“And everyone at SAP knows that if customers love you everything else takes care of itself,” Co-Ceo Bill McDermott told reporters in a first public appearance with his counterpart Jim Hagemann Snabe at a news conference at the CeBit trade fair.
In addition to SAP CRM (Customer Relationship Management), their products offerings consist of SAP ERP (Enterprise Resource Planning), PLM (Product Lifecycle Management), SCM (Supply Chain Management), and many others. Particularly, SAP’s CRM system helps companies by giving them a single view of each customer where they can arrange their information ahead of sales, marketing, and services to their network. SAP believes that in our competitive business world, companies who have a competitive advantage are the companies which are customer oriented and giving their full focus on their customer’s satisfaction. “Delivering an outstanding customer experience is key to setting yourself apart from the pack.” Also according to SAP, “Companies seek to retain their best customers and maximize the effectiveness of every customer interaction – whether it’s sales, service, or marketing.”
SAP claims that they are the leaders in providing such systems including CRM which helps companies to make their customers satisfied; that we know. What we do not know is the answers on the following questions which are positioned on a different angle: Do SAP actually have a good Customer Relationship Management? Are their customers satisfied? What are they doing with about creating and developing relationships with their customers?
SAP deals with thousands of customers, mostly businesses, on an hourly basis. SAP’s customers include companies of all sizes and in all industries. They are the worldwide market share leaders based on total software revenue for business solutions in the three different software solutions the company offers. The company leads the market share of CRM with a total market share of 25.35%, with a nine percentage points more to its closest competitor. For the SCM market, they recorded a significant 16% lead over their competitors with a 22.4% market share. Concerning the ERP system, SAP also leads the market with the highest share compared to other software with a 27.5 percent. The reason why I stated these numbers is to give an idea of how big SAP’s customer portfolio is. In addition to the fact that SAP has many SAP labs locations all around the globe, the company spreads across many countries for other activities. Field organizational activities are responsible of sales, marketing, and consulting. On the other hand, customer support organizations, also called Active Global Support provide support to their customers in the world.
SAP has also delivered the latest technology for their features of SAP Enterprise Support and another special program that provides the same cause to meet their customers need. The company is enlarging its maintenance offering to provide nine years of support, where they deliver maintenance for latest offerings through 2017. On the other hand, User Groups is another element that SAP offers to its customers in order for them to optimize innovation through input and feedback which gives additional value to the customers. Established In 2007 to further facilitate the information exchange, the SAP User Group Executive Network (SUGEN) coordinated for a better collaboration among SAP User Groups. Adding to that, the company provided additional support including: Custom Code Support, Testing Efficiency Improvement, Enterprise Support Report, and Guidelines for Configuration and Operations. The other services the company offers are “Call me now/ Chat now”, where customers can instantly contact SAP to ask about any technical assistance or any other help. SAP also organizes annual awards for its customers. For instance, CIBER Company was awarded the “Most Satisfied Customers 2010” by SAP UK for customer satisfaction excellence.
The basis of SAP’s capability to provide the best solutions and software that concentrate on what their customers really need is innovation. Out of the huge collection of videos SAP shows on their website about innovation and their customers, you can see the way how they deal with each case depending on different situations in different companies. Also on their website, SAP states that their partnership with customers who are market leaders, visionaries and innovators helps strengthen their businesses and continually inspires to do more.
Many reasons underlie on why customers choose SAP instead of other IT solution companies. As stated before, SAP is the leader in all kinds of solutions in the applications market; therefore companies tend to choose their solutions in order to operate their businesses. The other important factor is the focus SAP has on what they do. Enterprise solution software is the company’s core and only business. Oracle’s solution software business, for instance, represents 24% of its products revenues and only 12.5% of the company’s profit. Moreover, customers tend to choose SAP over other competitors because of their focus on the value they give to their customers through knowing what the organization really needs from SAP products. 30% of SAP’s product orders come from new customers and the other 70% represents orders from existing customers. This proves the point that SAP focuses on the durability of their customer value and that customers are satisfied. *view chart below Another aspect that plays a role in the choice of SAP by companies is because of the variety of 25 industry-specific solutions SAP has created. Compared to their competitors, SAP provides superior technology through investing in R&D more with more than 10,000 developers. In addition to that, SAP has developed an enormous strong and loyal partner network that develops the value for SAP customers by offering a wide range of product facilities. Additionally, being a safe and stable company, SAP reduces the risk for their customers to lose their business because of other software companies’ failure. For example, Oracle has been facing a long extensive acquisition battles with Peoplesoft before 2005.
In relation with what we discussed earlier in text, the four-step IDIC [Identify, Differentiate, Interact, and Customize] marketing model will prove how successful or failing the customer relationship management of SAP is.
