SAP Gives in to CRM (Part Time) Matrimony

Event Summary

On May 2, SAP AG, the leading provider of enterprise software applications, announced a strategic alliance with Nortel Networks to develop and integrate industry-specific customer interaction solutions that could extend the scope of collaborative customer relationship management (CRM). As part of the agreement, SAP has embedded within mySAP.com customer interaction applications from Nortel Networks' Clarify eBusiness Applications unit to provide extended customer-service functionality and new levels of information access and use to businesses.

SAP and Nortel Networks will further extend their alliance by creating Internet-based service solutions that enable virtual communities where vendors, partners and suppliers can present themselves to their joint corporate customers as one unit.

"The alliance with Nortel Networks is a manifestation of our commitment to providing businesses with flexible, open solutions for a collaborative work environment, freeing users from technological limitations," said Peter Zencke, member of the executive board of SAP AG. "Enabling collaborative virtual communities of companies to present one face to their joint customers, SAP and Nortel Networks will deliver a new quality in customer relationship management."

With the embedded Clarify eFrontOffice applications from Clarify eBusiness Applications accessible through personalized workplaces, mySAP.com will allegedly provide a robust contact center that delivers a comprehensive and seamless customer experience. The unique SAP integration technology allows customer information from all available sources - including Web, phone, fax, person-to-person interaction and handheld devices - to be leveraged by all employees with a customer-facing role. Tailored initially to the unique business needs of the banking, insurance, high-tech, and communications industries, the combined solution will provide a single view into a broad, rich set of company and market information, processes, relationships and interactions among companies, suppliers, partners, and customers.

"Nortel Networks and SAP will provide businesses with the ease and flexibility required to build mutually loyal relationships beyond the walls of a single organization," said Tony Zingale, president, Clarify eBusiness Applications, Nortel Networks. "With the combined industry and Internet expertise of both companies, businesses will be able to collaborate in new ways and achieve greater levels of return on relationship."

Today's agreement is aligned with the previously demonstrated open strategy for complementing mySAP.com solutions with tightly integrated applications from SAP partners for marketing planning and campaign management, catalogs, push technology and Internet connectivity solutions. The mySAP.com Workplaces are role-based personalized portals for employees, partners, and customers. Seamless access is provided to internal and external applications, hosted services, and business content via a single, easy-to-use Web-based environment, as alleged by SAP. The mySAP.com Workplace portals supposedly tie together data from an array of sources and applications, regardless of whether the information resides in systems from SAP, providing a flexibility to utilize previous technology investments and a start-to-finish solution for end users.

The combined SAP and Nortel Networks offering will be available in May and is currently being deployed for use within both Nortel Networks and SAP. Current companies that have integrated SAP with Clarify eFrontOffice include BP Amoco, GTECH and Scientific Atlanta.

Market Impact

Behind the flashy marketing pitch lies SAP's tacit acknowledgement that it cannot manage everything on its own at this stage. SAP has traditionally been stubborn with its build-it-ourselves approach. While this backing down may be somewhat embarrassing, it also exhibits some pragmatism and wising up to the circumstances.

SAP has to be willing to be more flexible and humble in its strategy if it is going to succeed in the new economy. With the excess of integration products on the market and improved interconnectivity, users are becoming much less wary of piecing together best-of-breed solutions. Ground up development of a complete end-to-end e-business solution spanning all functions of the front and back office is undisputedly a major mission. While SAP can effectively manage large human and financial resources functions, it may not suffice; coordination and time constraints play a major role too.

This move may, however, change the balance of power among major CRM players (or aspirants). Vendors like J.D. Edwards, Lawson, and Great Plains, who bundle other vendors' products as a part of their overall solution, may get some vindication for their strategy. They have been lambasted so far from purist "one-stop-shop" suppliers like SAP and Oracle as well as from analysts. J.D. Edwards may still struggle to justify its need for almost a double-digit number of third party software alliances. The proverbial argument has been that integration of products from different vendors is difficult and expensive, therefore buying a completely integrated end-to-end solution is a better bet.

This move leaves Oracle as the only noisy one-stop-shop supplier in the e-business applications space (PeopleSoft, Infinium, and Epicor may be able to tout similar capabilities in the near future). Oracle had a much different approach in building its CRM solution; it bought a slew of third party products to use as the foundation for its CRM suite. While this has presented its own set of problems, it seems as though Oracle may actually deliver the "total solution" promise with release 11i of its applications. Where complete system replacement is possible, this may give Oracle a significant head start in future selection bids. We also believe that the ubiquitous Siebel may also benefit tremendously from this move. The SAP installed base has been one of its fertile grounds and so far SAP's ousting strategy for Siebel has largely revolved around the integration argument. Now this becomes obsolete and creates a free-for-all situation within the CRM market place.

In addition, some caveats remain about the partnership. On the surface, it looks as if the deal is only for the mySAP.com product release. This may leave the vast majority of SAP R\3 customers in the lurch, since few have made plans to upgrade to mySAP.com in the near future. And because it is limited only to the call center functionality within a certain number of industries, the two companies may compete for other front-office applications such as marketing, sales force automation, and field service. Moreover, SAP has always been a reluctant partner, usually only teaming up with another vendor temporarily until it could buy the time to build the functionality itself (the partnership with i2 is a perfect example). With this in mind we wouldn't be terribly surprised to see SAP buying Aurum, Baan's CRM business, for a bargain in the near future.

User Recommendations

SAP customers should certainly consider Clarify call center, but avoid selecting it without looking at what the other vendors have to offer. Notwithstanding, SAP should be included on almost any initial long list for global extended-ERP selections. However, existing and potential users currently evaluating SAP products, particularly its extended-ERP product components, may benefit from considering already available and fully functional components from other vendors on the merits of individual components, instead of blindly following their brand loyalty. Each component should be put through its paces using a well-documented set of requirements, scripted scenario demonstrations, and rigorous reference checking.

Future clients are also advised to request the Company's written commitment to promised functionality, general availability date, price, length of implementation, and seamless future upgrades, particularly for recently announced partnered offerings. SAP has traditionally been honest and forthright in addressing these questions. Therefore, it should not be difficult to make SAP grant a single contract and help desk for all the disparate components of its product offerings.