Like the fall of the Berlin wall, the assassination of John Lennon or the day Neil Armstrong took his giant leap for mankind, Wednesday 5th June 2013 will enter the annuls of history as SAP’s where were you when moment…
Ok, maybe a little melodramatic, one might even say a poor attempt at some tabloid style headline rhetoric, but whatever you feel about the first few lines of this blog, if, like us, you’ve been investing heavily in SAP’s flag ship Web Channel Experience Management (WCEM) juggernaut, the announcement probably left you wondering if all the wheels hadn’t just fallen off your multi-channel car.
To say this announcement came as a shock, would be to underestimate the furore that it has generated, both in the community groups and the internet at large. The weeks since have been awash with near endless speculation and rumour as to the merits and motivation for this acquisition, with opinion ranging from excited anticipation to frustrated consternation, and generous helpings of plain old dazed and bemused in between. However, regardless to which camp you have currently hitched your wagon, the same burning question still exists… to which basket should I currently be stashing my proverbial e-commerce eggs?
Before we get going on the meat and potatoes of this blog, I think now would be a good time to reflect on the history of SAP’s e-Commerce solutions and consider how this has motivated the recent announcements. Whilst the thrust of this article is not a SAP E-Commerce history lesson (Ingo Woesner has already done a great blog on the Evolution of SAP's E-Commerce solutions), we believe that this does provide some interesting information for framing the story so far.
- The History -
The evolution of SAP’s e-Commerce platform has been a long and sometimes frustrating journey. From those tentative first steps with the ITS, to the launch of their much loved, but often maligned ISA solution, right through to today’s state of the art WCEM platform (and recently announced Hybris acquisition) there has often been much to debate.
For us, ISA was their first serious move into the e-Commerce market, it’s obvious advantages of tight integration and generally competitive functionality offered a compelling argument for many customers (large and small) who saw adopting this platform as a coherent and complementary strategy for their e-Commerce aspirations. With some attention to detail, a reasonable budget and a little time and effort, ISA could be fashioned into a product that provided a pretty good customer experience, yet allowed the IT department to leverage their core investment in SAP skills to support.
However, this was the era of the internet bubble, before long SAP faced some stiff competition in the market place, as the pace of development picked up, their resolve seemed to falter and they took their foot of the gas. Their original promise of tight integration (particularly for SAP CRM customers) still rang true, but could no longer be counted as the compelling argument it once was, other vendors stole a march.
To think that SAP made no notable extension to ISA would be inaccurate; CRM 4.0 saw the completion of “e” commerce holy trinity - sales, service and marketing. CRM 5.0 brought us further enhancements to e-Service with complaints and spare parts, with e-Commerce gaining campaign integration and newsletter subscription. However, by this time SAP was under increasing pressure, their slow pace of development, coupled with a seemingly lack lustre program of product investment, vision and strategy saw them lose significant market share to their competitors. Despite further changes in CRM 6.0 and 7.0, with the notable inclusion of loyalty management, the image conscious B2C crowd was already moving to pastures greener. SAP’s competitors could claim to have all this, and more, packaged in an environment which was more appealing to the marketing and sales departments of any business.
Whilst selling the tightly coupled integration benefits of the SAP solution were easy for SAP IT departments, the end user and key influencers could not readily buy into this. To them the other products out there looked better, claimed to cover the full feature list and all had stories to support their SAP integration claims via various tools. It was only until the implementation that the true complexities enabling scenarios such as product configuration or true closed loop marketing across the channels became clear. By this time the investments were made and compromises taken to implement the chosen solution.
The last remaining bastion of SAP’s ISA product then became the B2B space, here, the lower focus on image, the greater propensity for tight back office integration, and the use of the SAP Enterprise Portal to deliver additional content seemed to balance the equation in favour of ISA. Without notable exception, the vast majority of the higher release implementations we worked on over the next few years were overwhelmingly focused in this direction. Then, in 2011, along came the new WCEM upstart from SAP, a new contender to the e-Commerce throne. Although, this was a product that had been completely re-designed from the ground up, it somehow felt familiar, for many, and certainly for us, it looked like we had finally turned a corner and emerged with a solution that addressed prior ISA acceptance issues, this was surely a turning point in the fortunes of SAP’s e-Commerce offering!
Although WCEM 1.0, being a brand new product, had some limitations and was focusing on B2C functionality, it did not feel hastily put together, in fact, when you looked under the hood, the architecture felt like a master stroke of design, a real thoroughbred in the SAP stable. As systems integrators and web channel consultants, we were enthused and genuinely excited by the prospects for this new product. From our perspective, WCEM had all the bells and whistles (JSF, CMS etc…); those key features that could really make the difference in a sale to a customer, not only that, for once it really looked pretty good out of the box! Furthermore, SAP had made commitments to a real development roadmap and strategy for this product; we were going to see continued and sustained investment in new features and its initial B2C focus was soon to be complemented by additional B2B functionality leveraging the renowned and robust back office processes available in the SAP CRM and ECC offering.
