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C/4HANA: SAP’s Industrialization Of Customer Engagement

John Bruno Senior Analyst
Mark Grannan Senior Analyst
Ted Schadler Vice President, Principal Analyst
June 5, 2018

SAP announced a new name, market position, and strategy for its customer engagement portfolio. Instead of a potpourri of products, SAP will now offer the quirkily named C/4HANA, which is comprised of SAP Marketing Cloud, SAP Commerce Cloud, SAP Service Cloud, SAP Sales Cloud (including CallidusCloud), and SAP Customer Data Cloud (Gigya). C/4HANA attempts to remind CIOs that SAP has more than the S/4HANA ERP supply chain portfolio — it also has a demand-chain portfolio.

With this announcement, SAP has signaled that its front-office strategy is built on its industrial foundation. This is SAP going beyond selling its front-office applications to its existing ERP customers; this is SAP looking to get its share of the CRM pie by delivering independently viable front-office capabilities that, when coupled with its back-office solutions, will deliver a more comprehensive and valuable solution to its customers. We view this shift positively because companies need both great customer engagement and great business operations. And the two parts must work together to deliver a great customer experience. Anything less than that is a digital illusion. 

For five years, SAP’s front-office strategy has ridden on the shoulders of Hybris Commerce, while its other CRM and digital experience applications have largely left customers wanting more (see below for links to all related Forrester Wave™ reports). It was time for SAP to make a choice: Abandon CRM altogether, or double down on the front office. SAP is doubling down. Now the hard work begins. SAP must:

  • Earn the credibility of SAP customers, partners, and sellers. The shift away from Hybris to C/4HANA was largely a byproduct of the strategic direction from SAP Hybris’ new president, Alex Atzberger. However, leaving the Hybris name is a risky move. Hybris is a well-respected brand that appealed to more than just CIOs. With the rebranding, SAP must answer many questions: How does it convince prospective customers that this attempt at shaking up the front office is different from those in the past? How does it convince Hybris commerce customers that SAP will continue to lead in commerce? How does SAP convince everybody that these offerings aren’t just for the CIOs already familiar with S/4HANA? 
  • Double down on marketing and customer service. The first steps to refocusing on CRM can be seen with today’s announcement of Coresystems (field service) and the recent CallidusCloud and Gigya (for customer identity and access management) acquisitions, but there’s work left to do. SAP needs to show the same commitment to marketing and customer service solutions — and do this without losing its commitment to drive innovation in commerce and data management. 
  • Decide if experience is worthy pursuit. In most cases, SAP Hybris Commerce tried to go it alone on experience with baked-in content management system capabilities. In a few cases, SAP has filled its content gap with OpenText partnerships, but for the most part, it was pushing would-be brand-centric customers to stitch products like Adobe and Hybris Commerce together. Overall, the C/4HANA move to relegate commerce to an equal footing with sales, service, and marketing begs the question: What will enable omnichannel experiences in the future? Going forward, DAM, web CMS, MRM, and content marketing should be acquisition targets if SAP is going to take this area seriously.
  • Invest in a services layer between customer engagement and the back office. Salesforce recently acquired MuleSoft while Oracle acquired Apiary (now a part of Oracle Integration Cloud) to beef up its API management strategies. These investments drive stickiness with developers and systems integrators, who must build on top of legacy infrastructure, but do so with a lightweight, modern services approach that allows for maximum flexibility and reuse. SAP’s history is not reassuring here. For example, SAP never unified its front-office YaaS (Hybris-as-a-Service) and back-office SAP Cloud for HANA, and the recent acquisitions have yet to be fully integrated. We believe that SAP should follow Oracle’s and Salesforce’s lead and try again with an API management strategy.

Although Forrester views this shift positively, SAP’s legacy brand position was one reason its front-office strategy failed to take off, even after multiple rebranding attempts in the past few years. Now that SAP (core) has re-established dominance (over Hybris), what chance does a customer-centric strategy have unless the entire organization mobilizes behind it?

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