Disclosure – many of the companies mentioned in this post have been consulting clients – Full details on my disclosure page.
A few months ago when SAP announced its acquisition of commerce systems vendor hybris, there was much discussion about what it means for SAP’s chances of really capturing the heart of modern commerce. While SAP is undoubtedly one of the main ERP vendors of note, and already powers some of the largest merchant companies on the planet, it’s also fair to say that over the last few years it lost some of its shine as newer companies drove home all the buzzwords of the “new commercial models” – from daily deals to location-based offers, and on to integrated e-commerce solutions the world has moved on from big box retailing of a generic model.
This is where the hybris acquisition came in – hybris delivers what it calls “OmniCommerce” an awful buzzword that essentially means selling products through a variety of different channels. The idea being that an organization can have a single view of their customers, no matter where those customers come from. it also means that if chose to buy online one day, and then from a retail store the next, the service, awareness and integration I find with the vendor is consistent across those two channels. It’s a simple concept but complex to engineer from the backend. hybris powers B2B and B2C brands from names as diverse as Rexel, Levi Strauss, Nikon and Nespresso.
The hybris acquisition was finally closed a couple of weeks ago and SAP started to peel back the covers on what the combinaed companies would actually deliver. There was much hope that it would be meaningful. Speaking after the acquisition announcement, hybris CEO Ariel Ludi said that:
SAP bought the Swiss commerce platform company to move beyond traditional customer relationship management (CRM) and enable it to deliver a multi-channel customer experience, in-store as well as through e-commerce, to companies that sell goods and services.
Ludd went on to explain his view on why a traditional CRM product fails when it comes to delivering an organization’s needs in a multi channel worls. As he said:
The old CRM systems are now like dinosaurs in the context of the omni-commerce movement. They are not channel-aware, and so unable to get a single view of the customer. They also cannot react to information in real-time. They are very batchy. Our vision is for real-time systems
Strong words, especially given his history as a Salesforce staffer. Anyway – post acquisition, SAP announced plans to more tightly integrate the hybris commerce technology with SAP’s ERP offerings. It’s a logical move – it is no longer tenable to use a back office system that isn’t tightly integrated across all the different commercial channels, integration is critical. And this is an area where there may be cause for concern. Zach Nelson, CEO of NetSuite may joke about SAP being the place where good technologies go to die, but there is a grain of truth in what he says, and that extends beyond SAP to every large vendor. The fact of the matter is that when one massive enterprise company buys another well established vendor, there is significant difficult in integrating the two organizations, both in terms of product and the business aspects. A mature technology product is a complex thing, built in a particular way, along architectural norms and with particular models around data integration. Trying to shoe horn that into another technology stack is difficult. If that wasn’t enough you have all the tensions around sales organizations – sales compensation differs greatly from organization to organization – expecting an acquired entity to just mold seamlessly into the mothership is a complete pipedream.
Expecting one vendor to be able to deliver, via acquisition, a platform that delivers the multitude of functional areas that modern commerce requires is problematic. It’s one reason that NetSuite in particular has been reluctant to go overboard on the acquisition front. In stark contrast with Salesforce (and, obviously, Oracle and SAP) they prefer to build the omnichannel experience from within – built on a single platform with a single sales structure. That said, even NetSuite needs to fill in some of the gaps and has made a few acquisitions (Retail Anywhere and OrderMotion for example). The interesting thing here though is that, at least in the case of Retail Anywhere, it was already built on the NetSuite developer platform and hence has deep integration as a matter of course. The bottom line however is that a common platform for mobile commerce, e-commerce and good old point of sale is increasingly important to companies who want to get a truly integrated measure of their customers.
Time will tell how the internal tensions viz SAP and hybris are resolved. In the briefing call SAP’s CMO Jonathan Becher stated that hybris is the default commerce product going forward – that indicates a real commitment to making it a core piece of the SAP solution – they’ll need to if they want the product to really be meaningful. I’m mindful that the language being used was similar to that which we heard when SAP acquired SuccessFactors. That deal panned out somewhat strangely with Lars Dalgaard, ex- SuccessFactors CEO and previously heralded as SAP’s cloud wunderkind, leaving to take up a VC role at Andreesen Horowitz. It strikes me that SuccessFactors/SAP is a good example of a big ticket acquisition that just doesn’t gel – while at a macro level maybe it benefitted SAP commercially, I’m not seeing massive customer benefits being realized.
Omnichannel absolutely is the way of the future – but the jury remains out on whether SAP can actually deliver on the promise.