Tight integration, state of the art functionality, usability and look and feel, were now words that could finally be in the same sentence. Customers were going to be able to leverage real and tangible benefits from implementing their B2B and B2C processes across a single, tightly integrated SAP platform, the world looked like a better place. However, the story told by the market did not seem to match our expectations, there was talk of the cloud and the lack of functionality provided for the dominant B2C retail space; were we wrong, was it really that far behind its competitors?
We did some research to understand where exactly this impression was coming from and how WCEM was being perceived by the SAP customer base and a few themes began to emerge:
Then came WCEM 2.0, where among other things, many in-store processes were introduced. SAP’s retail market expectations were high, but the general acceptance by their retail installed was modest, few made the jump to WCEM even with the promise of support for retail specific article types. The main reasons for the hesitation were:
As a consequence, despite the comprehensive retail store functionality and obvious integration benefits, only a few retailers signed up for WCEM.
More recently, with the introduction of WCEM 3.0, things were really starting to come together. The proposition started to become easier to sell, and all the initial promise of ISA was becoming a reality, customers were starting to believe in the product, it looked like we were destined for success.
- The Acquisition -
Whaam! (as goes the famous painting of Roy Lichtenstein by the same name) along came SAP’s announcement, it was to purchase Hybris. The bottom literally fell out of our WCEM world overnight. After the shaky start, all that subsequent effort, and just when we were all starting to make headway, had SAP just managed to kill WCEM!?!
Well, the good news is we don’t think so!
During the rest of this blog, we hope to show you just why WCEM is here to stay, and how bright this future will be. But first, let us spend just a little time considering the motives for this acquisition.
As we have alluded to before, SAP has really faced some stiff competition in the Cloud computing market and received criticism for their product portfolio and strategy. This is of particular relevance when you consider the context of this acquisition, SAP’s major focus in recent times (aside for HANA) has been the SME, their Business ByDesign software solution has been specifically developed to target this market, but in recent times, it would seem that they have struggled to get much traction when going head-to-head with the likes of SalesForce.com.
There is however, no doubt that SAP has committed heavily to continue its e-business strategy even more so that it did in the past and truly has potential to dominate this space. The potential for SAP lies in its ability to bring to bear the fully integrated components of a business application suite to meet the demands of a multitude of business scenarios for small, mid and large scale enterprises. To our knowledge, no other product has the breadth and depth of integration provided by SAP, yet they still lack credibility to be able to go the final few yards. Enter Hybris, with this product, SAP has found the missing ingredient, they now have all the tools necessary to complete their Cloud offering, and has gained instant industry credibility to boot. In our humble opinion, it is now not a matter of if, but when, SAP will make their mark in this space.
So what, I hear you say, I thought this was a blog about WCEM? Well, hang on, there is method in our madness. At present, the only clear message to come from the annals of SAP HQ in Walldorf has been the Cloud computing mantra, but is this really surprising if you stop to think about it for a while. The process of legal and regulatory approval takes time; it’s feasible that this deal my still fall through and if we recall for a minute SAP’s targeted acquisition of Retek in 2005 (Forbes, 2005; CNET News, 2005; CNET News, 2005) the parallels are obvious. On this occasion, SAP once again wished to assume a dominate presence in the retail sector, they made commitments and investments to the market, only to have the rug pulled out from under them by Oracle. Like the child touching the hot stove, you learn from your mistakes. As is normal in these situations, SAP will likely have instructed its staff to keep Hybris at arm’s length and refrain from speculation, therefore, pushing SAP for more details is unlikely to bear fruit and we must wait to see how this unfolds once the ink is dry. Thus, it is left to the likes of us, having lived and breathed SAP for decades to attempt to illuminate the paths SAP will likely tread.
So, are we any further forward with our tale, well yes and no is the answer to that! For now, I think we have established some of the ground work, now we need to think a little harder as to how this might all fit into our bigger picture. Let’s take some time to explore the respective strengths, weaknesses and features of both products so that we might make some informed speculation on how things might shake out in the future.
- The Clients -
Drawing on our previous comments, it’s interesting to compare how the respective client portfolios stack up, and how this may affect and influence the future direction of both solutions. SAP has already clearly articulated that Hybris will continue to be run as a separate company under the control and direction of its current management. One can obviously debate at length the strategic and long term viability of this statement, and if SAP acquisition history really points in this direction. One thing is clear. Hybris does have an existing installed base (especially non-SAP clients), which SAP will be keen to retain, grow, and potentially convert to their Cloud based service offering as well as a Web Channel solution.
