Last month, SAP Hybris hosted a number of analysts, clients and prospects in Forth Worth Texas for their North American Customer Days event. The major discussion point for the event was the impact digital has had on the relationship with the customer. How does the continued disruption created by the digitization of our economy impact the manner in which retailers and brands interact with their customers? SAP Hybris emphasized that due to this digital revolution, retailers and brands that employ a “one size fits all” viewpoint is passé. We at Constellation Research couldn’t agree more. On the contrary, retailers and brands in their continued efforts to tailor experiences to the customer of one – lean on the technology and business processes that will permit these contextual experiences for the customer.
There were two points of emphasis at the event that reinforce the evolution of the retail – customer relations:
- CRM is dead, long live CRM. CRM as we knew it, is most definitely gone. The days of the CRM systems we saw arise in the late 1990s, such as Seibel and Onyx, addressed a very specific need – a linear repository for organizing customer touch points. Originally these systems were created to organize and keep track of a limited number of touch points between a sales force and a prospect or client. This sufficed when most of those interactions were in person, over the phone or via email. A finite number of touch points. Increased digital growth has given rise to an ever growing number of dynamic communication points between customer and brand. This evolution requires the systems being employed to keep pace. Traditional CRM systems and the mind set behind them are dated. Of course the notion of customer relationship management remains important, maybe more so than ever. Maybe not the term “management” since the customer has more influence in the relationship. Retailers are no longer driving the relationship, but working to understand and anticipate customer needs. In this light, the solutions are truly dated. As the number of communications points between customers and brands is ever shifting, growing and constantly evolving the necessary systems are asked to do more and do so faster and more efficiently. Brands and retailers, more than ever, must have systems in place that properly track, store and provide inputs into customer relationships. Legacy CRM systems are dead; the goals of CRM are more than ever vital for brands.
- Data is the new fuel. Data is the new oil that drives the digital business; those retailers and brands that will strive in this business environment are the ones that turn this oil into fuel. The importance of data is by no means a news bulletin, but it is the importance of transforming this data that remains the challenge. We all know that retailers and brands have an unprecedented access to data. But, as SAP Hybris points out, it is not about extracting the data it is about being able to transform this raw material, in the form of data, into insights. This transformation is multi-faceted. It must be done quickly, efficiently and intelligently. For example, the NHL (the North American professional ice hockey league, National Hockey League) worked with SAP Hybris to determine which data sources to focus on, how to leverage the data sources and what growth plan to adopt with regards to adding new data sources. With a large and various number of data lakes – individual team data, NHL.com assets and even fantasy hockey sites – there was no shortage of information for the NHL to choose from. With SAP Hybris, the NHL took a structured and disciplined approach – always keeping the customer at the center of the efforts. Which data pools were the most applicable to start with, and which could be brought in to build on the insights that were being drawn out? This approach has allowed the NHL to create a more efficient customized customer experience – being more contextually aware of the customer’s needs and possible experience with the NHL.
SAP hybris understands that it’s more than technology that will help your business, on the contrary the technology becomes less important. The need for new business processes, through the usage of the data is what distinguishes the leaders from the laggards. The technology needs to support, not lead these efforts.
At the core the focus continues to be on the customer, but it always has been. The nuance is that the focus is on the contextual customer interaction, which continues to be honed in more and more down to the individual. Retailers and brands need to be more nimble and willing to experiment with new technologies and allow for new applications – all with the changing business processes in mind. As SAP Hybris customer Loblaw stated from main stage – brands and retailers need to own digital, they have to think big, take risks and learn from these efforts. If companies don’t they will be left behind in this ever changing digital economy.
Today JDA announced the changing of the guard at the head of the company with long time JDAer – Hamish Brewer moving on. Interim CEO Baljit (Bal) Dail will take over until a full time CEO is found. From an outside perspective this is a surprising announcement. However, from a business stand point this makes sense.
Since the acquisition/merger with Red Prairie in April 2013, the dynamics for JDA has changed. What has been a strategy of acquiring new revenue streams – see Manugistics and i2 acquisition – could not be sustainable. At some point JDA will need to compete with organic development of its own and revenue if it hopes to challenge the likes of SAP and Oracle. It looks as if the board determined that Hamish was not the right person for this new challenge. Mr Brewer does deserve a lot of credit for being able to cobble together a family of supply chain vendors and not only keep the ship afloat but also continue to drive JDA forward.
Whether it is Mr Dail or a new CEO, they will face some challenges:
- How will JDA continue to drive and grow revenue. JDA has the classic problem of a large business, the good is they have a large portfolio of products the negative they have a large portfolio of products. In such verticals as automotive they are facing challenges from the likes of Kinaxis. In the S&OP space the likes of SteelWedge offer a viable option. Of course they always have the threat from SAP and Oracle.
