SAP has tightened its approach to CX, providing a composable architecture designed for specific industries that shifts away from competing with market leaders such as Salesforce.
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SAP CX has undergone a significant transformation in the last few years, from its roots in traditional CRM functionality to a cloud-centric customer experience.
Now, SAP CX products span across enterprise processes and have been re-architected for composability, according to Sven Denecken, senior vice president and chief marketing and solutions officer for SAP Industries and CX.
SAP CX is also taking an industry-specific approach, with CX functionality designed initially for retail, consumer products, utilities and automotive, he said.
However, the SAP CX journey has not always been easy to follow, and there have been missed steps and abandoned paths.
Acquired cloud pieces of the SAP CX portfolio such as Hybris, CallidusCloud and Gigya remain central to SAP CX's core, but not everything has worked. The high-profile consolidation of the cloud CX products as the C/4HANA platform -- based on the HANA database -- never caught on. Further, the acquisition of Qualtrics in 2018 to integrate its experiential data with SAP's operational data was largely abandoned, and SAP unloaded Qualtrics earlier this year.
The reorientation to SAP CX is important as it positions SAP away from competing directly with market leader Salesforce by providing functionality that could be more appealing to SAP's large installed customer base, according to industry observers.
Reorienting the market approach
SAP CX is being given new importance, said Joshua Greenbaum, principal at Enterprise Applications Consulting.
Any strategy by SAP that went head-to-head with Salesforce was a bad strategy.
Joshua GreenbaumPrincipal, Enterprise Applications Consulting
SAP has not indicated that it is getting out of the CRM business. Instead, it is leaning into CX and redefining its strategy, he said.
"Any strategy by SAP that went head-to-head with Salesforce was a bad strategy. That's not how SAP can succeed in CX," Greenbaum said. "There was certainly at one point some idea about reinvesting and trying to beat up Salesforce, but that's not what they're going to do. They're going to change the equation with a more industry-focused strategy."
Much of SAP's efforts will be directed at the untapped potential in the vendor's installed base for CX, he added.
SAP's industry-focused tack for CX taps into its strengths by providing an integrated experience across processes such as configure, price and quote (CPQ) for manufacturing in ways that competitors can't do well, Greenbaum said.
"It will be cheaper for customers to do something on CX for CPQ with wall-to-wall SAP than to try to kludge Salesforce and some expensive integration with MuleSoft and hope it all sorts out on the ERP side," he said.
SAP's track record in CRM is questionable, and it makes sense to tilt away from a race against Salesforce to focus on its installed base, agreed Kate Leggett, an analyst at Forrester Research.
"SAP's investment and focus on CRM has been checkered at best over the years," she said. "According to Forrester's quantitative evaluation of the strength of their CRM products, their products really don't perform as well as others from Salesforce or Microsoft."
However, there's a "huge market opportunity" to sell SAP CX into the installed base where there's less competition from the CRM market leaders, Leggett said.
This is particularly the case now that SAP is realigning CRM into industry-centered SAP CX applications, as customers look to modernize their back-office systems first and then pull in CRM functionality, she said.
Strong leadership can drive SAP CX
There is a perception that SAP has let CRM lag, which makes it important for the company to demonstrate how it has invested in and evolved into CX, said Jon Reed, co-founder of Diginomica, an enterprise industry analysis firm.
Concentrating on industries and selling into the existing customer base is the best strategy for this, he said, as SAP believes it has a big opportunity there.
"This now becomes a different type of game because they're not thinking about winning net-new CRM or CX deals," Reed said. "But it's a little tricky because they're really saying they're not trying to be a CX market leader and competing with the other leading CRM platforms -- they're trying to be the best CX platform for their customers."
One advantage to making this work is that the SAP CX product portfolio has been re-platformed into a modular microservices-based architecture that should make it easier for customers to use and build on, he said.
Reed noted that this has been done under the leadership of Ritu Bhargava, chief product officer of the SAP CX/CRM group since 2021, after long stints as an executive at Salesforce and Oracle.
"They have a leader who has a strong vision and personality, and it will be interesting to see how CX does under her purview," he said.
Looking for CX messaging at Sapphire
SAP Sapphire, the annual conference for SAP customers and partners taking place this week, is a good place to drive the SAP CX message, according to analysts.
"If SAP is serious about CX, then it has to be a part of the Sapphire keynotes and fanfare, because it was a sideshow the last couple years," Reed said. "One keynote last year was CX-related, but they didn't explain it very well."
Leggett is looking to hear some industry-focused examples of how customers are innovating with CX -- for example, with generative AI.
"At Sapphire, I'd like to see real innovations in their CX solutions and how CX can seamlessly fuse demand chains and supply chains, backed by customer stories," she said.
SAP is putting serious effort into promoting CX, Greenbaum said.
"They've been solidifying their position around these four key industries, so it's a position of strength," he said. "CX is a place where I'm looking for some strong statements at Sapphire."
Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.