Figure 1 Customer Groups
Of the estimated 500 worldwide Hybris implementations, roughly 20% are current SAP suite users (Patrick Finn VP of Channels, Hybris US, Vantageb2b, 2013). We also know that 50 to 60% of the Hybris customers fall into the retail sector from which approximately less than 60 would be SAP suite users – we know retail to be a target growth area for SAP. The question is why these customers would have chosen Hybris over a more tightly integrated scenario with WCEM. Maybe some of the reasoning behind their decision has been highlighted earlier in this blog. Certainly for these customers the prospect of a tighter SAP supported integration between their customer experience platform and SAP suite must be a very welcome prospect. Whilst for SAP having the immediate opportunity to penetrate further into the retail sector gives them a boost to execute on this.
So, what about all those SAP Web Channel implementations I here you say? Well, again, here we find ourselves asking another interesting question. Given this customer base, why would SAP choose to consciously make a move that would damage this revenue stream?
Comparing the SAP WCEM and Hybris customer bases does not appear to show any major conflict between these two groups. For sure SAP has a strong interest to penetrate further into B2C retail, yet this does not justify the initial public assumptions that this deal will result in Hybris replacing SAP WCEM. From all of our investigation and analysis it is firmly our opinion that:
Hybris does not compete; it completes SAP’s solution.
We believe this statement to be true, both in terms of functionality and customer base. Whilst there is no denying that Hybris has an established foothold in the retail space, including customers utilising the SAP suite, the past few months have seen positive growth for WCEM sales which now exceeded those in the Hybris/SAP context. With over 700 SAP Web Channel implementations (compared with 500 existing Hybris installations), the conclusion must therefore be, SAP’s e-Business investment will continue to grow, albeit, now positively influenced by intellectual property and capabilities of Hybris.
Quite obviously, many of these customers have selected WCEM based on the functionality offered, the tight integration provided and the published roadmap of development. Furthermore, while Hybris capabilities for the B2C scenario benefits from the more centralized / product driven maintenance functionalities with a Product Catalogue Management (PCM) which leads to the better back-office user-experience (e.g. for Marketing managers), the integration with additional components such as contracts, dynamic pricing, complaints and services makes staying with the WCEM solution a compelling proposition. In short, to force either set of customers to migrate their implementations to a new platform that may not provide all the functionality of the one they are currently utilising does not seem to make much sense. This would also be a dangerous strategy providing these customers cause to look outside of the SAP product family. The much more likely and beneficial solution would be to incorporate the best parts of each solution into future software releases, providing a clear and concise upgrade path to new features and functionality.
- The Features -
Much has been made in the press of the features available within the Hybris solution, particularly those in relation to product catalogue management and end user experience, especially from a retail perspective. But do these features really represent compelling reasons for abandoning the WCEM product?
Product catalogue management forms the cornerstone of each product, and in WCEM, is provided by leveraging the SAP Master Data Maintenance (MDM) solution (certain scenarios provide support for the legacy TREX solution). Hybris on the other hand, has its own purpose built Product Content Management (PCM) solution, which was designed exclusively for this purpose. In this area, we would conclude that Hybris PCM, based on the evidence is ahead. Criticisms from some quarters surrounding ulterior motives for MDM adoption do seem to have some merit, but equally such a technology would have been hard to discount given the initial requirements of WCEM solution. However, whatever your view, both solutions form stable and robust components of their respective architectures. If we look to the future, we feel that PCM probably has the edge; and a future integration scenario for WCEM does not seem beyond the realms of possibility.
Obviously one can point to the incredibly tight integration between the SAP CRM and ECC systems as one of the huge benefits that it brings to the table. Clearly this is an area where Hybris comes up short, with SAP integration provided only through 3rd party integration technologies. There is no doubt that SAP will not leave this unaddressed, but the question remains how they will tackle it. Perhaps their move into upcoming ODATA services is highlighting the way.
Features strong on the WCEM side can typically be seen where this tight integration serves to benefit. Product configuration is a very good example of this. Hybris like most other multichannel products struggles when providing a product configuration function to its SAP backend customers. Although there are some partner products that aim to address this gap none can provide the seamless integration of the WCEM environment.
Similarly e-Marketing also benefits in this regard with integrated closed loop scenarios between the CRM marketing platform, the customer experience channel and the analytical components. Sure with a tool such as Hybris all of this is achievable to some degree with developments, partners and partner products. However, today the expectation is shifting to a more plug-and-play model. People are undertaking this effort to get products working together but it for sure is not what they want to be focusing on nor bearing the costs of.
