shattering.
But the omission of CX as a major part of their thinking and possibly their portfolio is very troubling to me – as it would obviously be.
So, all in all, it's mixed. I applaud SAP for some of what I heard and remain a fan of the company. I admire its commitments and achievements not only overall but especially during the pandemic/social unrest where they have been responsive with not just the mea culpas that everyone seems to be throwing around concerning systemic racism but with action which is what matters.
But they do need to respond to the puzzling lack of CX as part of their strategic direction. Yet another pivot, or just an oversight that they can fix? I'd love it to be the latter, but I'll wait to hear.