The definition of CRM has changed. Yes, that is a big statement to make, but it’s an important one. CRM grew from a customer data repository into functional applications, first with sales automation and then to support customer service and marketing. Today’s enterprise software vendors cannot rest on “core” CRM functionality; their buyers demand a comprehensive set of capabilities to empower their front office employees to deliver the best experiences for their customers. Across the board, large CRM vendors have done this through acquisition and ecosystems/marketplaces. That’s why this acquisition is so important for SAP. With one stroke of the pen, SAP added arguably the single most comprehensive suite of sales focused applications to their CRM portfolio.

It didn’t always seem like SAP was poised for or willing to execute on an acquisition like this. For example, if you made it to either SAP SAPPHIRE NOW 2017 or the SAP Hybris Summit in Barcelona, two things were clear: SAP is a proud company with an arsenal of great technology and CRM seems to get lost in the midst of an ever expanding software portfolio. Perhaps years ago when the SAP Cloud for Customer (C4C) team joined the Hybris portfolio, SAP would elevate it to the same degree as Hybris Commerce: nope. But SAP buying Callidus Software signals that they are finally ready to take CRM and non-commerce customer engagement seriously. It also follows a major theme for SAP: a blending of back office and front technology that started with the Hybris acquisition. This is a very good thing for SAP. This blending of traditional and new SAP allows the company to:

  • Bring the Age of the Customer to their core verticals. SAP is a juggernaut in many traditional verticals, not the least of which is manufacturing. Many businesses that I talk to yearn to be more customer obsessed and deliver a better experience, specifically on the sales part of engagement. At the same time they’ve been unsure if their long-time ERP partner, SAP, would be up to the task. CallidusCloud brings with it more than sales performance management, solutions for managing sales content, delivering sales training and coaching, seller analytics, and more allow reps to deliver a richer experience for buyers.
  • Close the ecosystem gap with its CRM competition. The CRM market has grown to include dozens of point solutions that hang on to or integrate with core marketing, sales, and customer service application. SAP has always leaned more heavily towards first party solutions or discrete go-to-market relationships over an open ecosystem. For companies looking to augment core CRM with these adjacent solutions, SAP has closed the gap on what is possible with C4C and CallidusCloud. Businesses can look for immediate front office benefits that come with CPQ and their sales enablement offerings.
  • Deepen its value proposition around financials. SAP often touts that 76% of the world’s transaction revenue touches an SAP system. This number will grow. CallidusCloud boasts some of the strongest capabilities in market around sales performance management, especially around their strong incentive compensation tools. 2018 ushers in many new regulations, including one that SAP has their eyes on: ASC 606. Of course accounting regulations are always on SAP’s radar, but these regulations go beyond revenue coming in; they apply to (commissions) payments going out. With CallidusCloud, SAP now has a compliant solution to solve for  payments.


What It Means

This is an announcement and there is plenty of work to go to bring these two solution suites together. Let’s not forget that it has only been one year since SAP announced a partnership with CallidusCloud to OEM sales performance management and CPQ for their customers. It will take time to audit the entire set of capabilities, make determinations on whether to focus development efforts on the CallidusCloud or SAP versions of those tools, and to package those in a way that makes sense for SAP’s CRM business. These are all the normal blocking and tackling processes of any enterprise software acquisition of this scale. This news should thrill current and prospective customers of SAP. This acquisition boosts SAP’s standing in the CRM market by giving buyers more options, allows their buyers to drive more customer obsessed strategies, and simplifies (for the most part) the technology investment decisions with SAP. Potential customers should pay close attention to CPQ as CallidusCloud already offers a leading solution. With the overlap in functionality with existing products, expect CallidusCloud’s CPQ to take the reigns as the SAP solution moving forward.