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8/7/2013
09:19 AM
Doug Henschen
Doug Henschen
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SAP Buys Hybris, Gains Customer Experience Power

SAP tightens competition with IBM and Oracle, promising consistent, cross-channel customer experience. But more deals will be needed.

"E-commerce" is a dated concept, according to Hybris CEO Ariel Luedi. Instead we should think of all types of customer transactions simply as commerce. We should also stop handling digital transactions and conventional transactions with separate silos of technology.

Luedi touts Hybris as a modern platform that handles the complexities of managing multiple customer touch points, delivering consistent information and consistent customer experience regardless of how the customer wants to do business. Start a transaction online and you can pick up a phone and complete it through a call center without having to start from scratch. That promotional price quoted in an email offer won't be new news to the store clerk or call center service rep. And if you buy something online you'll be able to return it at store without a problem.

It's easier for Luedi to be bold about his promises now that Hybris is officially part of SAP -- a deal formally closed last week and extensively discussed on Tuesday at SAP's offices in New York City. The terms of the deal were not disclosed, but the Wall Street Journal quoted unnamed sources who put the deal at more than $1 billion. It was a private company with roughly 700 employees and $150 million annual revenue run rate. But now that Hybris has SAP's backing, Luedi says one of his biggest challenges will be "not drowning in demand."

[ Want more info on the marketing arms race among tech vendors? Read Salesforce.com's ExactTarget Buy Equals Marketing Clout. ]

Hybris' strong suit is supporting business-to-business (B2B) commerce, but it also supports business-to-consumer (B2C) commerce, product content management and order management. B2B customers include the likes of industrial products supplier Granger while coffee equipment maker Nespresso and camera manufacturer Nikon use Hybris for both B2B and B2C commerce.

Hybris' core architecture provides a master data-management layer said to ensure consistent inventory, pricing, order-status and other information across channels, whether that's Web, mobile, call center or retail stores. There's also a process-management layer that applies the same business rules across channels, so prices and promotions encountered online are consistent with those encountered in stores or on mobile devices.

SAP was attempting to grow organically in the commerce arena with its Web Channel Experience Management system, but SAP "finally reached the conclusion that catching up via a build strategy was not working," writes Forrester Research analyst Peter Sheldon. With the Hybris acquisition completed, Sheldon says the enterprise commerce technology landscape is now "dominated by four large software companies: SAP, IBM, Oracle and eBay."

IBM and Oracle are clearly SAP's chief rivals, and they've both spent billions on acquisitions in the commerce and customer experience arena. The most directly competitive products to Hybris at IBM are Unica and Sterling Commerce, while Oracle has ATG and commerce-oriented bits and pieces of BEA, E-Business Suite, FatWire, Stellent and Eloqua.

Hybris, which will continue as an independent business run by Luedi, has basic Web content management (WCM) capabilities, but it has long partnered with Adobe's for its deeper Experience Management WCM capabilities. The more important piece missing from SAP's portfolio is marketing automation, a hole plugged by IBM with its $480 million, 2010 Unica buy, by Oracle with its $871 million Eloqua acquisition in January and by Salesforce.com (which lacks a commerce platform) with its $2.5 billion ExactTarget deal in June.

Luedi dismissed these competitors on Tuesday, describing Unica as lacking on campaign execution, Eloqua as heavily focused on lead management and ExactTarget as limited to email campaign execution. SAP executives said they will build, partner or buy to fill in lacking components and provide a more complete and automated experience.

"In our vision, if somebody defines a campaign for this product in these markets for this price and these customer segments for this duration and so on, when these definitions are entered, the campaigns will actually happen," Luedi says. "Right now there's an artificial break between the planning phase and the execution."

That's a strong vision statement, but it's just vision. IBM and Oracle have head starts and larger scale in commerce. Sterling Commerce had revenues of $700 million when it was acquired by IBM in 2010 and ATG was on track for $200 million when it was acquired by Oracle that same year. IBM and Oracle have also filled in the marketing automation piece, so it will be no shocker if SAP makes another acquisition -- all the better if that move also bolsters the company's cloud-computing revenue.

SAP's commerce story is clearly getting a big boost boost with Hybris, and it's being smart about letting Luedi run it as an independent company, with continued support for third-party ERP systems and partnerships with the likes of Adobe. Luedi insists that Hybris' technology is two generations younger than the competitors and focused on consistent experience rather than the old school of "managing" customers.

"Most companies don't realize that they have lost control of the customer relationship," Luedi says. "Those days are over, so you have to let go and be prepared and adapt to the moods and channel selections of the customers."

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D. Henschen
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D. Henschen,
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8/7/2013 | 6:43:26 PM
re: SAP Buys Hybris, Gains Customer Experience Power
Who's buying Hybris' technology? Luedi says when the 15-year-old firm started out, it was invariably the person in charge of e-Commerce, but they often intended to address multiple channels. Nowadays it's common for the Web channel infrastructure to end up taking over all channels, he says. What's more, buyers increasingly have multi-channel responsibility. There are now people in charge of "omnicommerce" he says, and the title of chief customer experience officer is emerging.

Another items of note: 70% of Hybris customers are non-SAP shops - underscoring the importance of the company remaining an independent unit of SAP.
ChrisMurphy
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ChrisMurphy,
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8/7/2013 | 6:34:50 PM
re: SAP Buys Hybris, Gains Customer Experience Power
I wonder if SAP will be able to retain Ariel Luedi long term. Your point about the relative revenue of Hybris versus Sterling suggest SAP-Hybris has a lot of selling and evangelizing to do yet. But there's a big need inside companies as companies try to run as one digital business, rather than a bunch of channels of which ecommerce is one.
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