To start off, knowing that SAP’s relationship with customers is mostly B2B, it is important for the company to maintain an individual relationship with each and every customer. SAP’s mission in identifying their customers is not difficult, because of the fact that each organization from small-sized to big-sized is in need of kinds of software which SAP provides. What is not easy is identifying the end user. SAP knows that this specific organization will buy their product. What they do not know is who will use this software inside the company. Some companies especially small and medium-sized ones does not have an IT department or IT people that can help them implement or use these complicated programs which also needs maintenance. Further to this, we recognize how much variety of customers in different industries the company has. The basis of CRM is to differentiate your customers through knowing what they truly need and what their value is. Also in the analysis phase, SAP is aware of the fact that they have to differentiate between customers. When talking about thousands of companies with different backgrounds, we conclude that they are in need of different kind of products which in SAP’s case are software. SAP classifies the value of their customers according to the size of the company. The bigger the size of the company, the more it needs software solutions to operate in the best way.
Moving to the action phase of the IDIC, interaction between the company and its customers is one of the most important parts of the business. SAP wants to gather as much information as they can in order to serve their customers in the best way. On the other hand, customers are in need of a permanent consultancy and needs to collect more information from SAP since the products are not easy to use. Whenever they need help, customers can call or chat with SAP’s employees getting answers instantly. In addition to that, SAP offers a wide range of services and support from contact centers to field consultants and different kinds of courses. Concerning the customization part, customers have limited access in modifying the software specially that the product is extremely technical. The modifications could only stand to small details in the use of the software and not the software itself. However, as stated before, SAP customized more than 25 different industrial specific products. One of the main problems customers face is the use of the interface. SAP’s engineers work very hard to get the best software, but it is so complicated for them to transmit what they know to their customers through a user-friendly interface. It is hard and complicated for customers to translate “human logic” into computer rules.
Another CRM assessment we can perform is the trust equation. The trust equation is based on four factors: Credibility (Words), Reliability (Action), Intimacy (Safety), and Self-orientation (Focus). The more Credibility, Reliability, or Intimacy, the better the trust equation is. The more Self-orientation, the less trustful the company is. Concerning credibility, SAP is the most famous and recommended IT Solutions Company. Moving to how much reliable and intimate SAP is, out of thousands of customer testimonials you can conclude that all companies are working well and are happy of the results after implementing SAP’s systems. The strong and at the same time weak point of SAP is R&D. The company focuses by spending huge amounts of money on their R&D departments which gives them the opportunity to have the best quality products and technology in the world. However, this focus has a bad influence on the trust equation of SAP through the increase in the self-orientation factor. In a May 15th interview with the Wall Street Journal, Mr. Plattner discussed the complexity of SAP software, and what customers think of that complexity. As Lee Gomes of the WSJ put it, “With its [SAP’s] success, however, has come a reputation for making cumbersome products that average workers find extremely hard to use.”
Following the hundreds of customer testimonials that SAP shows on their website, you get a feeling that SAP’s solutions are miraculous and have no problems or complaints when acquiring them. In reality, the company is facing huge problems and complaints from a big amount of customers. Customers became upset in 2009 and SAP sales started to be affected. Hasso Plattner, SAP founder and chairman, acknowledged that customers had lost trust. Moreover, employees had also lost trust according to a survey by the financial times in 2010. According to multiple reviews, former users of SAP systems say that their software is difficult to configure, not friendly to the client’s requirements, requires significantly expensive consultants when implementing, and involve additional staff to get what you need. On the other hand, other reviews argue that the complaints are mostly from small and medium-sized companies. Those companies forget that they do not have the infrastructure and labor skills to implement an entire solution of this kind. Responding to the complaints regarding inexperienced consultants and high costs of implementation, again a common mistake concerning consultants is that they try to propose their own structure to the system which leads to unanticipated errors.
Is it lack of knowledge? Is it lack of way of communication with customers? Is it software complexity? All of the mentioned? It depends on each situation. Clearly, SAP has a grey image with respect to customers. The real question appears here: Can SAP fix it?
The focus is on growth, margin and innovation. It has to be kept in mind that all three have to be dealt [with] simultaneously,” Plattner (SAP co-founder and chairman) said. “Without growth, even strong margins don’t help. Without innovation, you cannot grow. And without margin you can’t have a streamlined company.” All of these are nice and attractive words, but it is obvious that SAP has the ability to maintain growth through innovation. The problem is how to deliver the knowledge of the product to the customers in the best way. Customers need simple easy to use software and not complicated ones. Work on innovation, but do not forget that your new innovations are used by a normal person and not an IT engineer.