- Speaking of product portfolios…JDA, like many legacy vendors, straddles the world of on premise and cloud offerings. While I think there remains room for both, I think the value that comes from being more “cloud heavy” will start to out weigh on premise. For example companies such as One Network or E2open have leaned heavily on the cloud and in doing so are able to bring added benefits of creating turn key networks. Users who need to integrate large networks of suppliers, customers and partners via their solutions into their supply chain network will lean more and more towards cloud heavy offerings.
The new CEO for JDA will face some interesting challenges. However, the company still has a number of arrows in their quiver. It will be interesting to see how the company moves forward. And what type of background the next CEO has will go a long way in determining where JDA finds itself in 5 years.
Disclosure: I worked at i2 Technologies for 5 years. I left i2 Technologies prior to being purchased by JDA in 2010.
When it comes to the supply chain space and solutions, there are three trends I am looking for in 2014:
- Software providers will strive to offer full supply chain solution suites. Mega vendors such as SAP, Infor and Oracle have been ahead of this game, just by their sheer size. A growing number of service providers such as JDA and Logility will continue to push in this direction –looking to offer their own supply chain solution platform. Practioners will seek service providers that can address larger and more inclusive supply chain challenges, rather than simply optimizing pieces of the overall puzzle. They recognise that optimizing parts of the supply chain can often times lead to unintended consequences in other parts of the supply chain. This does not mean that software providers that do not offer a full end to end solution will fall out of favour. These bolt-on solutions will continue to allow for targeted supply chain problems to be addressed. However, these solution providers will have to continue to demonstrate how their solution will be interoperable within the overall supply chain solution network. If you are already engaged with a mega vendor, lean on them to understand how their solution suite can address your larger supply chain issues. When it comes to vendors with smaller solution footprints, ensure that they can seamlessly tie into the solution ecosystem.
- Expect innovation from the non-usual suspects. Innovative solutions as well as thought leadership will not come only from best of breed providers or consultants, but also from such sources as 3pls and contract manufactures. These players will bring their unique perspective to the supply chain, and drive innovation and thought leadership from the manufacturing and transportation position….think about 3D printing from your contract manufacturers like Flextronics or Jabil and how they are applying this technology and how that innovation can impact your supply chain. Or how your logistics provider like DHL, FedEx or UPS will drive aspects like same day delivery or multi-channel retailing. Other logistics providers who can empower you to drive your supply chain into emerging marketing such as the likes of Agility or Imperial Logistics. Innovation in the supply chain had become more democratized; do not hesitate to look to all your service providers for innovative thinking.
- It will not be about big data but about actionable data. The notion of large amounts of accessible data will not diminish, on the contrary the amount of data we have access to for our supply chains will only continue to grow. But the vendors that are equipped to provide actionable data is going to be more important than big data. For example vendors such as IRI and Neilson can already provide large quantities of consumer data. Other business intelligence vendors have the ability to take massive data to cleanse and harmonize data. But practioners need to look for the vendors that are focusing on identifying that actionable data. To borrow a phrase from a conversation with SAP – “the haystack keeps getting larger and larger, and you are still looking for that needle” Solution providers will start focusing on identifying the actionable data, rather than just big data. Just because we can start looking at every last piece of data does not mean we should be doing so. Solution providers that offer the intelligence to find the key pieces of data within that haystack will be the ones that gain in relevance. Companies like Zyme are focused on the hi-tech space will be able to give companies like Barnes and Nobles a better understanding of what data they need to be aware of for products such as the Nook tablet. Work with your service providers to go deeper than just looking at big data – understand what types of data they are comfortable with and what industries they have deep knowledge of.
2014 should be another interesting year in the space…but then again isn’t every year that way?
No surprise, the vultures are already circling Blackberry and looking to recruit some of their top talent. The likes of Apple and Intel are starting to make overtures to Blackberry workers.
This cannot be a surprise to anyone. After the Waterloo based company
Back when it was the cool phone…
announced intentions to being acquired by Fairfax things have continued be out of sorts. With rumors that the financing might not be in place. There is talk of Blackberry heading to the chop shop and having their parts sold off. Something this blog has advocated to happen. Click here for post. It is interesting that the likes of SAP are looking into opportunities. If SAP were to get some of their enterprise assets it would be a very interesting asset for the package application giant. Being able to instantly have a powerful and secure mobile platform could be the catalyst for some of SAP’s solutions. Something to watch.
It is sad to watch, but the end of days seem very close for the once powerful mobile player. I might need to dust off my old Blackberry, wonder what it will fetch on eBay from the collectors!
So SAP finally did what many in the supply chain space had assumed would: acquired Pittsburgh based IO vendor SmartOps. Full disclosure, I worked at SmartOps in 2009 running marketing.
The news really is not so surprising, other than the acquisition actually happened! SAP and SmartOps were very close partners since 2006, a relationship that really was one where SAP was getting the milk for free from the SmartOps cow. The question became, why would SAP spend money when they were already getting all the benefits of the relationship? While all the details are not out yet, and may never be, it seems that SAP finally felt it was time to take full ownership of the SmartOps solution. The deal seems to have been driven from the HANA side of the house. Does SAP see this as a chance of getting some intelligence baked into HANA, giving that technology some teeth? The combination does hold some promise for providing real time intelligence to the supply chain process.