For sure, there is a significant feature overlap between Hybris and WCEM, how SAP addresses this in the future will be interesting to observe, but in our opinion, as they stand today, neither is a clear leader as a candidate to replace the other. Instead, we prefer to look at the underlying technology as a basis for which product provides the most benefit to the on-going development of the products. Then we see a bolstering up of that environment into a new evolution of both WCEM and Hybris. Will there be a migration strategy for both? At this point in time maybe even SAP cannot answer that question. But it would be a risky strategy for SAP to face existing WCEM customers with the choice of a new implementation of SAP products thus opening the door to reviewing alternate products and an ensuing potential loss of customers.
So in the short term we believe SAP will include Hybris into the product line up in the areas it fits well today and where SAP needs to penetrate further such as the retail sector and cloud based solutions. No doubt they will continue to evolve Hybris in these areas but they can also not leave WCEM alone and will execute on the existing pipeline of product evolution already planned in that area. Of course they will have their eyes firmly on an end state of a complete feature suite with tight integration built on technology platform providing their customer with the basis to take advantage of the technology enablement functions anticipated from things such as HTML5.
- The Technology -
One aspect of the technology that is quite interesting are the opportunities presented with the Hybris PCM. Building upon our brief feature comparison, PCM, in our opinion represents a good candidate for HANA integration, and this may also be seen as a key driver for the future direction of the product catalog management in both solutions.
Other considerations must also be given to the general frontend architecture. Here, in our opinion, WCEM is the clear leader, Hybris, being the elder statesman of the two products is based upon the aging spring framework. By comparison, WCEM, the relative newcomer to the party, has been grounded in the latest technologies
Again, many comparisons can be drawn between the two products and this is really beyond the scope of this blog, but for those of you who are eager to hear more, an in-depth comparison will definitely be the bases of a later blog in this series.
- Conclusion -
In our opinion, SAP acquisition of Hybris can be seen as a strong market play, allowing it to make significant leaps forward in some sectors. They are also clearly well positioned in the all-important analyst competitive profiling, but if you are a WCEM customer this is not the only game in town.
What information SAP is happy to disclose regarding the Hybris play clearly indicates that this will be their go to market approach for the customer experience enablement in the Business ByDesign suite. Without doubt they will be working to underpin this with HANA and completing the triumvirate with the Hybris mobile capability they deliver on their theme; in the cloud, in memory and mobile.
When you look at it like this you can hardly fail to recognise the power play that SAP is making in the cloud CRM / customer experience world of business applications. Like other successful cloud solutions, we all knew that SAP would be the ones to lead us into the same paradigm shift for business suite applications. To be sure they are pulling no punches here, and we could well be seeing the beginning of the blow that finally sends the likes of SalesForce.com to the canvas.
So is that it? You want cloud you’ll be Hybris, you want on premise its WCEM? Well maybe this is how it will shake out, or so it would seem in the next few years. This however, is not the SAP we know, where constant innovation and striving for product excellence are touchstones. As we have tried to point out through this blog, in no way should WCEM be considered the less attractive cousin of SAP Customer Relationship Management, in fact the opposite is true. In WCEM, SAP has truly a next generation multi-channel platform, well architected, feature rich and ready to deliver on the hopes we all had of ISA many moons ago.
Whilst the jury may still be out on the Hybris acquisition, we firmly believe that this can only represent good news for WCEM; the lift in profile that we can expect will only serve to help WCEM break-free the residual stigma of ISA and allow it to be viewed as a complimentary part of a winning customer experience platform.
As for the future beyond, well this is hardly a winner–takes-all strategy, leaving those who backed the looser high and dry. In true SAP fashion, we expect to see a genetic engineering evolution of both platforms bringing together the best of both.
So should anyone invest in WCEM right now? Well, unless you’re an SMB looking for the ultimate cloud based business suite experience; all other on-premise SAP customers ought to be looking seriously hard at WCEM right now. Forget all that you have previously thought, WCEM’s reality is very much what you may immediately be lead to believe. Is there really anyone left that still believes they don’t need to refresh their customer experience on a 2/3 year cycle?
Thinking in these terms, and facing an upgrade from WCEM to the next evolution as it merges with Hybris, or being on any other vendor’s platform trying to make the jump back, we think it is clear which path is going to get your future customer experience ambitions to market quicker. In a shameless plug for our work, this blog represents the first in a series of posts that we will be writing over the coming weeks and months, if you enjoyed reading this, please stay tuned to this channel for more in-depth comparison and editorial opinion on the WCEM and Hybris solutions.
SAP CRM Multi-Channel Architect & Managing Director of ecomize
SAP CRM / ERP Solution Architect
SAP Web-Channel Solution Architect
Ecomize are an CRM E-business specialist consultancy focused on delivering market leading Customer Experience solutions based on the SAP Web-Channel products. Our team, with an average of 10 years hands-on industry experience, is implementing innovative business solutions based on the SAP Web-Channel and Multi-Channel product portfolio to clients throughout Europe and the Americas.
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