Why Did SAP Say That CRM as a Software Category Has Failed?

Executive Summary

• Why SAP Has Stated that CRM Failed.
• Why SAP Liked to Make this Proposal Back in 2014.

Introduction

The following is an analysis of an article from Enterprise Irregulars on whether CRM has failed.

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Has CRM Failed?

Software categories get hot for reasons that are unrelated to the evidence for their return to the companies that implement them.

An article on the common statement that CRM systems have failed.

There is this continuing drone I hear time and time again from vendors who think that they are making some major, market-shaking change that goes like this:

“CRM has failed. We are the leaders of the new (self-interested fill in the blank whatever).”

I’ve heard this for over a decade from multiple technology vendors who are changing their messaging and their approach for one reason or another. Each time they declare “CRM is dead, has failed, etc.” and then, of course, outline how they are taking things to the next phase.

The latest pronouncement comes from, of all places, SAP. This disturbs me more than most because I’ve been a believer that SAP, since 2007, has been building some very good CRM applications for their suite, including their still under-publicized field service application, which I consider best in the market. – Enterprise Irregulars

This is quite interesting because customers don’t seem to agree with this. However, there is an excellent reason why SAP says this. SAP has failed to gain much revenue from CRM. SAP stated that they would beat Salesforce in CRM, and this never occurred. Therefore to distract from SAP’s own failure in the space, they had the incentive to critique the overall space or the whole software category.

I’ve also believed that SAP is one of the most innovative companies in the technology world. For example, SAP was the first I ever ran across that was co-creating products and services with their customers on a large scale; they were the first I ever saw to have a social listening product — T-Rex — which they never monetized; they developed the most advanced communities of any technology company, particularly the 3.5-million strong SDN. In other words, it is a progressive and smart company.

I have never seen T-Rex or ever seen it on any account. This article is three years old when this article was published, and I have never heard of T-Rex. Furthermore, not only is SAP not one of the most innovative companies in the technology world, it is amazingly non-innovative, especially considering how much money it spends on R&D. In addition to coming up with very little innovation and co-opting innovation from other software vendors, SAP reduces the innovation in the enterprise market by pushing out vendors from their customers when that vendor has far more innovative applications. I cover this in detail in the following article, How SAP Undermines Innovation.

About a year ago, I saw SAP shift their messaging from customer experience to customer engagement — a wise move, since customer engagement, as a market, promises to be a bigger market than CRM. In fact, I think that it will subsume CRM in the next three or four years. Customer engagement, unlike customer experience, promises to be a huge technology market that is just beginning to realize its potential as it evolves now from its currently nascent state. I’ll go into the reasons why in future blog posts.

Enterprise software represents the glue that ties together teams and business processes, especially in global organizations. See how enterprise software is simplifying, webifying, mobilizing, and getting a lot more social.

There is plenty of misdirection in this quotation. Obviously, SAP has not been successful, this author loves SAP, so SAP’s failure to do much of anything in a software category they invested in immensely needs to be minimized. So the author states that customer engagement is where the real action is. Three years after this article was written, customer engagement is not much of anywhere, but CRM, even with its very poor ROI, is still going strong in sales.

Okay, I can live with that. But then yesterday, I see in an SAP press release the following statement:

“The CRM experiment has failed. Today’s empowered customer requires a new model for engagement. In a world where the consumer journey is fragmented across a range of different channels, devices and touchpoints, it is more critical — and challenging — than ever for organizations to provide highly consistent and personalized brand experiences that engage and delight customers every step of the way.”

This is simply an idiotic statement from an executive from SAP attempting to dazzle his audience with BS.

If I hadn’t seen this quote, I wouldn’t be writing this post. I am truly sick and tired of seeing this “CRM experiment has failed” theme from varying vendors over the years.

Well, you have not provided any reason why you dislike the quote. That is no evidence why the quote is wrong, and you, as the author, have not understood SAP’s motivations in particular for making the statement in the first place. Yet, as the author, you were taken in by an executive from SAP who was trying to wow the crowd at SAPPHIRE.

If I look at this SAP pronouncement in total, I agree with a lot of it. I think empowered customers do need a new model for engagement. I think that a consistent omnichannel approach that enhances personalized brand experiences that engage customers is exactly what has to be done. I don’t think that they have to be delightful every step of the way. They have to be good enough every step of the way since “delightful every step of the way” means that the bar for “delightful” continually gets raised and will bankrupt a company since “delight” is different for every customer. But the spirit of the statement is right.

Deep. By the way, what happened to omnichannel? Omnichannel was as hot as Tabasco sauce back when this article was written, but now you don’t hear about it. And there is nothing to agree with SAP’s statement at SAPPHIRE. It is vapid.

However, this doesn’t give SAP the license to proclaim CRM a failed experiment. There is too much evidence to the contrary as I hope the above at least indicates, if not proves.

SAP says whatever it says to increase its sales, not because any of it is true. I have used it at this point.

As of now, despite their bold pronouncement, neither SAP nor anyone else has the portfolio yet to support a true customer engagement platform and suite. Most likely, no one will have a complete platform and suite. But a customer engagement ecosystem is possible and the companies that want to compete on the biggest stages will realize that and put together partnerships and products that will comprise that ecosystem.

I would not worry about it too much. Other companies have always been, and it now appears always will be ahead of CRM. Customers that want CRM need to look outside of SAP.

Conclusions

If SAP had successfully done what it promised Wall Street and customers that it would do, namely take over the CRM space, then no way would say that CRM had failed. But ever self-centered and willing to say anything, SAP has undermined CRM as it is embarrassed by its terrible performance in this software category. CRM, in my view, usually does have a negative ROI. However, that is not why SAP makes the statement that they did regarding its failure. SAP has no concern for whether its customers receive a positive or negative ROI for their customers. Their only concern is how well their software sells.