The combination, if management properly, could spell real trouble for companies that are working in the S&OP and Demand Sensing areas, think of Kinaxis, SteelWedge, Terra Technologies, Logility and the usual suspects such as JDA. The advantage for SAP is that they have worked so closely with SmartOps for so many years that the integration should be seamless….literally. The question becomes, can SAP nurture and give this new combination the necessary love and attention to truly get the most out of it? Or will SmartOps and their value just fade into the back rooms of SAP?
This past week with all the on goings at HP made me think of the great song from Blind Faith – Can’t Find my Way Home – and the great lyric “I’m wasted and I can’t find my way home.” After a rough 11 months under the guidance of former SAP CEO, Leo Apotheker, HP decided to jettison him and are going to replace him with former eBay CEO Meg Whitman. Okay, so let me get this straight, you allowed Leo to take HP down the path of challenging the likes of IBM and SAP with regards to corporate applications and services – even allowing Leo to announce that HP was jettisoning their PC and Palm products. This fell in line with Leo’s background from SAP where software and services were the path to greater revenue. Leo, with the backing of the board, seemed to be embarking on a transformation of HP that mimicked what IBM had done by jettisoning their PC division to China. Did Leo and the board come to the conclusion that profits were no longer to be made in competing in the capital intensive and margin challenged space of PCs? Did the rise of the iPad, iPhone and MacBooks cause Leo and the board to move away from the space and reconsider the Palm OS for tablets?
There appears to have been some element of this, otherwise why would they have made such statements about the PC and Palm? The desire to move away appears to be the correct on, the way in which they executed is another story (why not look for potential suitors behind the scene rather than come out and make a bold statement of your intentions?). Of course now all this comes into question because of the removal of Leo from power…and now you insert a B2C CEO in Whitman? With stints at eBay, Disney and P&G she does not come across as a veteran of the package applications or B2B high tech world. There is no doubt that she is an incredibly capable and intelligent leader, she was the one that took eBay from being a pez dispenser ecommerce network to the giant it is today (going from $4m to $8b). But was a very different world from where HP is today. I am sure there are lessons to be taken from what she did at eBay, but I am not sure she is the best equipped to take over HP in its current state. HP needs someone with deep knowledge of the B2B tech space, someone with the vision and gravitas to pull HP out of the morass it currently finds itself embroiled in.
Whitman has a tremendous mountain to climb and with the likes of IBM, SAP, Oracle, Microsoft, Lenovo, Panasonic, Apple…and the list goes one….all gunning for HP, it will be a tough course to navigate. HP needs to ensure that she has the ability to enact a strategy and see it through, give it more than 11 months! Her first big decision, what to do with the PC and Palm side of the house. Which course of action will be an indication of what she is thinking – keep going down the Leo route of services and software or go back to a mix of hardware and software? Both paths are fraught with risk and opportunity, my sense is she will opt for the latter, closer to her B2C background.
Time will tell.
Yes that is $1.3 BILLION that the German software maker will have to pay to Oracle in damages for a scheme to steal customer support and software from Oracle so that SAP could lull those customers over to their solutions. Ouch. SAP’s after tax profit last year was $2billion…wow. This will have some serious repercussions in the software and business world. I would not be surprised if you will hear of more law suits against SAP – similar to the one filed and won by i2 Technologies a few years back.
These law suits are too common in the software world, however they have always been difficult to prove and even more difficult to assess damages – how can you really place a monetary figure on supposed lost sales or clients? And how can you really prove a line of code was stolen? Yet this finding marks a signal that the courts are becoming more savvy in presiding and passing judgment over these matters. The impact of the this announcement will be felt throughout the industry and business:
- SAP will be seriously hamstrung to go out and acquire other players in the space to bolster their business. The major dent in their cash as well as market value could make them an enticing acquisition target themselves – Microsoft anyone?
- Oracle will be bolstered by this and they might go out and look for new targets to acquire. Not that they were in need of cash, but getting a nice check for $1.3 billion can make shopping during the holiday season much easier! Could they go out and target a firm like JDA – small fish I realize. Or maybe one of the system integrators out of India…What about Infor?
- New lawsuits, couple this verdict plus SAP’s willingness to pay off i2 in that lawsuit and I am sure you have every vendor that did business with SAP calling up their legal departments to determine if they can get shot at the giant. SAP’s ecosystem is far and wide so I would not be surprised to hear of many more small and large lawsuits being filed.
Part of me also wonders if SAP knew this might happen, reason why I have been seeing what appears to be a major uptick in television ads from SAP. A preemptive marketing campaign to remind us all how wonderful they are and how many of the things we enjoy “rely” on SAP software.
I am sure that Larry is going to have a very happy Thanksgiving, I wonder if this means he will purchase a new yacht to race in the America’s Cup regatta?